Tuesday, March 26, 2013

Exasperation coming on.


I have a lot of respect for the wisdom of Sir Bob Jones that he shares with us via his column in the herald. No, wait, that's a lie. I've got sod all.

The market will solve everything. That's this week's broken record message. In this case he's telling us that the market will take care of Auckland's housing crises. The government (local and national I presume) should butt out and let that holy of holies take care of everything. Seriously, has the man learnt nothing from the past 30 years. The market can be an efficient tool at times and it shouldn't be done away with completely.

It's not some bloody wondrous fix-everything type tool though. Like any system, it has it's own biases. For one thing, the market tends to follow the money. It doesn't really like to pay to much attention to the poor until such point in time as the poor, collectively, have enough money to make large investments worthwhile. So as much as Jones fantasises otherwise, the market is not going to step in and offer the poor better housing, there's not profit in it because, funnily enough, the poor have sod all money.

Of course, he could be imagining that the market will step in and build large numbers of expensive houses which flood the supply chain and bring the current medium value housing into affordability for the poor. That relies on more housing being built than our current growth rate requires. Eventually, we may be able to do that. It's going to take a long, long time though and in the meantime, the low and medium income earners just have to suck it.
Market systems indisputably produce the best outcomes but inherent in them is volatility, failing which they're not functioning properly. We need to recognise that and have less infantile handwringing when balances swing one way, confident that in the course of time they'll be self-correcting.
This is the bit that gets me. Let the market sort it out he says. Have confidence that any imbalances will be self correcting. 1) They not always self correcting and 2) that infantile hand-wringing? That's because it's it's actual people living in poverty, not just some bankers bottom line that is coping with that volatility.

What an arse.
 



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