Speaker: The plan against the rebuild
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Confusopoly, what a great word. All the best with the book launch.
The worst failure of this government, yet they tout it as their great success.
"Rotten to the core" comes to mind when I think of Key &Co. -
Shortly after the September earthquakes, developer Hugh Pavletich argued for the release of more land on the more stable western city fringes. Nothing happened. And, amazingly, neither did anything happen after the February earthquakes.
Pavletich has only himself to blame, though given his highly public disconnect from reality he’ll remain trapped in the ideological bubble for which he happens to be the local franchise.
After 4000+ rallied outside the Council offices in January 2012 to protest then Council CEO Tony Marryatt’s serial extortionism, Pavletich clumsily hijacked the gullible Peter Lynch’s Cantabrians Unite as an attempted stealth vehicle for his crackpot agenda. Despite online threats to Council to put thousands on the streets at short notice, the follow-up rally some weeks later attracted a bare 400.
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"In my view, too many city planners spent far too much of their youths playing _SimCity_,"
This is both amusing and disturbingly close to the truth — especially considering the version of _SimCity_ we had (maybe still have) includes an earthquake hazard.
The point about the best cities being _organic_ in a way _SimCity_ efforts are not is also vital.
It sounds odd but it feels as if New Zealand cities, Christchurch included, are simultaneously over planned and under planned.
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On 11 March 1931 the government appointed magistrate J. S. Barton and engineer L. B. Campbell as commissioners of Napier. Together with local committees they had the daunting task of organising reconstruction.
The rebuild of Napier is the gold standard against which the disaster that is the Canterbury rebuild should be measured. Tin Town was up in running within weeks, not months or years.
But the key was the not the “dictators” Barton and Campbell but their committees. The committees were a) local and b) empowered to make decisions. This government, with it’s arrogance, compulsive autocracy, cronyism and contempt for democracy was only ever going to adopt the the dictatorship part of the Napier model. Napier was rebuilt in two years not because it was a dictatorship of two men, but because those two men were informed by committees of locals who understood local conditions. And remember, the whole thing was done in the great depression.
So what of central government? In keeping with their general economic mismanagement of the great depression the United Reform coalition government of the day, gave only measly assistance (about 1.75 million pounds of the 3.5 million plus required), forcing the local councils to borrow for their rebuilds. Napier was on the verge of bankruptcy in 1938 when a saner central government (Labour) wrote of it’s government loan prompting howls of protest from Hastings, which was not granted the same favour – thus giving Labour a never-to-be-broken grip on the Napier urban vote and creating a feud between the two cities which is still going strong today (SAY NO TO AMALGAMATION!).
The general lesson in this, as it is with most things, is give the locals the tools and let them get on with it. King Gerry and his appointed apparachiks are a disaster for Christchurch.
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or in precis:
Christchurch - Suddenly, nothing happened....Here's a show to watch on Sunday morning TV1
Christchurch: From the StreetsThe first episode of the six-part series airs at 11.30am on TV1 on Sunday.
Each episode has a theme - Where we are at, Affordable Housing, the Arts, Children and Young People, the City Centre and, the Future. -
Joe Wylie, in reply to
King Gerry and his appointed apparachiks are a disaster for Christchurch.
You could add imported apparatchiks. A number of these people commute to their cosy sinecures.
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Excellent essay, Eric!
I've often been struck by a similar thought to that which you express so eloquently here -- that somehow the recovery has managed to find the 'un-sweet' spot between a highly-directed government response (that ploughed ahead with just getting things done) and a totally un-coordinated laissez-faire rebuild. We've somehow managed to enact the worst attributes of both approaches.
Your book of essays sounds like a fantastic idea -- I shall look forward to reading it with interest. Best of luck with the launch!
[BTW: will it be launched anywhere other than Auckland and Wellington? (Like Christchurch, he hints hopefully).]
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Kumara Republic, in reply to
Pavletich has only himself to blame, though given his highly public disconnect from reality he’ll remain trapped in the ideological bubble for which he happens to be the local franchise.
