The planning system is a big reason for Britain's sluggish economy - reform it

This can't be said to often - we have a dysfunctional planning system that sits right at the heart of our economy's sclerosis and underperformance. If you want places to grow and succeed you need to sort out the planning system, especially for housing.

From Sam Bowman and Stian Westlake:

The undersupply of housing, whose root cause is a dysfunctional land use planning system, is the UK’s biggest problem. It slows productivity growth by preventing people from moving to get better jobs, forces them to spend more on housing costs than they need to, and to have fewer children than they would like, at a later age than they would like. It creates a brain drain from deprived parts of the country, because only the most talented people can afford to move to prosperous cities, exacerbating regional inequality, and means that many of the income gains from the slower productivity growth we do get accrue to existing landowners in the form of higher rents and housing costs, instead of higher living standards for everyone.

Despite this, every political party is proposing housing policies that at best change none of the fundamentals and at worst will completely destroy the last vestiges of a functioning housing market. The Labour Party talks about rent controls, right-to-buy for private rentals and more vaguely about building lots of council houses. While the latter might help a little, it doesn't address the real issue which is that younger people in productive cities cannot afford to buy a house - or, for that matter, a converted airing cupboard pretending to be a studio flat. Labour's policies would see the complete collapse of the private rented market, a massive increase in homelessness and no increase in the rate of build for market housing and they remain completely wedded to a 'plan and provide' approach that simply doesn't work however much you tinker with it.

For the Conservatives, wedded as we are to the ideas of classical liberal economics, it ought to be simple - make lots more land available in places like Surrey, Hertfordshire, Berkshire and Buckinghamshire for people to build homes on. Instead we're either (and Bowman & Westlake fall into this trap) proposing massive densification as the solution - huge blocks of flats near to suburban railway stations - or else using false incentives like Help to Buy. Think-tanks like Onward have engaged in massive contortions to come up with housing policies that don't change the fundamentals of our planning system - indeed while they mention planning they hide behind opinion polling showing planning reform is unpopular to ignore the damage it is doing.

There are 118 golf courses in Surrey each of which could provide between 2,000 and 3,000 homes at suburban densities - just having 98 courses would allow for 60,000 new homes. We can then consider redundant airfields and other previously developed land as well as stopping the ridiculous block on what got called 'garden grabbing' where houses on huge single plots (something there's plenty of in the Home Counties) get redeveloped at more normal suburban densities of 20-25 homes per acre. To achieve this you don't need to scrap the 'green belt' you just change the rules to mean that previously-developed land (including those golf courses, gardens and airfields) falls outside those green belt protections unless there are exceptional reasons otherwise.

The second change to planning would be to alter the basis on which assessments of housing need are made. These "objective assessments of housing need" (OANs) are a core reason for our delivery problems. Supposedly these assessments are made on the basis of projected population growth adjusted to acknowledge economic factors (these are always upwards - nowhere admits to their local economy shrinking). The problem is that OANs point to a precise number for housing need - 43,500 for Bradford - and planners therefore identify and allocate a similarly precise acreage of land on which those homes will be built. In areas with growing demand, all of this will be developed meaning that there is no market for development land and the constrained supply - just the bits the planners have shaded in - results in higher land prices than would be the case if, for example, planners identifed land to meet twice the OAN housing number.

Finally we need to review the basis for green belt policy. If we hold to the five reasons set out in the National Planning Policy Framework (NPPF) there is no reason why the scale of Britain's green belts cannot be substantially reduced while still preventing the merging of communities, discouraging unmanaged sprawl, protecting the environment and encouraging the re-use of previously-developed land. We also need to get away from the foolish and expensive obsession with building new towns and new villages rather than extending the towns and villages we already have. Existing places already have the physical and social infrastructure of highways, hospitals, schools, water, sewage treatment and things like pubs, post offices, shops and parks. These existing places are also linked into existing rail, bus and urban transit networks.

I recall listening to the Leader of Lincolnshire County Council explaining how the main barrier to delivering some of the county's big sites was that the service undertakers (electricity, gas, water, etc.) didn't have the resource or investment finance to get the new towns 'wired up'. If, instead of this, the focus was on smaller urban extensions most of these problems would be managed more easily.

The UK's housing policy is a mess and this is entirely the consequence of policy-makers ignoring the simple fact that it is the planning system that causes most of the problem. This isn't to say we shouldn't have more social housing or that there aren't arguments for reforms to how the private rental sector operates but most of Britain's housing problem is people who want what their parents had - a nice house and garden is a decent suburb connected to 'town' where they can raise a family.

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British and American suburbs are very different - we should remember this when doing housing policy.

 I am, as you know, a fan of suburbs. The best suburbs combine the attributes of the city - walkability, access to public transport (but not to the exclusion of cars), a variety of house styles and tenures build reasonably densely all combined with a sense of openness and access to clean, fresh air and even the countryside.

So it worries me when people write about housing development and, in doing so, repeat this sort of line:

“…sprawling communities of single-family homes that require a car to navigate are not what’s drawing people anymore. What’s popular now are places where people can live in mixed-use, multifamily housing—maybe an apartment building above a coffee shop—and walk, bike, or take transit to get around.”

Firstly this isn't true. Or rather it is in some places because that's all we're building. This quotation comes from Tracy Hadden Loh, Christopher B. Leinberger, and Jordan Chafetz - pretty much champions of dense, high-rise city development. My problem is that it's quoted in a piece about British housing issues. Plus is completely ignores what Americans say when they're asked about the place they want to live and the houses they prefer - and what they actually do when able to choose.

But first let's remember that British suburbs look and feel very different from American suburbs. You'll all be familiar with what American suburbs look like from just about every second thriller or romantic comedy - low rise, often single-storey, family homes built on large plots that feature huge garages, lawns and not much else. Often there's no pavement (as we Brits call it correctly) and the road space is wide.

You'll also know that, while there are some similarities, British suburbia doesn't look much like this. I was brought up in Beckenham which is pretty much an archetypal suburb and while there were some larger houses (and a few very large houses) most of it consists of three-bed semis or, in the older Edwardian parts, solid three-bed terraces.

Even in today's new build suburban housing, the style, size and spacing is completely different from just about anything you'll see built in US suburbia (and not just because we use more brick or stone and less wood). Yet the writings of US anti-suburb urbanists are taken as applicable to this completely different environment.

The development of Britain's suburbs did not sprawl out in an uncontrolled manner, nibbling away willy-nilly at the edge of the countryside. They were, from late Victorian times onwards set out in planned environments - visit the Cator Estates is South London to see how this worked before the first world war and any number of places from Shirley near Croydon to Pudsey in Leeds to see the product of the 1930s housing development boom. These suburban developments were connected to existing communities - helps sustain and expand the services those places provided and allowing for immediate access to public transport networks - and laid out to encompass open space, schools and those rows of local shops we all grew up knowing. The idea that these places weren't 'walkable' is manifest nonsense yet again and again we're peddled this myth that only crowed, dense "mixed-use family housing" can provide for this perfection of urban pedestrianism.

Finally can we just say 'no, not true' to this nonsense:

...because though city-loving hipsters tend to grow up, start families and even buy houses and cars, they’re not going to conform exactly to the lifestyles of their parents and grandparents

Whenever people are surveyed about their preferences, most plump for that familiar family home with a garden - ideally near good schools and not so far from a good link to the city. Perhaps with a good park nearby, a decent pub and some local facilities (post office, chemist, doctors). It remains the case that suburbia - the English sort of suburbia - represent best compromise between urban living and some sort of bucolic countryside idyll.

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Yes politics is broken but the Independent Group don't want to fix it.

I've a feeling this should be headed "how is politics broken?" but I've chosen the headline from The Independent Group's shiny website as my text:

To change our broken politics, we need a different culture. The Independent Group aims to reach across outdated divides and tackle Britain’s problems together.

So what do they - the TIGs - actually mean by "politcs is broken"? Sadly they don't explain in their statement, preferring instead a list of broad brush statements designed to make nice noises rather than define a programme for a better politics. I guess the nearest statement of the new groups ideological position is this:

Our aim is to pursue policies that are evidence-based, not led by ideology, taking a long-term perspective to the challenges of the 21st century in the national interest, rather than locked in the old politics of the 20th century in the party’s interests.

