Just how badly has New Zealand done?

“Very.”

That was the Executive Summary to a discussion note I put together one Saturday a few months ago.

productivity just how badly has nz done

In one sense, there is nothing new  (the data have always been there) but there was a certain relentless bleakness about putting it together, and rereading it now.  If only the New Zealand political and economic elites treated the failure as seriously as it deserves.  But then countries fail mostly because of the choices of their elites –  sometimes including the well-intentioned ones.

The paper mentions another note of mine, which I included with one of the first entries on this blog.

Richer cities become less dense

Much of the debate around housing in New Zealand seems to involve “urban planners”, and people with similar inclinations, trying to tell people how they should live, and what sort of houses (and what sized sections) they should live in.  In particular, the planners seem to have quite strong preferences for higher rates of urban density.  Some of this seems to be about their own lifestyle preferences, and some the alleged agglomeration benefits.  We’ll come back to agglomeration over the coming months.  But here I thought I would just highlight some fascinating data I stumbled on a while ago on the Demographia website on urban historical densities.    Here is some of the data on historical urban densities.

First, a newer city; New York since 1800

new york

And then two older European cities.

London since 1680

london

And Paris since 1650

paris

I haven’t looked at how the data were put together, and I’m sure there must be considerable margins of error around any of the older estimates.

But….they paint a pretty clear time series picture for each of three of the rich world’s great cities: as cities get richer, their citizens seem to demand more space, not less.  This shouldn’t be a surprise –  think of the tenements that the poor lived in in earlier stages of urban development, and of the congestion and squalor of much-poorer developing cities today.

Of course, governments and “urban planners” can stymie these trends –  by applying land use restrictions.  But in whose interests are such restrictions applied, and who is positioned to make those judgements?    Shouldn’t policy facilitate private preferences, whether for more density or more “sprawl”?

And none of this bears on questions of why some rich cities (eg in US or Australia) are much less dense than comparable size cities in other places.  And it has nothing to do with the point that in any country the biggest population centres are likely to be more dense than smaller places.

But…to repeat…history suggests that, all else equal, as cities and countries get richer then. all else equal, their inhabitants prefer more space not less.

Peak starts in Christchurch?

I spent Saturday in Christchurch visiting family. I haven’t lived in Christchurch since I was six, but in some respects it is still “home”.  People close to me lost a lot.   I get down every few months and have followed progress since the earthquakes with both professional and personal interest.  Among the (not original) observations was the striking contrast between the quick private sector action on the periphery, and the mostly glacial pace of activity in the central city government-controlled zone (where, not coincidentally, owners’ property rights had been quite severely impaired).

Saturday’s Press had an interesting feature on “the growing number of rebuild-related firms going bust despite a building boom in Christchurch” –  presumably not a reflection of lack of work, but of the dislocations and opportunities that major economic shocks bring.  Some will have prospered enormously over the last few years, and others –  a minority – just won’t have coped with the challenges of, say, going out on their own and running their own business.

On this visit, even the government-controlled zone was finally starting to look more like a building site than a bomb site  (and I noticed that the Sunday Star Times had a big article yesterday on the scale of the central city developments).  And it is good to see an increasing number of new buildings up and open.  But I noticed on my previous visit, and again this time, that the new buildings often still have “for lease” signs up, and several vacant floors.  Wandering around the city it was not hard to imagine that Christchurch might already have passed “peak starts”, not just for commercial buildings, but for houses as well. Of course, there is years of work still to go –  and some of the questionable vanity projects (convention centre and sports stadium) are not even near commencement –  but it is difficult to envisage that the level of activity goes higher than it has been over the last year or so.  Four to five years on, presumably everyone has a roof over their head, and fewer firms are operating from very unsatisfactory temporary premises.  Housing market pressures look to be easing, and if the early commercial buildings aren’t quickly filled, what prospect for many more starts in the next five years beyond the projects that are already underway?  At an aggregate level, construction sector activity as a share of production GDP ran up very sharply (and much of that was Christchurch), but it has gone sideways or backwards for the last few quarters.

Once again, the Australian resources investment boom, and its aftermath, spring to mind.  With the difference that, vital as it was, the diversion of resources into repairing Christchurch doesn’t leave us with a new large productive sector at the end of it all.