@AndrewLittleMP all but admits rents to go up after Healthy Homes Bill?

Opposition Leader Andrew Little accepts that mandating insulation and heat pumps into rental properties will increase their value. But he denies that this will affect rents!

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Source: Healthy Homes Bill won’t up rents Little | Politics | Newshub.

An upgrade increases the value of a rental property if the improvements that increase its rental value. You cannot have the increase in the value of the asset without the increase in rent.

I will contract out the rest of my answer to David Friedman’s superb book Laws Order:

For an application of economics to a different part of the law, consider the nonwaivable warranty of habitability, a legal doctrine under which some courts hold that apartments must meet court-defined standards with regard to features such as heating, hot water, sometimes even air conditioning, whether or not such terms are provided in the lease—indeed, even if the lease specifically denies that it includes them.

The immediate effect is that certain tenants get services that their landlords might not otherwise have provided. Some landlords are worse off as a result; some tenants are better off. It seems as though supporting or opposing the rule should depend mainly on whose side you are on.

In the longer run, the effect is quite different. Every lease now automatically includes a quality guarantee. This makes rentals more attractive to tenants and more costly to landlords. The supply curve, the demand curve, and the price, the rent on an apartment, all shift up. The question, from the standpoint of a tenant, is not whether the features mandated by the court are worth anything but whether they are worth what they will cost.

The answer may well be no. If those features were worth more to the tenants than they cost landlords to provide, landlords should already be including them in their leases—and charging for them. If they cost the landlord more than they are worth to the tenant, then requiring them and letting rents adjust accordingly is likely to make both landlord and tenant worse off. It is particularly likely to make poorer tenants worse off, since they are the ones least likely to value the additional features at more than their cost.

A cynical observer might conclude that the real function of the doctrine is to squeeze poor people out of jurisdictions that adopt it by making it illegal, in those jurisdictions, to provide housing of the quality they can afford to rent.

If my analysis of the effect of this legal doctrine seems implausible, consider the analogous case of a law requiring that all cars be equipped with sunroofs and CD changers. Some customers—those who would have purchased those features anyway—are unaffected. Others find that they are getting features worth less to them than they cost and paying for them in the increased price of the car.

Henry Hazlitt on wise bureaucrats and farsighted politicians

HT: Adam Smith’s Lost Legacy

The Greens want to ban… | Kiwiblog

I cannot stand political correctness. It serves no purpose other than to restrict freedom of speech. Yes, some language can offend someone, but we all have the right to offend. It doesn’t mean we should, but we can. 
Without the freedom to offend, we do not have the freedom of expression. When we restrict the use of language, we risk entering the George Orwell 1984 dystopia - “ungood”, “goodest”, “plusgood”, “doubleplusgood” - that’s where we’re heading every time someone starts sobbing like a child because they were offended. 
You taking offence doesn’t make you special. You don’t get some new right when you’re offended. No one’s going to run over and kiss your feet. You will be offended by many people, many times, throughout the rest of your life and you pointing and screaming to tell them not to use “those words” or “that language” is just so unbelievably childish. 
Of course people can take things too far, but we can take anything too far. We can take violence too far by starting meaningless wars, we can take rights movements too far by not stopping at equality and desiring dominance. What words people use, really is the last of your concerns. 

