Sunday, 4 September 2016

Censorship

Over the years of leaving comments on articles and blogs, I've noticed a few don't make it pass the moderators. Frustratingly, the more well thought through and polite the comment, sometimes the less likely it is to make it into the public domain.

One of my favourite places to leave the odd comment or two is the London School of Economics SERC( Spatial Economics Research Centre) blog. There, economists like Professors Cheshire, Overman and Hilber write about the evils of the UK planning system and its stifling effect on new construction, the cause of our so called Housing Crisis.

To be fair, they do by and large indulge my hectoring of the learned professors, but when I do manage to point out the contradictions in what they say, my comment never goes up.

Here's my latest in response to this article written by Professor Hilber over a month ago "The UK planning system: fit for purpose?"

"I completely agree with Prof Hilber that supply is not being matched with demand in the UK housing market, causing many serious problems. I am sure the Professor would agree that market rents are the best way of allocating scarce resources like valuable land(location). Problems arise when owner occupiers can impute their rent, as the market can not then fully internalize opportunity costs. This leads to misallocation, the cause of excessive vacancy, under occupation and investment distorted in favour of London/SE, at the expense of the economy as a whole.

We can therefore kill two birds with one stone. A title deed can currently be seen as meaning"rent free". If title owners paid full market rent(as tax) for exclusive rights to a valuable location, as renters do now, the selling price of land(location) would fall, theoretically, to zero. Dropping the selling price of property to its capital only value.

Only then could the market allocate land and immovable property at optimal efficiency. Negating the need to wastefully build homes and additional infrastructure where a functional market would deem them surplus to requirements.

It’s a puzzle then why the Professor and his colleagues continue to recommend policies that concentrate on building more houses, as this is clearly sub-optimal from an efficiency point of view, let alone one where lowering house prices is a priority. 

Of course politics of land value taxation is tricky, but then the consideration of political issues is not the job of an economist."

 If Prof Hilber responds on this blog it would be gratefully received and published.




16 comments:

Bayard said...

Reminds me of the spoof strapline to the letters page of a newspaper:
"The opinions expressed on this page do not necessarily reflect the opinions of the paper or its editor (although, to be honest, they have very little chance of being published unless they do)"

Steven_L said...

I left one at the Bank of England blog once. They like using mad algebra and computer models to come to such conclusions as forex pairs move more when the nations concerned are in the news a lot. I tried to point out they were just stating the obvious but they were having none of it.

TheFatBigot said...

Whenever someone makes a comment that is irrational twaddle I can understand why it would not get through.

Mark Wadsworth said...

TFB has left a comment which is irrational twaddle and/or meant as an insult.

Shall I just delete it?

Sackerson said...

There is no housing crisis, as I have been saying for the last 5 years.

Demand is infinite - you could give me Buck House and I'd use it all and complain about shortage of space; there is a misallocation of housing (and the system works to "support" people living in places that are too big for them to manage); and, of course, there's the deliberately porous borders that have suited Labour for one set of reasons and the Tories for another.

http://theylaughedatnoah.blogspot.co.uk/2011/09/what-housing-shortage.html

We import half our food. If WWII happened now we would have to negotiate surrender fairly quickly. And the Britain that Bill Bryson is warbling about in his latest book (extracts in the DM) is disappearing because the planning system has been subverted by changes in legislation and regulation.

Bayard said...

"Demand is infinite"

Shelter estimates that there are around 80,000 homeless households in England. Meanwhile, there are about 600,000 million empty houses. So assuming an average of three people to a household, you could house all those homeless people and be left with at least 360 thousand empty homes, for which there is, de facto, no demand.

Your "infinite demand" is for cheap houses to buy within commuting distance of London and is similar to the demand for cheap gold coins, cheap diamonds or cheap Chateau Latour 1961.

Sackerson said...

In the 70s, we had a large flat in Streatham which my father could afford on his Army pension and modest income from a civvy job in Ebor Street. There's other factors at work.

Sackerson said...

And here's one: http://www.standard.co.uk/news/london/londons-3bn-ghost-mansions-foreign-investors-are-using-capital-s-finest-homes-as-real-life-monopoly-9128782.html

Shiney said...

@B

"Your "infinite demand" is for cheap houses to buy within commuting distance of London and is similar to the demand for cheap gold coins, cheap diamonds or cheap Chateau Latour 1961"

You didn't include the "Free at the point of use" NHS in your list

Demetrius said...

The trouble with Housing is Politics. The trouble with Politics is Money. The trouble with Money is Debt. The Trouble with Debt is Housing.

Mark Wadsworth said...

S, it's not just that it's not a housing crisis - there is plenty of housing, it is also that it is not a crisis in the first place!

A crisis is a sudden unforeseen event that the govt has to deal with on the hoof - the situation with housing is a state of affairs which successive UK governments have been deliberately engineering for several decades.

Bayard said...

"In the 70s, we had a large flat in Streatham which my father could afford on his Army pension and modest income from a civvy job in Ebor Street. There's other factors at work."

Apart from the rich foreigners coming over here, buying up all our shoddily built blocks of flats...... another factor is that there are far more people earning good money living in London than there used to be in the 70's. Whereas then PEGM lived in a few central boroughs (who'd ever heard of Hammersmith in those days)?" or in the suburbs, now the area of London they occupy has spread out as far as Streatham and beyond.

Ralph Musgrave said...

Coincidentally, the latest post on my own blog is on the same subject.

http://ralphanomics.blogspot.co.uk/2016/09/positive-money-gets-censored.html

Far as I can see it's academics, intellectuals and lefties who are the most averse to free speech: precisely the people who claim to be open to all ideas, however novel / bizarre / mad etc

Ben Jamin' said...

@ RM
I guess its human nature. People do not like to have their authority questioned. Even if their authority only extends to writing copy or moderating a website.

Bayard said...

I suppose there are many people of the same cast of mind as TFB above: I don't agree with this, therefore it must be irrational twaddle therefore it is not worth publishing. When you know you are right, dissenting opinions often appear to be so obviously wrong that it is hardly worth the effort to rebut them. In addition it seems obvious that someone that wrong, when they have had the right thing put to them and cannot see that it is right, cannot be intelligent. Intelligent criticism is welcomed, but why publish the opinions of fools?

Physiocrat said...

I posted this, in case it gets moderated out.

House prices are the capitalisation of rental values, with a component on top for speculation ie the expectation of future increases in prices. The ratio between prices and rents is also is dependent on the cost and availability of finance. For this reason, house prices are a bad indicator for affordability; rents, on the other hand, take out the speculative components. The contemporary extremely low rates have therefore supported a high ratio of price to rents.

Any discussion of this subject must also refer to the number of vacant properties and outstanding planning consents. When I worked for a London borough in the 1980s and 1990s, there were figures for the overhang of planning consents, covering the area of Greater London; and it was substantial and did not support the contention that planning was a supply bottleneck. I expected to see the current figure for consents; in its absence, it is impossible to know whether or not planning constraints are a bottleneck. In the absence of a tax or charge on vacant land with consent, developers have an interest in trickling the supply onto the market. This would point to market factors as being the bottleneck. If the latter is the case a more liberal consents policy would yield negligible increase in supply