Bill Shorten doesn’t have a lot of public support, a fact that reflects his background as a machine politician with a penchant for self-promotion. For a long time he has been accused of pursuing a “small target strategy”, hoping to win by default against Tony Abbott.
The latest developments in tax policy ought to prompt ] a reassessment. The nature of policy debates like this is that the government holds all the cards: control of the political agenda, expert Treasury advice, and the capacity to manage the media with judicious leaks.
Despite all of this, Shorten has left Malcolm Turnbull and Scott Morrison looking flat-footed. Their preferred option of raising the GST rate and expanding its base is dead in the water, but not yet formally disavowed. Opposing it was an easy choice for Shorten, but still one that required him to override some supporters within the ALP.
The general assumption was that the government would soon announce Plan B. But Shorten has now beaten them to the punch. His proposals to limit negative gearing and scale back the concessional treatment of capital gains are more substantial than anything they are likely to contemplate in relation to property taxation. And Labor has already signalled willingness to limit tax concessions for superannuation.
So, unless the government is willing to do something really radical, involving an explicit break with the Abbott era, anything announced in the Budget will look like “me too”.
Update Immediately after posting this, I found this piece by Laurie Oakes, arbiter of the Australian political zeitgeist, making an almost identical argument.
John Quiggin 
@Ikonoclast
And the growth in population?
@Ikonoclast
In the last decade we have been adding to our population at a rate close to 400,000 a year, in the prior decade the rate was about 250,000. I assume this would put pressure on property prices especially given the concentration of the increase in a few cities.
@J-D
That’s a rather sincere question in response to my smartass comment, J-D, however I’m not sure I actually expressed a desire for a ‘vision’ from a political party. Just the thought that, in the ALP, Penny Wong might be able to formulate one.
But perhaps I can see your viewpoint: “visions” are waffly, imprecise things, generally full of self glorification and lots of impressive sounding intentions and beliefs. In short, they don’t tell us a thing about what the political party might actually do if it got into power.
Whereas a ‘plan’ is more detailed and will inform us clearly what the political party will do – if the party actually sticks to it’s plan, of course, and the plan doesn’t tell us that. Any anyway, it’s really only true if the plan is more or less a blueprint – there are ‘plans’ that can be every bit as waffly as a ‘vision’.
Nonetheless, we can evaluate political parties – eg to decide whether to vote for one – from their ‘plans’ but not from their ‘visions’. Is that what you’re getting at ?
@John Turner
Yeah, Melbourne’s population – currently a bit under 4.4 million – is supposedly going to increase to 7.7 million by 2051, a mere 35 years (ie about 95,000 per year on average, or about 1825 per week). That should transform Melbourne from “the world’s most livable city” to one of the world’s hell-holes well before we get to 2051.
@John Turner
My guess is that if we superimposed house prices (adjusted for inflation) over a population growth rate graph for say the last 100 years we would find the correlation would be slight. Other factors, especially those I mentioned are more influential in my opinion.
If you look at Google Public Data, Australia’s growth rate bobbled around 2% from 1960 to 1974. Then it plunged to 1.23% in 1975 and persisted at about 1.3% until 1990. Then it went lower on average to about 1.2% until 2005. Since 2005 it’s been a bit higher again and jagging up and down quite a bit in individual years but maybe averaging 1.4%. Historically speaking, this population growth is nothing unusual for Australia. In and of itself, this should not qualify as a big push on house prices, again in my opinion.
Nevertheless, I think we need a population policy and we would need to stabilise at around 45 million, at the most, according to ecological footprint analysis. I would suggest a safer target of 35 million to allow leeway for error and degradation of our footprint capacity (which is already occurring).
@John Brookes
My son, daughter and their friends (young adults about 22) are generally saying they won’t ever buy a house or apartment until there is a major housing price crash. They see current house prices as ridiculous. This is because they compare those prices to what they can earn as new graduates. They do their sums and can see no point in going so heavily into mortgage debt especially with student debt still hanging over their heads. Many of them are scarcely even interested in owning a car unless their parents give them a second hand one. Most of them continue to live at the parents’ home well into their twenties.
This goes to an issue I see as a big problem for nations in secular (long-run) stagnation like Australia, USA, UK and so on. Household formation by people in their twenties is plummeting. They simply cannot afford to form households. From a selfish point of view this bothers me. I want my twenty-somethings to move out. From a developmental point of view it is also better for the twenty-somethings themselves to move out. Finally, from a social point of view, society itself will begin to have problems if twenty-somethings are not forming households and families. But all I ever see in the financial press are worries these forces will drive down house prices. They care nothing for the social effects.
