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Tuesday 4 June 2019

Want to tackle inequality? Then first change our land ownership laws

George Monbiot in The Guardian

What is the most neglected issue in British politics? I would say land. Literally and metaphorically, land underlies our lives, but its ownership and control have been captured by a tiny number of people. The results include soaring inequality and exclusion; the massive cost of renting or buying a decent home; the collapse of wildlife and ecosystems; repeated financial crises; and the loss of public space. Yet for 70 years this crucial issue has scarcely featured in political discussions.

Today, I hope, this changes, with the publication of the report to the Labour party – Land for the Many – that I’ve written with six experts in the field. Our aim is to put this neglected issue where it belongs: at the heart of political debate and discussion.

Since 1995, land values in this country have risen by 412%. Land now accounts for an astonishing 51% of the UK’s net worth. Why? In large part because successive governments have used tax exemptions and other advantages to turn the ground beneath our feet into a speculative money machine. A report published this week by Tax Justice UK reveals that, through owning agricultural land, 261 rich families escaped £208m in inheritance tax in 2015-16. Because farmland is used as a tax shelter, farmers are being priced out. In 2011, farmers bought 60% of the land that was on the market; within six years this had fallen to 40%.


Homes are so expensive not because of the price of bricks and mortar, but because land now accounts for 70% of the price


Worse still, when planning permission is granted on agricultural land, its value can rise 250-fold. Though this jackpot was created by society, the owner gets to keep most of it. We pay for this vast inflation in land values through outrageous rents and mortgages. Capital gains tax is lower than income tax, and council tax is proportionately more expensive for the poor than for the rich. As a result of such giveaways, and the amazing opacity of the system, land in the UK has become a magnet for international criminals seeking to launder their money
We pay for these distortions every day. Homes have become so expensive not because the price of bricks and mortar has risen, but because the land that underlies them now accounts for 70% of their price. Twenty years ago, the average working family needed to save for three years to afford a deposit. Today, it must save for 19 years. Life is even worse for renters. While housing costs swallow 12% of average household incomes for those with mortgages, renters pay 36%.

Because we hear so little about the underlying issues, we blame the wrong causes for the cost and scarcity of housing: immigration, population growth, the green belt, red tape. In reality, the power of landowners and building companies, their tax and financial advantages and the vast shift in bank lending towards the housing sector have inflated prices so much that even a massive housebuilding programme could not counteract them.

The same forces are responsible for the loss of public space in cities, a right to roam that covers only 10% of the land, the lack of provision for allotments and of opportunities for new farmers, and the wholesale destruction of the living world. Our report aims to confront these structural forces and take back control of the fabric of the nation.

A Labour government should replace council tax with a progressive property tax, payable by owners, not tenants. Empty homes should automatically be taxed at a higher rate. Inheritance tax should be replaced with a lifetime gifts tax levied on the recipient. Capital gains tax on second homes and investment properties should match or exceed the rates of income tax. Business rates should be replaced with a land value tax, based on rental value. A 15% offshore tax should be levied on properties owned through tax havens.

To democratise development and planning, we want to create new public development corporations. Alongside local authorities, they would assemble the land needed for affordable homes and new communities. Builders would have to compete on quality, rather than by amassing land banks. These public corporations would use compulsory purchase to buy land at agricultural prices, rather than having to pay through the nose for the uplift created by planning permission. This could reduce the price of affordable homes in the south-east by nearly 50%.

We propose a community participation agency, to help people, rather than big companies, become the driving force in creating local plans and influencing major infrastructure. To ensure a wide range of voices is heard, we suggest a form of jury service for plan-making. To represent children and the unborn, we would like every local authority to appoint a future generations champion.

Councils should have new duties to create parks, urban green spaces, wildlife refuges and public amenities. We propose a new definition of public space, granting citizens a legal right to use it and overturning the power of private landowners in cities to stifle leisure, cultural events and protest.

We propose much tighter rent and eviction controls, and an ambitious social housebuilding programme. We also want to create new opportunities for people to design and build their own homes, supported by a community right to buy of the kind that Scotland enjoys. Compulsory sale orders should be used to bring vacant and derelict land on to the market, and community groups should have first rights to buy it.

