John Key is still a fucking moron

Cartoon by Richard McGrail from The Free Radical

I've been reminded this morning about what a clueless fucking moron we had as a Prime Minister for two-and-a-half terms. Back a few years ago when we were "rock stars." Remember that?

Anyway, here's John Fucking Key last month giving his considered analysis of what's wrong with New Zealand's economy now:

"The guts of what’s wrong is that the housing market is going down, not up,' he said.
    “When house prices go up, everybody tells the pollsters, ‘Oh that’s terrible, my son or daughter can’t buy a house. I feel really bad.’ The technical term for that is ‘bullshit’.
    “What they really do, is they say to their wife – or the wife says to her husband – ‘God, we paid $1 million for this house and it’s worth $1.7 million now.’ Quietly they go, ‘Oh, we feel rich’.
    “And then they go and borrow a bit from the ANZ and they go on holiday and they upgrade their kitchen, they feel good about life. So when you have a negative wealth effect, they feel bad.”

And I bet the roomful of home owners and property "investors" and National Party political advisors — no to mention all his former colleagues on the ANZ board —had a smug little chuckle into their at their man's shrewd witticisms. It's hard to know where to begin at his economic acumen however, 'cos apparently it's never begun.

Let's make it simple, since that's the best description of Key's grasp of things. Trump's been called a fucking moron for not understanding the economic destruction of tariffs. And rightly so. But Trump doesn't pretend to be in any way clued up about economics. Key does. And yet the fucking moron apparently knows nothing about a simple enough concept: capital consumption. It's a process of converting someone else’s wealth into your income.

And this is his one simple trick to fix the fucking economy.

You wouldn't believe it.

Here's what the fucking moron either doesn't know, or doesn't care to know.

That fucking "wealth effect" the moron talks about is paid for by one thing: it's paid for by eating the fucking seed corn. The seed corn is the part of your harvest you put aside to plant again next year. Without that seed corn, you have nothing to plant, and nothing further to harvest. What Key wants to "fix" the economy, the simple guts of it, is for is to eat the fucking seed corn. That's his recipe for success. 

Any fucking moron could get a "wealth effect" (and a poll bump) by consuming the seed corn.  But ultimately the farmer will pay a price; he'll no longer have anything to farm.

Fellow on the right enjoys Key's "wealth effect." Not so much farmers on the left.

But the difference in what Key proposes is even worse: he wants home owners to consumer other people's seed corn. Hayek used to call this "forced saving." Savers have to save more, or else, because the "seed corn" being consumed is theirs. 

Here's the thing: When mum and dad borrow a bit from the ANZ and go on holiday and upgrade their kitchen and put in another fucking ensuite, that's paid for by what was, or would have been, accumulated capital. The accumulated capital of those other savers. It's called "forced saving" because what pays for John Key's fucking borrowing is new counterfeit capital: i.e., new money that's been borrowed into existence to pay for the holiday, the new kitchen, the fucking ensuite. That counterfeit capital means savers are forced to save more just to keep up.

That's because this new borrowing is new money "injected into the economic system at a specific point" that advantages those consuming the counterfeit capital while disadvantaging those trying to save.

If the money or credit were evenly distributed among all economic agents, no “expansionary” effect would appear, except the decrease in the purchasing power of the monetary unit in proportion to the rise in the quantity of money. 

However if the new money enters the market at certain specific points, as always occurs, then in reality a relatively small number of economic agents initially receive the new loans. Thus these economic agents temporarily enjoy greater purchasing power, given that they possess a larger number of monetary units with which to buy goods and services at market prices that still have not felt the full impact of the inflation and therefore have not yet risen.

The purchasing power of these home-owners is paid for by the losses of savers. 

Hence the process gives rise to a redistribution of income in favour of those who first receive the new injections or doses of monetary units, to the detriment of the rest of society, who find that with the same monetary income, the prices of goods and services begin to go up. “Forced saving” affects this second group of economic agents (the majority), since their monetary income grows at a slower rate than prices, and they are therefore obliged to reduce their consumption, other things being equal.

In a nutshell Key's quick-fix for poll-driven success, and economic growth, is to grant home-owners purchasing power by quietly, secretly and unobserved, stealing from savers. ("By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens." ~ John Maynard Keynes)

Recall that he said something similar when the problem erupted of paying to repair leaky homes. He said quite bluntly, not to worry,  inflation would fix that. Remember that when housing unaffordability was bad before he took office, and he promised to fix it. He didn't, of course. Instead, he did everything he could to put rocket fucking fuel under house prices. It would, he claimed, 'fix" the problem of paying for the problem. 

