Forget the hysterics, commercial rent control is a good idea

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The New York Post today ran a breathless attack by Lois Weiss on the proposal wending its way through City Hall to provide greater stability and protections to commercial tenants. In essence, the new law would apply a watered-down version of rent stabilization to commercial properties. The two most important aspects of the bill would prevent landlords from increasing commercial rents beyond prevailing rates in a one-mile radius of the property and would make 10 years the default length of a lease. Compared to the current residential Rent Law the burden on landlords is minimal, but we also shouldn’t shield our eyes to reality: this is an expansion of rent control.

For many people, including a lot of left-wingers, rent control is a lumbering, oafish policy that leads to shoddy housing, misallocation of capital and acts to bind poorer people to certain areas when they might be better off if they were more mobile. Across most of the US rent control is long dead, and only in New York City is it still a major part of the real estate market. In NYC less than a third of homes are owner-occupied, while the remaining 67.2% are rented out. Though the percentage of ‘regulated’ units is plummeting, fully 43% of all housing in New York City is rented by people who enjoy the protections of rent regulation. These protections include secure tenancies which prevent landlords from evicting people who pay the rent on time, as well as caps on how much the rent can be increased each year.

Personally, I don’t think rent control is ideal but the alternative is beyond unacceptable and the principle of rent regulation, though not the practice, should not be objectionable to anyone except the purest of libertarians who reject taxes and planning laws. If you’re happy enough with the idea of the government telling you what you can do with your property (the bricks must be of somber shade! it can’t be taller than five stories!) and with the government appropriating part of your income in the form of taxes, I don’t see how regulating rents is somehow a greater offence against the rights of property.

These principled objections aside, there are a lot of reasons to support commercial rent regulation. The most obvious is that it prevents landlords from sucking up almost all of the profits created by businesses. So much of the money that flows through businesses renting properties in New York just goes straight into the pocket of landlords. The Bank Street Bookstore, a children’s bookstore and neighbourhood favourite on the Upper West Side, has finally found a new home after it was driven out by high rents. The owner of another bookseller, Bookculture, emptied out his retirement fund to meet the costs to secure a new lease going for $35,000 a month. Call me old-fashioned (or a bad socialist…) but I think that the rewards from small businesses should accrue to their owners, not landlords.

The most obvious criticism of regulating commercial leases, of course, is that it would stop stores being rented by the people who can put them to best use, i.e. those who can wring the most money out of the location or at least stomach the astronomical rents. As anyone who spends time in the bustling parts of New York can tell you, however, this often pits a local business against the deep pockets of Chase, AT&T or Duane Reade. Banks in particular open new branches as physical loss-leaders, taking the hit on rent in order to capture new customers that will in the long-run earn them vastly more money. This bring us to the second reason to support commercial rent regulation: it will slow or even stop the homogenisation of New York City.

People who know me might be surprised that I, a man known to rise to the defence of the culinary accomplishments of McDonald’s, should care much about the fate of prissy boutiques that I dislike or established neighbourhood stores that I rarely venture into. But the stipulation in the bill preventing leases that charge rents much in excess of prevailing rates in the area will give neighbourhoods far more control over their streets, something I do care deeply about. Democracy means very little if it doesn’t even stop down the street but rather at our front door. People need to be able to exert some control over the character of their area. In a city that gives such undue weight to the aesthetic concerns of residents, it is strange that there is no mechanism for residents to step in to protect beloved local institutions that more often than not are small businesses. It is easier in New York City to protect the bricks and mortar that shelter a neighbourhood institution than to protect the institution itself. 10-year leases and rent caps that are relative to area prices will ensure that functional businesses can survive and thrive.

At the same time that relative nature of the rent cap will ensure that zombie stores don’t litter the streets. There’s something right and socially justifiable about rent stabilization laws that allow an old couple that has lived in a now-buzzing neighbourhood to remain in the home that they have lived in for decades. There is no such reason to feel sentimental about businesses that have no customers. Failing businesses should make way for other businesses and should not be protected. What needs to be protected are businesses that are capable of paying reasonable rents and turning a good profit but which cannot win a bidding war with a financier’s hobby restaurant or a major corporation.

