Over the years of leaving comments on articles and blogs, I've noticed a few don't make it pass the moderators. Frustratingly, the more well thought through and polite the comment, sometimes the less likely it is to make it into the public domain.
One of my favorite places to leave the odd comment or two is the London School of Economics SERC( Spatial Economics Research Centre) blog. There, economists like Professors Cheshire, Overman and Hilber write about the evils of the UK planning system and its stifling effect on new construction, the cause of our so called Housing Crisis.
To be fair, they do by and large indulge my hectoring of the learned professors, but when I do manage to point out the contradictions in what they say, my comment never goes up.
Here's my latest in response to this article written by Professor Hilber over a month ago "The UK planning system: fit for purpose?"
"I completely agree with Prof Hilber that supply is not being matched with demand in the UK housing market, causing many serious problems. I am sure the Professor would agree that market rents are the best way of allocating scarce resources like valuable land(location). Problems arise when owner occupiers can impute their rent, as the market can not then fully internalize opportunity costs. This leads to misallocation, the cause of excessive vacancy, under occupation and investment distorted in favour of London/SE, at the expense of the economy as a whole.
We can therefore kill two birds with one stone. A title deed can currently be seen as meaning"rent free". If title owners paid full market rent(as tax) for exclusive rights to a valuable location, as renters do now, the selling price of land(location) would fall, theoretically, to zero. Dropping the selling price of property to its capital only value.
Only then could the market allocate land and immovable property at optimal efficiency. Negating the need to wastefully build homes and additional infrastructure where a functional market would deem them surplus to requirements.
It’s a puzzle then why the Professor and his colleagues continue to recommend policies that concentrate on building more houses, as this is clearly sub-optimal from an efficiency point of view, let alone one where lowering house prices is a priority.
Of course politics of land value taxation is tricky, but then the consideration of political issues is not the job of an economist."
If Prof Hilber responds on this blog it would be gratefully received and published.
Debate Magazine
