Housing in London

In The Green Noose, Tom Papworth has argued persuasively for loosening the green belt. Another way to goose up the supply of housing in London would to deregulate the construction aspect of provision.

We welcome competition in local government, so let HMG pass legislation encouraging London Boroughs to bid for time-limited privileges. The idea would be that the first (as it might be) eight out of thirty-two London Boroughs would obtain the full extent of incremental rates on new housing arising, if they bid for temporary relief from taxes and regulatory restrictions.

New construction is already exempt from VAT, so the targets would be to suspend officious HMRC registration of subcontractors, so as to reduce labour costs; taxes on capital gains, profits and dividends arising out of qualifying developments, so as to incentivise developers and investors; and suspending stamp duty on associated property transactions, so as to cheapen costs to purchasers.

This is however likely to be less effective than deregulation of land-use and construction practices. As to land-use, we would advocate suspending

  • Height restrictions, protected sight-lines, listings, change-of-use consent and the whole paraphernalia of JNCC restrictions;
  • The rights of occupants of collectively owned properties to form blocking minorities refusing market compensation (this is with a view to easing the consolidation of building lots); and
  • Judicial review of compulsory purchase and planning decisions.

To conclude on this score, we would argue for a presumption of planning approval unless a reasoned refusal is delivered within fourteen days; developers’ access to an appeals tribunal with a presumption of summary reversal; and stricter tests for reasonability and timeliness in the exercise of neighbours’ rights, including local impact, party-walls and natural light.

Finally we turn to construction practices. These are hamstrung by obsolescent and intrusive restrictions by way of building and fire regulations. It’s an open secret that the latter are honoured in the breach, with new residents removing smoke-detectors and door-closers and demolishing corridor and lobby walls as soon as they can. As to building regulations, these are largely a cloak to defend time-expired practises and uncompetitive suppliers. Instead, let developers show that their proposals comply with best practice in the form of building codes elsewhere (eg. Vancouver, Melbourne or Chicago).

To those who argue that this encourages builders to resort to regulatory arbitrage, our answer is “why not?” More competition in local government!

To be serious about inequality for a moment

The Office of National Statistics has just released figures on incomes in the UK. Giving us that interesting little chart above. Do note that that is income of those who are in the tax system. And also that it does not include the impact of the benefits system. So this doesn’t include subsidy to housing or anything like that.

And then have a look at the global rich list. Where you can plug in an income and the country to which it refers and see where that income in that country puts you on that global rich list. The reason you must add the source country is because they are calculating using PPP adjusted currency rates. That is, they’re taking account of how much things cost in each country. So this isn’t really a comparison of incomes, it’s a comparison of living standards.

And here’s the astonishing thing. That bottom 1% lifestyle in the UK is still among the top 20% globally. The UK minimum wage puts you well into the top 10% (almost top 5% in fact). And a little over median wage puts you into the global top 1%.

To repeat, this is not assuming that things are cheaper in other countries. This is after we convert to the prices you’re paying at Morrisons.

We’ve nothing at all against those who would campaign about either poverty or inequality. But we would like to take this little opportunity to remind all that by any historical or global standard we here in the UK, yes even the relatively poor by local standards, are living pretty high on that income scale. And that feeds in to what we think is the important point about what we might want to do about inequality or poverty. Let’s concentrate on that global picture, not gaze at our own navels. Encouraging poor country growth wit the aim of abolishing absolute poverty seems to be so much more productive to us than worrying about whatever gap there might be between the top 20%, top 10% and top 1% of the global income distribution.

President Obama: the ultimate poverty hypocrite

Americans are experiencing buyer’s remorse. Last summer CNN found that 53% of those polled would choose Mitt Romney to be president today, over the 44% who chose Barack Obama. And with Obama’s approval ratings fixed these days below 50%, I suppose it’s only human to get a bit testy with those you’re compared to:

President Obama poked fun at former rival Mitt Romney and leading Republicans on Thursday, saying the GOP’s rhetoric on the economy was “starting to sound pretty Democratic.”

At the House Democratic Caucus retreat in Philadelphia, Obama noted that a “former Republican presidential candidate” was “suddenly, deeply concerned about poverty.”

“That’s great! Let’s go do something about it!” Obama added in a not-so-veiled jab at Romney.

What’s not particularly smart, however, is to frivolously attack someone’s track record on poverty when your own record looks abysmal:

A few ugly facts about the Obama Presidency:

  • Median household income has slumped from $53,285 in 2009 to $51,017 in 2012 just up to $51,939 in 2013.

BN-DV798_income_G_20140725164636

  • In comparison to his three previous successors, this fall in median income looks even worse:

20140927_USC762

  • Real median household income was 8.0% lower in 2013 than in 2007.
  • Nearly 5.5 million more Americans have fallen into poverty since Obama took office.
  • Obama oversaw the first time the poverty rate remained at or above 15% three years running since 1965.
  • Home ownership fell from 67.3% in Q1 2009 to 64.8% in Q1 2014; black home ownership dropped from 46.1% to 43.3%.
  • Labour force participation rate fell from 65.7% in January 2009 to 62.7% in December 2014.
  • The federal debt owed to the public has more than doubled under Obama, rising by 103 percent.
  • 13 million Americans have been added to the food stamp roll since Obama took office.

Obama has been very successful in painting a picture of himself and the Democrats as the ‘Party of the Poor’, and did an even more sensational job convincing 2012 voters that Romney’s riches and successes put him out of touch with the middle-class America. But in reality, the president’s policies have pushed millions more people into financial stress and poverty.

And he’s still causing damage; even his latest State of the Union address called to raise taxes on university savings accounts and still cited fake unemployment numbers, as if this somehow helps the double-digit workers who have given up looking for jobs.

Perhaps the president really thinks his increased federal spending will pay off for the poor. Maybe he really believes that multi-millions more on food stamps is a saving grace instead of a tragedy. But regardless of intention, the facts speak for themselves.

Obama’s talk on poverty is cheap. And his mockery of Romney cheaper.

 

A new ASI project: book reviews

One can never read too little of bad, or too much of good, books: bad books are intellectual poison; they destroy the mind.

~ Arthur Schopenhauer

The Adam Smith Institute is on the look out for young liberal thinkers to review political, philosophical and economic books! If you are a student and would like to review an important new book-length contribution to the humanities, get in touch.

After we’ve sent you the book, express your critique in 1000 words and submit it to sophie@adamsmith.org to be a part of a new ASI reviews publication we are launching.

We welcome reviews on recent works tackling everything from private schools for the poor to the causes of social mobility, to be edited and compiled together by the ASI research team.

Here are some books we think would be good choices—we are very open to any other suggestions:

 

Logical Fallacies: 5. Equivocation

 

Madsen Pirie’s series on logical fallacies continues with a look at equivocation.

You can pre-order the new edition of Dr. Madsen Pirie’s How to Win Every Argument here