The NHS has gone mental!

From the BBC:

Muslims with mental health issues could be helped by re-embracing their beliefs and religious teachings, it is claimed. Traditionally, therapists have shied away from talking about religion as part of treatment - and can often see it as part of the illness.

But an NHS project based on research by Leeds University is "showing some individual signs of success". Those behind the therapy say many Muslims do not get help because of stigma attached to mental illness…

Dr Mir has helped to create a new treatment, based on an existing form of cognitive behavioural therapy (CBT) called behavioural activation. Following a successful pilot involving 20 patients, it is being provided by the NHS via a mental health charity in Leeds.

Patients on the course are asked if faith was part of their life when they were well. Those who stopped their religious practice because of depression are re-introduced slowly using a self-help booklet, which highlights passages from the Koran that illustrate "even people with strong faith" can become depressed and that it does not mean God is displeased.

Brilliant. The cure to depression is wearing a headscarf and inviting your husband to beat you/making your wife wear a headscarf and beating her.*

* Delete according to gender of 'patient'.

The Median Multiple

Economists, policy wonks and journalists from all round the World are united in their analysis of the problem of housing affordability. It's all the fault of the Government.

Planning regulations are the cause and location values are the effect. Many economists now call land values "regulation tax" instead.

The tables above are taken from a typical report on the subject by Demographia here .

What the report does is rank 377 cities in USA,  Canada, Australia, New Zealand, UK and Ireland by their median multiple, which is the median house price divided by median household income ie affordability.

With this they also give various examples from the USA linking affordability with planning . Dallas being a perennial cherry picked favourite among economists (there are obvious reasons why the largest cities in Texas are outliers, but these are never mentioned in any of the reports).

For arguments sake, let us agree that yes, in general the higher the median multiple, the more restrictive the planning regulations are. But, going down that 377 list from least to most affordable, it's clear there is another differentiating factor that stands out.

I'm sure the sprawling Dallas Fort Worth metroplex (25,000km2) is a good place to find work and bring up a family. Texas as a whole is now doing well with mineral extraction. It also has a competitive tax regime.
But, if you want, beauty, culture, diversity, heritage and the very highest pay you live and work on the east or west coast.

We are told that supply constraints are the problem but there doesn't seem to be a shortage where the MM is highest.

You can make anywhere more "affordable" by trashing the place and making it less economically efficient. In an unregulated land monopoly this is what you'd get. In the absence of LVT, which would automatically prevent urban sprawl, and help efficiency, we need regulations via planning instead.

In the UK we have seen the effects of applying "free-market" solutions to the land monopoly by relaxing building regulations in 1980. The Parker Morris regulations had given us minimum space standards. With those gone, the effects were inevitable. The smallest homes in the developed World and the highest land values. One fed into the other.

Now we are being told to do the same with planning regulations.

Another Confused Economist

Over at Policy Exchange, head of Housing and Planning policy Alex Morton unleashed his new paper “Taxing Issues? Reducing housing demand or increasing housing supply?” onto a credulous public.

The very fact this is not an either/or issue, gets the alarm bells ringing this may not be the most informed analysis.

Alex, like a lot of free-market evangelists, is deeply confused about what gives land its value. Like fellow economist Kristian Niemietz,  he seems to be saying that if we had no planning restrictions, land values would be zero, or close to it (strangely though, this economic rule doesn't apply to Chelsea and Westminster).

"In a functioning land and development market, house prices will be close to the cost of construction, and land value will not vary by use. Except for a handful of cases (e.g. prime central London) land will roughly be the same value across different parts of the country and for different uses.

"A field of land for agricultural use outside London will have the same value as a site with industrial planning permission outside Newcastle. If the market is dysfunctional or is unable to function properly, large and volatile price  differences will emerge."

Phew! It appears Alex can think of no good reason why an acre of land (prime central London excepted) in one location might be more valuable than in another. Outer London, Outer Mongolia, can you spot the difference?


