Loosening planning permission makes us richer
An interesting paper from an offshoot of the LSE. Looser planning permission makes a city richer. Of course, the paper looks a little odd at first sight but they do the work correctly.
The Blitz, in which the Luftwaffe dropped more than 18,000 bombs on London over eight months during the Second World War, was utterly devastating for the capital.
More than two million homes were destroyed, 60,000 civilians killed and 87,000 wounded between September 1940 and May 1941.
Yet a new study from the Centre for Economic Performance (CEP), at the London School of Economics (LSE), suggests that the capital is £4.5 billion a year better off because of the raids.
Note what they do not do which is make the cod-Keynesian mistake of only measuring the economic activity of rebuilding while ignoring the losses from the bombing. Rather, they've:
This paper exploits locally exogenous variation in the location of bombs dropped during the Blitz to quantify the effect of density restrictions on agglomeration economies in London: an elite global city. Employing microgeographic data on office rents and employment, this analysis points to effects for London several multiples larger than the existing literature which primarily derives its results from secondary cities. In particular, doubling employment density raises rents by 25%. Consequently if the Blitz had not taken place, the resulting loss in agglomeration economies to present day London would cause total annual office rent revenues to fall by $4:5 billion { equivalent to 1:2% of London's annual GDP. These results illuminate the substantial impact of land-use regulations in one of the world's largest and most productive cities.
Roughly speaking, you understand, bomb sites had planning permission by definition. Not-bomb sites had to go through the post-war planning process. Those places where people could build without according to the planners' desires built bigger and quite possibly better. To such an extent that the London economy is now larger than if all had been according to plan.
The lesson from which is pretty obvious really - abolish the Town and Country Planning Act 1947 and successors and we'll all be richer. Which would be a nice result from just getting government to do less, wouldn't it?
That small government, free market - liberal - argument for Brexit
For at least one of us here the argument in favour of leaving the European Union is that the EU prevents the creation of the sort of governance we would prefer. We find now that those arguing in favour of Remain are making the very same argument, an interesting confirmation of our basic contention.
John Harris in The Guardian:
The likes of Liam Fox seek a Britain that would be disastrous for many leave voters. These ultra-free-marketeers must be stopped....If we take that as a given, anyone involved in progressive politics ought to focus on one imperative above all others: the defeat of the zealots who saw the dismay and disaffection of so many potential leave voters, opportunistically seized on it – and now want to pilot the country into a post-Brexit future that is completely inimical to their future. We all know who they are: in the Conservative party, their strength is built on a bedrock of true believers in a weird kind of anarcho-Thatcherism: Jacob Rees-Mogg, Fox, an array of MPs too obscure to mention.......these politicians are blazing a trail for a rightwing politics that has decisively left behind any semblance of moderation, and fully embraced the reckless mindset of the revolutionary. There is a reason why the hard Brexiteers cannot coherently explain their vision of Brexit: their chief aim is to break as many things as possible, in the belief that from the rubble might arise a kind of flag-waving, small-state, free-market utopia that even the blessed Margaret might have found unpalatable.
As regular readers will know our views on the role of the state in the economy are rather more subtle than that propagandistic description. And yet there is a truth underlying the point.
That sort of small state, interventionist only when absolutely necessary and reliant largely upon free markets, society is what produces the wealth and living standards of Hong Kong, Singapore, Switzerland and, in fact, all the places richer than us which aren't just living off resource rents.
We'd like Britons to be richer than they are, as rich as the current state of knowledge enables us all to be and we're really pretty sure that our fellow countrymen would also like that. Which is why we advocate what we do. Including to point out that the European Union's basic governmental ethos isn't amenable to that plan.
The contention here from Harris is that we must leave the EU in order to have that plan. Sure, he's exaggerating, but his point is that the EU saves the progressives' desired system. Leaving would enable to deconstruction of that bureaucratic social democracy if that's what Britons want to do, therefore we must stay in to preserve that bureaucratic and regulatory social democracy.
