Imagine you were a pointy headed policy wonk, beavering away struggling to solve the problems of our age. The specific problem you're looking at is the high price of housing in the UK. So, you spin your beanie hat and correctly identify that it's the cost of planning permission that causes the high cost of housing:
We estimate that social landlords (housing associations and local authorities) are paying on average the equivalent of c. £1.1 million per acre or £40,000 per home for land. Almost all of the value represented by this price is created by the planning system – green field land with no prospect of development might sell at 1 per cent of this level.
(Note that they're assuming 28 homes per acre: rabbit hutches.)
Good, now, propellered hat still whizzing away madly you then propose, well, what?
Well, if you work for the nef, you suggest that taxation on property development should be raised. Quite ignoring that taxing something produces less of it. You then insist that private sector organisations shouldn't be allowed to get planning permission. No, really, reducing supply is well known to reduce prices, isn't it? Finally, we'll bankrupt most of the current developers by taking away their land banks which already have planning permission.
Oh, and joy of joys, they also reinvent the collaterialised debt obligation (CDO) but this time it's the government's housing benefit payments that provide the collateral.
However, if you worked for the Adam Smith Institute you might think that, well, if it's planning permission that makes housing so expensive, why don't we just increase the amount of planning permission we hand out? If we increase the supply of something we're fairly sure that we'll decrease the price of it.
You know, there is a reason why nef is taken to mean "not economics frankly" and why the ASI was voted think tank of the year in 2009. We are, whatever you think of our political views, at least in contact with reality.