Working with the slightly clunky English, I assume the last part is a suggestion that 20th century politics was all about "party interests" rather than "national interest" (an interestingly populist position that I'm sure Matteo Salvini, Nigel Farage and Donald Trump would endorse). We are, however, no closer to understanding just how British politics is 'broken'. Or indeed what needs to change to fix it.

And the stuff about 'evidence-based' not ideological - a sort of utilitarian wet dream - fails to explain what you do when evidence tells you to do something unpopular (reduce immigration controls, abolish tariffs, build roads not railways). Indeed this utilitarian statement is deeply ideological - there's no room for democracy, for risk or for taking a punt, if the computer says "yes", we do it.

As it happens I do think our politics is badly damaged and that what we see from the populists - right and left - reflects how people are responding to this damage. The creation of this new independent group - whether it grows into a different party or remains a club of independents - probably doesn't get anywhere close to fixing the problem. The set of bland statements from the group simply doesn't deal with the disconnection between government and the governed that is at the heart of our problems:

The Trust deficit in our core institutions -government, business, media and NGOs -between the Mass and the Informed public has never been bigger. In the UK only 40 per cent of the Mass public say they trust in institutions, compared to 64 per cent of the Informed public –a record breaking 24 percentage point gap –the biggest of any of the 27 country’s we survey. By comparison the gap in Donald Trump’s America is 13 percentage points.

This is from Edelman's Annual Trust Barometer and shows that the British public, wherever they sit in the ideological spectrum, have lost most of their confidence and trust in politics. And out in that real world we will hear how this is described - when one of the broadcasters ventured out of London they heard MPs described as children, politicians as useless, and our political leaderships as incompetent (they didn't ask about the media or they'd have heard a similar set of sentiments). All of this is, in part, about Brexit and the endless circling round a decision (in the hopes it will go away, I fear) but it goes deeper. The Edelman survey shows how people feel unrepresented, unable to voice their fears and concerns, are often angry, and that this sense is strongest among the mass of the population.

This collapse in trust - in government, in politics, in the media - describes how our democracy is damaged. It isn't a democracy if people feel that, whatever action they take, it will either be ignored or worse that they'll be told they are wrong and that the elite - who, of course, mostly trust the institutions they control - know better what is good for people. At the same time the way in which public services are supposed to serve communities becomes compromised - firstly by the 'one-size-fits-all' approach of centralised government and then by the capture of public services by producer interests. "Members of the community", as many public employees patronisingly call regular folk, see their services - police, NHS, councils - as obsessed with matters of identity, political correctness and PR rather than the day job of providing communities with services.

People are told they don't understand when they complain about the lack of police response to burglary or bad driving especially when they point to hundreds of coppers seemingly trawling through the internet looking for rude things on Twitter. Folk get frustrated when they see unaccountable NHS boards dodging responsibility for bad management and poor decision-making. And parents see dealing with the school or college as a battle against often barely comprehensible bureaucracy rather than a partnership dedicated to the interests of the child.

Worse still and too often, the response of the authorities to challenge - angry, irritated challenge on occasion - is to throw the diversity book: racism, misogyny, transphobia, islamophobia. Add to this a desire of some to micromanage every aspect of people's behaviour - drinking, smoking, cream cakes, burgers, salt, sugar and snacks - and we have a bureaucracy, directed by an out-of-touch elite, that has misplaced priorities and a condescending, sneering attitude to the genuine worries of those people Edelman's survey calls "the mass".

So, yes, our politics is broken but the fix isn't down in Westminster. The fix isn't about who likes who in parliament, about a new set of mates for a bunch of grand MPs. The fix is about restoring trust in our institutions - courts, police, parliament, NHS. The fix is about seeing democracy as giving ordinary people - not MPs - power over the things government does that affect their lives. The fix is about accountability, about allowing people the right to be angry with government without fear of the diversity police or the sound of doors to decision-makers being slammed by their gatekeepers.

None of this is on offer from the first eleven defecting MPs. They only offer an elitist - "the experts will tell us what to do and we'll do it" - approach to government. And they don't want to get your endorsement for their plans - "Sarah Wollaston calling for second referendum whilst seemingly refusing to stand in a by-election herself. This is why people despise some politicians", was one comment.  These people fear democracy and want the certainty of a system where the vagaries of voter choice don't affect their careers or power. This is not changing politics, it's more of the same just in a different bottle with a different badge.

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Like medieval citadels, great cities fuel social disharmony and division

I've talked before about how the big cities that, at present, drive economic growth, act to exclude people. Or, to put it another way, prevent people from being anything other than 21st century peons trapped in small, crowded apartments that eat up £4 in every £10 they're paid. And worse, unlike the past's rural peons, these new urban serfs cannot settle, opt out of having a family and live a sort of 'kidult' existence that is filled with ultimately unfulfilling fun.

The problem is that, when people travel away from the city so as to have a stake in the nation, settle down and raise a family, they find is difficult to maintain the work they had before and quickly discover that (outside the specially privileged world of public sector professionals) the opportunities in affordable places aren't there. This brings me to this quotation from French geographer, Christopher Guilluy:

All the growth and dynamism is in the major cities, but people cannot just move there. The cities are inaccessible, particularly thanks to mounting housing costs. The big cities today are like medieval citadels. It is like we are going back to the city-states of the Middle Ages. Funnily enough, Paris is going to start charging people for entry, just like the excise duties you used to have to pay to enter a town in the Middle Ages.

Guilluy uses this, in part, to explain the "gilets jaunes" protests in France but also transfers the effect elsewhere - to the UK's Brexit vote, to the election of Donald Trump, and to the new Italian government. While, Guilluy speaks most commonly of the working class, it's clear that the protest movements (whether on the streets as in France or in the voting booth as in Italy) extend to a wider group of those excluded from what I once called "The Great City of the West":

There's no actual reason, other than our sociable nature, for us to live in those 'Great Cities of the West'. Indeed, they're filled with untypical humans. There are the brave few who upped sticks and travelled thousands of miles to live poor quality lives on the fringes of the gleaming, sparkly city hoping for a lucky chance. We've the fortunate beneficiaries of inheritance or beauty who can skim across the surface of the city enjoying its lights and pleasures while affording the means to avoid its darkness. And there's a vast mass of clever, skilled, hard-working people who turn the wheels of the city's economy but can't get a stake in the city, can't find the means to settle and have a family, and who justify this on the basis that they can get to see the beauties in their plays, galleries and stadiums.

Out in the provinces - sneered at by the grand city folk - there's a different culture emerging. In part this is fuelled by anger at the denial of opportunities but it is also about the reforming of community and of a hope that politics will bring the cities to their senses and allow the idea of an inclusive democracy back into our culture. Meanwhile the wealthy elite call for the over 75s to have their vote removed or for people to have to take a test to earn the right to vote - the desire is to exclude the less educated, the old, the working class from power, to return us - in the name of progressive politics - to a world before the extension of the franchise to workers in 1918.

Just as, before the trade unions and their socialist and social democrat party offspring, workers lacked a voice, today people in small town England, in la France périphérique, rust belt USA and Italy's crumbling industrial cities lack a voice. Yes they are working class but it is broader than this, as Guilluy describes:

They tend to be people in work, but who don’t earn very much, between 1000€ and 2000€ per month. Some of them are very poor if they are unemployed. Others were once middle-class. What they all have in common is that they live in areas where there is hardly any work left. They know that even if they have a job today, they could lose it tomorrow and they won’t find anything else.

If the establishments of the west want to avoid upheaval, they need to find a way to respect - listen to, heed - the voice of these people. Above all we need to stop patronising them as the "left behind" or worse and to realise that the great cities of the west will need them. The great and good must stop making the city such a barrier to having a real, cash stake in society.


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Don't lock 'em up - prison doesn't work

It is an understandable response to crime - lock 'em up, throw away the key. The problem is that this visceral desire to punish doesn't do much to deter and, so it seem, fails in its most obvious objective, reducing crime:

Current policy debates suggest that state prosecutors may have been a key force behind the historic rise in US incarceration. This paper investigates how state prosecutors of differing political affiliations influence county-level incarceration. Exploiting quasi-experimental variation generated by close elections, I find that Republican prosecutorial offices sentence defendants to longer incarceration spells as compared to their Democratic and Independent counterparts. This increase in incarceration length is driven by longer sentences for both violent and property offenses, and translates into a persistent increase in incarceration. These sentencing and incarceration enhancements do not lower crime at the county level, indicating that, in terms of public safety, the marginal return to the tough-on-crime stance may be close to zero.

