Thursday, 8 October 2015

Cameron: how to raise house prices even further

There are occasions when I despair of the miserable failure of the Westminster world to understand what is staring them in the face - and I must admit I felt that listening to David Cameron's conference speech about housing.

It isn't that I disapprove of home ownership. Quite the reverse, I think everyone should own their own home. It's a sign of civilisation and independence. It is the complete mismatch between Cameron's policies and his stated objective that is so infuriating.

In fact, I can't think of any area of public discourse so shot through with complete twaddle as housing policy,

Simon Jenkins hit the nail on the head in his recent article on the most damaging housing myths. He was absolutely right that there is no connection between increasing the supply and bringing down prices. Again, quiet the reverse:

"The chief determinant of house prices is the state of the market in existing property and the cost of finance. During the sub-prime period, prices soared in America and Australia despite unrestricted new building. It was cheap money that did the damage. The house-builders lobby equates housing to “new build” because that is where their interest lies..."

This is the point I was trying to make in my chapter on house prices in Broke: How to Survive the Middle Class Crisis, but the Westminster world seems sold on it. There must be some relationship between conventional supply and demand - but the supply of housing finance, now almost infinite, will always stay ahead

The idea that rising prices has something to do with planning controls is also completely fatuous,  There is outstanding planing permissions for 400,000 homes, not being built - because the prices will be too high to offload.

But even Jenkins then went on to get it wrong himself in the bizarre, but horribly mainstream, idea that all we need to do is to increase urban densities.

This has been the preferred solution from environmentalists and architects alike. To do it on any scale would mean reducing the vital informal green space that makes cities liveable - and which will be so important economically (more on this another time!). It also now has a proven role keeping us all sane.

Building upwards has always been disastrous in UK public policy.  In the end, the rich keep their lower densities and their green spaces, and the high densities get visited on the poor.

Or as Marie Antoinette might have said: "They have no homes? Let them live in flats."

Just have a look at where that kind of inhuman planning leads next time you are around East Croydon, where the new slums are taking shape, for sale in Singapore (pictured above).

In the meantime, putting more money in the housing market, and letting a few people sneak in via 'affordable prices' which are still ten times what anyone can afford on the minimum wage will only raise prices even further.  And the idea that rents are driven up more by demand than by the cost of buy-to-let mortgages - well it is more of the economic illiteracy that is driving our housing disaster.

If house prices rise in the next three decades like they did in the last three decades, the average home will be worth £1.4m.  I didn't suppose that would actually happen - but then I heard Cameron's vacuous speech on the subject.

No, to bring down prices you have to control the amount of money going into the housing market, especially from overseas. To cool down the property market in London and the south east, only major devolution of power and a regional revival will do it.

And for goodness sake leave the green belt alone. It is all that prevents London expanding across southern England in a soulless sprawl.

AND! My ebook Operation Primrose is on special offer for 99p this week. There is also a conventional print version here

Subscribe to this blog on email; send me a message with the word blogsubscribe to When you want to stop, you can email me the word unsubscribe

Wednesday, 7 October 2015

When the child abuse campaign becomes tyrannical

Every society goes in an out of periods of insanity where they lock people up merely for being accused of something.  Let me put it more strongly.  There are some crimes considered so loathsome that you only have to be accused of them to be immediately assumed to be guilty.

The last few months have seen the apotheosis of a moral panic about child abuse, which reached a head with the investigation into establishment abuse, leading to murder.

There have been other moments in recent years. The frightening alliance between what you might call the child abuse 'industry' and fundamentalist Christians led to a similar panic about 'satanic abuse'. Children from the Orkneys were taken into custody in the middle of the night. Other families were torn apart before it became clear that satanic abuse wasn't happening anywhere.

I have been wondering why this keeps happening - and rather more so last night when one of the sources of the VIP paedophile ring story said that the names were given "as a joke suggestion to start with".

Because the moral panic, the tabloid coverage, the suicide of abusers, the great smashing of pedestals, doesn't help the victims either. And of course there are victims, and they must be believed - but not uncritically. Not tyrannically. Nor does it help children, in any circumstances, to take them from their beds in the middle of the night or to remove them from loving families, except in extremis.

The loss of John Hemming's Birmingham Yardley seat robbed Westminster of one of the most powerful sceptical voices about the abuse of justice around child custody.

It was a long, courageous campaign and there was hardly a bandwagon for anyone to jump on.  It did the Lib Dems credit that one of their parliamentary party was brave enough to ask those kind of sceptical questions.

