protectionism

Surely it is a given that we are all different? Size, shape, gender, colour, intelligence, personality, practical ability... So surely the human brain, and mind, are also infinitely variable. So why then do we have clothes, shoes, accessories, food, gadgets, literature, music, art, newspapers, all sorts of media, cars, houses, gardens, holidays, hobbies and pastimes of every conceivable colour, shape, size, sophistication, individuality to suit our needs and tastes and yet, when it comes to nurturing minds, especially young ones, in other words education, the state seems always to want a one size fits all, or nearly all solution we must all be dragooned through?

_{Scary kids from Pink Floyd's "Another Brick in the Wall" video, copyright Columbia/CBS. Is this how we see education?}

Even the current advocates of increased "choice" in education are generally not calling for the sort of individually tailored schooling that might cater for a near infinite combination of aptitude and need in different subjects. No, squeezed onto the cattle trucks of the "skills agenda" at an increasingly early age, our children's precious formative minds are driven through National Curricula, SATs, Literacy Hour, regurgitated standardized lesson plans and a plethora of targets till they get an OFSTED stamp on their forehead to say they are ready to be part of Britains fast changing economy. Or at least, the fast changing economy that was being predicted by, yes, you guessed it, government, a decade ago when they started.

On Saturday I was having dinner with friends who either have children going through this system or looking to have soon. All of them, I think it would be fair to say, would be termed "left of centre" and would never have considered private education or home-schooling previously but are all actively considering it now or would if they had the money. They feel patronized by the system, and treated with varying degrees of contempt by the school and its staff.

But most of all they feel helpless when they can see that their child needs extra help or a different approach in one subject where they may thrive in a totally different subject with little struggle. Such different approaches may not be available in the one school. And the lesson plans used don't vary a great deal from school to school so there isn't a great deal of choice anyway. If they wanted to change schools - as one is trying to do now as a result of their experience - the bureaucracy is stifling.

Oh, this all sounds incredibly expensive doesn't it? How can we satisfy that nearly infinite combination of needs and aptitudes? Turn it around and ask, if we can satisfy a near infinite appetite for different trainers, baked beans and holidays, why can we not produce individualized education - surely one of the most important human needs, even for those of us who tend towards Herbert Spencer's view that the state should not be dictating or providing education at all.

I think we need to consider how to personalize education, from the earliest age; we're not going to achieve any step change in attainment just by adding a few extra teachers armed with standard lesson plans, just by putting a little extra money in the direction of the least well off - though that will no doubt help, assuming they can actually find the package to suit them.

Localism is certainly a part of the answer, as perhaps are things like "free schools" on the Dutch model and an idea expanded on at Regno del fines blog. Why not return the provision of schools much much closer to the families using them - at parish level or something similar sized. Parents could decide amongst themselves in a mutualist structure whether to get in a teacher who's going to teach the children proper grammar or to learn their times tables.

And we should not be so squeamish about the corporatization of education. By which I don't mean the mish-mash of schemes to get token private money into the current system. I mean that education, or at least the "skills agenda", is already a subsidy to business (or it ought to be if the education system produced people business can use). It is corporate welfare. So why not instead expect business itself to contribute directly to nurturing the skills needed in an area - perhaps paying for particular teachers is specialized subjects related to the local economy? It would be more transparent at least than corporate lobbyists persuading a few politicians far away to spend our money on providing them workers, and probably more reactive to changes in the economy.

A quantum leap in the amount of flexibility and personalization of education is what we need. And for government to butt out as much as possible. For surely, we have pretty well reached the situation Spencer predicted:

It has been estimated that Fannie Mae and Freddie Mac between them underwrite debt of some $5,000,000,000,000 and that US losses from the current credit crunch could amount to $1,600,000,000,000.

The entire external debt obligations of the world's 40 odd Highly Indebted Poor Countries (HIPCs) is some $300,000,000,000 - that's about 6% of Fannie and Freddie's problems. So any bailout of the US mortgage system is going to amount almost certainly to more money than would write off all that, mainly African, debt (were that the best way to proceed, which I believe it is, with conditions).

