The Real Problem Was Nominal: The Crash of 2008

Prof. Scott Sumner, who inspired the US programme of QE3 and was dubbed ‘the blogger who saved the US economy’ by The Atlantic, explains how central banks—not bankers—caused the 2007-8 crash. He goes on further, showing how the European Central Bank is repeating the mistakes the Fed and the Bank of England made in the dark days. And he argues that they can solve the slump and prevent future crises with a market-based, rule-based, stability-focused monetary policy of targeting the level of nominal GDP.

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The Green Noose

  • Despite academics, politicians, and international organisations recognising that the UK is facing a housing crisis, it is currently far less developed than many imagine, especially when compared to similar countries. Indeed, only two members of the EU 27 have less built environment per capita than the UK: the Netherlands and Cyprus. 90% of land in England remains undeveloped, and just 0.5% would be required to fulfil this decade’s housing needs.
  • Green Belts are not the bucolic idylls some imagine them to be; indeed, more than a third of protected Green Belt land is devoted to intensive farming, which generates net environmental costs.
  • The concept of ever-expanding urban sprawl is mistaken and pernicious. In addition, Green Belts can give rise to “leap-frog development”, where intermediate patches of land are left undeveloped due to restrictions, a phenomenon indistinguishable from what many understand urban sprawl to be.
  • By encouraging urban densification, Green Belts take green space away from those places where it is most valued. Each hectare of city park is estimated to be of £54,000 benefit per year, compared to a mere £889 per hectare for Green Belt land on the fringe of an urban area.
  • There are substantial welfare costs of Green Belts. They have made accommodation more expensive and smaller, increased costs for businesses (especially relative to other European cities), and have contributed to the volatility of house prices.
  • The avenue of reform we favour is the complete abolition of the Green Belt, a step which could solve the housing crisis without the loss of any amenity or historical value – if only politicians and planners had the courage to take it.
  • Failing this, we conclude that removing Green Belt designation from intensive agricultural land would also enable the building of all the housing required for the foreseeable future, and could help ameliorate the catastrophic undersupply of recent decades.
  • In the short term, simply removing restrictions on land 10 minutes’ walk of a railway station would allow the development of 1 million more homes within the Green Belt surrounding London alone.

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Wind Power Reassessed: A review of the UK wind resource for electricity generation

The UK wind debate assumes that wind farms operate at roughly their average output most of the time. According to Dr. Capell Aris’ new paper produced in concert with the Scientific Alliance this is not true. Power comes only extremely intermittently and variably and there are long periods of negligible efficiency in the long winter months when power is most needed. A 10GW wind fleet would need approximately 9.5GW of fossil capacity to guarantee its output.

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Parliamentary Snapshot: MPs on Entrepreneurship

Members of Parliament may talk a good talk about their desire to support entrepreneurship in the UK, but in practice there are multiple, competing policy options open to them – whether this is increasing tax breaks, spending more in various ways or cutting regulation. Due to the limited time and resources available to government it matters where the sympathies of our representatives lie within the context of the current policies already in force. Parliamentary Snapshot: MPs on Entrepreneurship is the first survey to uncover the views of MPs on policies impacting entrepreneurs, providing useful insights on the opinions and working knowledge of the House of Commons.

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Quids In: How sterlingization and free banking could help Scotland flourish

An independent Scotland using the pound outside of a currency union would have a more stable financial system and economy than it has now or than a currency union could provide, argues Sam Bowman. ‘Adaptive sterlingization’ – a combined policy of unilateral use of GBP without a formal currency union and reform of Scottish banking regulations – would reduce risk-taking and increase competition in banking, significantly reducing the prospect of large-scale bank panics and financial crises. The ‘dollarized’ economies of Latin America – Panama, Ecuador and El Salvador – provide strong modern-day evidence that banking systems do better without central lenders of last resort.

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Sweet FA: Why foreign player crackdowns hurt English football

It is a very common view that “importing” foreign football players into the UK to play in the Premier League leads to less opportunity for English players to play for these teams. This means that English players get less high-level experience, and consequently aren’t as good as the players of Spain, France, Italy or Germany, who make up a larger fraction of the players playing in their home leagues. This, the argument runs, is an important factor in explaining the English national team’s perceived underperformance in international competitions. I review the literature and present novel data establishing a negative relationship between current performance (as measured by FIFA ranking) and the current amount of football played in a league by native players (across Spain, England, Germany and Italy). Further, I find no relationship between minutes played by English players in the Premier League five or ten years ago and current performance. Finally, I find strong evidence that a league’s overall strength (as measured by its UEFA coefficient) is predicted by the current amount of foreigners playing in it. To restrict foreign players would not directly benefit the English national team, but it would risk substantially curtailing the overall quality of the world’s most popular football league.

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Is government helping exports?

Estimated to be spending £100m over its targeted budget, UKTI is not delivering enough exports to justify its costs. This report argues that UKTI is representative of some of the worst inefficiencies of the bloated quango state. [gview file="http://www.adamsmith.org/wp-content/uploads/2014/09/UKTIPaperWeb.pdf" save="1"]