OK, it's just one study (and one that's a little too politically-loaded for my taste) but it concurs with findings from less partisan studies that consistently show incarceration, "tough" sentence and rigorous sanctions regimes have negative effects on recidivism. Here's the UK government's findings:

Short-term custody (less than 12 months in prison, without supervision on release) was consistently associated with higher rates of proven re-offending than community orders and suspended sentence orders (‘court orders’)

For this group of criminals, prison just doesn't work. Indeed it doesn't just not reduce crime, it increases the chance that one-time criminals become career criminals. Norway has pretty much the world's lowest rate of recidivism (less than 20% compared to the UK's 70%). The Norwegian approach to imprisonment is part of the reason:

The thinking is that justice for society is best served by releasing prisoners who are less likely to reoffend. The Norwegian penal philosophy is that traditional, repressive prisons do not work, and that treating prisoners humanely improves their chances of reintegrating in society.7 This is achieved by a “guiding principle of normality,” meaning that with the exception of freedom of movement, prisoners retain all other rights and life in the prison should resemble life on the outside to the greatest extent possible.8 Within the walls of Halden, one of the newest maximum-security prisons in Norway, are cells with flat-screen televisions and mini-fridges, long windows to let in more sunlight, and shared living rooms and kitchens “to create a sense of family,” according to Hans Henrik Hoilund, one of the prison’s architects. Prisoners are not left to their own devices upon release, either. There is a safety net. The government guarantees it will do everything possible to ensure that released prisoners have housing, employment, education, as well as health care and addiction treatment, if needed.

I know you're all horrified but shouldn't we look to what seems to work rather than lock more and more young men up in overcrowded, ill-managed, drug-riddled prisons? If community sentences work (i.e. mean less recidivism, less crime and safer communities) we should use them more and, if short prison sentences don't work, we should use them less. We also need to create the space and time to straighten out those who we do lock up and if this means prisons being a more pleasant environment then that's what we should do.

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We must stop 2019 being the year of the antidemocrats - delivering Brexit is only the start

"There will be no end to the troubles of states, or of humanity itself, till philosophers become kings in this world, or till those we now call kings and rulers really and truly become philosophers, and political power and philosophy thus come into the same hands." Plato

It begins.

"There are only a few weeks left now for the vast, sensible majority in the Commons to acknowledge that voters were wrong" Matthew Parris

I picked this one but it could have been any one of a hundred recent examples - not just in the UK but across the world: intelligent, educated, wise people saying that you can't trust voters or that voters are wrong. Each time this happens the advocates of a philosopher monarchy are reminded that it's this idea that drives the terrible populism (or, if you prefer, democracy) that Plato's latter day fan boys despise.

The most worrying thing about politics today is this belief that only educated people can be trusted to get things right. In the year when we in Britain marked the centenary of millions of our working class being given the vote, the narrative of elite political discourse has become ever more opposed to the ideas signalled by extension of the franchise. In case we forget, the central belief that led to a wider franchise was that not only can we trust the people but it is right to do so. We should also remember, while we're doing this, that the wider franchise not only meant we had a Labour government enacting all the things moderate centrist folk like but (given the absolute nonsense talked about the Northern Ireland border) probably led to Irish independence too.

The depressing thing about all this is that it is only going to get worse - 'despite Brexit' as the phrase goes. Indeed, it worries me that the response to us leaving on 29th March 2019 from putative philosopher kings with columns in the Times or the Guardian will be to double down on "don't trust the people" and to argue for more limits to democracy so such a terrible thing doesn't happen ever again. This tendency will be accompanied by faux-populism - everything from appointing a "waste food tsar" and banning plastic from schools through to stern lectures about diet becoming taxes and bans on anything affordable that has any actual taste. Plus an endlessly repeated patronising mantra - "stupid voters got it wrong, stupid voters got it wrong".

At the heart of all this are two linked beliefs - first, that most people (not you and I, obviously but most people) are too stupid to make the right choices; second that there is an absolutely right choice and it can be determined by looking at the evidence. Now it's plain that we all (not you, I know, but exceptions prove the rule) make stupid choices from time to time, it's part of the human condition and it's also true that looking at evidence helps to make better choices. But this doesn't mean that you can eliminate "stupid" choices or that the evidence you have will necessarily lead to a better choice.

But this sort of view - clever people will make policies and impose them on thickos for their own good - is the essence of Plato's philosopher kings thesis. And indeed the core premise for things like "United for Change" the new 'centrist' party that may or may not sweep everything before it:

United for Change, founded by the millionaire entrepreneur Simon Franks, wants to create a “true grassroots movement” that will practise politics without tribalism, confrontation, “yelling and finger pointing”.

The party has been developed in secret for almost two years by businesspeople and political donors who want to take advantage of anti-political sentiment in Britain.

We're told by Franks that we'll be getting policies drawn up by experts - doubtless to be promoted by eager salesfolk (or an "army of volunteers"):

We want to craft a commonsense policy agenda that’s informed by those with real experience and expertise. That’s why we’ve created a structure to allow experts, academics and experienced practitioners to contribute.

Now while this is a project (secret because they're "putting substance before style") from one wealthy bloke, it reflects the reality of where our politics is headed. Not that democracy will be abolished or the franchise limited but rather that, in the manner of the EU, complicated pseudo-democratic structures will be put in place to give the illusion that leaders are elected and decisions are democratic. Alongside all this the real leaders (or "senior leaders" as we now call them) will carry on in their appointed and unaccountable world - the police, NHS, social services and transport will be managed in a supposedly businesslike manner by boards of wise folk who aren't actually accountable to anyone.

The irony in all of this is that, in Britain, only the loopier parts of our politics understands just how the current system threatens democracy - a few of the Corbynistas (when they're not pretending to be communists) and the libertarian parts of the pro-Brexit right understand that the Brexit vote was about saving democracy. That vote - and the vote for Trump, Salvini or any of the other left and right wing populists - wasn't a cry of pain but a call for action. And the action we want is a restoration of democracy, accountability and the idea that, when all it said and done, we (The People) can kick out any philosopher kings before their self-importance and sense of righteousness gets too much.

So when we leave the EU that should just be the start. The other shibboleths of our state need democratising too - from the House of Lords and the judiciary through the NHS, police and civil service, to the legion of unaccountable local council chief executives, social services directors and planning managers. If you are looking for a 2019 project, this should be that project - Brexit ought to be the launch pad for a renewed democracy. I fear the great and good - those with most to lose from more democracy and more accountability - will do their utmost do make Brexit into a vehicle for less democracy: they should be stopped.
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So all you want for Christmas is a new political party?

UK politics is in a shocking mess with the two big parties riven by factions, splits and arguments. We have parts of the Conservatives referring to colleagues as "quislings" and "traitors" at the same time as the Labour Party's left is calling for anyone with the mildest critique of the leader to leave the party and join the Tories. The cause of all this - or most of the cause - is the division over the UK's imminent departure from the European Union. It's not simply a matter of leave versus remain any more but a bewildering mish-mash of options, arrangements, contested votes and personal vendettas all fuelled by the high octane fuel of twitter. It's time for a new party to crawl from out of this chaos armed with wisdom, common sense and an unshakable moderate purpose - or so lots of people seem to think (or want or believe).

Now it is possible that a new party could be formed - indeed we are blessed with dozens of such things. It is also possible that this new party will sweep all before it as people leap at following a political movement that isn't either obsessed with One True Brexit or led by Jeremy Corbyn and a clique of Tankies (although we should remember that there is a national party, the Liberal Democrats, that meets these criteria and it isn't bounding ahead in popular support). But these things are unlikely for a whole lot of reasons - here are a few thoughts.

