When the European Central Bank announced its new policy measures last week, most of the commentary focused on the introduction of negative interest rates. From now on, commercial banks depositing funds with the ECB will have to pay a penalty for doing so. Read more
Economist Edward Glaeser, ranked as one of the profession's top 50 practitioners, summed-up 40 years of transport economics at Harvard University in four words when he was visiting Wellington last year: "Bus good, train bad." Glaeser's argument is centred on the risks of bus versus rail. Rail is capital and land intensive as you need to buy the land at market prices in order to put a track on it. Read more
This year’s global publishing sensation has been Capital in the Twenty-First Century, a tome on the alleged rise of inequality in developed countries. Written by French economist Thomas Piketty, it argues that over long periods of time, capitalist societies had become more polarised. Read more
Since the publication of The Spirit Level in 2009, and its ‘devastating critique’, The Spirit Level Delusion, in 2010, debates in the media and among politicians have been gripped by wealth inequality fever. The latest instalment is French economist Thomas Piketty’s Capital in the Twenty-First Century – a book which is at the centre of its own maelstrom over the accuracy of its analysis. Read more
At a recent Local Government New Zealand (LGNZ) event on housing affordability, the most telling moment came when economist Arthur Grimes said: “You can have big cheap cities, or small expensive cities, but just don’t say you can have small and cheap.” This statement seemed to come as a surprise to some, particularly Auckland Deputy Mayor Penny Hulse, who appeared to strongly disagree with Grimes’s position. Her reaction is understandable given that the Auckland Plan aims to deliver affordable housing by increasing the population density of the city. Read more
‘Opportunity cost’ is one of the most fundamental concepts in economics. When choices have to be made, the opportunity cost of the preferred choice is measured by the net benefits that could have been secured by choosing the best of the rejected alternatives. Read more
What is democracy? Well, usually democracy is when the people vote in an election and the winner then happens to form a government. Read more
Wellington (4 June 2014): The New Zealand Initiative has expressed concern about a Fairfax Media report today that the RBNZ is not ruling out restricting mortgage lending according to household income multiples. Such a policy is currently being considered by the Bank of England under its new governor Mark Carney. Read more
This week the Minister of Education, Hekia Parata, released a report on the details of the government's $359 million policy to create a new career structure for teachers (Investing in Educational Success) following consultation with the education sector. The Beehive media release makes it sound as if everybody is happy as a result of the consultation, and most are, including the secondary teachers' union, the PPTA. Read more
With a greater number of local government bodies having adopted a compact city development strategy, or in the process of considering it, The New Zealand Initiative set out to examine whether these urban forms deliver on their stated benefits. The compact city school of thought is built on the belief that cities should be sustainable in their use of resources, and while this takes many policy forms, it is principally expressed in restricting the outwards spread of the urban footprint. Read more
An Insights reader recently wrote in with a thoughtful question: how could we advocate for the release of land in New Zealand cities as a means of tackling the housing affordability crisis and promoting economic growth? They noted that continued growth, driven by population expansion, is not sustainable in the long term. Read more
The constant striving to improve one’s lot is human nature, and people naturally move to where the opportunities lie. But when moving house and moving jobs involve children, these moves become controversial. Read more
Try to envisage a world in which you wake up every morning from your bed, manufactured by Kiwibed, prepare your breakfast of Kiwibread and Kiwicoffee, and put on your clothes – made by Kiwiclothes, no less. This may sound like a nightmare to some, where practically all goods and services are produced by nationalised and monopolised industries, and are shielded from the price-reducing effects of private competition. Read more
If markets are anything to go by, last weekend’s elections to the European Parliament delivered a good outcome, promising stability and predictability for the continent. Across Europe, stock indices soared on Monday: up 3.4 per cent in Italy, up 2 percent in Greece. Read more
Budget day last week was dominated by the usual focus on the return to surplus, some new spending pledges and discussions around potential future tax cuts. Soon afterward, however, commentators and politicians discovered that the Treasury papers contained some political dynamite outside the core of fiscal policy: a projected rise in net migration figures. Read more