With apologies to the Independent, this seems worth reproducing pretty much in full:
There has been a sharp drop in the underlying value of private housing project starts in the first quarter of 2011. Glenigan, the construction data service, recorded a 61 per cent year-on-year fall in the underlying value of new starts in the three months to March.
The weak first quarter of 2011, in line with other survey data, is in sharp contrast to the strong rebound experienced a year ago in the run-up to the general election. The underlying value of civil engineering project starts fell by 16 per cent.
That's a staggering collapse.
Labour ensured government spending kept this sector going.
That was the right thing to do, for the economy, for those needing housing and for the infrastructure refurbishment we still need to make it green.
Thev Tories are axing all investment as fast as they can.
And with it confidence in house building has collapsed.
There's only one person to blame for this downturn. It is the deliberate choice of George Osborne.
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All land has value but that with planning consent for residential property has the same value as land which already has the houses built. We should be collecting all the land rent for public benefit. This would force land owners to use it or sell it on to those who want to use it – and at a much reduced price. Land wasted is production foregone for ever.
Richard,
I came across this posting in Mike Kunczal’s Rortybomb (http://rortybomb.wordpress.com/) posted on 20th April
“On Public Funding of Colleges and Towards a General Theory of Public Options.”
It referred back to a blog on JW Mason’s The Slack Wire (http://slackwire.blogspot.com/2010/09/public-options-general-case.html) on September 5th last year. JW Mason also applies the analysis to working tax credits.
The analysis seemed to me novel, convincing and highly relevant to any public/private debate.
The blogs refer mainly to US higher education, where they have a mix of public and private universities. The starting point is that it would appear exactly equivalent to spend $1m providing bursaries to students to attend the university of their choice or giving $1m directly to public universities. However, the hypothesis is that where supply is inelastic, bursaries allow more students to apply for a fixed number of places, forcing up prices. The overall effect is that the subsidy mainly ends up as profit to the private universities and increases the cost to students who do not get bursaries. In contrast, giving $1m to public universities allows them to lower fees, encouraging the private universities to lower fees. Calculating all the knock-on effects, $1m in bursaries gives less than $1m in benefit, subsidising public universities gives more than $1m.
The reason I am offering the comment here is that housing is the perfect example of inelastic supply. “Help for first time home buyers” exacerbates the problem, “Social housing” helps them. Of course in real life helping people to have decent homes is far less useful than subsidising bankers’ bonuses.
I THINK the same analysis applies to the NHS “reforms”. Employing more doctors and nurses increases supply. Establishing a market for services without increasing supply will push up prices and increase private profit.
This may all be simplistic to anyone better informed than myself, but I thought it was a useful approach. However, in cases where demand is less elastic than supply, I suspect it may lead to unpalatable conclusions. Also, it doesn’t address the problem that funding without quality control will encourage inefficiency.