THE LAST DITCH An Englishman returned after twenty years abroad blogs about liberty in Britain

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The Spectator Housing Summit 2018

The Spectator Housing Summit | Spectator Events.

Having cancelled my longstanding subscription to The Economist, which I used to love but which is now staffed by halfwit conventional thinkers aligned with the Leftist Establishment, I take The Spectator instead. Its Editor, Fraser Nelson, chaired the above event at the Southbank Centre this morning and I turned up because I was invited. I am a real estate man but always focussed on commercial property. Housing was not my thing professionally. In my personal life I take the view that much wrong with Britain can be traced to our weird relationship with it; seeing it as more than shelter to keep the rain off while we are eating, sleeping or watching TV.
 
It's a key political issue now. The Conservatives fear that if a way can't be found for twice as many young people to become homeowners as are managing it at present a generation of voters will be lost to them. That's probably true. I have heard some seriously stupid suggestions about solving that problem from Tories recently. I was hoping to hear more intelligent ones today*
 
I did. The Chief Secretary to the Treasury, Liz Truss MP, said some sensible things. She noted that housing in London now costs 12 times average salary. Given the UK's rising population (the only one in Europe) we must "let our cities off the leash" and allow them to expand. More importantly we must densify them. She noted that infrastructure was key to this and claimed that levels of infrastructure spending (as a proportion of GDP, the dubious way politicians always like to state such figures) is at its highest for 40 years. You could have fooled me but I suppose she would know.
 
She claimed, mystifyingly, that the Government was "generating more land". I assume she meant it is finding ways to encourage more of it (and Britain is only 8% built upon) into development. She said we need to overcome "the blob of vested interests" and "challenge the mentality of the comfortable" who would rather the fields near their homes stayed open while their children or grandchildren lived like students in grotty house shares.
 
She warmed the cockles of my old heart with talk of "streamlining the Byzantine planning system" and intervening if local authorities failed to implement their local plans to allow their communities to grow. All well and good and it was cheering to hear sensible talk emanating from the Treasury of all places. The problem is that key solutions are not in the hands of Central Government. Planning is a local competence and public opinion expects it to remain so. If a local council denied a planning permission only to be over-ridden by Whitehall, there would be hell to pay. Local electors (at least the kind inclined to make planning objections) are NIMBIES to a man and woman.
 
The most depressing work in my career was when I was a young lawyer in Cambridge. It's a beautiful city blighted by hordes of other-worldly academics with too much time on their idle hands. Any application for some sensible modernisation to make their medieval museum vaguely resemble a liveable modern town raises dozens of objections from such types. Some of them used to instruct me to lodge them with the Planning Committee.  I vividly remember, for example, trying to stymie a slight increase in the size of the Cambridge bus station to accommodate vehicles that couldn't navigate the narrow medieval street without an increased turning circle. I was instructed to tell the planning committee that the tiny strip of land to be taken from "Parker's Piece" was sacrosanct because "WG Grace used to practice his cricket there".  
 
In the recent local elections the Tories on my manor ran on a slogan of "keep Ealing low-rise". If London is to be more densely developed (and it's one of the least dense capital cities in Europe) then more multi-family housing is needed. Paris raises permitted building heights steadily the further one gets from the centre. At six to eight miles from Nelson's Column, Ealing would (if it were in Paris) be full of high rise buildings. The happy folk who would live here if there were a sensible planning policy, however, don't have a vote. The selfish incumbents who want to delude themselves that their pocket-handkerchief gardens make them heirs to the Romantic Poets do have a vote.  They use it to ensure their grandchildren bicker over who nicked the milk in their student-style communal slums.
 
I am a radical on Town & Country planning as on other economic issues. I would abolish it. To me it is offensive that the value of a man's land is stripped from him by laws that deny him the right to put it to its highest and best use without grovelling to local politicians in thrall to his envious neighbours.  If you fear the consequences, pray consider Prague. It's one of the most conserved and protected cities in the world. You can't move a brick without conservation types crawling all over it and – very often – bankrupting you by demanding you alter the scheme you spent millions on designing to make it a replica of some older structure, traces of which they have uncovered in their parasitical zeal. Yet almost nothing that is beautiful about that city dates from the era of regulatory prod-nosing. If a Prague building is worth conserving, it was built by free landowners who would have put any passing busy-bodies to the sword. If you want to see a screwed-up city, consider what was done to Birmingham in the 1960s by a massively empowered City Council.
 