Actually, I think a housing price crash would be economically and socially beneficial in the long run. House prices need to drop to a third of current levels which would be closer to the historically sustainable level. Many who got burned by such a drop would be over-invested and/or over-geared in housing. Most of these would be speculators, as 60 per cent of investment housing debt is held by the top fifth of income earners.
“HILDA data – used extensively by the Reserve Bank – is a much more reliable measure than the Tax Office data on what type of household gets by far the biggest benefit from negative gearing, and it ain’t the poor.” – Michael Janda, online business reporter with the ABC.
@John Turner
It’s important to distinguish between what I would describe as ‘thinking in terms of a destination’ and what I would describe as ‘thinking in terms of a direction’; the second is crucial but the first is a mistake. However I recognise that the terms I use may not make clear the distinction I have in mind. I offer just a few illustrative examples in the hope that they will make the distinction clearer.
Compare/contrast the items on the first of the two lists that follow with the items on the second of the two lists that follow.
A1 ‘They want to make our country into where everybody is equal.’
A2 ‘They want to make our country into a genuine democracy.’
A3 ‘They want to make our country one where diversity is fully accepted.’
A4 ‘They want to make our country one where everybody is secure.’
A5 ‘They want to make our country one that everybody is proud of.’
A6 ‘They want to make our country into one that is free of violence.’
B1 ‘They want to reduce inequality in our country.’
B2 ‘They want to make our country more democratic.’
B3 ‘They want to increase acceptance of diversity in our country.’
B4 ‘They want to make people in our country more secure.’
B5 ‘They want to increase the sense of national pride in our country.’
B6 ‘They want to make our country less violent.’
The items on the first list are all examples of what I mean when I refer to ‘thinking in terms of a destination’. The items on the second list are all examples of what I mean when I refer to ‘thinking in terms of a direction’.
Obviously there are different directions we could go in (as well as different destinations we could think of): if some people want to reduce inequality, some people might want to increase it; if some people want to increase acceptance of diversity, some people might want to reduce it. A discussion about which direction we want to move in might be useful; a discussion about which destination we want to select won’t be.
@J-D
This only further convinces me that your intellectual method is one of scholasticism. This need not be interpreted as an intellectual attack on you. For example, if you are fully conscious of using this method and if to you it forms a coherent intellectual method then you would take being called a “scholastic” in this sense as a compliment.
I am genuinely curious. What is your intellectual training? For example, one of my guesses is that you trained at a Catholic University and your education might have heavily featured figures like Anselm of Canterbury, Peter Abelard, Alexander of Hales, Albertus Magnus, Duns Scotus, William of Ockham, Bonaventure and Thomas Aquinas, or even Francisco Suárez and Luis de Molina. It is also possible your training is in Law or Business Management. I would be interested to know.
In the interests of full disclosure, my training is in the modern Sciences and Humanities and would be broadly called Scientific Humanist. But I also have some Protestant-based theological knowledge: more than the average Protestant believer and less than the average Protestant Theology graduate. Thinkers I would name as important to forming my world view would include Bacon, Newton, Berkeley (as a counterpoint), Hume, Darwin, Marx, Tolstoy (as a moralist and Christian Anarchist), Einstein and A.N. Whitehead.
@Ikonoclast
What, no mention of Bertrand Russell, though you include his Principia mate, Whitehead ? Did you never read Bertie’s History of Western Philosophy ? Shame.
A truly impressive pair of lists, Ikono, both for you and for J-D (and I’ll have to go and look up Suarez and de Molina). But really, Ikono, it’s just two lists of opinionated opinionists. So, by way of contrast, let me introduce you to the two thinkers I would name as important in forming my worldview: me and Robert Thouless (author of ‘Straight and Crooked Thinking’, revised 1953 to save you looking him up. Which I bought for 3/- back in 1959).
@Ikonoclast
My background makes no difference. I have stated my view. If you are unable to evaluate it properly without knowing my background, then you’ll also be unable to evaluate it properly even if I do tell you about my background. If I’m mistaken, my background won’t change that; if I’m not mistaken, my background won’t change that. My opinion’s merits (or lack of them) are unaffected by my biography. If you want to disagree with me, please go ahead; if you don’t, that’s also fine by me.
