Why don’t we, you know, just build another London?

To return to our current favourite subject. We’re told, endlessly, that Britons must live in chicken coops with no garden because we’ve just not got the land for anything else. We must preserve the national patrimony by everyone living in tattered shacks:

Up to a billion solar panels will be fitted across Britain by 2035 under Ed Miliband’s plan to hit net zero targets, data suggest.

The Energy Secretary’s proposals will carpet the country with panels covering an estimated 750 sq miles, a bigger area than Greater London.

But it appears that we do have the land. We’ve enough land to build another London. So, why don’t we, erm, just build another London? The current one houses, what is it, perhaps 8 million people? At the usual 2.4 people per household that’s about 3.3 million dwellings. Sure, we might spread it about a bit, use a bit of land here, a bit there. But 3 million houses would aid in solving at least some of our housing problems.

If we do have space for this much solar - something we are assured we do - then that means we’ve this much space available. We should use whatever space we have available for its highest valued use. Which is, in the case of land, under houses. We already have that proof that we’ve got the land therefore we should use it to build those houses. QED.

If MiliEd is serious of course we can always put solar cells on top of the houses and solve two problems at the same time.

Of course, this will mean that fewer Britons will have to live in tawdry chicken coops which is why some will oppose the idea.

Tim Worstall

A basic working theory - the world’s gone mad

We’d also insist that this is a workable theory, not just a useful working one. That the world around us has gone mad.

Ed Miliband will decide whether Britain’s biggest solar farm can be built on Winston Churchill’s ancestral estate after the renewables project cleared a key hurdle.

The Planning Inspectorate confirmed on Friday that the Botley West Solar Farm on Blenheim Estate had been accepted for examination.

Months of scrutiny will now follow to determine the project’s feasibility before the Energy Secretary will decide next year whether it can proceed.

If approved, the site will cover at least 2,471 acres of the 12,000-acre estate and provide renewable energy to more than 300,000 homes in Oxfordshire.

This is, because of course it is, in the Green Belt:

This is a huge proposal, covering 1,400 hectares (14 sq km, 5.4 sq miles) of mostly agricultural land in Oxford’s ‘Green Belt’ a ring around the city intended to be kept free of new buildings and other developments.

The Green Belt is that area of land which will, if built upon, be the ruination of the national patrimony. That’s the claim at least.

If that land were devoted to housing at current minimum density insistence we could plonk 42,000 houses there. This would also never be allowed of course - ruination of the national patrimony etc.

But now for the madness. A solar farm - whether those are useful or not at our northern latitudes - can be placed 5 or 15 or 50 miles wherever. We have this technology called “wires” that can move the resulting electricity around. There is no argument, at all, in favour of the ruination of the national patrimony to produce a bit of electricity that is.

Housing, on the other hand, everything is location, location, location. Being 5 - or 15 or 50 - miles closer or further makes all the difference. So, if we’re willing to ruin the national patrimony then it is for housing that we should be willing to do so and not solar farms. Yet that is exactly, precisely and wholly the opposite way around from how the system, governance and the world actually works.

Time to return to the ancestral wisdom of the Yorkist* forbears. “The whole world’s mad ‘scept thee and me. Not so sure about thee, neither.”

Tim Worstall

* Probably. They’re unlikely to have been Lancastrians up there.

Don’t let the activists create the definition

We have to say this is a new one on us:

charging deserts

where a vehicle with only 10pc of its battery remaining would not be able to reach a site with at least six rapid or ultra-rapid devices

This strikes us as activists insisting upon entrenching their prejudices into the very language. We also insist that this is dangerous. For, by said entrenching into the language we’re all deprived of the ability to argue against the prejudice. Who, after all, would be in favour of “charging deserts”? Other than, you know, the people who might want to question the merits, costs, sensibility, of having 6 charging devices every 50 yards of the country’s roads?

There is also considerable form for this. Poverty these days means being on less than 60% of median household income. Low wages are less than 66% of median hourly wage. They’re both measures of inequality, not poverty - and make no reference at all to the actual standard of living. Fuel poverty is being unable to heat an entire house to 19 oC (we think we’ve got that right) on less than 10% of disposable income. That is, everyone before about 1980 was in fuel poverty.

We don’t object to people desiring such things even as we might disagree - desiring greater equality is valid even if we think that it’s wrong. But we do object to those prejudices becoming the definitions. We should not allow the activists to define the language for us that is. Despite it being obvious that only the activists are going to be willing to sit in the conclaves where such definitions are cooked up.

Charging deserts indeed - we’re absolutely certain that there are vast areas of the country many miles from a site with half a dozen petrol pumps….and to claim that a petrol pump is a more efficient machine than a charging station, well, yes, it is…..

