Do the LibDems know what "liberal" means?

Iain Dale has demolished in a few short words Ming Campbell's proposal to abuse local-authority powers to get more social housing built, so effectively that even the LibDem NorfolkBlogger agrees with him. This has provoked an unintentionally funny response on NorfolkBlogger's site from Tim Leunig, Lecturer in Economic History at the LSE, and original author of Ming's proposal:

"In what sense are CLAs illiberal?
1) Allow local authorities total control over how many houses are built in their area
2) Allow local authorities total control over what proportion are social houses
3) Will lead to lower house price inflation, so that hopefully your child and mine can afford to leave home in 2030

Freedom and social justice: a good combination, surely?"

In what sense is "total control" by the authorities "illiberal"? If you need to ask, Tim, you are probably beyond help.

Tim is not just any LSE academic, but "the first person at LSE to be awarded two teaching prizes". More evidence of the sad decline of the LSE as a centre of academic excellence.



The two strands of liberalism that diverged in the second half of the nineteenth century are differentiated principally by their attitude to government and freedom.

Classical liberalism defines liberty as the absence of coercion, and regards government's role as being the provision of defence, law and order to protect nation, person and property against aggression. Those powers naturally include a degree of coercion, but any extension of government powers beyond those necessary to fulfil these responsibilities is regarded as fundamentally illiberal.

Social liberalism defines liberty as freedom from various privations and imbalances in the power structure, and regards government's role as being the guarantor and (where necessary) provider of that liberty. The government's role includes those functions endorsed by the classical liberals, but goes beyond it to include attempts to maximize people's welfare and minimize their disadvantages. By this definition, it may be considered illiberal to oppose any government action whose intention is to deliver those objectives.

These differences in definition can lead to fundamental differences of opinion about what constitutes liberal or illiberal policy and action. But I would argue that Tim has gone beyond even most social liberals' position in his comments. The difference between social liberals and socialists is that, although their objectives are similar, the former still want government action to be limited to the minimum necessary to achieve those objectives, while the latter regard central control as inherently desirable. "Total control" by authorities, however benign the objective, is not a notion that should sit comfortably with someone who defines themselves as a liberal of any colour.

A socialist would ask what the government could do to ensure adequate housing for all and minimize inequalities in the standard of housing. A social liberal would ask what is the minimum intervention necessary to ensure that everyone is adequately housed. A classical liberal would say that government has no business intervening in people's housing so long as they are free to make their own arrangements.

Is it necessary to give total control to local authorities over how many houses are built in their area and what proportion are social houses, in order to achieve the objective of adequate housing being available for all? I would argue that it is not only unnecessary but counterproductive. But even from a social-liberal viewpoint, less sceptical of governmental capabilities, is it possible to argue that the same objective could not be achieved with lesser powers? One can achieve a sufficient volume of housing without constraining the total volume, let alone its location and ownership. There are ways to achieve this without intruding so clearly on the property rights of the original landowners.

The other fallacy that Tim has fallen for is that, by giving powers to local authorities, he has given them total control. He would have also to repeal the laws of economics and individuals' freedom of choice for this to be an accurate claim. He is inviting, not compelling, landowners to offer parts of their land for development. The landowners may choose not to offer sufficient land, or to offer it at a price that provides little margin for the community (they will have a pretty good idea what the land will be worth with the permission that would almost certainly be granted if the land were purchased).

What his proposal is really doing is turning planning from an adversarial into a complicit process. There is no doubt that there is a problem with the current system, and that local authorities and residents need to have more balanced incentives to consider the positive as well as the negative impacts of development on their area. But the incentive for councils to grant themselves permission once they have bought land at probably considerable cost is so great that it is hard to imagine that they will remain objective about any objections that are brought against the development. Planning should be a measured judgment, not one in which self-interest lies heavily on one side or the other, whether that is political interest in objecting to most developments (as at present) or financial interest in permitting most developments (as proposed).

This is an inherently corrupting proposal, which an economist ought to be ashamed of introducing. 

"Experience should teach us to be most on our guard to protect liberty when the Government's purposes are beneficent. Men born to freedom are naturally alert to repel invasion of their liberty by evil-minded rulers. The greatest dangers to liberty lurk in insidious encroachment by men of zeal, well meaning but without understanding."

—  Louis Brandeis, quoted in Friedrich Hayek, The Constitution of Liberty

Iain Dale's post prompted extensive comment in which Tim Leunig participated. Tim is in a strong position, because most of the criticisms revolved around a misunderstanding of his concept, thanks to its misreporting by the BBC (what a surprise). Helpfully, Tim posted a link to another paper in which his proposal is explained. It is important to record, though, that however reasonable Tim may sound in tackling misunderstandings of his proposal, he has not provided satisfactory explanation for two criticisms:

1. How does he know that landholders will sell at the claimed multiple? He seems to have plucked a multiple of five (i.e. if the unpermitted land is worth £5,000 per acre, they will sell at £25,000 per acre) out of thin air. Why would landholders not offer their land at close to its permitted value? They will know, if it is bought, that it will almost certainly be granted planning permission, so they will know what it is worth to the council. Without this assumption, he cannot assume that the council will take the lion's share of the planning benefit, and without that assumption, the claimed economic benefits to the local area fall down.

2. He claims that "This scheme reduces the scope for corruption compared with the current one. At the moment a council can enrich a landowner by millions a hectare when the local plan is drawn up, giving huge incentives for people to offer corrupt side payments. Under my scheme the gains to landowners are much smaller, and so the incentive for corruption is reduced". The naivety, particularly for an economist, is breathtaking. Is the only possibility of corruption, or the only form about which one should be concerned, the situation in which landowners give councillors kickbacks? The democratic process and the openness to scrutiny of planning decisions are quite good safeguards against such blatant corruption. But this proposal would encourage a more subtle, but equally damaging form of corruption - the overriding of all dissent, however reasonable, once land had been purchased. A council simply could not afford to pay a hefty sum for a piece of land, and then not give itself permission.

This proposal makes the council both poacher and gamekeeper. It should be a fundamental of any institutional proposal that those roles would be opposed. We need incentives for councils to balance benefits against disadvantages in their planning decisions, but not to move the imbalance so strongly from one side to the other.