Land is very valuable in cities and the people who own it are inclined to maximise that value. They may have bad taste or poor architects but some reasonable building regulations would be sufficient to ensure that whatever they build in their own interests is at least better than the sort of crap a planning authority would do.
 
The panel discussion that followed the Secretary of State's speech was depressing. Clive Betts MP, "token Bolshevik" and chair of the Housing, Communities and Local Government Committee in the Commons predictably denied that planning was in any way a problem. In fact he wanted more prodnosing because technical standards in the UK construction industry are low (sadly, true) and would be improved by pubic servants regulating and supervising them (sadly as false as Satan's smile).
 
The people on the panel from the productive sector were steeped enough in the way British planning is run to know that no radical solutions are on offer. They cringed to their public sector masters and blathered about new technologies and creativity and "careful thought". They didn't seem optimistic about technology however, For example, modular systems speed the process of housebuilding in other countries and reduce the cost but on the narrow, winding streets of Britain's cities (especially London) to deliver a house in three truckloads would involve taking down lamp-posts and other street furniture along the route. Because of traffic congestion such deliveries would even then only be permitted in the wee small hours when, of course, the local NIMBIES would raise hell at their sleep being disturbed (and to hell with their grandchildren in bedsits).
 
Successive governments' consistent failure to maintain and improve infrastructure to meet the needs of a growing population has created a bloody mess. It would take a generation to fix if we began now in earnest. We haven't and we won't. Hence the nervous looks as an enslummed millennial (who let him in?) asked "what can be done now to solve our problems?" The truthful answer (that nobody gave) was that what is needed to solve today's problems should have been done during the last twenty years. And wasn't.
 
Someone from the Adam Smith Institute suggested the "quick fix" of building on parts of the Green Belt around London based on such criteria as proximity to existing transport links. That would certainly help. The Green Belt was established in a different era for a smaller city and it's time for it to go. The city that has the most parks of any in the world is not going to choke if it expands onto that sacred turf. London is not a city in a bottle. It's surrounded by the lush, green Home Counties. The trouble with the idea (and it might have to be executed for lack of a better one) is that it involves London sprawling, rather than densifying when people increasingly want (and environmental factors suggest that they are right) to live in the cities and not outside them.
 
Another practical fix is to convert retail to housing. Shopping centres are emptying because of the ever growing online market. The representative of the Federation of Master Builders on the panel reported that the local authorities he works with think their high street shopping needs typically to be reduced "by half" to reflect this trend. But local busybodies will get sentimental about shopping centres they never use, just as they demanded that pubs be kept open whose doors they never darkened. Such people have votes that count disproportionately because of the low turnouts in local elections.
 
Market forces could sort all this more quickly than you imagine. I watched markets at work in in the post-communist capitals of the former Warsaw Pact, where things were screwed up by decades of Communism on a scale that Londoners could never imagine. My clients fixed things at an incredible pace because they could. The communist bureaucrats were banished to their dachas and there had been no time for the new democracies to build their payrolls. I remember telling an incredulous New York banker worried about where the "banking district" of the new Warsaw would be that "It will be wherever you put your building sunshine". He put one on the best  site he could find and, sure enough, his competitors clustered around him.
 
But real estate is not a free market business in Britain or anywhere else with planning laws. Land worth X without a permission and worth 20 X with is a commodity whose true value is mostly in the public domain. Only investment in infrastructure and courageous deregulation can solve this problem in the medium to long term. Only the shattering of such shibboleths as the Green Belt can do some good in the short term. The current government lacks the political chutzpah, and I can't even blame it. Such are the demographics of its core voters that it would have to be more un-Tory than is survivable. 
 
