YIMBY: How To End The Housing Crisis, Boost The Economy And Win More Votes

• It has become widely accepted, including by the government, that the UK is in the midst of a “housing crisis”, where prices and rents have rocketed in key locations.
• There are a range of policies that would solve this, and many of them are well known. But none have been implemented because they have not been able to generate support from existing homeowners and the residents of areas that would see increased building.
• We propose three policies that would hand power back to residents; ways of solving the housing crisis that will also win political parties votes. Each would make a huge difference alone; together they could have a transformative effect on the housing situation in Britain:

1. Allowing individual streets to vote on giving themselves permitted development rights, to build upwards to a maximum of six storeys and take up more of their plots.
2. Allowing local parishes to ‘green’ their green belts, by developing ugly or low amenity sections of green belt, and  getting other benefits for the community in turn.
3. Devolving some planning laws to the new city-region mayors including the Mayor of London. Cities could then decide for themselves if they want to expand and grow and permit extra housing, or maintain their current size and character.

• Not only do young tenants and aspirant homeowners stand to benefit from a building boom that delivers more housing, but the economy could get a major jolt at a time of slow growth and difficult productivity.
• Evidence suggests that GDP per capita would be 30% higher—we would produce and earn nearly a third more every year—in just 15 years if we built enough homes in the right places. That’s £10,000 extra on the average household income.
• Politicians can solve the problem if they are willing to think big and propose policies that make reform work for everyone. Reforms that make most voters worse off have little chance of happening.

Read the full paper.

Discussion paper: Updating student finance

The current system under which university education in England is financed via student loans has been accompanied by controversy since its inception. The 1998 Teaching and Higher Education Act was introduced by the recently elected Labour government under Tony Blair. It brought in tuition fees, with loans available for students to pay towards their fees, and also replaced maintenance grants by loans for most students.

Tuition fees were raised to £3000 per year in 2004, and in subsequent years to £9250. The increases were marked by student protest and street demonstrations, amid claims that this would discriminate in favour of middle class students and those from well-to-do backgrounds. The Labour manifesto pledge to scrap tuition fees altogether was reckoned by many analysts to have contributed to a large proLabour vote among young people.

Many claimed that tuition fees financed by student loans represented a shift from finance of university education by older taxpayers to finance of it by a cash-strapped younger generation which enjoyed few of the state benefits available to its older counterparts.

The replacement of maintenance grants by maintenance loans was seen by some as part of the same process, with these rising for the year 2016/17 to a maximum of £8,200 for students living away from home outside London, and more for those studying in the capital. For a typical 3-year course leading to a degree, this has meant that students upon graduating could face a debt burden in excess of £50,000 (according to the Sutton Trust, the average student debt at graduation was £44,000 in 2016). It causes disquiet among many students that they are starting their working life with such a huge overhang of debt.

The calculations of repayment liability and of interest charged are dauntingly complex and impenetrable, and the system has been charged several times with failure to process information rapidly, or to correct overpayment collected. The current basis for most is that interest will be charged at the Retail Price Index for salaries up to £21,000 and at RPI + 3% for salaries of £41,000 and over. Debts are written off after 30 years, no matter how much or little graduates pay back, and once you have paid off your debt you no longer make repayments. Graduates who go abroad for 3 months or more have to complete an Overseas Income Assessment Form so that repayments can continue to be made, although there are obvious difficulties in some cases of enforcing collection

Read the full discussion paper here.

Chlorinated Chicken - why you shouldn't give a cluck

• The EU has banned the import of chicken disinfected with chemical rinses for two decades.
• Liberalising US poultry imports is expected to be a key feature of US-UK trade talks.
• Americans safely eat upwards of 156 million such chickens each week.
• Adults would need to eat 5% of their bodyweight in chlorinated chicken each day to be at risk of ill health from poultry alone.
• US methods produce fresh chicken at 79% of the price of equivalent birds on British supermarket shelves.
• British trade negotiators should be authorised to permit the import of chemically disinfected poultry from the US in return for a rapid free trade agreement.

Today in Washington teams from the UK and the United States will begin talks that both sides hope will end up in a trade deal between the two countries after Britain leaves the European Union.

