Banned left a comment here:
As a former north Londoner I would have been far more interested in a cross-rail north-south link if only to avoid the wastelands of Croydon. Your point that "once the stations are built they'll have no problem selling off a bit of land for housing or commercial uses" is of interest, greater London grew in the way that it did precisely because speculative railway/tube builders (many of whom went bust just like .com) built the railways that they did and speculative builders followed to produce the outer London suburbs for the workers of central London.
Leaving aside the north/south London snobbery, this illustrates that "a little knowledge is a dangerous thing". When the private railway companies built new railways, what usually happened was that they went bust. The rest is as Banned describes it, but he misses out the bit that says "those who owned land surrounding the new stations made massive windfall gains by selling off land to speculative builders".
One company noticed that land values in the areas surrounding the new stations rocketed (from thousands to millions of pounds per acre, in today's money), and that the capital gain on the land was more than enough to finance the entire capital cost of the railway and stations. So the company that built the Metropolitan line first bought up a lot of farmland stretching away from London, borrowed money, built the railway and sold off the land again, making a handsome profit overall.
That to me looks like a good "capitalist" model. Somebody does the numbers, makes the investment, takes the risks and (hopefully) makes a profit, with a corresponding gain to society as a whole (the operation helped London grow and prosper).
I might conclude that the cross-rail link is a Socialist venture, doomed to failure and/or permanent subsidy.
Why "socialist"? Are railways and transport infrastructure inherently "socialist"? Methinks not. Is it "socialist" to expect a property owner to pay for his own roof repairs or home-extension or to pay towards the street lighting or flood defences in his area? I'd think not (although hardcore Home-Owner-Ists may disagree).
Ergo, how can it be "socialist" to try and match up risk-and-reward, costs-and-benefits by expecting those people who are likely to benefit disproportionately from Crossrail (without otherwise bearing any risk - they lose little if it goes wrong) to decide whether the project goes ahead and ask them to contribute a small fraction of the resulting increase in their property values if they want it to?
In economic terms, surrounding landowners "own" the railway. Is it "socialist" to expect the shareholders of a business to pay up some share capital? Is that a "subsidy" to the business? Methinks not. Again, the Home-Owner-Ists, who want banks to be re-capitalised by slashing interest rates on mortgages at the expense of savers; and who will take massive tax increases on employment sullenly on the chin but are up in arms about modest Council Tax hikes, might well disagree.
I tell you, Home-Owner-Ism is pretty much like Socialism in blue clothes.
A grim document
16 hours ago
18 comments:
And the Mtropolitan Railway's locos were a nice colour too.
Jings, Mark you're on a right one here!
'...if you are happy to pay an extra £1.20 per square yard per year (about £300 on
the Council Tax for an average-sized London terrace, rather less for a flat and so on,
and the corresponding amount on Business Rates, depending on how big the plot size
is) in exchange for having Crossrail, then vote "yes", else vote "no". End of.'...Etc.
I have read the original post. But...
('Leaving aside the north/south London snobbery' -ad hominem?)
"a little knowledge is a dangerous thing" agreed.
And the next couple of paras.
But then: 'That to me looks like a good "capitalist" model. Somebody does the numbers,
makes the investment, takes the risks and (hopefully) makes a profit, with a
corresponding gain to society as a whole (the operation helped London grow and
prosper).'
Versus 'and ask them to contribute a small fraction of the resulting increase in their
property values if they want it to?'
Or if they do not want it to, but the majority rule, they are therefore expected to pay
up or move out, utilising their gain? Perhaps they like living there and never expected
the benefits of the new stations and had accepted a trade-off of inconvenience against
the perceived utility i.e. 'tis nice and quiet here, why change it?
You will argue that their eventual gain is enhanced and will be subject to greater tax
that will be offset against their future earnings from the property(and that it will not
be paid until they sell), I would suggest that the perceived future costs(unknown) do
not equate to the enjoyment of the extant and that the future unknown tax is a
burden.
'In economic terms, surrounding landowners "own" the railway. Is it "socialist" to
expect the shareholders of a business to pay up some share capital?'
To have you asking that question suggests to me that you deem landowners/mortgage
payers not only to be the same but that necessarily as a land owner/mortgage payer
they have to consider for themselves : 'Is that a "subsidy" to the business?' No, it is
normal for a business but these people are not a normal business they are merely
people who believe, under current terms, that to have a mortgage produces a profit
over time.
'Methinks not. Again, the Home-Owner-Ists, who want banks to be re-capitalised by
slashing interest rates on mortgages at the expense of savers; and who will take
massive tax increases on employment sullenly on the chin but are up in arms about
modest Council Tax hikes, might well disagree.'
WTF? Honestly, can I have some of the sherry?