Which leaves Labour to "solve" it in catastrophic ways. Buckle up for a bumpy ride. And take your poor grandchildren out to a nice dinner from time to time to cheer them up in the squalor you've confined them to.
 
___________

*Regular readers will have noted that, despite my advanced age, I am not so much a cynic as a very disappointed optimist!


Of Left and Right, Reason and Faith

 

Left and Right are not useful labels any more, if they ever were. They don't even mean the same things everywhere. I am “right wing” (I would just say right) when it comes to economics but a liberal in social respects. For example I literally do not care who does what to whom sexually as long as everyone involved is a consenting adult and I am left out of it unless I choose otherwise.

 

I would have tried to dissuade a partner from aborting our child had the case arisen. If she’d insisted I doubt I would have ever been able to get over it — or stay with her. Yet to avoid criminalising women and / or driving them into the hands of backstreet charlatans, I would not legislate on the subject. I would leave it to their consciences. In my heart I am pro life. In my head I accept a woman's right to choose. Am I left or right? No answer to that question will inform our discussion so why ask it? 

 

On Continental Europe and in America there is a "religious right". I have no truck with that. Many Continental friends quite wrongly think themselves leftists because neither do they. Their calling themselves leftists tells us nothing useful about them. 

 

I am a reluctant atheist who would love there to be a just God. If there is I am damn sure He has all necessary tools at His disposal to smite or forgive sinners as He sees fit. It's a blasphemous insult to offer Him the puny help of Parliament, Congress, National Assembly, Duma, Sejm or Bundestag. He would find it hilarious I suspect. But then if He’s not laughing at His various churches generally, He’s not the superior Being of my imaginings. 

 

A legal system to my taste would therefore have literally nothing to say about marriage, abortion or sexuality in general. If it's a sin, brother and sister, the Lord will deal with it. All we can do is try to follow His will and hope He understands our choices. Dear fellow atheists, you should have enough principle in you to allow believers to follow their Lord as best they can without interference from a state many of you are currently urging on like a bully's lickspittles.  

 

For religious and non religious alike marriage is principally an agreement between adults as to how to live together and raise children. Nothing could be more private and so it should be left to them. If they're religious then their God will be the third party to their agreement. He needs neither legislator to set the terms nor lawyer to litigate them. The law need only specify the minimum responsibility of parents to the children born into the contract without their consent. Everyone but the child is — after all — a volunteer. 

 

In truth I think very few things are the legitimate business of the state. That's lucky because the state is a flawed human institution almost inevitably staffed by the least appropriate people — the ones attracted to lording it over their fellow humans while living at their expense. A drooling idiot is likely more often to do the right thing than a government agent. 

 

I express it colourfully but in essence that used also to be the stance of the Conservative Party in Britain. Back in my student politician canvassing days I remember a Tory MP, when asked whose permission a constituent should ask to fell a tree in his garden, replying "It's your bloody land you fool. Do as you damn well please". The question itself was in his view the pathetic weakness of a submissive serf. 

 

By those robust yeoman standards the party led by Mrs May is not worthy of its name. Few Conservative Parties in the West now are. If you think tax avoidance “costs” Society, then you believe all wealth belongs in truth to the State and the individual is just its creature. If you think it’s a good idea to take money by force from those (based on past performance) most likely to generate more wealth and give it to those (ditto) least likely then you are a Socialist — an adherent of the most comprehensively tested and unquestionably failed idea in human history — wherever you place your X on Election Day. That goes for you, Prime Minister. 


Of sound and unsound money

Frexit fever reaches heart of French establishment – Telegraph Blogs.

When the Euro was about to be launched a colleague and I were in Germany on business. Over drinks with our German business partners they teased us about it. In all previous such conversations with them we had been primarily concerned about the impact of EU policy on the UK's interests. As a global trading nation, we argued, these often diverge from those of the more parochial economies of mainland Europe. To their surprise, on this occasion we were more worried about Germany for whom we predicted the Euro would be a disaster.