The last successful new national political party in Great Britain was formed in 1900. We call it the Labour Party (it's true to say, however, that the Scottish National Party and, to a lesser extent, Plaid Cymru are also successes and were founded more recently). It took the Labour Party nearly 25 years to get a sniff at government and 45 years to secure an overall majority. And Labour was also helped by the massive expansion of the franchise in 1918 (not just women but millions of working class men too). So, if you're seeing your new party as something that will rush Chuka Umuna, Chris Leslie or Justine Greening into Downing Street perhaps think again.

The Labour Party (and for that matter the SNP) weren't set up by existing politicians unhappy with the current political arrangements. Labour was, in essence, formed by the trade union movement and began life with an established and organised activist base as a result. Even so it wasn't until the 1922 election that Labour got more than 100 MPs elected. A bunch of existing politicians setting up a new party has precedents (Oswald Mosley's New Party in 1931 and the slightly more successful Social Democrats in the 1980s) but without the activist base it is pretty difficult to turn fine words into campaigning on the ground. In the case of the SDP, they were subsumed into the Liberal Party following pacts and alliances simply because the Liberals already had an organisation, local councillors and local parties.

Again this doesn't prevent a new party succeeding but it makes it more hard work than it looks when some bright-eyed politicians appear smiling and blinking on the news shows. And it won't be those politicians doing the slog but some people who, at the smiling and blinking point, aren't involved with the new party. Moreover, the chitter-chatter about new centre parties covers up another essential flaw - these parties are light on ideology and unsure on their positioning. This makes it difficult for them to deal with the inevitable problems that come from one or other established party occupying politics' centre ground.

To succeed any new political party has to decide which of the established parties it plans on replacing (in the manner of Labour replacing the old Liberal party). As those media-friendly, centrists parade their credentials it is important to target one or other existing party - saying something like "we'll take moderate votes from both parties" is to fight on two fronts making it more difficult to win. Far better to say something like "Labour has been taken over by the far left, we want to return to the values of Attlee, Gaitskill and Wilson in providing a voice for Britain's workers and their families". Or, if it's the Tories in your sights, "the Conservative party needs to be the voice of decent, patriotic communities but its obsession with Europe and austerity is failing these people". And remember that this message isn't just for 2022 (or whenever there's an election) but for as long as it takes to complete the replacement of the targeted political party.

All this means that you'll lose - six years of Labour campaigning after its formation resulted in just two MPs - and, more significantly, you will split the vote for left or right resulting in them being out of power or in unstable coalitions for decades. Lots on the left blame the SDP and Liberal Democrats for Margaret Thatcher's governments (and I guess that plenty of Liberals back in the first half of the 20th century thought the same of Labour).

Setting up new political parties works where you've a system of proportional representation (just look at Ireland or Holland for a guide) but even in such systems being an established political brand with an organisation and loyal supporters counts for a great deal. In the UK with its first-past-the-post system new parties start at a disadvantage and you can rest assured that existing politicians are not going to vote for self-destruction just for the sake of your shiny new centrist party.

A new party might work but the UK's political game, even with the current chaos, is stacked against new political parties (and, it seems, pretty much against either radical change or the fixing of mistakes within the existing big parties). You may want a new party for Christmas but it's likely to end up like one of those toys that everyone wanted, played with once or twice and then left untouched in favour of the Lego set with the pieces missing.

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Why house prices should be the number one concern of a Conservative government

Housing is the largest expenditure item in the household budget. Higher house prices have a disproportionate potential to reduce the standard of living by consuming funds that would otherwise be available to purchase other goods and services. Even more concerning, high house prices, and related high rents, increase relative poverty, as many lower income households may have to forego basic goods and services because of higher housing costs, and may even be forced to seek public housing subsidies.

Worsening housing affordability and its adverse impact on the declining standard of living threaten one of the greatest human advances in history – the democratization of prosperity.

In 1959, 1970 and 1979, Conservative leadership set out the aim of creating a property owning democracy with the private ownership of housing at the heart of that promise. In broad terms, though building, liberalising finance and through right-to-buy, those Conservative leaders - Macmillan, Heath, Thatcher - delivered on that promise.

Today that promise needs renewing. The answer to the housing pain of younger people doesn't lie in rent controls, council housing or build-to-rent, the answer lies in setting out how ordinary working families can buy a house. We've made some progress though protecting right-to-buy (although failing to extend it to the wider social sector is a disappointment), reducing stamp duty and Help to Buy. But these instruments don't change the fundamentals for too many people in London, houses are too expensive to buy. This expensiveness is a function of land prices not the cost of building a house and the way to reduce land prices is to make more land available for housing in places where people can live and work (or commute to their work).

In the short term (getting that land supply up isn't an overnight task) a Conservative government should also abolish stamp duty for first time buyers, reform green belt regulation to allow small scale building on brownfield sites, support approaches aimed at reducing build costs, develop more flexible shared equity schemes, finish the job of reforming leasehold and give tenants first refusal (with a RTB discount) when landlords sell property. Other thoughts might include tenant ownership of social housing, reforming conveyancing, longer tenancies in the private sector, and a ringfenced 50% levy on land sales with value increases consequential on housing allocations (at least so long as that value is in the gift of the planning system).

It may be a step too far to simply abolish the green belt but we need to review its size and purpose. Simply opposing 'sprawl' because sprawl is bad can't be justified in an age of electric autonomous vehicles, improved mass transit and home working. Suburbia is socially beneficial and, if transport changes happen as we expect, will be less of an environmental concern. The economic case for densification - based on agglomeration as a driver of growth - needs challenging both because it is socially damaging but also because that economic case is based on removing the brightest from elsewhere and piling them up in the big city to produce.

If we do these things, the main reason for young (and not-so-young) people's angst - not having a real, tangible stake in society - is removed and we once again deliver on the idea of a property-owning democracy that has been at the heart of British conservatism for 60 years.

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Thoughts on The Negotiation...

I've no idea what the final outcome will be in The Negotiation and I'm not sufficiently informed or expert for any speculation to be of much value. I thought, however, I'd make some observations about The Negotiation itself and why it is extremely challenging. Plus why I think the UK government is making a fairly decent fist of the process, even though I would not have adopted the approach they have chosen.

When you or I undertake a negotiation it's normally a pretty straightforward affair even when it involves a significant deal like buying a house. Back when my better and wiser half was negotiating multi-million pound business deals, it was still pretty clear who were the parties involved, information was secure, and the process was conducted with a sense of goodwill and positive intent. None of this applies for The Negotiation.

Let's review.

In simple terms the UK government is negotiating with the EU commission but is doing so on the understanding that any deal is subject to approval by others (British parliament, European parliament, etc, etc.). But the UK government also has to deal with:

An active and well-connected campaign for the negotiation to fail supported by just about every broadcaster and broadsheet newspaper

An opposition party committed to disrupting the process and, it seems, working at least partly in cahoots with the other side in The Negotiation - while offering no strategy of its own

As repeated leaks demonstrate, a civil service that includes people who want the process to collapse

A group within the governing party that is seeking to undermine negotiations either for reasons of supposed principle or, just as commonly, personal ambition

Another party group seeking an impractical resolution that doesn't reflect the realities of the situation or represent UK interests

Direction or attempted direction from parliament, courts and 'expert opinion' that sets out alternative approaches - not in the interests of resolution but for reasons of disruption

A persistent narrative of failure from the media, politicians and commentators - nothing works, all is chaos nothing is right

Non-participant governments (Ireland, Spain) seeking to meet domestic political imperatives through pressure on EU party to negotiations

In this context it's quite remarkable that the UK government has stuck to the basis of its position as set out by the Prime Minister in her speech to Conservative Party Conference in October 2016 - leave the EU including the customs union and single market, negotiate a trade deal with the EU27 that (in the context of leaving) best reflects the interests of British business, industry and consumers.

The UK government may be mistaken in its approach, I'm not qualified to say one way or another, but to say it is unclear, chaotic or confused is simply rubbish. What's unclear, chaotic and confusing is all the chaff, cantreps and tripwires constructed by the list of people in the UK wanting The Negotiation to fail. Plus a constant barrage of negative misinformation from a - mostly ill-informed and partisan - commentariat that wants to paint Britain as useless, the government as incompetent and the whole process as some sort of existential threat to human civilisation.