But hold on. A few pages further on, explaining the principles of LVT he writes:

"Land values arise from the advantageousness of location. If two identical semi detached houses are built in the same area, but one is next to a park while the other is not, the one by the park will have a higher selling and renting prices.

"The difference results from its higher land value, in turn caused by the proximity to a particular amenity, in this case the park."

Now imagine that difference was somewhere that paid higher wages, had more opportunities, offered a greater diversity of leisure and shopping facilities. If you are in business do you want access to huge rich market, or a poor small one?

Who wants to be at the margins? Some do, but most want to be where the action is. And they are prepared to pay for it. Difference in location value? How much can you afford to pay for it?

More NCEisms

Following on from the "A Search-Theoretic Critique of Georgism" post earlier, I found this elaboration by one of the authors here.

Gochenour, gives us a valuable real life example of how landowners create land values, and therefore all Land is Capital etc, etc.

An illustrative example: say an undeveloped lot near a residential area is valued at $x, the sale price at auction.

The new owner, an entrepreneur, has local knowledge and believes that the lot is a good place for a business. He canvasses the neighborhood and decides to build a restaurant serving delicious BBQ sandwiches. He believes he has a solid chance of running a successful restaurant, so he takes the risk and embarks upon the project. Ten years later, the restaurant turns out to be a success.

Sadly, the restaurant burns to the ground in a freak conflagration. The rubble is cleared and we are left with an empty lot. But is it the same lot as before? Should it be valued at $x? Now, everyone knows a successful restaurant could be built here, before, no one knew. The “unimproved” value has changed. For that matter, the value of nearby lots is likely to have changed as well. What happened to the value of big commercial lots in semirural areas after the first successful Wal-Mart?

There are a couples of point here:

Firstly, the site described above had potential, which the search discovered (costs which the entrepreneur incurs before he bids for the site - he pays these in his capacity as entrepreneur and not in his capacity as landowner). The other people at the auction were too lazy, unimaginative, skint to put in a higher bid. Only later when the restaurant became a success was the full value of this location revealed. But it would have been revealed to anyone who built a well run enterprise from that location.

Can it really therefore be said, the restaurateur created the potential i.e. the added land value, or just exploited its full potential? What exactly was innovated? A tasty new way of BBQing ribs perhaps, but is that a new use for land? I'm pretty sure retail was discovered quite a long time ago.

If we take Gochenour's logic further, if someone naively pays too much for a plot of land, they are destroying land values? Personally, I think they are just an idiot. The only thing they've really destroyed is their bank balance.

At the end of the day, if any business has to include an under valued site as part of their plan, they haven't got a viable business.

Secondly, a lot NCEist use efficiency as a reason against LVT. What if in the example above the restaurateur had rented the plot instead. The landlord is in effect collecting private LVT. As we all know, had the restaurant been a rip roaring success he would have put his rents up.

So for consistency, as well as arguing against the public collection of site values on grounds of efficiency, NCEist's should also be calling for a ban on private landlords or for rent controls.

But, of course they never have and never will. Funny that.

Desperate Straw Man Found. Now It's Idi Amin

I thought I'd post this link to an academic paper written by Zachary Gochenour and Bryan Caplan of George Mason University here, titled "A Search Theory Critique of Georgism".

In it, like all NCEists their main argument revolves around the fact the optimum use of any plot of land needs to be discovered, and that discovery has costs, which must be capital costs, therefore any tax upon land acts like any tax on capital i.e. there is no such thing as land rent.

Never mind there are dozens of examples of oil producing nations (including of course the UK, Norway, Libya, in fact, just about all of them) that have tax regimes in place that do tax this land rent for use as public revenue. That's ignored. Obviously.

More amusing is Caplan's assertion that any attempt to install a Georgist tax will result in a situation akin to Uganda under Idi Amin. Good KLN that. Original at least.

Anyway, the paper is littered with plenty of KLN's to keep us all entertained. But one did catch my eye, and perhaps worthy of comment.

"We do not mean to suggest that there is no merit in the idea of taxing relatively inelastic products as opposed to relatively elastic ones. However, we propose that there is nothing inherently special about land in this regard, and suggest that taxing of negative externalities (Pigou 1920, Baumol 1972) is plainly superior from an efficiency perspective."

