Ten initiatives to help young people: 1. Housing

Young people find it difficult to obtain housing because it is so expensive.  This is because demand is rising much faster than supply.  People live longer and occupy housing for longer.  An increasing proportion of people choose to live singly, and immigrants add to the population.  All these factors increase demand, but planning regulations prevent a corresponding increase in supply.  More homes are needed, and it should be made easier to build them, and to build ones suitable for young people.

Parts of the green belt are by no means green.  Agricultural land around cities is often given over to monoculture with quantities of fertilzers and pesticides poured into it to grow huge fields of a single crop, resulting in poor habitat for birds or small mammals.

One solution would be for government to buy chunks of agricultural land around cities.  They would do so at the market prices for agricultural land, or slightly above, and from farmers willing to sell.  Government would then re-zone the land as suitable for building, and sell it, again at market prices, to developers.  Since land that can be built upon sells for many multiples of the price of farmland, government will make huge change-of-use gains.  

The sale of large blocks of such land will lower the price of building land.  The hundreds of thousands of extra houses built upon it will lower the price of housing as the supply more than keeps pace with demand.  Government could designate a proportion of the new homes specifically for young people.

The result would be extra housing where people wanted it to be, on the edges of cities instead of beyond the green belt.  Much of it would be more affordable to young people, who would then be able to live closer to where they work, without having to pay exorbitant housing costs.  With more young people finding it easier to buy homes, the pressure on rental properties would decrease, lowering the living costs of those who choose to remain and rent properties within the cities.

The programme of building such housing would boost employment, creating tens of thousands of extra jobs, including jobs for young people.  It would give the economy a significant boost.  More to the point, it would solve one of the most serious problems faced by young people today.

London is hard hit by the housing crisis

The cost of the housing shortage to London’s economy is well over £1bn, says this week’s report from Fifty Thousand Homes, a new campaign backed by over 100 business leaders and supported by organizations as diverse as London First, CBI London, and Shelter.  They publish data compiled by the Centre for Economics and Business Research (CEBR), data that shows the annual wage premium caused by high housing costs is currently £5.4bn annually, and will rise to £6.1bn by 2020 unless action is taken.  Furthermore, the unnecessarily high cost of housing is diverting an estimated £2.7bn from annual consumer spending, a sum that could be creating many thousand jobs in the capital.

The ASI has repeatedly called for planning changes to make house-building in cities easier, including our most recent paper, “The Green Noose.”  David Cameron’s conference pledge of a national crusade to build 200,000 affordable new homes will be no more than a pious intent unless it is backed by real changes to make new housing possible in and at the edge of cities – the places where people want to live.

As we have said before, significant parts of the green belt are by no means green or environmentally friendly.  Building homes on some of this non-verdant land will save many middle and low income workers the long and expensive commute which high housing costs impose upon them.

Now that good economic data has emerged revealing some of the economic costs of poor housing policy, the case for change becomes overwhelming.


Transport for London could dissipate its goodwill

Transport for London has quite a good record. There have been significant improvements in London’s transport, and TfL can take credit for some of them. We have the new Routemaster buses with the open back that you can hop off in a traffic jam, or hop on or off at traffic lights. There are the new wide tube train carriages that allow you to talk from one carriage into another in search of a seat. We are soon to have all-night tube services on some lines.

The new traffic lights that tell pedestrians how long they have to cross are a good innovation, as is the reconfiguration of some congested crossings that were previously more dangerous to pedestrians. TfL took part in some of the consultations that led to these and other improvements.

The leaked proposals under consideration on Uber could dissipate all of the goodwill TfL has earned, however. There is no conceivable benefit to Londoners in having to wait 5 minutes before a car can pick them up, or in preventing them from seeing which cars are nearby. This is typical corrupt rent-seeking, trying to hobble competition through political lobbying in order to protect incumbents and keep up prices.

Uber has provided Londoners with a service that is more flexible, more convenient and less costly. An estimated 1.2m users have taken to it. They do so because it is of value to them. Black cabs provide a good service, too. Most cabbies are cheerful and helpful, and they know the shortcuts. There is room in London for both types of service. The way to benefit most Londoners would be to ease the regulations and costs of the black cabs, rather than to legislate away the benefits that Uber brings.

