The Pin Factory Blog

The UK's land-use system drives up housing prices. Though academics have been telling the government that for decades, apparently a few more MPs have just noticed this.  The question is whether they'll actually do something about it. At the moment, they seem to get about half of the problem, and half of the solution... hey, that's better than normal! Zoning restrictions and complicated bureaucracies drive up land prices. When supply is artificially restricted but demand increases, amazingly, prices go up! 

The problem is not simply the "stratified communities" or a lack of warm fuzzy feelings that these MPs seem to be concerned about. Land restrictions benefit exactly one group: wealthy homeowners.  Everyone else suffers the consequences, from the obvious (higher housing prices) to the subtle (higher food prices). There is a vast body of research that suggests that zoning laws redistribute wealth from the poor to the upper and upper-middle classes.

At least politicians now realize where the solution lies: to reducing the barriers to production. But they aren't willing to go far enough. The government wants to continue to play social engineer in the attempt to artificially impose a sense of community onto towns by requiring that new homes be low-cost and sold only to local labourers. So they'll lift one layer of restriction, but create a whole new set of restrictions and bureaucratic processes for developers to deal with.

The economic impact of the lack of a real market in land in the UK is widespread. At the moment, I'm working on a paper that seeks a middle ground – a market-based solution that will give residents control over their own neighbourhoods but prevent them from imposing the costs of their preferences on the rest of society. In the meantime, any action that actually lifts the barriers to building affordable housing would be a welcome step.

A friend has just sent me a comparison of the McCain and Obama tax plans, which make interesting reading. McCain does not actually propose to change much, but Obama, says the comparison, would be raising tax rates in several key areas.

On capital gains, McCain would have no tax on the sale of homes up to $500,000 but Obama proposes a 28% tax on the sale of all homes. On dividends, McCain's 15% represents no change, but Obama's team would tax dividends at nearly 40%. On income tax, McCain would again change nothing, but Obama would revert to the pre-Bush-tax-cuts position, raising rates even for those on just $30,000 a year. And Obama would restore the inheritance tax that Bush repealed.

Obama fans would no doubt challenge this interpretation. But the fact is that the last thing America needs right now is higher taxes. After seven fat years, you have to expect a few lean ones. Everyone has to go a bit hungry, the government included. You can't maintain a bloated public sector through hard times and expect an over-burdened private sector to carry it without stumbling. Certainly, Margaret Thatcher in the UK raised taxes in the teeth of a recession: but that was done to bring the government's books back into balance, no longer dependent on the frauds of borrowing and inflation. With sound money and sound budgets restored, the economy boomed and Thatcher was able to cut the tax burden year upon year upon year.

As Ronald Reagan put it: We don't have a budget deficit because we haven't taxed enough. We have a budget deficit because we've spent too much. Simple, really.

O. Glenn Smith writes in the International Herald Tribune on the potential for getting our much of our energy needs from the Sun:

Science fiction? Actually, no - the technology already exists. A space solar power system would involve building large solar energy collectors in orbit around the Earth. These panels would collect far more energy than land-based units, which are hampered by weather, low angles of the sun in northern climes and, of course, the darkness of night.

Cost and efficiency have been the stumbling blocks to this becoming a possibility and unsurpisingly the breakthroughs have come from the private sector. Space Exploration Technologies and Orbital Sciences have been at the forefront of developing the technology to make this a possibility.

Clearly this is promising, but for the foreseeable future our energy needs will still need to be met through a variety of sources, with coal, gas and nuclear at the forefront. As such, government targets on renewable energies are damaging the market response. For example, the government has set unrealistic and damaging targets on the power we will get from wind turbines. Recently a report by an independent consultancy, funded by the Renewable Energy Foundation, undermined the government’s policy.

With the three main political parties closely aligned on imprudent carbon-reduction obsessed energy policies, we could have a monopoly in such bad policies (£260 per year, per household) in the future. And sadly when the government messes up, it doesn’t go out of business.
 

This should ring a few alarm bells over here. Hasn't something similar been going on over PFI deals?

The best response to this sort of monstrosity, compulsory voluntary national service, is the essence of Milton Friedman's retort about the draft. It's slavery.

What is the largest form of wage discrimination in the world today? Sexism? Racism? No, restrictions on migration.

Those anti-terrorism laws: they were only going to be used in the most exceptional circumstances, weren't they?

Explaining quite how dilatory and incompetent the government has been over computer security. Bodes well for the national database, doesn't it?

Why a carbon tax is preferable to cap and trade.

