A fly on the wall of the 9th floor - 2021.

PM: Granters, we simply Have to Do Something about these house prices. 19% in a year, and much more in some provincial localities. This is gonna Cost us if we don't handle it. What can we Do?

FM: Well, to be perfectly Francis, Jace, you haven't helped the cause by saying out loud that house prices should Keep Going Up. I mean, talk about Mixed Messages. We are gonna try to dampen demand - after all, with fewer immigrants and students, there should be a bit of wiggle room.

PM: But honestly, less demand by whatever method you dredge up, is surely gonna hurt those least able to climb aboard the Property Rocket - I mean, get themselves into an Affordable First Home. Making the minimum deposit Higher strikes directly at them, doesn't it?

FM: Well, yes, but it's more intended for those Awful Speculators, and the banks seem to have taken that to heart already. We are having a little difficulty defining 'speculator'. But I've got the IRS trawling the books, and a team looking through CCTV footage to see who owns those Teslas and Ferraris - there's gotta be some dirty money there. Fingering unloved Rich Pricks always goes down well in the cheap seats - I mean - with our valued Electors.

PM: But all that's gonna take Absolutely Ages, Granters. I've got FHB's besieging most of our Auckland electoral offices, and there's even talk of a Hikoi of the Dispossessed. That's Bad Optics, I need not Remind you. These poor folk need answers Now, else it's another Previa for the next accommodation option. And there's talk, now that the RMA is gonna get trisected, about Councils, their crazy Land policies, and their effects on pricing by causing 'artificial scarcity' - whatever That means. Gosh, having queues outside offices is one thing, but having 70-odd Councils, their elected Councillors and their Staff, all up in arms because we are evidently gonna cut their lucrative Consent, Planning, Inspection and whatever rackets - I mean - Services Revenues, down to size, is altogether another. Can't we promise them some of the Magic Money Tree fruit? Heck, look what it did for He Who Must Not Be Named, while the PGF money tap was flowing. Give them a slice of GST? Make it no GST on Rates? Anything? Granters, you've gone white. Are you OK?

FM: Jace, Jace, Jace. There are many threads to weave here, and the whole sorry mess can't be solved in a day, a year or even a Term. Oh, now You've gone white. Join the club.

Massive violence - the solution to 'Inequality'

It's worth slogging yer way through Scheidel's 'The Great Leveller'. Contra to the simplistic strain running through so many comments on economics, which boils down to a Utopian wish for 'policies to reverse inequality', Scheidel's magisterial survey of inequality across several millennia shows two aspects clearly:

1. Inequality is baked into agrarian (and its later variants including industrial and post-industrial) existence. The need to harvest, store, allocate and secure grains means, even in simple societal arrangements, that there is great opportunity to clip tickets and enrich elites at every step of the chain. So and invariably, societies develop priestly, ruling, military and other top-of-the-tree layers which then and equally invariably, oppress all beneath them. Millennia of histories, in his scholarly account, attest to this.
2. The only episodes which stop or significantly reverse this trend, are inherently violent. Mass-mobilisation wars, catastrophic pandemics, transformative revolutions, and state collapse are the Four Horsemen - the Great Levellers. Period.
   Finally, and if one was to take seriously the 'population overshoot' espoused by some commenters as the Root of our current Condition, it really just depends on one's tolerance for high body counts.......which Horse to back....
   From the blurb:

   Are mass violence and catastrophes the only forces that can seriously decrease economic inequality? To judge by thousands of years of history, the answer is yes. Tracing the global history of inequality from the Stone Age to today, Walter Scheidel shows that it never dies peacefully. The Great Leveler is the first book to chart the crucial role of violent shocks in reducing inequality over the full sweep of human history around the world. The “Four Horsemen” of leveling―mass-mobilization warfare, transformative revolutions, state collapse, and catastrophic plagues―have repeatedly destroyed the fortunes of the rich. Today, the violence that reduced inequality in the past seems to have diminished, and that is a good thing. But it casts serious doubt on the prospects for a more equal future.

Pike River - a fatally flawed design mandated by Gubmint

Pike River was at base a Gubmint-enforced faulty design, and any regulatory 'failure' was well downstream of that.