This prick has form.

He's either a calculating Machiavellian.

Or he's pig ignorant.

My money's on the latter.

RELATED:

• Key on housing affordability and elsewhere - NOT PC, 2007
• Counterfeit capital - NOT PC, 2008
• Mr Key’s dirty little secret - NOT PC, 2009
• We’re rock stars! - NOT PC, 2014
• How Do People Destroy Capital? - Keith Weiner, SNBCHF, 2015
• Housing bubble is consuming our capital - NOT PC, 2015
• The Reserve Bank’s war on capital - NOT PC, 2016
• Key admits to ‘crisis theatre’ and talks up house-price inflation - NOT PC, 2016
• John Key has had an unbelievable solution for affordable housing - NOT PC, 2017

Removing barriers to overseas building products, one subclause at a time [updated]

BUILDING MINISTER CHRIS PENK IS surely mistaken (or misled) if he thinks he is going to see a quick remedy to high
building costs from his announcement, already signalled, that building products from overseas may now be used in New Zealand.

The problem, you see, is that regulations here around our approvals process make it prohibitively expensive to obtain official approval for any materials, local or imported, so that most would-be inexpensive imports just don't happen. (Around 90% of products used in building or building components here already are imported, but they're generally not the primary ones requiring approval by the grey ones.Why pay upwards of $250,000 to have your primary Euro-component approved here, when it's already selling like hotcakes in your Euro markets.) 

So Penk's idea is that materials or systems already approved by the grey ones in similar jurisdictions and standards environments to ours (such as Australia, Canada, UK, US and Western Europe) can be cited in documentation to the grey ones here— and then, with some fingers crossed, be approved for use in buildings here without the otherwise burdensome cost of obtaining formal approval upfront.

Cheaper materials: cheaper houses.

Nice idea. Shame if a bureaucracy somewhere were to ruin it.

The programme will be run by MoBIE. 

I attended a webinar run by MoBIE dicks recently outlining how they intend to run it. They called it 'Removing Barriers to Overseas Building Products.' Try not to laugh as I relate their intentions.

First of all, they've started a committee. And several working groups. Large ones. Large enough, I imagine, to fill at least one floor. It will be these newly-appointed bureaucrats that will decide which standards/regulation of which similar jurisdictions will be considered for approval by these bureaucrats. And this will of course take some time. 

First of all, of course, they have to meet to define regulatory criteria. And to issue new acronyms (things like BPS, BPIR, etc.)

This is how bureaucracies work.

The committee/working groups will then make recommendations to the CEO of MoBie which standards/regulations he may recognise. May. Those deemed unobjectionable are then added to something called Building Product Specifications — a "new regulatory instrument." [UPDATE: The inaugural Building Product Specifications document has just dropped today, but dn't get excited, it's simply a compilation of standards/regulations already cited in the NZ Building Code. Enjoy.]

Following which, MoBIE's dicks will then publish a "Recognition Notice" detailing which new standard/regulations have been recognised. Once a standard/regulation has been so recognised, it will then be added to the Building Product Specifications document.

They hope ("always hoping, hope is vain") to issue their first "Recognition Notice" by year's end. That will be for one regulation/standard from one jurisdiction for one building material or system. For which the Notice will be once piece of "evidence of compliance with the New Zealand Building Code."

Still, once that Notice is published, building importers may then decide to bring in a building material or system; builders and building designers may offer the imported product in plans and specifications based on it being "Recognised" as evidence it complies

Did you follow all that?

Note the process here: it's MoBIE who decides to decide. Not builders, not building designers, not building materials scientists or building materials importers — all of whom have a large interest in the process — and nor is it the building minister. No. It's MoBIE's dicks who decide to initiate the process,  and it's they who will grind slowly through all the world's standards, regulations, codes, guidelines, approval systems, benchmarks and norms, deciding which of them they might like to spend time taking through their process and (eventually) recognise.

So we can see how this is good for bureaucrats employed within MoBIE. 

But how does all this help builders, building materials importers, would-be building owners, and me as a building designer? 

Well, nothing at all will help until at least the start of next year, when the first "Recognition Notice" might (might) have been issued for the Australian Watermark Scheme — so importers et al can start taking advantage of Australian plumbing and drainage products.