@GrueBleen
Do you really think Newton and Darwin and Einstein were ‘opinionated opinionists’? Perhaps it’s not surprising that your worldview was shaped by you and Thouless.
With Freud (right or wrong), those three created the Western post-Christian understanding of our place in nature, the basis for discussion of whatever society we have, never mind what we might want.
@OM
Outside of some limited subject area expertise – and don’t forget Newton got a lot wrong, and Darwin was just a beginner who didn’t even understand genetics and Einstein was a misogynist – yes, they were all just opinionated opinionists. Unless you want to install them in some kind of pantheon of lesser gods, or such.
As for Freud, if you think he had any real influence, well, that’s entirely your issue. Skinner, for one, had a lot more influence.
But as for them being “the basis for discussion of our place in nature”, well again that’s your opinionated opinion which you came to how exactly ? Did any thinking of your own enter the discussion ? Did you reject Marx and Smith and Hilbert and Goedel – amongst many, many others – out of ignorance or because your own thinking concluded that they should be ignored ?
And as to “the basis for discussion of whatever society we have”, where does Newton – or indeed any of them – enter into that ? Newton, I might remind you, was just a religious nutcase who couldn’t even formulate the calculus as well as Leibniz. So I ask again, just what part do you fondly imagine Newton played in “the basis for discussion of whatever society we have” ?
I reckon, if you think about it for a little while, you might have to admit that your own worldview was shaped by your personal misconceptions. Just like mine.
@J-D
The divide you put between destinations and directions makes no logical sense. Directions come from a desire to head for a destination. In a pure physical navigation sense, we decide destination and then decide direction. In that sense, one cannot choose a direction without having a destination. With respect to qualitative, social or moral goals, the situation really is the same. We first decide ideals as goals whether these are realistic or unrealistic final goals. We then sift goals further to delineate between completely unrealistic goals and goals which may be approached but never reached perfectly. We then decide the direction(s) to take to get nearer to fully realisable goals and partly realisable goals. Thus it always logical to debate and/or analyse goals (destinations) before commencing in “directions”.
The setup in your B list presupposes the destinations or goals anyway. You cannot logically remove qualitative “goal concepts” by playing such semantic games. “To reduce inequality” still presupposes measures for equality and methods and values behind those measures, otherwise you could neither conceptualise nor measure inequality reduction. The debates about the moral and economic values of equality still have to had first along with debates about how to measure equality/inequality. Your distinction between the A and B list is on any logical analysis, spurious.
I wonder in turn why you feel the need to be uncommunicative about your intellectual underpinnings. I am quite intrigued to understand the deeper basis of your thinking. The basis seems entirely semantic to me with reference to neither logic nor empiricism. If you disagree, you are entirely free to divulge the real method of your thinking.
@Ikonoclast
Oh pish tush, Ikono, J-D is just saying that ’tis better to travel hopefully than to arrive because we always pick the wrong places to go to.
Nonetheless, if you think about it, there is a very quantitative and qualitative difference between “everybody is equal” and “reduce inequality”. The one would require god-like powers because to make everybody equal would require that everybody is made totally identical. Whereas to reduce inequality merely requires that we know exactly what “inequality” means and that we have an infallible measure that allows us to determine just who is unequal and by how much.
A doddle, you see.
Ikonoclast, J-D’s division is a division between execution and political spin.
Who can forget the classic Howard “we are going to inject 500 million dollars,……over 10 years” into what ever politically damaging nightmare he was facing. This inevitably meant nothing would be spent for 9 years and probably nothing in the tenth as circumstances would have changed, by that time. The Liberals (Liberal with the truth) call this “responsible economic management” and the primary means by which huge surpluses are accumulated to give as reduced tax handouts to the top tax bracket.
One of those I remember was during the drought. Money was made available to country township businesses to help carry them through worst period when farmers had no cash flow. I don’t know what the conditions were but it was reported that they were so onerous that virtually no-one took up the offer. But, the political points were scored, “Howard saves country townships”,…not.
As someone once said “the road to hell is paved with good intentions”. J-D’s B list is such a road.
@GrueBleen
The book you mention by Robert Thouless looks really interesting. I will try to get hold of it. It is like a succinct anthology of logical fallacies from what I see on Wikipedia. That could be very useful. I wonder if it mentions two fallacies which commonly occur in neocon or neoclassical economic propaganda? These are;
(1) The fallacy of composition; and
(2) The fallacy of reification (false concreteness).