Historically, sex allegations have often been a way to challenge the establishment (see for example the consistent campaign along those lines by Irish nationalists in the 1880s). But if we forget about dead politicians - from Leon Brittan to Ted Heath - the real victims in all this are most often poorer families who can't stand up against the officials who get it wrong.

In fact, there was a fascinating article last week in the American political weekly The Nation. This is how it starts:

"O n July 29, 2013, a Latina mother in Illinois named Natasha Felix sent her three sons, ages 11, 9, and 5, out to play with a visiting cousin, a young girl, in a fenced park right next to her apartment building. The oldest boy was charged with keeping an eye on his siblings, while Felix watched them all from the window. While they were outside, a local preschool teacher showed up at the park with her class. She saw the 9-year-old climb a tree. Felix’s youngest son fought with his cousin over a scooter and, at one point, ran with it into the street. Based on this, the teacher called the child-abuse hotline, and Felix received a visit from the Department of Children and Family Services.

"According to legal filings in the case, the investigator, Nancy Rodriguez, found that Felix’s kids “were clothed appropriately, appeared clean [and] well groomed,” and that Felix “appeared to be a good mother.” Felix’s oldest son seemed like a “mature young boy” who “certainly could be allowed to go outside by himself to the park next door.”

"However, when Rodriguez asked Felix if the boys had any special needs, Felix replied that the 11-year-old and the 9-year-old had been diagnosed with ADHD. On the advice of their doctor, they were off their medications for the summer. Rodriguez later wrote that “based on the mother not knowing that the kids were running into the street with the scooter, based on the children having ADHD,” she recommended that Felix be cited for “Inadequate Supervision” under the Illinois Abused and Neglected Child Reporting Act. As a result, Felix was placed on the state’s child-abuse registry, which led to her losing her job as a home healthcare aide and ended her dreams of becoming a licensed practical nurse."

Nobody suggests that we should be any less vigilant about protecting children. But this kind of tyranny - by professionals against the poor - is actually another kind of child abuse. We all know it goes on and it does so here as well as across the Atlantic. It leads to over-protected kids, addicted to computer games, who never go out by themselves or dare to climb trees.

It also leads to the most appalling bullying of children. It is professional bullying backed by the force of the mob.

Illinois is an interesting case. I couldn't help noticing that their number of children diagnosed with autism or Asperger's leapt 62,000 per cent in the decade to 2002. A clear sign of professional insanity.

Subscribe to this blog on email; send me a message with the word blogsubscribe to When you want to stop, you can email me the word unsubscribe

Tuesday, 6 October 2015

The trouble with Osborne's smokestack hunting

As usual, it seems to me that the BBC have got the wrong end of the stick about the significance of George Osborne's announcement that the government will let councils keep the proceeds of the business rates.

In doing so, he has not yet had the nerve to let them set their own, or change their arrangements for taxing businesses, but that will come eventually. But listening to the BBC, you would be forgiven for thinking this was an argument between a Conservative government flinging away Margaret Thatcher's centralising legacy versus Labour council chiefs who want to reinstate it.

There is a certain logic to that, I suppose.  There is a renewed openness among Conservatives to some measure of local economic self-determination. There is also a new closedness among Labour people to the same thing - on the grounds that it is just a cover for cuts, as the leader of Nottingham City Council told Michael Heseltine so miserably on the PM programme yesterday (51.41).

No, what really irritates me about the coverage is that it is almost certainly correct.  Most local authorities will think no further than competing with their neighbours to attract more multinational employers to set up locally.

This is depressing because it may well be what the government intends - to slash planning or other regulations, or slash local business tax to encourage competition for what the American cities used to call 'smokestack hunting'.

This still goes on, but not at the expense of the environment in the USA any more.  It became clear back in the 1980s that the reason a CEO chooses one to invest in one city rather than another is nothing to do with planning permission or lax environmental regulations. Quite the reverse. It is because it is the kind of place where they and their partner happen to want to live and bring their family.

That requires amenities, green space, clean air, low traffic, sports facilities, art galleries, theatres... That is what the New Civics movement and the Places Rated Almanac taught the USA.  I am hoping that same thing now occurs to cities in the UK. I believe it will, partly because their leadership is considerably more innovative and imaginative than it tends to be in Whitehall.

The real issue isn't smokestack hunting, because - let's face it - there aren't many smokestacks to hunt. And the great retail boom is over too.

The urban renaissance, and the Northern Powerhouse, are going to derive their power from how well they manage to use the resources and the people they already have to grow their own business sector. And to do what cities have done since time immemorial - to replace imports.

