Economics – Croydon Constitutionalists

Where did the apartments go? – Berlin’s Rent Cap Act

Students For Liberty write about Berlin’s Rent Cap Act its failings and implications for New York and elsewhere.

” Berlin passed a rent freeze to fix its housing shortage. Twelve months later, the number of apartments available to rent in the city had literally halved”

In February 2020, Berlin passed a rent freeze to fix its housing shortage. Twelve months later, the number of apartments available to rent in the city had literally halved. Rent control is one of the most-studied policies in economics. Berlin just gave us the cleanest test we have.

The law was called the Mietendeckel, Berlin’s Rent Cap Act. It froze the rent on roughly 1.5 million apartments built before 2014, rolled prices back to their June 18, 2019 level, and forced landlords to cut existing contracts starting in November 2020. Tenant unions cheered. Landlords went to court.

The market response was immediate. New rental listings in Berlin fell from more than 600 per week before the announcement to fewer than 300 after the law took effect. That is a 56% collapse in the flow of apartments reaching renters, inside twelve months, documented week by week by economists at DIW Berlin and Aix-Marseille.

“New rental listings in Berlin fell from more than 600 per week before the announcement to fewer than 300 after the law took effect”

Where did the apartments go? Owners pulled them off the rental market. Rental-to-owner conversions in Berlin jumped from 12,700 units in 2019 to 19,200 units in 2020, a 51% increase and the highest annual figure since Germany began tracking that number in 2005. Every one of those units is a rental that no longer exists.

Builders read the same signal. New dwelling completions in Berlin fell 14% in 2020, in the same year that the rest of Germany’s completions rose about 5%. Building rental housing in a city that had just told owners what price they were allowed to charge stopped making financial sense.

“Builders read the same signal. New dwelling completions in Berlin fell 14% in 2020, in the same year that the rest of Germany’s completions rose about 5%”

The shortage spilled across the border. Potsdam, the neighbouring city in the state of Brandenburg, was not covered by the freeze. Rents there rose roughly 5% by the first quarter of 2020, 9% by the second, and 12% by the third. Renters priced out of frozen Berlin bid up rents wherever the law did not reach.

Landlords who kept advertising began posting two prices on the same unit. One at the legal cap. One at the market rate that would kick back in the moment the freeze was struck down or expired. 11% of listings carried this double price in February 2020. One month later, in March, it was 34%. By March 2021, close to half. The average gap between the two prices was 51%.

“Renters priced out of frozen Berlin bid up rents wherever the law did not reach”

On April 15, 2021, Germany’s Federal Constitutional Court struck the law down in its entirety. Rent regulation on private housing is a federal power in Germany, and Berlin’s state parliament had no authority to set the rules.

The ruling was retroactive. Tenants who had paid the lower capped rent for months were now billed for the difference. A Sparkasse Berlin survey found that 47% of Berlin renters had saved nothing for the bill. Monthly repayments ran from €100 to €500 per person. Some households owed several thousand euros in a single letter from the landlord.

Berlin is now one of the cleanest natural experiments in the economics of rent control. A single city, a single law, a defined start date, and Potsdam sitting across the border as an unregulated comparison. Assar Lindbeck, the Swedish social-democratic economist, once wrote that rent control is the most efficient technique known to destroy a city, next to bombing. Berlin’s data put numbers on the claim.

“In twelve months, Berlin delivered fewer listings, fewer new buildings, higher rents in the neighbouring city”

Rent control does not create apartments. It gives a discount to the people already holding a lease. It removes apartments from the market for everyone else. The people trying to move in, the students, the recent graduates, the workers arriving for a new job, never see the door open in the first place.

In twelve months, Berlin delivered fewer listings, fewer new buildings, higher rents in the neighbouring city, and a legal bill sent to the very tenants the law was written to protect. On June 26, 2026, New York City’s Rent Guidelines Board voted 7 to 1 to freeze the rent on roughly one million stabilized apartments, delivering Mayor Zohran Mamdani’s central campaign promise.

Every number above is drawn from a peer-reviewed study in Management Science measuring Berlin’s twelve months under the freeze. New Yorkers weighing the same policy have the result already in hand.

Reproduced with kind permission of Students for Liberty. You can find the original X thread at https://x.com/sfliberty/status/2094924529625657396, find them on X at https://x.com/sfliberty you can also find them online at https://studentsforliberty.org/.

“Rent control does not create apartments. It gives a discount to the people already holding a lease. It removes apartments from the market for everyone else”

George Ayittey on Africa’s wrong turn to socialism.

Students For Liberty write about Ghanaian economist George Ayittey and how American billionaires often founded the company that made them rich. However, in socialist-era Africa, the wealthiest people were heads of state and their ministers.

