Housing, financial stability etc – LEANZ seminar 25 June

About the time, back in April, when I posted some comments on Grant Spencer’s speech on housing LEANZ invited me to speak at one of their Wellington seminars, next Thursday 25 June.

LEANZ is an organisation dedicated to the advancement in New Zealand of the understanding of law and economics. It provides a forum for the exchange of information, analysis and ideas amongst those with an interest in this form of analysis. That interest may be practical (for example, the field of law and economics is very relevant to many aspects of the practice of law, public policy and consultancy), or it may be more academic.

“Nowhere is the baneful effect of the division into specialisms more evident than in … economics and law … the rules of just conduct which the lawyer studies serve a kind of order the character of which the lawyer is largely ignorant; this order is studied chiefly by the economist who in turn is similarly ignorant of the character of the rules of just conduct on which the order he studies rests.” F A Hayek Law, Legislation and Liberty Vol I, pp 4-5. LEANZ hopes to work to bridge this divide.

This is the topic blurb I gave them some time ago –  by the look of it, written before the new lending restrictions proposed in the May FSR

House prices, especially in Auckland, have become increasingly unaffordable. This is largely the outcome of the collision between two sets of public policies: restrictions on land use which impede new housing supply, and high target levels of inward migration of non-citizens.  One or other policy might make sense, but the combination has very adverse effects on the younger and poorer elements of the population of our largest city.  It is a real phenomenon rather than a financial one, and the pressures can only be sustainably alleviated by government action in these policy areas.  The Reserve Bank appears to have taken on itself some responsibility for trying to manage house price fluctuations.  However, the Bank’s involvement appears to be based on a misconception of what is going on, and a misapplication of insights from financial crises abroad, notably that in the United States last decade. There is little or no evidence that financial stability in New Zealand is in any way threatened.  The LVR restrictions –  and others the Bank appears to be contemplating – undermine the efficiency of the financial system.  They may also be slightly impairing its soundness.  Parliament should be asking harder questions about whether such uses of regulatory powers, especially by a single unelected official, are appropriate.

LEANZ tell me that all are welcome to attend –  there is no obligation to become a member first, although I’m sure they would also be happy to have a few more paid-up members.   Details of the event are here.

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