  1. Ban fizzy drinks from schools
  2. Ban fuel inefficient vehicles
  3. Ban all gaming machines in pubs
  4. Ban the GCSB
  5. Ban violent TV programmes until after 10 pm
  6. Ban feeding of antibiotics to animals that are not sick
  7. Ban companies that do not comply with a Code of Corporate Responsibility
  8. Ban ACC from investing in enterprises that provide products or services that significantly increase rates of injury or illness or otherwise have significant adverse social or environmental effects
  9. Ban commercial Genetic Engineering trials
  10. Ban field testing on production of GE food
  11. Ban import of GE food
  12. Ban Urban Sprawl
  13. Ban non citizens/residents from owning land
  14. Ban further corporate farming
  15. Ban sale of high country farms to NZers who do not live in NZ at least 185 days a year
  16. Ban the transport by sea of farm animals, for more than 24 hours
  17. Ban crates for sows
  18. Ban battery cages for hens
  19. Ban factory farming of animals
  20. Ban the use of mechanically recovered meat in the food chain
  21. Ban the use of the ground-up remains of sheep and cows as stock feed
  22. Ban animal testing where animals suffer, even if of benefit to humans
  23. Ban cloning of animals
  24. Ban use of animals in GE
  25. Ban GE animal food
  26. Ban docking of dogs tails
  27. Ban intrusive animal experimentation as a teaching method in all educational institutions
  28. Ban smacking
  29. Ban advertising during children’s programmes
  30. Ban alcohol advertising on TV and radio
  31. Ban coal mining
  32. Ban the export of indigenous logs and chips
  33. Ban the use of bio-accumulative and persistent poisons
  34. Ban the establishment of mustelid farms
  35. Ban new exploration, prospecting and mining on conservation land and reserves
  36. Ban mining activities when rare and endemic species are found to present on the mining site
  37. Ban the trading conservation land for other land to facilitate extractive activities on.
  38. Ban the further holding of marine mammals in captivity except as part of an approved threatened species recovery strategy
  39. Ban the direct to consumer advertising of pharmaceuticals
  40. Ban sale of chips and lollies on school property
  41. Ban any additional use of coal for energy
  42. Ban fixed electricity charges
  43. Ban further large hydro plants
  44. Ban nuclear power
  45. Ban further thermal generation
  46. Ban private water management
  47. Ban imported vehicles over seven years old
  48. Ban the disposal of recyclable materials at landfills
  49. Ban the export of hazardous waste to non OECD countries
  50. Ban funding of health services by companies that sell unhealthy food (so McDonalds could not fund services for young cancer sufferers)
  51. Ban healthcare organizations from selling unhealthy food or drink
  52. Ban advertising of unhealthy food until after 8.30 pm
  53. Ban all food and drink advertisements on TV if they do not meet criteria for nutritious food
  54. Ban the use of antibiotics as sprays on crops
  55. Ban food irradiation within NZ
  56. Ban irradiated food imports
  57. Ban growth hormones for animals
  58. Ban crown agency investments in any entity that denies climate change!!
  59. Ban crown agency investments in any entity that is involved in tobacco
  60. Ban crown agency investments in any entity that is involved in environmentally damaging oil extraction or gold mining
  61. Ban non UN sanctioned military involvement (so China and Russia gets to veto all NZ engagements)
  62. Ban NZ from military treaties which are based on the right to self defence
  63. Ban NZers from serving as mercenaries
  64. Ban new casinos
  65. Allow existing casinos to be banned
  66. Ban promotion of Internet gambling
  67. Ban advertising of unhealthy food to children
  68. Ban cellphone towers within 300 metres of homes
  69. Ban new buildings that do not confirm to sustainable building principles
  70. Ban migrants who do not undertake Treaty of Waitangi education programmes
  71. Ban new prisons
  72. Ban semi-automatic weapons
  73. Ban genetic mixing between species
  74. Ban ocean mineral extractions within the EEZ
  75. Ban limited liability companies by making owners responsible for liability of products
  76. Ban funding of PTEs that compete with public tertiary institutes
  77. Ban the importation of goods and services that do not meet quality and environmental certification standards in production, lifecycle analysis, and eco-labelling
  78. Ban goods that do not meet quality and sustainability standards for goods which are produced and/or sold in Aotearoa/New Zealand
  79. Ban new urban highways or motorways
  80. Ban private toll roads
  81. Ban import of vehicles more than seven years old unless they meet emission standards
  82. Ban imported goods that do not meet standards for durability and ease of recycling
  83. Ban landfills
  84. Ban new houses without water saving measures
  85. Ban programmes on TVNZ with gratuitous violence

Political correctness is the natural continuum from the party line. What we are seeing once again is a self-appointed group of vigilantes imposing their views on others. It is a heritage of communism, but they don't seem to see this.  - Doris Lessing

via Kiwiblog

William Easterly: Freedom as a Solution to Poverty

Video

Many people are far too smart to save for their retirements

Which is better? Save for your retirement through the share market or save to own your own home and then present yourself at the local social security office to collect your taxpayer funded old-age pension?

