We often hear that “all economists agree rent controls don’t work”. But is this actually true?

My new long-read for @futureeconscot looks at the evidence – and finds the reality is far more nuanced than is often claimed. Some key points 🧵 futureeconomy.scot/posts/57-can-r… Economists’ distain for rent controls is rooted in basic models of supply and demand

Rent controls will allegedly reduce prices below the equilibrium price, which will reduce supply and choke off investment — leading to fewer, poorer quality homes

It’s undoubtedly the case that Scottish Government decisions have contributed to fiscal pressures

But the idea that UK fiscal choices haven’t played any significant role is absurd - and that’s not what the SFC report says (as some are claiming) bbc.co.uk/news/articles/… The Barnett formula means that most of Scotland’s budget is determined by UK spending decisions

When the UK makes cuts, this directly impacts Scottish budgets. The austerity of prior UK governments left an almighty mess — and (so far) the new regime hasn’t sought to unwind it

The Scottish Government has passed legislation permitting the introduction of rent controls

We often hear that “all economists agree rent controls don’t work”. But this is fundamentally flawed 🧵 bbc.com/news/articles/… We’ve been here before — with minimum wages. Textbook economics said minimum wages would increase unemployment

They didn’t. Why did many economists get this wrong? gov.uk/government/pub…

The claim that broken monopoly sectors can be fixed through regulation, not ownership, is a reasonable argument

But I think it overlooks some key practical problems. These issues are ultimately why I favour public ownership🧵

https://twitter.com/guardian/status/1551866908152143874

The first problem is that the collective resources of the private utilities far exceeds that of the regulators. This means that, even with a competent regulator, companies can run rings around them. They outspend and outgun regulators when finalising regulatory settlements

Is there a government from recent memory that hasn’t “prioritised growth”?

The problem is that growth hasn’t actually improved most peoples’ lives. At best this looks like business as usual, at worst it will turbocharge a failing model. bbc.co.uk/news/uk-politi… Successive governments have prioritised GDP growth, and it has delivered a financial crisis followed by the longest sustained decline in living standards on record. Not to mention accelerating environmental breakdown. Instead we should ask: ‘what kind of growth, and for who?’

This week the Scottish Government published the first of its ‘Building a new Scotland' paper series, focusing on the economic case for Scottish independence

A few thoughts on its contents 🧵 gov.scot/publications/i… Some context: the paper is the first major publication since the Growth Commission (GC) in 2018. The GC was, for the most part, a complete non-starter

Its proposals for sterlingisation + fiscal austerity rendered it totally unpalatable. My analysis here: opendemocracy.net/en/oureconomy/…

Neoliberalism might be in retreat, but progressives face a new threat: a dangerous mix of crony state activism and creeping authoritarianism.

New by me in @guardian. theguardian.com/commentisfree/… It’s clear that the UK government has moved away from neoliberal orthodoxy. The question is: what is replacing it? I think there are three notable developments.

The first relates to the return of state activism and the loss of faith in unfettered markets:

It’s good to see Starmer setting out some kind of vision (finally), but the speech was rather underwhelming - long on rhetoric and frustratingly short on actual substance.

Some thoughts: For all the talk about inequality, where were the policies to tackle it? Saying “we won’t do the things the Tories say they are going to do” (e.g cut universal credit) does nothing to tackle historic inequalities. On tax, ownership, corporate power etc - there was nothing

This piece by Andrew Wilson is littered with falsehoods. That they continue to be repeated - while legitimate criticism is ignored - is starting to have a seriously corrosive effect on the debate about Scotland’s future.

Thread:
spectator.co.uk/article/scotla… Firstly, he confirms that an indy Scotland would pursue Sterlingisation (which he previously said would last “up to a decade”). He then claims that new central bank would be created immediately, “serving similar functions to euro members’ central banks.” This is nonsense >

I’m not sure people realise the scale of the social calamity we’re allowing to unfold, all so that landlords don’t lose much rent during the pandemic.