“In Ghana, Nkrumah’s government built 64 state enterprises before his overthrow in February 1966. Only three or four were profitable”

In 1960, newly independent African leaders had a choice: capitalism or socialism. Almost all of them picked socialism. A Ghanaian economist named George Ayittey spent forty years documenting what happened next. His findings are in print, and almost nobody outside Africa wants to hear them.

The reasoning in 1960 looked airtight. Colonialism had been run by Western capitalists. So capitalism was a tool of oppression. Socialism, its opposite, would be the path to liberation. Kwame Nkrumah in Ghana, Julius Nyerere in Tanzania, Sékou Touré in Guinea, Mengistu Haile Mariam in Ethiopia, and Robert Mugabe in Zimbabwe all reached the same conclusion through the same logic.

The logic was tidy. The results were catastrophic. In Ghana, Nkrumah’s government built 64 state enterprises before his overthrow in February 1966. Only three or four were profitable. By 1970, the Ghanaian state was setting prices on nearly 6,000 items across more than 700 product groups.

“By 1976, the state had relocated more than 11 million peasants into roughly 8,000 collective villages. Much of the relocation was done at gunpoint”

In Tanzania, Julius Nyerere called the program ujamaa, a Swahili word for familyhood. By 1976, the state had relocated more than 11 million peasants into roughly 8,000 collective villages. Much of the relocation was done at gunpoint. Government bulldozers flattened old houses so families could not return.

Tanzania exported 540,000 tons of maize in 1970. By 1974 it was importing 300,000 tons. Within a few years a country that had been able to feed itself was depending on Western grain shipments to survive.

“Out of a population of 5.5 million, about 2 million Guineans fled the country. The richest territory in French West Africa ended up importing food it once exported”

In Guinea, Sékou Touré made unauthorized trade a criminal offense. Smuggling could be punished by death. Out of a population of 5.5 million, about 2 million Guineans fled the country. The richest territory in French West Africa ended up importing food it once exported.

Ayittey then asked the question he considered most important. How do the rich get rich in the United States compared to Africa? In the United States, the wealthiest people are builders. Elon Musk built Tesla and SpaceX. Jeff Bezos built Amazon. Roughly two thirds of American billionaires founded the company that made them rich.

In socialist-era Africa, the wealthiest people were heads of state and their ministers.

Mobutu Sese Seko of Zaire (now the Democratic Republic of Congo): estimates of stolen wealth ranged from 1 to 5 billion dollars.
Sani Abacha of Nigeria: around 5 billion.
Ibrahim Babangida of Nigeria: roughly 12 billion.
Hosni Mubarak of Egypt: estimates ran as high as 40 billion.
Muammar Gaddafi of Libya: estimates reached 200 billion.

Ayittey put it plainly. The combined net worth of every American president from George Washington through Barack Obama, all 43 of them, was about 2.7 billion dollars in 2010 figures. Sani Abacha alone stole more than that in five years in office. African socialism built a ruling class that created nothing and extracted everything.

“Roughly two thirds of American billionaires founded the company that made them rich. In socialist-era Africa, the wealthiest people were heads of state and their ministers”

The argument Ayittey most wanted Africans to hear, and the one almost nobody quotes, is that socialism was never African. Pre-colonial Africa had open markets, long-distance trade, and private enterprise. Cloth-weaving, iron and gold smelting, regional commerce. Property was held by extended families and clans, not by the state.

Nyerere and his peers took kinship-based property and relabelled it communism. They confused village solidarity with state ownership. They imported a nineteenth-century European industrial ideology and applied it to agricultural societies that already had functioning markets older than the modern European state. Shortages, political prisons, and a parasitic ruling class followed.

South Africa in 2026 is preparing the same policies. The Expropriation Act was signed in January 2025. The MK Party introduced a constitutional amendment bill this April to push land restitution claims back to 1652 and remove compensation from the property clause.

Zimbabwe ran this experiment in 2000. Tobacco export earnings fell from 600 million dollars to 175 million by 2009. Maize production did not return to pre-seizure levels until 2017.

Ayittey warned about this for thirty years. He died in January 2022. South Africa is doing it anyway.

“Zimbabwe ran this experiment in 2000. Tobacco export earnings fell from 600 million dollars to 175 million by 2009”

Reproduced with kind permission of Students for Liberty. You can find the original X thread at https://x.com/sfliberty/status/2070649595445584346, find them on X at https://x.com/sfliberty you can also find them online at https://studentsforliberty.org/.

Germany’s Wirtschaftswunder, and the end of price controls.

Students For Liberty write on how the end of price controls helped drive Germany’s post war recovery.