Under this fine game of bluff, you bleed the taxpayer in your old age and pass on your debt-free home to your children.

This strategy is rational for the less well-paid. The family home is exempt from Income and asset testing for social security. If you lose you bet, sell your house and live off the capital.

For ordinary workers, this is a good bet. The middle class might prefer to live in a more luxurious retirement.

For ordinary workers, whose wages are not a lot more than their old age pension from the government, a government funded pension is a good political gamble. The old-age pension for a couple in New Zealand is set at no less that 60% of average earnings.

Compulsory savings for retirement requires the middle class to do what they can afford to do and would have done anyway.

Compulsory savings for retirement requires the working class to do what they can less afford to do.

Instead compulsory retirement savings deprives them of an old-age pension paid for by the taxes of the middle class.

In Australia, ordinary workers are required by law to save 9% of their wages for their retirements at 65 before they have had a chance to save for a car or a house or the rest of the condiments of life the middle class take for granted.

Edward Prescott argues for compulsory retirement savings account albeit with important twists because it is otherwise irrational for many to save for their retirement:

The reason we need to have mandatory retirement accounts is not because people are irrational, but precisely because they are perfectly rational — they know exactly what they are doing.

If, for example, somebody knows that they will be cared for in old age — even if they don’t save a nickel — then what is their incentive to save that nickel? Wouldn’t it be rational to spend that nickel instead?

…Without mandatory savings accounts we will not solve the time-inconsistency problem of people under-saving and becoming a welfare burden on their families and on the taxpayers. That’s exactly where we are now.

Prescott’s proposals are age specific. Those younger than 25 are not required to save anything because they are more pressing priorities such as buying cars and other consumer durables:

  • Before age 25, workers would have no mandatory government retirement savings.
  • Beginning at age 25, workers would contribute 3% vis-à-vis the current 10.6%.
  • At age 30, that rate would increase to 5.3 percent.
  • At 35, the rate would equal the full 10.6 percent.
  • Upon retirement, there would be an annuity over the remaining lives of the individual and spouse

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Most of all, the retirement savings must go into private savings accounts. These savings remain assets of the individual and therefore the compulsory savings requirements is not a tax and does not discourage labour supply, as Prescott explains:

Any system that taxes people when they are young and gives it back when they are old will have a negative impact on labour supply. People will simply work less.

Put another way: If people are in control of their own savings, and if their retirement is funded by savings rather than transfers, they will work more.

Prescott’s Nobel Prize jointly with Finn Kydland was for showing that policies are often plagued by problems of time inconsistency. They demonstrated that society could gain from prior commitment to economic policies.

Of course, as Tyler Cowen observed, forced savings schemes are easily offset by people rearranging their affairs, and they have their entire adult life to do so:

How much can our government force people to save in the first place?

You can make them lock up funds in an account, but they can respond by borrowing more on their credit cards, taking out a bigger mortgage, and in general investing less in their future.

People do not save for their retirements not because they are short-sighted, but because they are far-sighted. They know that governments will not carry out their threats and other big talk about not providing an adequate old-age pension.

The only way that governments can commit to not bailing people out who retire with no savings is to make them save for their own retirements over their working lives.

Some will be against this compulsion. Their opposition to compulsion cannot be based on opposition to the nanny state because that is faulty reasoning.

These opponents of compulsion and everyone else in the retirement income policy debate are playing in a far more complicated, decades long dynamic political game where ordinary people time and again out-smart conceited governments who pretend they know better:

The government has strategies.