And finally, yes, this is the way it is working.

Following the government’s broadly popular welfare reforms, there has been much discussion on welfare. Debate has been centred on how deserving those in receipt of welfare are. Interestingly though, there seem so be growing consensus that people are abusing the system and few have come out in defence of the current welfare system. The status quo has become indefensible, so those in favour of welfare are now calling for the government to spend our (and their) money in “better" ways.

A good example of this supernanny argument is Deborah Orr writing in The Independent. She argues that:

The children who are really at risk of becoming professional system-milkers, on drugs, working in the black economy, causing local havoc, need to be helped while they are still at primary school. It is often easy to spot children who are likely to go off the rails very early on in their education. But the things that will help them – boarding schools, special schools geared to their needs – are invariably dismissed as too expensive or out of step with the idiocy of under-resourced, lip-service "inclusion".

It is indeed often easy to spot children who are likely to go off the rails…their parents have been in receipt of welfare for years. They are the children who grow up in areas that are wholly sufficient on government largesse. These areas have had their societal structures fractured by the downward pressures of government interference. Orr’s idea of removing them further via their inclusion in special schools is something of a perverse incentive. After all it was government interference that created these children, more government is not the solution.

Despite claims that we are all middle class now, there is a clear underclass in Britain whose lives are distorted reflections of the twisted dreams of socially conscious politicians. The need for the special education that Orr is demanding is a by-product of a state controlled life.

She is right about one thing though. The government’s welfare proposals are not radical enough. However, instead of special schools, a good place to start would be a flat tax that incentivizes hard work while taking the poorest out of the income tax net. If this was coupled with the introduction of competition and choice in education, it would go a long way to empowering those downtrodden by government.

I drink almost 2 litres of water a day; a glass or two during breakfast, picking up a bottle on the way to the tube, refilling my mug a couple of times from the office sink during the day and another bottle on my way home from work. Like most people, I take my access to one of life’s necessities for granted. However, water shortages are wide spread across the globe and a good article in The Economist, points out that soon a crisis in the world’s water supply coild become a real problem.
   
The article suggests a solution to this shortage and it is quite simple: the trading of water across the globe. This is a clear, open market, pro-globalization proposition. It appears that the transport of mass amounts of water is both  feasible and cost-effective.
   
An important point to take from this article is that the idea of a global water shortage is misleading. In total there is more than enough water for all…that Canada and Brazil have more water than they need is of little consolation to parched Yemen and northern China. If this isn’t an argument for free trade, I don’t know what is.

Supporting open economies allows those who can provide or produce something to specialize. In agriculture for example, economies that don’t have the natural requisites to produce their own food can import and specialize in a different productive endeavour. Yes, this may mean that a change is necessary in what may have historically been the established industry of an economy, but if anything, humans are adaptable and the most successful countries and economies have been those that adjust their output to what they can do best.
 

I'm pleased to see that The Great Global Warming Swindle is still up on the website of the UK's Channel 4 television station, despite the communication regulator's critical remarks on it.

The programme was done as an antidote to Al Gore's An Inconvenient Truth. It beat up poor Al pretty mercilessly. It was hugely entertaining. Channel 4 prides itself on iconoclastic stuff and likes stirring up debate. But of course the enviro-nazis don't want debate on this issue stirred up, and around 250 folk complained. The regulator, Ofcom, has to investigate even if it only gets one complaint, so the watchdogs went through the programme with a fine-tooth comb. They concluded that it treated some of the climate-change experts unfairly and did not give them a chance to respond.

Well, they didn't need to respond because they'd got their response in at length beforehand, thanks to Big Al. It was Swindle that was the response. But the regulators ruled that the programme, while polemical, had not materially misled people. People watching it knew what they were getting.

Still, I'm sure the fuss will be enough to ensure that all the schools that are happily showing An Inconvenient Truth to their pupils (with all its own polemics, and with its demonstrated errors) do not show this cheerfully vicious rebuttal. There's something terribly one-sided about this debate, don't you think?

Orange is the new Thursday.

Far too many people close to the seats of power seem to misunderstand the role of speculators and the effects of their actions.

Sadly, this then leads to really stupid laws passing through the legislatures.

Further logical inconsistencies, this time from Al Gore (surprised?).

And yet more silliness over matters environmental: we're being forced to use more expensive waste disposal methods because....well, apparently, just because.

It might also be that windmills won't work as advertised either.

Good advice here for would be writers.

And finally, no, it isn't only State bureaucracies that mess up.