The three-day week

So, the new economics foundation (why the no capital letters?) has published "21 hours: Why a shorter working week can help us all to flourish in the 21st century".  The idea is that moving to a three-day working week would reduce income inequality and increase quality of life.

Would it?

Anna Coote, one of the authors, said at the launch today that they are 'still working' on how people would pay their mortgages.  It would also be dependent on a more progressive tax system, a higher minimum wage, a de-facto monetization of non-'work' time, a change to employers' National Insurance contributions in order to facilitate having greater numbers of employees rather than fewer, and reductions in the desire for consumer goods - "a change to what we think is enough", partly through self-production of goods in 'leisure time'.  The authors want to change the way we value all our time, paid and unpaid.

A certain amount of the following discussion was really a reaction to the prescriptive nature of the ideas and the implicit call for regulation contained in the report.

Mark Littlewood (Director General of the IEA), replying, pointed out that there are people who work 50-hour weeks and there are people who barely work at all, and that over a person's life, the number of hours varies dramatically.   He also contended that workshare doesn't, ah, work, and that Mitterand's government in France, and an experiment in Germany by IG Metall in the 1980s, prove it.  And he suggested that 'self-production' is highly inefficient - far better to do that which one is good at, no? - and, finally, he pointed to OECD figures showing that working hours in the UK have dropped by about one-sixth since 1970.

John Philpott, chief economist at the CIPD, welcomed the vision but not much of the detail regarding the solutions, saying they're "not the right ones", and pointing to the old Keynesian idea that increased riches will lead to greater leisure.  He thinks that 'low-growth-low-consumption' doesn't work, favouring flexibility in working practices and greater choice in how we produce and consume.  (That's all very well, except for what Hank Sohota calls 'fat, sugar, and salt' - when the choices people make aren't the ones they perhaps ought to.)

Perhaps the issue is that the nef folks are trying to push too hard, that these kinds of changes could happen over a century or more - but that structural shifts take time, a lot of it. The authors contend that they understand it; but if they do, why the call for prescriptive regualtion?  With something this complex - we're talking about a fundamental re-working of our economy here - any policy intervention is going to have unintended consequences.  Nonetheless, the aims are laudable, and as a bid to start discussion, this is a good beginning.

(As an aside - if the problem is that we don't sufficiently value what is currently unpaid time, why don't we find ways to remunerate it?  Not to sound Panglossian, but the logic of capital would, I think, always drive us to the current economic system.  The big question is:  Can we combine markets with an economic model which is not predicated upon eternal growth, natural resource use, and measures of GDP?)

At last - a private institutional rented sector in Britain

A recent news article in Building points to mounting evidence for the rise of the commercial rented sector in the UK.  This is something I've been banging on about for years - and very welcome indeed.  In this case, the pension funds are finally getting in on the act.

I'm becoming convinced that one of the great problems for the built environment in the UK is that land values are too high; that another issue is the relative balance of homeowners to renters; and that the two are related.  First, the British culture of homeownership fuelled the drive to see the house as a repository of household savings; then, the good people who had seen the value of their houses rise thought 'if one house is a good investment, surely two houses is a better investment!' - and thus were born the hordes of small-scale buy-to-let landlords whose speculation led to the building of masses of small, poor-quality and badly-designed city centre flats, built for childless professionals without a nod to social infrastructure, in cities such as Leeds.  Over time, the population's distrust of traditional investments, leading to complete reliance on housing to create value and savings, has led to a property bubble of astonishing proportions.  Soaring land values have fed back into the mix, with the result that new-build housing in Britain is some of the smallest in Europe.  Even the current economic climate and concomitant falls in house prices have not brought property values within reach of first-time buyers.  And many British city centres continue to be largely child-free zones, as new parents head straight to the suburbs for an impression of safety and good schools.

There is another way, though.  Look to the rental-heavy property markets in Continental Europe, where large investors - insurance companies and pension funds, for example - add long investment horizons and the ability to fund large capital costs to the mix.  Their objectives are not quick profits but steady cashflow and lasting value, massively increasing the importance of high-quality, re-usable, adaptable buildings and good social infrastructure.  They know that in order to build assets which will continue to perform, with minimal maintenance costs, in 50 or 100 years - and while private individuals won't be concerned with such a criterion, what pension fund wouldn't? - they will need to get it right the first time.

Could the institutional private sector be the way forward to bring house prices down and invest in a more socially sustainable, higher-quality built environment?

Update on Thursday, August 27, 2009 at 10:00 by Eli

Of course, the story isn't necessarily as simple as that.

In some cases, positive intervention in cities is only made possible when a single enlightened developer gathers together a sufficiently large parcel of land to foster a large-scale intervention, e.g. King's Cross Central in London; or technical improvements, for example to energy distribution and consumption, only become feasible with scale.

But one could also argue that many of the problems to do with the built environment in the US and Britain are actually a result of having large corporate landlords - take megamalls, for example, or the rapidly-growing category of mono-use 'managed' quasi-public-but-really-private spaces, which quietly subvert the priorities afforded to civic space for profit.  That's a topic for another post, though...