The latest bright idea from those who would solve the housing crisis seems very much less than bright to me. Here’s Polly detailing it:
But land prices are the key. Oxford economist and housing expert Professor John Muellbauer calls for a national land bank, the state acquiring land for garden cities or any building at current land use value and, once given planning permission, selling on to builders, keeping the windfall added value.
Err, yes. The current high price of housing is a result of not much housing being built. OK, so we’re OK with that analysis. Polly then tells us that simply building more won’t help: in direct violation of this supply and demand thing that we know abouit economics. And then the solution is that the State should be the person buying the land for development. But our problem is that it is already the State that decides what can be built and where.
For that is indeed our problem. The majority of the price of a house, anywhere anyone actually wants to live that is, is in the value of the chitty that allows you to build a house on that particular plot. These chitties are, we might note, State issued. So our problem is simply that said State won’t issue enough chitties so as to bring the scarcity value of the chitties down. And our solution to this is to allow the State to collect the value of said chitties?
The solution is, of course, as we here have been saying for some years now, simply to keep issuing those chitties until the scarcity value is exhausted. It’s absolutely true that certain locations will still have scaricity value but housing as a whole won’t. Or, if you prefer, the solution is not that the State should be more deeply involved in the planning of housing but that it should laregly withdraw from such planning of housing.