Which is rather our point, isn't it? Note the difference between Harris' accusation and our own position. Harris insists that this small state solution will be imposed by Brexiteers red in tooth and claw. We are only insisting that the standard classically liberal order can only happen if we're outside the EU. Whether it does happen will still be in the hands of the people of Britain. That being rather our point, being in the EU means Britons cannot have what they might want, being out gives the choice.
Sure, we argue that people will prefer, possibly even should prefer, that classically liberal order. But what we're insistent upon is that people should have the choice. We are, after all, a democracy, are we not?
Why politics and planning just aren't good ways to run things
That there will be politics is obvious enough, that there will be some modicum of planning equally. There really are problems which need to be chewed over publicly, it really is true that all markets all the time markets does not address every single problem we face. It's also obviously true that democracy is valuable in that deciding upon what the goals are is important.
However, it's also important to note that the politics part introduces gross inefficiencies into the system. This is above and beyond Hayek's point about the centre never having the information to plan, this is about the purblind refusal to accept what we do in fact know. Take the subject of consent for organ donations:
A new system of presumed consent for organ donation will save up to 700 lives a year, ministers have said.
The Government today confirmed its intention to change the rules in spring 2020, introducing an “opt-out” model after decades of debate.
It's not just that we have no evidence of this contention, it's that all the evidence we do have show us that this contention is wrong:
The best estimates of presumed consent suggested that switching to presumed consent might increase organ donor rates by 25%. 25% isn’t bad! But we don’t have many examples of countries that have switched from one system to another so that estimate should be taken with a grain of salt.
The latest evidence comes form Wales which switched to presumed-consent in 2013. Unfortunately, there has been no increase in donation rates.
We're the people who actually conducted the experiment. We're the people who produced the evidence. No lives are saved by the nationalisation of corpses because nationalising corpses doesn't raise the transplant rate.
We have pointed out, many a time, that paying donors for organs - as in Iran, where there is no waiting list for kidneys - works, no other method we've tried does in the sense of producing enough organs for the desired number of transplants. But that isn't our point here.
This is our point:
The legislation, which was introduced in Parliament last July, is expected to return to the House of Commons in the autumn, having won widespread political backing so far.
Planning doesn't work for Hayekian reasons. But also because politics will determine what is planned and how. And politics doesn't produce the right answer nor the best plan. It produces what many people agree upon, a very different matter.
As here, enough agree that presumed consent will increase transplant rates therefore that's going to be the political action. The real world tells us - in an experiment conducted by our very selves just yesterday - that presumed consent won't work. But it's still going to happen because politics isn't a good way of determining how we do things.
All of which is Churchill on democracy of course. The lesson of which is that sometimes we must use this not very good system. But let's limit our use of the not good system to when we must shall we? Rather than using this inefficient, often entirely wrong, political planning in every nook and cranny of our lives and economy.
After all, if political decision making is to ignore the evidence staring them in the face over organ donation what's to make us think they'll be different over where houses should be built, the rents that should be charged, the righteous level of wages, what are the industries of the future that should be invested in, which factories should be making what?
When did this happen - and who did it?
A case, of White Van Man being cruelly oppressed by the authorities or a righteous protection of the environment?
A council is refusing to back down and cancel a roofer's £300 fine- which he claims was for keeping empty crisp packets in his work van without a rubbish licence.
Stewart Gosling, 43, kept the stash of empty crisp packets and water bottles in a plastic commercial waste bag in the back of his white van.
But when he was pulled over by council workers carrying out spot checks, they told him he was breaking the law for carrying the rubbish without permission.
It is, of course, that delight the European Union and law derived from it that leads to such. We tend to think that £300 for a crisp packet or two is a bit too much as a fine. But that's not the important point here, not at all:
A Waltham Forest Council spokesman said: 'The waste in this case was being transported in commercial refuse bag in the trader’s vehicle.
'Regardless of what the items are, if waste is being stored in a commercial refuse bag in a trader’s van it is necessary that they have a valid waste carriers’ license (sic).
'It is widely recognised as best practice for tradesmen to be licensed to avoid legal repercussions, in the event they are required to transport even small quantities of waste.'
That the anal retentive prodnoses appear to be in charge of society is also not something we favour but that's not the important point here either.
