Auckland and migration

Ask and ye shall receive: within two hours of my request to Stats NZ, I had an Excel sheet showing internal migration breakdowns by territorial authority. Thanks Ronald Mair!

I'm still puzzling out whether clean Tiebout hypotheses can be built given the rather strong confound of huge migration to Auckland from overseas. 17% of Auckland City's 2006 population resided overseas at the time of the 2001 Census; Auckland City drew 38% of all overseas migration to the greater Auckland region. So despite losing net 12,700 residents to other parts of greater Auckland, Auckland City still tied for top overall population growth in the Auckland region.

So, does Tiebout say Auckland City did poorly for on net losing so many prior residents to other parts of the region, or that it rocks for gaining so many from overseas? I suppose the answer will depend partially on whether housing prices went up or down relative to the region's average over the period as well. I have a couple years to ponder how to build the test though given that the next census isn't out 'till 2011.

Other fun facts:

• On average across territorial authorities (districts and cities), 23% of folks resident moved to another district/city between the 2001 and 2006 censuses.


• Only 13% of folks resident in Christchurch in 2001 left as of 2006, the smallest rate of out-migration of any of the regions. 36000 individuals left.


• 31,407 people moved to Christchurch from overseas: 9.6% of the 2006 population. Susan and I were two of them!


• A further 48,831 people moved to Christchurch from other parts of NZ. So a quarter of Christchurch's 2006 population did not live in Christchurch in 2001.


• Paul Walker will be dismayed to find that 14,079 folks moved to Christchurch from the North Island (which he tends to view as being far worse than any other kind of foreigner). 12,027 left Christchurch for the North Island.

Texas vs California

BK Drinkwater usefully points to a City Journal piece by William Voegeli comparing Californian dysfunction to Texan sensibility. Voice in California provides no check on government:

James Madison would have to revise—or possibly burn—Federalist No. 10 if he were forced to account for the new phenomenon of the government itself becoming the faction decisively shaping its own policy and conduct. (See “Madison’s Nightmare” in City Journal’s 2009 special issue, “New York’s Tomorrow.”) This faction dominates because it’s playing a much longer game than the politicians who come and go, not to mention the citizens who rarely read the enormous owner’s manual for the Rube Goldberg machine they feed with their dollars. They rarely stay outraged long enough to make a difference.

Consequently, exit works. California sees out-migration and folks move to Texas. Tiebout says it's fine for some jurisdictions to be high tax / high service with others low tax / low service -- you then have preference-based sortition. But California is now high tax / low service, and for that bundle of services, you're better off in Texas.

For California’s governmental-industrial complex, a new liberal administration and Congress in Washington offer plausible hope for a happy Hollywood ending. Federal aid will replace the dollars that California’s taxpayers, fed up with the state’s lousy benefits and high taxes, refuse to provide. Americans will continue to vote with their feet, either by leaving California or disdaining relocation there, but their votes won’t matter, at least in the short term. Under the coming bailout, the new 49ers—Americans in the other 49 states, that is—will be extended the privilege of paying California’s taxes. At least they won’t have to put up with its public services.

I wonder if NZ census data gives any way of tracking migration among the several cities that previously made up the new Auckland supercity. Best I can find has Auckland split into Northern, Western, Central and Southern zones. Table 11 gives us some idea of flows among those four parts, but nothing disaggregated by Mangere, Rodney, and so on. Will have to see if Stats has the data in more disaggregated form; would be fodder for an interesting honours project in a census or two's time.

Maori seats in Auckland

I'd previously worried that adding Maori seats for Auckland could well wind up reducing Maori influence on Council by effectively giving all other councilors no reason to worry about Maori issues - they'd have no Maori constituents.

Of course, exact results would depend greatly on what the population distribution looked like and whether Auckland went for single or multi-member districts. So I assigned my Public Choice class to weigh things up as an assignment: assuming that the objective is to maximize Maori influence on council decisions, are separate seats a good idea?

Best argument I've seen for separate seats:

Having the option to enroll on a city-level Maori roll would allow Maori in wards where Maori population would otherwise be too small to be considered to have their votes weighed separately; in that case, the median city councilor can be made more pro-Maori. So lots of wards shift from 5% Maori to zero percent as those folks flip to the Maori roll, while folks in wards that are above 10% don't. The median councilor could then well have a higher proportion of Maori in his district than would be the case otherwise. This requires then that folks only (or massively disproportionately) choose the Maori roll if they're in low-Maori wards: that way, one of those wards disappears and the median shifts to the next higher Maori proportion district rather than the other way. Of course, it's pretty unrealistic to expect that level of strategic voting.