To help stabilise land prices and make homes more affordable, we propose a new body, called the Common Ground Trust. When people can’t afford to buy a home, they can ask the trust to purchase the land that underlies it, while they pay only for the bricks and mortar (about 30% of the cost). They then pay the trust a land rent. Their overall housing costs are reduced, while the trust gradually accumulates a pool of land that acts as a buffer against speculation, and creates common ownership on a large scale.

We call for a right to roam across all uncultivated land and waterways (except gardens and similar limitations). We want to change the Allotments Act, to ensure that no one needs wait for a plot for more than a year. We would like to use part of the Land Registry’s vast surplus to help community land trusts buy rural land for farming, forestry, conservation and rewilding. We would like a new English land commission to decide whether to make major farming and forestry decisions subject to planning permission, to help arrest the environmental crisis. And we want to transform the public’s right to know, by ensuring that all information about land ownership, subsidies and planning is published freely as open data.

These proposals, we hope, will make the UK a more equal, inclusive and generous-spirited nation, characterised not by private enclosure and public squalor, but by private sufficiency and public luxury. Our land should work for the many, not just the few.

Monday 3 June 2019

Patriot Act - Apologies on Indian Elections


In economics the majority is always wrong

 It is time for US business and government to embrace Galbraith’s pragmatic approach writes  Rana Foroohar in The FT



Economists’ reputations, like skirt lengths, go in and out of fashion. In the past 10 years, John Maynard Keynes has received fresh appreciation, and Hyman Minsky has been having a moment. 

I think it’s time for John Kenneth Galbraith to have his. The late liberal economist’s “concept of countervailing power”, put forth in his 1952 book American Capitalism, is a critique of the “market knows best” view that has dominated the US political economy since the era of Ronald Reagan. There could not be a better time to re-read it. 

---Also watch


Markets don't supply according to demand

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Despite the much discussed rise of millennial “socialists” (to my mind they are not, really), Americans still fundamentally accept the idea that the private sector always allocates resources more efficiently than the public sector. It is a truism that dies hard, even amid what feels like a drumbeat of boardroom scandal, an explosion in unproductive corporate debt, and an inverted yield curve for Treasuries that suggests investors fear a recession is coming. 

Policymakers across the political spectrum agree on what we need to create real and lasting growth — decent infrastructure, a 21st-century education system, healthcare reform. 

Yet these are things that the private market has little incentive to address. Building roads and running schools and hospitals (at least the non-profit kind) simply isn’t as lucrative as throwing up luxury condos or engaging in financial speculation. 

As Galbraith would have agreed, private markets also are not well set up to address the broad economic and social externalities of climate change or the effects of income inequality. 

One obvious example is that burgeoning student debt has become a headwind to overall economic growth. Market prices cannot capture the full costs of these problems. 

Galbraith also would have argued that corporations can be just as bureaucratic and dysfunctional — if not more so — than government. His 1967 book The New Industrial State explored how large companies are driven more by their need to survive as organisational entities than by supply and demand signals. 

He predicted that innovation and entrepreneurial zeal would decline as such organisations rose. That is exactly what happened as our economy became dominated by superstar companies. 

Look at any number of troubled behemoths — from GE to Kraft Heinz to Boeing — and it is hard not see exactly what Galbraith predicted. In an endless search for profits, many companies simply move money around on their balance sheets, creating a short-term financial sugar high without real innovation. 

We live in a world in which markets cannot handle even a tiny rise in interest rates without plunging, and when the savings from tax cuts went not into new capital investment but share buybacks, which were also fuelled by debt issued at those very same low rates. Can anyone really argue that the private markets are allocating resources efficiently? 

I am not saying that we need centralised planning. Galbraith once put it well: “I react pragmatically. Where the market works, I’m for that. Where the government is necessary, I’m for that. I’m deeply suspicious of somebody who says, ‘I’m in favour of privatisation,’ or ‘I’m deeply in favour of public ownership’. I’m in favour of whatever works in the particular case.” 

Politicians and policymakers on both sides of the aisle should sear these words on their brains. Americans don’t really do nuance. We like strong, simple statements, such as Reagan’s observation that: “The government is not the solution to our problem; government is the problem.” 

But the “private good, public bad” argument simply isn’t true. How else can we explain the rise of China? It has not only shown that government planning and economic competitiveness cannot only go hand in hand, but that in the current era of tech-based disruption and inequality, public sector support may be necessary for the private sector to thrive. 

It is time for political conservatives, economic neoliberals, and chief executives to embrace this. I find it endlessly frustrating to hear so many American corporate leaders complain that government cannot get anything done, even as they pay expensive accountants to keep as much wealth as possible out of state tax coffers. 

