Spain Tries to Solve Yesterday’s Housing Crisis

Barcelona Spain
Buildings in Barcelona, Spain, December 10, 2017 (Unsplash/Marco Da Silva)

Spain’s ruling left-wing parties have agreed various measures to make housing more affordable, including a rent cap and higher property taxes for landlords.

The proposals are unlikely to be effected in areas ruled by conservatives, and they are right to block them. The pandemic has already made housing more affordable in Spain. The country doesn’t need the government to step in. Read more “Spain Tries to Solve Yesterday’s Housing Crisis”

German Left Has Wrong Ideas for Housing Market

Berlin Germany
Houses in the Prenzlauer Berg neighborhood of Berlin, Germany, July 1, 2018 (Unsplash/Jonas Denil)

Housing is one of the top issues in the German election on Sunday. Proposals reveal a traditional left-right divide: the Social Democrats and Greens seek to rein in prices with rent controls; the Christian Democrats and liberal Free Democrats call for more construction, including by relaxing planning laws and other regulatory requirements.

Coinciding with the federal election, a referendum in Berlin will decide whether the city-state expropriates about 200,000 homes.

The proposal is for private landlords owning more than 3,000 properties to be “socialized”. Supporters argue this would lower prices, as the houses would no longer need to be profitable, but this betrays a simplistic understanding of the market. If the government makes it impossible for developers and landlords to turn a profit, they will develop and rent out fewer apartments and the housing shortage will grow, not shrink.

That’s exactly what happened when Berlin froze rents last year: the number of apartments on the market dropped 57 percent. Owners kept their flats empty while the Constitutional Court reviewed the new law. It ruled in April that the freeze was unlawful. Renters had to suddenly pay a year’s worth of missed rent increases.

Now left-wing parties want to try the same nationally. Read more “German Left Has Wrong Ideas for Housing Market”

Biden’s Child Benefits Don’t Make Child Care Cheaper

Joe Biden
American president Joe Biden meets with staff in the Oval Office of the White House in Washington DC, June 2 (White House/Adam Schultz)

Last week, American parents received their first monthly child benefits worth $300 for children under the age of 6 and $250 for kids up to the age of 17.

Couples making under $250,000 per year, or single parents earning less than $112,500, qualify.

President Joe Biden described the cheques, worth $15 billion, as “the largest ever one-year decrease in child poverty in the history of the United States of America.”

That’s probably true, and the hope is that the benefits, introduced as part a COVID-19 rescue plan, will become permanent.

But they don’t lower the price of child care. Read more “Biden’s Child Benefits Don’t Make Child Care Cheaper”

Swedish Housing Crisis Has Similarities with Netherlands

Stockholm Sweden
Strandvägen boulevard in Stockholm, Sweden (iStock/Alexis Gonzalez)

Stefan Löfven may be Europe’s first prime minister brought down by a housing crisis, but he is unlikely to be the last.

Löfven, a social democrat, lost the support of the far left over a proposal to allow landlords to freely set rents for newly-built apartments.

Rents in Sweden are usually negotiated between landlords and tenants’ associations.

Other countries struggle to find the right balance between public and private in housing too. Berlin instituted a citywide rent freeze last year, but it was struck down as unconstitutional by Germany’s highest court. Spain’s central government is challenging a Catalan rent cap. Authorities in Barcelona want to extend a moratorium on evictions that has been in place since the beginning of the COVID-19 pandemic.

But perhaps the best comparison is with the Netherlands, which organizes public housing in much the same way as Sweden. Read more “Swedish Housing Crisis Has Similarities with Netherlands”

Dutch Should Keep Health Care System They Have

Leiden Netherlands hospital
Leiden University Medical Center, the Netherlands (LUMC)

Nearly all political parties in the Netherlands call for more government in health care.

The far-left Socialists and Greens would replace private health insurers with public health funds. Labor would keep the insurance companies but take away their power to negotiate prices with health providers. The Christian Democrats and far-right Freedom Party want to end competition between hospitals. Even the center-right VVD believes liberalization has gone too far.

I’m a member of the VVD, but on this point I disagree. (So I’m glad there are few concrete proposals to reverse liberalizations in the VVD’s manifesto.) The Dutch health-care system is one of the best in the world. In a column for Trouw, I challenge the parties that want to uproot it to point to a better example. If there isn’t one, let’s keep the system we have. Read more “Dutch Should Keep Health Care System They Have”

Be Wary of the Return of Big Government

Union Station Washington DC
South Front Entrance of Union Station in Washington DC, July 4, 2019 (Unsplash/Caleb Fisher)

Big government is back.

Massive rescue programs have prevented business failures and unemployment on the scale of the Great Depression, even though last year’s economic contraction was nearly as bad. The European Union agreed a €750 billion recovery fund, financed, for the first time, by EU-issued bonds. The money comes on top of national efforts. The United States Congress passed a $2.2 trillion stimulus, worth 10 percent of GDP, in March and added $484 billion in April. An additional $900 billion in relief was included in this year’s budget.

Joe Biden, the incoming American president, wants to spend $2 trillion more over the next four years to transition the United States to a greener economy and create a public health insurance program. Corporate tax would go up from 21 to 28 percent.

In Spain, a socialist government has introduced the biggest budget in Spanish history — partly to cope with the impact of coronavirus, but also to finance digitalization, electric cars, infrastructure, renewable energy and rural development. Taxes on income, sales and wealth are due to increase.

In the United Kingdom, the ruling Conservative Party is building more social housing and it might renationalize rail. Unlike during the last economic crisis, it does not propose to cut spending even though tax revenues are down.

Same in the Netherlands, where all the major parties agree the government needs to do more to reduce pollution and prevent people at the bottom of the social ladder from falling through the cracks.

I’m not opposed to more government per se. I’ve argued the United States should imitate policies in Northern Europe to improve child care, health care and housing.

But let’s be careful not to throw “more government” at every problem. Sometimes government is the problem. Read more “Be Wary of the Return of Big Government”

Trump Bans TikTok. Where Is the Party of Free Enterprise?

Donald Trump
American president Donald Trump makes an appearance at the Conservative Political Action Conference in National Harbor, Maryland, February 24, 2017 (Michael Vadon)

As if we needed more proof the Republican Party has surrendered all its principles to Donald Trump, the president is trying to ban a private company by executive fiat and the party of free enterprise is silent.

Trump may have a point on the merits. The Chinese-owned video-sharing app TikTok has a lot of problems, not in the least its vulnerability to state interference.

But I don’t doubt the only reason Trump cares is that teenagers used TikTok to disrupt one of his rallies in June. They organized a campaign via the app to buy tickets to Trump’s event in Tulsa and never showed up, humiliating the president, who faced a half-empty arena. Read more “Trump Bans TikTok. Where Is the Party of Free Enterprise?”

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

London England
London, England at night, February 14, 2012 (Warren Chrismas)

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”