The Americans are rather ahead of us on this, given their constitutional prohibition upon unreasonable search and seizure. Yet we also insist that the police are not allowed to just randomly stop anyone and test them for drunk driving. There must be some cause, some reason to think that the offence might be being committed. Erratic driving for example.
Equally it's an important part of the British dispensation that we do not carry ID, that we do not have to prove ourselves to any passing official or policeman. The inquiry "And who are you, what are you doing here?" can be and is righteously answered by "Going about my lawful business, Constable."
Then, under the guise of this environmental law, we've granted every local council in the country the right to stop any vehicle and inspect it for empty crisp packets. An authoritarian breach of basic civil liberties is an authoritarian breach of basic civil liberties whatever the justification.
And that actually is the point here. Sure, the justification is the maintenance of our green and pleasant land but we've still just ceded much too much power to the State. That it's the local councils, not the police or the immigration authorities, insisting "Your papers please" as of right is not an improvement.
It is not that we the people are some problem to be managed by them, we appoint them simply to do society's scut work for us. The problem here is that they've taken unto themselves powers that State never should have in the first place, to be able to demand we prove our innocence at their pleasure.
Not that we expect such self-knowledge from The Guardian but still...
The Guardian gives us a long read on denialism. The part that so interests is what is not being said:
Denialism is more than just another manifestation of the humdrum intricacies of our deceptions and self-deceptions. It represents the transformation of the everyday practice of denial into a whole new way of seeing the world and – most important – a collective accomplishment. Denial is furtive and routine; denialism is combative and extraordinary. Denial hides from the truth, denialism builds a new and better truth.
OK. That's what we're being told it all is.
In recent years, the term has been used to describe a number of fields of “scholarship”, whose scholars engage in audacious projects to hold back, against seemingly insurmountable odds, the findings of an avalanche of research. They argue that the Holocaust (and other genocides) never happened, that anthropogenic (human-caused) climate change is a myth, that Aids either does not exist or is unrelated to HIV, that evolution is a scientific impossibility, and that all manner of other scientific and historical orthodoxies must be rejected.
We have checked and nowhere is the denialism with the greatest impact upon humans mentioned, not even once. That delusion that planned economies work. We did test this idea to destruction in that controlled experiment we call the 20th century. The market economies wildly outperformed the planned ones in that basic aim of having an economy in the first place, making human lives better. But not a mention of this at all.
There are multiple kinds of denialists: from those who are sceptical of all established knowledge, to those who challenge one type of knowledge; from those who actively contribute to the creation of denialist scholarship, to those who quietly consume it; from those who burn with certainty, to those who are privately sceptical about their scepticism. What they all have in common, I would argue, is a particular type of desire. This desire – for something not to be true – is the driver of denialism.
Quite so, that desire to insist that if only the right people were directing affairs then all would be copacetic. The right people always, but always, being defined as those doing the insisting.
If we are to be properly informed concerning what we humans really do know then it is of a certain importance that all accept the idea that market economies work, non-market economies do not. As above, we have tested this and we know it to be true.
But then we don't really expect that level of self-knowledge from The Guardian. It would certainly have a lot of blank space between the adverts if it took the principle seriously.
The student loan obligation that lives on after death
No, the British student loan system doesn't operate this way and we're not even sure that the American one should. However:
Deceased and still in debt: the student loans that don't get forgiven
Student loans not expunged upon death? Now there's a thing, eh?
In 2005, Sean Bennett took out a student loan with Sallie Mae, in 2010 he graduated from college and in 2011, when Sean was 23 years old, he died in a car accident.
At first, Sallie Mae sent out a letter of condolence to Sean’s parents explaining that they had a policy of forgiving debt if the recipient dies before they have repaid (they could afford to forgive – in the first quarter of this year alone, Sallie Mae made $333m in interest repayments from student loans).
Their policy of debt forgiveness is available on their website but it’s also in a file which Sean’s parents have meticulously maintained. It contains Sean’s loan application, his death certificate and the letters they received from Sean’s lenders when they decided to chase the debt after all.