It is time to admit that endless tax cuts have not put more money into the real economy, despite frequent, incorrect claims from businesses that they would create lasting above-trend growth. Rather, they have led to pitted highways and hazardous bridges that rival those one might find in any number of far poorer countries. The US ranks 31st out of 70 countries on the OECD’s Pisa test for mathematics, science and reading. 

Let us try something new. Let us stop assuming that markets always know best. Let us pay our taxes, modernise our social safety nets, regulate markets properly, enforce antitrust to protect the overall economic ecosystem and not just the largest businesses, and reinvent our social compact. 

This is not socialism. It is smarter capitalism. The majority may not yet believe that. But as Galbraith is often quoted as saying: “In economics, the majority is always wrong.”

Saturday 1 June 2019

The winner’s wisdom of Silicon Valley Stoics

Letting go of comfort and control makes sense — if you already have those things writes Janan Ganesh in The FT.


 The late George Michael used to hail marijuana as the optimal drug — for those who have already achieved their ambitions. For the rest of us, he warned, its mellowing properties would sap our drive. “You’ve got to be in the right position in life,” said a man who kept houses in both Hampstead and Highgate, which, if you know Manhattan better, is like keeping homes on East 75th Street and West 75th Street.  

An idea that works for an established winner can be utterly ruinous for a mere aspirant. 

 For some reason, this insight comes to mind whenever I encounter the modern fad for Stoicism. Which, given that I have access to the internet, and to the state of California, is rather a lot. 

In common parlance, Stoicism used to mean nothing more specific than a kind of grin-and-bear-it fortitude. But in recent years, the actual philosophy of Seneca and Marcus Aurelius has rallied too, if in glib and half-understood form. 

The new Stoicism calls for — and here I paraphrase — a virtuous rather than joy-centred life. It often takes the guise of self-denial: the modern Stoic volunteers for ice baths and sparse diets. It also manifests as a certain detachment from the vicissitudes of life. The modern Stoic does not rail against external variables. Enemies, disasters and random surprises are all part of the natural order. 

You can recognise the parallels with the Zen vogue of yesteryear. And you can guess who has fallen hardest for this creed. It has made deep inroads into the educated rich, and into the tech cognoscenti in particular. Through their cultural reach — the podcasts, the Ted talks — it is fanning out from Silicon Valley to other pockets of well-fed ennui. 

There is a something to be said for this elevated version of self-help. Certain habits I keep, such as a minimal intake of media, are unconsciously neo-Stoic. And while some of its followers would fall for any passing -ism or -ology (Tim Ferriss, Arianna Huffington), others have brains like industrial lasers. 

All the more reason, then, for the smarter among them to insert a qualifier: letting go of comfort and control makes perfect sense (and I really must resort to italics here) once you already have these things. The new Stoicism is a kind of victor’s wisdom. It simplifies the lives of people who are beset with extreme surplus. This is not a universal problem. Modern Stoics should not pretend to universal (or even broad) relevance. “Very little is needed to make a happy life”, wrote Marcus Aurelius, the ultimate owner of everything in the known world at the time. At least he did not try this line on the masses. His Meditations were never meant for publication. Would that his 21st-century heirs were so coy. 

As a way of de-stressing powerful millionaires, neo-Stoic thought is hard to fault. For those striving for some power and millions to be stressed about, it rather speaks over their heads. Most of us aspire to material comforts or (another Stoic no-no) popularity. It is fine to achieve these things and then decide to keep them in check, lest they drive one mad. But to warn others off them, or pretend they can get them by not craving them, is life advice at its most de haut en bas. 

 You will notice that the smarmy de-emphasis on earthly pleasures stops well short of total renunciation. Like some credulous Sloane on an equatorial gap year, the modern Stoic idealises hardship precisely because they can pick and choose their exposure to it. “Practising poverty,” they call it, with Marie Antoinette’s self-awareness. 

Perhaps the worst of it is the deception of those who are just starting out in life. Unless “22 Stoic Truth-Bombs From Marcus Aurelius That Will Make You Unf***withable” is pitched at retirees, the internet crawls with bad Stoic advice for the young. The premise is that what answers to the needs of those in the 99th percentile of wealth and power is at all relevant to those trying to break out of, say, the 50th. The new Stoicism is not useless. It promises a measure of serenity in a world that militates against it. You’ve just got to be in the right position in life.

