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Thursday, 9 March 2017

Hone Harawira and Housing

Earlier this evening, the Debating Society hosted a political debate featuring the leaders of several minor parties and some random Chris MPs from National and Labour (okay, Chris Hipkins isn't that random).

Things probably went pretty much how they were expected to go. Turns out most of our MPs are ex-druggies and one wonders how many were lying to be interesting... the question one thinks is begged is: how many have ever smoked? That'd be interesting to know. In any case, apart from one ugly moment where things got out of hand between Harawira and Chris Bishop (the National Chris) it was mostly a civil debate where the participants were good natured and open to discussion (even if we did start late).

Thing is, I cant quite remember how the ugly moment played out. I think it started when Bishop's approach to condemning Harawira's views on housing basically boiled down to "lol, racist". If that's correct, it then took a personal turn (including reference to the infamous Paris trip). Anyway, the housing stuff is what matters (in some sense, being able to recognise MPs is indicative of a failure of party politics and, thus, a failure of government). Sadly, my note taking skills aren't perfect but this is what I wrote with respect to Harawira's approach to Auckland's rents being too high:
  • Make immigrants buy new homes [by which I mean, Harawira means build new homes].
  • Limit speculators to a set number of properties [five was the number mentioned].
  • Tax them properly [so they don't sit on houses].
We can, for completeness, compare Bishop's (earlier) comments (to the same question) which were rambling and "not answery" but we eventually managed to get enough sense out of him that I managed to write:
  • Housing market = failed market... broken system [this was the coherent beginning].
  • RMA supply changes [the eventual sense].
The other parties, in case you think you need to know, basically said "build more houses" although Hipkins trotted out Labour's standard xenophobic-racist spectrum views on speculators and Maramara Fox (Maori) blamed council in part. But the question is (I will, in a forthcoming post, explain why Labour's policy is so) whether or not Harawira's policy really is racist? Was Bishop lazy or did he have some kind of point? I must say that, as ever, ACT (David Seymour) and National had to bear the standard of responsibility in this era. Shame about their other ideas, really. But I digress we are here to discuss Harawira's Three Elements.

User Pays Immigrant Housing

In some ways this is a really old-fashioned model of immigration. Time was you set up a company, bought up some land and then brought over some investors (immigrants) who discovered you sort of hadn't really made clear exactly when and by whom their houses would be built. But that's probably not what we're talking about here, which is a big issue.

However, we do need to fair to Harawira here. The impression I got was that Harawira was sitting there and thinking about the discussion that had already happened. Which is, of course, why he started with something like (not a real quote): "If the problem is 26,000 immigrants, then..." That is, contrary to Bishop's claims, Harawira wasn't really blaming immigrants as such rather he formulated a solution that, in truth, ran wild with the reasons why immigration is a good idea (i..e extra demand = more derived demand = extra jobs = great for everyone) from the assumption someone else had put on the table (the 26,000 thing). Of course, the formulation rather assumes that the issue at heart is immigrants. But, the intellectually honest answer (with the time to think that our friend Bishop due to the medium didn't have) is that if this policy is racist it must be judged for its effects rather than the contextually so explained away origins. What would they be?

Basically, I think this would be a disaster. Immigration is a good thing (see: that nutshell argument). However, what would happen is that you essentially price immigrants out of the picture. This is particularly true if we look at immigrants we kind of have a moral duty to "import" (this is what happens when you go around trying to make your own little NZ Empire in the Pacific... as a dominion of the British Empire)... or, more generally, anyone for whom the "push" matters more than the "pull". New Zealand and Auckland is worse off for the absence of immigrants and we are worse off when we bring in immigrants in ways which don't allow them to be at home in and add to what NZ culture is. If you've ever complained about echo chambers, you have complained about restrictive immigration policies... but did you notice? This is, incidentally, a broader issue with user pays systems and it's why I have characterised the (apparently ad hoc) "policy" as a user pays approach to immigration and housing. Basically, when you institute a user pays approach you raise the costs borne by the individual and thus basically make it very difficult for those of limited means to access, invariably, vital services. This is a problem with how GPs work in NZ.