However, a guide to logical fallacies is not a guide to logic. The bigger part of logic will deal with valid logical procedures. In turn, understanding deductive logic is not sufficient for attempting to understand the world. We need to look at induction (how does that work or how can it work and what are its limits?) and we need to look at empiricism and pragmatism as procedures, practices or methods: information from the world external to minds, brains and formal systems and indeed information from minds, brains and formal systems too and also the practical useable information from all those sources (pragmatics). So, I know I am being a pedant but you will need more than Thouless’s book to be able to think usefully and critically and I know you can’t work all the rest out by yourself as that would take more experience and experiments than one person could ever amass. 😉
@GrueBleen
When people refer to ‘Principia” it is usually Newton’s work to which they refer so you had me confused there for a moment. Whitehead and Russell’s work ‘Principia Mathematica’ I have not read but I have read his History of Western Philosophy which sits on my bookshelf yet; I even had the good fortune to hear the great man speak as the president of the CND and also later John Collins in 1963 during the Aldermaston March (I was a mere 16 years of age).
Well, Robert Thouless clearly had politicians in mind when he wrote Straight and Crocked thinking.
@John Turner
Unfortunately I didn’t ever get to see Russell live, the closest I came was a tv interview with him when he was, I think, 93. Still very sharp and clear. And like you, I never did get around to reading Russell and Whitehead’s Principia, and also like you, Russell’s History of Western Philosophy sits, mostly read, on my bookshelf.
But I did get to attend a lecture given at Melbourne Uni by Robert Thouless who was blind (I was in High School at the time) in which he, amongst other things, advocated that suicide should not be a crime (which it was at the time).
@Ikonoclast
Thouless wasn’t writing as an expert logician, so he didn’t go through all the formal errors, though he did cover some. But not ‘composition’ and not ‘reification’ specifically, at least to my recall (and my PAN books copy doesn’t have an index, so I can’t check quickly). No, I had to go later to other sources for those.- L Susan Stebbing’s ‘A Modern Elementary Logic’, I think, was my first port of call. Copi came a little while later.
And he certainly didn’t cover my personal favourite bugaboo: the greatest problem is to stop thinking too soon, and most everybody always stops way too soon. However, both ‘composition’ and ‘reification’ are amongst my many favourite bugaboos, too.
But he was very good on the ways people confuse themselves and others with faulty reasoning – both inadvertently and deliberately – particularly in conversation and debate. On that, he was really good, and to a mid teenager like me when I first read him, a total eye (and mind) opener.
As to induction, well, I remember the old ‘proof’ that all swans are white:
1. All swans are white is logically equivalent to “all not white things are not swans”.
2. Here is a pair of brown shoes which are not-white things which are not-swans.
3. Therefore (pointing to a very large number of not-white not-swan things), all swans are white is corroborated.
And as to “valid logical procedures”, you might be surprised how little, outside formal mathematics and the occasional scientific paper, anyway, such things are ever actually used. Read any publication any time and tell me how many times you actually encounter any “logical procedures” at all. Or even a passing nod to the idea that they should provide arguments cast in formal logic – boring, nobody would ever read such things.
But otherwise, my point isn’t that I didn’t need or use any other sources of ideas and information, it’s just that ultimately I have to do my own thinking. A conclusion I’m sure you are supportive of.
However, we all run into a very simple problem: we have neither lifetime enough nor certifiable knowledge enough to seriously tackle many issues or problems in a formally valid way. So we all have to just ‘accept’ the testimony of others into our belief set. A real shame, that, but such is life.
@BilB
Oh yes, he very definitely did 🙂
@Ikonoclast
For one example, it is possible to recognise inequalities (of various kinds) and to set out to reduce it without formulating any concept of what complete equality would be like. For another example, it is possible to recognise insecurities (of various kinds) and to set out to make people more secure without formulating any concept of what complete security would be like.
For yet another example, of a more specific kind, it is possible to oppose slavery and to set out to abolish it without having answers to questions like ‘What will the slaves do when they’re freed?’ or ‘What will we have instead of slavery?’ or ‘What will a society without slavery be like?’
If you think these statements (or any of them) are incorrect, you are free to attempt to show how — that’s up to you.
Or, if you think that it’s a good idea (even if not strictly necessary) to attempt to define what complete equality would be like before setting out to reduce inequality; or to attempt to define what complete security would be like before setting out to improve security; then you are free to explain why you think so.
