the only guy that can code in the most boring department at the biggest financial institution you’ve never heard of. alt @granular_flaws
Beigel side of London
Joined December 2020
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The answer to “why is my £775k new build flat so small and crappy?” Is simple: the money left to actually build it after the government has took their £442k share is only £178k - less than some spend on their kitchen extension
Incredibly important report that gets to the core reasons why we can’t have nice things.
Government imposed policy costs make up 57% of the clearing price of a new flat in London and 42% of a new home in the Home Counties.
Despite a big housing shortage and positive planning reforms, new home starts in England are declining from 182,000 in 2022 to under 125,000 last year.
While the macroeconomic context has worsened with build cost inflation and high interest rates, the Government is imposing more burdens on new homes, not fewer.
Taxes, levies, planning, and mandates add over £440,000 to the cost of delivering a home in London and nearly £225,000 nearby, with several of these imposed recently like the Second Staircase, Future Homes Standard, Building Safety Levy, Biodiversity Net Gain and Residential Property Developer Tax.
Individually these may be justified, but together they are making new homes unviable.
As a result, large developers are buying less land and small builders are going out of business; nearly 4,000 construction firms went bust just last year.
If we want to build more homes, we should be easing the burdens on them, not adding more.
Making housebuilding viable again is the most important issue in housing policy and my co-author, Edward Donovan, has completed excellent modelling showing how big the challenge is.
Read the full report: cps.org.uk/wp-content/upload…
And simulate what changing the policies does with Edward's modelling here: easing-the-burdens.cps.org.u…
It’s incredible just how much more important cars, vans, and trucks are for Britain’s logistics than everything else, despite rail devouring the lion’s share of government transport funding.
Disturbing micro-signal for general competence that a game originally made for a 90s audience who were new to 3D graphics and limited by an awful controller has been dumbed down in its modern remake.
Long tail of the Flynn effect reversal?
From The Power Broker:
One Sunday in the summer of 1914, Frances Perkins happened to be standing beside Moses on the deck of a ferry taking a group of young reformers to a picnic in New Jersey, and as the ferry pulled out into the river and they leaned on the rail, watching Manhattan spread out behind the boat, Miss Perkins heard Moses suddenly exclaim, “Isn’t this a temptation to you? Couldn’t this waterfront be the most beautiful thing in the world?” As she looked at him in astonishment, Moses painted for her a picture of what the scene could be like on a Sunday: the ugly tracks completely hidden by “a great highway that went uptown along the water;” cars travelling slowly along the highway, their occupants enjoying the view; beside the highway, green parks filled with strollers, tennis players, and bicyclists; sailboats skimming on the river, and motor yachts tied up in gracefully curving basins. The thing that astonished her most, Miss Perkins recalled later, was that Moses “had it all figured out”—every curve the highway would have to take, every building that would have to be torn down to make way for it, the exact location of every tennis court and boat basin.
Henry and I were running along the Thames in South London when he pointed out to me that one small thing could unlock thousands of new homes for Londoners: a tunnel. Now he’s got a plan…
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For similar reasons of legibility, I also prefer third world construction corruption - literal embezzlement - over the stakeholder feeding frenzy that leads to the £16B parliament refit
You’re at least able to see where the money is going (Range Rovers) in Equatorial Guinea
I find an extractive elite composed of 100,000 imperial clan pensioners sucking the system dry far more disturbing than a tiny aristocracy living in grand houses that can, at least, be usurped and replaced in a short revolution.
Hoping that this will be something like the Dutch solidarity scheme which is a genuine improvement on annuities, but I’m well aware that the British state is likely to screw this up (or just use it as a mechanism for income redistribution).
My personal assumptions - drawdown will get easier to manage due to AI progress, doubting ‘bigger fund + patient capital means higher returns’ orthodoxy (just buy equities, ignore PE), and not spending all your pension before passing isn’t problematic (inheritance is a net positive transfer) - point to an highly equity weighted drawdown that can pay out pretty high (if returns are good) and pass on some money at end of life.
