Tuesday, 18 June 2013

Never let an economist get his hand on a lever

As if to prove the truism that most modern mainstream economists have never seen a policy lever they’ve never liked, the BNZ’s Tony Alexander came out over the weekend with a list of ways in which to meddle in the housing market.

Tony’s Plan, as economist Eric Crampton* called it in criticising it**, consists of eight points ranging mostly from the fanciful to the farcical, including the creation of a Super-SOE “whose sole purpose is to undercut existing building materials suppliers,” “a new large state house building programme” using some sort of “efficient building systems” that presumably only a large state house building programme will be able to dream up, and “a tax on all houses owned by Kiwis offshore with the aim of encouraging them to sell them.”

I’ve got a better idea. How about we tax economists who blurt out fatuous nonsense.  If the government had a thousand bucks for every time that happened, you could virtually pay for a small, rights-recognising government and have plenty left over for refunds.

My advice to Tony until my own policy prescription is picked up is this: Shut up. Then you’ll only be thought a fool.

* * * * *

* Eric being one of the few modern mainstreamish economists to forego the profession’s knee-jerk eagerness for lever pulling.
**…and mostly, and deservedly, demolishing it…

1 comment:

  1. Biggest puzzle for me is that, if there are such big inefficiencies in housing that could yield crunchy crunchy profits if resolved, WHY IN HELLS ISN'T TONY ALEXANDER GETTING BNZ BACKING TO SET UP A CONSTRUCTION SUPPLY COMPANY OR A MODULAR HOUSING COMPANY?

    All he'd need to do is announce:
    "BNZ deems there to be substantial inefficiencies in housing. We are prepared to loan up to $x for the best business plan for the establishment of a bulk construction materials importer/distributor, and $y for the best proposal for a low cost modular house construction company."


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