Yep, Pavletich isn’t so much a developer as a speculator, and continues to be a fanboy of Houston’s sprawl model. And even Houston is taking steps to encourage building upwards.
And much of the malaise that Eric Crampton outlines above is attributable to the C-word: cartelisation. Not just insurance co’s dragging the chain, but also vested interests in the property bubble, and the whole political structure involving CERA & CCDU. Applied neo-feudalism if I ever saw it.
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One of the editors of the book, Barnaby Bennett, has written this helpful summary: A voters guide to the Christchurch rebuild for the rest of NZ
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My pick for next word of the year....confusopoly! very apt descriptive word
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Beaut summary of a bloody mess, Eric. I don’t agree with you on many things economic, but you’ve nailed a lot of the elements here.
I think CCC have woken up somewhat under Lianne Dalziel, but not enough. CERA have been a major disappointment. Brownlee – I dunno what he’s been doing. And I should, I live here and take an interest.
We have broken politics to deal with, as well as roads and buildings. It’s bloody frustrating. -
Eric Crampton, in reply to
Thanks! The word I stole from Scott Adams, who used it to explain cell phone pricing plans that make it deliberately difficult to compare things against competitors.
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Eric Crampton, in reply to
Thanks, David. We both missed the Christchurch launch: I'd already moved to Wellington. It was in late August.
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Eric Crampton, in reply to
Hate on Houston all you want, Deep Red, but note that it successfully delivers very affordable housing while making sure the infrastructure costs are borne by the people who live out in the sprawling suburbs. I put more emphasis on also easing up on the height limits and making it easier to increase density than Hugh does, but I don't think he's opposed to also allowing greater densification.
Note too that the true friend of the property speculator ISN'T Hugh Paveltich. Property speculators make bundles by knowing which areas will be scheduled for intensification and buying them up then dribbling them out. Paveltich tends to say, on the edges of town, let anybody develop suburbs anywhere so long as they're willing to front the infrastructure costs via MUDs. It is hard to think of anything that would more quickly destroy the regulatory rents earned by the speculators than a blanket policy allowing development.
Think real hard about mood affiliation, Deep Red. The policies you favour may well be lining the speculators' pockets.
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Eric Crampton, in reply to
Thanks, Rob!
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Moz, in reply to
Paveltich tends to say, on the edges of town, let anybody develop suburbs anywhere so long as they're willing to front the infrastructure costs via MUDs.
I haven't heard him say anything about public transport that could be construed as positive, making the whole "push them out of town" approach to low-cost housing a bit of a disaster. The idea that you can just drop a new suburb in farmland and walk away counting your profits isn't working in the USA right now. A lot of local governments (Paveltich's "suburb owners associations") are either bankrupt or forced to "tax" their poorer residents through the police force they own because the residents with money won't pay. Ferguson is an example of this, notable mainly because it's drawn media attention to a common problem, rather then because it has the problem. Detroit is a larger example of the same problem.
The underlying issue, as I understand it, is that because the whole suburb is built at the same time everything tends to break down at the same time. Roads, water, sewers etc are all designed for 20-30 year lifespans, then they can be run down for another 10-20 years and that time is up. But fixing is expensive, and for the first 30 years it's not popular to tax everyone and build up a giant fund to pay for the infrastructure that's slowly wearing out. For the constructor, and also each resident it's better to get out just as the problems start, leaving the new residents with the problem. In Australia they've recently been forced to bring in laws on the size of the sinking fund for strata (multi-title) buildings to address this issue. In the USA they're letting "the market" sort it out.
So no, let's not build cheap suburbs out past Rolleston then leave the CCC with the bill for supporting them. Either build them properly under the control of the council, or make them genuinely independent enclaves, responsible for everything from sewerage to transport. Real gated communities, in other words. Despite Paveltich's optimism, I predict that if they were built they'd be yet more enclaves of overpriced, covenanted mcmansions.