The thing is the above historical note makes things a bit interesting. We could, in theory, set up some sort of company or entity which people wanting to immigrate to New Zealand could make contributions to. In theory, our entity would be able to do things at scale and would definitely be able to start thinking about building denser living environments. Peter Thiel is one of NZ's most controversial citizens but even those individuals as wealthy as he aren't going to be building the types of housing that we actually want (e.g. tower blocks, terraced homes). That is, if  (and it is a very big if) we assume that immigrants would keep coming in, they'd be building socially undesirable homes of the type vaguely affordable to a single household. So, really, this "solution" would just be exacerbating the problems. Compounding this is that we have developers build their own infrastructure in the first place to induce a modicum of co-ordination to exist. As doing that raises the costs for the new home builder the infrastructure is already built only where we want the houses, which incentivises development aligned with our plans (i.e. co-ordination). Or, at least, that's a theory. And it's a socially and morally responsible conception that Harawira would have us just ignore.

In the final reckoning, then, Harawira's policy is racist because its effect is to remove immigrants. It's not racist for blaming immigrants for the housing crisis because, in the circumstances of tonight's debate, it didn't do that. (If he repeats it tomorrow then Bishop has a point.) It's racist because it's unlikely that the sort of NZ Company style entities required to avoid preclusion of immigration would arise. It's also unlikely to provide an actual solution because it doesn't really build housing... it builds sprawl. But it's critically just one of the three things I noticed Harawira talk about.

Limiting Speculators

Ooh... this one is interesting.

As I understood Harawira, he would restrict both Johnny Foreigner and Citizen Thiel (i.e. citizens) from owning more than, say, five investment properties. He could have meant just a restriction for Johnny Foreigner but I just have a feeling that he didn't, so we'll work with the responsible conception. Citizen Thiel could have been restricted in theory but that would be the most interesting policy ever... giving random people with no connection to the country whatsoever privileges that they'd lose on gaining a political connection is way out of the ordinary. That is, we can ignore that possibility. Anyway, onwards.

Working from our assumption (as described above), the problem I have here is principled on one hand and theoretically practical on the other. As a matter of principle, I am uncomfortable from precluding myself from ever have six investment policies. I don't think it's a good idea, as in socially useful, for myself to ever acquire such a portfolio but I feel like I should have the choice to be bad. You know? And, of course, if I remove the choice, I am going to be removing the incentives to encourage investment in new properties... after all if when I go up to six I get fined or jailed or whatever, I am going to have a lot more uncertainty and caution when I make decisions about how to use my money. That's not a good thing if we want investment money for the right kind of properties. I have to say... I agree with any analysis that suggests it is ultimately more effective to encourage people to do the right thing than it is to hope they do the right thing if we stop them from doing one kind of bad thing. (Probably cheaper too.)

I must note that investors don't know how a property will pan out when they're making their decisions. That is, I've got to be really sure Development 6 will make me more money than any of my five existing developments/properties to go ahead... as I lose the revenue from whichever one I am forced to sell. Do you see how that is a problem?

Taxing Investors Properly

My man.

This, right here, is the way to go. Through working with our tax policies (and regulatory environment... so the RMA does have some part to play here) we're best able to encourage the development of denser housing forms. We're also able to manipulate the economic environment so that flipping houses loses its appeal and leaving properties vacant in the hopes of capital gains becomes unattractive. We want a tax set-up which makes building a block of flats look so damn good that you ignore buying that Double Grammar zone property on the cheap. If this has the side-effect of basically meaning you don't pay taxes if you build such properties... I'm okay with that right now (we can fix it later on once we're not in shortage). It's definitely better than encouraging the perverse fraud perpetrated by our government where your ghost-inhabited investment properties don't generate you income.

Conclusions

Harawira didn't really explain how the tax package would work/what it would look like but that's okay. The main thing, in a debate, is that we see how a party thinks. The specific policy prescriptions, in some sense, come later on. This is one more reason why Bishop ought to have given Harawira some more slack. It is also why I made the distinction between offering the User Pays system tonight and tomorrow. But, most importantly, it is why I have stayed up and written this. It is absolutely critical that I do my bit to try and head off any turn of the debate to areas it shouldn't go. If I don't I make it so much more likely that we create a new normal where it becomes just another thing to make it practically impossible to become a citizen. Just another thing to prevent NZers with permanent residency from being able to participate in their government. Just another thing for the foreign to be construed as the crux of all our ills. Just another thing... And, sure, I've got next to no power... for Christ's sake, I write for a blog that has no readers. But I still have to try. And that, I think, is to end this discussion on the note that Patrick Gower began the debate: we have to trust that our institutions are able to work, which means I have to trust that I have a voice.

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