Berlin Shows How Not to Do Housing Policy

Berlin Germany
The sun sets on the Saint Nicholas’ Church and town hall of Berlin, Germany, January 26, 2010 (Mika Meskanen)

If you’re trying to control housing costs in your city, don’t look to Berlin for inspiration.

The German capital is due to implement a five-year, across-the-board rent freeze in March. The measure is expected to save around 340,000 tenants money during that period, but it will come at the expense of housing affordability in the long term.

The German Economic Institute in Cologne estimates that Berlin’s policy will reduce the value of some properties by more than 40 percent.

A consequence of that will be underinvestment. The BBU, a trade association of developers in the Berlin and Brandenburg region, says its members expect to reduce investments by €5.5 billion and construction by a quarter.

Germany needs 350,000 new homes each year to keep up with demand. Only 286,000 were built in 2018. If the BBU is to be believed, that number will fall — driving up housing costs across Germany. Read more “Berlin Shows How Not to Do Housing Policy”

Renationalizing British Utilities and Rail Would Be a Mistake

British post box
A Royal Mail post box in London, England, July 26, 2011 (Tim Miller)

Rising energy rates and railway fares in the United Kingdom are lending credence to the argument that privatization was a mistake.

YouGov last year found majorities in favor of taking energy, water and railways back into state ownership.

Telecom is the exception. Only 30 percent believe it should be run by the government.

The reason may be that the benefits of telecom privatization have been obvious whereas those of other privatizations are harder to discern.

Compared to the 1970s, however, utilities and railways provide a far better service today. Read more “Renationalizing British Utilities and Rail Would Be a Mistake”

Both Left- and Right-Wing Critics of Britain’s NHS Have a Point

A hospital in London, England, February 21, 2010
A hospital in London, England, February 21, 2010 (Lars Plougmann)

Crises in Britain’s National Health Service (NHS) tend to provoke the same ideological debate: the right blames “socialized medicine”, the left calls for more money.

Neither side is completely wrong.

The Financial Times argues there are too many administrators and not enough frontline medical staff in English hospitals.

Repeated government reforms have spurred fragmentation and only added more layers of bureaucracy.

But “cuts” (really: restraint in the growth of health spending) haven’t helped, especially when the population is aging and requiring more services. Read more “Both Left- and Right-Wing Critics of Britain’s NHS Have a Point”

Macron’s Liberalization Has Made Travel More Affordable in France

View of the Arc de Triomphe in Paris, France
View of the Arc de Triomphe in Paris, France (Unsplash/Rodrigo Kugnharski)

Emmanuel Macron’s liberalization of intercity public transport in France is paying off.

Until 2015, railroads had a monopoly on domestic ground routes of 100 kilometers or more. Macron — then economy minister, now president — wrote legislation that allowed buses to compete.

Bloomberg reports that 6.2 million passengers took a long-distance bus in 2016 and bookings are up another 25 percent this year.

That’s still a fraction of the more than 100 million annual high-speed train passengers, but competition from buses is forcing the state-owned railway to cut rates. Read more “Macron’s Liberalization Has Made Travel More Affordable in France”

Repression Is the Wrong Approach to America’s Opioid Epidemic

Donald Trump
Businessman Donald Trump gives a speech in front of the United States Capitol in Washington DC, September 9, 2015 (Joshua M. Hoover)

One of the few silver linings to last year’s presidential election in the United States was that candidates from both major parties recognized that opioid addiction should be treated as a public-health, rather than a law-enforcement, problem.

Which makes it all the more disheartening that Donald Trump is taking exactly the wrong approach to this crisis.

Politico reports that the new president believes in a “tough law-and-order approach” to arrest the rise in drug overdose deaths.

142 Americans die from opioid abuse every day. That is more than die in car accidents or from guns.

The crisis is concentrated in postindustrial states like Kentucky and West Virginia: the heart of Trumpland. Read more “Repression Is the Wrong Approach to America’s Opioid Epidemic”

May Adopts Energy Policy Her Predecessor Called “Nuts”

Prime Ministers Theresa May of the United Kingdom and Lars Løkke Rasmussen of Denmark answer questions from reporters in Copenhagen, October 10, 2016
Prime Ministers Theresa May of the United Kingdom and Lars Løkke Rasmussen of Denmark answer questions from reporters in Copenhagen, October 10, 2016 (The Prime Minister’s Office/Tom Evans)

British prime minister Theresa May has adopted a policy her Conservative predecessor, David Cameron, once described as “nuts”.

When the opposition Labour Party proposed to freeze electricity rates in 2013, Cameron, then the Conservative Party leader, ridiculed it.

Now May has taken it over. Read more “May Adopts Energy Policy Her Predecessor Called “Nuts””

Clinton’s Plan to Control Drug Prices Seems Like an Overreach

Former American secretary of state Hillary Clinton gives a speech in Iowa, January 23
Former American secretary of state Hillary Clinton gives a speech in Iowa, January 23 (Hillary for America/Barbara Kinney)

Hillary Clinton has a new plan to stop what she considers “unjustified” increases in drug prices.

Slate reports that her plan comes down to European-style price control.

As president, Clinton would create a task force of regulators with the power to decide whether price increases on old, essential medicines and devices were reasonable given product improvements and the amount of competition in the market. If not, the task force would have the power to mete out punishments to companies that were trying to profiteer, potentially with fines.

Fines would still require an act of Congress, where market-friendly Republicans are likely to retain their majority in the House of Representatives and block such penalties.

Nonetheless, as Slate puts it, “Clinton is subtly sending the message that she’s comfortable moving toward a more European system in which regulators have a direct say not just in what drug companies can charge the government, but what they can charge the rest of the public, too.”

It may not happen in the first four years of a Hillary Clinton presidency, but price controls are becoming Democratic Party policy — which means they could happen eventually. Read more “Clinton’s Plan to Control Drug Prices Seems Like an Overreach”

More State Aid Won’t Save British Steel

Tata’s decision to put its British operations up for sale has predictably triggered calls for state aid.

Sajid Javid, the Conservative business secretary, has fortunately ruled out nationalizing the Port Talbot steelworks in Wales, but he is leaving the door open to some form of government assistance.

The “steel industry is absolutely vital for the country,” said Javid. “We will look at all viable options to keep steelmaking continuing in Port Talbot.”

He would be wrong on both counts. Read more “More State Aid Won’t Save British Steel”

Greece Continues to Drive Businesses Away

Are there another people in Europe so determined to shoot themselves in the foot as the Greeks?

Against all the advice of other euro states, they elected — twice — in recent years leaders who vowed to reverse what little progress had been made to liberalize the Balkan nation’s economy. Labor market reforms came undone last year. Privatizations were canceled or pushed back.

The country only agreed to sustain reforms in return for a third, €86 billion bailout this summer when it, once again, teetered on the brink of default.

Now promises have already been broken and targets missed. Greece is typically slow to implement the economic policy changes it commits to undertake. Yet there seems to be no holdup in policies that make things worse. Read more “Greece Continues to Drive Businesses Away”