Tim Worstall

Douglas Mason

Today (13 December) marks 20 years since the death of Douglas Mason, the prolific Adam Smith Institute author, who proposed to replace council ‘rates’ (a local property tax) with a per-capita charge for local services — which was immediately dubbed the ‘poll tax’.

Everyone accepted that the ‘rates’ had to go: they were fixed in arbitrary and unfair ways, and only a tiny minority paid them, giving the majority an incentive to press for higher council spending. Several inquiries had proposed other options, such as local sales or income taxes, but none found favour. Eventually Mason’s idea was adopted, but without many of the safeguards he proposed, which made it unpopular and a focus for discontent.

Most of Mason’s other ideas were much more successful. In A Home for Enterprise, he proposed that, given the illiberalism of the new China, the UK should give right of abode to Hong Kong residents. It was after his death, but eventually the Cameron government accepted this important humanitarian principle. In Time to Call Time, he reviewed the evidence for more liberal licencing laws, another policy that was subsequently adopted. In Sunday, Sunday he made the same case for Sunday trading. In Privatising the Posts, he advocated Royal Mail privatisation, which again occurred later. And his case for privatising the Forestry Commission, Wood for the Trees, was thwarted only when a group of celebrities (who plainly did not understand the policy) objected.

Mason’s talent was to take an issue, be it regulation or taxation and state control, explain its history, review its problems, explain how state and political involvement made things worse, show how non-government solutions would be better, then put forward a range of options, complete with practical ways of implementing them. Often he was well ahead of public opinion, but in many cases, as with licensing and Sunday trading, opinion eventually caught up with him.

Douglas Calder Mason was born in Dunfermline and went (like the ASI co-founders Madsen Pirie and Eamonn Butler) to the University of St Andrews. A science fiction addict, he amassed what was perhaps the UK’s largest collection of Sci-Fi anthologies such as Analog and Astounding, many going back to the first issue. He also loved and sold antiquarian books. In 1990 he collapsed outside Parliament, where he worked, and was given a cancer diagnosis with ‘months, not years’ to live. But he lived another 14 years, continuing to write, lecture and travel until his death in 2004.

You go Angela, you go girl!

Apparently Angela Rayner is going to do something sensible about Britain’s housing woes:

Labour bid to ‘bulldoze’ the Home Counties

How excellent. That Green Belt around London - there are other versions around other cities and areas too - means that it is impossible to build houses in the most valuable area to build houses in the country. This is an obvious nonsense. The very definition of wealth creation is moving an asset from a lower valued - say, golf course, parking lot or green field - to a higher valued one - say, underneath a house. So, given that we like being richer, wealthier, we should do that.

We have a law against doing that, the Town and Country Planning Act 1947. Specifically and deliberately enacted to stop people doing exactly that wealth creation. The underlying reasoning was that if those rolling acres got built upon then the proles might have decent housing that proles would like to live in, where proles would like to live. Of course that cannot be allowed now - only the haute bourgeois should be allowed such a freedom.

So, good.

Then the not so good:

Labour has been accused of seeking to bulldoze through the Home Counties as Angela Rayner prepares to unveil the biggest overhaul of planning rules in a generation.

The Housing Secretary will on Thursday unveil a new National Planning Policy Framework (NPPF) intended to pave the way for thousands of estates across the South East.

Ms Rayner’s proposals – which will include building on the green belt around major cities such as London – are expected to go even further than a draft version of the framework, which had proposed building 69,000 houses a year in the South East.

Because maintaining the national planning will retain exactly the basic problem here, the national control of planning. The answer is simply to not have planning control at that national level. Blow up the TCPA and successors. Proper blow up - kablooie.

People should be allowed to build houses where they think people would like to live. Further, the houses built should be of whatever type the builders think people would like to live in. At whatever density that is and so on. At which point market forces will very quickly zero in on the production of housing of the type, location, size and greenery of what people do wish to live in.

The only complaint we’ve got about Ms. Rayner threatening to concrete over the Home Counties is that she’s not, in fact, threatening to allow people to do that. She should.

Tim Worstall

Non-Dom Non-Sense

Scrapping the non-dom tax regime, only to fudge its replacement, is an economically senseless, political move. Such a move, initiated by the previous government, ignored the available evidence and will only accelerate the exodus of wealthy individuals from the UK. By definition, globally mobile, remittance basis non-doms don’t have anywhere near the level of ‘life inertia’ which barely anchors the domiciled wealthy to our shores. Emigration to Switzerland – with its favourable forfeit system – or Italy – with its €200,000 flat fee – is a very real option, particularly for the richest non-doms.

And yes, it’s not just about tax – from top class universities to the City of London, the UK has abundant natural advantages which will always have their lustre. But crime is high, public services are on their knees, and with an already high tax burden, the scrapping of the non-dom regime could push people over the edge.