Best arguments I've seen thus far against separate seats:

• Maori and non-Maori political preferences are not so polarized as to mean that Maori voters in districts would be written off by candidates seeking a majority


• Having multi-member districts could increase the chances of Maori being elected without having the need for separate seats
  
  • Caveat here: some folks found the nice old Bernie Grofman paper showing that multimember districts in US local elections reduced rather than increased black electoral prospects. Indeed, "at large" elections were worst for black representation.
  
  So this really requires some kind of STV implementation in a multimember district to work. The Royal Commission report seemed to view multimember districts as unambiguously good for minority representation; the US evidence suggests otherwise.

Best argument I've been able to come up with for separate seats (which none of the students gave, but one came close):

Maori wards would be designated based on electoral enrollment numbers; actual influence within any ward depends on voter turnout. And Maori turnout is much much lower than the population average: The number of votes cast in the Maori electorates in national elections is roughly 58% of the number cast in general electorates. Consequently, even if my earlier worries were well founded, there could still be strong argument for separate seats (given my initial "assuming" that the goal is to design a system that maximizes Maori influence) because each Maori voter who turns out is given weight proportionate to the number who have enrolled on the Maori roll: each vote effectively counts as 1.73 votes as compared to that voter's influence in a general electorate.

While lots of students found US evidence on the effect of majority-minority districts, perhaps because I pointed them to some of it, none of them found the rather nice paper by former Kiwi Jeff Karp that argues that combined seats seem to do best for minority interests. He there shows that while minority groups tend to be disengaged from the political process, this dissatisfaction is minimized in systems where parties are encouraged to compete for votes across diverse groups (like first past the post elections with single member districts, or the less proportionate forms of PR).

On balance, I don't think separate seats would do much to improve substantial representation of Maori interests in Auckland and could work to harm substantive representation in order to ensure some descriptive representation.

So which matters more: having a couple of councilors who look like you and care passionately about your interests, or having equilibrium policy be a bit closer to what you'd want? I tend to go for the latter, but the former is certainly more expressively appealing.

Tiebout and Auckland: Sir Roger gets it

I've previously complained that nobody else seems to have noticed that Auckland's amalgamation will reduce Tiebout competition. I hadn't seen Sir Roger Douglas's submission.

On the community level, Councils should be designed to allow greater choice and competition between Community Councils, as well as providing for greater community control over expenditure.

Mechanisms that allow individuals to opt out of certain Council functions, and groups of individuals to switch Community Council, create a new Community Council, or amalgamate with an adjacent Community Council will foster greater competition between Councils. Such competition will allow more diversity and experimentation within Local Government.
...
Only when Government bodies are held responsible for setting and collecting rates and expenditure will there be adequate checks on their capacity to spend. The rates set by Community Councils could be collected on their behalf by the Greater Regional Council, but it is most important that the resident knows which portion of rates goes to the Community Council and which portion goes to the Greater Regional Council.

While the Government’s position on Community Councils – a position which departs from the Royal Commission’s absurd proposal to have only six local Councils beneath the regional authority – is generally sound, it is also important that Community Councils are held accountable for what they spend. This will only occur if they raise their own revenue.

...a group of citizens adjacent to another Community Council should be able to opt-out of their current Council, joining the neighbouring Council, if they think their mode of service delivery is more suitable to their wishes. The capacity to change Council will create competition for ratepayers, which is likely to see value for money being delivered by Local Government. Although this choice would only be able to be used by those at the edges, the capacity for others to change providers drives efficiency and therefore benefits all ratepayers.

Lots of other great suggestions in there, like having line-item council tax bills and allowing residents to opt out of certain items in favour of private providers. Hope the Local Government Minister was paying attention.

Auckland Maori seats: good idea? [updated]

The main stumbling block currently to Auckland's merger into a mega-city isn't worries about the loss of Tiebout competition - which seems to be only of concern to me, see here and here, though NotPC also agrees and I may have convinced Matt Nolan (see comments, oops) Rauparaha that this is worth worrying about.

Rather, the biggest concern seems to be whether city council will have a standard set of wards or whether it will follow the system used for national elections in having overlapping districts: one set for those voters who want to elect to be on the Maori roll, and another set of general electorates for those who don't.

Correct me if I'm wrong, but I don't think there's anywhere else in the world that uses this kind of system.