“So we all have to just ‘accept’ the testimony of others into our belief set. ”
What process do you or does one go through to decide which testimony to accept and…. don’t you think that one can tentatively accept parts of another’s testimony and also be dubious or sceptical about other parts and sometimes even if that testimony aligns with our own, it could be that the testifier arrived at their conclusion based on different rules – different from those that I would use – that guide their acceptance of the testimonies that they accepted as true or true enough and was incorporated into and or informed their testimony?
It occurs to me that it is the process of working out ones values that reveals the value of ones testimony, is I think what I meant to suggest. 🙂
I like Spinoza and find his thought process worth bothering with because he lived his philosophy; he was not a hypocrite.
My process is to put all new information on probation until it can be validated as being compatible with my general understanding, supercedes my current information, or is just garbage to be discarded. I think most people operate the same way to a greater or lesser degree, but if their knowledge base is very limited then they can be accepting garbage as superceding their previous knowledge which is worse garbage.
The anti science and denialist groups (and the finance thieves) have a vested interest in packaging garbage information as genuine “new” information in order to protect particular groups who stand to lose from an improved global knowledge base. In the tax “debate” Abbott and his minion Morrison sort to advance the interests of the upper income by painting an increased GST as being a logical and inevitable advancement of a “fair” tax system.
Thorless had plenty of ways for seeing through the LNP confusion machine
No. 3. proof by example, biased sample, cherry picking
No. 6. ignoratio elenchi: “red herring”
No. 9. false compromise/middle ground
No. 12. argument in a circle
No. 13. begging the question
No. 17. equivocation
No. 18. false dilemma: black and white thinking
No. 19. continuum fallacy (fallacy of the beard)
No. 21. ad nauseam: “argumentum ad nauseam” or “argument from repetition” or “argumentum ad infinitum”
No. 25. style over substance fallacy
No. 28. appeal to authority
No. 31. thought-terminating cliché
No. 36. special pleading
No. 37. appeal to consequences
No. 38. appeal to motive
(from Wiki on Straight and Crooked thinking)
@Ikonoclast
While the percentages are not significantly different the actual increase in numbers is significant because of the compounding effect. From what I could deduce, the annual increase in building approvals has not kept pace which is I suggest is a contributing factor underpinning a steady growth in prices but, I agree, not the cause of the price bubble.
@BilB
There’s a lot of new knowledge available these days about the ‘rules’ that under pin human cognition and the biases that we all have. Understanding one’s own Unconscious motivations seems to be the difference between philosophy that is useful and philosophy that is just idiosyncratic individualistic wanking.
@BilB
I wish I had the time, and the memory capacity, to put new testimony ‘on hold’ awaiting validation. But I don’t, so most of it just slips in – but only, thankfully, to middle-term memory and is forgotten fairly quickly.
However, Thouless was a psychologist (who, incidentally believed in ‘psi’ aka extra-sensory perception) and his main interest was in human behavior rather than the philosopher/logician’s interest in formal logic. So, as per the list you quote, there’s a lot of emphasis on how we screw up our thinking and how we try to screw up the thinking of others.
Julie T,
I will share this here as you seem to listening and thinking.
It has become evident to me that the principle driver of human interaction perception is not cognitions, but empathies. Cognitions are about what we hear or perceive, empathies are about whether we are listening or receptive.
We are all built with a particular empathy performance band level which fits into a bell curve distribution which ranges from the hyper empathetic (dangerous to oneself dysfunctional) to the zero empathetic psychopathic (dangerous to everyone else dysfunctional).
In order to understand the political mess in the US all you need do is determine where each of the commanding players fits into the empathy bell curve. The bleeding heart liberals are on the left and the Libertarians and brutal dictators are on the right. The rest of the population fills the space in between. The further apart the players are, the greater the probability of total failure.
Now apply that to the family structure and you will see that the maternal is to the left and the paternal is to the right. In a functioning family the empathy spectral bands overlap by a huge amount. When a family is disintegrating the empathy spectral bands narrow to where the overlap is insufficient to maintain the union.
Now take that thinking to the US political environment and you will see that the party’s empathy spectral bands (policies too) have narrowed to the point separation. And that is what we see in the nomination for a new judge.
US political parties want a divorce.
Next step is to understand the implication to economics.
@Julie Thomas
I think, Julie, that it very much depends on the quantity and quality of ‘testimony’ as to how one ‘decides’ what to accept or reject or modify. For starters, a lot of testimony is never ‘decided’ as such, it just slips in without conscious involvement – for instance, the grammar and vocabulary of your native language(s) – are you conscious of having learned any of that, at least until you got through a fair bit of schooling ?