Thread: opendemocracy.net/en/oureconomy/… Shelter estimates that 322,000 renters have fallen into arrears since the pandemic started. Many will be unable to pay this back and, with the eviction ban now lifted, will be made homeless. Councils predict that up to half a million renters could be evicted *during a pandemic*

Today the UK government has published the details of its “once in a generation” overhaul of England’s planning system. The proposed reforms confirm many of the fears I outlined here, and in some ways they are more concerning.

THREAD:

opendemocracy.net/en/oureconomy/… The White Paper proposes to replace the discretionary system of planning permission that has been in place since 1947 with a zoning system whereby all land would be designated simply as either ‘growth’, ‘renewal’, or ‘protected’. The significance of this can't be understated.

Apparently the Treasury is considering creating a “public funding body” which “could be similar to the Industrial and Commercial Finance Corporation (ICFC) that was created after the Second World War”.

What was the ICFC, and what happened to it? Thread: ft.com/content/9d1dd8… The ICFC was created by the 1945 Labour government to increase funding to SMEs. It was owned by a consortium of the ‘big five’ clearing banks and the Bank of England. Initially the clearing banks opposed its creation, but eventually consented out of fear of nationalisation.

The UK is asking manufacturers to “transform production lines to make ventilators”.

But after decades of decline, the UK has one of the smallest manufacturing bases among major economies. And there are some influential voices who wanted to see it vanish completely...

Thread: Patrick Minford was once described as “Margaret Thatcher’s favourite Economist”. A few years ago he acknowledged that his ideas would “mostly eliminate manufacturing”.

“Britain is good at putting on a suit” he said.

Fat lot of good that is right now. thesun.co.uk/archives/polit…

Yet another article that confidently diagnoses why Labour lost the election without even attempting to survey relevant evidence. These really aren’t helping anything. THREAD: jacobinmag.com/2019/12/labour… The piece says “large parts of our 2017 base either didn’t turn out or turned to the Brexit Party — ensuring a thumping Tory majority.” Yes, the Brexit party impacted things in a handful of seats. But overall only 1% of Labour’s 2017 base voted for them, according to Ashcroft

Some thoughts on the ridiculous figure splashed across the Sunday news papers:

1) This has literally been plucked out of thin air — Labour’s manifesto hasn’t even been published yet, so this can’t be taken as a serious assessment of the party’s policies 2) The analysis makes a series of fanciful assumptions about the up-front cost of some policies, but makes no attempt to assess the potential benefits that may offset the costs. You wouldn’t last long in the civil service producing this kind of rubbish

Had fun debating Patrick Minford on Brexit. He wasn’t best pleased when I accused him of being an extremist.

Here’s a short thread explaining why I think this is accurate: A former key advisor to Thatcher, Minford is currently a leading member of ‘Economists for Free Trade’ (formerly ‘Economists for Brexit’). Throughout his career he has pushed an extreme free-market agenda, and vehemently opposed even the mildest progressive reforms.

Astonished to read this article by Ken Roghoff, in which he claims that “it has never been remotely obvious to me why the UK should be worrying about reducing its debt–GDP burden”

THREAD: thetimes.co.uk/article/never-… This is the man whose academic work was widely cited by politicians as justification for implementing austerity. Here is an excerpt from a speech made by George Osborne in 2010:

Matt Ridley assures us that a no-deal Brexit is nothing to worry about: “It is highly likely that the downsides of a clean break are being exaggerated, the upsides underestimated”

Let’s take a look at his record of assessing future risks, shall we? Thread thetimes.co.uk/edition/commen… In 2007 the 5th Viscount Ridley, to use his full title, was Chairman of Northern Rock when it became the first bank since 1878 to suffer a bank run thanks to the disastrous business model it had adopted. He later described this as a “painful memory for me” express.co.uk/news/uk/196113…

I see people are arguing about EU state aid and competition rules again. As ever, this seems to be generating a lot of heat and not much light. Here are some key points which I think both sides of the debate sometimes overlook. Thread: There is no universal right answer to the question “are EU state aid & competition rules problematic?” This is because the answer depends on your political standpoint. Broadly: EU state aid & competition rules are accommodating of social democracy, but not democratic socialism