By contrast the EU has today decided to support the idea of giving the surplus it has made on the Common Agricultural Policy as a result of rising food crop prices (so it has been subsidising less) to "African farmers". That's about €1,000,000,000 - or one three-thousandth of Fannie and Freddie's problems and two hundredths of Africa's problems.

But where did they get that money from, how did it arise? Robbing those very African farmers by denying them access to our markets and subsidising dumping on theirs. Tariffs are pure evil, aren't they?

So, whenever anyone says to you that it's difficult to find the finance for debt relief in the poorest countries, you'll now know that is total bollocks.  Just think of the scale of the US mortgage debt and what such sums could do for the 600 million or so poorest on the planet.

They've been rumbled. The very shaky foundations of the entire house of cards have been exposed. The vast fraud against lower and middle income households that is the financial system, and, ultimately, government has been laid bare. Surely everyone can now see that? No? That doesn't surprise me. Just as there was very little outcry in this country when former Governor of the Bank of England Eddie George revealed that their commission on independence in 1997 was not just to maintain an inflation target but also to see to it that house prices continued to rise by keeping money as cheap as possible for as long as possible.

In my opinion, whatever the consequences in the short term, it would be better if Fannie and Freddie were allowed to die gracefully even as their lives have been a disgraceful deceit. What have they done that is so bad that a normally forgiving person like me would be calling for the corporate equivalent of the death penalty? The seemingly innocent practice of underwriting mortgages is in fact a key factor in the creation of the property price bubble and in the transfer of wealth from poorer to richer.  Yes that's right, redistribution the wrong way!  Without that underwriting the front line lenders would have been more cautious in their lending stabilising prices and not stretching households to the financial limits just to have a home over their heads.

Oh, what a clever idea, you still say perhaps - after all, it surely helps more people buy a home. And that's what Fannie and Freddie were supposed to do, by offering an implicit government guarantee people who would previously not have been considered for a mortgage got to join in the jamboree. And that's the problem - a government guarantee. They, the state, have pledged an eye-wateringly close to unlimited amount of money, that's *our* money of course, to make us have to pay more for our homes to the banks who effectively create the credit in the first place and line the pockets of landowners. And this in a nation that is still so relatively empty as to have marginal land in abundance so other land values should still be relatively stable other things being equal.

But those other things are not equal, the cycle of lending inflates the broad money supply so over time reducing the value of the asset that very system conspired to make you pay so much for in the first place. And all this is only possible because of the enclosure of land, the privatisation of the entitlement to and collection of the value that the whole of the community creates at any particular unique location.

At best, Fannie and Freddie are shining witnesses to the power of unintended consequences - I am sure the New Dealers whose brainchild they were earnestly believed they were helping: at worst, they can be seen as part of a conspiracy between government and those who own the financial system and its institutions to transfer vast amounts of wealth from Average Joe to the richest few. Add the evidence of Eddie George that in the UK the past ten years' property price boom was deliberate though unannounced political policy and it's harder to rule out conspiracy over cockup.

Either way, Fannie and Freddie should go, and go quickly, and, as they say, be buried in a closed casket to boot. It will unleash financial turmoil of unprecedented ferocity I am sure. But it will be the herald of death to a fundamentally flawed, corrupt and downright fraudulent system that continues to benefit a tiny few at the expense of the vast majority. I was introduced to a new, to me, term at the weekend, the Kondratiev wave. Looking at the vast amounts of money involved in the current potential crisis, the fact that the asset bubble is bursting as production is also slowing and there's ever decreasing amounts of money available to maintain existing economic activity, and I'm beginning to wonder if Kondratiev wasn't on to something.

This is a huge opportunity. An opportunity to reinvent a stable monetary system more suited to a globalised world of trade and increasing aspiration amongst a whole new world of consumers, a world in which, of necessity, economic activity is shifting relatively away from the west, from the existing reserve currency and its close followers and towards the east and the global mass of population.

And that, dear reader, is why I am likely to die waiting. An opportunity those who wield power would prefer us to miss.

There has been a bit of a spat at the Euro-parl about whether some amendments to the "Telecoms Packet" (how romantic, is that like the Peninsular and Oriental Steam Packet Company's packet?) that I encouraged readers to respond to a couple of days ago.

One of the movers of one of the offending amendments has, according to the BBC, said...

