Sunday reading 14 June 2015

Jenée Tibshraeny, “NZIER’s Shamubeel Eaqub calls for a cultural U-turn“, Interest.co.nz. Eaqub covers a lot of ground on housing policy in this interview:

In ‘Generation Rent’, the Eaqubs discuss three sets of solutions to help solve our housing problems.

“The first set of solutions – palliative in their nature – will be to provide better and more sustainable living conditions for Generation Rent”, they say.

“The second set will take the heat out of the housing market in the current cycle, by using levers to control demand: raising interest rates, reducing credit availability, creating a more responsive construction sector and perhaps restricting migration and limiting foreign buying.

“But these cyclical measures, though useful, will only buy us time. Throughout the cyclical ups and downs, prices have steadily trended upwards because of underlying policy errors.

“The real fixes, and the hard work, will be in correcting structural problems: slow land supply; expensive infrastructure provision and a broken model for its funding; taxes that favour housing; and policies that encourage banks to lend more for individual property investment.”

Richard Florida, “Why groceries cost less in big cities“, Citylab:

But while most people think just about everything else costs more in New York, a recent study by Jessie Handbury of the University of Pennsylvania and David E. Weinstein of Columbia University suggests that groceries and other staples may actually be cheaper in big cities than in small ones—when one does the proper sort of comparison…

Once they adjust for both variety and availability, Handbury and Weisntein find conventional wisdom flipped: People in bigger cities actually pay less, in real dollars, for their groceries. Someone moving from Des Moines to the Big Apple would see a 1.5 percent increase in prices for commonly available groceries. But this higher common goods price index would be offset by the greater number of goods available in New York. As the researchers write, “The gains due to variety mean that the theoretically rigorous exact price index indicates that the price level in New York is actually 4.2 percent lower than Des Moines.”

Clifford Kraus and Nelson Schwartz, “Rick Perry hones his image as ‘Texas miracle’ fades”, NY Times. An interesting look at the state of the Texas economy, which is sometimes cited as a model in the US and other English-speaking countries:

Not long ago, what former Gov. Rick Perry and other conservatives like to call “the Texas Miracle” — the booming Texas economy — looked like a potential steppingstone to national office. But as Mr. Perry jumps into the ever-widening race for the Republican presidential nomination, his state’s economic performance appears considerably less miraculous.

Although Texas’ unemployment rate of 4.2 percent remains well below the national average of 5.4 percent, the state lost 25,000 jobs in March. And while April was better over all, the oil industry in Texas lost an additional 8,300 jobs as plunging oil prices prompted drillers and producers to shut down projects.

[…]

“Texas did pretty well, but it’s hard to say how much of that is because of policy choices versus luck,” said Tracy Gordon, senior fellow at the Urban-Brookings Tax Policy Center, a nonpartisan research group in Washington. “We often think of states as playing with the hands they are dealt and making policy choices based on that.”

Joanna Mathers, “Generation Rent’s woes continue to spiral“, NZ Herald:

Labour’s housing spokesman Phil Twyford’s West Auckland electorate office is inundated with similar stories. But in the unregulated market, things are unlikely to improve for renters, he says.

“Homes in the private rental market are in far worse condition than the state housing stock. The rental situation is getting worse. Life is incredibly hard on renters and we don’t have the laws to back them up.”

Housing Minister Nick Smith says the Government “doesn’t accept that renting is as good as it gets for average New Zealand families”, but he confirms he is “considering improvements to tenancy law”.

The Government’s focus remains on getting families in homes, but this is scant relief for the thousands who can’t afford to buy, or who don’t fit the traditional family unit.

Renter Rachel Clark says she is one of many renters who don’t fit a stereotype. “Those who may have wanted to invest their time in travel or more study or creative pursuits rather than a deposit on a house.”

“I don’t think we should be penalised for choosing a different lifestyle to our parent’s generation. Things were easy for them, cheap homes, free education. Times have changed and so should the renting culture.”

Alan Davies, “Is low spending on trains why the inner city is so expensive“, Crikey:

Last week Alan Kohler wrote a story for Business Spectator, Australia’s train to nowhere, arguing that the failure of Australian governments to invest in public transport, particularly rail, has favoured house prices near the centre. (1)

Drawing on recent research published by the Reserve Bank (see first exhibit) he says the reason inner-city prices have gone up much faster than the outer suburbs over the last 30 or so years is because a lack of infrastructure spending has made it unviable to live further out.

Australia is a big country; it should have a network of fast and efficient trains linking widespread suburbs, but instead we are crowding into the inner suburbs and paying exorbitant prices so we don’t have to commute more than hour to work each day.

[…]

I don’t doubt that the dramatic increase in the value of properties closer to the city centre shown in the first exhibit is the response to increased demand, but I think there are other possible explanations that are more convincing than the historical level of investment in radial rail.

One is that the ratio of dwelling supply to demand has deteriorated much faster in the inner city over the period than it has in the suburbs. That’s in large part because existing residents in established suburbs tend to object to redevelopment…

David Roberts, “Here’s what Obama’s big carbon pollution plan would mean for jobs“, Vox. Roberts makes an important point that can’t be stated clearly enough: addressing climate change is not likely to have any major economic costs:

Opponents of President Obama’s Clean Power Plan (CPP) — the EPA’s proposed rule to reduce carbon emissions from the power sector — tend to discuss it in apocalyptic language, particularly regarding its effects on employment. To pluck an example from a hat: when he was running for Senate last year, Ed Gillespie warned that EPA carbon regulations would destroy “244,000 jobs a year.” (Yes, that is ludicrous.)