Trade deals require pragmatism, they require compromise and they require the parties involved to look at their own regulatory frameworks and see if there are areas they can improve. With the UK leaving the European Union it can look again at restrictions on imports that the EU has imposed. Importantly these can be done through an evidence-based-policy lens.

Chlorinated Chicken is one of the areas that the UK can look at again as we enter talks. It is a safe treatment mechanism for meat practiced regularly in the US poultry sector. Importantly it is banned for import into the EU despite the European Food Safety Authority saying four types of chemical rinse, including chlorine dioxide, ‘would be of no safety concern’.

In fact a person would have to eat around 5 per cent of their body weight in chicken every day (nearly three whole birds a day for the typical British man) to reach the safety limit, according to European Commission data. Drinking water poses a far greater risk, making up 99 per cent of the disinfection byproducts consumed in a typical daily diet.

It does, however come with significant benefit. Immersing poultry meat in chlorine dioxide solution of the strength used in the United States reduces prevalence of salmonella from 14% in controls to 2%. EU chicken samples typically have 15-20% salmonella.

But why is this important? Because it's been a stumbling block on US-EU trade talks to date, with the USA likely to make increased access for American poultry exports to the UK market.

The UK can show it is serious about being open for business by striking a deal with the largest economy in the world and can simultaneously show it bases regulation on scientific evidence. That sounds like a win-win.

Read the whole piece here.

Children of When: Why housing is the solution to Britain's fertility crisis

Andrew Sabisky discusses the increasing difficulty that young couples are having in having children when they want to and having as many of them as they want. The biggest driver of this effect is the rise in housing costs and fall in house sizes, which constrains family sizes and is driving the country towards a demographic crisis.

1. In the UK and across the developed world populations are rapidly ageing and total fertility rates are substantially below replacement level—meaning a falling ratio of workers to dependents.
2. In recent decades, immigration has propped up the supply of workers and kept the population pyramid in shape, but in the wake of Brexit, and an expected decrease in immigration, there is a clear need to raise birth rates.
3. The nation’s low birth rate is not just an economic problem. International survey data indicate that many women across the developed world are not able to have as many children as they would like.
4. International evidence shows that housing markets have substantial effects on fertility: rising house prices may boost fertility for homeowners, but slash fertility amongst renters — between 1996 and 2014 157,000 children were not born due to the cost of living space.
5. In little more than a decade, home ownership rates have collapsed among young people, as house prices and rents continue to rise. If current trends are maintained we may expect fertility to fall even further.
6. Free-market reforms to housing regulations could help raise fertility and improve the country’s long-term economic and social prospects. 

Read this paper.

Instrumental Variables: How the UK can become a world leader in medical innovation

A little under a year ago, the New York Times reported on do-it-yourself insulin pumps. Tech savvy people, mostly parents to diabetics, were pairing glucose sensors with insulin pumps. These would allow caregivers to constantly monitor glucose levels. Some even made what are, in effect, artificial pancreas, with the glucose sensor triggering the insulin pump, automating insulin delivery.

In September, the FDA approved MiniMed 670G, a mostly automated insulin pump, for sale to the general public. The device was made available spring 2017. The device is only available in the US, and Medtronic, the device manufacturer, has stated there is no timeline to bring it to other markets—diabetics can only access the years old previous version.

Automated insulin pumps illustrate two important aspects of drug and medical device regulation. First, existing regulatory systems have been slow to adapt to changes in the development of new medical devices, and medical innovation more broadly. Second, safe and effective medical devices are often unavailable in the UK, while British newspapers abound with stories of life-saving drugs unavailable in Britain.

Brexit gives the UK the opportunity to tackle both challenges and to become a leader in medical innovation. The European Medicines Agency (EMA), as well as the Medicines & Healthcare products Regulatory Agency (MHRA), the UK’s own regulatory body, were both designed for a different era.

They were created for big medicine, when large, multi-national corporations were the primary drivers of innovation. The world is in the early stages of changes in the nature of medical innovation. The era of big medicine will soon be behind us. To take full advantage of the coming changes in the structure of innovation, regulatory policy must adapt.

The UK has two advantages which could allow it to lead the charge in medical innovation.

First, the UK has a well-educated population, even relative to other developed countries, scoring near the top of the pack in maths and science, according to the multi-national TIMSS exams. It also has disproportionately strong higher education, with more universities in the world top 10, top 50, and top 500 than any country except for the US, according to most rankings. It has the human capital 2 necessary to be at the cutting edge of innovation.