1. The seam at PRCC sloped upwards, through known-to-be-gassy coal (it's substantially the same as coal found at Brunner and Strongman - both famous historic disasters).
2. This should have placed a very high design emphasis on excellent mine ventilation.
3. DoC controls both the surface over the seam (Conservation land) and the outcropping face of the seam (the escarpment is in Paparoa National Park).
4. A sensible ventilation plan would have been to allow either or both of vertical vents up to surface through overburden, and vents right along the top of the seam straight out to the escarpment. Both would be natural ventilation (methane is lighter than air, and both sets of vents would vent up). As mine roads were driven, they could have been vented up and out, with less mechanical assistance needed and much greater margins of safety.
5. DoC would allow only one vent hole in its precious Conservation Estate, and would not even consider a vent on the escarpment above the seam.
6. The one vent allowed was at the lowest point of the coal seam (the least likely place to accumulate and vent methane without yuge mechanical assistance).
7. This was an inherently flawed design (the Royal Commission could find only one other similar design across the globe, and IIRC That went Boom, too)
8. It was, in short, an accident waiting to happen, from a design forced by Gubmint intransigence to be fatally deficient.
9. To be sure, mine management failures were also there. But managing a lemon tends to produce a bitter result regardless.

Machinery Training in the olden days

I look back on my machine-operator training: operating dozers, loaders, scrapers, graders, rollers, crusher plants, excavators, rock quarry blasting, and of course trucks. Total training for any one of these was less than a day. It was always a case of - get 'er rolling and don't Break it'...

Most such operations depend much more on muscle memory and a feeling for machinery, than any amount of theory. Simulators like the Caterpillar series do help with the muscle memory, but not much with the practicalities - like a tracked machine can slide sickeningly down-slope if walked across it sideways in the wet.....

Not much help now, because you need two years in an Approved Training Establishment and a piece of paper to even climb aboard an actual live machine....
My total 'test' for all of F/R/W/T classes was driving an ancient Cat D6 in a figure 8 in front of a country cop in 1971. Total elapsed testing time 2 minutes. No test at all for wheeled loaders (Cat 922 and Hough 65), no test for rollers (numerous), graders (Cat 112 and Champion D686). No license to run quarry plant (jaw and gyratory crushers, hammer mill, gensets to power all electrics). No license to run rock drills and place explosives. No RMA to doze up gravel, walking an International TD24 back and forth through the middle of the Hurunui river.

No kidding, there was simply zero environmental oversight or thought given. That's one reason why the 'old MoW' and assorted contractors of the era seemed so productive.....

Old-style Gubmint versus the current risk-averse, high-cost model

An Interest commenter avers that in the olden days, if the Gubmint got involved, Things got Done, referring to my exploits on the Cat D7 in Invercargill..

My rejoinder:
- No TLA DC's or Modest Fees. 
- No Worksafe (the old D7 was sans muffler, hearing protection unknown). 
- No Traffic Management (I walked the D7 all over public roads on planks and traffic had to take its chance). 
- No site inspectors (I once had the scraper fall sideways off of a 7m high stockpile because some eejit on a loader had excavated the side of the thing unbeknownst to me, and had an exciting hour maneuvering dozer and scraper to the point where I could back the entire rig straight down the side and off the heap). 

It was a much less regulation-mad, low-key Gubmint. Zero comparison with the risk-averse, safety-mad, high-cost model one sees everywhere now. And then folks gape in wonderment at plot prices that are in Buzz Lightyear territory....

Muddling through the Transition

Opening up means asking - to who, under what conditions. Most comments are simply tribal reflexive so far: red/blue, prepper/unprepared, subsistence existence/urban luxury, quasi-religious incantationists/full-on science. None of that is frankly very useful.

Some heretical thoughts:

• We know what we can Export but there's not much notion of How long-term. If FF is goneburger or too unstable, we may need to swallow our principles and think about a nuclear-propelled shipping service (maybe shared with Oz, which has plenty of U). Air freight may be a stop-gap but obviously cannot handle thousands of tonnes a week....and electric planes are a science fiction proposition for long-haul. City-hops, maybe.
• We need plenty of imports of raw materials or finished goods we simply cannot easily get ourselves: most metals, cotton, rice, sugar are examples of the former; chips, capacitors, tractors, trucks, machine tools, locomotives of the latter. Again, Oz is the obvious partner here.
• Few commenters including Goldsmith of the article and many on this august site, have much idea about how to preserve social cohesion and at the same time have some progress towards a new configuration during the transition that is a'comin' down the pike. It's simply ridiculous to expect the laid-off media types to 'learn to code', the tourist-trap woikers to light out for the nearest subsistence farm, the teeming masses of South Auckland and Northland to be Educated quickly or value-added enough to become SME entrepreneurs, the youngsters in the meshes of what passes for Education to look forward to - well - anything much in their fondly hoped-for future. We'll frankly be lucky to see a fraction of any of this, and disconnection does tend to lead to social unrest if history is any guide. Yet cohere, somehow, we must.
• No-one has much of a way through any of this. The talking-down we endure from the Covid Crew is one pole to be avoided, as are the Sermons from the Mount from those convinced that the way that works for their tiny fiefdom, is The Way, the Truth and the Life we must henceforth all Obey, at the other pole. As always, muddling through some sort of emergent middle is what we'll end up doing, assuming the centre holds. If it doesn't, look out below. In these circumstances, philosophers are far more useful than the Experts and the Zealots. Leonard Cohen became an advocate for 'Love is the only engine of survival' in his songs and life, and Alain de Botton, via a long series of books about How to Live in our fractured times, are two I recommend.