Friday 31 May 2019

Pakistan, Waziristan.- the descent continues



Hope Vs Reason

Najam Sethi in The Friday Times


The economy is in tatters, inflation and joblessness are stalking the landscape. Both western and eastern borders are insecure – a civil war is threatening to spill over one border while an invigorated predator is sizing up its prey on the other. Terrorism/insurgency in Balochistan is barely manageable even as another threatens to shatter the newfound peace of FATA. Hounded to the wall, the mainstream opposition is inching towards mass agitation. Yet the PTI government of the day – hanging by an arrogant and unaccountable puppeteer’s thread — is bent upon imprisoning popularly elected leaders of Sindh, Punjab and FATA, blackmailing the NAB Chairman to do its bidding, prosecuting an honourable judge who dares question the writ of the puppeteer, extinguishing a rising star from lighting the path of the opposition and gagging the media from speaking the truth. Under the circumstances, can we shut our minds to reason and hope that all will be well? Or will defiance trump logic and set things right?
The Afghan Taliban are not likely to concede core American demands. In time, the Americans will blame Pakistan for not doing more to bail them out. President Trump has already teamed up with PM Modi to contain, if not confront, Pakistan’s lifeline ally China. Before long, both will turn the screws on Pakistan, the former via the US Treasury’s manipulation of the IMF and FATF and the latter by priming its “offensive-defense” proxy war doctrine. This will transpire when the ruling Puppeteer–PTI clique stands totally alienated and isolated from most sections of state and society.
The confrontation in FATA between the “patriotic” army and “treasonous” populace may get worse. Both sides have wantonly crossed red lines. In the heat of the moment, the protestors tried to overrun a security check post. The army shot and killed several of them. Next time, the protesting crowds will be bigger. If a new insurgency is born, it will doubtless be aided and abetted on a bigger scale by hostile neighbours.
The NAB chairman was spoiling to be hoist on his own petard. But the PTI exploited his weakness to advance its anti-opposition agenda. Now, if he throws in the towel and the government is successful in empowering its hand-picked Deputy Chairman, then there will be more confrontation, more repression, more political instability, more economic chaos. It is remarkable, isn’t it, that the media managers of the government, in cahoots with a civilian intel agency, should have successfully staged such a coup? No wonder, the government is adamant in denying a proper investigation into L’Affaire Chairman!
The decision to target a Supreme Court judge and teach a suitable lesson to other wayward judges was expected. The good judge had dared to tick off the Intel Agencies and seemed inclined to read out the “democracy” sections of the constitution to them. Horror of horrors, he was also lined up in due course to rule as the chief justice of Pakistan for many years. Confronted by leaked reports of a Presidential Reference to the Supreme Judicial Council to defame him, he has demanded to know the veracity of the reports. The Additional Attorney General in Karachi has resigned in protest. If other judges don’t resist such machinations, the peoples’ struggle for an independent judiciary will be lost. Certainly, there is at least one other judge who may be on the hit-list for ruffling the untouchable feathers of certain VIP housing societies across the country.
Next in line is the Election Commission of Pakistan. Having advisedly taken a soft look at the shenanigans of the Prime Minister, it is now being pressured to take a hard stance against Mariam Nawaz Sharif. If it does the government’s bidding, it will join the queue of discredited state institutions that are paving the way for societal anarchy and states of siege.
The worrying future is already upon Pakistan. The US is gearing up India and others to confront and contain China in the Asia-Pacific and Asia-West region. China’s Road and Belt project, in general, and CPEC, in particular, will be targeted. It is also engaged, along with Saudi Arabia, UAE and others in trying to force regime change in Iran as a prelude to redrawing the map of the Middle-East. This makes Pakistan’s third southern border vulnerable. It also threatens to open deep sectarian divisions within the country.
Wiser counsel would surely advise a contrary path. A national all-parties government headed by a stolid prime minister who can disarm domestic critics, build trust with prickly neighbours, manage the economy dispassionately and herald certainty and stability would do Pakistan much good. Such a dispensation would heal the wounds between provinces, between state institutions, between political parties, between classes and ethnicities, between Pakistan and its neighbours while pulling the economy out of its current trough. A nation united and at peace with itself is bound to be a nation united and at peace with the rest of the world. More than anything else that is the need of the hour.
Will hope be rekindled at the altar of realism? Or will despair be our lot when reason is sacrificed?

