Housing markets and economic stories

Part of the story isn’t being told.

As we move towards the General Election strands of news and snippets of information have emerged which circle around the issues but there is a gap in the middle where the story could – and should – be.

I’m thinking here of housing-related aspects of the party manifestos: cuts in inheritance tax on property versus mansion taxes. I’m thinking of the observation that buy-to-let lending was the only component of mortgage lending not to stall in February. I’m thinking of Hannah Fearn’s argument that removal of the obligation to invest pension pots in annuities can be interpreted as a move to recapitalize the bank of mum and dad. And finally I’m thinking of Christine Lagarde’s words of support for George Osborne’s strategy for economic management.

So what’s the story that is missing? [Read more…]

Independence, devolution and power

When I first saw this tweet, late last Saturday night, my immediate and admittedly facile response was “Neither of them”. Alex Salmond was propounding a vision for an independent Scotland that was no doubt seductive for many, but was panglossian in its optimism. For me, the Yes campaign was irresponsible in the way Salmond blithely dismissed all requests for detail or serious engagement with potential risks. It was premised on a blatant failure to acknowledge the geopolitical realities that an independent Scotland would face. Cameron, on the other hand, would seemingly say just about anything, panicking and offering ever greater concessions, if he thought it might increase the chances of a No vote. The cynic might say that if Cameron’s last minute appeals were filled with emotion it was just as likely to be distress at the thought of an early exit from Number 10 as it was at the thought of the union breaking up.

I didn’t envy the voters of Scotland their choice. On one side, the picture being painted of the post-independence world was inaccurate in ways that were rather irresponsible. And that wasn’t even allowing for all the areas in which we just didn’t know what might happen. On the other side, enticements from a set of Westminster politicians who have repeatedly proven themselves unable or unwilling to deliver on such pledges and largely motivated by self-preservation or preservation of sectional interest. Who to believe?

I guess we will never know how much the various promises affected the voting. At the moment all we know is the outcome. The referendum is history.

We are beginning to see the contours of the post-referendum game. And the game is beginning to look ugly. It would also appear that a new settlement for Scotland may not take centre stage. [Read more…]

Housing pathology and paralysis

A few weeks ago Janan Ganesh in the FT described the UK housing market as an ‘institutionalised pathology’. The problems that the housing market is causing for the British economic and political system seemingly become ever more apparent by the day.

There is an increasingly strong coalition of opinion uniting behind the sort of radical action that is needed on housing supply to deal with the problems. The recent intervention by KPMG/Shelter, or the RSA, or today at the BBC website all set out prescriptions that bear more than a family resemblance.

And as a similar message emerges from different quarters it throws into sharper relief the timidity and short-term self-interest of the political class. The political economy of housing may have led politicians to a predictable level of inactivity. It may be that it is only if and when the private renter vote is effectively mobilised that change will occur. Perhaps only then will a government be brave enough to take on the countryside preservation lobby. But the problems intensify in the meantime. [Read more…]

Is third party expertise just what the kids need?

On Thursday Noah put up a brief post on the Market Priesthood. It relates the story of Steven Levitt and Stephen Dubner, of Freakonomics fame, meeting David Cameron, of Coalition Government fame. Levitt and Dubner tried to persuade Cameron that health care was just like any other part of the economy. Cameron was, apparently, not impressed.

Noah riffs off this story:

This is exactly what I call “free market priesthood”. Does Levitt have a model that shows that things like adverse selection, moral hazard, principal-agent problems, etc. are unimportant in health care? Does he have empirical evidence that people behave as rationally when their health and life are on the line as when buying a car? Does he even have evidence that the British health system, specifically, underperforms?

No. He doesn’t. All he has is an instinctive belief in free markets … I don’t think Levitt has a model. What he has is a simple message (“all markets are the same”), and a strong prior belief in that message.

Then yesterday in the Guardian Patrick Butler picks up on the proposals put forward by the Department of Education to local authorities the power to outsource pretty much all of their children’s services apart from adoption. [Read more…]

Moralizing destitution

Just by way of a change, today I wrote a post at Medium.com. It’s a crisp, clean properly WYSIWYG writing experience. There is just enough formatting to allow you to make your point. But not a lot of bells and whistles to distract you from the writing. That is, I believe, the point. I may well use it again.

Here’s how I got going:

Moralizing destitution

Now the clergy are involved. That adds a whole new dimension to the debate.

A bench of bishops and a whole bunch of other church leaders have called on David Cameron’s government to act to address hunger. They note that:

“Britain is the world’s seventh largest economy and yet people are going hungry … Half a million people have visited foodbanks in the UK since last Easter and 5,500 people were admitted to hospital in the UK for malnutrition last year”.

While not placing the blame for this situation exclusively at the door of the Government’s welfare reform agenda, the church leaders claim that half those using foodbanks: [Read more…]

The £74,000 question

Piggy bank pound sterling. Clipping path included.The brouhaha over the impending proposal by the Independent Parliamentary Standards Authority to increase MPs pay to £74,000 is understandable. It seems perverse to be considering an 11% pay rise on a £66,000 base salary at a time when most other public sector workers are in the middle of a long period of real wage stagnation.

