Afternoon roundup

The browser tabs, there are so many.

• I'm quoted in the Dom on the 1 April minimum wage increases. I hadn't gone through MBIE's advice before. MBIE's review has a decent summary of the literature, provides the necessary warnings about substantial real minimum wage increases in the current environment. Alas. The analyst would had to have known that the advice would be ignored, but be darned if the advice wasn't going to be provided anyway.


• If iPredict still existed, what would be the fair price on a contract paying $1 if NZ had US-style rent controls before 2022? $0.60? It feels like Robertson's set up a self-fulfilling prophecy. The changes to the tax deductibility of interest for debt on property investments are terrible policy. Bryce and I put out a short research note on it last week. Rents are likely to increase with the changes. Robertson has warned about rent controls if rents go up, or at least didn't rule them out. The Minister will "take action if necessary." Suppose you were a landlord who hadn't put up rents but you worried that the government was set to ban future rent increases if others put up their rents. You have no control over their rents, but you know they're running the same calculus that you are. Solve for equilibrium. Then Robertson will find himself pressured by journalists asking him to make good on his March threats, for the sake of tenants. And then we get rent control. 


• Berlin will tell you how great rent control can be. The freezing of rents in 2014 on existing builds, exempting new builds, saw shortages in existing builds (nobody moves out of them because you lose the low rent) combined with skyrocketing rents in the uncontrolled sector. Here's the IFO Institute paper on it, only the abstract is in English though. 


• Matthew Hooton's Herald column on the government's very slow vaccine rollout is excellent. The Herald also has a dataviz on it. 


• I wonder whether any of the building materials shortage would be eased if NZ didn't make it so hard to import building materials. BusinessDesk has been following the timber shortage. 


• My Newsroom column this week went through the rather cruddy legislate-in-haste policies we've been getting. 


• In praise of chain stores on Cuba Street. Finally. Excellent piece from Georgina Campbell. 


• And there's a new weird Creutzfeldt-Jakob kind of brain disorder in Canada's maritime provinces.
• Wellington's pipes? Nobody knows how much of a mess they're in. 


• Border workers who don't want to be vaccinated? This is dumb. Minister Hipkins has a giant sword. He can issue Public Health Orders. A Public Health Order could forbid anyone from border-facing work unless they had been vaccinated. Knot-sword-solved. Folks could redeploy or work elsewhere. There is unbelievable continued muppetry in the border system. It cannot afford to have unvaccinated people. 


• If I were still teaching Public Choice, the Tourism Industry Taskforce's report would feature in one of the assignments.
  
  "The Tourism Futures Taskforce report says:

  1.3 Efficient competition – Government endorsement of Commerce Commission authorisations for supplier collaboration We need to prevent competition that results in wasted surplus capacity and triggers downward competitive pricing. Authorising businesses to coordinate more sustainable pricing and supply through use of Commerce Commission authorisations will enable supplier-led capacity and price management, or government intervention. We recommend that the Government provides a policy direction to the Commission supporting such authorisations with a mechanism to value the public benefits in a consistent manner. The result of authorised collaboration will enable better economic returns on capital assets, more coordinated management of destinations and further investment by businesses in other wellbeings (which would be a clear requirement of the authorisations – for example: better wages, biodiversity, and climate and community outcomes).

  Discuss with reference to theory as developed in class. Particularly check through the weeks on rent-seeking, and sections on raising rivals' costs.