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Thank god we don't have the nanny state forced on us by the Helen Clark government, think how much worse it would all be in that scenario...
(Yes, irony.)
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Kumara Republic, in reply to
Some salient points there, Eric. But Pavletich and Demographia also conveniently neglect to mention that the very cheapest houses in America also happen to be areas of industrial decline and high crime rates, such as Detroit. Not that I was knocking Houston per se, but just pointing out Houston is evolving with the times, and Pavletich was relying on outdated notions of the big Texan metro.
Closer to home, land-banking remains a sticking point. Putting the infrastructure burden on sprawl dwellers is a nice idea, but ratepayers in AKL being who they are, they'll probably whip out the Dancing Cossacks quicker than Tsar Putin can whip out his hunting knife.
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Pavletich supported me on a debate regarding the relevance of mid- to- high-density housing over at Macrobusiness. The Texas model is extremely important for nzers to be aware of, especially with regards to death by bureaucracy. The risks in NZ are now so precarious because of the housing bubble that people should be concerned, yet they're not.
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Great assessment, Eric, I hope it is recognised everywhere right up to the top in NZ. Hugh Pavletich's intuitions were correct right back when these earthquakes happened, I think he correctly predicted what a total shambles was likely to follow, and that hopefully it would lead to a much-needed revolution in politics in NZ.
I love the term "Tragedy of the Anti-Commons", I never heard that before. Did you see Bob Jones' last Herald column?
http://www.nzherald.co.nz/sir-bob-jones/news/article.cfm?c_id=1503264&objectid=11321027
Sir Bob also wrote some pretty good op-eds on ChCh in the last 3 years. I presume you have them.
Re your "Sim City" analogy, I have been using the term "Second Life Fallacy" for some years, to describe the mental approach many planners have. This relates not just to planners thinking they can order myriads of individuals lives better than those individuals can, but to their absurd belief that the "correct" urban forms as they exist somewhere else already (Hong Kong is always a favourite) can be replicated by planning fiat without any regard to centuries of path-dependent evolution in the local economy and in society itself. I also like to call this the "Cargo Cult" fallacy, and refer them to this video:
You make a very good point here:
".....we have been in the worst of all possible worlds here. A well-run government rebuild would have been better than what we’ve had. An unhampered market approach led by developers and property owners would have been far better than what we’ve had....."
I have become so cynical about Kiwis mistrust of true free markets in urban development, that I have even said that I wish that if they really accept that certain approaches are necessary to save the planet (they elect people like Len Brown and Celia Wade-Brown, after all), then we should go the whole hog and use wholesale compulsory acquisitions and direct government operation in the urban land market, which is the essence of what makes subway systems fiscally viable in HK and Japan. The absence of any sort of advocacy of this nature among the "save the planet" activists, does stink of deliberate service of the vested interests in site rent.
I also recently discovered, after using the term "regulatory givings" for several years on my own insight, that there is in fact a small literature on this subject. The way UGB's and zonings are working tend in our own era to provide regulatory givings. It is all very well to have an Anglo tradition of property rights, but you violate that tradition by withholding the rights of potential competitors in the supply of urban land, to convert its use; and the result is a bad as any Latin "extractive" culture (to use Acemoglu and Robinson's term from "Why Nations Fail").
I am also cynical enough to propose a law at the national level, that a local populace that gives a Mayor and Council a mandate to impose a UGB, immediately automatically forfeit all rights of NIMBY objection to any intensification whatsoever. I say this in the belief that they would come to their senses pretty quickly. We like to think ourselves more sophisticated than the typical red-neck bible-bashin' gun-totin' types in the libertarian-growth US cities, but they worked out decades ago that if you don't want an apartment block in your street, you need to let development happen "somewhere else" where NOBODY's backyard already is. Kiwis are actually stupid enough to think, in contrast, that all the sacrifices will be made by "other people", who will ride the Light Rail and leave the roads clearer for Numero Uno, and who will tolerate apartment blocks in THEIR backyards. DUH!
