Government debt since 1880

@Maori_Party @TeUruroaFlavell sold their people out to the NIMBYs

The Māori Party face the least political risks from deregulating land supply because so few Māori own their own homes. Less than half the rate of European New Zealanders. Māori home ownership rates peaked in 1991.

Source: 2013 Census QuickStats about housing.

Nonetheless, the Māori Party supplied the last two votes to vote down attempts to relax regulatory restrictions on the supply of land in New Zealand.

Source and notes: International House Price Database – Dallas Fed June 2015; nominal housing prices for each country is deflated by the personal consumption deflator for that country.

Their rationale for making land more expensive is a commitment to environmental principles. As the Māori Party coleader explained at the time:

We know there is considerable pressure and need for this Government to address the housing shortage, particularly in Auckland. However, one intent of the RMA, is to protect our environment for generations to come and this must remain paramount.

The 2014 policy manifesto of the party did not discuss housing supply or the need for reform of the RMA. It was mainly about social housing and the quality of rental house.

The chances of Māori increasing their homeownership rates rather than becoming leading members of Generation Rent requires a relaxation in restrictions in the RMA on the supply of land.

Auckland is up with London and New York in terms of housing unaffordability relative to median incomes. US cities with responsive land regulation don’t experience housing bubbles.

Glaeser and Gyourko summarised the findings of a number of studies on land supply and housing prices:

Recent research also indicates that house prices are more volatile, not just higher, in tightly regulated markets …. price bubbles are more likely to form in tightly regulated places, because the inelastic supply conditions that are created in part from strict local land-use regulation are an important factor in supporting ever larger price increases whenever demand is increasing. …. It is more difficult for house prices to become too disconnected from their fundamental production costs in lightly regulated markets because significant new supply quickly dampens prices, thereby busting any illusions market participants might have about the potential for ever larger price increases.

There has been a steady decline in housing affordability in New Zealand. The position is critical of the bottom 20% of the income ladder. Four in 10 now spend more than 30% of their disposable income on housing costs. Māori will be over-represented in this group but the party set-up to speak for them fails to do everything it can to make their housing cheaper.

@NZGreens say something sensible on global warming @jamespeshaw @GreenpeaceNZ

It is a stretch to say that New Zealand Greens have accepted that adaptation is the only proper response to the threat of global warming.

Nonetheless, their call for a plan for adaptation is an acceptance that more must be done than hoping for the best that a massively expensive international public good will be provided through a climate change treaty.

It is time for the environmental movement to face up to the fact that there never will be an international treaty to restrain carbon emissions.

The practical way to respond to global warming is healthier is wealthier, richer is safer. Faster economic growth creates more resources for resilience and adaptation to a changing environment.

Source: Energy Policy & the Environment Report | Leading Nowhere: The Futility and Farce of Global Climate Negotiations.

Tom Schelling has been involved with the global warming debate since chairing a commission on the subject for President Carter in 1980.

Schelling is an economist who specialises in strategy so he focuses on climate change as a bargaining problem. Schelling drew in his experiences with the negotiation of the Marshall Plan and NATO.

International agreements rarely work if they talk in terms of results. They work better if signatories promise to supply specific inputs – to perform specific actions now. Individual NATO members did not promise to slow the Soviet invasion by 90 minutes if it happened after 1962. NATO members promised to raise and train troops, procure equipment and supplies, and deploy these assets geographically. All of these actions can be observed, estimated and compared quickly.

The Kyoto Protocol commitments were made not about actions but to results that were to be measured after more than a decade and several elections.

Climate treaties should promise to do certain actions now such as invest in R&D and develop carbon taxes that return the revenue as tax cuts. If the carbon tax revenue is fully refunded as tax cuts, less reliable countries, in particular, have an additional incentive to collect the carbon tax properly to keep their budget deficits under control.

As for the chances of a global treaty, Schelling has said:

The Chinese, Indonesians, or Bangladeshis are not going to divert resources from their own development to reduce the greenhouse effect, which is caused by the presence of carbon-based gases in the earth’s atmosphere. This is a prediction, but it is also sound advice. Their best defence against climate change and vulnerability to weather in general is their own development, reducing their reliance on agriculture and other such outdoor livelihoods. Furthermore, they have immediate environmental problems — air and water pollution, poor sanitation, disease — that demand earlier attention.

The costs of global warming to New Zealand are small. For developing countries, their best protection against global warming is rapid economic development through capitalism and freedom.

The latest report from the Intergovernmental Panel on Climate Change’s (IPCC) Working Group II has concluded that global warming of 2.5˚C would cost the equivalent to losing between 0.2-2.0% of annual income.

Speech for Me But Not for Thee

Gedanken zur Geschichte

Freedom-of-Speech-megaphone-300x23611John Stuart Mill’s On Liberty is one of the greatest books on political philosophy ever written. Mill gives a powerful argument for freedom of speech and a passionate start for a liberal political philosophy. The idea that coercion is only justified when the individual threatens the well-being of others is one the most influential liberal doctrines in the history of ideas:

The sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number, is self-protection. That the only purpose for which power can be rightfully exercised over any member of a civilised community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant. He cannot rightfully be compelled to do or forbear because it will be better for him to do so, because it will make him happier, because, in…

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Thompson’s Reformulation of Macroeconomic Theory, Part V: A Neoclassical Black Hole

Uneasy Money

It’s been over three years since I posted the fourth of my four previous installments in this series about Earl Thompson’s unpublished paper “A Reformulation of Macroeconomic Theory,” Thompson’s strictly neoclassical alternative to the standard Keynesian IS-LM model. Given the long hiatus, a short recapitulation seems in order.

The first installment was an introduction summarizing Thompson’s two main criticisms of the Keynesian model: 1) the disconnect between the standard neoclassical marginal productivity theory of production and factor pricing and the Keynesian assertion that labor receives a wage equal to its marginal product, thereby implying the existence of a second scarce factor of production (capital), but with the market for capital services replaced in the IS-LM model by the Keynesian expenditure functions, creating a potential inconsistency between the IS-LM model and a deep property of neoclassical theory; 2) the market for capital services having been excluded from the IS-LM model, the…

View original post 1,478 more words

NZ mode of commuting

Bugger all people commute by bus or train outside of Wellington. Even in Wellington taking the bus or the train has trouble staying well ahead of walking to work.

Source: Ministry of Transport. (2015).  25 years of New Zealand travel: New Zealand household travel 1989–2014. Wellington: Ministry of Transport.

The truth behind NZ wind power @GreenpeaceNZ @GarethMP @RusselNorman

How the World Income distribution changed during the last 50 years @jeremycorbyn

Court Tosses Lawsuit By Escapee Who Claimed Gov’t Negligently Allowed Him To Break Out


By Darren Smith, Weekend Contributor

Jose Banks Jose Banks

An inmate who previously escaped from a detention facility in Chicago filed a lawsuit against the government demanding ten million dollars in damages resulting from his escape caper failed to convince the Seventh Circuit of his claim’s merit, but the court at least acknowledged his lawsuit “gets credit for chutzpah.”

The jailbreak occurred in 2012 when plaintiff Jose Banks and a cellmate rappelled down seventeen stories down a high-rise corrections center using a rope constructed of sheets and dental floss. He managed to hail a cab and evade law enforcement for several days before recapture.

Banks claimed among other things that he suffered emotional injury from the trauma of fearing for his life as he dangled from the makeshift rope used in his escape.

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