Wednesday, July 13, 2016

A housing fundamental... too hard basket - again

NZ is far from alone in its housing market difficulties. Economist John Cochrane highlights research which is very relevant to NZ.
“Conor Dougherty in The New York Times has a good article on zoning laws,
"a growing body of economic literature suggests that anti-growth sentiment... is a major factor in creating a stagnant and less equal American economy.
...Unlike past decades, when people of different socioeconomic backgrounds tended to move to similar areas, today, less-skilled workers often go where jobs are scarcer but housing is cheap, instead of heading to places with the most promising job opportunities  according to research by Daniel Shoag, a professor of public policy at Harvard, and Peter Ganong, also of Harvard.
One reason they’re not migrating to places with better job prospects is that rich cities like San Francisco and Seattle have gotten so expensive that working-class people cannot afford to move there. Even if they could, there would not be much point, since whatever they gained in pay would be swallowed up by rent." 
Stop and rejoice. This is, after all, the New York Times, not the Cato Review. One might expect high housing prices to get blamed on developers, greed, or something, and the solution to be government-constructed housing, "affordable" housing mandates, rent controls, low-income housing subsidies (which protect incumbent low-income people, not those who want to move in to get better jobs) and even more restrictions.
No. The Times, the Obama Administration, California Governor Gerry Brown, have figured out that zoning laws are to blame, and they're making social stratification and inequality worse.”
David Farrar of Kiwiblog also noticed this piece, and his comment:
This is the major factor in house prices in Auckland. Labour, National, the Productivity Commission, the NZ Initiative etc all agree. We just need the Auckland Council to listen - and if they won't, to have Parliament over-rule them.

is especially pertinent.

Sunday, May 22, 2016

San Francisco's attraction comes at a price.... so does Auckland's

Insightful article about the high cost of living in San Francisco... many commented in response to recent photos, on how they love the place. This piece draws on a highly innovative data set to throw light on the plight. Conclusion?

For the love of god, keep adding homes. Keep adding homes so things don’t get any worse and you’re not trapped in a lose-lose-lose shitstorm like San Francisco.

Here is the paper.

Very relevant to NZ and in particular Auckland housing bothers - as expected it concerms free lunches, the middle classes and failure to face trade offs. Surprise.

DAO - next step in applying the blockchain

The blockchain offers probably the most productive leap in efficiency and equity since the development of money. It's a liitle demanding to understand but it is revolutionary.... the following updates progress and gives an idea of why it is important.

What Is the DAO?

The blockchain is a shared, decentralized, digital ledger that cryptologically seals and stores a permanent record of all transactions that occur on it. Bitcoin, the digital currency, is perhaps the most well-known and widely used application of blockchain technology. Ethereum is a different blockchain from Bitcoin and was created with the intention to allow self-executing smart contracts to be coded directly into it, permitting trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. (See also: Is Ethereum More Important Than Bitcoin?)
The organizational theorist Arthur Stinchcombe once wrote that contracts are merely organizations in miniature, and by extension all organizations are just complexes of contracts. Firms are created using a series of contractual agreements, ranging from employment contracts and employee benefits, to deals with vendors and suppliers and obligations to its customers, to building leases and sales & purchases of equipment. Traditionally, these contractual obligations are quite costly because they need to be enforced externally by society in the form of a trusted legal system and through legal enforcement. Courts, lawyers, judges and investigators all form this system of contract enforcement. With a blockchain-based smart contract, however, much of these costs are greatly reduced or eliminated. This promises to make blockchain-based organizations more efficient, cost-effective, and competitive compared to traditional firms in the marketplace. (For more, see: Decentralized Autonomous Organizations: IoT Today.)

Monday, February 8, 2016

Digging out the meaning of sovereignty

The issue of sovereignty has been much discussed in respect of the TPP. Long experienced trade negotiator and former minister Hon Phil Goff spells out the essence of sovereignty, in this context, most usefully:
“Every time you sign any international agreement you give away a degree of your sovereignty.” He cited the China free trade deal negotiated when he was Trade Minister.
“We gave up the sovereign right to impose tariffs against China when we signed up to the China free trade agreement. But it came with quid pro quos. China gave up its right to impose huge tariffs on us.
“That’s what an international agreement is; it’s an agreement to follow a particular course of action and a limitation on your ability to take action against the other country.
“You have the ultimate right of sovereignty that you can back out of an agreement – with all the cost that that incurs.”
Note that Phil Goff is a former Labour Minister of Trade.

Thursday, December 24, 2015

Short skirts and tall buildings

There is a reasonably respectable theory (by comparison with the universe thereof) which says that stock prices track hemlines (the Go Go 60s and the grim early ‘70s e.g.) – and randomness is a prime culprit. Another interesting line up comes from the building of sky scrapers.
  • 1885 and the first seriously tall edifice… the Home Insurance Building in Chicago
  • 1907 the stock crash and up goes the Singer Building to lead the leap skyward
  • 1936 and the depths of depression brings us the Empire State building (still the optimal height / yield mix)
  • 1970s and the oil shock gave us the World Trade Centre and Willis Towers
  • late 1990s and the Asian Financial crisis sees the Petronas Towers  pierce new heights
  • and the GFC in 2010 produced the record breaking Burj Khalifa in Dubai
What is tougher to tell is whether the buildings preceded a crash or were built shortly after in an attempt to inspire confidence. Too few data points of course (but it’s Christmas).

The worry is that 2018 will see the tallest yet at 1,000m Kingdom Tower, Jeddah opened. Precursor or sugar high? Clearly a skirt length prediction called for.

Monday, December 7, 2015

Dangers of sheer ignorance….

A recent and respectable poll of appropriate size and sample showed that when NZ’s were asked:

“How much of the country’s wealth is owned by the richest 1%?” the average response was “50%”

“How much should the richest 1% own?” the average response was “27%”

Now – how much does the richest 1% actually own? 10%.

Does the average NZr therefore want the top 1% to get a top up of 15% ?

Thanks to D. Farrar.

Tuesday, October 27, 2015

Advice for journos: Read “Stats Done Wrong” …

A fine example of rubbish designed to grow stories not knowledge would be this mornings “death by bacon if the sausage hasn’t killed you” piece of melodrama drawn from the aptly named WHO.

We are told that an extra 50 grams of bacon will increase one’s chances of getting bowel cancer by 18% – and variants on those numbers. We are not told an 18% increase “over what”. Yesterdays consumption? Some unspecified existing average? Zero? Presumably Dr WHO tells us in his report and the mere detail has eluded the journalistic mind?

Getting only slightly more picky, how does this compare with a 50 gram increase in anything else? The only clue seems to be that processed meat is as bad as tobacco and arsenic. Most helpful I’m sure. Alarm and despondency is however as job preserving for WHO persons as it is for news inventers.

Of course living another day does indeed increase one’s probability of dying. What’s more the longer this living an extra day business goes on the more dangerous it gets.. A sure-fire means of preventing this is not to be born. More effective than any rasher avoidance scheme.

BTW the book, written in a less annoyed frame of mind than I write, may be found here in draft or buy at Amazon.