Matt Nolan

Housing and the value of individuality

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The government is introducing ways to reduce the compliance costs associated with building homes. By doing this, the government can increase the amount of house and land packages in perth or increase the supply of properties, lowering the price of houses, and thereby increasing housing affordability.

No doubt this will be an interesting policy to look over, however this is not what I am going to do right now. Instead I am interested in Professor Roy Fleetwood’s (of Victoria University’s Architecture and Design Faculty) dual claims that”the plan risked creating cardboard cut-out houses” and that “the Kiwi dream was to build your own home, but individuality was highly prized”.

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jamesz

Sony backs down on Fresh Start

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Apparently Sony has backed down on it’s proposed $50 charge for removing the junkware that usually comes preinstalled on computers. The new Fresh Start option when you buy your Vaio laptop allows you to choose to have a clean OS, without all the usual trial software and other adware, for an extra $50 over the usual price. If you look at Gizmodo’s comments you’ll see the predictable outrage of consumers over having to pay more to avoid something, rather than paying to gain something. However, to an economist, this looks like a simple case of price discrimination much as you see with business class flights on a plane. What’s the difference here? Read more

jamesz

Growth and happiness

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The Standard was at Joe Stiglitz’ talk in Wellington last week and was particularly interested an audience member’s question about growth. The question is whether economists focus too much on growth, to the detriment of human happiness. It’s an interesting and worthy question, but not one that hasn’t been considered by economists. There are two important issues around GDP: first, whether it’s a good measure of growth and, secondly, whether growth is particularly important. Read more

Matt Nolan

Social devolution or individual freedom?

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Here I am going to discuss an issue that is way over my head – but is extremely important for the practical application of economic concepts. I am going to discuss how changes in economic policies can influence social structure.

I decided that I would attempt to write about this after reading this post. In the post the daily dissident laments the collapse of community and the movement in consumerism and its impact on individuals.

The first argument against this view is the idea of individual freedom – individuals have the right to make their own choices, and the frame of communal society alienates that right. However, it is possible to look at the idea of community while providing individuals with rights.

The most basic way to frame this problem initially is as a prisoners dilemma. Read more

jamesz

iTunes: friendly or foxy?

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It seems Apple’s thinking about giving iPod owners free access to the iTunes download service! Are they just good souls or is there a more sinister, profit-seeking motive behind their announcement (tongue firmly in cheek)? The first thought of every economist when they see something like this is to scream “price discrimination”. It looks like a classic case of a two-part tariff where the marginal cost of providing the tunes to a customer is zero; which it probably is, since Apple will likely pay a lump sum to the record companies rather than a per track sum. However, this is only half the story here. Read more

Matt Nolan

March 08: Fed cuts rates to 2.25

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Another month, another 75 basis point rate cut by the Fed. This is (close to) what the market expected, so I can’t imagine that it would have much impact on anything. However, the statement was interesting.

Does anyone else find it interesting that the Fed cut rates by 75 basis points but still wrote a whole paragraph (1/3 of the meaty bit) on the risk of accelerating inflation compared to last time when they said:

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.

The most interesting bit was:

Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.

If the CPI measure ticks up, will this be the end of rate cuts?