The Devil's in the details but this sounds like a good idea.....


We have, for some years now, been saying that Britain doesn't have a shortage of land to build upon but does have a shortage of land that people are allowed to build upon. That permission to build is artificially constricted by the state and any solution has to be an increase in the number of those permits granted. So, this looks encouraging:

Billions of pounds worth of public land and buildings could be sold off with planning permission already granted to solve the housing crisis, David Cameron will announce today. In a major speech ahead of the spending review the prime minister will outline plans to cut waste, sell off government assets and merge public services as Ministers attempt to save cash.

Of course, it's entirely possible for such schemes to die in a blizzard of bureaucracy. But government as a whole grants planning permission and government as a whole owns a lot of land. So, if they can manage to get their act together they could in fact achieve what would be at least a partial solution to our housing problems: the release to hte market of substantial amounts of land with planning permissions.

That government will capture the value of the granting of the planning permission is an added bonus. Government should, after all, capture the value that government creates where this is possible. But it's not the point and purpose of the scheme at all: that is simply to make available more land to build upon.

We'll have to see how well government can deal with its own bureaucracy though. One could, for example, imagine local authorities being forced to grant outline permissions but then, when the project is bought by private interests, playing silly buggers with the detailed implementation. We'll see no doubt...

Poor George Monbiot doesn't really get it, does he?


That there's something wrong with the British property and land markets is entirely true. but if we're going to complain about it it does help if we manage to identify what is actually wrong with it. Which is where George Monbiot doesn't really get it:

It’s hardly surprising, given the degree of oversight. Private Eye has produced a map of British land owned by companies registered in offshore tax havens. The holdings amount to 1.2m acres, including much of the country’s prime real estate. Among those it names as beneficiaries are a cast of Russian oligarchs, oil sheikhs, British aristocrats and newspaper proprietors. These are the people for whom government policy works – and the less regulated the system that enriches them, the happier they are.

Land has great value in Britain not because it is less regulated, little regulated nor even under-regulated. It is because it is all over-regulated. Specifically, through the planning system which creates and artificial scarcity of who may build what, where. That makes having the right chitty extremely valuable. And as such, the people who currently own both land and chitty are absolutely delighted about this system of over-regulation. While the rest of us are less so as we're forced to pay for that artificial value created by the artificial scarcity.

It has been pointed out for decades, just as one example, that the existence of green belts is simply a subsidy to those who currently own land inside one. The answer to which is, of course, deregulation of those restrictive planning laws.

Or, as we have suggested more than once around here, simple demolition of the Town and Country Planning Act 1947 and all its successors.

We do agree with Monbiot that all is not right with Britain's land. But the problem is one of over-regulation, not under-.

Freedom fighter John Von Kannon


We are sad to report the death, at 66, of John Von Kannon, a friend and leading figure in the freedom movement in Washington DC. He was Vice President of the Heritage Foundation, which he had served since 1980 as a thinker, doer and fundraiser – one of the founding generation that included Ed Feulner, Phil Truluck and Stuart Butler. John – nicknamed "The Baron" – Von Kannon was one of the founders of The American Spectator where he learnt the art of raising money. Blessed with great humour, an easygoing manner but also great focus and determination, he helped raise the Heritage Foundation's budget from $4m to over $90m. He was also instrumental in building up conservative and free-market think-tanks and campaign groups into an effective national network.

Among other awards for his work for liberty, he received the Heritage Foundation's highest honour, the Clare Booth Luce award – previous winners included Ronald Reagan and Margaret Thatcher – and Ashland University's John Ashbrook award. He was also elected a 'distinguished member' of the Philadelphia Society. He was a trustee of the Foundation for Research on the Economics of the Environment and Vice President of the Pacific Legal Foundation, a leading public interest law foundation.

John was charming, funny, effective and constant. He will be sorely missed by all who knew him.

What have the Syrians ever done for us?


Anton Howes, an economic historian who studies the causes of the Industrial Revolution, writes on refugee inventors:

Another was Johann Jacob Schweppe (1740-1821), whose company lives on of course as a manufacturer of tonic water. Schweppe’s major contribution was to apply Joseph Priestley’s experiments on carbonating water to develop a machine that could mass-produce it, and then to develop it into a marketable product. Schweppe was the son of a peasant from Hesse. Lacking the strength for agricultural labour, he was apprenticed to a travelling tinker, who recommended him to a silversmith. He eventually ended up settling in Geneva.