I may be in a minority of one here but I think, given the unprecedented complexity caused by those who want The Negotiation to fail, the UK government is doing as good a job as can be expected.

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Free markets are better for fairness and equality than the state

Yet again we have evidence of how systems dominated by non-free, constrained or licenced systems (or else directly controlled by the state) are less fair and equal than free systems:



Business - that's the free market - is by far the best sector for social mobility. Rather than as with the law (what a surprise) where the man at the top being ten times more likely to be privately-educated, he's only four times more likely in the private sector.

This is because, unlike state-controlled systems like law, medicine, the army and the civil service, the private sector doesn't have the luxury of relying on Daddy and thereby ignoring 90% of the population. If you're good, your chances of getting to the top in private business are far higher. As a result private business is more innovative, more diverse and more creative than the public sector. This is because without that innovation and creativity businesses fail. And without diversity you miss out loads of people who'll bring to the skills, talents and originality you need to succeed.

Every time we look at the world, we see that free systems - markets, trade, speech, assembly, choice - deliver a more equal society. A society that can't be gamed so much by the wealthy, well-connected and fortunately-born. As I've observed before, it beats me why the left has such a down on freedom when it delivers the goods on fairness and equality better than their preferred state-directed utopia.

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Yay for suburbia (and let's build more of it, fast)

I'm a suburban boy, it's in my bones - the semi-detached house with a garden, one of thousands just the same. It is, for some, the veritable definition of Malvina Reynolds' song "Little Boxes".

"And they're all made out of ticky-tacky and they all look just the same."

As children - perhaps prompted by a father who was something of a folk music fan - we even referred to the estate at Orchard Avenue in Shirley as the 'ticky-tacky houses'. This was a world of trains to work - Reggie Perrin's soliloquy of a walk to the station from his semi in a London suburb - of buses to school, of hobbies and pastimes, sheds and allotments.

It became popular to deride suburbia - its design, its housing, its values - and to draw a negative parallel with either the racy, youthful and exciting life of the big city or else the bucolic, laid-back pleasures of the distant country. To be suburban became the acme of shallowness, a selfish existence, uncaring and dull - an insult used by historian, Simon Schama to put down polemical columnist, Rod Liddle:

‘Go back to your journalistic hackery… and turn your suburban face away from the plight of the miserable,’

Yet most of us - even Simon Schama - are the products of suburbia, living in those semi-detached houses, going to the same sort of state school and having our values set by life in these work-a-day, middle-class places. When I think of my childhood, I think of suburbia, of its space, its variety and the security it afforded us. And I know that my core values - community, neighbourliness, decency, politeness, respect - come from that suburbia.

So why is it that we have such a problematic relationship with suburbia? How did a suburban boy like Simon Schama come to use 'suburban' as an insult, as a way to dismiss someone he disagreed with and felt, in some way, beneath his attention? And when did we start the fetish of the city - the dirty, crowded, unsafe, unfriendly, child-free city? A fetish that, frankly, is something we (perhaps secretly) despise - what we hanker for is suburbia. There is no better place to raise a family - near enough to town for work and pleasure but far enough away that you can take Mr Pooter's advice about home:

"After my work in the City, I like to be at home," as he put in his Diary of a Nobody. "What's the good of a home, if you are never in it? 'Home, Sweet Home', that's my motto ... there is always something to be done: a tin-tack here, a venetian blind to put straight, a fan to nail up, or part of a carpet to nail down."

The truth is that, despite all the efforts of planners to force us into over-dense, anti-family urban cramp, we're still headed for suburbia if we get the chance:

Much of this has been driven by migration patterns. In 2016, core counties lost roughly over 300,000 net domestic migrants while outlying areas gained roughly 250,000. Increasingly, millennials seek out single-family homes; rather than the predicted glut of such homes, there’s a severe shortage. Geographer Ali Modarres notes that minorities, the primary drivers of American population growth in the new century, now live in suburbs. The immigrant-rich San Gabriel Valley, the Inland Empire, Orange County and their analogues elsewhere, Modarres suggests, now represents “the quintessential urban form” for the 21st century.

This is California, famously unfriendly towards sprawl, a place with some of the world's most vicious urban containment policies, and a place with some of the world's most over-priced housing. Imagine how much better it would be if we recognised that people want to live in one of those 'ticky-tacky houses' - three bedrooms, front and back garden, garage. A place that combines comfort and affordability with room to grow.

And it makes economic sense too:

Overall, what suburbia dominates is the geography of the middle class. All but four of top 20 large counties with the highest percentage of households earning over $75,000 annually are suburban, according to research by Chapman University’s Erika Nicole Orejola. One reason: Most job growth takes place in the periphery. Even with the higher job density of downtowns, the urban core and its adjacent areas account for less than one-fifth of all jobs, and since 2010 this pattern has persisted.

It's a myth that the only places where jobs get created is in the urban core or grand cities - 80% of jobs are elsewhere and, you've guessed it, most of those jobs are in and around suburbia.

So suburbs are nicer places to live (really they are) with better amenities than either the city or the country. Suburbs are cleaner, friendlier, safer and less stressful that the city. And more accessible with better schools, healthcare and activity than the countryside. Plus people want to live in them.

Perhaps then, we should ignore all the pompous city living snobs who sneer at suburbs (often while dreaming of a nice posh pile in some village that's really an exurb) and get on with building what most folk want - more suburbs.

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It's my party and it'll change politics forever...

Setting up new political parties is a tricky business. I appreciate that us politicians all believe - each and every oneof us - that our intellect, wit, charm and charisma means any party we set up would storm to victory on a tidal wave of popular passion for our brilliant policies. But, truth be told, the track record of new political parties in the UK is pretty rubbish - indeed the record of new parties isn't great anywhere.

This, however, doesn't stop people suggesting that a new party would change everything. Here's Spad Superstar, James Chapman (from holiday in Greece):

James Chapman stepped up his online campaign for a proposed “Democrats” party he has been mounting while on holiday in Greece, saying Brexit signalled the demise of the Conservatives.

A number of serving, former and shadow cabinet ministers contacted Chapman after he posted a series of provocative tweets this week, he told BBC Radio 4’s Today programme.

He said: “Two people in the cabinet, a number of people who have been in Conservative cabinets before now – better cabinets, I might say, than the current one – and a number of shadow cabinets ministers have also been in touch.

“They are not saying they are going to quit their parties, but they are saying they understand that there is an enormous gap in the centre now of British politics.”

That this exciting new project from a bloke on holiday in Greece who appears not to have a job at the moment tells you everything you need to know. We've all, with the help of sunshine, Mediterranean food and good red wine worked up incredible schemes to build mighty businesses, transform the game of football, rebalance the British economy and, as James has done, change the face of British politics forever. And when we return to the rain, sandwiches and supermarket lager of Britain these grand plans disappear into the mundanity of everyday life and business. As they should - 'pub talk' as a former colleague David Emmott once called it - because they make little sense.

We know how new centrist parties motivated by divisions over Europe, along with other policies like nuclear disarmament and nationalisation, turn out - even when they are led by a phalanx of cabinet superstars (or in reality three superstars and the one whose name no-one can quite remember):

The SDP began in January 1981 with the Limehouse Declaration, a statement of intent by four former Labour Cabinet ministers—Roy Jenkins, David Owen, William Rodgers, and Shirley Williams—to quit the leftward path that had lately been taken by Labour.

The SDP sputtered on until 1988 as a serious party when most of it voted to merge with the Liberal Party (that it so closely resembled it had shared election campaigns in 1983 and 1987).

While James Chapman's 'Democrats' might be the product of him having too little to do in Greece and too much wine, lots of people seem to think that there's some sort of mileage in setting up a sort of centrist party (presumably one that isn't run by a pleasant god-botherer or aged ballroom dancer) to stop Brexit. Leaving aside that this is perhaps the most short-term justification for creating a political party, it's not going to happen for a couple of very important reasons.

The first reason is that Labour MPs (activists, councillors and what have you) are going to stay right where they are in the expectation that one of two things will happen - Corbyn's leadership will collapse leading to the centre-left getting control again or Corbyn will be prime minister and they'll get some of the goodies that go with power. Folk like Liz Kendall, Yvette Cooper and Keir Starmer won't walk away from safe seats and guaranteed media access to engage in a risky, dodgy new party (even one with a tad more thought and planning than James Chapman gave the idea in between eating, tanning and drinking).

