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Insights 45: 30 November 2018
Read: In NBR, Roger Partridge shares his concerns about the state of education in New Zealand
Read: Eric Crampton discusses on Newsroom the real truth about income inequality
Listen: Eric Crampton argues on Radio NZ that Shane Jones needs to clarify WTO comments

Having and eating your housing cake
Dr Oliver Hartwich | Executive Director |
If house prices go up, it is a scandal. If house prices go down, it is a disaster.

That must be the logic by which the media reports on the ups and downs of the property market.

After years of covering the housing crisis, in which rising prices locked a generation of young Kiwis out of the market, the media have just discovered an equal and opposite crisis. This time it is caused by the threat of falling house prices.

In a story on Monday, the New Zealand Herald discussed recent declines in Australian property prices and what they might mean for our own market. “The good news,” the Herald told its readers, was that “there are a few variables which suggest the flow through might be tempered this time.”

The good news? The Herald had clearly forgotten about previously alerting us to people sleeping in cars, families living in overcrowded flats, and key workers enduring ridiculous commutes. All caused by high house prices.

And now the prospects of a moderate house price correction should have us worried?

Maybe it is unfair to blame the Herald for its confused reporting. The country itself does not know what it wants.

In opinion polls about the biggest political issues for the country, the affordability of housing usually comes up on top. Bringing housing back within the reach of ordinary New Zealanders was a key promise in last year’s election.

To make housing more affordable is behind the Government’s Kiwibuild policy. It is the reason the Government introduced new ways of financing residential infrastructure. It is why a new Housing and Urban Development Authority has just been established.

So why is it that the same voters who demanded political action on the housing crisis are now spooked by the first signs of a housing market correction?

It is a mixture of loss aversion and the endowment effect: Even if your house has gone up 50 percent in value over the past five years, you would not want to part with a single dollar of its current value. That is because people always value more strongly the things they own.

From a psychological perspective, the only thing worse than rising house prices are falling house prices.

From an economic perspective, what we really want is to unfetter our housing markets on the supply side.

Even if it means falling prices.

Vapers pushed out in the cold
Jenesa Jeram | Research Fellow |
In the old days, quitting smoking was apparently a miserable affair.

So miserable, in fact, that even when faced with the prospect of ‘quit smoking or die’, too many smokers tragically fell into the latter category.

For many now ex-smokers, vaping has been a game-changer. Vaping has helped tens of thousands of New Zealanders quit smoking. And for many, the process has been thoroughly enjoyable.

But all that might change if the Government’s proposals for vaping regulation move ahead.

Last Friday, Associate Health Minister Jenny Salesa announced a range of proposals for regulating vaping and smokeless alternatives. The proposals include banning vaping in bars, restaurants and workplaces; restricting colours and flavours of e-liquids that might attract children; and severely limiting advertising just like for tobacco.

The proposals are heavy handed and unnecessary.

Pushing vapers outside in the wind and rain along with the smokers sends the false message that vaping is as dangerous as smoking. Vaping is at least 95 percent less harmful than smoking. Even the Cabinet Paper for the proposals admitted there is no robust evidence of the risks of second-hand vapour, but claimed vaping should not be ‘normalised’.

Workplaces and hospitality venues should be able to define their own vaping policies based on the needs of their employees and customers.

We’ve come a long way, baby, if the Government is worried about quitting smoking being normalised.

Restricting colours and flavours just because they might attract children is also disappointing. Is it better to force vapers to maintain a taste for tobacco, even though many adult vapers would prefer not to?

There is no such thing as ‘kid colours’ or ‘kid flavours’. Some adults may prefer the flavours of candyfloss, fruit and chocolate milkshakes to those of tobacco, brussels sprouts and quinoa.

Many of the Government’s proposals are based on the idea that children need to be protected from taking up vaping. But rather than take away many of the positive aspects that attract smokers to vaping in the first place, Government only needs to enforce one regulation: prohibit sales to minors.

Perhaps those calling for strict vaping regulations really do see the world in beige and grey.

To some people, the sight of construction workers puffing clouds of candyfloss may be a mild nuisance.

But for those committed to tobacco harm reduction, they see empowered ex-smokers doing something overwhelmingly positive for their health and their families.

All power to them, and may their voices be heard in the public consultation of these proposals.

The New Zealand Initiative’s report, Smoke and Vapour: The Changing World of Tobacco Harm Reduction, recommended against many of the regulations the Government is proposing.

The war of Gondorean aggression
Dr Eric Crampton | Chief Economist |
Desperate to turn away from trivial controversies here in New Zealand about Santa’s true gender, I looked to the British press and found The Times and The Telegraph reporting on claims of racism in J.R.R. Tolkien’s depiction of orcs in The Lord of the Rings.

The case is stronger than it might first appear. For that stronger case, we must turn to the truly excellent work of historical fictional reconstruction undertaken by Kirill Yeskov.

Yeskov’s 140,000 word analysis of what really happened in The Lord of the Rings was first released, in Russian, in 1999. It was translated into English in 2011 as The Last Ringbearer and is freely available online.

Russian scholars were used to deciphering the true story that lay behind Soviet government official accounts. Yeskov took The Lord of the Rings as history written by the victors hundreds of years after the events. Is it really plausible that orcs were a different evil species? How could they even be of a different species than humans if the Uruk-Hai were meant to be the children of men and orcs? It’s these little tells that helped Yeskov figure out what really happened.

There’s no use hiding the truth of it. The peaceful Orocuen people of Mordor were on the cusp of an industrial revolution. Gandalf saw the threat that technology posed to the wizards’ continued domination. He urged the invitation of elves back to Middle Earth for the genocide of Mordor. Only Saruman stood against him in the wizards’ White Council – and was cast out.

The war was harsh. The Nazgul – Mordor’s greatest scientists who took up the mantle of magic to shield their oasis of reason from the dark ages that lay beyond in Gondor – were defeated. In the end, the Elves scoured Mordor of anyone with an education to push them back into the stone age. The genocide ended, along with the Elves and magic, but I do not want to spoil the tale for those yet to read the true history.

In Yeskov’s telling, Tolkien’s orcs were orcs only because men could not bear for them to be otherwise, having been complicit in their killing. Dehumanisation of the enemy comes hand in hand with atrocity and can continue as rationalisation long after the fact.

And for the truth about Santa, Hayden Donnell’s case at The Spinoff that Santa is neither man nor woman, but a genderless eternal demon, is more than a little compelling.

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