Slowly we advance, ever so slowly

Aditya Chakrabortty has just had one of those shocking little experiences:

Among the first acts of Starmer’s government was to slash the discount available to council tenants wanting to buy their homes. In London, the cut is especially sharp: before the deadline of 21 November 2024, the markdown could be as much as £136,400; now it is £16,000.

….

Brent saw a more than 7,000% rise in right-to-buy (RTB) applications in November over the month before; in Lambeth and Camden, it was more than 2,000%, for Southwark, 1,500%.

November’s flood of applications means Lewisham is dealing with more bids this financial year than it received in the previous four years put together, while Hackney is managing the equivalent of more than three years’ worth of would-be buyers.

Islington got 922 RTB applications in November alone, where it would normally expect closer to 200 over an entire year.

With months still left of this financial year, London authorities have together already received 3.5 times the RTB applications they got last year.

If you change the price of something then you change demand for that thing. Further, the general public is rational in the sense that if they can buy something £120,400 cheaper today than tomorrow then they’ll buy today. Rational self-interest we might call that.

Excellent, we’ve now the basic logic to explain how a market economy works. People react rationally to changes in the prices they face and react according to their perceived self-interest.

Yes, obviously, this is an advance even if it’s all very slow. Presumably we can now hope for more of The Guardian’s economic editorials (which are written by Mr. Chakrabortty) to reflect this new and hard-won knowledge?

We can so assume, can’t we?

Tim Worstall