£300 per annum as a modest tax hike bears no relation to yer average dude.
'massive tax increases on employment'? versus an aknowledged increase in
immigration to do down the opposition? As admitted? Yet I am supposed to agree
that I agree with massive tax increases? For sure we may have had unemployment
and no-one willing to take jobs offered but to not say to the unemployed ' here's a job
take it or lose benefit' may have had beneficial consequences without mass
immigration and the resultant necessity to build 20m houses for the proposed 70m
they expect.
And as to slashing interest rates, please can you or anyone else just explain for once
how a Company that can take in monies at £1=£1 can then then lend the same
monies at £1=£9 when they lend it but also equals £9+interest when they want it
back? (just in case the abnormals come on I maintain and have argued successfully
that fiat money=fiat debt i.e peut-etre 10% maximum).
'I tell you, Home-Owner-Ism is pretty much like Socialism in blue clothes.'
I tell you, you normally talk a lot of sense but you appear to me to have had a senior
moment, to be polite.
STB.
STB, your spacing leaves a lot to be desired, but I'll pick up on this:
"they are therefore expected to pay up or move out, utilising their gain?"
Correct. I am a free-market economist and I believe in efficient use of resources. A railway is a resource. People who want it should live near it and people who don't want it should move elsewhere, having pocketed a modest capital gain for their troubles.
It is a recorded fact that the value of a house goes up by tens of thousands of pounds if a new station is built near it. The rents of such houses go up by £1,000 a year. Is it reasonable to expect people to chip in £300 (using the first model) or £100 (using the second model) to get a benefit worth £1,000 a year?
Over time, you'll find that people who buy or rent homes there are prepared to pay extra for being near a station, so only people who are prepared to pay extra to live near a station will live there, what's wrong with speeding up the process?
This whole landownership thing is basically smashing Adam Smith's Invisible Hand to pieces and a permanent drag on the economy. If you take all those home-owners and land-owners collectively, and imagine they were one person, then of course they would vote for it. The benefits far outweigh the costs.
The problem with Home-Owner-Ism is that everybody holds everybody else to ransom, and each individual's small, short-term gain is far outweighed by the gains that we forego.
Wasteland of Croydon - beautiful.
I understand where you're coming from, but to force someone to move just because they are not allocating resources properly. Why can't the people who are actually USING the railway service pay for it? That is how a normal business works.
You say you are a free marketeer, but that someone living next to a new station should pay more tax/subsidy/whatever. If the rail company can't do its market research properly then why should you be forced to prop up their company?
Imagine your family owned a house in the City of London or Mayfair. Unless you still live there, someone probably decided the gain in selling it was worth more than the convenience of living there.
You build the station and some win (the neighbours) and some lose (the rival railway's neighbours?). Should those whose win pay those who lose somehow? How would that work? FREE market?
JH, Croydon's lovely at this time of year.
EKTWP: "Why can't the people who are actually USING the railway service pay for it?"
They should do, and they do. But if they lived somewhere else before it was built they pay twice over - once to use the railway (via ticket prices) and again to live somewhere near a station (via the higher rent). If you are a home-owner in the area, you only pay once (via ticket prices) but you win an equal and opposite amount in capital gain. So you don't pay at all. If you build the railway, you lose all your money (railway companies always go bankrupt).
It's only the landowners who neither pay for nor use the railway who win on both sides of the equation.
Or let's turn this on its head. Imagine that London Transport did a Dr Beeching and shut down all public transport; demolished and sold off the bus depots; tore up the rails, demolished all the stations and sold off all the land in small parcels.
Who would lose most? Tenants would just bugger off elsewhere. London land-owners would find that their homes and business premises were now practically worthless. Does that make shutting down London Transport a good idea?
(railway companies always go bankrupt).
I think you'll find that historically, many railway companies made a lot of money for their shareholders - it was that that sparked off the "Railway Mania" which produced all the companies that never had a hope in hell of being profitable. These profitable companies no longer survive, simply because they were bought up by other railway companies in the 1922 grouping, which themselves were nationalised after the war. Admittedly, of the four remaining companies then, only one was making a profit, but they all had been run into the ground during the war from which they had not recovered.
Surely that is the whole point of allocation of resources. I live just by a tube station and pay a hefty premium for it. But I'm happy because to me it is worth paying extra to be within a short walking distance of it. But, it is a risk that my landlord took when he bought the flat. Noone said that it would go up in value or that LT wouldn't demolish the station. Just because you gain from something by mistake doesn't mean you should have to pay for some of it, surely?