You may not consider that as ‘testimony’, but to me it is, as indeed is virtually all of the social behaviours that we learn.
But in general, I try to be a bit like BilB and hold at least the serious stuff in ‘belief limbo’ until I’ve had time to actually think about it.
However, if, for example, I hear of a road accident causing death on the radio in the morning, I’m mostly likely to accept that without further ado. On the other hand, the testimony from scientists about having detected gravitational waves takes a bit more. But I did read a few apparently informed posts, and compared their experiment to the Michelson-Morley effort to find out whether there was an ‘aether’, and it made sense. So, noting that this is still ‘provisional’, I now accept “gravitational waves have been shown to exist” into my belief set.
But when we come to so-called ‘philosophy’, or as I generally call it, opinionated opinionism, then I try (not always completely successfully) to be very skeptical indeed. And that is where, as I said to Ikonoclast, I really have to do my own thinking, if I can, when I can and as best I can.
And yes, that is where one’s self-knowledge and self-understanding is important. Unfortunately, I have no way of documenting the complete set of all my beliefs, so I can never be sure I’ve really evaluated opinionist testimony – especially when we humans are afflicted by, as the psychologists try to explain, ‘theory (belief) perseverance’ (qv along with cognitive dissonance).
@BilB
No doubt that the human mind/brain responds emotionally then rationalises after; many thinkers have recognised that and now neuro-science gives us pictures of how it goes.
When you say we are all “built” I need to know what you mean by this word before I can judge or determine the truth value of that statement or testimony.
Have you read any of Johnathon Haidt’s characterisation of Liberals, Conservatives and Libertarians? He had some interesting things to say in his book “The Righteous Mind” about the way we western people are divided but he’s got nothing more to say that makes any sense to me.
It works better for me to understand the relationships between a couple as not maternal and paternal because there are many dyad relationships that are within the normal range of human ‘sociability’ (and by socialiality I don’t mean being able to do small talk at parties) have been essential for our survival as a species.
The ‘breeding pair’ as the foundation of human reproduction and societies does not seem rational to me; human societies have always included dyads and non-breeding pairs who contributed to the success of the society and the economy, so it is more rational to think of the dichotomies we like to create in neutral not loaded terms.
Sometimes I think it is useful to explain that a natural male and female relationships could be likened to the way our left and right hands work together without one thinking the other is the best or the strongest.
The yin and yang concept from the eastern philosophies though is particularly resonant with whatever it is that I do to discern how reliable or true a statement is; the contrast and comparison of another cultures way of rationalising experiences, and accepting that the ‘weird’ assumptions other humans develop about what is natural are an intelligent response to their environment, was the most useful exercise I managed and that was in my Philosophy of Science class when doing Hons with a wonderful anthropologist lecturer.
Julie, in my experience empathy capacity is not a conscious choice. You can choose to how to direct your empathy, but if you have a low empathy capacity you will not be able to direct it. Empathy is largely emotionally driven and can be enhanced or retarded according to ones age, situation and experiences, I believe.
I make the maternal and paternal, as distinct from male and female, connection to politics as they are very much both aspects of governance of a population. The left is largely dominated by social drives, the right is more dominated by concerns for creation and preservation of wealth (originally food, shelter and safety).
With a taste for anthropology you might find the work of Robert Sapolsky fascinating.
https://www.youtube.com/watch?v=AytXzf2TvA8
the the most important revelations begin 46 minutes in but you have to watch the whole doco to appreciate the importance. Think of the Alha’s as your typical libertarians.
@John Turner
Ikonoclast is completely right about the relative insignificance of population growth. Large increases in housing prices have been a characteristic of almost all developed countries; countries which do not share Australia’s “third-world style population growth rate” (to borrow an expression from Bob Carr’s recent piece of spectacularly ill-informed clap trap) have had very similar increases in prices.
Aggregate, non-spatial analysis of housing that simply assumes an upward sloping supply curve is, quite frankly, lazy, trash analysis. The frequency with which it is trotted out by supposedly reputable people does not change this fact. That said, there is reason to expect population growth to have some effect on house prices. As growth continues to occur in the major cities, the advantages that they have over stagnant regions—including their ability to offer higher nominal wages and better consumption amenities—will also increase, and these extra advantages will be reflected in higher house prices. But the idea that this is necessarily a bad thing is very wrong.