Sallie Mae did not, of course, "make" $333 million in interest payments. It received them. And also paid out substantial sums to the people who had lent it the money in the first place. But then The Guardian an accounting, economics or numbers.
However, let's think of the alternative system to student loans - taxpayer funding of both students and academe. We're really pretty sure that tax bills are not expunged at death, the estate must still settle them. In fact, it's worse than that, death itself is a taxable event, the government will, upon issuance of that death certificate, start asking for up to 40% or so of everything.
We cannot see why that's a better system than a student loan similarly living on after death. Especially since the complaint here is that dead people shouldn't have to pay.
Nine arguments against basic income debunked
1. Such a system removes the incentive to work
One of the most popular arguments against basic income is that providing everyone with enough money to live off could reduce the incentive to work, leading to a drop in productivity, higher unemployment and a subsequent slowdown in growth. Current benefit systems often fail to ‘make work pay’, with sharp cut-offs leading to additional earnings being cancelled out by the withdrawal of benefit payments. If a system like the NIT was carried out correctly, there would be no such disincentives - the more income earned, the more income kept. We see in the US pilots of basic income in the 1970s that overall hours worked fell slightly, with the most significant reduction in work coming from single mothers. Most often the drop in hours worked was due to people allowing themselves more time to find new, more suitable jobs, rather than them simply working less.
Despite the ability to get by on no work at all, the individuals who would be most likely to ‘slack off’ are those whose productivity is low in the first place, perhaps due to lack of motivation or aptness to the role they are in. The absence of these workers from the labour market could actually boost productivity as they could be replaced by new capital - their roles could be automated. These individuals could then have the opportunity to learn new skills and become productive in other industries where they are better suited (see point 2). More people could find a role that motivates them, and as the US pilots suggest, few appear to drop out of the labour force solely due to the UBI received. Additionally, many of those who could benefit the most from basic income would be those who often face difficulties in full-time work (i.e people involved in childcare, domestic duties, those who are disabled). In this case it makes it easier for these people to manage as they are now receiving their own income and aren’t reliant on another’s, assuming that the basic income is paid out on an individual rather than household level.
2. People are more likely to find work meaningless when it is no longer their main source of income
Won’t those who choose to stay in employment find little value in their work if they don’t need the money they earn? This argument holds little reason itself; many people relish work itself and hold a sense of pride and identity in what they do. With the current welfare system millions are stuck in ‘unfulfilling’ jobs, often because they cannot afford to take time off and obtain the skills needed to switch industries. Basic income could allow those who feel this way to be free to pursue the positions they are really interested in, rather than having to take anything to keep afloat. People could have the liberty to learn skills that would allow for an expansion into more creative, or simply more enjoyable and fulfilling roles. Greater bargaining power for workers could mean businesses having to replace mundane, but essential, jobs requiring little skill with automated capital or AI – otherwise market distortion would occur due to labour being more expensive than capital.
3. Such a scheme would be too costly to be feasible
Perhaps the most popular criticism of basic income is its apparent cost. The money needed to give an entire population enough to live off of has to come from somewhere. What could make such a system affordable – potentially even revenue neutral – is a withdrawal rate in the case of Negative Income Tax (or clawing back money through taxation in the case of a UBI). As people earn more, the amount they receive through the NIT decreases on a tapered rate until they reach a certain income where they are no longer eligible for the NIT. It is entirely possible to set the withdrawal rate and the baseline at a level where sustenance is possible and the cost of introducing the scheme is not prohibitive to implement - a revenue neutral UBI could provide those over 25 with over £70 a week.
Additional savings from basic income could be made through the reduction in the number of DWP employees as much of the bureaucracy that is attached to the current welfare system might no longer be required.
4. Giving everyone money would lead to excessive inflation
A common misconception is that as an entire population now has enough money to live off, more money will be injected into the economy leading to higher levels of inflation. This is not the case. Firstly, the money supply isn’t changing due to the nature of the funding behind the NIT (see point 3). Demand-pull inflation would not occur because we’d have to be close to full capacity to experience high inflation in this scenario; more likely is that we’d experience a healthy level of inflation and growth. In fact AD itself might not shift out as you’d expect. And if inflation were to occur, we would expect to have seen it already with the current welfare system providing substantial payments through Universal Credit.