Soon after taking his business to London in 1792, where he set up an aerated water factory on Drury Lane, the turmoil in France intervened. Fortunately, his daughter managed to join him before France declared war on Britain in 1793. Fearing the government’s reaction, Schweppe successfully appealed for the right to stay. He eventually returned to Geneva in 1802. France having annexed it in 1798, he returned to find himself a French citizen. (By the way, contrary to what it says on Wikipedia, his business did not fail - it was actually extremely successful and he simply sold his majority stake).

But Anton's list is of Europeans. What about Syrians? I was quite surprised to find out that Steve Jobs is half-Syrian, but the list goes on:

First up, there’s Ayman Abdel Nour, a one-time university friend of Assad’s at the University of Damascus, where he studied engineering. He became increasingly disillusioned with the regime, fleeing to the UAE in 2007, and then the US, where he is editor-in-chief of an online paper focusing on Syria. However, he has since developed and patented a sub-surface irrigation system, dubbed the Hydramiser. I don’t know much about irrigation, but it seems like a pretty helpful innovation for arid countries attempting to overcome their inherent agricultural disadvantages.

Read Anton's whole piece for more. I don't know of any inventors who are both Syrian and refugees, but perhaps one day that'll change.

And yes, I am aware that there are cultural differences between Syrians and Britons. Lots of people said this to me after my own piece that argued that accepting refugees might not be so bad in the long-run, economically speaking. Indeed Sweden, which in Europe takes by far the greatest number of immigrants from the Muslim world per capita, seems to have quite a serious crime problem.

But on the other hand London has done rather well out of immigration. The Asians who fled Uganda have been a success story in Britain, and the Arab migrants to the United States have integrated very well too. We should bear the potential problems with immigration in mind, but the fact that there are costs does not mean we should ignore the benefits too.

There's not really $22 trillion in savings from giving cities lots of money


Another day, another new report on how if we just spend squillions on pet schemes then more than squillions will be saved and we'll all become rich! As reported:

Putting cities on a course of smart growth – with expanded public transit, energy-saving buildings, and better waste management - could save as much as $22tn and avoid the equivalent in carbon pollution of India’s entire annual output of greenhouse gasses, according to leading economists.

So, to the report itself:

Even with this focus on the low-carbon options that could be adopted or promoted by local government, and with conservative and time-limited estimates of costs and benefits, the analysis finds a compelling economic case for significant low-carbon investment in cities. In the “medium” scenario, the gross global costs of these investments would be US$977 billion per year in 2015–2050 (equivalent to 1.3% of global GDP in 2014), but they would reduce annual energy expenditure by US$1.58 trillion in 2030 and US$5.85 trillion in 2050 (see Table 2 for further information).

Well, yeees. We would rather like to see this benchmarked against the predicted costs and benefits of earlier schemes and their out turns. Given the rather large variance between predictions and outcomes we're not convinced that a 1.5 return is enough to span the gap on what people have been given the money to do so far. But we're afraid that this report does get worse than this:

Beyond those built into the International Energy Agency (IEA) 4DS scenario, this estimate of carbon saving potential does not take into account rebound effects, where savings from improved energy efficiency are used to access more energy services rather than to achieve energy demand reduction.

Ah, yes, so we're aware of the Jevons Paradox, where greater energy efficiency leads to greater energy use because it's cheaper, but we've decided not to include it because it makes our sums look bad. And:

While we must acknowledge potentially significant opportunity costs,

They don't include any opportunity costs at all in their calculations, that is their full acknowledgement. And an economic report that doesn't consider the most important part of economics isn't worth the paper this report isn't printed on, is it? Finally:

The main findings are based on a central or “medium” scenario where real (i.e. after inflation) energy prices rise by 2.5% per year, real interest rates are 3% per year, and the technological learning rate for each measure is low.

That is, we've magicked in that all this new technology will be really easy to work out and install (umm, like Edinburgh's tram for example?) and energy is going to rise in price really strongly off into the future. Do note that that assumption about energy prices makes energy double in price every 28 years. Not, to put it mildly, the experience of the past couple of centuries where, with blips of course, energy has been getting cheaper. Seriously, their model says easy alternative technology and vast energy prices: why would any action other than market forces be needed in such a scenario?

So, grossly unrealistic assumptions, a determined ignorance of the two main economic points that should be under discussion and even then a return well under the ability of the public sector to screw things up....well, would you invest on this basis?

Finally, two things. Firstly, if energy is going to go up in price in that manner then absolutely no public action is necessary. Because a doubling of real energy prices every generation will mean that people will quite naturally move to different technologies. And secondly, there's absolutely nothing here that could not be better achieved by instituiting a carbon tax, so as to move prices to make sure that people do indeed do so.