I told them of overhearing the then Finance Minister of a less wealthy EU country explaining to a group of Economics students how he proposed to 'pump up' their currency in advance of joining the Euro. Once in, he told them, the marriage to the Deutsche Mark would give his citizens high purchasing power and increase their ability to borrow. My colleague pointed out that, because of their history, Germans are averse to debt and afraid of inflation, while other Europeans are not. They - and their governments - rather like the idea of large debt paid back in bad coin.

They scoffed, but history proved them wrong. The Greek government, for example, had lied through its teeth in the run up to joining EMU and has been officially criticised for continuing to do so in the years following the adoption of the Euro. They statistically masked the effects of their orgy of spending and debt until there was nothing to do but prop them up if the currency was not to be jeopardised.

Our German business-friends were man enough to call my colleague last year and tell him that we had been right. I take no pleasure in that. History continues to vindicate commonsense over voodoo economics, without ever teaching the 'something for nothing' crowd to adjust their expectations to reality. I also feel no glee at the stirrings in the French Establishment about 'Frexit.' I would rather be rich than right. I would rather be free than either. This mess is going to hurt me in the end, however right I was.

Just look at the views of François Heisbourg, as reported in the linked Telegraph Blog. He is a Knight of the Legion of Honour and holder of the French Order of Merit. He is also Chairman of the International Institute for Strategic Studies and an insider Énarque par excellence. You will find little sign in his words of a new dawn of commonsense in the European élite.
The dream has given way to nightmare. We must face the reality that the EU itself is now threatened by the euro. The current efforts to save it are endangering the Union yet further
The retreat he proposes is merely tactical. He is still locked into the mad meme of 'ever closer union.' His only concern is that introducing the Euro too soon has threatened that objective.

In my view, the introduction of the Euro was a misjudged attempt to bounce Europe into political union. The federalists knew that a currency crisis would happen. If two middle-aged English lawyers could predict it over beer in Frankfurt, how could the great minds of the Énarques fail? I believe they anticipated the current crisis (or something like it) and believed it would force a concentration of political power, however little European citizens might want it.

It never made sense for nations with different economies, fiscal policies and approaches to state expenditure to be locked into a single currency without a single government. The crisis turned out to be a bug, but it was meant to be a feature. Even now most federalists, disappointed though they must be that Europeans' appetite for union has diminished in its wake, are still claiming all is well. Those, like Heisbourg, who say that;

God knows denial has been for a long time, by default, the operating mode of those in charge of EU institutions.

are simply concerned that the political miscalculation of premature currency union is now threatening the success of the whole project. None of them have learned a thing.

No less predictable, but far more chilling, are these words;
Money has to be at the service of the political structure, not the other way around
He says it to oppose those federalist politicians who, he claims, are trying to shape political structures to prop up the Euro. He is right to oppose that and might say, I suppose, that I am taking his words out of context. Still I think, in a Freudian way, they are incredibly revealing of the attitudes of our political elites.

Until our mad masters re-learn that money is a means of exchange at the service of the whole society there is no hope for our economic security. The users of a currency are the ones who matter, not the politicians administering it. We 'own' our money and the underlying value it represents, not them. The only true economic role of 'the political structure' is to ensure its soundness so that we can continue to trust it. That they now complain we don't trust them is very largely a product of their failure to perform that basic task. They have behaved like racketeers and cannot complain when that's how they are seen.

Political elites have got away so long with debasing money to serve their own ends that it now seems they have come at last to believe that this is its true purpose.

Robber Barons; then and now

 
I am happy to be the source of Samizdata's quote of the day, but my own choice today is from this 1970s lecture by Milton Friedman at the University of Utah; 
We had robber barons then and we have robber barons today. But there’s a big difference between the robber barons then and the robber barons today. The robber barons then primarily could get their money only if people freely gave it to them. They got their money by selling a service. And nobody had to buy it. And if people bought it it was because it was a better service than it was before. The robber barons today are in a large part able to get their money by sending a policeman to take it out of your pocket.
I commend Professor Friedman's speech to you. Even someone as opposed to current economic ideology as I am, still falls from time to time for some of its pervasive - and destructive - foundation myths.

h/t the ever-educational Café Hayek

Work, apparently, is not the answer. Is it idleness then?