Does having these kinds of overlapping districts help Maori? I suspect not much under proportional representation except inasmuch as they help to facilitate overhang: many voters in the Maori electorates tick the Maori Party as their district Member of Parliament but give their Party vote to Labour. The Maori Party then wins more seats than those to which it is entitled by its list vote and Parliament is made bigger. In a PR system, this means that the Maori Party has a seat or two more than it otherwise would and so has a bit more clout as a minor party.

Auckland's council, though, as best I understand it, isn't planning to go PR. What are the effects of this kind of system when you have only ward-based representatives?

Imagine that there are two groups, A and B. Everyone that self-identifies as group A, 10% of the population, is 90% likely to vote for Party 1 and 10% likely to vote for Party 2; everyone in group B, 90% of the population, is 47% likely to vote for Party 1 and 53% likely to vote for Party 2. Suppose every district has 100 voters and groups A and B are evenly split across all districts. In that case, every district has 9 A-group and 42 B-group voters for Party 1, 1 A-group and 48 B-group voters for Party 2, and Party 1 wins all districts. Now, suppose that you instead create special A-group electorates that comprise 10% of the seats. Now, Party 1 wins all A-group electorates but Party 2 wins all other seats. You've made sure that Group A is represented, but at the cost of vastly reducing their influence.

Indeed, this has been found to be one of the effects in the US of judicial mandates for majority-minority districts. Heck, even Wikipedia knows it:

Gerrymandering may be advocated to improve representation within the legislature among otherwise underrepresented minority groups by packing them into a single district. This can be controversial, as it may lead to those groups' remaining marginalized in the government as they become confined to a single district. Candidates outside that district no longer need to represent them to win election.

As an example, much of the redistricting conducted in the United States in the early 1990s involved the intentional creation of additional "majority-minority" districts where racial minorities such as African Americans were packed into the majority. This "maximization policy" drew support by both the Republican Party (who had limited support among African Americans and could concentrate their power elsewhere) and by minority representatives elected as Democrats from these constituencies, who then had safe seats.

Enough of Wikipedia; turn to Google Scholar. Cameron, Epstein and O'Halloran, 1996, find that there is a very real tradeoff between advancing the number of minority representatives and advancing the issues that minority voters care about. Shotts, 2001, finds that a majority-minority mandate has no effect where Republicans control redistricting (because they already would have packed minority voters into a small number of districts, by my read) but reduces Democratic seats where Democrats control the redistricting and where the majority-minority mandate requires supermajorities; in this latter case, it can cause the Democrats to lose control of the state legislature.

I can see why the Maori Party would support this kind of move: it guarantees them a couple of seats (yes, yes, city council elections aren't party-based, you get the idea though). But it may well also guarantee that no other city councilor has to care at all about Maori issues because they won't have any Maori constituents. But that's too conspiratorially-minded. Most likely, nobody involved in the process has bothered to check the empirical literature, just like nobody involved in the process has bothered to worry about Tiebout.

Careful what you wish for, folks. The Law of Unintended Consequences is a stern one.

Auckland Supercity - Part Two

Rheema Vaithianathan, Auckland University economist, worries that the Auckland supercity will lead to job losses and in particular will hurt the suburbs.

I'm worried that the opposite will happen.

Let's turn it over to Wendell Cox, in interview with Winnipeg's Frontier Centre for Public Policy

FC: You have written eloquently about urban amalgamations – can you summarize your views on that subject?

WC: Virtually all urban amalgamations have been justified on the basis that we are going to obtain economies of scale and lower costs in the long run, and everything will be better because things will be better coordinated. I don’t see any evidence whatsoever that places that are amalgamated, whether we talk about Toronto or Montreal or Indianapolis or Miami, are better governed than places like Paris, for example, that has 1,300 local governments. Or Chicago that has about 200 local governments or more, depending upon the special districts you might include. The basic problem with amalgamation is that the last thing it does is reduce costs. What ends up happening is you need more bureaucracy. You have conflicting labour contracts of the previous organizations. The previous municipalities get merged in such a way that the worst provisions and the most expensive provisions become the controlling provisions for all of the labour contracts. Again. if you look at the real experience on the ground in the United States where we have marvelous data, you find that the larger municipalities tend to have higher costs per capita than medium-sized municipalities. The smallest municipalities also have high costs, but probably the optimal size for a municipality is somewhere in the 50-100,000 population range, which says that Winnipeg ought to be six cities – not one.

FC: You have written that some of the most successful cities are the ones with the most municipal government units. Why is local or neighbourhood control so crucial?