No, we think not. Into the roundunderthdeskreportfile for this one.

Why the answer is a carbon tax and not carbon credits


Back a decade we here at the ASI were mulling through the implications of the Stern Review and associated work. We still differ over the strength of the evidence stating that disaster is imminent. But our views on how to deal with it all assuming the evidence is true have converged. Some of us were in favour of carbon permits, trade in them across countries and industries, for such markets would be a most efficient manner of gaining the cheapest reductions in emissions quickly. Others of us preferred a carbon tax. Essentially on the grounds that while in theory less efficient the intervention of the necessary bureaucracy would make the cap and trade systems less efficient after all.

Here we show that all projects abating HFC-23 and SF6 under the Kyoto Protocol’s Joint Implementation mechanism in Russia increased waste gas generation to unprecedented levels once they could generate credits from producing more waste gas. Our results suggest that perverse incentives can substantially undermine the environmental integrity of project-based mechanisms and that adequate regulatory oversight is crucial. Our findings are critical for mechanisms in both national jurisdictions and under international agreements.

So we are, assuming the evidence insisting upon action is robust, rather of the view that the tax route is better.

Centralisers don't get it: We're all planners!


Unless you live a solitary life on a forgotten island, it seems likely that decisions you make will impact upon others. Decisions about what to buy and sell, which causes to support, which groups to join, which friends to make, and which things to say, all constitute the actual form of society. The fallacy of the central planner is to believe that none of this could happen effectively without their interference. The debate, therefore, is as to what kind of society we ought to live in; a bottom-up society of individuals voluntarily cooperating, or a "strategically planned" society with fundamental parts of our lives influenced by social science experts.

While the "invisible hand" explains the behavioural forces that make a free society possible, the advantage of dynamic planning as system over a system of state control is infrequently made. The free society acts as a total nexus between all agents, retaining all the information of how people act, and, indirectly what people want. Though it lacks a mind to process or plan, the ripple effects of our decisions change the system and society as a whole, whether through changes in prices and production, our personal relationships or through cultural memes. No central planner, no computer and no expert can comprehend the complexity of the organic society they wish to reorder, nor can the information held in bit pieces by individuals be reduced and aggregated to guide the planner as to our wants. The paradox is that the brightest and best intentioned officials are routinely outsmarted by ordinary people managing small projects, precisely because the system of free association has no calculating centre or mind to overrule the genuine needs and desires of individuals to plan for themselves. Going forward, it is necessary to accept that a network of ordinary people has more collective intelligence than any committee of even the super bright.

Even indicative planning assumes that authority knows best how to arrange our lives, and, as with the holiday companion who insists on planning every minute of your day around their own interests, this engineering of persons soon becomes tiresome. Yet the stifling conceit of strategic planning can be replaced with a decentralised model. As everyone is different, finding satisfaction in colours of life specific to their person, our approach to others must recognise human beings as ends in themselves, and respect that their own path to happiness may not be the same as our own.

Localised actors, whether individuals, companies or governments can act based on better knowledge of their own specific problems, and provide solutions that are diverse and flexible. The inflexibility of the standardised national plan is its fragility, for whatever its political imperative, compounded errors induced by poor information impact on the grand scale. The utopian thinker should remember "small is beautiful", and be content to respect the authentic wishes and plans of people as they are.

The real problem with Corbynomics and Peoples' QE


There's a number of problems with this idea central to Corbynomics, this Peoples' Quantitative Easing. It's illegal for a start, being simply monetisation of fiscal policy. It won't work as planned simply because any independent central bank would alter other monetary policy so as to accommodate the change. It's not possible to remove central bank independence because that is again illegal under EU law. And of course there's the killer blow, which is that it was designed by Richard Murphy. We therefore know that it is wrong, we just have to work out why in this particular instance. Allister Heath points to another problem, one that has been occurring to us too:

... financed by “People’s QE”, another of Corbyn’s idiotic schemes. The Bank of England would restart its quantitative easing (QE) programme but instead of buying gilts, newly-minted money would be spent on government infrastructure programmes.

Down that road lies catastrophe: monetising public spending, by eliminating the Government’s budget constraint, frees politicians from the restraints of reality. But the escapism is only ever temporary. If enough money was printed, inflation would make a comeback.

Murphy's answer to this idea that simple monetisation of fiscal policy would increase inflation is to insist that we are all missing the importance of taxation. Yes, true, increasing the money supply would, ceteris paribus, increase inflation. But government could then reduce aggregate demand by increasing taxation. So, there, you see, it all works!