How much have places like Manchester really thought about this? Not a lot, I fear, but they will. How much has the Treasury considered it?  Hardly at all.  But as I wrote in my short book People Powered Prosperity, they will too.

Subscribe to this blog on email; send me a message with the word blogsubscribe to When you want to stop, you can email me the word unsubscribe

Monday, 5 October 2015

Hayek, Liberalism and the story of the past half century

OK, here's a question. Can you guess which book is represented on Wikiquote by the following two quotations?

"Conservatism, though a necessary element in any stable society, is not a social programme; in its paternalistic, nationalistic and power adoring tendencies it is often closer to socialism than true liberalism; and with its traditionalistic, anti-intellectual, and often mystical propensities it will never, except in short periods of disillusionment, appeal to the young and all those others who believe that some changes are desirable if this world is to become a better place."

"The more the state 'plans' the more difficult planning becomes for the individual."

Have you guessed? It is the founding document of neoliberalism, Friedrich von Hayek's The Road to Serfdom.  These were the only two quotations listed and they make both the two points I wanted to make. That, at the dawn of what became the Liberal heresy neoliberalism, Hayek was:

1. Writing a manifesto that was intended to be explicitly Liberal.

2. Aiming at a target that wasn't so much Keynesian economics - Keynes liked the book - but the pseudo-science of state planning.

I have been thinking about this because I have been listening to the New Economics Foundation podcast series about neoliberalism, and you won't hear either of these central ideas articulated.

It seems to me that the Left's narrative about neoliberalism is too naive to overcome it - it understands none of the appeal of its original ideas. It is somewhat vacuous - a fairy tale about nasty people overturning the great and enlightened Keynesian consensus of 1945.

Until we can develop a better understanding of where neoliberalism came from, and why it became such a perversion of itself, we will never force a path beyond the neoliberal consensus we need. And I use the word 'heresy' advisedly - a heresy is an ideology that takes one aspect of the truth and pushes it to absurd lengths.

Part of my counter-narrative is here, but even that fails to do justice to the power of Hayek's original ideas. We need to realise that the history of social policy since the Second World War in the UK, about self-determination and the rejection of state-approved scientific progress, was led originally by Hayek.

What Hayek launched, and others too - like Borsodi in the USA and Schumacher in the UK - was a challenge to conventional progress, just as it was a challenge to conventional categories. We broke out - we rejected the the idea that the government would decide where to funnel resources, and launched a whole series of movements that rejected the Spirit of '45, along with big bureaucracies, official instructions, closed shops, concrete jungles, high rise flats - anything that treated us individuals as amorphous groups.

The result has been the roller-coaster ride we have all travelled during my lifetime - the end of deference, the beat generation, the Liberal revival, the voluntary sector, gender and sexual equality, Shelter, and the breakdown of simple class divisions, the green movement...

Those who voted Margaret Thatcher to power in 1979 were people in the grip of Hayek's original ideas, but also those in search of a sense of independence who were in the grip of his spirit. 

Unfortunately, thanks to those who waited in the wings, on both sides of the Atlantic, neoliberalism turned out to be wholly illiberal (this is my conspiracy theory).  It shored up the status quo, rather than undermined it.  It became an apologia for monopoly rather than a critique of it. Instead of a manifesto for the small to challenge from below, it became a justification for protecting the strong and wealthy.

And in direct contravention of Hayek's purpose, neoliberalism emerged - not as a critique of pseudo-science, but yet another pseudo-science itself.

But don't let's pretend that Hayek's original ideas had no power to move. They were hugely influential on our lives, and - instead of naively talking in terms of the fairy stories of good and evil - we need too go back to the original source and see where it all went so horribly wrong.

And if you don't believe me, see how the Hayekian fury with government planning had set in by the time they made the film Passport to Pimlico (1949, see picture above burning ID cards). Someone shouts at the official loudspeakers:

"We're sick and tired of your voice in this country - now shut up!"

That was the Hayek spirit before neoliberalism undermined it. For my Liberal colleagues, it is worth realising the story of our own journey this past half century. It began as the political wing of the counterculture, but getting a bit muddled as the counterculture became so incredibly vast that it could even encompass the man who represents the Spirit of '45, Jeremy Corbyn himself.

Subscribe to this blog on email; send me a message with the word blogsubscribe to When you want to stop, you can email me the word unsubscribe

Thursday, 1 October 2015

Everything changed in 1972. Or did it?

