Tuesday, 13 March 2012

They published my article at ConservativeHome

It always looks nicer in print, as they say.

My latest blogpost: They published my article at ConservativeHomeTweet this! Posted by Mark Wadsworth at 07:43

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17 comments:

WitteringsfromWitney said...

Congrats due I believe? Well done and nice article.

13 March 2012 at 08:40
Mark Wadsworth said...

WFW, thanks.

13 March 2012 at 09:45
Lola said...

Good article. But, too clever for usual Conhome suspects. Let's see how many comment!

13 March 2012 at 10:31
mombers said...

V interesting article, congrats. I have one question though. Ceteris paribus some of the extra take home pay that people will get from the reduction of tax rates will end up going towards extra rent or mortgages. Will this not just push up prices and rents? So instead of the pension industry extracting rent, landowners will. The money in pensions mostly cannot go into residential property, so this will surely just increase the amount of rent available to landowners to cream off? The perfect answer is of course LVT to prevent public wealth getting trousered by landowners, but absent this, will this lead to higher rents/prices?

13 March 2012 at 12:56
Mark Wadsworth said...

L, far too clever for half of them, Blue Eyes has responded to a few comments with the question "Did you actually read the article?"

M, fair point, that all depends on people's propensity to save. If people do the sensible thing and invest directly in the stuff which their pension fund would have invested in (shares or commercial land and buildings), then no harm done.

If some of it goes into rents (like the lady who commented and said it's better to buy "property" than pay into a pension fund), well, that's tough.

But it's hardly a justification for government sponsored rent-seeking to say that if it didn't happen, the savings would all go in to higher land prices/rents .

13 March 2012 at 13:12
Bayard said...

"Good article. But, too clever for usual Conhome suspects."

Yes, many knees a-jerking.

13 March 2012 at 13:22
mombers said...

MW, I suppose that the joys of Mortgage Backed Securities and various other fixed income products that can be bought by pension funds do mean that some pension fund money gets pumped into raising rents and prices. My guess is that people would be more predisposed to put more money into good old trustworthy bricks and mortar rather than save some of the extra take home pay in more constructive investments. Higher cost of capital for the productive economy is my opinion

13 March 2012 at 13:42
Mark Wadsworth said...

M, there is a trade off between buying shares and buying land and buildings.

If people sell shares and buy land instead, then shares are cheaper and land is more expensive, the yield on shares rises to 10% and on land it falls to 1%, at which stage people stop buying land and buy shares instead.

(Yes, of course LVT would help)

13 March 2012 at 13:50
Old BE said...

Gah, I can't believe how dim-witted so many of them are!

It's quite fun jousting though :-)

13 March 2012 at 14:22
Steven_L said...

The yield on the like of BMW and Daimler was recently more like 12% or 13%.

Yet the HOists still prefer central Brighton property yielding 4%.

They are idiots - buy the cheap shares.

13 March 2012 at 14:30
Mark Wadsworth said...

BE, thanks for the jousting, ConHome comments are blocked where I work.

SL, I'm sure it balances itself out in the end; the idiots will end up earning pennies from an overleveraged BTL and the brave (or foolhardy) will be earning big yields (or capital gains) on their BMW shares.

Until there's a land price slump or a bubble in the price of shares, of course...

13 March 2012 at 14:52
Old BE said...

At the weekend I mentioned to a friend that I am trying to pay down my mortgage at the moment. The friend looked flabbergasted and asked simply "why?!". I suppose the question makes sense if there is something yielding more than the 5% I'm paying on my debt...

13 March 2012 at 14:56
Anonymous said...

The effective yield on your paid down debt at 5% is nearer 7% if you're paying standard rate tax, plus NI, and nearer 8 if you're at 40%. And it's effectively guaranteed, since rates aren't going down any time soon. Pretty good, in investment terms.

Plus the "positive imponderable" of having less debt to service and so of paying hugely less rent to the bank overall for the use of the money.

I rarely let a mortgage borrower out of here without putting their figures through my spreadsheet for the time and money they can save by overpaying. Some even do.

13 March 2012 at 15:31
Lola said...

@FT

"I rarely let a mortgage borrower out of here without putting their figures through my spreadsheet for the time and money they can save by overpaying. Some even do. Ah, I see that the situation is the same the world over...

13 March 2012 at 16:10
Bayard said...

"The friend looked flabbergasted and asked simply "why?!"

I suppose a lot of people haven't moved on from the days of MIRAS.

13 March 2012 at 17:29
Anonymous said...

Hell's teeth: the people over there are conservative are they?

We really are all doomed.

Are conservatives meant to be in favour of smaller state intervention?

When presented with excellent evidence that pensions would be better if left out of the tax system; and that income tax could be reduced instead to get better effects they complain?

"NERO! Shut up that fiddling."

14 March 2012 at 13:23
Mark Wadsworth said...

BE, I always say that paying off your mortgage is the best kind of saving (taking risk, reward into account), luckily FT and L appear to agree with me on this one.

OP, yes, they are Conservatives who believe in small state, low taxes and people taking personal responsibility.

In fact, they think that these things are so important that they want the government to actively cajole, coerce and subsidise people into taking personal responsibility, even if that means much higher tax rates. Oh... hang on.

14 March 2012 at 13:28

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