Homeownerism isn't a conveyor belt of profit: there are risks involved. If all the bankers, Russians, Arabs, etc left London, then prices would no doubt fall and a lot of people would be out of pocket. Should they be paid back? It is an investment/speculation (I agree not ideal as everyone needs somewhere to live), but to punish people for owning things and doing well doesn't seem to make any sense. It would be the opposite of banking: socialising the gains and privatising the losses!
Ἕκτωρ, I lived in Crouch End and paid an ever heftier premium for it. One of its many charms is that it does not have a tube station.
Mark, 'a little knowledge' perhaps, 'dangerous' ? I think not. Apart from the socialism I'm not sure where we disagree but it is late.
EXTWQ: "... to punish people for owning things and doing well doesn't seem to make any sense. It would be the opposite of banking: socialising the gains and privatising the losses!"
Not "things", "land". Owning "things" (like cars or televisions or fridges or paintings) doesn't give you special rights or privileges, but owning "land" does. I never said people should be punished for "doing well", I'm all for reducing taxes and regulatory burdens on productive and profitable activity. You can scroll my 'blog up and down and sideways if you want to prove otherwise.
Home-Owner-Ism is exactly the same as banking - they want somebody else (in this case, whoever pays for the railway to be built) to pay for the costs and take the risk, and then privatise the gain. And woe betide anybody who dares depress the value of their homes by a single penny. In yesterday's PBR he increased just about every single tax you can imagine - except Council Tax...
Free market capitalism only works if there is a trade-off between risk and reward. As soon as there are one-way bets, it all turns to dust.
Banned, so you despise public transport, you never used the stations at Highgate, Crouch Hill or Turnpike Lane? You never took the N91 bus from Holborn?
No Mark, I had the daily choice of a bus to Finsbury Park ( W3 ), Wood Green( W7?), Archway (41) Turnpike Lane(41) depending upon my destination or a healthy walk to Highgate; far from despising public transport it was the default method since it was rarely worth driving into town unless I could use my 'bike.
Additionally we had the use of Hornsey BR station to take us into the countryside though oddly my generation did not discover Crouch Hill Station which could be used as a kind of northern crossrail even in the 70's, preferring instead to go to Camden Town and then back out again, dunno why.
The 91 from Holborn would never have been a practicable proposition, would have taken all day. Sadly the night bus, N19 from Pimlico, terminated at The Nags Head in Archway so we'd get a cab home, I understand that it now runs through Crouch End and beyond.
Banned, thanks, very helpful. Now let me ask you the same question I asked above:
" Imagine that London Transport did a Dr Beeching and shut down all public transport; demolished and sold off the bus depots; tore up the rails, demolished all the stations and sold off all the land in small parcels.
Who would lose most? Tenants would just bugger off elsewhere. London land-owners would find that their homes and business premises were now practically worthless. Does that make shutting down London Transport a good idea?"
I think your argument fails on the element of coercion. If I were to build a desirable amenity near your house, why would that allow me to demand that you paid for it on pain of expropriation?
If I were to deliver goods to your house that you hadn't ordered, you would not be obliged to pay for them. Why should goods that are delivered near your house be any different?
Brian FOD, your argument fails as it does not address the 'free rider' problem.
You may as well say, why should street cleaning, street lighting and police be paid out of council tax? Some people don't drop litter, don't go out in the dark, are built like a brick shithouse, don't own a car and live in a block of flats with 24 hour security and so have no interest in these services.
But these people would still be able to sell their flat for a much higher amount to somebody who does not necessarily fall into this category, so there is some logic in making them pay - it's like insurance.
It is clear that a majority of people quite like the services just mentioned, so a majority force a minority to contribute. That's democracy. That's why I said there'd have to be a local referendum.
As to your 'desirable amenity', could you be more specific?
There is, AFAIAA, a law against forcing people to pay for goods that they never ordered but which the company fails to come and collect, which deals with your last issue.
Dr. Beeching did not shut down all public transport, just some nice bits. I have little recent knowledge of the difficulties facing London Transport/TfL ( of which I was quite fond since my parents did not drive) nor of London in general having abandoned the metropolis to its terrible fate two decades ago.
"There is, AFAIAA, a law against forcing people to pay for goods that they never ordered but which the company fails to come and collect, which deals with your last issue."
You are correct. There is the Unsolicited Goods and Services Act 1971, the existance of which was rather my point.
It doesn't matter what particular amenity I had in mind; even if you don't want it we will still make you pay for it (presumably in direct contravention of that Act).
I'll admit your point about street lights and litter does have some force, but then we call it what it is: tax. And people whose streets are not lit still have to pay it.
B, I have never called "Land Value Tax" anything other than "Land Value Tax". As a free-market capitalist I don't like free-riders, but maybe you're a Home-Owner-Ist and think that when property owners get a free ride, that's somehow OK.
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