And secondly, with a few exceptions the Conservative Party has already been done over by Remainers and the Conservatives currently have (courtesy of the DUP) all the jobs and most of the power. Why on earth would any unnamed cabinet ministers walk out because of the slight possibility that Jacob Rees-Mogg might get to be leader of the Conservative Party at some unspecified point in the future? Assuming that Rees-Mogg actually wants the job.

Moreover running a political party is about a little bit more than have some influential figureheads - political organisations aren't just a couple of chancers sending out press releases from an office on the edge of SW1 (although I suspect folk like James Chapman think this is all you have to do) but involve a lot of organisation, effort and structure. Remember that, after its initial surge, the SDP essentially piggy-backed on the existing Liberal party structure and organisation - a new centrist party can't assume that the current liberal democrats, for all their opportunism will let this happen again.

The last successful new political party in the UK was the Labour Party. And it's worth bearing in mind that it arrived to the left of existing politics and that it took best part of 25 years to get to the stage of forming a (coalition) government - over 40 years to govern alone. There may indeed be a 'gap' in the centre of British politics because of Brexit and Corbyn but, if people want a party, you have to ask why - just like in 1981 - they don't simply switch to the existing, established and "winning here" Liberal Democrats?

British politics has to get a lot more broken before there's even the faintest chance of a new party - let alone one with any chance of success. The Conservative Party isn't (despite the best efforts of the media to pretend otherwise) split on policy but rather by the competing ambitions of leading figures. This is why otherwise sane Tories give credence to the idea of Rees-Mogg. And there may be enormous policy differences between the Corbynistas and Blairites in the Labour Party but the latter are staying put because they believe people - inside and outside the party - will eventually get bored with permanent revolution.

But Still - pour me another glass of that lovely red wine and let me explain my plan for a new centre-right political party...

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Hows about we try some of that there local democracy? It used to work quite well.

A while ago I wrote about the move to ban local councils from charging for Park Runs following the decision of a town council to do just that:

And, of course, you all think it absolutely right that politicians in London ban Councils from deciding on things like what they can and cannot charge people or organisations for doing. Don't get me wrong here, I don't particularly think Councils should charge for park runs (although please note that crown green bowlers, cricketers and football players are charged to use facilities in public parks) but I do think that if we are to go to the trouble of electing local councillors to make decisions we should actually let them make those decisions. And, yes, that might include charging for a park run. If you don't like the decision you get the chance to vote out the people who made that decision. This is how the representative democracy lark works.

This process - whereby decisions made by local authorities are over-turned because national politicians see some votes to grab or are badgered by national media and other national politicians into stopping the local council from doing what its democratically elected councillors have decided they will do.

This isn't just a British problem (although we are, among larger countries, one of the very worst offenders) - here's Joel Kotkin in New Geography about the USA:

This follows a historical trend over the past century. Ever since the Great Depression, and even before, governmental power has been shifting inexorably from the local governments to regional, state and, of course, federal jurisdictions. In 1910, the federal level accounted for 30.8 percent of all government spending, with state governments comprising 7.7 percent and the local level more than 61 percent. More than 100 years later, not only had the federal share exploded to nearly 60 percent, but, far less recognized, the state share had nearly doubled, while that of local governments has fallen to barely 25 percent, a nearly 60 percent drop. Much of what is done at the local level today is at the behest, and often with funding derived from, the statehouse or Washington.

Anyone taking a reasonably long view of English local government will recognise this trend with local councils increasingly mere agents of central government enacting programmes and projects deriving from the legislative and fiscal decisions of national government. The drive to standardisation through inspection regimes and the tendency to go on about 'postcode lotteries' provides the justification for this change. Very little that Bradford Council does is not directed, regulated and funded by central government meaning that, when that central government changes its spending priorities or reduces spending the thick end of the impact is felt by the council.

I believe this is, for all of standardisation's superficial appeal, bad government. Not only does is assume that circumstances are the same everywhere but it kills administrative innovation by constraining the freedom of action for local councils. It may be true that we'd all like everybody everywhere to receive the same incredibly high quality of service but the reality of modern government is that quite the reverse is true - the lack of flexibility and independence at the local level results in sclerotic, unresponsive public services that become inward-looking and producer-oriented. Faced with radical alternative approaches the producer-dominated local government (and agencies with related vested interests) appeal to national government and national bureaucracy to prevent any threat to the current system.

This problem has got mixed up with the arguments about regional devolution (an excellent idea being very badly delivered because of national government's control of investment finance and insistence on city-regions rather than existing political geography). The thrust of localism is that government is better when politicians focus on making what they see out their front door better rather than on designing grand schemes and systems to run everything, everywhere according to rules laid down by clever folk in a London office.

And let's remember that the check on this system - we call it democracy where I come from - is that folk get a regular chance to replace the politicians if they mess up. I happen to think this a rather better approach to government than the current system where those local councillors can simply blame central government for everything that has gone wrong.

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In all this trade talk let's not forget that we're rich because we're free

It starts like this:

At the end of last year, a news story was published with huge implications for ‘international development’: a drop-off in commodity prices through 2016 dashed hopes that the world’s poorest countries could escape extreme poverty by the end of the decade.

The story raises a critical question directly linked to what Brexit will mean for countries of the global South and the reality of what ‘free trade’ and protectionism mean in the context of economic development – a reality brought into sharper relief in recent weeks by a long-running spat over trade at the G20 and Liam Fox’s focus on signing tariff-free trade agreements around the world.

And then goes rapidly down hill. The thing that beats me is why people who tell me that they 'care' about the world's poorest are so trapped in the belief that more open trade is making the 'world's poorest countries' less well off. Let's start with the facts:

The world’s achievement in the field of poverty reduction is, by almost any measure, impressive. Although many of the original MDGs—such as cutting maternal mortality by three-quarters and child mortality by two-thirds—will not be met, the aim of halving global poverty between 1990 and 2015 was achieved five years early.

The main reason for this wonderful decline in world poverty is the recognition that open markets, more free trade, property rights and good economic governance are the necessary prerequisites for reducing poverty. Bear in mind that the natural state of humankind is grinding poverty. Up to around 1700 - a little earlier in Holland - nearly everyone lived and had always lived in what we'd describe today as absolute, abject poverty. Since that time, courtesy of us recognising that if you allow people to prosper by innovation the whole of society benefits, average incomes in the UK and other developed nations have risen - in cash terms - by a factor of at least sixteen. If we take account of what that innovation means - the thousands of things that make our everyday lives better ("dentistry" as P J O'Rourke put it) - then that factor of sixteen is truly much higher.

Now free trade isn't the reason for that growth in our living standards (nor, for that matter, is the shocking colonial exploitation of the 100 years from roughly 1850 to1950) but it is one of the things that contributes to the, sadly belated, opportunity for those countries that missed out on the first economic revolution to secure the sort of living standards even the poorest in Britain enjoy. And much of it will be about those institutional reforms, the list of things governments shouldn't do, enabling people to do business (again - property rights, good economic governance, free markets). But trade matters and the more free that trade the better.

So we don't want this sort of nonsense:

But the UK must go further. Brexit trade policies will do little for longer term economic change in the South unless poor countries can export processed or manufactured goods with similar preferential schemes, or, conversely, use tariffs to shield emerging industries from international competition. On top of this, the Northern-led agenda of using trade deals to privatise public services and grant corporations legal powers to sue states outside national jurisdictions offers little in the fight against poverty.

I agree the UK must go further and absolutely agree that the sort of protectionism that forces developing countries into exporting raw produce rather than processed goods (as I once asked, 'why aren't we eating Ghanaian chocolate bars?') is a bad idea all round. But the next part - tariffs and import substitution - is a return to the days before 1980, before the dramatic drop in the world's poverty, before the triumph of what's now called neoliberalism. And being able to go to an independent court for arbitration is a protection not an affront to liberty - without giving people and businesses the power to challenge government there is no check on arbitrary decisions by that government.