And after that, the committee/working group/bunch of overpaid bureaucrats will then begin to meet and consider whether or not  the American Society for Testing and Materials (ASTM International) and the European Committee for Standardisation (CEN) may be considered for recognition.

Don't wait up.

They may be some time.

UPDATE:

Email from MoBIE this afternoon: 

"The newly released Building Product Specifications document lists 130 [already-recognised] product standards, including US, European and other international standards alongside New Zealand equivalents for products like plasterboard, cladding and insulation. ...
    "Soon [sic] other pathways will be in place for the Minister of Building and Construction to endorse overseas standards, and for MBIE to formally recognise certain products certified overseas as complying with the Building Code. Updates about these pathways will be made soon [sic]."

This is horrifying

[Hat tip Charted Daily]

"But how much can you *do* with a 70 square-metre house?!"

THIS IS ONE OF THOSE rare things, a government announcement I can get behind:

“Last year the Government consulted on allowing\granny flats of up to 60 square metres to be built without building or resource consents. The proposal received huge support, and as a result the Government has agreed to go even further by increasing the maximum size to 70 square metres.”

This is great news!

And it does look like it may actually happen — with the announcement yesterday that " Granny flats of up to 70sqm, and papakāinga of up to 10 homes would be allowed without a consent on specific land zones."

Never mind the misnomer "granny flat," When/if this is introduced, any house with a decent sized-section will now give owners the opportunity to add one new minor dwelling. (Let's call it that, shall we, rather than the more popular but slightly derisive 'granny flat'.)  One minor dwelling in all the places that's possible can do amazing things for making dwellings more affordable — helping make up for three decades of cementing in the opposite trend.

"But," I hear you ask, "how much can you do with a 70 square-metre house?!" Answer: a lot. If you do it right, a minor dwelling might even become your major dwelling.

To give you some idea of that size, until recently, the average size of a New Zealand house was 200 square metres. Now that we've been overdosing on bland, cooky-cutter townhouses, it's just under 160 squares. 

So even with that drop, a house of just 70 squares represents a fairly drastic compression of space.

So ... how much can you do with a 70 square-metre house?

Turns out, with a knowledge of good spatial design and a little bit of cunning, an awful lot.

Yes, I know those of you living in homes with kitchens the size of a large double garage won't fit in. But, for the record, I live in a very workable house of just 45 square metres. So to me, 70 square metres looks like a luxurious surplus of useable space!

So let's have a look at what a little bit of ingenuity and exploiting a few legal loopholes can do.

Architect James Schildroth recently designed this artful 2-bedroom 756 square-foot house below (around 70.2 square metres) and will make it available to build. In the States (where the sun is a different way around and building is much cheaper), he reckons it would cost around US$270,000....

Despite the size, it has almost all a home needs. There are several space-saving measures here (smaller bedrooms and closets, minimal kitchen, etc.) and a number of 'tricks' that help space appear larger—most especially carefullly "nesting" spaces, and opening spaces up at the corners. That low roof corner outside the lounge is especially effective, offering privacy from a possible neighbour, while also suggesting to occupants that the edge of the main space is defined by the outside edge of those overhanging eaves, at once both sheltering and opening up.

These psychological "tricks" are important in every home, but especially important in one so small, when every square metre has to justify itself many times over — space that's not just flexible, but hard-working!

Floor plan & diagram overlay for Frank Lloyd Wright's Pope-Leighy House (above) suggests how 'nesting' 

spaces within even a small home can help produce an illusion of larger space by virtue of the shared 

spaces — the particular space experienced depending on the observer's location at any point in time

HERE'S ANOTHER: A 72 SQUARE-METRE home-office by (Organon Architecture) over two levels, the lower of which is just 55 square metres, but with extensive pergolas — and a hill!

And you can do a whole lot with even less, if you're cunning enough.

The key, really is breaking the box. Understanding how to play with the visual field to suggest a larger apparent space.  And to properly 'nest' spaces so that every square metre within works harder, and suggests more.

Prefabricated modules and the like are part of the thing, but not the main thing. It's how modules and spaces are arranged that becomes the main thing.

HERE ARE SEVERAL MORE EXAMPLES. 

Several years ago, when it looked like Auckland Council were about to relax rules around 60-square-metre "minor dwellings," I was commissioned to produce a few floor plans and systems for what, it was anticpated, could have become a modest business. Sadly, the relaxing of rules never happened, and my client instead decided to try for better things in Queensland. But the idea is there in each of these homes: that a modestly-sized home need not feel small if it is well laid out.  

