What's wrong with housing policy in a nutshell

We’ll admit that Matthew Parris is not usually our go to figure for enlightenment upon public policy but here he’s extremely informative:

But the developers will turn out to be the usual handful of huge housebuilding corporations. Profit, not social need, drives them, so government’s job is to direct. Private housebuilders have rarely been interested in building for the poor, nor is it their business to care that huge profit margins may be related less to added value and more to the shortage of land.

Informative about what not to be doing of course.

Profit is the value added in an activity. This is by definition. The value of the inputs at market prices is the value of their alternative uses. The value of output at market price is, well, it’s the value of the output. Profit is the value added in the activity, the amount by which the value of the output is greater than that of the inputs. Again, that’s a definition.

Value add is what we all live off. GDP is value added - it’s all production, or all incomes, or all consumption. That production number is the value added in all the economic activities in the place and or country. More GDP - again, this is all definitional - means incomes will be higher.

So, the claim is that private housebuilding will strive to add value, something that increases incomes. It’s government’s job to direct, to make sure this doesn’t happen so that we can all be poorer.

We submit that that’s a hell of a way to run a railroad and a logical construction of the grandest idiocy. Therefore let’s not do that.

The idea that the capitalists are not interested in producing for the poor is belied by many centuries of experience. As has been pointed out, it was capitalism that allowed the mill girl to have stockings - feudalism provided QE I with them just fine. Building cars only for the rich, as Aston Martin is currently showing, is a great way to lose money. Henry Ford’s Model-T, that jalopy for the working man, created one of the world’s grandest fortunes. The history of the press is of every new entrant undercutting the previous price level - the penny newspaper for a halfpenny. That last still has subsequent generations rolling in lucre - why wouldn’t capitalists be interested in taking the poor’s money?

Finally, we don’t have a shortage of land, more of Surrey is under golf courses than houses. We have a shortage of licences to allow houses to be built, something that can be solved at a stroke of the bureaucrat’s pen. Which is exactly what we should do of course. For the current system is like complaining about the price of cars while ignoring that the real problem is the limit on licences for the man with a red flag to walk in front of it. Artificial scarcity will indeed concentrate minds upon what can be sold to the rich - only the rich can afford the scarcity.

Our establishment hamstrings that red in tooth and claw capitalism then complains that capitalism and profit aren’t producing the goods. The actual answer is to stop that government direction and leave that market be to produce.

Or, as we’ve said before now, the answer is to blow up the Town and Country Planning Act 1947 and successors. Proper blow up - Kablooie. Now there’s a proper housing policy.