BBC News - Alan Milburn says child poverty 'no longer problem of the workless and work-shy'.

I am trying to stay positive in the face of a nation gone mad. I really am. I was much helped by a pleasant meal last night with a fellow-blogger and occasional commenter here whose views are relentlessly sane.

I even briefly managed to do it in the face of Alan Milburn's certifiable analysis of the woes of our poor. 
He thinks we need higher minimum wages to price more low-skilled people out of work and perhaps even make offshoring fashionable again. No trace of sanity there but still I managed to keep smiling.

Sadly, however I made the mistake of reading the comments on the linked article at the BBC website. The drivel there is enough to make the brightest optimist despair.

Try this for size;
The real reason why poverty is increasing is that we have had government after government making public sector cuts. This has led to more expensive services and unemployment which forces wages down. And all this has been done in the name of tax cuts for the rich. 
or this
Rent and utility bills are killing everybody including business, they must be capped and energy re-nationalized. I don't care if people think it's socialism because at what point do you say capitalism with no rules or morals has to stop and isn't working?
or this
So much for our government's claim that work is what stops poverty and benefits is (sic) what keeps people in it
or even this
I couldn't care less how well the banking sector is doing or what the GDP is or the UK's position in wealth tables is so long as I can turn the lights and heating on and eat decent food without worrying about the cost. [my emphasis] MAJOR wealth distribution needed
Yes, of course. That will all work in Britain. After all remember how well it worked in China, the USSR, Eastern Europe, Cuba and - oh wait - here.

Was ever any man as wrong as Francis Fukuyama? Despite the comprehensive proof of its failure when tested disastrously on more than half of mankind in the 20th Century, it seems the cancerous doctrine of socialism will never die in Britain until the government's cheques actually start to bounce. Not while the state's employees, corruptees and other dependents retain the vote. This despite their conflict of interest, not just with taxpayers, but with the fabric of reality itself.

Limiting the power of government - money [Guest post by Mark]

Since the 17th/18th century capitalist seizure of government power, and specifically following from the 1694 creation of the Bank of England, the government's debt has been the basis of our monetary system. This combination of government power and capitalist credit money made possible a broader based integration between government and the economy - contributing directly to the explosion of British economic, industrial and military power which later gave birth to the British Empire.

This system has obvious advantages with respect to the coordination of a mass economy but from the perspective of individual freedom it is deleterious.

Some argue that the private creation of government money is a separation of powers which itself limits government. In reality, the opposite is true. Finance is government and government is finance - and at the same time, if we wish to do business, we cannot help but be drawn into this government-private hybrid money nexus. The power of government is surreptitiously (or not so surreptitiously) extended to every aspect of economic life.

Not only is it nearly impossible to escape this system but also, if the government relies upon and controls the private money system, we face the twin dangers that (1) control of government/finance becomes the most profitable activity in society and (2) the temptation to raise revenue for government takes precedence over real economic considerations.

The Fred Goodwins of the world, or the trend for physicists to become bankers are a result of (1) while the austerity/ higher tax campaigns are a result of number (2).

Libertarians would generally seek to solve these problems by eliminating the government from money creation. There are a number of problems with this approach. Firstly, credit networks without government support tend to be either small and personal, or entirely unstable. Secondly, there is no evidence that pure "commodity money" has ever existed or that barter can be used to run a large scale economy. Thirdly, almost everyone agrees that there must be some role for government and if government must use private money we again run into problems (2) + (1) - because government relies upon private money it cannot be separated from private business.

Now, there may well be a trade off between the ability to run a mass economy and individual liberty, in order to be free we might have to accept fewer things. I'm relatively comfortable with that - from the perspective of libertarians the destruction of the mass economy may well be a feature rather than a bug. However, I do feel that, rather than eliminating government money creation, as libertarians suggest, (or eliminating private money creation as per the positive money proposal) - we should allow both systems to operate alongside each other, but to exist, entirely and conspicuously separately - in essence, make using government money and engaging in the mass economy a choice.