At which point we wonder why the use of the magic money tree in the first place. The end result will be that, to erase the effect upon inflation of the increase in money, taxes will rise. That is, there's no difference here between PQE and the more traditional tax the heck out of the population and get to spend it all on lovely things.

We also have another worry. Which is that we all know that politicians like spending our money like those drunken sailors on shore leave. But the insistence that there's at least some, occasional, relationship between how much they gouge out of us and how much they spend does produce some limit on their profligacy. Remove that limit and let them print whatever they like and, then ask them to raise taxes to stop the resultant inflation. Well, who does believe that inflation will be a sufficient reason for them to raise taxes sufficiently? It's not exactly what has happened anywhere else government has resorted to the magic money tree, is it?

Another societal mass delusion, this time about sugar


Yes, yes, we know, we're all becoming gross lardybums because Big Food insists on feeding us masses of sugar. And there should be regulation, banning, taxation, anything, to save us from exploding as we gain ever more weight and fat as we gorge. We know this must be true because the nation's favourite cheeky chappie, Jamie Oliver, is telling us so:

If anything, Oliver’s proposed 20% tax on sugary drinks is a pretty modest gesture (it’s hardly the end of pudding as we know it – he’s not asking for anything to be banned), but still it attracts the frothing rage of libertarians and the resistance of industry lobbyists. Oliver’s been there before, of course. But the extra twist is that this row increasingly pits parents against everyone else.

The argument for taxing or otherwise regulating the white stuff is almost always framed as saving the kiddies from an untimely death (Oliver says he was inspired by seeing his own four bombarded with fizzy-drink ads while watching telly). But what separates this war on Big Sugar from his school dinners project, or even from sin taxes on age-restricted products like booze and fags, is that there’s no way of weaning children off sugar without also affecting adult diets. And many grown-ups respond to that with all the fury of toddlers denied a biscuit.

Yet the real problem here is that absolutely none of this diagnosis is actually true. we're not eating more than our forefathers did, we're not even eating more sugar than our forefathers did. We are, in fact, consuming less of both than our ancestors did, even that we did ourselves only a few years ago. As Chris Snowdon has pointed out:

All the evidence indicates that per capita consumption of sugar, salt, fat and calories has been falling in Britain for decades. Per capita sugar consumption has fallen by 16 per cent since 1992 and per capita calorie consumption has fallen by 21 per cent since 1974.

If calories consumed have been falling then it cannot be a rise in calories consumed that is making us all lardybuckets. If sugar consumption is down if cannot be sugar consumption which is making us all grossly fat. It must, obviously, be something else. That something else being that calories expended has fallen faster than calories consumed. Perhaps the largest influence on this has been the general introduction of full on central heating in recent decades. After all, we are mammals and the major energy use in mammals is the regulation of body temperatures.

One more little factoid on this: the current average UK diet has fewer calories than the minimum acceptable diet under WWII rationing. Quite seriously: we are gaining weight on fewer calories than our grandparents lost weight on.

And thus as a society we find ourselves in one of those madness and delusions of crowds events. These are not restricted to markets gone haywire, like the idea that American house prices could only ever rise, or that tech stocks could be day traded to a fortune. They can be rather more societal in nature: think witch burning or the much more recent Satanic abuse mythology. And we are now in the middle of another one about sugar.

It simply isn't true that we are eating more of it, nor that we are consuming more calories in general. Thus the solution to our generally getting fatter just isn't related to our consuming more of what we don't in fact consume more of.

Let them in


In City AM today I have a piece on the refugee crisis, arguing that the costs that many are (understandably) worried about may not actually be a problem:

A recent study looked at the impact of Yugoslav refugees on Danish workers in the 1990s and 2000s. Because Denmark’s resettlement policy distributed these refugees across the country without respect to local labour market conditions, this is a case study in how “exogenous” immigration affects natives. . .

Instead of starting a race to the bottom, as some feared, this influx of workers allowed the Danish economy to become more complex. Adam Smith’s “division of labour” increased, as jobs became more specialised and hence more productive. . .

Crime is on people’s minds too. And it’s true that asylum seekers do seem to increase property crime rates in the places in Britain they go to, though interestingly they seem to reduce violent crime rates.

But this seems to be a consequence of the tight restrictions that effectively prohibit asylum seekers from working for at least the first 12 months that they spend in Britain. If we liberalised those rules, we could solve that problem.

It's important to get the numbers right. The UK has accepted around 5,000 asylum applications from Syrians, not 216 as many people are claiming – that 216 is the number of Syrians we've actually evacuated from Syria directly. But I think there's a strong case for letting in many more than that.