The black cab drivers’ association and those representing licensed minicabs boast openly that they were behind the now-public consultation proposals, and influenced TfL to take them on board. TfL should now ditch those proposals as ones bringing no benefit and great disadvantages to Londoners. Unless they do so, they will rapidly lose all of the goodwill gained by their other, more sensible, innovations.


Mr Corbyn and the deaf philosopher

Jeremy Corbyn captivated the Labour Conference with his calls for a kinder politics and a caring society.  His audience enthusiastically applauded the idea of seeking fairness and compassion.  This is not surprising, since these are all aims that would be shared and expressed by many, if not most, people across the political spectrum.  David Cameron would have received rapturous applause for the same words, as would Tim Farron.

It is not the aims that mark the political divide, but the methods that might be deployed to achieve them.  It is not the intentions that matter, but the policies pursued to bring them about.  Mr Corbyn’s speech was long on ambition but short on policy, though there were some policies, together with others in the pre-conference days, that enable us to picture the approach he would take, if not the detail.

I have at times advocated being a ‘deaf philosopher,’ not listening to what politicians say, but watching what they do, judging them by their actions and not their words.  It is all very well talking about caring and compassion, but not much use if the policies pursued bring about drabber and more restricted lives for the people they claim to serve.

The Communist governments of the Twentieth Century uttered high-vaulting words of fairness and ‘rule by the people,’ but the reality they delivered was of squalid poverty and stunted lives.  More than that, their rule was marked by a huge gulf in living standards between the party elite allowed to buy Western goods in special shops and the mass of ordinary people consigned to the endless queues for the shoddy products of a socialist economy.

Mr Corbyn talks of rent control, a policy no serious economist endorses.  This is because it fails in practice.  For a few it fixes their rents, but given non-market returns, landlords withdraw properties from the market, so availability diminishes.  Moreover, with inadequate returns landlords do not spend to maintain properties as well, so they decline in quality.  Fewer and poorer properties is not the intent, but it is the result.

Renationalizing railways and utilities is advocated to ‘put the people in charge,’ but in reality it means bringing them under political control.  When they were under state control they were characterized by under-capitalization, producer capture, vulnerability to frequent industrial unrest, and services that paid scant attention to consumers.  The talk was of one thing, the reality of another.

It will be very important during the coming months to make the case that real-world results matter more than high-falutin intent.  We need to see what happened before in the UK, and what happens elsewhere when politicians attempt to impose ideas without regard to their actual results.

Turning points

There have been turning points in the development of humankind.  Some would point to the ability to make fire and the effect it had on people’s diet and survival chances.  Undoubtedly the development of agriculture about 12,000 years ago and the domestication of grains and livestock enabled humans to become a settled species and to store value against adversity.

For most of the time men and women have been on this planet they have lived a meagre existence at subsistence level, vulnerable to storms, drought and crop failure.  Something happened about three centuries ago that changed that for an increasing proportion of Earth’s population.  It was undoubtedly a turning point when people began to use some of their resources as capital to generate wealth. 

Social and intellectual changes played their part in fostering a culture of experiment, innovation and investment.  Led by Britain, the Industrial Revolution set humankind on an upward course of wealth creation that has lifted large and increasing portions of humankind out of starvation and misery.  The wealth generated by the use of capital has made possible a secure and adequate diet as well as modern medicine and sanitation.  It has enabled widespread access to education and healthcare.  It has profoundly altered the conditions of life along with the other major turning points.

Capitalism has spread and is spreading its benefits across the world.  It is not to Socialism that we owe lifestyles replete with opportunities as well as comforts.  By concentrating on the creation of new wealth instead of the mere redistribution of existing wealth, capitalism has set humankind on an upward path of limitless development.  In place of envy of those who have more, it provides space or what Adam Smith called “the uniform, constant and uninterrupted effort of every man to better his condition,” and of course it applies equally to women.

It seeks not a fairer world but a better one, not equality but opportunity.  It works with the grain of the real world rather than attempting to impose a preconceived mental pattern upon it.  It works by improvement and evolution, not by revolution.  Even though this seems obvious, it is worth repeating from time to time to people for whom this is not so.  When people are tempted by the fantasy world of Socialism, it is worth reminding them of the real-world achievements that Capitalism has brought about and Socialism never has and never can.