We should always demand that local government runs the ruler across all spending - article rejoinder

As a former (pre-1989, so old-world, prudent-rural-Council) LG Treasurer (no fancy CFO titles back then) I have been quietly appalled at the way in which staff have usurped Councillors.

Part is structural: Councils employ a CEO, who then employs all other staff. So there's an instant disconnect. Councillors tend to be actively discouraged from interacting with staff ('Policy, not execution', 'Governance, not Management' tend to be the shibboleths).

Part is the 'argument from authority' - a fallacy which nevertheless traps many a Councillor into a place whence no real push-back against even plainly loopy staff initiatives is possible.

Part is Council groupthink, especially when essentially tribal voting blocks have propelled 'their' councillors into the fray and proceed as if the 'others' are anathematized.

And part is the huge information and power disparity between staff, and the councillors, committees and especially the public. Taking on City Hall is a losing proposition, so most simply don't bother.

Staff attitudes to councillors can be summed up as 'vote-hungry show ponies around a very distant table'. Who can be and thus all too often are ignored. Calling for 'a staff report' is a recipe for getting handed 'what the staff always wanted', but suitably obfuscated so as to survive the limp surveillance of Der Public, and the occasional inquisition from the latest unpaid intern reporter in a local tabloid.

Against this background, and the 'four well-beings' power of general competence (Sec 10(2) LG Act 2002) it is only to be expected that there is little to no hope of effectively managing increases in Council spend, let alone reducing it. Bureaucracies are remunerated by numbers of staff managed - a built-in growth incentive. It simply hasn't occurred to any of them that there might be Limits to Growth. Or that (as in the older models) significant pools of expertise lie outside the staff echelons, can be tapped for free via committees and co-options, and can thus serve the dual purposes of keeping community connections, and deepening the intellectual horsepower brought to discussions.

So the article's fond hope that "We should always demand that local government runs the ruler across all spending" is quite impracticable, and has been increasingly so for three decades. We are all strapped to the Rates Rocket, every year the uplift increases, and few of us have any trust left in the edifice it's funding.

Maybe the WuHuFlu might be a circuit-breaker in this dismal progression. Maybe the engineers and other unexcitable types on staff might club together and persuade the Event Managers, Tourism Promoters, Community Engagement Fluffballs, and all the rest of the 'Social and Cultural Well-being' parasites, to gracefully yield their comfortable, secure and marginally useful positions in order to fund the unexciting requirements like sewer replacements, well-head securing, bridge strengthening, and public building earthquake-hardening.

But I wouldn't bet the rating tax base on That happening in my remaining lifetime.....

As with the DHB's I think there may well be a Great Reset of the number and distribution of authorities - Councils, Regional's etc. It's simply nuts to have small authorities, each with their own fiercely guarded C-suite, systems, Plans etc - all somewhat inconsistent with each other (District Plans....) - all claiming to be Diffrunt, Speshull, and thus entitled to defend their fiefdoms until Kingdom Come. Whereas in the commercial space, large verticals and franchises tend to have a single shared or multi-tenanted set of systems, extensive supply-chain links via EDI, superb logistics etc. I did some work for a well-known retailer a decade ago, and at that stage, they were doing a weekly forecast of sales for every SKU (around 10,000) in every product category across 100 stores, 3 countries and 3 currencies, complete with expected delivery dates from logistics, landed costs, margin, and local RRP. Councils and DHB's may be able to approach this sort of performance in the best examples, but I suspect the majority are still emailing Excel workbooks around.

One of the saddest aspects of the post-1989 TLA environment is the complete shutting-out of ordinary folks from the business of maintaining their own tiny pieces of the puzzle. In a former life, as well as being a Councillor on the Otautau (pop 3,000) Town Council, I was on the roster of volunteers who ran the local swimming pool. As a County Treasurer, I attended numerous meetings of committees for Water Races, Reserves, Halls as well as the usual Council committees and sub-committees. These all served the dual purpose I outlined above: keeping strong roots in the communities they served, and adding on-the-ground expertise and voices. Nothing like this now exists, and one obvious result is the complete disconnect between the behemoth Councils and the populations they serve. It doesn't take degrees in horticulture to maintain a local garden, keep a local reserve mowed, trees trimmed etc. 