What a fuckwit. I doubt there has ever been any piece of legislation in any legislature which was claimed not to have "innocent intentions". But in a month when his own party has been moaning about, amongst other things the use of RIPA in ways for which it was not intended, surely the extension of "innocent intentions" into overbearing surveillance and so on should be obvious.

If there are drafting issues that permit an interpretation of a law that increases surveillance then the lawmakers should protect against it. The world is littered with "innocent" laws that have been interpreted to allow more sinister applications. A Tory, if committed to small government, should know this and not continue to protect his corporate sponsors.

Can anyone point me to a Euro-parl equivalent of "Public Whip" so I can determine if any of my supposedly liberal Euro-reps agreed with this Tory tosspot?

Thanks to Liberal conspiracy for highlighting protectionist amendments being sneaked into the Telecoms directive which MEPs will decide on tomorrow:

The amendments basically set the scene for forcing ISPs to monitor all their customers' traffic to catch them sharing copyrighted material on the web and to cut customers off if they keep doing it.

Over in the comments on Matt Wardman's blog posting the other day I suggested that this whole surveillance obsession smacks of "we do it because we can". Why should one's electronic communications, voice or data, be any more permissible to be snooped on than any other communication - snail mail, face to face or similar. Just because we can. For a variety of reasons electronic communications leave traces, and traces can always be tracked, but why should they be?

It is true that we need to have a debate about intellectual property and how, or indeed whether, it should be enforced in an era of global instant communication. It appears that the artists tend to be ahead of their production companies in exploring how to use the massive marketing opportunity that is the internet, such as recent experiments in releasing music for free, or on honesty box terms, on the web. But of course it is the media corporations and production companies that are lobbying for this sort of protectionist measure. The debate needs to be held much more widely than that though, and not snuck through where these measures were explicitly removed from the directive last time the European Parliament discussed it.

I have written to Sharon Bowles and Emma Nicholson. I suggest everyone take a look at the details of these amendments and give some thought to writing also to any of their MEPs. It is being debated tomorrow, so act fast!

I very fundamentally believe that the internet in particular is seen as a threat by both governments and corporations who feel they are not able to control it. For me, it is the greatest advance in people communicating with people and eventually needing far less "government" to broker their international relationships or trans-national corporations to broker their trade. But for it to bring about the vast benefits of voluntary co-operation amongst individuals around the world it needs to find its own rules, not have them imposed by those very bodies that are scared of it!

...let alone enforceable?

A row that has so far been played out in the pages of the august British Medical Journal has suddenly burst out onto the public stage as MPs have found constituents being told they will have to pay for their NHS treatment because they've paid for additional drugs or treatments, for example that the NHS doctor tells them may help but cannot be prescribed by them.

But is the notion that you can be barred from receiving the treatment your tax already pays for even legal? Apply the same argument to education, for example, and parents who pay for a few weeks extra tuition for their child would be forced to pay for the whole of their state school provided main stream education.

And even if it is legal, how is it enforceable? Should someone who buys some nutritional supplement that a friend recommends in addition to prescription drugs for their illness be forced to pay the full costs of their NHS treatment? Or is there some (arbitrarily?) set level - is it okay to buy an extra packet of over the counter drug but not a cancer drug that NICE won't allow you to have on the NHS even if your NHS doctor says it will possibly help over and above what they can do for you? And how do they know? Is it basically down to whether or not a private consultant requests your medical records from the NHS and the person receiving that request has to snitch on you?

Of course I can see there may be cases where it might be legitimate for the NHS to wash their hands of a patient who has paid for some additional or alternative treatment that actually compromises the care the NHS is trying to give that patient. But if it's complimentary to the treatment the NHS are giving, and only unavailable through them because of NICE, or budgets, or rules, that doesn't apply. Indeed, it would probably be saving the NHS money in the longer run - the quicker you are cured, or the more independent you are, because you have supplemented your treatment, the more resources they have to spend on people who cannot pay the extra, surely?

Again, the comparison with private education is interesting - if someone's additional private tutoring has made them better able to cope with their mainstream school classes in some way, the classroom teacher, surely, has more time to spend on others.

And if it's indeed just if it goes against the advice of the NHS,
should anyone who does not apply government sanctioned wisdom on
healthy living be made to pay for all NHS treatment because their
lifestyle is prejudicial to their health in some way? 