Compromise dies in the age of outrage

Hardening political positions are the sclerosis that may lead to a heart attack for democracies writes Tim Harford in THE FT


I don’t often find myself agreeing with Esther McVey, but I wondered this week whether the candidate for leader of the UK Conservative party might accidentally have spoken the truth: “People saying we need a Brexit policy to bring people together are misreading the situation. That is clearly not possible.” 

The British do indeed seem in no mood to compromise. The results of elections to the European Parliament produced a thunderous endorsement of parties that proudly reject an attempt to find common ground on Brexit. The Conservatives and Labour, each caught in an awkward straddle, were slaughtered. Labour offered the slogan “let’s bring our country together”. Ha! Voters preferred the Liberal Democrats (“Bollocks to Brexit”) and the Brexit party (“they’re absolutely terrified of us”). 

Sometimes an extreme position is the correct one. When King Solomon proposed cutting the baby in half, it wasn’t because he was looking for the middle ground. Yet a capacity to find compromises is a good thing to have. Positions may differ, but whether we live in the same home or on the opposite side of the planet, we benefit when we can find a way to get along. 

If this new distaste for compromise is a problem, it is not the UK’s alone. Positions seem to be hardening everywhere, the sclerotic arteries that may lead to a heart attack for western democracies. Perhaps this is driven by personalities. For a man whose name adorns a book titled The Art of The Deal, Donald Trump is curiously uninterested in negotiating lasting agreements with anyone. Or maybe it is a function of an information ecosystem in which outrage sells. 

Perhaps the problems themselves are more intractable. Some issues do not lend themselves to compromise. Brexit is one. Splitting the difference between Remainers and hard Brexiters is less like cutting a cake and more like splattering its ingredients everywhere. Egg on my face, flour on yours, and nobody even partially satisfied. 

Abortion is another. There is a principled case to be made for a woman’s absolute right to control her body. There is also a principled case to be made for the absolute right to life of a foetus. But like the unstoppable cannonball and the immovable post, both rights cannot be absolute simultaneously. 

In contrast, other complex and emotive problems may still allow for compromise. On climate change, we can shrug and do nothing, or we can turn our economic system upside down, but there is plenty of middle ground between those options. In a trade negotiation, a mutually advantageous outcome is almost always there to be discovered. 

Roger Fisher and William Ury’s classic negotiation handbook Getting to Yes advises: focus on the problem rather than the personalities; explore underlying interests rather than explicit positions; and consider options that may open up scope for mutual benefit. 

We may find a much better way to split the cake if we discover that you scrape the icing into the bin, while I would happily eat it with a spoon. It is sometimes astonishing how far a principled negotiation can go towards giving both sides what they want. 

It is clear that we British have failed to follow this advice. Our debate is driven by a bitter focus on personalities, from Theresa May to Nigel Farage to Jeremy Corbyn to the generic “Remoaner elite”. Each side knows what the other wants but has shown very little interest in why they want it. Without sincerely exploring the underlying aims and values of warring tribes there is no chance of finding an outcome everyone can accept. 

The US debate also seems the antithesis of Fisher and Ury’s advice. Too many politically active people seek the humiliation of the other tribe. Dismissing compromise as craven appeasement seems to be a winning tactic, particularly in the primary elections that set the tone of US politics. 

Compromise, however, is often possible even in unpromising situations. On abortion, for example, it emerges with a focus not on absolute rights but on practicalities. Many people can get behind policies to minimise unwanted pregnancies, and to make abortions safe and regulated rather than dangerous and illicit. It is a middle ground that many countries manage to find. 

One can see politics as a competitive sport or a search for solutions. There’s truth in both views. However, a democratic election is far closer to a competition than to a principled negotiation. Do we not wish to see the opposite team soundly thrashed? Do we not boo their villainous antics and laugh at their mishaps? Who wants to play out a nil-nil draw? 

I would not want to venerate compromise as the supreme good in politics. Sometimes it really is true that you and I, dear reader, are absolutely right and they are absolutely wrong. (It may even be true that we are absolutely wrong and they are absolutely right.) Either way, the merits of the case must be weighed against the merits of trying to respect everyone. It feels good to win, but this isn’t a fairytale: the losers won’t stamp their feet and vanish through the floor. They — or we — aren’t going anywhere.