Time for a re-connection.

The 'economy' is not a Machine, but an Anthill (sort of)

A common failing is to think of the economy as a machine, which is subject to controls - levers and dials - which can be twiddled or pulled with well-understood results.

It simply isn't. What we characterize as an 'economy' is the aggregate result of millions of transactions between individuals, firms, 'little platoons' (the plethora of voluntary and uncommanded associations that folks generate), Governments, localities, resources, and other countries.

While some of this is counted, regulated and observable, much isn't. Ideas, innovation, tinkering, and thinking have generated most prosperity that we now enjoy, and much of That went completely unrecognised until it erupted (disrupted?) into the counted 'economy'.

That also makes a nonsense of the notion that 'economies can be re-constructed' as though they are a building, a dam, or an object with a BOM. To the extent that analogies work, economies are closer to an anthill (cubed) than to a machine. And there's no recipe for 'constructing an anthill' because there's no central intelligence, let alone central planning, involved. There's a bunch of ants....This is neatly laid out in Steven Johnson's 'Emergence'.

So Treasury and the other entrail-readers have no way of seeing or modelling aspects such as:

1. The possibility that older, skilled workers and business owners simply take a very long or permanent sabbatical. They've gotten used to a world where suddenly they are not beholden to customers, IRD, MBIE, Worksafe, TLA's and all the other overheads, and they may have discovered that they quite like it. That puts quite a dent in aspects like apprenticeships (who will mentor 'em?), productivity, niche products or raw materials, and other activities that are deep down in the BOM.
2. The possibility that actually-but-not-immediately-essential services or businesses have been so damaged that they won't re-start, or are sold on at fire-sale prices to new owners who take years to achieve the same levels of output or productivity. Either way, there's a big dip in the offing.

• Part of any reconfiguration (itself a bottom-up process) will lie in choice of trading partners. China has shat in its own nest via deceit, delays and imperial moves; so there will be a tense time as NZ still exports food to them, while at the same time gently disengages imports to some extent, and that as the aggregate choices of thousands of individuals and businesses rather than Gubmint fiat.

A lot of water to go under This bridge. Final word from Richard Fernandez: the most likely result of all of this will be systems run for the benefit of their componentry, rather than for the maximal optimisation overall. And globalism-compatible, not globalism-dependent. The title: Planning the Great Escape from House Arrest, and from Communist China.

Councils, CEO and Staff - once again, I wearily explain their relationships

This was a response to a comment which confessed that 'As voters we are failing'.  My reply:  No, don't be too hard on yourself (and by extension, on the rest of us Ratepayers strapped to this Rates Rocket).

• Voters only vote for Councillors.
• Councillors have only one Employee - the CEO.
• The CEO employs everyone else.

So all staff under the CEO actually are insulated totally from the Councillors. To staff, Councillors are a set of buffoons around a very distant table.

So staff are perfectly free to pursue their own aims and objectives and higher budgets, to the extent that these fly under the CEO's radar. And render 'reports' up through the CEO to the Council which lead to largely pre-determined policy positions which, quelle surprise, support those very same aims, objectives, and those safe and comfortable staff lives......

Covid and Councils

Well, we're not gonna need Conference Centres for a while either. And as several Councils have declared themselves to be in a Climate Emergency, they won't be needing:

1. those divvies from the airport companies (who just facilitate Nasty Emissions)
2. Tourism and business development agencies (neither is gonna come roaring back in the next year or three, so just fire 'em all)
3. Rates penalties set at 10% (when fer gosh sakes, even IRD's UOMI is 8.35% and even that's usurious when OCR is 0.25%)
4. Festivals, buskers, events and other Covid-Cluster-Generators
5. 4WD's and SUV's for Council staff who never get off the seal - buy 'em e-bikes with trailers

This Emergency could turn out to be Quite the Tipping-point for Councils....bring popcorn.

Define 'essential'

The Gubmint's definition of 'essential services' (tucked inside the Covid19 Levels blurb here) includes the airy statement 'including their supply chains'.

This raises the eternal question of exactly what constitutes 'essential' parts of a 'supply chain'.

E.g. the 3-waters functions of TLA's are certainly Essential. But suppose a water main blows (we've had four instances in our street over the space of 18 months). That'll need a digger, a tip-truck at minimum. One of them blows a hydraulic hose. That needs the Hose Guy to roll his truck and fix it. So he's Essential too. The Hose Guy gets a flattie on the way to or from the fix, that needs the Tyre Guy to either roll his truck, or stay open. So the Tyre Guy's Essential too.