The people have counter-strategies.

Ancient Chinese proverb

The living wage

Why not just increase the family tax credit? That would increase the incomes of poor families without putting their jobs at particular greater risk.

The local calculation of the living wage includes cable TV and an overseas holiday.

Milton Friedman provides some critical truths on the living wage:

Do-Gooders believe passing a law saying nobody shall get less than [a minimum wage] is helping poor people (who need the money).

You’re doing nothing of the kind.

What you’re doing is to ensure that people whose skills do not justify that wage will be unemployed.

Watching people fighting on Armistice Day

The Midnight Oil song was true.

Generals launched attacks on Armistice Day in full knowledge that the 11 am. truce had been agreed unofficially up to two days before. The Germans finally signed the armistice at 5:10 a.m. on the morning of the 11th November.

  • The records of Commonwealth War Graves Commission shows that 863 Commonwealth soldiers died on 11 November 1918 – this figure includes those who died of wounds received prior to November 11.
  • The Americans took 3,300 casualties on the last day of the war.

The last American soldier killed was Private Henry Gunter who was killed at 10.59 a.m. – the last man to die in World War One. His divisional record stated:

Almost as he fell, the gunfire died away and an appalling silence prevailed.

General Pershing supported commanders who wanted to be pro-active in attacking German positions on the last day of the war.

Pershing stated at 1919 Congressional hearings that although he knew about the timing of the Armistice, he simply did not trust the Germans to carry out their obligations.

Pershing also pointed out that his orders of the Allies Supreme Commander, Marshal Ferdinand Foch, to

pursue the field greys (Germans) until the last minute

Pershing found the idea of an armistice repugnant. He maintained:

Germany’s desire is only to regain time to restore order among her forces, but she must be given no opportunity to recuperate and we must strike harder than ever.

As for terms, Pershing had one response:

There can be no conclusion to this war until Germany is brought to her knees.

Pershing said that conciliation now would lead only to a future war. He wanted Germany’s unconditional surrender. He insisted that Germany must know that it was fully defeated in the field of battle rather than betrayed from within.

When presented with the terms of the 1919 Treaty of Versailles, several German governments resigned.

France started to remobilise before Germany finally accepted the Treaty. The Treaty was somewhat harsher than the German Foreign Office anticipated.

A blow by blow account of the six-months of treaty negotiations is in Margaret MacMillan Paris 1919: Six Months That Changed the World 2002 who showed that:

  • real defeat was not brought home to the German people,
  • the power of the peacemakers was limited,
  • they were not responsible for the fragmentation of Europe which was already happening,
  • the blockade did not starve Germany,
  • neither the Versailles treaty nor France was vindictive,
  • reparations were not crushing,
  • the treaty was not enforced with any consistency, and it did not seriously restrict German power, and
  • The Versailles treaty was not primarily responsible for either the next twenty years or for World War II.

The high-minded efforts of the Paris negotiators were doomed as some of them realised. Lloyd George wrote:

It fills me with despair the way in which I have seen small nations, before they have hardly leapt into the light of freedom, beginning to oppress other races than their own.

‘Recycling is garbage’ from the NY Times in 1996; it broke the record for hate mail | AEIdeas

Mark Perry for Earth Day linked to the classic 1996 New York Times Magazine article “Recycling is Garbage” by New York Times columnist John Tierney. He wrote about those millions who suffer from “garbage guilt,” as Tierney describes the religious components of recycling.

recycling

Tierney’s argument was that recycling may be the most wasteful activity in modern America:

Rinsing out tuna cans and tying up newspapers may make you feel virtuous, but it’s a waste of time and money, a waste of human and natural resources.

You can understand why Tierney’s article set the record for the greatest amount of hate mail in New York Times history.

via Recommended reading for Earth Day: ‘Recycling is garbage’ from the NYTimes in 1996; it broke the record for hate mail | AEIdeas.

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