The aim was to build these homes on a precast-prestressed concrete transportable deck — using a container module in order to show the many limitations of container design, and to allow factory-built homes to be fully transported if possible. They featured both "ceiling decks," to help with services and the manipulation of space,  and a "smart slab" in which dimensions were set for the builder and in which all main services were to be run as a "plug-and-play" system.

I did modify one of these designs to be built in a small town in Victoria. (See if you can work out which design...?)

Anyway, take a look. There were around a dozen ...

Like I say, you can do lot with sixty metres. Let alone what you can do with seventy!

A coward's budget [updated]

The New Zealand Government's gross debt — the amount taxpayers must service — will now increase by another $73b by 2029, reaching a massive $283b.  That's $94,000 for every New Zealand family (with nearly $6000 of that just to pay the government's interest!).

Things are desperate. It's the middle year of an election cycle. Time for something bold.

No?

No.

Its not about doing more with less, or vainly trying to to. It's about doing less with less. Less with our money.

Ms Willis has failed us on both counts.

Let me give you two examples. (Three Four if you count my polite suggestion yesterday to gradually raise superannuation age, and include Lindsay Mitchell's today to time-limit welfare assistance.")

Several years ago when Helen Clark's Labour Party was about to lose an election , then Finance Minister Michael Cullen placed a fair proportion of New Zealanders onto welfare. His Welfare for Working Families programme made sure that, until ended, more than half of the country will now be beneficiaries. On the mooch. More than half of the country pulling down more from other taxpayers than they can ever give back.

This National Party Finance Minister could have done nothing with the programme — allowing inflation to make the maximum threshold for the programme dissolve.

She could have ended it altogether — signalled in good time, of course, to let folk plan ahead — but ending it could have saved $2.5-3billion. 

Instead, she raised that threshold below which working families get welfare. Around 142,000 New Zealand families. Which means even more working New Zealanders will continue to be moochers off (further normalising the behaviour perpetuating the Welfare State).

Many years ago a National Party Finance Minister introduced an Accommodation Supplement to, supposedly, help out poorer renters. Of course, it did nothing of the sort: instead if helped out their landlords, who could simply raise their rents to meet this new "supplemental" monetary demand for their supply. The Supplement — a grant to landlords — currently costs around $5 billion.

This National Party Finance Minister could have announced a lowering of the Supplement, saving some of those billions.

She could have announced it would end altogether, saving them all (while lowering rents). Instead, another expensive, destructive market-distorting subsidy continues.

I highlight these two measures because, for all Nicola Willis's hand-wringing about being prudent, about being responsible, about needing to achieve a surplus — and with the economic system flatlining while government debt vaults up decade by decade, bold measures to get there are not just a nice-to-have but a have-to-have — this budget is neither prudent, nor careful nor responsible.

Not being bold is to be irresponsible.

It's to be a coward.

Opposition parties are trying to paint this as an austerity budget. National Party pollster David Farrar boasts that it isn't.

It bloody should have been.

More here from others:

The Taxpayers’ Union is slamming Budget 2025 as a waste of time and hype, asking ‘is that it?’

"Nicola Willis has failed,” says Taxpayers’ Union Spokesman Jordan Williams. “This Budget could easily have been delivered by Grant Robertson."

“Willis promised to tackle the last Government’s ‘addiction to spending’. Spending is going up as a proportion of the economy in this year’s Budget compared to the current year. Core Crown Expenses are forecast to be 32.9 percent in 2025/26 compared to 31.8 percent under Robertson in 2022/23.

“She promised to balance the books. The OBEGAL never gets into surplus according to Treasury forecasts. Willis has had to make up a new measure to exclude the ACC deficit to create an illusion of a laughably small surplus in 2029.”

“And she promised growth. But the headline measure – an accelerated depreciation regime – is basically no better than what the last Labour Government tried immediately after COVID.”

“According to the Budget documents, the Government's headline ‘growth’ policy adds just 1 percent to GDP over 20 years. It is laughable in its small size.”

“More spending, more debt, and nothing to materially shift the dial and grow the economy. It’s not a Growth Budget, it’s a fudge-it."

Further:

"Spending as a share of GDP is materially higher than in the last fiscal year Grant Robertson was responsible for."  

Liberty Scott:

It's very much a centrist budget to not please those wanted a balanced budget and shrinking of the state, and of course isn't a budget of new grand larceny and profligate handing out to preferred causes, it basically just holds the line of NZ's Jacinda-era bloated state. ... a[nother] kick-the-can-down-the road budget.