Ignore the first KLN concerning the taxation of other inelastic products and consider his recommendation that Pigouvian taxes are plainly superior.

The thing is, LVT can be regarded as such a tax. It is the right to exclude under the law that gives land its value. We are all excluded equally (negative externalities). Under LVT we are all equally compensated.

Or we can regard monopolies as causing negative externalities. Again, LVT is just compensation for this.

Economists like Caplan flip flop around desperately trying to discredit LVT, but all they do is ultimately reveal the paucity of their arguments. It's all about protecting greed and privilege. Nothing else.

Land Monopoly Black Hole (LMBH).

An astrophysicist observes clusters of orbiting stars moving at incredible velocity, or the bending of light without the influence of any object, or beams of high energy radiation emanating from the centres of distant galaxies. If he/she didn’t know about black holes and their effects they’d have to provide an alternative model of physics. An erroneous one.

It’s a bit like that with economics. If at the heart of your model only Capital exists, you are never going to be able to account for the effects of the £250bn per annum LMBH at the heart of our economy.
You will observe phenomena like boom/bust cycles, wealth/regional/intergeneration inequalities, dysfunctional housing markets, falling disposable incomes, poor growth, etc,etc.

But because your model does not account for monopolies (everything has to have a free market solution, right?), you must put the blame elsewhere. Too much government regulation, too much tax, the lazy feckless poor, not enough house building, not enough private property,  immigration  etc, etc.

Equally, if you can’t see the LMBH, it could all be exactly the opposite.

The LMBH distorts and destroys,  unobserved and unaccounted for by politicians, economists and the media. Blind, brainwashed or corrupt? Who knows?

Monopolies are a Government Invention

In response to Allister Heaths article "UK needs to stop deliberately inflating residential land prices" city am , IEA economist Kristain Niemietz made this comment:

"Since you mention Hong Kong: I recall a study which showed that even in this extreme example, a substantial share of house prices is explained by building restrictions as opposed to a genuine shortage of land. Physical scarcity of land is mostly a theoretical possibility. There are hardly any places in the world where that is a binding constraint yet.

And of course, national figures on population density are entirely misleading. If that was a factor, house prices in Australia should be close to zero, but in fact they're among the highest in the world because Australia operates British-style planning restrictions. For obvious reasons, people don't want to live in the Australian outback, but in commutable distance to the population centres, which is where the planning constraints apply."

Leaving to one side Australian homes are three times the size here in the UK, is Niemietz really saying that if the Government just got out of the way of free-markets, not only would land values fall to zero, but so would the price of bricks and mortar?

The power of free-markets. Wow!!

That's very reassuring

From the BBC:

Being frightened of falling over is likely to increase an old person's risk of having a fall, researchers have found. The link remained even when they were not actually at a high risk, the study in the British Medical Journal found.

That really is just messing with people's minds, isn't it? Are old people supposed to convince themselves that they are not frightened of falling? What if they grow reckless and then have a fall? Who's to blame then? What about somebody who's never worried about falling anyway? Will they get overconfident?

PS, the article features rent-a-quotes from fakecharity Age UK, but does not conclude with a government spokesman saying that "More will be done" so it's possible that we can take the article at face value. It doesn't appear to be shroud waving or anything (but we will see).

Boo! There's no 'but' this time.

From The Daily Mail:

David Cameron will today launch a national citizen service that will see hundreds of thousands of 16-year-olds sent on summer camps at a cost of up to £1,400 each.

The £50million scheme aims to get a disaffected generation of teenagers from different racial and social backgrounds to join in local community activities. The Prime Minister will announce that 10,000 school leavers will be able to take part in a summer volunteering programme from next year...

New Education Policy!!!

The government will teach all children how to manage money, control debt and set up loans from the age of 5.

Right, because the bloody government knows how to manage debt. Twats. Perhaps they should teach them what benefits they are 'entitled' to and how to claim for them.