Thursday, 3 September 2015

Reader's Letter Of The Day

From The Evening Standard. The letter won't be viewable online for a couple of days, because for some reason it is updated two days in arrears, go figure, but here is the original text as submitted:

If Thames Water was allowed to charge what the market would bear, they would enjoy excessive profits of the scale that London developers, home sellers and landlords do now. Surely a compelling case for heavy taxation or regulation of these monopoly profits?

A Land Value Tax would deal with the problem most efficiently but rent controls and a massive council housing building drive would provide some relief for UK renters and homebuyers. We have the shameful honour of the worst value housing in the world, clearly the market is utterly broken.

Joe Momberg, Young Peoples Party


Ben Jamin' said...

As quote here before "Rents are an efficient rationing device. They are not an ethical basis for distribution." (prof Roger Sandilands).

Odd how for example the Green Party doesn't campaign for the efficiency of uncapped but taxed (or auctioned) water pricing, and the same goes for airport land slots.

Think of the VAT or NICs you could reduce with the revenue from that. Good for the environment too (apparently, by not paying full market rate for landing slots, this leads to half empty or the wrong capacity of aircraft).

Dave Wezel if you are reading this please comment :)

Random said...

Lola said...

The thing that worries me is when you say the market is broken it gives licence to some grotty politico or bureaucrat to meddle - and people being what they are - mostly for their own benefits or according their own prejudice.

Yes, the market broken, when it comes to land. But that's largely because of failed interventions elsewhere and other distortions precipitated by the idiot actions of those same bureaucrats and politicos.

In that sense then, the market is not broken. It has been messed up.

Mark Wadsworth said...

BJ, we've discussed water before. As an economist or environmentalist, I agree. As a politician I say leave well alone.

R, weird.

L, without LVT the land market will always be broken. It's not a market. It's a black hole.

Bayard said...

"Odd how for example the Green Party doesn't campaign for the efficiency of uncapped but taxed (or auctioned) water pricing, and the same goes for airport land slots."

That's because the Green Party is left-wing and socialists will always prefer regulation to other forms of control.

mombers said...

Water is an interesting one because you really have to force people to have sewerage - anyone who opts out is very likely to impose a huge burden on everyone else. You could have a system in place to prosecute people who supply their own sewerage but you're getting into the realm of regulation costs getting prohibitive. So capping prices is the best way IMHO. It's a cockup that water meters aren't compulsory though.

Lola said...

MW. Well. Yes. LVT is the 'fix'. But that 'fix' is not one that the Powers That Be want to accept as it destroys pretty well all their crony franchise.

To the barricades!

Ben Jamin' said...


People do supply their own waste services via a soak or a septic tank.

Not terribly realistic, in the short term for those who live in flats.

No doubt that if the price of water/waste services were at free market levels, parallel alternatives would very quickly spring up. They'd have to.

Once we have equilibrium, all we've done is add another layer of expense/inconvenience.

I think the supply of water could be different though.

I personally can see no reason a) abstraction licences shouldn't be auctioned for. They are currently Grandfathered, which is a disgrace.

b) everyone gets a meter, and the water companies can charge whatever they like per litre.

If we strictly regulate the amount allowed to be abstracted per licence, we mop up the economic rents via the auctions.

We get less abstracted, and less wasted from leaks.

I know it's hard for people to believe the UK suffers from over extraction, but we do and forecasts predict this will only get worse.

Bayard said...

"No doubt that if the price of water/waste services were at free market levels, parallel alternatives would very quickly spring up."

There'd be a lot more rainwater collection. It would be something else that LVT would sort out.

DBC Reed said...

@B Brilliant! The last days of laissez faire before Joe Chamberlain put it out of its misery in Birmingham were highlighted by Brum's fucked up private water supply.Loads of people were using private wells but the ground water had become contaminated with cholera or typhoid/ something off-the-scale nasty.There was a private company providing piped water but not on all days of the week and they were constantly digging up the roads.
Chamberlain put an end to laissez faire from town level (he municipalised the water company)to International Free Trade but it has risen from the grave in a macabre Gothic Revival.Predictably it is doing no more good now than it did then but, as they said in the First World War, it just needs one more push and several hundred thousand more casualties.

Bayard said...

BJ, the problem with water is that is is something we can't really live without, so at the bottom end of the scale, demand is pretty inelastic. The problem with waste water is that the lack of facilities is not a problem to the individual, but the whole community. So there is a strong argument for state provision of water and sewerage, but that argument is much weaker outside towns and cities, where it's easy to make your own arrangements. So DBCR's example of municipal water supplies is probably the most sensible. The mistake, IMHO, was the creation of the vast Water Boards in the first place, compounded by privatising them into equally vast water companies.