I will try to make it to your events, tomorrow in Wellington, and on 14 Oct.
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Philip Hayward, in reply to
Earlier, DeepRed, you said "even Houston is taking steps to encourage building upwards".
Actually, in the locations it is happening in Houston, it was never discouraged. Houston has no centrally imposed zoning. All the zoning is by "covenant" or a local form of it. In most of the central commercial district and other commercial nodes, there is no prohibitions at all on building "up".
Houston is indeed building "up" and is well up the rankings of cities globally for number of tall buildings relative to population. But all this building "up" is strictly functional, none of it is forced by "compact city" boundaries necessitating cramming, and none of it is speculative, because in a city with a land rent curve as low and flat as Houston's, it is impossible to lift site rent (in the economic sense of the term) by upzoning.
The many advocates of upzoning and building "up", are 100% wrong that this will restore "affordability" in the face of a UGB imposed at the fringe. Building "up" ONLY lowers "floor rents" in cities like Houston. In fringe-growth-contained cities, "floor rents" remain constant (or rather tend to rise forever), and adding floors increases site rent. This is why the vested interests pushing UGB's always push upzoning as well - their gains are magnified. In a city with a UGB and mandated low density, the price of land per square foot never goes anything like as high. You get unaffordable large-section housing; upzoning merely delivers equally unaffordable housing on whatever smaller size of section is permitted. Housing is approximately the same unaffordability in Boston as it is in Manchester in spite of the fact that the average section size is around 10 times smaller in Manchester. Hong Kong is not density-restricted and is 2.5 times as built "up" as Manhattan is, yet its apartments are smaller on average and cost a lot more.
Ironically, lovers of vibrant inner city living who cannot afford it in a city with a UGB, would be staggered at how cheap apartments and townhouses are in central Houston or indeed any US city that is surrounded by continual free-market fringe growth. Even New York was affordable for decades for this reason - the inhibitions to growth at the VERY expansive urban area fringe have only recently started to really bite, leading to knock-on effects on location value everywhere from there in to the centre of NYC. NYC even now is easily the most affordable "global city", for the simple reason that every other global city does NOT have housing of similar value and standard 30 minutes subway ride away. For example, a standard house in this location in New Jersey would cost something like 1/6 of the equivalent in the London urban area.
Also, businesses "priced out" of Manhattan have plenty of places to go just across the Hudson, or a bit further afield, at a fraction of the rent that ANYTHING in the London urban area would be. One of the best things you can read to get an understanding of urban evolution, is Robert Fishman's "Megalopolis Unbound" (Google it, there is a downloadable Word Doc out there). He points out which industries left city centres first (and indeed some industries commenced "suburban" in the first place), and by the 1970's, it was "offices" that were nevertheless lower down the income scale than the big operators in finance and advertising and law and so on.
Hugh Kelly and Matthew Drennan (2011) “Measuring Urban Agglomeration Economies with Office Rents", could only find evidence of agglomeration effects in the few largest CBD's in the USA (NY, Chicago, SF, Washington and a couple of others). In all other US cities, these effects were indistinguishable from those of the urban area as a whole.
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I agree with almost all of the article. I also think the Houston model can work well for second tier cities such as Christchurch. However, I also think there are limits to its applicability. Houston just didn't feel like a great city when I was there and all my co-workers (who were all transplanted from elsewhere) hated living there because they didn't like it as a city. Whereas Paris by contrast has great aesthetics and that happened because Haussmann was a genius and imposed taste on the developers. We can't clone Haussmann, but we can note that visual coherence can make people feel better about living in cities.
So yes, ditch the planners by all means, but at the start of the process get developers, public officials and architects (probably including some international firms, to challenge the status quo) to agree a design language appropriate to a city's history and values and maybe a transect with a rough guide as to the density gradient from CBD to outer suburbs. Keep a presumption in favour of a right to build but allow the combined body the right to veto developments that were violently offensive to the design book. In return get rid of zoning, height limits, urban growth boundaries and "heritage" listing.
