Wellington Mayor continues tradition of blaming markets for government failure

Wellington's mayor, Justin Lester, has blamed 'land bankers' for not building new houses on the undeveloped land they own. The two developers whom Lester has blamed must feel like Dreyfus because there are few clearer cases of blaming the victim. 

New Zealand has some of the most unaffordable housing in the world and Lester is right to identify this as a supply problem. However, the reason for it is primarily our regulatory environment and local government practices. Our Resource Management Act gives local government draconian powers to delay, stop and impose excessive costs on housing development and, in my experience, councils exercise these powers with great zeal, even to the point of deliberately ignoring the law where it favours developers.

No sane businessman would sit on assets that do not generate income when those assets could be put to productive use. Developers do not buy undeveloped land to admire it and every day they do not develop it costs them money in interest charges, rates, etc. They make money only when they sell the developed sections.

Blaming the market for government failure has become a tradition for politicians. The most grievous example was the Global Financial Crisis where bankers were blamed for creating the subprime mortgage market, which was actually mandated by US Government policy. The response from politicians is invariably more regulation, which then creates even worse market distortion and greater failure in a continuing vicious circle. Witness the fact that the US financial sector is even more exposed to high-risk financial instruments today (post Dodd-Frank) than it was at the time of the crash in 2007.

Lester's desire to penalise developers with 'targeted rates and levies' will undoubtedly have the exact opposite effect to that which he desires. It makes one wonder whether he has any knowledge of economics at all because a basic understanding of high school-level economics would tell him that increasing taxes on the supply side just pushes the price curve upwards, thereby increasing prices but decreasing supply. 

I suspect Lester is smart enough to understand this but like most politicians of his ilk, he is wilfully ignorant because he needs a scapegoat to divert attention from the failings of his council in causing the supply-side issues in new housing development.

Cyclists are the Parasites of the Roads

Recently a friend of mine who is an avid cyclist told me he was off to protest outside the Wellington City Council chambers with a bunch of like-minded, two-wheeled self-locomotionists. When I asked him why, he said it was because the Wellington City Council did not provide enough cycleways.

'Let's get this straight,' I said to my friend. 'You don't pay any road user charges or petrol taxes, you don't pay any accident insurance levies and you don't even pay any city rates because you live out of town. And yet you want Wellington City ratepayers like me to provide you with special paved tracks for you and your mates to cycle around the city. Is that correct?'

That's right,' he said with a smirk.

A little while ago I narrowly avoided my vehicle being hit by a cyclist while I was stopped at a pedestrian crossing. The cyclist had broken at least three traffic rules and by doing so had placed himself in the position of having to chose whether to hit an elderly pedestrian on the crossing or my car. It was only my alertness and my very quick reactions in getting my car out of the way that prevented him causing serious injuries either to himself or the pedestrian. My reward for my almost superhuman effort to save him from disaster of his own making was to suffer his verbal abuse. Rest assured, I gave as good as I got.

Let's face it - cyclists are the parasites of the roads. They don't obey any road rules, they are the most discourteous road users, they constantly put themselves in danger and expect motorists to have some sort of six sense to avoid them, and they think the rest of us should be happy to pay for their self-indulgent lifestyle choice. They are the ultimate bludgers.