And why the post-1984 generation that did it accidentally on purpose can't find a way to either climb back down, or lower the ladder to the generations born after 1984.
Another great article Bernard. I have to question this statement, though: "Paying for the housing and transport infrastructure to adjust for climate change will cost hundreds of billions of dollars. That will have to be paid for with taxes on the wealthiest over the next couple of decades."
It's too bad that this perception that the gov's only source of money is taxes is so persistent, because it's false. The rbnz is owned by the gov and can finance anything the gov wants to fund, free of debt or taxation. Indeed, we should all be asking why the gov doesn't use the rbnz more on behalf of Kiwis to end poverty and homelessness etc, instead of allowing the private banks to produce most of our money supply as interest-bearing debt-money. Housing prices would never have got so high if the gov had curbed private bank deposit-creation ("lending"). For anyone who's unaware of private money creation, here's a short Bank of England video. The man says it at 1:15 .
Also from Wikipedia's entry on the rbnz: "the largest portion of money created is not created by the Reserve Bank itself, 80% or more is created by private sector commercial banks."
Seriously though, your columns are an island of sanity in our current political landscape dominated by Polyanna syndrome. In my experience, many of the 0.5 million lost voters are too terrified to even admit that it is even happening. And with violence in the US and Trump to distract us, it is easier to ignore local politics (what ... we can't vote in US elections!!).
I've also read your article "The dirty little secret in this migration debate":
> New Zealand is kidding itself that it is growing its economy and its wealth, but all it is doing is bringing in more people, working them harder for less pay, and refusing to invest in the underlying infrastructure and social fabric of the country because its delivers a short-term financial and political gain. It is disgraceful.
...
> The bigger picture is this is effectively a bi-partisan migration 'policy' that is both delusional and fraudulent.
This "fastest population growth in the developed world" also accidentally on purpose reduces the necessity of investment in young NZers, undermines the market power of young workers while further increasing property values. Our housing crisis seems to be the conclusion of so much fraudulent policy over several decades.
Democracy won't solve it b/c society isn't altruistic enough. Historically, the Chinese, the Russians and the French solved it via revolution. If the problem isn't solved, then we are on the way to building an Aristocracy. Hunger Games anyone?
I think it is interesting that the motivation for the open-door approach to high migration is primarily related to successive governments wanting to rapidly attract young workers to migrate to NZ given our ageing population demographic. But the only way either Nat or Lab could bring in 70,000+ new people annually, and house them, was by encouraging NZers to become landlords. So that activity was incentivised both by tax breaks for landlords respecting that as a business it was otherwise normally uneconomic (when house prices were relatively stable) and accommodation supplements for tenants. Successive governments couldn't have got away with bringing in a million extra people into NZ over 20 years without the much-maligned landlords being there to provide rentals to house all the new arrivals. House prices spiralling out of control was just an unintended consequence. If I am right in what I surmise, and about the true albeit unstated, motivation for the policies they have adopted, then Nat and Lab have created a massive social mess (inequality) while trying to fix a looming social problem (an ageing population). That is my guess about 'why' we have got to where we have.
Thanks Bruce. I can see the logic, but take the view the rise of house prices as more of an accidental side effect that was politically convenient. It’s true Governments could have done the migration sensibly with more Government investment in housing and infrastructure, but that would have entailed higher taxes and/or debts. That decision to ‘starve the beast’ with lower taxes and investment was deliberate, but not to put up prices. It was a beautiful/horrible side effect.
Great work Bernard, and thanks for sharing, this should be compulsory reading for all politicians and influencers.
Another great article Bernard. I have to question this statement, though: "Paying for the housing and transport infrastructure to adjust for climate change will cost hundreds of billions of dollars. That will have to be paid for with taxes on the wealthiest over the next couple of decades."
It's too bad that this perception that the gov's only source of money is taxes is so persistent, because it's false. The rbnz is owned by the gov and can finance anything the gov wants to fund, free of debt or taxation. Indeed, we should all be asking why the gov doesn't use the rbnz more on behalf of Kiwis to end poverty and homelessness etc, instead of allowing the private banks to produce most of our money supply as interest-bearing debt-money. Housing prices would never have got so high if the gov had curbed private bank deposit-creation ("lending"). For anyone who's unaware of private money creation, here's a short Bank of England video. The man says it at 1:15 .
https://www.youtube.com/watch?v=CvRAqR2pAgw&feature=emb_logo
Also from Wikipedia's entry on the rbnz: "the largest portion of money created is not created by the Reserve Bank itself, 80% or more is created by private sector commercial banks."
https://en.wikipedia.org/wiki/Reserve_Bank_of_New_Zealand#Fractional-reserve_banking
Best. TLDR; Ever.
Seriously though, your columns are an island of sanity in our current political landscape dominated by Polyanna syndrome. In my experience, many of the 0.5 million lost voters are too terrified to even admit that it is even happening. And with violence in the US and Trump to distract us, it is easier to ignore local politics (what ... we can't vote in US elections!!).
I've also read your article "The dirty little secret in this migration debate":
> New Zealand is kidding itself that it is growing its economy and its wealth, but all it is doing is bringing in more people, working them harder for less pay, and refusing to invest in the underlying infrastructure and social fabric of the country because its delivers a short-term financial and political gain. It is disgraceful.
...
> The bigger picture is this is effectively a bi-partisan migration 'policy' that is both delusional and fraudulent.
This "fastest population growth in the developed world" also accidentally on purpose reduces the necessity of investment in young NZers, undermines the market power of young workers while further increasing property values. Our housing crisis seems to be the conclusion of so much fraudulent policy over several decades.
Democracy won't solve it b/c society isn't altruistic enough. Historically, the Chinese, the Russians and the French solved it via revolution. If the problem isn't solved, then we are on the way to building an Aristocracy. Hunger Games anyone?
Why did so many economists predict that house prices would fall during lock down?
I think it is interesting that the motivation for the open-door approach to high migration is primarily related to successive governments wanting to rapidly attract young workers to migrate to NZ given our ageing population demographic. But the only way either Nat or Lab could bring in 70,000+ new people annually, and house them, was by encouraging NZers to become landlords. So that activity was incentivised both by tax breaks for landlords respecting that as a business it was otherwise normally uneconomic (when house prices were relatively stable) and accommodation supplements for tenants. Successive governments couldn't have got away with bringing in a million extra people into NZ over 20 years without the much-maligned landlords being there to provide rentals to house all the new arrivals. House prices spiralling out of control was just an unintended consequence. If I am right in what I surmise, and about the true albeit unstated, motivation for the policies they have adopted, then Nat and Lab have created a massive social mess (inequality) while trying to fix a looming social problem (an ageing population). That is my guess about 'why' we have got to where we have.
Thanks Bruce. I can see the logic, but take the view the rise of house prices as more of an accidental side effect that was politically convenient. It’s true Governments could have done the migration sensibly with more Government investment in housing and infrastructure, but that would have entailed higher taxes and/or debts. That decision to ‘starve the beast’ with lower taxes and investment was deliberate, but not to put up prices. It was a beautiful/horrible side effect.
Cheers