Second, Brexit caused a large regulatory shock. Most regulatory changes take substantial time because of slow moving bureaucracies. Because of Brexit, the UK must make rapid changes. The question is, what type of changes should they make?

Read the whole paper.

Discussion paper: Five Ideas

In light of the upcoming general election, and with the U.K. launching out into uncharted waters post-Brexit, the President of the Adam Smith Institute Madsen Pirie outlines five bold policy proposals that have the potential to bolster Britain's standing on the world stage. 

Read the whole paper here.

The neoliberal mind

In The Neoliberal Mind, Dr Madsen Pirie makes the first serious, monograph-length attempt to describe what a 'neoliberal' really is – as a description of temperament and political beliefs, not as a political slur. Optimistic, forward-looking, and globalist in outlook, Dr Pirie's neoliberals are people who are excited about the prospect for deeper trade links around the world to lift people out of poverty and for technological advances to solve the problems that face societies around the world. They prefer to draw their ideas from the real world instead of theorising abstractly, and believe that markets above all alternatives have proven themselves to be the best way of promoting innovation and economic efficiency, to drive humanity's prospects forward.

Read the whole paper here.

Killing the cash cow: why Andy Haldane is wrong about demonetisation

In this polemical essay, Prof. Kevin Dowd lays into Bank of England chief economist Andy Haldane's views on demonetisation—abolishing cash.

One of the most significant developments in economic policy in recent years has been a gradually escalating government war against cash. At first sight, one might think that there is nothing too much to worry about: we are merely talking about technocratic issues related to payments technologies and the implementation of monetary policy, and cashless payments systems are already both commonplace and spreading. The reality is rather different: the issues at stake are of profound importance. The abolition of cash threatens to destroy what is left of our privacy and our freedom: we wouldn’t be able to buy a stick of gum without the government knowing about it and giving its approval. The cash abolitionists want total control over your money and what you can do with it. Besides making us all entirely dependent on the whim of the state, banning cash also threatens to cause widespread economic damage and have a devastating impact on the most vulnerable in our society. Quite simply, the government’s war against cash is the state’s war against us.

Read the whole paper here.

Lackademia: Why do academics lean left?

• Individuals with left-wing and liberal views are overrepresented in British academia. Those with right-wing and conservative views are correspondingly underrepresented. Around 50% of the general public supports right-wing or conservative parties, compared to less than 12% of academics. Conservative and right-wing academics are particularly scarce in the social sciences, the humanities and the arts.
• Though relatively little information is available, evidence suggests that the overrepresentation of left-liberal views has increased since the 1960s. The proportion of academics who support the Conservatives may have declined by as much as 25 percentage points since 1964.
• The left-liberal skew of British academia cannot be primarily explained by intelligence. The distribution of party support within the top 5% of IQ is relatively similar to the distribution of party support within the general population.
• The left-liberal skew may be partly explained by openness to experience; individuals who score highly on that personality trait tend to pursue intellectually stimulating careers like academia. And within the top 5% of IQ, openness to experience predicts support for left-wing parties.
• Other plausible explanations for left-liberal overrepresentation include: social homophily and political typing; individual conformity; status inconsistency; and discrimination.
• Ideological homogeneity within the academy may have had a number of adverse consequences: systematic biases in scholarship; curtailments of free speech on university campuses; and defunding of academic research by right-wing governments.
• Recommendations include: raising awareness; being alert to double standards; encouraging adversarial collaborations; and emphasizing the benefits of ideological heterogeneity within the academy.

Read the whole paper.

Against the National Living Wage

• The National Living Wage, announced in the 2015 Autumn Statement and effective from 1 April 2016, effectively takes control of the Minimum Wage out of the hands of the Low Pay Commission and gives it to the government.
• Whereas the LPC had a mandate to balance both pay and employment concerns, free from political pressure, the issue is now politicised.
• There are worries that abandoning this framework will threaten employment: the Office for Budget Responsibility projected last year that 60,000 fewer jobs will be created under this regime than the previous status quo.
• This paper reviews the empirical evidence on the direct and indirect impacts of increases to the Minimum Wage.

Read the whole paper here.