Wednesday, September 25, 2013

Running out of energy

The problem I have with Ed Miliband's set piece speeches is that I get most of my news through newspapers and blogs, and very rarely actually hear him speak. This means that when I do, in the occasional PMQs or conference speech, a large chunk of my reaction is taken up with noticing how odd he looks and how strangely plaintive his speech cadences are.

That said, and given that the ability to remember an hour long speech more or less verbatim is impressive, presentationally I thought that much of his speech yesterday was pretty good. It was a bit revivalist in character, but since Labour likes to think of itself as a great moral crusade, that's probably no bad thing.

As to the content, well I wouldn't be expected to agree with much of it, and I didn't. Rather than go through it point by point (because I'd rather not write it, and you'd rather not read it) I just thought I'd look at the two most eye-catching initiatives - the energy price freeze and the 'use it or lose it' policy regarding undeveloped land. In each case, the policy identifies a genuine problem and then proposes a solution by Government diktat. It's a classic left-wing position.

Energy prices first. The energy companies don't register particularly excessive profit margins - between 4 and 7%. The principal reason for sharply increasing energy bills is the cost of oil and gas, exacerbated by the diminished value of the pound (especially given the drop in North Sea production). Energy bills are high because energy is expensive. Asking people whether they would like these bills to be lower is something of a no-brainer, it's Hopi Sen's pony polling:

1. Would you like a pony?
2. Would you like someone else to pay for your pony?

Keep that in mind when reading Jonathan Freedland's article about how well all this went in the focus groups:
Labour tested the energy freeze on focus groups and saw approval go "off the charts", according to one senior figure.
Well, quite. Food prices have risen quite a lot too recently - nearly twice as fast as energy prices - can we expect the price of bread to be capped as well? If not, why not? What's the intellectual justification for caps on one and not the other? Labour are trying to deal with a problem by legislating for it to go away. We don't just have historical and academic evidence that this doesn't work, we have a contemporary example.
A Venezuelan state agency on Friday ordered the temporary takeover of a factory that produces toilet paper in what it called an effort to ensure consistent supplies after embarrassing shortages earlier this year. 
Critics of President Nicolas Maduro say the nagging shortages of products ranging from bathroom tissue to milk are a sign his socialist government's rigid price and currency controls are failing.
It's the same problem that characterises Miliband's other eye-catching initiative: the confiscation of undeveloped land. There's a shortage of housing in this country, and house prices are very high. There's clearly a supply-side problem. Ask most developers, and they'll pinpoint the planning system as the key blockage. The reason most developers have substantial land banks (the undeveloped land that Miliband wants to confiscate) is that it takes roughly 4 years to get planning permission to develop it. The best way to clear the logjam in British construction is to fix the planning problem - again, something Labour is opposed to.

Labour is trying to resolve difficult problems by legislating them away. It doesn't work.


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