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From this side of the Atlantic, the depth and variety of America's regional city economies are enviable. Many have theorised that the British-American wealth gap is down to seemingly random cities like Salt Lake City being able to keep up with global metropolises like NYC, compared to the failure of places like Leeds against London. To put numbers on it: SLC manages 93% of the GDP/capita of NYC, while Leeds only achieves 64% of the per-worker productivity of London.
But this is an oversimplification: American cities are competitive because they offer unique features that create a separate local economic maximum for internal migrants, industries, and foreign investment to not just agglomerate in NYC. Take a look at what SLC offers:
- A 30-minute drive from the largest copper mine on the planet
- Spiritual and organisational headquarters of the Mormon church, also home to their $100B+ endowment fund
- Next to the geographically unique great salt lake where 45% of the world's brine shrimp cysts are produced
- ~1 hour drive from some of the best ski resorts in the world with (imo) the greatest snow consistency - dry powder
Clearly a different universe to the office towers of NYC. Now compare Leeds and London and it's clear both offer the same array of educated populace, a CBD focused around services, cloudy cold weather, and high industrial costs. Given both seem to be dead set on services-slop... why should anyone move to Leeds over London?
Seemingly, the *only* reason to consider Leeds is if you take Britain's planning issues as a permanent feature of economic geography, and presume higher London rents are here to stay, but that may be possible to fix with the stroke of a YIMBY pen.
Until Britain's regional economies differentiate themselves from London as much as areas like the Texas Triangle, the Bay Area, and LA have from NYC, I don't see durable regional economies being created.
This is just a failure to understand a complex causal chain. Seems worrying that we have an energy secretary that doesn’t have access to thinking mode.
For those who don’t know, this very idea was proposed by Major in 97. Blair and Brown objected to it, saying the transition costs to a state pension funded on actual savings were too high.
Nobody seems to be aware that the Norwegian SWF only started receiving capital in 1996
The chancellor is unwittingly implying that the 1997-2010 Blair era didn’t practice enough austerity.
‘We'd have a British sovereign wealth fund now that will be worth probably a trillion pounds’
Chancellor @JohnHealey_MP suggests what Britain could have gained if it had set up an energy wealth fund like Norway’s back in the 1980s
#Peston
Great post. V important to explain the issues with ‘media pundit economics’, a set of ideas that have a disturbingly large influence despite being mostly incorrect.
The U.S., France, and Spain will soon hold elections, and much of the debate is about how large government should be. Almost every fiscal multiplier cited in those debates answers a question the debates are not asking.
Why? Because the impact multiplier of a temporary increase in government spending, the number nearly always cited, and the long-run multiplier of a permanent increase in government spending, the relevant number for this discussion, are two very different objects.
The first measures how much output changes in the very short run when government spending goes up for some time. The second measures how much output changes in the very long run when government spending goes up permanently.
The distinction should be obvious. Unfortunately, the distinction is not obvious, even to many economists.
Why are the two multipliers so different?
First, taxes. Temporary and permanent increases in government spending have very different tax implications.
Second, slack. In the short run, output can rise because there are idle workers and machines, and because the central bank may not react. In the long run, output depends on the total levels of labor, capital, and technology, and government spending can affect all three.
Third, what the government buys. Building a new highway today (a temporary increase) has very different implications than lowering Social Security retirement age (a permanent increase).
Fourth, evidence. Nearly all our estimates come from episodes that were temporary by design: wars, stimulus packages, or federal money flowing to one state while the rest of the country pays the bill. Those episodes tell us little about a permanent, national, tax-financed program.
People can reasonably disagree about the right level of government spending. The question has a positive side (what are the short- and long-run consequences of spending more or less?) and a normative side (should the government provide transfer x?). I might have some answers on the positive side. You do not need to share my normative views.
But if you want to argue for a permanent increase in government spending and its consequences ten years from now, please do not cite models or evidence about the short-run effects of a temporary increase. Those models and that evidence answer a different question.
Many of the policies the manifesto proposed read as far ahead of their time.
There was the ‘pension plus’, a plan to slowly transition the unfunded state pension to a savings based scheme. The fiscal time bomb of the state pension would have been self solving by 2040
And…