We seem to be hurtling towards a turning point in the zeitgeist, as I may have mentioned before - though my sense is that Corbyn is symptom rather than cause.  So I have been thinking about other turning points - not the economic ones this time, but the social ones - and I've settled on 1972.

No it wasn't the ending of exchange controls (1979) as I argued in my book Broke. Nor was it the Three Day Week as I have been writing more recently (1973/4 - more on that later). Nor is it the moment I remember, as a child, when I was no longer forced to wear a cap to go to Oxford Street (1965).

No, I have settled on 1972, not because of the miner's strike and the blackouts, or Watergate come to that - both moments when it was clear that something would have to change - but because, as far as I can remember, it was the year I heard three words for the first time:




It is strange to think that there was a period, in living memory, when we didn't eat two of them or sleep under the third.  The concept of yoghurt was particularly mind-boggling because I  could see that never, as long as I lived, would I be able to spell it.  But sure enough, we used to spend half the day in those days knitting spaghetti or practicing hospital corners on the sheets and blankets.

And we could have spent the time staying in with Monty Python.

I'm not saying that this was when they were introduced into the UK, just the first time these concepts floated into my consciousness.  Perhaps, in its own way, this was an important shift as Geoffrey Howe's ending of exchange controls after all.

The reason I've been thinking about it now was that, only yesterday, Sainsbury's claimed again to have introduced the avocado pear as early as 1962.  I'm prepared to accept their word for it, and I see there has been debate about this before.

But I wrote in my book Eminent Corporations that you could fix that elusive moment when our supermarkets suddenly started to pack their shelves with exotic French or Italian cheeses, and we started to learn some of those strange foreign words which have become so familiar as foodstuffs now, was down to the rule of Marcus Sieff over Marks & Spencer in the early 1970s.

As I understood it, one bemused M&S customer complained that avocado pears were not as nice as perhaps they should have been with custard.

I see that I may not have been quite right about the avocados after all.  But still something shifted in 1972, the year I turned fourteen. England opened up a little. We became a little less crusty. We were no less English, of course - see my book How to be English - but we let in the breezes from the south and felt a little more exotic as a result.

Perhaps it isn't a coincidence that the countdown had begun that year for us to join what was then the European Economic Community the following year.

Subscribe to this blog on email; send me a message with the word blogsubscribe to When you want to stop, you can email me the word unsubscribe

Tuesday, 29 September 2015

The next struggle over solar power - and who will win it

I find myself on the opposite side to the science writer Matt Ridley most of the time, because he takes his very sensible theses too far - in a rather too deterministic way. He gives a sense that whatever happens had to happen. Which is nonsense.

But I found myself warming to him on the BBC radio programme Start the Week yesterday morning, talking about his book The Evolution of Everything, for his emphasis on the clear historical drift towards complexity - where the power of change goes in a direction towards what bubbles up from below.

Put like that, there seems to me to be a broad drift towards independence and self-determination that you can see back for the past two centuries or more. There are hiccups, blind alleys and blips, of course. And turnings, like the one taken by Margaret Thatcher, which seemed to be about independence but was actually a new kind of tyranny.

It is a way of understanding the world. With me so far? Now what, then, are we to make of the emerging struggle over solar energy in the USA?

Because there is a battle under way there which goes to the heart of the future of energy, and barely a hint of it has yet reached the UK - though battle has already been joined in sunnier places like Spain.

It is one of those areas where the UK is sadly backward in its political discourse. But it is important who wins. It is the attempt by energy utilities to charge people extra for their solar panels.

It is also fascinating that the battle lines in this particular battle pits Greens and Liberals on one side and Conservatives and the Old Left on the other - with the Tea Party, perhaps the American equivalent of UKIP, bitterly split on the issue. Because it is, at heart, about independence and self-determination.

It is reaching a crescendo in the US because the California Public Utilities Commission is proposing, not just to halve the feed-in tariff to half what people generating electricity are paying - that much seems to be happening here - but to charge people with solar panels to connect to the grid so that they make no savings.

Perhaps it is the Tea Party who are most traumatised by the debate, divided as they are between those who follow the Koch brothers in supporting Big Oil in all its manifestations and those who value some measure of energy independence.

Why is the Old Left in favour? Because they regard people who can pay the upfront costs of solar panels as free-riding on the grid, which most people need to stay connected to because they are not generating enough in the evenings. It means that the costs of the grid are falling increasingly on the poor.

It is another way in which energy utilities, like banks, are becoming public services, and haven't adjusted to the role.