Eric Crampton mentions some political sleight-of-hand:

"At some point, we have to wonder about the fiscal responsibility provisions in the Public Finance Act matter, because those effectively say you should not be running structural deficits for a decade, and we will have been running structural deficits for a decade. The ones during Covid were excusable - now, not so much. ....

"If you want to see the state of the government's books on the more traditional OBEGAL measure, rather than the one that excludes substantial ongoing ACC deficits, you have to go to the "Additional materials" in the online appendix. 

"Here 'tis. No return to surplus."

Michael Reddell:

"The Growth Budget" has just one growth-oriented policy [i.e., accelerated depreciation for business investment], estimated by Treasury to raise GDP by a mere 1% over 20 years (0.5% in total in the next five). 

"We were, of course, promised 'bold steps.' 

"Simply unserious."

UPDATE: More from Michael:

"[T]he government chose to title its effort [yesterday] 'The Growth Budget.' The Minister spoke today against a backdrop emblazoned repeatedly with that label.... the Prime Minister made a big thing of the need to accelerate growth ... The Minister of Finance in announcing the Budget date ... [boasted] 'the Budget will contain bold steps to support economic growth' ...

"They did not deliver.

"There was a single growth-oriented initiative in the Budget ... [T]he best Treasury estimate is that it will lift GDP by 1 per cent, but take 20 years to do so

"This year’s Budget represents another lost opportunity, and probably the last one before next year’s election when there might have been a chance for some serious fiscal consolidation. The government should have been focused on securing progress back towards a balanced budget. Instead, the focus seems to have been on doing just as much spending as they could get away with without markedly further worsening our decade of government deficits. ...

"We used to have some of the best fiscal numbers anywhere in the advanced world, but as things have been going – under both governments – in the last few years we are on the sort of path that will, before long, turn us into a fairly highly indebted advanced economy, one unusually vulnerable to things like expensive natural disasters. ...

"The government seems to have become quite adept at rearranging the deckchairs (cutting spending that they consider low priority and increasing other spending) but they are choosing to make no progress at all in reducing the structural deficit. ...

"Which brings us to the most recent IMF Fiscal Monitor released a few weeks ago [showing how our] primary deficit now compares ... Depending on your measure we were (based on HYEFU/BPS numbers) worst or close to worst in the advanced world. Today’s Budget will have done nothing to improve that ranking."

Those slow-moving near-invisible market crashes ....

"Trump’s tariff mayhem has crashed stock markets across the globe. ... Doing nothing would have been far better than doing what he did. ... [When the stated policy risked a sovereign downgrade from Moody’s and probably kicked off a small recession, reversing course is indeed a win for all Americans, much in the same way that surviving a self-inflicted gunshot wound is a win.]

"[But consider.] Are there any pre-2025 policies that have already done damage on the scale that Trump is now inflicting on the global economy?

"While you might object, 'If any such policies existed, we would have noticed,' you shouldn’t. Imagine Trump imposed his current tariffs gradually over the course of the year, while constantly reassuring the world that he had no intention of raising overall tariffs. The total damage of this would ultimately be about the same as what we’ve seen. The visibility of the damage, however, would be far lower. ...

"Once you accept the possibility of pre-existing massive wealth-destroying policies, plausible candidates are easy to find. Here are [two]:

"1. The near-ban on international trade in labour. Raising tariffs from around 3% to around 30% crashed the market. But the effective tariff on foreign labor ranges from about 250% to 1500%. Indeed, that understates the damage, because arbitrary non-tariff barriers are a greater burden than precisely-defined tariffs.

"2. Draconian regulation of construction. Existing regulations roughly double the price of housing, imposing a massive burden on not only consumers, but any business requiring offices, factory space, and so on. ...

"We recently got to watch a horrific spectacle of policy dysfunction unfold before our eyes. Tariffs spiked; markets crashed. But after seeing this crash with your own eyes, you shouldn’t merely acknowledge that ... one mistake. You should open your mind to the possibility that ... for every major market crash heralded on the news, there could easily be a dozen invisible crashes — policies that wantonly but stealthily destroy trillions of dollars of value. Immigration, housing, and nuclear power are only my top candidates.

"A further deep lesson: ... We’re habituated to their harm ... to the point that few of us realise how much wealth we’ve lost, how much wealth we’re losing, and how much wealth we and our descendants will continue to lose for decades or centuries to come.