The third reason to support commercial rent control, and the one that appeals to me the most, is that it would buttress residential rent regulation. Despite the best efforts of New York’s property developing elite rent regulation is still a viable force in New York City. Regardless of the many outsider objections to it, rent regulation is at the core of New York’s social contract and is a guarantee to many otherwise powerless people that their home, at least, is under their control. If businesses were to begin benefiting from rent regulation a major commercial interest would be drafted into the fight to protect the idea of the State and City interference in the real estate market. If well-connected cafe owners and personable small businessmen began to mobilise to defend rent regulation, then the position of working class New Yorkers would be even more secure.

St. George

Writing about British politics from across the Atlantic can be a disorientating experience. Americans find themselves engaged in a cold civil war that pits the urban ‘blue’ against the suburban ‘red’. Working in politics here is to grapple with clear cut questions posed by self-assured ideologues. The vast bulk of the American public, protestations to the contrary notwithstanding, structure a great deal of their outlook around shared, competitive assumptions of how the world works and what is moral.

Looking over my shoulder at Britain can encourage a certain disdain for the politics of the old country. The comparative gentility – itself such an achievement after the bitter Thatcher years – can make it seem that the questions being addressed in Britain are of a lower order, beneath the dignity of anyone seeking to rise above purely parochial concerns. This is wrong, however, as Britain and the British left specifically is dealing with issues that will shape the future of the country for decades to come. In no other country is the national question both so pressing yet novel. The potential for Scottish independence has thrust Britishness centre stage, and with it English national consciousness.

English nationalism has long been the sleeping dog of British politics. Over sixty-three million people live in the United Kingdom, fifty-three million of whom live in England. Despite the fact that the English increasingly identify themselves as English, as opposed to merely British, little attention is paid to the idea that the English, too, will someday need to acquire national institutions. An English Parliament is a cause for cranks. The extent to which there is a politicised sense of Englishness is also the extent to which there is hostility to the European Union. UKIP’s lack of success outside of England (or even the Home Counties) is not an accident but rather a product of the party’s role as the only English actor on the political stage, in stark contrast to all others. Labour has emerged as the main champion of union, a stance that is motivated by both idealism and brutal electoral arithmetic. The Tories are more comfortable with the English, indeed they are only electable in England, but they are still at heart a British party.

All this paints a dismal picture for the future of the left and the welfare state in England. There exists today a golden window of opportunity for the left to seize the mantle of Englishness and paint a picture of English nationalism that is inclusive an egalitarian. Metropolitan liberals who regard nationalism with a mix of disgust and disdain might find the idea of cladding the message of the left in the flag of St. George repugnant, but if the future of England is a nationalist one then it would be a catastrophic error to let the right determine the sentiments underpinning nascent English nationalism.

It would not be hard – in fact it would be natural – to trumpet an England of the NHS, local pubs and small ‘l’ liberalism. It would be a vision of the country that would powerfully resonate with the vast majority of people.

But doing so would speed up the disintegration of the United Kingdom. The left, and the Labour Party more specifically, remains one of the few binds still tying the constituent countries together. If the Scottish people felt that staying in the UK meant being governed by Conservatives for the next few decades, independence would be inevitable. That Scotland’s departure in such a situation is a given highlights the weak bonds of the country today. If the Labour Party began to take Englishness seriously, it would become a predominantly English party by virtue of demography. What is more, it seems hard to see how a confident English nationalism in an unreformed union could avoid either rejecting the UK or asserting its overwhelming political power in a way that drives out the other nations.

So where does this leave the left when it comes England? Beyond the obvious consideration that Labour in its current form cannot lose Scottish votes and still have a chance of once again entering government, it would be difficult for the left to shape English national consciousness without effectively abandoning the union. It would be possible, but incredibly difficult, to see how a ‘national’ England could coexist with Wales, let alone Scotland. The question then is: should the English left be willing to abandon frontline defence of the UK to ensure that the English nation isn’t defined by Nigel Farage?

