Press Release: Rent controls are flat earth economics

Commenting on Labour's election pledge to impose rent controls and three-year tenancy standards, Research Director of the Adam Smith Institute Sam Bowman said:

"Labour’s announcement that it will impose rent and tenancy controls is one of the worst policy decisions of recent years. It goes against one of the only true consensuses that exists among professional economists. No doubt with the best of intentions, Labour has unwittingly announced a policy that would devastate Britain’s cities by creating massive slums and exacerbate the housing crisis.

"Rent controls fail the most basic test of supply and demand. A price ceiling on rents leads to a reduction in the quality and quantity of places to live – as the market-clearing price rises above the price ceiling, the quality of existing stock degrades, eventually turning into slums. New construction is disincentivised and available housing becomes scarce. In Britain, this would escalate the housing crisis to an unprecedented level.

"The evidence bears this out: In a 1968 study by Paul Niebanck, 29% of rent-controlled housing in the United States was in a deteriorated state, compared to only 8% of uncontrolled housing. (http://www.walterblock.com/wp-content/uploads/publications/RentControlMythsRealities.pdf p. 68)

"Rent control is not a left-right issue: rent controls are opposed both by right-wing economists and left-wing economists like Paul Krugman and Emmanuel Saez. A confidence-weighted 2012 survey of economists found that 95% thought that rent controls had done damage where they were applied. (http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_6upyzeUpI73V5k0)

"The very announcement of this policy will probably do some damage: if there’s a danger that your investment might be subject to punitive state-imposed price ceilings, it’s probably better to play it safe and invest in something else.

"The only good way to lower rents is to allow more construction in places people want to live. We simply must build more.

"Rent control is a stunningly bad idea that could devastate Britain’s cities and clobber renters. To paraphrase the socialist economist Assar Lindbeck: the only thing worse for cities than rent control is bombing them."

For further comment or to arrange an interview, contact Kate Andrews, Communications Manager, at kate@adamsmith.org / 07980 627940.

The Adam Smith Institute is an independent libertarian think tank based in London. It advocates liberal public policies to create a richer, freer world.

Eamonn Butler on BBC Radio Five Live

Director of the Adam Smith Institute, Eamonn Butler, featured on BBC Radio Five Live's programme Wake Up to Money to discuss whether a 'Made in Britain' tag is valuable to UK business.

Listen to the whole interview here. (start 27:18)

Sam Bowman Debates Union Action Restrictions in City AM

Research Director of the Adam Smith Institute, Sam Bowman, debates the Director General of the Institute of Directors on whether the recent tube strikes indicate that the government should restrict union action.

Read the full debate pieces here.

GDP Press Release: 0.8 is Nothing to Hate

Commenting on the latest GDP figures released this morning, The Adam Smith Institute's Head of Policy, Ben Southwood, said: 

"Lets not mince words. These figures are rather good: growth at 0.8% quarter-on-quarter, or 3.2% in the annualised terms they use in the USA, and 3.1% compared to the same quarter last year.

"The unemployment rate at a five-year low, total employment at an all-time high, inflation at 1.6%, below target again after years above—but not for dangerous deflationary reasons.

"It would be easy for Osborne to conclude that his plan has worked and everything is fine in the UK economy—and to a first approximation he's basically right, things are OK and outside of foreign problems the economy will probably trundle along.

"But the recovery has been painfully slow and long and really we should be seeing a much swifter return to pre-recession living standards.

"Now that the demand side of the economy seems fixed in the short-term, Osborne needs to reform monetary policy so this sort of crisis can't happen again—CPI targeting failed completely, and targeting total spending would have worked much better.

"Perhaps even more pressing and important is planning. UK planning is a mess. Firms cannot build the houses people want in the places they want them and all the government can offer is tiny garden cities.

"Writing in City AM last year economics Professor Nick Crafts said liberalising planning could add full percentage points—tens of billions of pounds—to GDP growth in the short term. LSE experts have calculated that moving the green belt out one mile would instantly make space for a million houses."

For further comments, contact Ben Southwood at ben@adamsmith.org. To arrange an interview, contact Kate Andrews, Communications Manager, at kate@adamsmith.org / 07584 778 207.

The Adam Smith Institute is an independent libertarian think tank based in London. It advocates liberal public policies to create a richer, freer world.

Philip Salter Writes for City AM

Director of The Entrepreneur's Network (TEN), Philip Salter, writes for City AM: "UK innovators beat the US for optimism but challenges remain"

Read the article here.

"TODAY, Silicon Valley Bank releases Innovation Economy Outlook 2014, its annual global survey of more than 1,200 executives of fast-growth software, hardware, cleantech and healthcare companies. It offers food for thought for entrepreneurs, investors and policymakers. Thankfully, the main course is a feast of optimism, although challenges remain.

"Many stereotypes are rooted in fact – some aren’t. The broad assumption in the entrepreneurial circles is that entrepreneurs across the Atlantic are more optimistic than those in the UK; this assumption may need revising. Significantly, 84 per cent of UK executives surveyed are planning to grow their workforce this year, compared to 76 per cent in the US..."

Sam Bowman writes for City AM

Research Director of the Adam Smith Institute, Sam Bowman, wrote an op-ed for City AM on the three reforms needed to transform UK recovery into a long-term boom.

Read the full article here.

"The question is, how can we get the strong growth we all want? Tax cuts are nice, but hard to sell as long as the deficit remains large. And calls for business deregulation are often too vague to be useful. But there are clear areas for reform in planning, immigration, and money, and none would threaten the deficit. Reform these areas – the PIMs, we might call them – and real, booming, sustainable growth will come."

Sam Bowman appears on BBC Radio 4 debating the future of European labour regulation

Research Director of the Adam Smith Institute, Sam Bowman, debates the General Director of the European Trade Union Confederation on the future of European labour regulation.

Listen to the full BBC Radio 4 clip here. (Start at 25:13)

The Register features ASI guest lecture with Cody Wilson

The Register interviewed Cody Wilson - inventor of the 3D-printed gun - at the Adam Smith Institute's guest lecture on Monday, 14th April 2014.

Read the full interview here.

"For a man some perceive as an audacious libertarian who puts untraceable weapons into the hands of criminals, Cody Wilson is a surprisingly ordinary fellow, albeit one who gets quite animated about 3D-printed guns, Bitcoin and "crypto-anarchism".

At an event organised by the Adam Smith Institute in London, the 26-year-old spoke at length about the origins of his firm Defense Distributed, which last year revealed the plans for the Liberator 3D-printed pistol."

Adam Smith Institute featured in The Observer

Sam Bowman's quote on housing prices in London was featured in The Observer on Sunday.

Excerpt:

"The new data prompted one London agency to brand the current market a "superbubble", while the Adam Smith Institute, a rightwing thinktank, says the London property market is now a "disaster" for young people.

Sam Bowman is quoted in the Telegraph

Research Director of the Adam Smith Institute, Sam Bowman, was quoted in a Telegraph article, commenting on the out-of-control housing market in London.

Read the article here.

Others were more blunt. “This is a disaster – the housing market is out of control, particularly in London, making housing increasingly unaffordable for many people,” said Sam Bowman, research director at the Adam Smith Institute.

“Rising house prices are nice if you own your own home and are planning on downsizing or want to leave your house to your children, but if you want to get onto the property ladder or move to a larger home, say, to start a family, the price rises revealed by [yesterday’s] news are devastating.”