"[P]opulists [like Trump] do immense harm blatantly. Traditional politicians, in contrast, favour stealth. When they inflict immense harm, they do it gradually. And in the face of blatant opportunities to to make the world dramatically better, they yawn. ... But once you learn to see the invisible crashes, you won’t be able to unsee the ugly truth ... "

~ Bryan Caplan from his post 'The Invisible Crash'

Why don't you live where we tell you to?

"So many suggestions come down to 'what if instead of allowing housing where there is demand for housing, we tried to make people live somewhere else,' and I feel like the downside of that approach is pretty obvious."

~ Matt Yglesias

Did you know you can see shit political economy from space? [update 2]

Auckland: Eden Terrace's workers' cottages on the right, Mt Eden's California Bungalows 

beginning over the railway line lower left. (Photo showing the area before the Dominion Rd flyover,

from the Sir George Grey Special Collections, Auckland Libraries, 580-9498']

Did you know you can see shit political economy from space? Here below is the Black Hole of North Korea at night, too poor to have enough lights to switch on.

And you can see shit political economy in Auckland too, in aerial photographs. To be accurate: you can see shit political economy in the form of the effect of tariffs. ...

Let me explain.

Workers' cottage, Freeman's Bay

Victorian Villa, Grey Lynn

The first houses built here en masse were workers' cottages and then villas. When you fly over the city, you can see a ring of these villas around the inner parts of the city — especially so in Ponsonby and Grey Lynn — built right up until the First World War.

But after that war, something changed. It seemed to some that the United States had rescued Europe from its Great War, and had a lifestyle to which an increasingly prosperous population could aspire. It was the Jazz Age — the age of radio, electrification, automobiles, and the mass production (Fordism!) that made them affordable. In love with Americanism, in housing here it became the decade of the California Bungalow.

California Bungalow, Mt Eden

A villa is not a bungalow.  Like the California lifestyle it aped (and which the world would fully fall in love with after another war), the California Bungalow was freer than the more uptight Victorian villa, and reached out for sun and air. Their broad spreading gables form a second ring around the city in what we now call the "tram suburbs," a ring from Pt Chev through Mt Albert, Sandringham, Mt Eden, Greenlane, Ellerslie, and right around to the border of Meadowbank/Remuera.

Their popularity was immense. 

Their takeover seemed unstoppable. 

Until something happened.

That something involved a tariff. Brought in by US Senators Smoot and Hawley, their Smoot Hawley Tariff Act raised tariffs on imports by an average of twenty percent. Their intention (we're told) was to quarantine American manufacturers from the effects of the 1929 stock market crash. What it did do instead was to spread the misery and contagion around the globe, kicking off the Great Depression and all but shutting down international trade for nearly two decades.

John Bell Condliffe's "wagon wheel" showing the dramatic death spiral of world trade
following the disastrous implementation of the 1930 Smoot-Hawley Tariff Act

New Zealand economist J.B. Condliffe has a world-famous diagram describing the accelerating downward spiral of trade as every country and trading bloc in the world put up their own tariff walls in response. It was one of the most successful acts of intentional self-destruction in all modern history.*

Almost at a stroke, we fell out of love with the US.  In Britain, still the head of something called an Empire, an Imperial Preferences Act was swiftly passed making trade within the Empire roughly tariff-free — allowing many Commonwealth countries to escape the Depression first. (Not so the US of A, which had to wait until the death of a President and the end of a war to boom again.)

And trade amongst the Empire, rather than outside it, meant many more British goods replacing the previous love affair with American. Not least in housing. If the twenties was the decade of the California Bungalow, then the thirties was the decade of the English Cottage/English Revival. We can see these crabby, restrained offerings around the outer parts of the tram suburbs. (And you can see all these styles described in the Auckland Council's 'Style Guide,' pp 14-24)

In insulating itself from the world, America had not only shot itself in the foot economically, it also lost its influence with the rest of the world. 

Turned out it was a not-so-great way to Make America Go Away Again.

* * * *

* Until April 2, 2025, that is, with what Johan Norberg calls "the longest suicide note in economic history."

UPDATE 1: David Farrar notes that our average two-percent tariff rate (world's second-lowest after Singapore) becomes in the mind of the Toddler-in-Chief a twenty-percent tariff. (I use the word "mind" loosely.)