You can by now discern where this is going. Just how far down the 'Supply Chain'/Bill of Materials does the Essential designation flow? And how to give certainty to the Hose, Tyre, Parts, Mechanics etc firms as to how Essential they are?

The Reverse-Bill-of-Materials conundrum

This is a reverse-bill-of-materials moment for the economy. A BOM is usually intended to show what one needs to Build something, and often a BOM is largely composed of many 'kits' - sub-assemblies, and that recursion can go many layers down to arrive at the ultimate content. That's what makes such a nonsense of trying to, for example, derive a 'carbon footprint' for a finished product of any complexity - too many ultimate components and thus far too many assumptions needed.

A dis-assembling economy. OTOH, crucially has no BOM's which specify the componentry which will ultimately be affected. So the unravelling of entire sectors (events, festivals, tourism) is inherently unable to be predicted in the precision needed to direct remediable action or arrange substitutions.

That's what makes this whole thing so not-amenable to ordinary economic modelling. Because BOM's only work during Assembly, not for Demolition. Hence the headless-chicken circling seen from prognosticators of all stripes, and from not a few commenters right here on Interest.....

As a thought experiment, imagine an AirNZ engineer, a barista, and an RE salesbot (sorry, Personage). 

1. The engineer has two mortgages, two cars on HP, an overdraft and significant CC debt, but owns two residential rentals and is now jobless. 
2. The barista has zero mortgage and moderate CC debt, but a student loan and a small overdraft - little to no other assets beyond a motorscooter, and her boss has just announced a 3-day week. 
3. The RE bot has a thumping mortgage, no rentals, a large Amex balance, two leased vehicles and a few other toys/assets, and the firm has just cut the commission rate by 50%. 

Now, kindly predict the economic effects of this small sample's situation. Then multiply that by a million.....

And here's the real kicker. It's far, far easier to Demolish than to Build.....

A Tale of Two Gabbys

Gabby Hakoops, esteemed slack-key guitarist to the King of Diamonds, stood before the Witchsmeller Pursuivant, accused of playing Gabby Faure's 'After the Dream' instead of the programmed 'Ride of the Valkyries' at a recent State Banquet for the Queen of Hearts.

Hakoops averred that the sheet music was, in his words, 'Pukaroo', that it had been safely stored in a Music Shack with a locked, strong - albeit somewhat rusty yet still impressive - iron front door with many Big Bolts, that Dark Forces in the Land were to blame, and then referred the matter to the Grand Inquisitor.

The latter had returned after a fifteen-second Conflab with his minions, stated that no Dark Forces were involved, and that he 'does not appreciate Frivolous Litigation and can he please have another Inquisition Chamber, as he is perennially Under-Resourced'. He was also heard, sotto voce, to complain that he had not been invited to the State Banquet.

The MinionQuisitors have revealed that, after failing to open the Music Shack's front door despite many repeated attempts to hammer out the weakest-looking Rusty Bolt, they thought to try the Back door. This was not only wide open, but seemed never to have had locks or, indeed, Hinges. They concluded that Starveling Waifs, who may have included a noted Cellist in their number - or perhaps all were wearing Stillettos - to judge by the marks on the floor, may have conducted a rehearsal for a Symphony, which included Gabby Faure's piece, and had left behind the 'After the Dream' music. This was, in their summation, then picked up by the esteemed, but perhaps short-sighted, Hakoops, who then faithfully rendered it in mellifluous slack-key fingerings, to the assembled multitudes at the State Banquet.

As the theme of the Banquet was to have been 'Victory and Livery' - hence the Wagner on the playlist - the rendition of 'After the Dream' completely spoiled the occasion. Not only was the King of Diamonds mortified, but the Queen of Hearts had to endure a mild Inquisition after the Witchsmeller Pursuivant was summoned and immediately smelt Something Fishy. She, we are informed, was Not Amused.

Hakoops has been sentenced to a long gig in a Folk Band in a far-off land over the Edge of the Earth. He departs on the morrow. The Music Shack is currently the subject of demolition and re-build, hopefully, this time, with only one entry, and with code-compliant, non-rusty, Big Bolts. But, being as how it's being rebuilt by the very Minions who assembled the Last Shack, and despite including the very Latest Technology, we are reliably informed that Dark Forces, via the Afeared Five-Eyed Raven, are this very minute Watching and Waiting.....