Government created money could be a form of virtual commodity, (with the function of gaining respite from the taxman - essentially a tax credit). If the government did not require private money, there would be no (revenue related) reasons for it to tax these transactions. Therefore, it would be relatively easy to eliminate VAT, income tax, capital gains tax and replace it with some form of flat tax on tax credits only. In this way, the ability to do business would be separated from the need to pay tax.

Personally, I would set up the system in such a way that it would be possible to choose through lifestyle to avoid tax entirely. (For example - we distribute 100 tax credits to each citizen every year and tax on the basis of natural resource consumption- 100 tax credits for every 10 squared meters of land - by making a lifestyle choice to consume fewer natural resources you could avoid taxation and then be free to engage in whatever other business you choose - obviously many people would insist that people did "work first" before they get credits.)

You could then choose to conduct business either using surplus tax credits (which would offer the mass stability of government money), private credit agreements or barter/commodity money. These entirely independent monetary systems would provide a *real* division of economic power and be based entirely upon voluntary exchange.

As I say, I don't know if this would be more efficient from the perspective of production or "raise GDP", but I do think it would be more conducive to personal liberty.


A tale of two public pension problems

America’s Urban Distress: Why the Public Pension Problem Is Worse than You Think | Zero Hedge.
The linked article is typical of two things. Firstly why I had to smile when, on my recent tour of their country, American Conservatives told me their country was turning "socialist." And secondly why that's unlikely ever to happen.

Pensionassumptionchart_thumb

As I understand it, the equivalent shortfall in the UK is near-total. There are no pension funds for most state employees (though the teachers do have one - massively underfunded, of course). No money has been invested to provide for the future pensions of most state employees, any more than it has for future state pensions for the rest of us. It's a pure Ponzi scheme. As Nye Bevan said in a rare burst of humour and honesty;
The great secret about the National Insurance fund is that there ain't no fund
Yes, America's pubic authorities have under-funded their employees' pensions, but ours have not funded them at all. They have simply expected from the outset to take the necessary money by force from future taxpayers. After all, what honest return in investment could possibly compete with the infinite return on money taken by violence at merely administrative cost? Our rulers have disregarded the Jeffersonian wisdom that has restrained American public spending for most of its history;
I place economy among the first and most important of republican virtues, and public debt as the greatest of the dangers to be feared.
Hence the last Labour government's panic-stricken importation of millions of immigrants to make up for the declining birth-rate of the underpaid and over-taxed locals who have economised in the face of rising overt taxation and the relentless covert taxation of inflation by cutting back on the size of their familes. Hence also, perhaps, the oddly perverse incentives to breed - regardless of ability to pay for the resulting childrens' upbringing. A Ponzi scheme backed by violent force can last longer than a private sector version, of course, but it can still be brought down prematurely by demographics.

So why does the story suggest it's unlikely that socialism will ever arrive in the US of A? Because of the writer's delightfully thoughtless assumption that future obligations should be funded. Of course there are economic idiots everywhere (and dishonest self-serving rascals too) but there are fewer people in the US prepared to dispute Adam Smith's truism that; 
What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom
America's free speech is constitutionally entrenched - as witness the delightful puzzlement of American tech companies such as Google and Twitter when European authoritarians demand they censor their services. The media (particularly local media) routinely use their freedom to challenge particular line items of public spending, even if lax in holding politicians to account for the overall ballooning of the American state and its various extortions.

Again, their failings pall into insignificance compared to ours. Here, a multi-billion pound hole in the Ministry of Defence's budget didn't even pass the Alistair Campbell "crisis management" test of remaining in the headlines for more than ten days. The public sector incompetents who lost billions down the backs of their ministry's sofas faced - as far as we know - no consequences at all. This, though whole cities of taxpayers will have to work for years to meet the shortfall.

I am optimistic enough to believe that America's good sense will one day benefit us too. The statist tide is turning there, as was clear from my conversations with many people on my tour. In recent press reports I have even read the words "libertarian populism" - a phrase as unexpected and delightful to me as was "the fall of communism" two decades ago. If the state can be scaled down in the United States and the resulting economic benefits compared and contrasted with the moribundity elsewhere, that will arm lovers of freedom everywhere.