WC: It is crucial because we tend to treat people we know and walk by on the streets more reasonably than people we don’t know. It just so happens that we are much more responsible in how we treat our neighbours and our friends and our relatives than those we don’t know. That is just human nature. The closer we can have City Hall to the people who live there, the more responsible the public policies are going to be and the more in-tune the interests of the residents are going to be with public policies.

So instead of getting efficiencies, we get ratcheting up of expenditures to those of the worst districts.

Cox goes into more detail here and cites my old home town of Winnipeg as case in point:

In 1972, Winnipeg merged 13 smaller municipalities into one large entity called Unicity. These municipalities had previously co-operated on a number of common issues, like arterial roads and water projects, through a Metropolitan Corporation, but had
reserved to themselves a wide range of municipal functions. They competed with each other to attract development and residents, a fact that exerted pressure to keep municipal costs down. Evidence shows the merger removed that bias and municipal costs “leveled” up to the highest spending level, the one reported by the central, core city, with about half of the urban area’s population. Reduced accountability on spending brought higher property taxes, soaring debt levels and less responsive government units. These factors contributed to Winnipeg’s relative decline against other cities, falling from Canada’s third largest city in the late 1960s to the eighth largest today.

Critics suggest that amalgamation stamped the soul out of neighbourhood communities when it moved decision- making power and local service-delivery choices into the hands of distant, more unconnected, politicians who responded in the new structure to the tightly organized provider groups that dominated the new organization. One result was higher property taxes. Prior to a dramatic reorganization of city government under city manager Gail Stephens, city staffing and compensation levels peaked among the highest in Canada (see Manitoba has Larger Public Sector than Most, Frontier Backgrounder No. 3, December 2000, www.fcpp.org)

Did Unicity otherwise meet expectations? University of Western Ontario Professor Andrew Sancton, author of the book “Merger Mania: The Assault on Local Government (McGill University Press, 2000, p. 62), summarized Winnipeg’s Unicity amalgamation
project as follows: “What is the lesson of all this? It is that 30 years after Canada’s most dramatic and comprehensive municipal amalgamation – in which virtually all the residents of the Winnipeg city-region were included – the area now confronts the same problems as everyone else: most of the growth is occurring outside the
municipal boundaries and there is need for new mechanisms for regional co-operation. No one is recommending further amalgamations.”

BK Drinkwater comments more on the report. I share his generalized concern about multiplier effects: surely there then are offsetting divisor effects. But that's all beside the point if the spending cuts never actually happen.

Auckland Supercity

Central government in Wellington seems set to force Auckland's eight local councils to merge into a mega-city. Complaints thus far have centered around the potential loss of voice as constituents become more distant from their representatives.

I'm worried about something else entirely. Voice is nice, but the threat of exit is a more powerful check on local governments' activities. Tiebout explained it all back in 1956 with his pure theory of local expenditures. In short, competition among jurisdictions for residents forces them to run their operations more efficiently; mobility across jurisdictions also allows matching between consumer preferences and government service bundles. So, if the rates in one of the local councils are getting steep relative to the services provided by the council, moving to the other side of town can help.

Whatever efficiencies of scale there are from having services provided to a larger jurisdiction can also be achieved by contracting out. This happens endogenously and only where the economies of scale are substantial enough to justify it. It's then hard to see from whence come the efficiencies of amalgamation. For example, if a couple of councils find that they'd save money by jointly running their fire services, nothing stops them from setting up a joint fire service that caters to both councils.

Muriel Newman today links to a couple of nice Canadian case studies of amalgamation. In Winnipeg, where I did my undergraduate studies, amalgamation led not to efficiencies but rather to a leveling-up of union contract salaries to match those paid in the highest-paid prior city, a deterioration of service quality, and stagnation. Winnipeg community activist Nick Ternette is even giving a talk tomorrow at the Frontier Centre on the failures of Unicity!

I hope that local government minister Rodney Hide, who has lectured in economics and ought to know Tiebout, has thought this one through. I've not yet seen the case made where any serious weight is put on the loss of Tiebout competition. The Royal Commission Report makes no mention whatsoever of Tiebout. A search on "competition" finds lots of references to how well a unified Auckland could compete with other "global cities", but nothing on the loss of interdistrict competition. There's one mention at page 348 of how competition among vestigal local bodies post-Amalgamation ought be stifled. None of this fills me with confidence. Note, however, that I do not purport to have read through the Royal Commission Report in any great depth.

Update: Ilya Somin here talks about the importance of Tiebout competition among US States.