Anti-Dismal is back live!

Hi all, I am a month slow on noting this as I haven’t been reading blogs over the past couple of months – so just pointing out now that Paul Walker is back blogging over at Anti-Dismal again.  I’d suggest heading off and reading this recent post.

Truly, the link between factors such as agglomeration, scale, productivity, and dispersion of income is a pretty danged important issue – and one that keeps being looked past when discussing inequality trends IMO.

Tweeting the curse of distance

Via Owen Williams on Twitter came this gem:

This is true, shipping is a pretty big deal.  However, Aaron Schiff pointed out another common cost of being in NZ:

This is of course the curse of distance – both from the “production” of goods and from large centres of “consumption” (where the fixed cost of transporting can be spread over more customers).  The OECD has discussed this cost before, and NZ’s Productivity Commission also mentions it when discussing why productivity in New Zealand is relatively low.

Nice to see Amazon giving us some concrete examples we can use to discuss the phenomenon though – well nice until you want to buy anything ;)

A response to Danyl on data and inequality

Over at Dim Post I see Danyl is discussing the latest (2014) Household Income Report and Piketty’s book Capital in the 21st Century.  Excellent – there are lots of important and interesting issues to discussing look at these sources.

However, in this instance the data he is using and his interpretation is sadly a bit off.  I thought I’d discuss why this is here. Read more

Potential output in monetary policy

When it comes to “potential output” there is often a view that the economies potential to produce is determined by the labour, land, and forms of capital that are available to create this output from – and this is right!  Furthermore, each of these factors tends to produce a diminishing amount of additional output as you use more of it.  Although the factors of production are often complementary this often implies a situation where – in the long-run – the potential for output (and growth in said output) in a nation is fundamentally about technological change and the quality of institutions.

However, in a recent speech by John McDermott of the RBNZ he points out that, when it come to considering monetary conditions, the type of “potential output” we are interested in is a bit different.

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Rates and property values: it’s the relativity that matters

I have a very minor quibble with today’s article in the herald titled “Higher rates the flipside of soaring house prices“.

The crux of the article is this redacted quote

If you live in Auckland and neighbouring houses have sold for unheard-of prices in the past two months, you can expect your home’s official value to shoot up.

The flipside? The new values will be taken into account when setting new rates next year.

While I’m not privy to the precise detail of how rates are calculated (nor do I want to be!), my understanding is that the council sets a fixed amount they want to raise via rates, and then allocates that across houses via relative values.

Because the pot is fixed as such, if all house values increase by the same amount, we would expect the share of rates that each house pays to stay the same (this is where I expect someone with an intricate knowledge of rates calculations to jump in and correct me…).

Therefore it is only if your property value  increases by more than other properties, we would expect your share of rates to increase. So if you own a house in an area that has rapidly gentrified since rates were last set (Guessing places like Onehunga, New Lynn etc…), then the share of rates you pay will probably increase, since your property value has likely increased by more than the city wide average.

The first sentence of the article I have quoted is probably getting at this, but I just thought it was worth making it explicit that the general increase in house prices in Auckland doesn’t necessarily mean you are going to pay more rates.

More rhetoric on restricting the choice of the poor

I see that leading Stuff today is an article on New Zealand’s “obesity epidemic”, and how we must changes some things because we are “killing ourselves”.  The policy suggestions are:

In a report published today, the association calls for drastic cures for the bulge, including taxing or minimum prices for sugary drinks, restricting food advertising aimed at children, and taking fast food out of schools.

I’ll be honest, I can see a reasonable justification for everything except the minimum price.  I can see a good justification for changing policies around children, based on habit formation.  This isn’t the point.  The point I’m touching on involves the inappropriateness of quotes like this:

Otago University health researcher Professor Jim Mann said he supported the report’s recommendations, particularly a fizzy drink tax. Kiwis were becoming so big that they were almost blind to obesity. “Parents can’t even identify when their children are overweight or obese. Obesity is fast becoming normal.”

New Zealand’s poverty rates, particularly among children, and cheap access to fatty tasty foods were largely to blame, as was a lack of political will. “There is this obsession with the nanny state, that we shouldn’t be telling people what to do.”

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