When the UK employed QE after the 2008 recession it didn’t cause excessive inflation, though we’d injected huge amounts of money into the economy. This is because the banks who received this extra cash didn’t actually push it straight into the economy - they held onto it. Similarly, those who receive extra income may choose to hold onto it rather than spend it immediately.
5. A basic income would worsen poverty and inequality
Some say, like Ian Goldin of the Financial Times, that by replacing specific benefits with a single grant, those who are dependent on multiple benefits won’t have enough income to cover basic needs, and those who don’t need the additional income will get it anyway. But those receiving the income would have the freedom to spend it on whatever they want, covering previous benefits they received and more. And basic income trials suggest that people tend to spend such money on necessities like food and shelter, rather using it to fuel addiction or ‘wasting’ it in some other manner. A GiveDirectly trial, in which entire villages in Kenya were sent direct cash transfers, resulted in individuals being able to literally build a roof over their heads, as well as start businesses and invest in livestock.
Though inequality is not something to be concerned about, the actual level of inequality might actually decrease with UBI as there would be a baseline standard of living, narrowing the gap between the rich and poor. Billionaires don’t ‘get a little more’ out of the system because with both a NIT and a UBI, and those with greater income pay it back via withdrawals or taxation. A basic income would be even better for many in poverty than the National Minimum Wage; those whose skills demand less in wages than the NMW may usually go unemployed, but with basic income in place these less-skilled workers could still receive a small wage (and supplemented by their basic income).
6. There are political implications - excessively high levels of UBI/NIT would be promised by politicians to garner support
There could be the issue of opposing political parties promising higher and higher levels of basic income in order to accumulate greater levels of political support. For basic income to work it should optimally be at a revenue neutral level – otherwise it could become unaffordable or force the government to borrow to fund it. A solution to this might be to have a third party administer the level of basic income (we see something like this in the Low Pay Commision advising the government on the National Minimum Wage). Removing politics from the payments means evidence based increases or decreases in the level, rather than rhetoric driving the debate.
7. Increased costs from higher levels of welfare tourism
There are concerns that countries providing a basic income for all open themselves to being ‘swamped’ by an inflow of immigrants into the country looking for a stable income. The argument goes that the country would then end up increasing the amount spent on such a programme, and so decreasing its affordability.
What this argument doesn’t take into account is the additional revenue provided by immigrants in terms of productivity and growth. Studies have shown that UK immigrants should not be generalised as sucking the cash out of the welfare system, and most immigrant groups are actually less likely to claim benefits than natives. Many forms of basic income such as CBI are only paid out to citizens of the country, so migrants would have to wait several years after moving before they could claim basic income, weakening any incentive to emigrate solely because of the programme.
8. Basic income makes people more reliant on the state
This argument suggests that by spending more on welfare, individuals become more reliant on said welfare and this dependency could be detrimental when trying to cut down on spending in this sector. However, by introducing a UBI scheme you are letting people spend money on what is their personal priority rather than tying them to a state-funded welfare programme or busybody groups that decides what people need for them.
By taking a less interventionist approach, governments are allowing individuals to become consumers: they are now contributing to market forces. With benefits and more specific programmes, the government could actually be creating surpluses and shortages in various industries by distorting demand and supply.
9. Introducing basic income could create a ‘slippery slope’
Some argue that the laissez-faire approach basic income provides to welfare could open the gate to more reforms of a similar nature, for example increases privatisation, or cuts to other schemes. programmes. While more free-market policies may not necessarily be a problem, worries about this are unfounded: basic income is an idea that has garnered support from the left, right and everywhere in between. As the Citizen’s Basic Income Trust puts it: ‘[CBI] is not the possession of any political ideology.’ The introduction of basic income would not make ‘right-wing’ policies more viable anymore than it would do for the left.
Emma Weber is a research intern at the Adam Smith Institute.
How can they charge these prices? Because people will pay them
Some questions in newspaper advice columns are easy enough to answer. "No, ee's not worf it" being a useful one that applies to many. This is equally simple:
How can Viagogo get away with charging such big fees?