The mathematical futility of long-term climate projections

The entire climate-prediction edifice as currently promoted, is founded on quicksand, as time-series research at LSE demonstrates - the Hawkmoth Effect rules. The issue comes down to several Inconvenient Modelling Facts:

• Complex systems do not generally have the mathematical property of Structural stability. This leads to quite different projections, using the same initial conditions, even if two models differ to a minute degree - the poster at the link graphically illustrates this.
• Models used for projections simplify real phyical processes (for tractability) and make assumptions (for tuning) - both of which cause structural inadequacy by incomplete description of the phenomena being modeled.
• Turbulent/chaotic systems are pointless to model over long time series if accurate projections are expected: each time-slice depends on the output of the former slice as initial conditions and projections thus rapidly depart from sensible physical-result boundaries as model-time progresses
• The real physical world, as best can be gleaned from observation of history, has close-to-absolute boundaries on temperature = +/- 2-3 degrees Centigrade, and two dominant Attractors: Ice Age and InterGlacial. There have been more than enough long-tail (extremely low- probability) perturbations in the past (vulcanism, comet strikes) to supply a record of any vast excursions from these boundaries. The bounds seem to hold, regardless
• The 'Escape from Model-land' LSE paper suggests that consistency with the past, use of long-tail (very low probability) inputs and expert judgement as to model applicability and utility in the first place, is the only way out of Model-Land
• "The utility and decision-relevance of these model simulations must be judged based on consistency with the past, and out-of-sample predictive performance and expert judgement, never based solely on the plausibility of their underlying principles or on the visual “realism” of outputs."

The two turbulent/chaotic systems which climateers attempt to model are, of course, Atmosphere and Ocean. 

Essentially, they are trying to predict the weather on 27 March, 2119, when predicting the weather on 27 April 2019 is clearly a nonsense: a coin-toss or a dartboard are more useful Models. Next weekend's weather - a reasonable prediction is likely. Tomorrow - the prediction will be close to spot-on. 

Models are always wrong, but mostly they are Useful.....except for the Far Future.  Mathematics rules.

Zoning Causes Commutes

 "We must strive to provide employment close to where people live” Parfitt (of Auckland Council) says. “Long commutes place a huge, unproductive strain on both people's quality of life and our transport infrastructure."

Well, the Plannerz insist on separating all sorts of uses by zonerating to the nth degree. No longer can the shopkeeper live in the flat above the store, the temporary construction crew live in a donga at the latest site, the mechanic trade from a three-bay garage at home, or the budding fashion designer sew and trade from the spare bedroom.

Well, at least not legally. In practice, good neighbours, high fences and quiet work habits mean that all this and more activity is happening anyway: people simply can't be arsed dealing with the Clueless Councils and their minionz.

Planning which enforces separation of uses causes Commuting. It's as sad and as simple as that. The RMA was designed to handle incompatible uses by examination of Effects. This doesn't need spatial Zoning to be present, but the Town and Country Planning Actorz simply could not conceive of a future without squiggles on maps.

So here we sit, locked into spatial use-mandates created by unelected bureaucrats, in our cars, mostly at idle, as we transport ourselves, slowly and expensively, to our Place of Work......

Tertiary Funding

In answer to a question about why SIT needs an Auckland branch...

The zero fees model (I was there at the inception) depended on the original bums-on-seats EFTS funding: mo' Bums, Mo' Munny. It's easy to see that, with the injection of an initial capital sum to enable the show to get through the first year or three, the EFTS funding would let it wash its face thereafter provided sufficient bums - er - students - were garnered. The funding came from the community (Mayor Tim had a hand in that), the students came - good advertising, tight cost control and well-delivered courses, and the rest is history. The students, needless to say, came at the expense of competing institutions. And the Auckland branch? It's the same reason as banks used to get robbed - it;s where the Munny (students, carting student per-EFTS funding like little dollar balloons over their heads) is/are.

Of course, it was a classic first-mover-advantage - er - Move. It could not easily be replicated, not least because there were no other tightly knit communities like Southland, prepared to stump up the millions needed to get over that initial hill.

But that explains the Auckland branch.

Oh, and the Management. Well, SIT never got itself embroiled in the wilder reaches of Credential Mania. Unlike, say, Aoraki, which at one point had a Diploma in Aromatherapy on the course list....... never lasted (the course or the institution).....pity the suckers students who Believed....and then Enrolled. Because if yer didn't, ye'd be Larfing yer head off....

A Fly on the Wall of the 9th floor...

An imagined Fly-on-the-wall conversation:  The PM and the FM.

PM:  Granters, I've just come back from talking to those Teachers.  Can't we shake that Money Tree you have, and give them a few raises?  I mean, who's gonna edumicate little Neve if the teachers cannot afford houses in Auckland?  And I'm sure as heck not gonna Buy in Wellers....