So it should set everyone’s mind at ease that, according to a new study, the CPP will yield a small net gain in employment.

Before getting to those details, it’s worth emphasizing a broader point that gets lost in these debates: the net effect of the CPP on employment, like the net effect of past air-pollution regulations, is likely to be small. Performance standards on energy technologies simply do not create or destroy enough jobs to matter much in the larger debate over economic health. Other structural factors, like whether the Fed prematurely raises interest rates, will likely have much more macroeconomic employment effect than EPA’s rule.

New Zealand-specific research has found something similar: putting a price on carbon emissions will do us very little economic harm.

Pattrick Smellie, “Small growth impact from big greenhouse gas cuts, Infometrics tells government“, NBR:

Infometrics says the impact of reducing non-agricultural greenhouse gas emissions to 40% below 1990 levels – the target currently adopted by the EU – would cost just over one-tenth of one percentage point of growth a year between 2021 and 2030, the next so-called “commitment period” for a globally negotiated new pact to tackle climate change.

The Infometrics modelling, which assumes global carbon prices rising to average $50 a tonne, also suggests that there would be little difference between adopting a 40% cut target and a 5% cut…

Looking at national economic output rather that household income, Infometrics projects a 5% greenhouse gas reduction target would reduce gross domestic product by a total of 0.9% over the 10 years between 2021 and 2030, while assuming that the New Zealand economy would grow by an average of 2.1% every year during that period. With a 40% cut, the impact over a decade is modelled at 1.1%.

“John Key says reducing emissions would be ‘disastrous’ for the economy but his own economic modelling shows the impact is marginal,” newly elected Greens co-leader James Shaw said in a statement. “Why wouldn’t we choose an ambitious and fair 40% emissions reduction target when it would still see our economy growing 2.1% annually – the same amount as with a token 5% reduction target – according to the government’s economic analysis?”

Which begs the question: Why the hell aren’t we getting on with it?

Leah Shahum, “Five key lesson’s from Europe’s Vision Zero success“, Streetsblog:

Here are five initial  takeaways, focusing on areas that seem relevant to the U.S. experience and worthy of more exploration.

1) Managing speeds — and speed differentials — is a top priority

In all three of these countries, the leaders of traffic safety efforts emphasize that managing speed is the number one determinant in their successes in improving safety.

Over the past 15 years, the national governments of Sweden, the Netherlands, and Germany have all proactively and systematically changed their approaches to speed. Each nation (to differing degrees, but all significantly) has lowered speed limits for a clearly defined hierarchy of roads and corresponding speeds. For instance, the Netherlands has shifted…

• from 50 kilometers per hour (kph) to 30 kph on smaller, residential streets;
• from 70 kph to 50 kph on bigger, or what we’d consider arterial roads; and
• from 100 kph to 70 kph on the freeway-like roads outside cities.

In each of the three nations, nearly everyone I’ve spoken with credits speed management as the greatest contributor to their success in improving safety on the streets and saving more lives.

But there’s another important factor: considering and managing for speed differentials. This means a great deal of thought is given to the kinds of users and the mix of users in the specific areas when designs and policies are laid out.

I really notice this when walking or biking around Auckland. Most streets have 50km/hr limits, and street layout – #2 on Shahum’s list – often encourages people to drive faster. It just doesn’t make sense that a high-traffic arterial should have the same speed limit as a high street and a quiet residential street. I don’t see why we insist upon this approach when it’s been proven to be unsafe.

Seth Kaplan, “Lagos: A model for the 21st-century city” Architecture Review:

If the international community and their own governments won’t or can’t save them, who will? The answer might be: their cities and citizens. If enough power were devolved to urban areas from corrupt and over-centralised national governments, fragile states might succeed. At least in democracies, the cities have more potential as elected politicians face more pressure to get results than national leaders.

Take Nigeria. It is arguably the worst run of the world’s seven most populous countries. Despite earning hundreds of billions of dollars in oil revenue in the past decade, it will soon have the second-most destitute people in the world after India. Average life expectancy for its 174 million people is 52 years. Transparency International ranks it 144th of 177 countries on the Corruption Perceptions Index. Nigeria has more than 250 different ethnic groups and a history of sectarian strife. It has pirates and armed militant groups fighting the state in its south, sectarian conflict across its ‘middle belt’, and an Islamist insurgency in its north.

But its largest city, Lagos, until recently one of the world’s most difficult to govern, seems to have turned a corner. Although still a slum-ridden and impoverished metropolis, with a population estimated at 21 million, it has seen steady improvement in its governance for over a decade. The government has enhanced public transport, cleaned up streets, upgraded the business environment, and bettered the lives of its inhabitants.

Glen Koorey, “Cycling projects underway around Christchurch“, Cycling in Christchurch. Glen gives a handy update on the state of play in Christchurch’s rethink of many of its streets:

So what has been happening around the city lately?

• Some of you may have seen the media items about the first part of the “Uni-Cycle” Major Cycleway on Matai St near Hagley Park getting underway this week (should take until about mid-August to complete). A key part of this work is the signalised crossing of Deans Ave into the Park directly from Matai, replacing decades of going around the long way (or sneaking under the barriers for the direct route). A separated cycleway will also then lead people across to the existing cycleways on the other side of the railway line. While only a short piece of construction, it’s a very important link in our overall network.

[…]

• More of those much-loved cycle lane separator treatments will be popping up around the city, as part of a minor lane marking improvements project. This will include sections of Ferry Rd, Blighs Rd, Antigua St, Kahu Rd, and Kotare St. Should be done by early July.

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