@GrueBleen
Nobody makes anybody live in Melbourne. Because people can leave Melbourne or choose not to move there in the first instance, Melbourne can only become a hell-hole if everywhere else in the country becomes a hell-hole, which seems rather unlikely. If Melbourne at a population of 7.7 million represented a hell-hole, it would never reach that population. However, given the production and consumption advantages of big cities such as Melbourne—and the fact that these advantages increase as cities grow—it is highly unlikely that Melbourne will stop growing, even if growth is poorly managed.
@Luke Elford
In which city can one pay for a house with the currency unit ‘production and consumption advantages’ (also referred to as ‘consumption amenities’)?
@Luke Elford
“…it is highly unlikely that Melbourne will stop growing, even if growth is poorly managed.”
Yep, and therefore, like I said, it will become a hell-hole even before it gets to 7.7 million. But thank you for your ingenuous thoughts.
> Nobody makes anybody live in Melbourne.
If your intellectual framework only distinguishes between “compelled at gunpoint” and “utterly free consequence-free choice”, then it’s going to be pretty obvious — at least to us — that your conclusions are going to be, you know, completely worthless.
Because they won’t be rooted in the real world, but in your fantastic imaginings. The thing is, your ideas are self-consistent, and “self-consistent” means that no amount of thinking about it will reveal discrepancy, because the discrepancy isn’t between different parts of your thinking but between parts of your thinking and reality. Reality checking needs to be done against the actual reality, not your understanding of it… but you can’t break out of your understanding by yourself.
You cannot introspect yourself into correctness. Not reliably, which means not usefully. You need to talk to people and check your ideas against not only your understanding of reality but the understandings of others, to guard against misunderstandings of How Things Work.
@GrueBleen
We need to get to the Hong Kong level of density where everyone lives in a shoebox apartment that costs $10M and are literally pushed into train doors by people pushers (yes that’s their actual job) so all passengers are squeezed in like sardines during peak times.
@Ernestine Gross
I’m pretty sure you’re trolling, but since your question may simply reflect the fact that you completely lack any understanding of some very basic ideas in urban economics, I’m going to reply in good faith.
By production advantages, I mean higher productivity [1] and hence higher nominal wages. People will be willing to put up with higher housing prices in one location compared with other locations if they earn higher nominal wages in that location because a higher nominal wage means that they will be able to achieve the same utility as elsewhere, despite the higher housing prices. They may not be able to consume the same bundle of housing and other goods as they would elsewhere, but they may be happy to make some substitution between these.
By consumption amenities, I mean any characteristic that makes people willing to accept a lower real wage to live in one location compared with other locations. People will be willing to put up with higher housing prices in a high-amenity location, even if housing prices are lower in a lower-amenity location, because the contribution that the local amenities make to their utility offsets the effect that higher housing prices have of reducing the bundle of housing and other goods they can consume—obviously, they will either have to consume less housing or less of other goods, or some combination of the two.
How this plays out in terms of housing consumption depends, obviously, on the nature of housing demand—in particular, the price and income elasticities. But generally speaking, households in larger cities spend more of their income—certainly in absolute terms and sometimes in percentage terms—on housing, but not enough to consume as much housing as similar households in smaller cities, and this is reflected in the makeup of the housing stock (e.g. smaller average numbers of bedrooms).
[1] Firms and workers in larger cities are (on average) at the very least privately more productive than those in smaller cities. Professor Quiggin has some iconoclastic ideas about the social benefits of (at least some) agglomeration economies, but they are immaterial to the discussion above.
@Collin Street
I note that you don’t actually explain why you think the idea I presented—that living standards (of individuals with given characteristics) experienced in different parts of the country cannot diverge too much when people can move between these areas—is wrong. And, since you’ve almost definitely never read the literature on this subject, how on earth do you know to what extent the idea has been tested against reality?
There are certainly limits to the idea of living standards being equalised through migration, but they don’t extend to people living in a hell-hole Melbourne in a generally non-hell-hole country. Migration can be costly, but that’s more an issue of people failing to leave declining areas, not for a location subject to immigration and fast population growth. People aren’t fully informed about the opportunities they have in different parts of the country, but the information requirements for distinguishing between hell-holes and non-hell-holes are very low. People form attachments to places—and they develop social networks they may be reluctant to leave—but again this is more of an issue for people failing to leave declining areas. At any rate, it hasn’t prevented migration from and population decline in many parts of the country.
@GrueBleen
It’s a shame you’ve chosen not to address my argument. Perhaps we can have a more fruitful interaction another time.