FM:  Jace, Jace, Jace.  I'm none too sure it was a brilliant move to munge your schedule and go talk to them in the first place.  Neve, teaching, you've been reading those Signs, haven't you.  You know a good chunk of them were painted by Children at Art period - I've already had Ian LG chewing my ear about Child Labour.  And as for schoolkids being paraded about the streets with signs - I know it is supported by a few Parents but the optics - oh, dear, it really does seem like Child Abuse...You of all people have gotta parrot the Party Line - we cannot fix Nine Long Years of Neglect in a single term oops I mean year.  And I've just had to spend a quarter of a billion on more freakin' Trees, to keep He Who Must Not Be Named away from our throats (golly, that man makes me Quake).

PM:  But Granty-poo, if there's that much in kitty that we can shell out scads of it out to Vol - I mean, you know who - then everyone in the queue - Teachers, Tertiary, Police, Defence, and I'm told MBIE and IRD although I must confess not to have noticed - they went Out too, or something? - where was I, oh yes, everyone in the queue, which seems to be growing daily, can See the dosh getting spread around and I sense that they are getting that FOMO thing - they are worried that the cupboard might be bare soon, and so they wanna get in Now, and with Big Percentages.  Oh, Grant, what are we gonna do?

FM:  Well, we have got the Cullen Tax Grab - I mean, the TWG - working away in the background, and perhaps we could advance the pace a little there.  Don't let this get outside the room, but the TWG is basically a Rich Prick's Squeeze, and all he, I mean They - haveta do is to get the definition of the RP's down low enough that we'll have a few more tens of billions.  Let me have a quiet word.  But please, for Financial Prudence' sake, don't go addressing howling mobs of tax-funded employees.  That's what Unions are for....

Gubmint tax-funded balm tor spiritual cancer

Contra to Jason's article wherein a weary acceptance of MMP is argued for,  it needs to be recalled that Godzone has no Constitution (unlike the US and Britain), no Upper House to allow measured reflection on legislation, and a tendency (shown all too clearly in the case of the Taranaki Hari-kiri re Oil/Gas) to sweeping, precipitate and (so it seems) completely reflexive action.  This is to be sure, occasional.  But it is nonetheless extremely unsettling, especially for the targeted groups.  This sort of action is fairly much what is behind the continued slide in business confidence:  the question that all think but few say out loud is simply 'what will these clowns do next?'.

It can fairly be advanced that the sort of populism we see now in NZ is an attempt to substitute State action of one sort or another for a fractured sense of national culture and the sacred.  Feelz, the faith-based Green initiatives, the raw narcissim of the Winstone Ganders of our Parliament, the inchoate visions of Maori resurgence, the general retreat into solipsism have become the standard fare, and a thin gruel it is.

The results:  a plethora of mindless acts (especially by youth, who feel all this anomie most intensely), suicides and self-harm, a deep series of fractures and the start of the demonisations we though were behind us - boomers vs Millenials, rural vs urban, Greens vs our present level of comfort, renters vs landlords, Awkland vs the rest of the country, cities vs provinces, makers vs takers, vegans vs omnivores, and on and on ad infinitum.  There is nothing here to unite us if these chasms widen.  And attempts by Gubmints to rub Statist balm, using our own extorted money,  into these essentially spiritual communal wounds, miss the mark so completely as to be farcical.

David Goldman argues that a sense of the sacred is needed to give purpose to life:

These all are manifestations of what is commonly called the identity crisis of the West, but might better be termed the West’s struggle with the sacred. By “sacred”, I mean that which endures beyond our lifetime and beyond the lifetime of our children, the enduring characteristics that make us unique and will continue to distinguish us from the other peoples of the world, and which cannot be violated without destroying our sense of who we are. The sacred is what a country’s soldiers are willing to die to protect; unless there is something for which we are willing to die, we will find nothing for which we are willing to live.
Tradition surely is part of this, but not every part of our tradition is sacred to us: we find within tradition elements that have prevailed through the ages and which we expect to prevail, if our present existence is to have a purpose, beyond our lifetimes. These elements of tradition cannot exist except through a nation: contrary to Hillary Clinton, it takes not a village but a nation to embody the language, customs and ethos that found our identity. The invariant feature of the various expressions of nationalism on both sides of the Atlantic is an attempt to recapture the past in order to envision a future. “Identity” as a concept is meaningless, except as it is rooted in the past and pointed toward the future. Who we are at the moment depends on where we came from and where we expect to go. Our present, as Augustine argued in Confessions XI, is a composite of memory and anticipation.
Augustine (in City of God XXIV) famously took issue with Cicero’s definition of a res publica as an association founded on common interest, arguing instead that it was founded on a common love. It might be more accurate to say that it is founded on a common sense of the sacred, for the sacred embodies not only love but also awe and fear, specifically the fear that by violating the elements of tradition that define us we will lose ourselves.