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Kumara Republic, in reply to
The risks in NZ are now so precarious because of the housing bubble that people should be concerned, yet they're not.
The problem is the NZ housing bubble has become our equivalent of G7 farm subsidies - long overdue for reform, but vested interests are too powerful for anyone to touch it.
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Kumara Republic, in reply to
So yes, ditch the planners by all means, but at the start of the process get developers, public officials and architects (probably including some international firms, to challenge the status quo) to agree a design language appropriate to a city's history and values and maybe a transect with a rough guide as to the density gradient from CBD to outer suburbs. Keep a presumption in favour of a right to build but allow the combined body the right to veto developments that were violently offensive to the design book. In return get rid of zoning, height limits, urban growth boundaries and "heritage" listing.
David Parker put it best...
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Philip Hayward, in reply to
DeepRed, I agree with you that NZ's house price bubble has vested interests that make it impossible to do effective reform. The foremost manifestation of this is the never-ending fabricated opposition to effective reform of urban land supply regulations.
The smart people in the vested interests, which includes the finance sector, KNOW that this is what would work, which is why it is the thing politicians are most scared of doing.
The longer that growth-containment policies are pursued, the more people become hostages to the racket. Developers are the first, because every site they own for work in progress and future developments, has cost them around 10 times too much. Developers are often blamed for "land banking", but in fact it is seldom developers themselves who are reaping the capital gains on land holdings - generally it is the vendors they are having to buy sites off simply to stay in business.
Hugh Pavletich is a rare example of a developer who got out of the business rather than become a hostage and possibly go bust in the inevitable downturn. Bear in mind that the volatility in SITE values is many times higher than the volatility in "house prices". NZ experienced a 15% decline in real house prices in 2007 and 2008, and numerous developers went bust, and the epidemic of finance companies going bust was related closely to the finance of SITES. When "house prices fall 15%", that means that SITES have more than halved in "value".
The UK, after several decades of this nonsense, illustrates how entrenched the vested interests become. When housing is systemically unaffordable even with an average section size of 1/16 of an acre, and urban land prices per square foot are HUNDREDS of times higher than benchmark non-growth-contained cities, reform would mean far greater price collapses and losses of "equity" by literally everyone, than reform in a country like NZ that is young to the price inflation. There is of course NO-ONE in the UK who is old enough to have got on the home ownership ladder when land prices were sensible, so EVERYONE is a hostage to the racket, not just those who bought since 2000.
David Parker needs to wise up about the difference between free market fringe greenfields land supply, and over-riding of LOCAL unanimously agreed-upon covenants. Free markets mean affordability, regardless of how many local communities adopt covenants to preserve their local wishes re the form of their community. This is still "the free market". Every median-multiple-3 city in the Demographia reports (which are also stable markets that do not bubble and bust), has plenty of covenanted low-density suburbs, and this has no effect on the median multiple, which remains stuck at around 3.
Glaeser, Ward and Schuetz (2006) did manage to calculate that every additional 1/4 acre of lot size mandated, increased the end price of the housing by 4%.
FOUR PERCENT. Bring on the violins. We are talking about markets being inflated 100% + no matter how much smaller their "housing" gets. The single determinant of whether a housing market will be affordable or not, is the freedom to convert land from other uses, to housing, of POTENTIALLY super-abundant quantities.
I don't dismiss the possibility that David Parker and some of his colleagues are capable of understanding all this (in fact I know some of the Labour people are reasonably sound). But generally the further you go to the "red/green" end of the political spectrum, the less basic economic intuition and ability to interpret real life outcomes, you will find there. The smarter people in Labour are probably secretly horrified at the mess they will be held responsible for should they end up in a coalition government with policy dictated by loony Greens and Mana-Internet types (and even the leftier members of their own caucus). I credit Shane Jones with being one of these smarter ones.
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