Because they can - some people will pay them. Enough people will pay them to make the tactic viable that is.
At which point a slightly deeper dive into the explanation. People will charge absolutely as much as they can for anything. We can ascribe this to capitalism if we desire - that lust for profit - but it's more a feature of being human. We'd all like to get more coming to us for what we've got to send the other way. So, therefore, people do charge as much as they possibly can.
The solution to this is market competition. It is true that there's some limited number of anything. Most especially tickets to an event. Price is not the only but it's the most efficient manner of sorting through who really, really, wants a ticket and who would prefer to be doing something else given what they'll have to give up to gain one.
OK. But how is that margin, mark up, that the intermediary able to charge limited? By the fact that they don't have a monopoly. Sure, they've an effective monopoly over that specific pair of tickers but not over all those to that event. Thus the competition of others also willing to sell their tickets brings down the margin that can be charged for any specific pair.
Or as we've been known to put it, it's market competition that reduces the gouging that human nature makes us all prey to. Which is why we have market competition of course.
Voluntary exchange is the very definition of what it is to be human
Adam Smith was here a little earlier with his comments upon the innate tendency to truck and barter of course. But we seem to be gaining proof that it's more than just humans like or tend to do so, it's the very definition of what makes us human in the first place:
Researchers reviewed ancient fossils and landscapes and found that what separates us from other forms of early man was our ability to flourish in even the most extreme environments, from searingly hot deserts and tropical jungles, to icy mountains and wastelands.
Scientists at the Max Planck Institute in Germany, claim that ability was far more important than art, language or technology, at setting us apart from other hominids, such as Neanderthals or Homo erectus, who also had rich cultures, yet still died out.
Not only did Homo sapiens survive in harsh landscapes but they thrived there, learning to become ‘generalist specialists’ who could out-compete those around them no matter what the environment.
There must be something that led to that ability to outcompete of course. That being:
Dr Brian Stewart, study co-author said:"Non-kin food sharing, long-distance exchange, and ritual relationships would have allowed populations to 'reflexively' adapt to local climatic and environmental fluctuations, and outcompete and replace other hominin species.”
The first two of those both being trade, that propensity to truck and barter.
Observation of modern humans tells us that this is something that we do, the best we know of proto-humans tells us that those who succeeded did it too. Voluntary exchange seems to be at the heart of our very identity - a fact which makes it very odd that so many people wish to protect us from trade.
One of these numbers is entirely unlike the other
There might be some impersonation at British elections. This is, of course, just as much a matter of the security of our democracy as all that shouting about who shows what adverts on Facebook. And as that episode shows, the security of our democracy is something all agree must be not just preserved but enhanced.
Thus trying to find out how much impersonation there is seems sensible to us:
More than 20 charities and civil society groups have urged the government to halt plans to expand compulsory voter ID, arguing that a trial at local elections in May did nothing to dispel fears it would put off vulnerable and disadvantaged groups.
The organisations, including the Salvation Army, Age UK, Liberty and Centrepoint, have written a joint letter warning that the idea was an excessive response to an almost negligible problem of voter impersonation at polling booths.
Well, we don't know that it's negligible, that's what we're trying to find out. By, you know, running trials and tests?
The joint letter, sent to the Cabinet Office minister Chloe Smith, said that during the trial 350 people were turned away for not having the correct ID and did not return to vote – and there were just 28 allegations of voter impersonation throughout 2017.
The thing is, one of those numbers is entirely unlike the other. The lower one, 28, is the number which a system of no checks appears to think worth pursuing. The 350 is the number the new system of checks seems to think is worth pursuing.
Sure, we don't know why those 350 didn't return. They were legal but didn't have the docs, they weren't legal to vote, they couldn't be bothered to prove matters either way, who knows?
Note also that the 28 concerns the whole country, the 350 only five local authorities. Of which there are some 400. Meaning that if we scaled up our trial results we'd be talking about 28,000 people nationwide.
Well, yes, that does seem to be worth further investigation, doesn't it? Certainly, those sorts of results concerning Facebook would be bringing calls for regulation. Why not here?