I also agree that 'trade deals' and especially bilateral trade deals are not free trade. Indeed the fact of the 'trade deal' between two governments (or groups of governments) is a reminder of the degree to which trade is not free. For sure a lot of so-called trade deals are really about regulatory harmonisation (sweetened by public procurement bungs in both directions) but they do not represent the ideal of allowing, in a well-governed economy, people to trade freely. This means, since trade is about consumption rather than production - imports not exports, allowing people to purchase the things they want with their own resources from whoever, wherever they wish.

Over the past 40 or so we've not talked much about trade. There has been occasional bits of political posturing about the 'balance of trade' and a great deal of macho talk about 'the global race' and 'competition' between nations but not much about actual trade. Or indeed the fact that it is nonsense to, for example, argue for a ban on live animal exports without realising that there's no difference between taking a truck load of sheep from Canterbury to Cannes or from Basingstoke to Aberdeen (at least not for the sheep). And a thousand other examples of how doing business - buying and selling, securing mutual benefit, adding value - shouldn't be different if the supplier is in Ulan Bator or Uttoxeter.

The result of us not talking about trade is that people begin to believe this sort of nonsense (completely unsupported by economic history):

...this obscures the fact that rich countries only pursued free trade after they ascended to the peak of the global economy; they used protectionism to ensure that domestic industries grew ahead of being exposed to competition, before “kicking away the ladder” they used to get to their dominant positions.

Not only does this line not make sense (if protectionism worked then there was no ladder to kick away) but it really isn't true. In the UK you only have to look at the 30 year long row over fixing grain prices with Corn Laws or the rows about 'Empire Preference' to see that there's nothing new at all about political arguments between mercantilists and free traders. And most of the time - witness steel, food, cars, even second-hand washing machines and old clothes - the protectionists, the mercantilists, win the argument.

Brexit really does mean a chance to do it differently. I appreciate that the absolutist position (remove all the tariffs on stuff we buy) may be correct in theory but we should remember it also removes the opportunity for reciprocity by governments - takes away a little of their power. Meaning it won't happen. But, since most of the barriers to trade are regulatory (or outright bans as is the case with much of European trade policy), the presence or otherwise of tariffs is pretty marginal - we lose a little by scrapping them but it allows us to get focused on improving economic governance in developing countries by helping them improve their standards of regulatory enforcement and compliance.

Free trade is a very good idea but the regime we have in world trade today is not free trade. We're a lot better than we used to be - the GATT Agreements and their child, the World Trade Organisation, helped make this the case as did the growth in international regulatory co-operation spawned by GATT - but the focus remains on the inter-governmental fix, on grand folk meeting in summits to decide whether or not some women somewhere will be allowed to sell you cocoa powder, knitted comfort blankets or large amounts of steel. If we can change this then we'll have a more free, more happy and above all richer world - all of it.

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I know it sounds good but will it work? Thoughts on big rises to minimum wages.

Be careful what you wish for - or so they say:

The study, commissioned by the city government of Seattle and published by the National Bureau of Economic Research, found that Seattle’s law incrementally raising its minimum wage — to $13 an hour last year, en route to $15 — resulted in low-wage workers’ earning less money rather than more. This surprised many in Seattle, who had been assured by all the best economists, including Paul Krugman, that such a thing would not come to pass.

The debate about minimum wages is a really important one. And, like all such debates, one that is dominated by righteous assertion - 'how can you not support people being paid a basic minimum, they have to eat' - rather than through considered analysis. It is probably time to take the pain and ask again whether minimum wages work.

The theory (at least as I understand it) tells us that, under all but the rarest of circumstances, if you raise the price of something the demand for that something will decline. All we need to examine is the magnitude of this effect - how quickly or slowly that demand falls as the price rises. It is stretching credulity to breaking point if we suggest that these effects do not apply when the price is the price of an hour's labour. So if we mandate a higher price for certain types of labour the result will be less demand for that labour either through the work concerned being forgone, reduced amounts of the work or else through automation (or, in extremis, through the business that used the labour in question ceasing to exist).

You all know this of course but how come we are all so keen on raising minimum wages (for good and noble reasons about people having a 'living wage' or whatever)? Partly this is because there have been a lot of studies suggesting that minimum wage effects are, at worst, small. The classic - if that's the word - in this genre is a study of fast food restaurants in New Jersey following a minimum wage hike:

Our empirical findings challenge the prediction that a rise in the minimum reduces employment. Relative to stores in Pennsylvania, fast food restaurants in New Jersey increased employment by 13 percent. We also compare employment growth at stores in New Jersey that were initially paying high wages (and were unaffected by the new law) to employment changes at lower-wage stores. Stores that were unaffected by the minimum wage had the same employment growth as stores in Pennsylvania, while stores that had to increase their wages increased their employment.

So much for supply and demand theory! Minimum wages rises increase employment! The problem is that things don't change quickly and reduced employment is built into business plans rather than implemented immediately - employment is sticky (partly because most business managers and especially small businesses really don't like laying folk off).

But there is a middle ground:

Thus, allowing for the possibility of larger job loss effects, based on other studies, and possible job losses among older low-skilled adults, a reasonable estimate based on the evidence is that current minimum wages have directly reduced the number of jobs nationally by about 100,000 to 200,000, relative to the period just before the Great Recession. This is a small drop in aggregate employment that should be weighed against increased earnings for still-employed workers because of higher minimum wages. Moreover, weighing employment losses against wage gains raises the broader question of how the minimum wage affects income inequality and poverty.

What's being suggested here is that in a market like the USA that generates lots of work all that increases in minimum wages do is anticipate rising wages - it's not that there's been a reduction in the numbers of jobs (and it doesn't really matter whether this is 100,000 or 1,000,000) but rather the impact on overall employment. If raising minimum wages doesn't raise unemployment this can only be because the rate at which the economy is generating new demand for labour is greater than or equal to the reduced demand for labour consequential on a higher minimum wage. And in a recession the wage floor might mean a more rapid shedding of labour.

In the UK we have seen surprising labour market resilience - employment has risen despite relatively slow growth and perhaps because of stagnating levels of productivity. A lot of these jobs have been minimum wage jobs but so far the effects of a rising minimum wage (the cutely tagged 'National Living Wage') haven't been seen in overall levels of employment - indeed quite the contrary as record employment and record immigration tell us.



UK wage distribution 2016. Source:ONS

This graph shows the effect of gradual increases in minimum wages. The question is whether the current approach of gradually increasing the minimum wage will continue to protect wage levels for low paid workers without the negative effect of reducing levels of employment for those low paid workers. A minimum wage is no use at all if its consequence is merely more unemployment or fewer hours of work for those low paid workers.

This for me is the reason why the Seattle findings are so important. It's not that we shouldn't consider minimum wages but that the impact of a massive rise in minimum wage is simply to increase unemployment and income among the lower paid. In Seattle, by 2021 the new minimum wage will increase wage costs for employers of minimum wage labour by 60%. It seems to me that the City got itself ahead of its labour market - here are the key findings from the University of Washington study that caused all the fuss (bear in mind that the study found the usual very small effect from the first minimum wage hike in 2015):





It does seem that Seattle has discovered that demand curves slope downwards and we should take lessons from this unsurprising revelation. The best way to improve wages for the least well paid isn't to require that employers pay them more - 18% more in the case of Seattle's 2016 minimum wage rise - but for economic growth to increase demand for labour.

For the UK our ever more surprising ability to create new employment masks these minimum wage effects:

...retail executives concede that sharp increases in the minimum wage have lent urgency to their efforts to use workers more efficiently, by investing in technology that makes many low-skilled jobs obsolete. “On a personal level, we all want to pay our workers more,” said a top executive at one large retailer that has recently announced redundancies. “But there’s going to be unintended consequences from what the government is doing. Automation that used to be too expensive is now cheaper than the people it can replace.”

The question is really how much longer can our economy absorb the workers shed as firms reduce labour levels and introduce automation? So long as the workers leaving Sainsbury or John Lewis can get a job elsewhere with relative ease the rising National Living Wage won't be an issue. But when that rising wage results in job losses the economy can't fill and sees reducing hours worked it becomes counterproductive. Labour's policy of an across the board £10 an hour minimum wage is great politics but such a huge increase in wage bills results in the sort of system shock seen in Seattle. And the people who would feel this shock will be the very low paid workers the policy is designed to help.