I think so. I don’t support Scottish independence, but I do say that the interests of the English people should not be subordinate to unionism. Preserving the English welfare state should be of greater concern to the English left than preserving the UK. We need to stop being squeamish about nationalism and realise that we now have a relatively blank slate in front of us and an opportunity to harness the inevitable growth of English nationalism to left-wing values of collective action and social inclusion.

English football- B teams or plan B?

The FA released a report over the past week identifying sources of potential reform in order to strengthen English football. Amongst the issues raised, player development featured prominently, and was the source of arguably the most significant proposal- a league of B-teams. Players stuck behind deep teams filled with established talent would get a chance to play more competitive football, and fans could see more of them.

The idea is one that aims to treat symptom, not cause.

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Isolationism?

Isolationism is the UK politics word of the week. Osborne spoke yesterday on the decision not to launch military action against Syria, but stopped short of actually calling the move isolationist.

“I think there will be a national soul-searching about our role in the world and whether Britain wants to play a big part in upholding the international system, be that a big open and trading nation that I’d like us to be or whether we turn our back on that.”

Lord Ashdown provided his opinion through the medium of twitter.

“We are a hugely diminished country this am. MPs cheered last night. Assad, Putin this morning. Farage too as we plunge towards isolationism.”

The FT published a comment piece today titled

“Isolationism is beneath Britain- Staying out of Syria must not presage a broader retreat.”

The recurring narrative is that the refusal of Parliament to sanction military action in Syria could be the first step on the path to diminishing British activity and influence in the world. Given the likelihood that both the US and France will engage in military action shortly, it may seem a plausible suggestion. However, the refusal to engage in conflict was far from a rejection of our place in international politics.
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Syria and the aesthetics of violence

Once again, Britain stands poised to launch a military campaign against a middle eastern country. The effects of such action feel distant, but real bombs will be dropped on real people- any justification for intervention has to be based on serious and considered grounds, not newspaper editorial logic. So why attack now?

The obvious spur is the chemical attack in Damascus that killed at least 350 people. The act is clearly repugnant, but why does death by chemical weapon result in military intervention, when the death of many more in Egypt and Syria by more conventional means attracts no response?

Etchingham wrote about the differing and inconsistent responses to violence in ice hockey. Many strongly support the role of fighting in the NHL, claiming that a sanctioned punch in the face contest mid-game was justifiable as part of the rough style of the sport. Sure, consecutive concussions are terrible for you, and the recent deaths of Boogard, Rypien and Belak have highlighted the potential for serious long term damage in enforcers, but the fans enjoy the violence, the players support it and the league has used it for marketing for a long time. Suggestions of greater regulation have been extremely unpopular. However, when the league examined no touch icing, it was considered a no-brainer. Players would chase the puck dangerously to the boards and occasionally a broken femur was the unfortunate result.

Why the difference in attitude? Continue reading

Pro-recovery and pro-cyclical

The Financial Times ran two pieces about the newer and stricter capital requirements for banks today, one comment and one news, and neither of them was particularly favourable. The news article concerned Nationwide’s decision to not expand into the SME loan market in the face of concerns about their ability to meet capital requirements “by organic means.” The decision highlights a problem that many policy makers face at the moment- whether to be seen as “pro-recovery” or learn from earlier errors and avoid pro-cyclical policy.

Capital requirements for banks are particularly pertinent because when fundamental errors of risk calculation were made prior to the 2007 financial crisis banks and financial institutions had extremely slim margins compared to the size of the problem faced. As in many instances of debt, the ultimate problem proved to be one of solvency through cash flow, not absolute size. It was clear from an early stage in the response to the financial crisis that stricter capital requirements would be inevitable.
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Polling notes- Miliband and Labour, separate narratives

There has been a great deal of speculation over the past few weeks as to the fate of Ed Miliband’s leadership. Senior members of the Labour Party, Conservative commentators and members of the media have been quick to bury Miliband, and with him Labour’s chances of winning the 2015 election.

Yougov has been conducting daily polls since the last election, which now constitutes a large quantity of data. Despite this, most referencing of these polls in the media is unreliable. Single polls are cherry-picked, and there is rarely any context given. In an effort to better understand Ed Miliband and the Labour Party this data can be put to good use.
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