Johan Norberg has more on the effects of what he jokingly calls '"Liberation Day June 17 1930":

As he says, " I think the US was heading for trouble even before, but it certainly deepened the depression and spread it around the world, with devastating effects for European democracies. We would have had a depression anyway, but perhaps not a great one."

UPDATE 2: 

"Thomas Rustici identified the role of the Smoot-Hawley Tariff Act in exacerbating the Great Depression, particularly through its effects on trade, banking failures, and economic contraction. His seminal work, *Smoot-Hawley and the Great Depression: A General Equilibrium Analysis* (2005), presents a compelling argument that Smoot-Hawley initiated a trade war, triggered mass bankruptcies, destabilized the banking system, and led to deflation and depression. ... 

"Conclusion Rustici’s work provides one of the most comprehensive and rigorous explanations of how the Smoot-Hawley Tariff Act triggered a trade war, bankrupted farmers and businesses, destabilized the banking system, and created deflationary collapse. His analysis is central to understanding how protectionist policies can create economic catastrophe by disrupting credit, trade, and monetary liquidity. His insights remain critical in debates over trade policy and economic crises."

Four years of housing uncertainty. Thanks National.

Important to remember that on top of Chris Bishop's announcement this week of recommended changes to the Resource Management Act, unlikely you'd think to be passed before the next election (with all the uncertainty that that will generate), is his and his boss's other injection of uncertainty into housing — i.e., what the planners will and won't allow on a building site — with an admission, buried in a speech yesterday, that this uncertainty will persist until at least 2027!

Dan Brunskill spotted the admission tucked into the speech, calculating that "National's U-turn on the bipartisan accord caused a three-year delay to housing reform"! He explains:

In a speech to the Property Council summit in Auckland on Thursday, Bishop said "Going for Growth” and other reforms would only be bedded in “from 2027 or so onwards.” 

This delay follows the National Party’s decision to abandon a bipartisan housing agreement, called the MDRS (medium density residential standards), negotiated from the National side by Judith Collins and Nicola Willis in 2021.

At the time, Willis said Labour and National had come together “to say an emphatic ‘yes’ to housing in our backyards.” [And this gave every developer certainty.] 

But new party leader Christopher Luxon sided with his NIMBY caucus colleagues in the run-up to the 2023 election and forced [sic] Bishop to rush out an alternative policy after letting his opposition to the arrangement slip during a public meeting.

National’s new policy allowed councils to opt out of the denser housing rules, provided they zoned their cities for 30 years of growth "immediately" — but, almost two years later, not a single council has formally adopted the policy.

Bishop said on Thursday the finer details of the policy’s first phase were still being worked through by officials and local councils should be ready to implement them in 2027.

This is partly due to a “sequencing problem” as the Government is also planning to introduce an entirely new resource management regime towards the end of next year. ... 

Housing reform and the new resource management rules will be implemented as part of the 2027 Long Term Plan cycle [they hope], or roughly four years after Bishop backtracked on the MDRS.

Four fucking years! George Gregan would be proud.

Speaking of NIMBY numpties, here's Bishop's idiotic boss protesting a new apartment development on the site a of a decommissioned and abandoned mechanic's workshop:

Little Nicola's report card after one year: 'Not Achieved'

 

"National was elected on the promise of fixing the economy. Not talking about it; but to deliver the goods. ... How is Finance Minister Willis doing? [Answer:] She has not yet proved herself. ...
    "[T]he Kiwi economy is stagnant ... experiencing one of the lowest GDP growth rates in the world. [I]nflation is lower, [but] it has been coming down in most nations. ... [W]e held out hope there would be a drastic reduction in red tape and regulation. However the new Department of Regulation has done next to nothing yet, other than hire managers. ... Willis has sent no clear message to the markets that hers is a government of low taxes. Quite the opposite, she has kept top tax rates the same, as well as corporate taxes. ... [yet] the fiscal deficit will [still] worsen under Willis, unless the economy starts to rapidly pick up. The trimming of civil servants, whilst necessary, is not on a scale that will greatly shift the dial. ...
    "[O]n healthcare, Willis pretends that hiring Lester Levy is a reform. Parachuting in a cost cutting manager does not constitute a health-care policy. ... [O]n housing, once the propaganda is stripped away, National's reforms offer less of an increase in supply than was going to happen under the bi-partisan accord that the Party signed up to with Labour years ago. ... National's trumpeted Fast-Track Approvals is nothing more than a rejig of the Fast-Track Approvals process Labour enacted when in office, although with a lessening of environmental checks. ...
    "Willis ... represents ... a Sir Bill English-type, a steady-as- she-goes, status-quo, old-style, conservative Nat. Maybe it worked for him. It won’t for her. It won’t for the nation. ... New thinking is required."

