100 tips on climate, planning and the economy | Brussels Blog

100 tips on climate, planning and the economy

posted by on 17th Jul 2020
17th,Jul

Not ordered by importance.

 

Tip #96: Needed: jobs with low productivity.

Production is changing:

  • Robots can displace many manual jobs.
  • Artificial Intelligence can trash displace “skilled” jobs.

These cause a fall in employment, BUT this can be offset by increased production.

Are there problems in increasing production and creating jobs? Yes, many economics text books discuss these problems.

However, there is a recent problem, which has been underestimated. This problem is climate change.

Production causes emissions of greenhouse gases, which are endangering the Earth’s climate.

The claim that it is possible to increase production and generate less greenhouse gas emissions is borne out by recent advances in the global economy. The problem is that in recent decades, improvements have not made emissions fall fast enough to avoid a climate disaster.

The remaining option is to reduce production: Less production means fewer greenhouse gas emissions.. (See Oxford Economics 1: Robots and climate.)

If production is reduced, either

  1. The number of workers in employment falls.
  2. The average worker must produce less.

… or both.

If high levels of employment are desired, jobs with low productivity are needed.

(Here, tip #100: Raise VAT rates, create jobs can help.)

  

Tip #97: Fund Engineering R&D by patents & Lifestyle R&D by planning gain

Innovations in engineering can be funded by the protection that patents give. Patents cannot easily be obtained for innovations in town planning.

Planning gain should be used as a mechanism for funding R&D in town planning.

See Paying for research.

 

Tip #98: Small scale microwave pyrolysis

There should be ambitious engineering research and development to deal with municipal waste. One area should be the development of microwave pyrolysis that can work alongside energy from waste incineration that is connected to local heat networks. Pyrolysis can extract raw materials from waste by heating at high temperatures.

Microwave pyrolysis should operate when renewable energy is plentiful. This can be used to pay for the installation of extra renewable energy capacity which can be used when demand for electricity for other purposes is high. There is also the possibility of using pyrolysis products to generate peak time electricity.

A small scale helps with the integration into local heat networks so that heat from pyrolysis can be used.

See Small scale microwave pyrolysis.

 

Tip #99: Tax income from planning gain.

Much of this is taken from Housing – part 5: Construction and prefabrication.

When planning permission is granted for a house,  the plot of land increases in value. In places where demand for housing is high it can be several hundred thousand pounds per plot.

Regional prices for new houses

I looked on Zoopla.co.uk in February 2019 for the price of new build 3 bed semi-detached houses and found these prices, (rounded up to the neatest £10,000).

The cost of building and development does vary a bit throughout the country, but not much.  Given the prices above the cost of building a new 3-bed semi cannot be as large as £90,000, let’s assume a figure of £70,000. (Advances in prefabrication will make this much less.)

This means that planning gain per housing plot varies between £20,000 and £360,000, with the places where demand is high, in the £200,000+ range. 

Assume that UK Government had a policy of finding green field sites in areas where demand for new housing is high. In these places planning gain would be in the £200,000 range.

If a development tax were applied at a rate of 50%,  a million new homes could bring in £100 billion in taxes.

A million homes? That’s just what’s planned for the Oxford Cambridge corridor.

Tip: Tax planning gain.

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Tip: #100. Raise VAT rates, create jobs.

A scheme to increase nominal VAT rates but to give tax breaks for employing people is described in A macroprudential proposal for employment . The original published scheme kept government finances unchanged. Now new tax income may be needed, higher income from VAT may be needed but so is full employment.

How high can VAT rates go?

When income tax is greater than about 70% the revenue generated starts to fall. This may not be the same for expenditure taxes but since VAT is less than 20% now, there is probably a long way to go before tax saturation.

Points about the original scheme

  • 1. The VAT rebate scheme (as published) incurs no government spending or borrowing. (HM Treasury conceded this.)
  • 2. Although the VAT nominal rate is increased, the total VAT bill falls due to rebates and savings on unemployment.
  • 3. Average prices of goods and services should fall, due to lower VAT take.
  • 4. It would boost the wages of the lower paid by increased competition for their labour.

OK, it taxes high productivity (i.e. capital intensive goods and goods with high value added per worker). However, since consumption must be cut for environmental reasons, there must be a less productive workforce if full employment is required. This points to slower, pleasanter lifestyles with less demanding jobs.

Let’s not mess with National Insurance as others have suggested. It is a very comforting fiction for the great British public.

Tip: Raise VAT but aim for full employment with VAT rebates.

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P.S. Put a bit more cash into Universal Credit.

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