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Young people are neoliberals - they just don't realise it yet so let's help them.

It seems to me that the real issue young people have is feeling excluded from the benefits of our capitalist, neoliberal society not that capitalist, neoliberal society itself. And this seems a reasonable gripe to me. Here's a tweet from lefty journalist John Elledge:




This - perhaps not all that considered - comment tells us a great deal. Mostly that the real irritation of the emerging graduate generation is that they feel unable to afford investment assets like houses. For me this is one of the essential failures of UK government over the last thirty years - the idea of a property owning democracy was ignored as we got ever more excited about the seemingly endless rise in house prices.

Some people want to blame all this on my generation - the boomers - who took advantage of cheap asset prices in the 1970s and 1980s and rode the bubble to the point where the house my Dad bought for £3,250 in 1963 in now 'worth' over £400,000 (Dad sold the house in 1975 for about £14,000). I am absolutely with all those people who feel that they're outside this bubblicious world - not just the young or poor but a whole load of people from 'Up North' who've not seen anything like the gains those 'Down South' have seen.

Add to this that we told young people that the way to get into this bubble world was to get a good degree (in fact any old degree as Blair's enthusiasm for book-learning led to the numbers going to university getting up towards half of 18 and 19 year olds). And because these degrees were the gateway to a world of wealth and power, we told young people they could have a load of (cheap) borrowing that they'd spend half their life paying off so as to get the degree.

Young people don't want to be socialists, they want the entrance fee to our neoliberal world of valuable assets, to that property-owning democracy we were all promised. And this is why they've dumped the capitalists, the people who they think are stopping them from joining the glorious free market rat race. "Have free university tuition". "Here's a subsidised mortgage". "How about a big pay rise". "Or a higher minimum wage". "Free child care". "Discounted rail travel"...

It doesn't matter how much others ask where all this cash is coming from, people aren't listening. Or rather they see those telephone number house prices and say, "y'all can afford to pay for this stuff, get on with it". And Labour offered them everything they were asking for and some things they weren't - no questions asked. Is it any surprise that folk who are outside that wealth bubble flocked to this banner?

Young people - and plenty of the not-so-young - want to know when it's their turn to play the free market, asset-owning, property-speculating game. They don't want socialism, they want what their parents and grandparents had - the chance to have a real cash stake in their society, the thing that Margaret Thatcher promised to my generation (and largely delivered). This isn't about nationalisation for all that people tell you the government should run stuff (they always have done by the way even at the height of Maggie's pomp). No, it's about us renewing the promise we made to the post-war generation and to late boomers like me - play your part, work hard, be a good citizen and we'll make sure you can have that real cash stake in Britain.

Right now we're still telling people to play their part, to work hard, to borrow to fund education and to be a good citizen but government has reneged on its side of the bargain, that cash stake in Britain. And the single-minded focus of any new government should be to renew that offer and make it work. Those young people really aren't baby ideologues desperate for some sort of socialist New Jerusalem. They're just like you and I were 30, 40, 50 or 60 years ago - bothered about our own futures, the things we care about, in that thing Adam Smith saw as the driver of a better, richer society: self-interest.

So let's start offering people that chance. Let's free up the planning system so more houses get built were people want to live. Let's revisit the idea of tax relief or other support that backs individual, personal investment in our society. Let's liberate the innovative instincts of property and finance people to meet the aspirations of today's ambitious young people - 21st century capitalists, budding neoliberals every one. And let's do this knowing that the alternative, Labour's market-fixing, price-controlling, 'magic money tree' programme carries in it the seeds of disaster, the crash that socialism always brings.

I'm with you if you want to bash at those folk farming grants and corporate welfare. I'm on your side if you want to try and stop well-funded lobbyists getting government to fix a market or a system to suit their clients. I'm right there if what you want is to stop rent-seekers freeloading on free health, welfare and education. And I agree with you when you say people should pay the taxes they owe - on the nail not just after a long-winded and expensive investigation.

But this isn't about socialism just about getting a free market that works for all of us. It's about setting economic liberty - the idea that, more than anything else, is responsible for the health and wealth nearly all of us enjoy today (even if we can't afford a house) - at the heart of government policy. The more we try to control the market the less liberty we have and the more power we hand to the commissioners, the lobbyists and the corporations protected by the government fix.

What we all want is a real stake in the nation we're a part of - not just a vague notion of citizenship but a real sense of being a part of the place, of having roots. And that means renewing that promise made by Harold MacMillan in the 1950s, by Ted Heath in 1970 and by Margaret Thatcher in 1983 - Britain isn't just land and institutions but its people, all of them. And all of them should have the chance to take a real, solid, tangible stake in their nation.

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Why nationalising the water industry is a bad idea....

It will surprise people to learn that most the the USA's water infrastructure is publicly-owned and managed. And it's not just high profile disasters (poisonings if you prefer) that are the issue, it's that keeping consumers - who vote - happy leads to under-investment in that infrastructure:

Yet there clearly are major infrastructure repair needs in America. We have not been properly maintaining the assets we have built. Levee failures notoriously caused much of the flooding in New Orleans after Hurricane Katrina, but America has yet to address the neglect of its dam and levee systems. For example, the recent possibility of an overflow or collapse at the Oroville Dam in California forced 180,000 people to be evacuated. Many dams, levees, and locks on our inland waterway system are in need of repair, often at significant cost. Examples include Locks 52 and 53 on the Ohio River. Built in 1929, their replacement cost is $2.9 billion. As the New York Times reported, this replacement has been botched, and it was originally supposed to cost only $775 million—still a lot of money.

As is reported recently, the UK is not without these water management challenges but they are largely in parts of the system outside the control of the industry. All this means we pay more for our water than the average American but it also means we have a water supply and sewage system that works.

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In which Professor Mazzucato discovers government is useless

Various people had a bit of a laugh about a tweet from economist Mariana Mazzucato moaning about the officious nature of the UK Home Office.



The humour came, of course, in that Professor Mazzucato is a popular advocate of the argument that it's the state that drives innovation with the private sector toddling along behind making profits from all those clever things government has done (I oversimplify but not by much). The Professor's entire opus is about how government is brilliant.

I am, however, a little more interested in what this Tweet tells us about government. Mostly it tells us that, when it comes to administrative functions, government is rubbish. This doesn't matter when all it represents is some inconvenience and annoyance to an economics professor but it does matter when the issue in question is whether a family has any money at all. The other day, I was told that a housing association was giving out food parcels to some of its tenants because of the delay between getting an assessment under the new universal credit (or indeed, on occasions, other benefits) and actually getting any money. This isn't because the benefit isn't enough but simply a case of government being unable to process simple administrative tasks efficiently (and yes I know the system is complicated but that's about getting the right boxes filled).

We encounter example after example of this administrative uselessness, most of it annoying and delaying rather than life threatening and all of it reminding us that huge bureaucracies operating without either adequate scrutiny or any competition are, in truth, the very antithesis of innovation. Government, the acme of monopolistic bureaucracy, has always operated this way - in 'The Castle', Franz Kafka summed how this governmental incompetence is married with arrogance and a lack of self-awareness to great the impenetrable barrier of bureaucracy:

“Surveyor, in your thoughts you may be reproaching Sordini for not having been prompted by my claim to make inquiries about the matter in other departments. But that would have been wrong, and I want this man cleared of all blame in your thoughts. One of the operating principles of authorities is that the possibility of error is simply not taken into account. This principle is justified by the excellence of the entire organization and is also necessary if matters are to be discharged with the utmost rapidity. So Sordini couldn’t inquire in other departments, besides those departments wouldn’t have answered, since they would have noticed right away that he was investigating the possibility of an error.”

What Professor Mazzucato, a highly regarded denizen of Britain's Castle and an advocate of its greatness, has discovered is that the system will do what the system does, will do that slowly and badly, and regardless of your job title will treat you with the same impersonal disdain you thought was reserved to common sorts on benefits. Your form will sit in a pile, will be processed in due course and will be returned if it is incorrect or incomplete. And there is no option to expedite matters by buying the mayor an expensive cup of coffee.

In the end government is useless. Then we revolt. And, as Kafka said about revolution:

"Every revolution evaporates and leaves behind only the slime of a new bureaucracy."

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