At The New Zealand Initiative researchers are exposed to a wide array of interesting information from various sources. Some of this relates research, others just fit into areas of interest. Here is my Top 10 pick from the past week. Additions, opposing views and points of debate are welcomed either in the comments section or via email (jason.krupp@nzinitiative.org.nz).

1. Chinese housing investment in Australasia
The impact that Chinese foreign buyers play on house prices in Auckland is a hotly debated topic in New Zealand. The Initiative believes that where foreign buyers do push up prices, it is a symptom of the constrained housing supply. Others believe they are a primary cause of house price inflation. Unfortunately there is little more than anecdote to go on. However, in Australia, where more data is available, recent research has shown that Chinese investors only own about 2% of the property market.

“But based on the data we do have, Chinese investment in Australian residential real estate accounts for just 2% of the total real estate sales volume. Chinese applicants for residential real estate investment approval account for one sixth or 16% of potential foreign real estate investors. This suggests the housing and housing affordability crisis will not be solved by a clamp-down on one group of buyers.”

2. Housing’s structural challenges
The New Zealand Initiative has long argued that cities need the regulatory freedom to build up and out to make housing more affordable. But even if there was a magic button that could deliver this regulatory freedom instantaneously, Auckland Chief Economist Chris Parker notes that this would not be enough to jump start supply because of challenges in the building industry.

“There are a number of challenges facing the building industry in Auckland, around scale, quality, efficiency and price. Scaling up the building sector raises questions: What are the crowd-out risks for other sectors in Auckland, as the building sector tries to outbid them for labour and materials? How can public policy better support industry to meet various sectors’ needs?... [t]here has been little, if any, measured productivity growth in New Zealand’s construction industry for over 30 years.”

3. Housing crisis a generational struggle
John Daley, the head of the Grattan Institute, recently completed a whirlwind tour of New Zealand, where he shared some of the think tanks’ work on housing in Australia. The collective research showed that the status quo of high house prices, Nimby-ism and resistance to densification is producing a generation in Australia that has less wealth that their parents – a trend we can see playing in places like Auckland. The video is a must watch for those concerned about housing affordability, and the slides are available here.

“To a large extent planning policy is what leads to developers not building the kind of thing that we might want from an economic perspective, what we might want from a fair-go perspective, and can see that people want. However it is about making some much more difficult decisions in the middle ring (10km from CBD)). I wouldn't want to suggest for a moment that this stuff is politically easy. In fact the politics of it are diabolical because the people who benefit from there being no change are the people who live there already and by-in-large vote for the town council or whatever it might be.”

4. Hockey gets schooled
Keeping with the theme of Australia, it was Joe Hockey’s turn to get a reality check on what the housing crisis means for ordinary Australians. The Treasurer suggested the formula for home ownership was to get a good job that pays good money. Wodonga resident Mell Wilson was having none of that, and spelled out why that advice was virtually useless in an open letter.

“Ms. Wilson incredulously took Treasurer Hockey through the economics of buying a first house in Sydney. She reminded him that it would take all of the average wage earner's take home pay for four years to save the down-payment on the median house, now priced at A$915,000.”

5. Crowd funding challenges government and charities
Earlier this year I wrote a research report on how the regulations governing the charities in New Zealand are biased against small groups and overly lenient on large players in the sector. Now it seems that challenges are set to increase further, as people donating skip the middleman using crowd funding.

“Crowdfunding, civic or otherwise, and alternative forms of collaborative financing arguably reflect a drive to democratise financial markets – from venture capital and startup investment markets to community bonds… We are witnessing the unbundling of age-old financial institutions and systems. For civic crowdfunding, the core question though is: what are the unintended consequences of this shift for philanthropy and existing models of giving?”

6. We have a duty to offend
Free speech is one of the fundamental building blocks of an open and prosperous society. Yet some people, this correspondent included, think this building block is under threat from those who support political correctness, and would muzzle those who seek to cause offence. Brendan O’Neill argues that offence is at the very core of societal progress. In his view we do not have a right to offend, but a duty to offend.

"Pretty much every leap forward in history, pretty much every freedom we enjoy, is a product of individuals having given offence. Having offended against the orthodoxies of their age. Offensiveness is not just something we have to begrudgingly accept, offensiveness is the motor of human progress. Copernicus offended Christians when we said the sun was at the centre of the universe. He really hurt them, and in the process made the world a better more understandable place.”

7. The rise of victimhood
Brendan O’Neill argues that the force behind political correctness is victimhood, the belief that individuals are so fragile that they need to be protected from offence even if it curtails freedom of speech. Reason Foundation has an interesting article tracking the rise of victimhood in the US, creating a society with feet of clay:

“Sociologists Bradley Campbell and Jason Manning are arguing that the U.S. is now transitioning to a victimhood culture that combines both the honor culture's quickness to take offense with the dignity culture's use of third parties to police and punish transgressions. The result is people are encouraged to think of themselves as weak, marginalized, and oppressed. This is nothing less than demoralizing and polarizing as everybody seeks to become a ‘victim’.”

8. Drinkers a net benefit to the health system
It has long been argued that smokers are a burden to the health system due to the costs of treating associated illness from the act. This is not true in New Zealand, as the excise taxes on tobacco more than compensate for health related costs. Work by Chris Snowden now shows that drinkers in the UK also over contribute to the health system. Cheers to that.

“It is time to stop pretending that drinkers are a burden on taxpayers. Drinkers are taxpayers and they pay billions of pounds more than they cost the NHS, police service and welfare system combined. The economic evidence is very clear on this. Forty per cent of the EU's entire alcohol tax bill is paid by drinkers in Britain and, as this new research shows, teetotallers in England are being subsidised by drinkers to the tune of at least six and a half billion pounds a year."

9. Not just food but plates too
The public debate around the sugar, salt and fat content in food is rife with experts telling people what they should and shouldn’t eat. For anti-paternalists, such as this correspondent, it is galling because these experts assume to know my preferences better than I do. But if telling me what to do wasn’t enough, now they’re telling me how big my plate must be as well.

“The data showed that people consistently consume more food and drink when offered larger-sized portions, packages or tableware than when offered smaller-sized versions, suggesting that, if sustained reductions in exposure to large sizes could be achieved across the whole diet, this could reduce average daily energy consumed from food by 12% to 16% among adults in the UK (equivalent of up to 279 kcals per day) or by 22% to 29% among US adults (equivalent of up to 527 kcals per day)."

10. Not so elementary after all
Sherlock Holmes, the literary creation of Sir Arthur Conan Doyle, is attributed with saying “Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth”. This is held by many as a fine example of deductive reason. The only problem is that the fictional detective used inductive reasoning, as Danielle Kincaid explains:

“Deductive reasoning is also known as ‘top-down’ logic, where the reasoner begins with an accepted premise and seeks to prove another statement based on previously ‘known’ information… Inductive reasoning, however, allows Sherlock to extrapolate from the information observed in order to arrive at conclusions about events that have not been observed.”