~ Robert MacCulloch from his post 'Finance Minister Nicola Willis: A First Year Economic Report Card'

Dole for developers

"[M]inisters [are] going to offer free downside price/liquidity insurance to large and established property developers. It [will] be sold as strictly 'time-limited' except that there [will], in fact, be no time limit specified. ...
    "This government (rightly) made much of inheriting a large structural fiscal deficit, and wanting to get government out of business. Instead, they jump in boots and all. And all apparently on the basis that a couple of Cabinet ministers and their Ministry of Housing and Urban Design officials know better than the market what should be built when, where, and by whom ...
    "[I]t brought to mind that old jeer about business-friendly (as opposed to pro-market) governments [helping businesses] to 'capitalise the gains and socialise the losses.' [Or that govts 'helping business' quickly corrupts into 'helping particular businesses.'] ... Plenty of people and firms will have undergone huge stress in the last couple of years, as inflation was squeezed back out of the system. It was and is a necessary adjustment. But most didn’t enjoy the favour of ministers. ...
    "[T]here is just no good or compelling analytical foundation for any sort of intervention of this sort (none are provided, and none are readily conceivable)."

~ Michael Reddell from his post 'Public policy just keeps on worsening'

"However much it offended the sensibilities of design snobs and planners, we were there because our shoebox apartment was better than the alternative."

"[I]n 2005, Auckland city was ... dotted with cranes, many standing up so-called 'shoebox apartments.'
   "The phrase was not meant as a compliment. They were derided as 'future slums' ... [which] ultimately led to a rule change ... making the minimum size of a two-bedroom apartment 70 square metres. ... [T]he change had a profound and lasting impact on apartment construction. ...

Chart by Apracitis Economics, from The Spinoff

"In 2005, I was only dimly aware of the furore, of the disgust shoebox apartments aroused. In 2005, I was living in one. ... In retrospect that apartment was where I started to get my shit together, started to have a sense that I could be something more than a fuckup....
    "The apartments were objectively ugly, though not so bad as they were made out at the time.
    "But the upside overwhelmed all that. I was right there in the city. ... It was what I needed at that time, however much it offended the sensibilities of design snobs and planners. I feel confident in saying many other residents, transient as we often were, felt the same way. We were there because it was better than the alternative. ...
    "Another characteristic of the inner city when I lived there was that homelessness barely existed. I remember vividly an extraordinary double-page feature in the 'NZ Herald' which looked at life among the unhoused then. It mapped specific characters, and if you spent a lot of time in the inner city, it seemed a near-complete survey.
    "The idea that you could now map the scale of human misery that a lack of housing has brought to Auckland is unimaginable. As the ’00s wore on, the GFC hit and the next decade began, the city acquired its current reality, with hundreds of people making lives on the streets of downtown and its fringes. It’s now a countrywide phenomenon.
    "That’s the backdrop of the reforms announced last week by housing minister Chris Bishop. I travelled into the city to see him deliver a speech about housing last week ... He spent long periods wading through the thickets of regulation, through the acronym soup of the MDRS and the NPS-UD, and paid compliments to Auckland’s groundbreaking 2016 unitary plan, which started the process of unshackling land for development and finally saw us surpass the heady mid-00s for construction of multi-units.
    "But the part which leapt out for me was not technical, it was moral. He announced an override of the minimum dwelling size standards – a return to plausibility for the kind of place I lived in 20 years ago. In front of a room full of people involved in construction and leasing, with tables for Colliers and CBRE and Crockers, he made a simple case. 'You know what is smaller than a shoebox apartment? A car or an emergency housing motel room.' That’s our current plan for dealing with people who don’t have a house, and it’s indefensible.
    "The rest of the reforms he announced are big. They are a continuation of an enormous body of work which started with Auckland’s unitary plan, was driven forward by Phil Twyford’s revolutionary NPS-UD which created a huge potential for urban density, and now reaches a powerful climax with Bishop’s 'Going for Housing Growth' package.
    "It’s not beyond criticism ... But to me those issues are less material, and likely to be less impactful, due to the return of the maligned shoebox."

~ Duncan Grieve from his post 'I lived in a shoebox apartment. I’m glad they’re coming back'