Here's the second set of questions to help you decide (part one of the quiz is here). Jot down your answers (As and Bs) on a piece of paper, then click and highlight at the end to check your result.
6. What percentage of the UK by surface area is covered by homes and gardens?
A. About thirty per cent
B. About three per cent
7. As an economy grows and becomes more sophisticated/specialised, the fraction of the economy which can be collected in ground rent...
A. Decreases
B. Increases
8. When a landlord collects ground rents, he is...
A. Adding to total wealth in the economy
B. Soaking up wealth from the economy
9. If you sell land, you are collecting the net present value of the rental value of that land.
A. Don't agree
B. Agreed
10. Which of the following increases the level of owner-occupation:
A. Heavy taxation of earned income/profits combined with subsidies to and light taxation of land ownership
B. Light taxation of earned income/profits and heavier taxation of land ownership.
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Results:
Mainly As - Oh dear, you are a Home-Owner-Ist.
Mainly Bs - Congratulations, you are a free market capitalist.
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Sunday, 6 November 2011
Take the test: are you a Home-Owner-Ist or a free-market capitalist? (2)
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6 comments:
I scored 100% Go me! Can we send this out to the parliamentary Tory Party? It'd be interesting to see thier response, in fact I might email all ten questions to my MP to see the response.
I think question 1 is ambiguous because you can't specify why ground rents have gone up. For instance, if you draw a traditional land market diagram (with a vertical supply curve) you can easily draw a movement of the demand curve so that the equilibrium point occurs at a slightly higher price, but consumer surplus is also much larger, because of demand becoming more inelastic.
CD, well done.
RA, it's not a question of opinion, it's a question of fact and observation.
The point isn't so much about whether the consumer is getting a bigger consumer surplus (because of demand getting more inelastic - perhaps it gets more elastic?) but the total rents paid in a modern, developed economy is a far higher share than in a less developed one, see e.g. here, in Wales, rents are only 40% of net wages but in the South East they are 50%.
As to the "why", we can debate that another time.
What puzzles me is that we are currently in a recession, so disposable income will be going down, so, according to Ricardo, rents should be going down too, but they are not, they are going up. What's going on?
B, the going-up-ness of rents is deliberately overstated because they always focus on London, where the economy is still doing OK.
And what they don't mention in the headlines is that rent arrears are going up in line with rents, so landlords are collecting more from fewer people.
That would chime with my own experience here in Wales, which is that rents are going down.
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