Or, perhaps, could it all be a case of corporate welfare - the NHS has "exclusive" deals maybe with drug companies that, say, give them discounts or some other kind of soft benefit even if only their treatment is used for a particular condition and if people opt to go for a competitor's supposedly better treatment the deals all fall apart. The NHS is riddled with protectionism, particularly in its procurement policies. And yes this itself locks out competition and keeps prices high.

The only real answer is that clinicians themselves should be allowed to select and prescribe their own choice of treatment that they think will help that patient get off their hands as soon as possible and let them get on with curing someone else. Surely that's the whole point of the NHS?

Quite by chance, as if on order to make the local elections more exciting in my ward, two local planning issues have suddenly popped up (not entirely unexpectedly it has to be said) that are likely to cause a deal of controversy when they get to decision-making time. I don't want to talk about their planning merits or otherwise on here. But I do want to use them because they are very good examples of why I am so passionate about land reform.

The first, in the ward in which I am standing is an application for new student residences adjacent to the site on which I am a warden proposed by my employers, Oxford Brookes University. To be fair it will make more of an impact on residents in the neighbouring ward, but it is the economics of it all I want to look at not the planning, to show why land value tax would be such a benefit to the community.

The second, just over the main road in the neighbouring ward but which will make a significant impact on neighbours in both wards one way or another is the news today that Tesco have bought up a local former pub building from a local bar/restaurant entrepreneur who had seemingly been knocked back in the early stages of planning such that he no longer felt it worth fighting for his ideas for the site. Here I want to look at how the planning system seems to favour the bigger developer with the financial clout and how this affects the fairness of land law.

But first, the new proposed halls of residence. This site is approximately quarter remaining of a site the university acquired from the Department of Social Security about seven years ago now. When I was last on the council, just at the end, they had owned the site for about six months, if I remember correctly having bought the whole thing for either eight or eleven million pounds through a charitable trust set up for the purpose and were just getting outline planning consent.

The entire site had been only about a quarter used for several years since most parts of the DSS had moved out. And even when at "full capacity" it had been an egregiously inefficient use of a piece of prime inner suburban land - even for offices - since it was half car park and half single storey nissan hut type buildings.

Since it had been government owned, effectively there was no income to the public purse from this land. Once it was owned by a charity the empty land has generated no receipts to the public purse in the form of business rates. The charitable trust sold off about a quarter of the land to the adjacent Oxford International Centre for Islamic Studies, first for use as a contractors car park and now it lies more or less empty. A hectare of prime city centre building land. The university built nearly seven hundred student rooms in new halls on half of the original land and these were opened five years ago now. But it is the effect of this last quarter of of the site I want to examine and show how failing to encourage optimal use of land where it is available is a disaster for the rest of us.

The site is about a hectare. So if the original purchase price for the entire site was the higher of the two figures I remember hearing at the time - eleven million pounds, its share would be two and three-quarters million. The current application is for 335 study bedrooms and since the student halls market has changed out of all recognition in those seven years, commercial firms are willing to pay it is rumoured up to £45,000 per room for suitable land, as a site alone it would be worth more like fifteen million pounds.

Point one: whilst the local authority has received virtually nothing for this land in rates, the owners, either the university or the charitable trust, have effectively got a book profit of £12 million - a four hundred per cent return in seven years.

335 study bedrooms would, if theory, allow some 83 four bedroomed family homes to be freed up from the current student private rented market somewhere in the city assuming student numbers overall remained static. That's 83 largeish families who have been otherwise excluded from the housing market in Oxford for seven years because these halls did not exist. At its worst, that means that the tax-payer, through housing benefit, has spent upwards of ten million a decade supporting those households in private rented accommodation while they wait for "affordable housing".

Point two: the cost to the tax-payer of that piece of land laid idle and not producing any local taxation has been at least ten million in housing benefits to private landlords while the owners have made that massive book profit.

Now imagine if that land were taxed on its value at its most productive use - that's currently the £15 million or so a commercial halls of residence developer would pay for it. A ten percent land tax would now be yielding the public purse £1.5 million a year, and more importantly would have been liable for that tax all the while it has been so underused. No owner with any financial sense would have kept that land out of productive use with a tax bill like that. The land would have been brought into its best use long ago, either as housing itself or freeing up those equivalent 83 units for family use instead of student private lets, and the tax-payer would not have had to support 83 families to the tune of that £10 million pounds a decade in supported housing.

