Tuesday, 30 November 2021
The Glittering Prizes, by Frederic Raphael
Thursday, 18 November 2021
A Psychohistory of Europe
Monday, 15 November 2021
A little bit more on houses and homes
I wrote a long post about housing policy the other day. This is just a short addendum.
In my earlier post I took it as read that it would be possible, at least in theory, to reduce house prices in London by increasing housing supply, just as increases of supply drive down prices in other markets, and I merely doubted that Britain could ever take the steps necessary to achieve that.
As it happens, there is a further twist when it comes to the land and housing markets: increased supply can raise prices. Here's how.
The crude model for jobs and housing in London (or similar big cities) is to imagine that jobs are essentially the same as a fountain of gold in the middle of London and people simply want to get there each day to siphon off their share of gold. The gold fountain doesn't run out, so building more houses doesn't mean less gold for each new commuter; but as you get more and more houses, people have more options for living in while commuting to the gold fountain and, as those options increase, they are less prepared to pay more for the privilege of living in any particular one.
But London doesn't in fact make money out of a gold fountain: it makes money out of people. The interesting fact is that the more people there are, the more deals are done: from big deals (the eurobond market; insurance at Lloyd's; M&A) to small deals (people buying haircuts, sandwiches and cinema tickets). People meet more people, share ideas and come up with more new ideas. Large numbers of people living in close proximity can support new restaurants, clubs, art galleries, etc. Densification creates excitement and wealth.
The effect is that adding more people makes the fountain of gold more valuable - and therefore increases people's willingness to pay for housing that can access that gold.
Let's take an example. I mentioned Battersea Power Station (BPS) in my previous post. Now think of Battersea as a whole. The redevelopment of the BPS site has added massively to the supply of housing in the area. But it has also added massively to the attractiveness of the area. If you live in an existing ex-council flat just outside the redevelopment zone then you will have seen: your local riverfront become more attractive and better served by funky hipster foodvans; new shops, restaurants and cafes appear; a new tube station open. Overall, the addition of a large number of affluent people to the area, and the cool new projects they support, is likely to have increased the value of your property.
The same is potentially true of London as a whole. If Zone 1 gets an injection of additional people making additional money then there will be all the more reason to splash out on a Zone 2 house that gives you the chance to join in the money-making machine.
I suspect that there is an effect of increased supply causing lower prices as well as increased supply causing higher prices. Which effect dominates will depend on all sorts of things, including the nature of the supply: BPS, with its proximity to the American Embassy and its new tube stop are a particularly high-quality addition to London; a development that increased crime or was simply particularly ugly might well depress prices.
My point is simply that the addition of more people - and the businesses and amenities that more people can support - has a contrary effect to that of mere supply of empty properties. As Ian Mulheirn puts it, "it’s like running up a down escalator".
(If you are interested in this kind of argument and Mulheirn's discussion of the difference between land and capital then I recommend this, on Henry George.)
Tuesday, 9 November 2021
Houses and homes
The cool new thing among the young and groovy elements of Twitter and the wonkosphere, particularly among what might broadly be called the classical liberal or small-c conservative elements, seems to be a desire to build lots more houses in London and the better parts of the south east. This desire is not merely presented as a good idea, along the lines of a new tax policy or suchlike, but rather a moral imperative.
However, below the break, I shall explain how the bright young YIMBYs (a) go too far, (b) don't go far enough and (c) are not moral crusaders at all. It's a shame, but there you go.
Monday, 1 November 2021
On "On Bullshit"
The first quibble I have is that I don't agree with his definition of "bullshit". I think the word just means "rubbish, but on a grand scale": it refers to exaggerated or self-aggrandising nonsense. The man who talks BS is someone who has big plans (that come to nothing) and important friends (who don't exist) - the "bull" indicates bigness. But I'm happy defer to the lexicographer on this one. I'll get on to the concept that Frankfurt wants to talk about, whatever we decide to call it.
But before we get to his point, Frankfurt talks about "humbug". Well, that is something different again. Humbug is about outward piety combined with inward cynicism. Think of the celebrity who flies in on a private jet to deliver a lecture on global warming. There's nothing wrong with the lecture: it is not untrue or deceitful; it expounds moral virtues that we all agree with (or at least pretend to agree with). The point is that the humbugger doesn't really believe in it. Humbug is a true - or at least socially correct - statement made insincerely. What we are misled about is the nature of the person making the statement, not the contents of the statement. When Scrooge says that Christmas is a "humbug", he is accusing people of being insincere in their expressions of goodwill to all mankind.
We do eventually get to Frankfurt's point, but only by going through an ill-chosen anecdote about Wittgenstein. The anecdote appears, I think, only because Wittgenstein is in it: the reader is supposed to get the feeling that s/he is hanging out with real philosophers while reading this article with the naughty words in.
So here we are. What Frankfurt has spent many pages getting to is the concept of making a statement while having no positive belief, or no honest belief, that the statement is true. This is not a discovery. It is the concept well-known to English law of "recklessness" in the making of a representation.