5 min read

A difficult hangover

New Zealand's housing crisis is destroying the country; bureaucratic sclerosis and the COVID-19 response; is the end nigh for Xi Jinping; and how the US and China's baby bust can be solved (or not).
Image of a cartoon showing how the Kiwis reduc immigration.
The Kiwis have a massive (lack of) housing problem. Source.

1—A difficult hangover

"New Zealand's leaders largely paid lip service to affordability while the middle class could buy in, allowing the national housing market to slip out of their control. Amid predictions that prices will now drop by 20 per cent as the country grapples with a cost-of-living crisis – filling up your car can cost C$2.50 a litre – affordability continues to plummet. Despite falling home prices, this is now the worst time in New Zealand in 65 years for a first-home buyer. Why? Borrowing costs have surged and banks have clamped down on new borrowers, labelling them too high-risk."

That's from Justin Giovannetti, a Canadian who lasted just two years in New Zealand before he and his fiancé pulled the plug due to Wellington's obscenely expensive housing:

"For what we were looking to spend in New Zealand, we could buy a walk-up near one of Montreal’s trendy neighbourhoods or a nice section in the suburbs, with room for our family to grow."

Canada (and Australia) also have housing issues but not at the level of New Zealand, where "limited financing and lower wages make the overall picture somewhat more challenging".

Giovannetti pinpoints the culprit, which is a familiar one: "the country's Byzantine environmental rules make the construction of new subdivisions immensely difficult", before going on to highlight some of the social issues caused by New Zealand's "difficult hangover" – not just the brain drain of people such as himself, but also rising poverty rates and a "fraying social fabric":

"New Zealand's children's commissioner reported in June that the country is now 'one of the worst places in the developed world to be a child'."

Yikes. You can read Justin Giovannetti's full opinion piece here (~8 minute read).

2—Bureaucratic sclerosis

Amidst the ongoing scandal surrounding Scott Morrison's actions during the pandemic – for those out of the loop, our former glorious leader appointed himself to several ministries in secret – comes an article from the NYT's Ross Douthat that digs into America's response to Covid-19. In short, it was plagued with "problems inherent to our public health edifice, from bureaucratic sclerosis to the ideological capture of putatively neutral institutions":

"In an ideal view of how expertise informs society, C.D.C. guidelines would track the evolving nature of the pandemic closely and provide a road map back to normalcy.

In reality, the C.D.C. has been consistently behind — behind evolving scientific knowledge, behind the curve of Covid's evolution, behind how most Americans have already adapted."

The same was largely true in Australia where politicians and their experts lagged reality, often quite significantly, meaning they responded too slowly at the outset and then were also too slow to reverse course when it was appropriate.

Unfortunately, it doesn't look like any lessons were learned – Douthat notes that the monkeypox response "has repeated Covidian failures", and that when the next crisis happens "all I can think is: I can never trust anything these people say again".

Check out Ross Douthat's full article here (~4 minute read).

3—The clock is ticking for Xi Jinping

Tweets pondering the tenure of Xi Jinping.
They're just rumours, but youth unemployment is at a record 19.9%, demand is in the shitter and old faithful (housing) is in dire straits.

4—Decline not domination

Historian Niall Ferguson wrote a lengthy column for Bloomberg that conceded while population size is not a "major determinant" of a country's success or power, it certainly helps – especially when confronted by looming "severe fiscal problems", as is the case in the US (the government expects net interest payments on federal debt to rise from 1.6% of GDP today to 8.2% by 2050).

After digging to the causes of declining fertility (drawing heavily from a recent paper by Melissa Kearney and Phillip Levine), Ferguson quickly debunks the notion that the "'Chinese Century' has begun". He does that by drawing from several charts, including the following two:

China's population is set to start contracting before 2025, a fact even the Chinese government now admits is true, and "will continue to shrink for more than a century". While larger in total numbers, its demographics will likely soon be considerably worse – that is, the ratio of the elderly to the general population – than in the US.

The fertility decline in China has similar causes to those witnessed in other developed economies, such as "increasing educational and employment opportunities for women compared with the perceived costs of raising children", but in China it goes even deeper:

"First, marriage itself is out of fashion. According to a 2021 survey by the Communist Youth League, 44% of urban young women aged 18 to 26 say they don’t plan to marry, compared with 25% of urban young men. Asked for their reasons, 61% of respondents said it was “difficult to find the right person,” while 46% said that “the financial cost of marriage [was] too high,” and 34% said they didn’t have “the time and energy to get married.” Nearly a third said simply that they “did not believe in marriage.”
Yet China has a further difficulty: the chronic imbalance in the population between men and women, a direct consequence of the selective abortion of female fetuses that the one-child policy made possible. In 2018, there were 5.9 million more boys than girls aged 0 to 4, and 112 men aged 15 to 29 for every 100 women in that age group. That imbalance is only going to widen in the next 10 years.

In short, America has a fertility problem, but China’s is already (since 1991) worse. America has an aging problem. But China’s will soon (from 2034) be worse."

Ferguson concludes that while the US can "unbust" its demographic timebomb by increasing immigration, "China doesn't have that option for the simple reason that almost none of the world's would-be migrants want to move there".

You can read Ferguson's full column here. (~14 minute read).

5—Further reading...

☁️ Forget autonomous vehicles, we might finally be getting flying cars and hoverboards.

🌶️ Several US politicians from both major parties visited Taiwan, just 12 days after House Speaker Nancy Pelosi stopped by. It's sure to inflame tensions and make November's meeting between Joe Biden and Xi Jinping a spicy one.

🏡 The Australian HR Institute found just 4% of workplaces require employees to work in the office full-time, with 58% of employees working from home at least one day a week.

⛓️ China's new vassal state: "How the War in Ukraine Turned Moscow Into Beijing's Junior Partner."

🐘 India's Prime Minister Narendra Modi "pledged to turn India into a developed country within the next 25 years".