This is bad news for the country, particularly given that millionaires who up-sticks will no longer have investment home-bias to the UK. We’ll have less productivity enhancing investment, job-creating spending, and wealthy tax contributors (the average non-dom pays £120,000 in income tax p.a). It seems odd that the government would bite the hand that feeds it, particularly as non-dom tax receipts hit record highs, already generating £8.9 billion a year. Government estimates that the changes will raise £3.2bn in extra revenue, of course account little for the change in behaviour that the policy seems almost actively seeking to engender.

The most harmful single aspect of the Government’s changes appears to be the imposition of inheritance tax on the worldwide assets of non-doms, for as long as 10 years after they have left the country. In a survey by Oxford Economics, this was cited by 80% of non-doms and 57% of their advisors as the main reason for considering relocation. For a government which had the sense to rule out an exit tax on the capital gains of wealthy people leaving the UK, it seems strange that they are willing to implement the ultimate exit tax – one on death – which is referenced as the biggest reason to get out of the country before April 2025 and will no doubt discourage new inward HNW migration. The prize? A supposed £430 million boost in tax revenue to squander on bat tunnels.

Shelter is shrieking too much about homelessness

As we’ve been known to point out before Britain certainly has problems but some are rather over-egged, shrieked about too much. At which point Shelter’s latest hysteria:

Soaring private rents, rising evictions and a chronic lack of affordable social housing have led to homelessness in England increasing by 14%, research from Shelter reveals.

The charity described its latest figures as “shocking” and “astounding”. They are contained in a report that estimates that on any given night more than 354,000 people in England are homeless, which is one in 160 people. That includes 161,500 children.

Shelter said the figure had risen by 44,500 people (14%), from one in 182 people, in just one year.

We are unconvinced. There is a number for people who are homeless, those sleeping rough:

About 3,900 people are sleeping rough on any given night, a 10% increase.

Near all of whom are suffering from significant mental health or addiction problems, usually multiply. This is not, in fact, a housing issue, it’s one about Care in the Community more than anything else.

But back to housing itself. As we’ve remarked before what Shelter is counting is the number who would be homeless - really, actually - it it were not for the welfare state we’ve already set up to make sure that people are not - really, actually - homeless.

Now please note here, this is not our example, this is the one Shelter uses in its own press release from which, obviously, The Guardian article is written:

Shelter said people were often experiencing homelessness for the first time in their lives.

It gave the example of Sally, 43, who is living in temporary accommodation in Dorset with her 14-year-old-daughter. Sally was evicted and spent eight hours on the street before getting a hotel room.

They are now in an unsuitable one-bedroom flat that is noisy and scary, she said.

8 hours, eh? Unsuitable you say? We say that’s pretty damn good for government action. In fact, we’d say that’s really very good indeed. And yet this is the exemplar of the horrors that the charity wants to use?

Of course, we’d all agree that British housing needs sorting out. More of it and cheaper - with the obviously joyous point that more will mean cheaper - is something we ourselves demand. But that problem of families being turned into homeless waifs to sleep on the streets does, rather, seem to have been solved already. 8 hours you say? One bedroom flat? Gosh.#

Tim Worstall

F. A. Hayek's "The Pretence of Knowledge" Lecture: A Critical Examination of Economic Knowledge

Fifty years ago today, the great economist and political philosopher F. A. Hayek was awarded the Nobel Prize in Economic Science. He used it as the opportunity to deliver a blistering lecture on ‘The Pretence of Knowledge’ — arguing that economists knew far less than they thought they knew, and that it was very cheeky of them to call economics a ‘science’ at all.

The award came, after all, in the mid-1970s, a decade marked by considerable economic turbulence, including oil price shocks, stagflation and unemployment. That was the legacy of twenty-five years of centralised ‘economic planning’ and Keynesian policies that saw government intervention as the way to manage the upswings and downswings of economic cycles. (The trouble was that politicians found it much easier to do the spending bit than the cutting-back bit.) 

I remember Hayek telling me that the success of an economy was probably inversely proportional to the number of economists it had. And when the professional wisdom of the greater majority was as wrong as it was, that should come as no surprise.

His Nobel lecture ‘The Pretence of Knowledge’ searingly critiques the assumptions underpinning economic planning and highlights the limitations of knowledge in the context of complex economies. 

At the heart of his argument is the idea that knowledge is scattered, partial, fleeting and often mistaken. So how are central planners to deal with that? And there is just so much information in a modern economy — millions of buyers, millions of sellers, millions of products and processes and distribution chains that are local and national and international — all of which is relevant to how things turn out. No single individual or institution, observed Hayek, could ever possess all the information needed to make fully informed economic decisions for a whole society. Rather, the relevant information is dispersed among countless individuals, each with their own unique and focused insights and knowledge of their personal values and circumstances. It is this diverse spread of information that feeds the market economy and steers production to the goods and services that people want; not what planners might think they want.