The cross-party rush by frontbench politicians to publicly distance themselves from the IPSA’s recommendation is equally understandable, even if it is known that many MPs say something rather different in private. They can see it would be politically damaging to accept such a pay rise now. It risks further reinforcing the reputation of politicians as self-interested and out-of-touch. David Cameron stated that the total cost of politics needs to be going down not up.

Of course, some of those graciously foregoing the payrise are independently wealthy so it will hardly make much of a difference to them one way or the other. [Read more…]

On Syrian atrocities

Stop bombing signSyria has been preoccupying the mainstream media and the political blogosphere for several days now. I’ve not blogged about it because I try to stick to things I know something about.

I know very little about Syria. Other than it is an awful situation. And awfully complicated. Clearly, the Syrian government has inflicted some truly unspeakable acts of violence upon the Syrian people. These may or may not have involved the use of chemical weapons. It seems likely that they did. Chemical weapons are horrendous. But even if they weren’t used it is clear that some dreadful crimes have been perpetrated. I’ve never entirely understood why chemical weapons, specifically, are a trigger for intervention. Is killing the same number of people by more conventional means less unacceptable?

The desire to intervene to stop such human suffering is only natural. It is a sign that simple human empathy is still alive.

But how to intervene effectively? [Read more…]

A couple of off-key incidentals from Cameron

The text of David Cameron’s speech today to the National Conservative Convention contains the following passage:

… We give people the tools to succeed. Yes, we believe self-reliance is a good thing, but that doesn’t mean “you’re on your own”. You can’t just say to the teenager who no one has ever believed in: “pull yourself up by the boot-straps”.

I know the leg-ups I got in life.

A loving family, wonderful parents, a great school and university.

Aspiration needs to be nurtured.

And this party has always understood that.

We want people to climb up through their own efforts, yes…

…but in order to climb up they need the ladder to be there in the first place…

…the family that nurtures them, the school that inspires them, the opportunities there for them.

Great Conservatives down the generations have put those ladders in place.

When Churchill invented the labour exchanges that helped people into work.

When Macmillan built new homes.

When Thatcher fired up enterprise so people could start their own businesses.

That’s what we’re doing in the Conservative Party right now.

There are a couple of things about this passage that jar somewhat. [Read more…]

Economical with the truth?

The agenda for this year’s Liberal Democrat Spring Conference carries the strapline Stronger economy, Fairer society. Given the parlous state of UK plc, and the deeply inequitable impacts of the Coalition austerity policy, the strapline touches on two of the biggest issues of the day. So the unwary among us might think that the discussion would have the economy somewhere near the top of the agenda.

Nothing could be further from the truth. In fact, the cynic might suggest there was strong circumstantial evidence to the contrary. The party leadership is doing as much as it can to avoid giving an airing to the issue of the direction of economic policy.

6162309761_6e59bfde6d_nFirst, Vince Cable has not been given the opportunity to speak to Conference as a whole. Instead, he found himself on a less high profile platform: speaking to a Friday evening fringe meeting organised by the Social Liberal Forum. The meeting nonetheless attracted an audience of a couple of hundred delegates. [Read more…]

Tory tailspin

5828140208_8a97682643_nIt is clear, even to the casual observer, that the Conservatives are in a bit of a tangle. You could say the same about the other main political parties. But the Conservatives appear to be going through a particularly public convulsion at the moment.

They seem to have misplaced 20% of their opinion poll support over the course of 2012. Many of those potential voters appear to have transferred allegiance to UKIP. On the basis of opinion polling, some commentators are already declaring UKIP the third party of British politics, overtaking the Liberal Democrats.

Paul Goodman posted a piece at the Telegraph on the weekend arguing that the rise of UKIP was one of four factors which pointed to the conclusion that the 2015 General Election is already lost. The piece generated a rapid response among the right wing commentariat. Both Tim Montgomerie and Iain Dale argued that while a Labour victory in 2015 looks likely, the result isn’t inevitable. There are steps that David Cameron can take over the next year that would revive the Conservative party’s fortunes. Grant Shapps waded in on New Year’s Eve to castigate anyone declaring that the election is already lost. This is just, in his view, being defeatist.

The question, of course, is what Cameron should do to turn things around. Inevitably, views differ. About the only point commentators seem to be closely aligned upon is that Cameron needs to make his long-promised landmark speech on Europe, with some serious substance, some time very soon.

For much of last year the Conservatives’ right wing backbenchers were making a nuisance of themselves both in the House and in the media. The clamour is for isolationism and turbocharged neoliberalism. A decisive swing to the right is claimed to be the way to see off the UKIP threat and encourage wavering right wing voters back into the fold.

Over the New Year it was the turn of the centre-right moderates and the modernisers to make an alternative case. This is a case we hear being made much less frequently. [Read more…]