"..by violating the elements of tradition that define us we will lose ourselves" - but what, any more, Defines Us in the here and now?

Politicians, whatever their personal characteristics, do reflect something of the zeitgeist.  And it is not a pretty image that we see in that dim mirror.  After all, just ponder the various comment threads here on Interest, for confirmation......

Coos, Culls, and the effect on NZ Inc

Michael Reddell has a good point to make, although the phrase 'gifting' could also be applied to beneficiaries, pensioners, Waiheke ferry off-peak users and other non-productive attachments to the ever-generous Gubmint Munny Teat.

Despite announcing yesterday a plan that aims to eradicate mycoplasma bovis from New Zealand, there was no sign of the pro-active release of any background papers or analysis. We don’t have copies of the relevant Cabinet papers, or the relevant advice from The Treasury or MPI. Not that long ago, the incoming government talked of its commitment to open government, and now it plans to spend hundreds of millions of dollars of taxpayers’ money – without, it appears, any additional legislation – without giving us, up front, any of the relevant papers.

One of the more obvious consequences of the cull is that real, productive units - 400KgMS per unit per season - are being turned into burgers and pet food with a much lower unit price. This is like replacing factories with coffee shacks, although, come to think about it, That's already happened: the foundry and machine shop I worked at in Invergiggle as holiday employment for a mechanical engineering degree (unfinished, y'all are quite safe) is now a bowling alley.

Another consequence is that, while entire farm herds are being culled and earnings fall, the debt load does not. Cue Boomer's Story.

We worked through Spring and Winter,
through Summer and through Fall
But the mortgage worked the hardest and the steadiest of us all
It worked on nights and Sundays,
it worked each holiday
It settled down among us and it never went away

So lenders will be anxiously poring through their dairy client's contracts, and trying to estimate what effect the cull will have on everything from provisions for defaults, to downstream effects on contractors, equipment sales and repair outfits (dependent on financing for sales) and the wider rural communities. For a marked-to-market loan on (say) a typical dairy farm in MPI's cross-hairs, this has gotta be a substantial write-down. Enough of these on the loans ledger, and the banks themselves are vulnerable to a credit downgrade. And we can guess what that will do to both the cost and availability of credit for - well, almost anything, as DC notes in the article.

The final (and there are more, as common taters may care to append) aspect is that there will be reduced economic activity as between farms: transport, sales, calf-rearing, the casual neighbourly offer of excess milk to next-door's calves, the annual Calf Day at rural schools, breeding herds, and the list can be extended far and wide. Reduced activity means less transactions, less tax, more calls on benefits and other support schemes, and everyone entering hunker-down-and-sit-it-out mode. This could easily last 3-5 years.

So Michael R's question about the basis upon which this whole scheme has been entered into, by the Good Intentions Paving Company (2017) Limited, is a very valid one. Transparency is sorely needed, not hand-waving.

Government cluelessness about the Time Value of Money

The issue with Gubmint large-scale anything which has to be built physically (as opposed to redistributed with a hefty ticket-clip) is that the entire public service has not Clue One about the Time Value of Munny.

Propose a project for $100m in Year 1, with an initial cost outlay (say, for Land) of $30m, Years 2-4 at $20m each nominal, and Year 5 at $10m, a WACC of 6%, a construction cost inflation rate of 9%, and a five-year schedule. The Gubmint wallahs then gape in wonderment as the thing (without contract variations) ends up costing $143.7m. Cumulative interest carry is $20.4m, construction inflated by CCI (which to be kind is limited to years 2-5 only) is $23.3m. So 100+ 20.4 + 23.3 = 143.7. The time value of munny....

This sort of non-thinking is absolutely rife through all levels of government. They never have to sell enough on Friday to make payroll on Wednesday following, never have to chase debts, never have to juggle cash flows to make the 20th of the month payments to creditors. Their world is literally cossetted: salaries arrive with the regularity of a sunrise, revenue falls into their ledgers like Sky Food off the edge of the bench for a dog, cash-flow is non-existent, and the only exception to this happy existence is IRD, who certainly know the Time Value of Munny if that's unpaid taxes....

Imagine, (strike up the John Lennon chorus about now) that Local Gubmint had to pay consent applicants the IRD UOMI rate on project value for every day they dragged the chain on the consent. Imagine... but enough already. T'will nevah happen.