Now, don't get me wrong, I am neither criticising my employer nor demanding ten storey blocks of flats on every vacant site. But I am illustrating the cost to society of holding land out of use, and the unfairness where, in doing so, the owners have made a vast profit at the direct expense of the tax-payer. It's the system that causes this, not the participants in that system who are only following the rules everyone else plays by.

Now to the "Tesco pub". Some time ago this down at heel local pub was closed, its future uncertain. A well known local restaurant and property entrepreneur bought it up and a few months ago publicized his idea for turning it into a row of three shops and some flats above in a "landmark" new building. But with an ambivalent local reaction and, it seems, less than enthusiastic reception from the city's planners to the idea, this chap pulled his plans and decided to look around for a buyer. The land registry records show that the property had cost him £400,000 and that it was mortgaged so he had financed it empty for seven or eight months developing his ideas and the prospect of a long uphill struggle into the unforeseeable future in the planning system means he would be financing it empty for many months, if not a couple of years to come.

It is opposite a long established and not so long ago refurbished and extended local Co-op store (where I joined as a member of the Co-operative and where I shop several times a week in preference to all the other supermarkets around I could potentially choose from) and a less long established Costcutter store that houses the local Post Office and a similarly aged Chemist shop that replaced a locally owned and well patronized cycle and fishing tackle shop and an electrical retailer. It is, to put it mildly, on an awkward site, at a very odd junction just at the point the Marston Road becomes a dual carriage-way "boulevard" and buses turn right against the traffic whilst the off-road cycle lane comes to an end, the road splits into two lanes prior to a busy and slightly awkward double roundabout junction. There is just enough parking in the lay-by outside the existing shops for their customers and nowhere else for cars to park.

The site might have been viewed as ideal for shopping or catering uses complimentary to the existing neighbouring shops. Extending the range of goods and services people could get in a single visit to the local shops. All very sustainable. And contributing to the local economy and the success of local entrepreneurs - all of which tends to keep more money in circulation more locally in Oxford, making us all better off.

But now Tesco have the site. Obviously, they are in competition with two of the existing local stores. For many, they will do a better job of supplying their grocery needs and at lower prices. That too is good for peoples' pockets and therefore local wealth retention. But since, if they've borrowed to buy it at all, as opposed to taking the purchase price out of the weekend's take from the nearby Tesco out of town superstore, it's probably a tiny dent in their current income rather than a major liability as it would have been to the local entrepreneur who had borrowed to buy it as a significant chunk of his portfolio. And they can afford to sit on it until the planners give in, until attrition of any opposition to the idea gives them an easier ride in the planning process.

At the moment I wouldn't dare to have made up my mind about the idea of Tesco Express there. On the one hand, competition is good for the consumer. On the other, Tesco has such financial clout that it could send its competition to the wall and leave it eventually and open field to increase prices because of its local monopoly. And there again, whilst as a member I would be very sad to see either of the two existing competing stores fail, they would almost certainly then be occupied by some other, and probably local, entrepreneur with another great idea that would compliment rather than compete in its turn with the Tesco store. Again, this increases the range of goods and services a person can get in one trip to the local shops.

But all I am highlighting is that because the planning system causes a proportionately greater opportunity cost to fall on the smaller businessman it actually favours the big financial muscle of large corporates who can afford to take the risk for longer. It is not a level playing field. But, as in the previous story, it's the playing field on which all would be developers have to play. On the other hand again, it would be quite wrong for the planning system to become a tool of protectionism, benefitting one business or businessperson over another by preventing competition. Perhaps in an LVT based system the tax payable on a site should be suspended for the time during which the planning bureaucracy was deciding on a proposal to concentrate the minds of planners on getting the best deal for all parties in the minimum time possible and enabling people to get on with running their businesses, extending their homes, or whatever the application was for.

Anyway - all that was a bit of a marathon use of two local and serendipitously current issues illustrate quite well some of my hot button issues on land reform, free trade and anti-protectionism and localism.