To Hayek, the problem of creating a rational economic order was not the planners’ focus on steering production and distribution. It was a problem of knowledge — what should be produced and to whom it should be distributed. That is a problem that markets solve minute by minute, across the world, and very efficiently. No government planner could compete with that.

Hayek warned that economists’ and politicians’ belief in their ability to control economic outcomes is a dangerous illusion. They neither understand the details of how economic life works, nor can they predict it (as genuine scientists might predict the natural world). Their ‘pretence of knowledge’ makes them overconfident of their powers to manipulate economic systems, resulting all too often in unwelcome and unanticipated results. Their interventions (such as wage and price controls) disrupt market signals, leading to gluts and shortages, waste and inefficiency. 

Hayek was in no doubt too that the assumption of the supposed experts that they can dictate the best course of action for society could lead to increasing authoritarianism as decision making shifts from individuals to the authorities. The threat to individual freedom is obvious. 

As contemporary politicians expand government into more and more corners of our lives, Hayek’s warning from 1974 becomes increasingly important. To put it simply, economists and politicians must realise the limits to their knowledge — and should have a lot more humility about that fact.

The Thames Water problem is wholly caused by OfWat

As we all know there’s a considerable call for more regulation of the English water companies. Even, a call for considerably more regulation of the English water companies. What all too few are willing to acknowledge is that it’s the current regulation of the English water companies causing at least one of the problems.

So, Thames Water requires refinancing. Ho hum, the sort of thing that does happen in capitalism. The sort of thing that is dealt well with by capitalism - need more capital, who you gonna call? The capitalists, obviously.

But even The Guardian has noted the problem here:

Investors have also expressed interest in taking a new stake in the business, which is needed to secure its finances in the longer term. However, they are still trying to find out what terms they might win from the beleaguered company, the UK government and the water regulator, Ofwat, if they provide billions of new equity funding.

As we’ve pointed out before OfWat is sitting there, opposable digits in fundament and mind in neutral:

That’s from OfWat, the regulator.

Until prices, therefore cashflows, for the next 5 year period are known there is no possibility of even examining, let alone solving, the financial structure. Therefore no solution is possible until that publication date. Everything said before that date is pure vapidity.

Which does give us an interesting insight into Thames Water’s problems, no? Capitalism and markets might well be able to solve this problem if it weren’t for having to wait for the bureaucracy….

The expected publication date is Dec 19th. Nothing can or will be done until then.

Of course, something useful could be done. A phone call along the lines of “Thumbs out, Mateys, and publish” would bring forward the ability to create a solution. But that would be to ask a bureaucracy to actually aid in solving a problem caused by that very bureaucracy. That’s not how this brave new world of mission oriented - with strict conditionality - high investment governance works, is it?

Tim Worstall

How to Re-Start Growth

Sensational ideas on re-igniting growth from US economist Tyler Goodspeed yesterday, at the Ralph Harris Memorial Lecture in Westminster.

The late Ralph Harris was the first Director-General of the Institute of Economic Affairs, a modest man who forced himself to be outgoing to spread the message about markets, build up an impressive think-tank, and importantly, to encourage young liberal-minded activists (like me, Madsen Pire, and many others). Tyler is one of the most gifted young economic historians with two PhDs, several books, and a spell in the White House to back up what he says.

All the factors of production in the UK are compromised, he explained. Take Land. Clement Atlee’s decision in 1947 to create no-build “green belts” round our cities choked off our urban production; and other 1947 planning restrictions are still killing productivity today. Then Capital. Our capital markets aren’t supporting startups and small businesses enough, because tighter liquidity regulations mean it’s safer to lend to the government than to business. Labour. We have very high marginal taxes, that cut in at much lower incomes than, say, the US. It’s a massive disincentive to work. And Energy. Because we are committed to banning fracking and phasing down gas, we find ourselves importing energy and energy sources — at great cost — from the US and other places.

It’s impossible to have much in the way of production when your main factors of production are squeezed like this, by government bans and regulations. (I would add another, Entrepreneurship which has also been stifled by high taxes and other costs on smaller businesses.) And things have got worse since the financial crash of 2007-8. The trend of growth was upward in the US and UK until then. The US took a hit, then resumed its upward growth. The UK flatlined. It’s pretty obvious why: our taxes rose, and our regulations got even more crushing.

So, what to do? First, says Tyler, we need a Policymaker Hippocratic Oath. First, do no harm — in this case, to the productive system of the nation. Second, remember that people are policy. If you have bureaucrats like the suits in the Bank of England and Whitehall, you’re going to get policy that suits the suits, not the productive public (which ties in with something Liz Truss says: that the bureaucracy controls policy these days, and ministers find themselves just mouthpieces for what the blob decides). Third, we need the politicians at the very top to understand the importance of productivity and markets for growth, people with genuine ideological conviction.

If only our mushy, all-thing-to-all-people political class produced such people!