In places like Arizona, where similar regulations have been passed, the number of people installing solar panels have dropped to a handful.  The real argument - which you might hope will eventually be employed in the UK - is that solar panels increase capacity, bit by bit, and reduce the need for new power stations. And that helps everyone.

Except perhaps the energy utilities, which need to transform themselves into genuine public services in the face of this disruptive technology.

These arguments have not really erupted in the UK yet and, when they do, despite the sound and fury of the struggling corporate leviathans, it is pretty clear how the story will eventually end. The disruptive technologies will win - whether they are Uber, the Bristol pound, Airbnb or solar technology. They put power in people's hands. They provide a small measure of independence - and that seems to be the way the world is going.

The old structures will fight back, of course. They will complain and lobby. But, in the end, they will lose. And when you develop a technology that genuinely promotes independence, as solar energy does, it will remake the institutions around it.

Subscribe to this blog on email; send me a message with the word blogsubscribe to When you want to stop, you can email me the word unsubscribe

Monday, 28 September 2015

How the radical centre could win

A couple of years ago, I heard for the first time a hint of what I believe is both the past and the potent future of a Liberal message for business - enterprise, competition, the right of the underdog to challenge the conventional, the feather-bedded, the privileged and the monopolistic.

It was Leeds MP Greg Mulholland talking about the entrenched monopoly for the pub companies, which had allowed them to squeeze the licensees. Since then, I have begun to hear the same message with increasing frequency from Liberals - until I heard it definitively in Tim Farron's talk to the group Lib Dems in Business.

It was there also in his leader's speech. In fact, it was the first hint of a radical Lib Dem position on economics for some time, developed out of Vince Cable's and Danny Alexander's work in government, and I must say my heart did a little leap when I heard it.

Liberals are, for psychological reasons, semi-blind to economic issues. They just don't see them - just as socialists don't really get issues about centralised power. In fact, one leading Lib Dem blogger listed the policy issues in Farron's speech and left out economics entirely - I won't say who it was - as if they hadn't heard it.

As I have mentioned elsewhere, I can't see how a political party can aspire to power without putting forward a reasoned, cogent, powerful recipe for prosperity. If they don't - and neither main party of the left did so in 2015 - they can hardly be surprised when people assume the Conservatives are the safe pair of economic hands.

As things stand, challengers from the left omit economics and business - as if it somehow wasn't their business at all - and concentrate on welfare, just as Corbyn has done. Welfare is important, of course, but it isn't somehow the guts of the matter.

They are also usually too puritanical to attempt any other kind of policy appeal, as if discussing economics wasn't just dull - it was downright insulting to the poor. The result is the disastrous Fabian position: ignore business completely and concentrate on public administration.

Luckily, I have the answer. It isn't a complete answer. It doesn't yet tick all the boxes - a great deal more thinking is required to put flesh on the bone, but this is the position a radical centre will have to take to shove the Conservatives aside and take power.

1.  Pro-enterprise, pro-competition, pro-challenge to the status quo, and the promise to end the current semi-monopolies in so many areas of modern life, and to set entrepreneurs free to challenge from below - backed by a new generation of local banks and business mentoring and coaching. The Conservatives are already trashing the emerging green sector and a range of other sectors are held back by centralised banking and oligopoly power. We have to show, in much more detail, how privileging the big against the small is undermining the economy. But that is the basis of the new radical centre for economics.

2.  Public services that are both more effective and less expensive, based on co-production and system thinking, setting the inflexible public service system - encased in a concrete, authoritarian cage by Blair and Brown - free to prevent and to treat people individually, rather than tackling symptoms over and over again. This will require some up front investment and a great deal of thinking before we can set it out clearly. The old left will never compete on the same ground either.

3.  Regular dividends from national or local energy investments, as they have in Norway and Alaska, or - perhaps like the proposals for the ScotPound - a regular annual dividend paid in a non-inflationary parallel currency, as an alternative to the seriously inflationary qualitative easing (which mainly goes, via bankers' bonuses, into London house prices).

Gar Alperovitz, the American visionary thinker, argued recently - following Schumpeter - that the American left ought to have been looking more closely at spreading the benefits of public investment.

I don't know how these proposals would work precisely, but I can - and do - argue that they work in principle. There are years ahead for the Liberal thinktanks - if there are any - to work out the details. But this is where it starts.  You heard it here first!

Subscribe to this blog on email; send me a message with the word blogsubscribe to When you want to stop, you can email me the word unsubscribe