I have never lived in Melbourne, or anywhere else in Victoria, so I have no experience of how attractive they are as places to live or how close they come to being hellholes.
However, if Melbourne is more attractive (or less unattractive) as a place to live than is The Rest Of Victoria (TROV), it’s to be expected that there will be a nett movement of people from TROV to Melbourne. That only depends on relative attractiveness, though, not absolute attractiveness. It could easily be the case that the flow of people from TROV to Melbourne makes _both_ less attractive places to live. That would be bad for everybody in Victoria and yet would still be likely to continue. Both Melbourne and TROV could become less and less attractive as places to live while Melbourne still remains more attractive (or less unattractive) than TROV, maintaining the population flow which makes everybody worse and worse off.
As I say, I have no idea whether this is actually the case. However, if something like that is going on, the policy response indicated (to my way of thinking) is to look for ways to make TROV a more attractive place to live. That would obviously be a good thing for the people of TROV in any case, but if population flow from TROV to Melbourne is making Melbourne a less attractive place to live, then it’s also a good thing for the people of Melbourne, and everybody can be a winner.
It’s easily possible for individuals making rational decisions for the best (their individual best) to produce a joint outcome that’s worse for everybody. That’s how traffic jams happen, for example. If there’s any hope for improvement in such situations, it lies in changing the incentive structure or, to say the same thing in different words, giving people better options.
The same analysis applies to Hong Kong (a place I’ve never even visited). Probably all those people moving into Hong Kong are making it a less attractive place to live, but they’re all coming from somewhere else, which must be (to them) even worse (despite what’s happening to Hong Kong); if something could be done to make that somewhere else a more attractive (or less unattractive) place to live, the flow of people to Hong Kong could be expected to slow, and again everybody could be a winner.
@Luke Elford
Ernestine Gross can reply for herself of course and she may do so. I think she might have been referring to the concept of the ‘minimum wealth condition’, and other issues, and their impact on the whole question. Consumption amenities can only be purchased by those with enough wealth to do so. This goes to the issue of how people get hold of the currency unit (the Australian dollar in our case). In turn, this point goes to income issues, wealth distribution issues, class issues, market failure issues, financial market issues and even foreign exchange and foreign investment issues. The set of people with the currency units to push up the price of houses in Melbourne is not the same as the set of people who benefit from the consumption amenities of living in Melbourne (considering in particular that we have a global financial system). Then again I might be completely wrong. E.G. may also (or instead) have been referring to other issues which I have completely failed to infer.
The formulation “In which city can one pay for a house with the currency unit ‘production and consumption advantages’ (also referred to as ‘consumption amenities’)?” does fit the rather abbreviated, wry and cryptic communication style E.G. favours at times. Don’t make the mistake I have made in the past and that is to think that E.G.’s statements are not coming from a carefully formulated and extensive theoretic position.
@J-D
Yup, many people like the density, the congestion and the city life however many are also there (in large cities) because of the employment opportunities and would love to move out to somewhere quieter but can’t.
@Luke Elford
Ikonoclast has covered the main points.
TP, “many” people need to try a city of 400,000. All the benefits of the ultra big city, without road congestion and long commutes.
@Troy Prideaux
I really like the way that, even in Melbourne’s CBD, you can get a ‘car park’ apartment; that is, an apartment that is about as big as a car parking spot – about 3 x 4 meters – which nonetheless contains a bed, a ‘bathroom’ facility and a kitchenette. And a ‘table’ and chair. Which costs about $400 per week to lease because it is in the city and close to everything.
Just the thing for the Chinese student, or unmarried merchant banker.
@Luke Elford
Well you just never know your luck, Luke. Keep on trying.
@J-D
Well, J-D, governments have been trying to make TROV more attractive for the best part of 100 years and so far haven’t succeeded.
A recent government did make Geelong a lot more attractive to a bunch of State public servants by the simple formula of moving their department there. So, if they wanted to keep their job, they moved to Geelong.
But it isn’t just the movement from TROV to Melbourne – which happens as the attraction of the farming life wanes markedly, but is quite minor – it’s also that Melbourne is the place that most of the immigrants who settle in Victoria come to … and stay there since they don’t have their jobs moved to Geelong. That is why the rate of population growth of Melbourne is high – around 1700 new Melbournians each and every week, I think, for a total of about 99,000 new Victorians in the year ending June 2015 (out of a total of around 371,000 for all of Australia).
@Ernestine Gross
He usually does.