“Cigarettes served as currency. Shops were empty because the real economy had moved to the black market”

In 1948, a German economist abolished the price controls that the Nazis had created, and the Allies and most of Germany’s own experts wanted to keep. They told him it was madness.

The setting: Germany, three years after the war. Twenty percent of housing destroyed. Official food rations ran between 1,040 and 1,550 calories a day. Cigarettes served as currency. Shops were empty because the real economy had moved to the black market.

Germans had lived under price controls for twelve years. Adolf Hitler imposed them in 1936 so his government could buy war materials cheap. Hermann Goering added rationing in 1939. Under the Nazis, breaking price controls could get you the death penalty.

“By 1947, the money supply was five times its 1936 level. Prices were still frozen. The obvious result was mass shortages”

In November 1945, the Allied Control Authority (the United States, Britain, France, and the Soviet Union) kept Hitler’s controls in place. By 1947, the money supply was five times its 1936 level. Prices were still frozen. The obvious result was mass shortages.

His name was Ludwig Erhard, economics director of the Anglo-American Bizone. He had refused to join the Nazi Association of University Teachers. During the war he wrote a memorandum outlining a postwar market economy, one that made his hope for a Nazi defeat clear.

Every serious voice said controls must stay. The Social Democratic Party wanted central direction. Labor unions agreed. The British authorities agreed. Most German manufacturers agreed. Even some Americans agreed. The memory of the 1923 hyperinflation made decontrol look reckless.

“Once the Deutsche Mark had real value and prices could move, the stockpiles came out of storage”

On Sunday, June 20, 1948, the currency reform introduced the Deutsche Mark. The same day, the Bizonal Economic Council passed a price decontrol law over Social Democratic opposition. Erhard spent the summer eliminating controls, allocations, and rations by directive.

By Monday, June 21, shop windows filled with goods that had “not existed” the week before. They had existed all along. Producers and traders had hoarded them because the old currency was worthless and controlled prices meant selling at a loss. Once the Deutsche Mark had real value and prices could move, the stockpiles came out of storage. The black market did not need to be dismantled. It moved into the shops.

That July, U.S. General Lucius Clay called him in. Clay: “Herr Erhard, my advisers tell me what you have done is a terrible mistake. What do you say to that?” Erhard: “Herr General, pay no attention to them! My advisers tell me the same thing.”

In June, industrial production sat at 51 percent of its 1936 level. By December, it had climbed to 78 percent. Absenteeism fell from 9.5 hours per week in May to 4.2 hours by October. Yale economist Henry Wallich later wrote that “the spirit of the country changed overnight.”

Germans call this the Wirtschaftswunder, the economic miracle. It had a mechanism. Twelve years of price controls had held down a working economy. Erhard removed the controls, and the economy came back. What made him rare was refusing to defer to every credentialed voice in the room.

“In June, industrial production sat at 51 percent of its 1936 level. By December, it had climbed to 78 percent”

Reproduced with kind permission of Students for Liberty. You can find the original X thread at https://x.com/sfliberty/status/2077165253062783066, find them on X at https://x.com/sfliberty you can also find them online at https://studentsforliberty.org/.

Estonia’s Flat Tax

Students For Liberty write on how Estonia’s flat tax came to be.

“He had read exactly one book on economics: Milton Friedman’s Free to Choose. He used it as a policy manual”

In 1992, a 32-year-old historian became Prime Minister of Estonia. He had read exactly one book on economics: Milton Friedman’s Free to Choose. He used it as a policy manual. Western advisors and Estonian economists told him it would fail.

After gaining independence from Soviet Union in 1991, Estonia had a destroyed economy. Inflation over 1,000%. Output falling 30% a year. Massive shortages of fuel and food. 95% of the economy state-owned. 92% of trade locked to a Russia that had stopped paying. The standard recipe for transition economies was gradualism. Step by step. Protect vulnerable sectors. Let the market adjust slowly.

Mart Laar took office in October 1992. Months earlier, Estonia had already broken from the Ruble and launched a new currency, the Kroon, anchored to a strict currency board. The IMF had cautioned against the rigid currency board, warning it would leave no room for monetary policy. Laar refused to loosen it and made it the foundation for everything that followed.

“On January 1, 1994, he did the thing nobody had done before: a 26% flat tax. Same rate for individuals and corporations”

Then he abolished tariffs. Not negotiated. Not phased. Unilateral. Estonia became one open trade zone with no protection for agriculture and no protection for industry. Western advisors warned the domestic economy would collapse.

He privatized fast. By 1994 most state enterprises were in private hands, sold through open public tenders modelled on the German Treuhand to keep oligarchs out. On January 1, 1994, he did the thing nobody had done before: a 26% flat tax. Same rate for individuals and corporations. A basic tax-free allowance for low earners, but no progressivity above it.

No democratic country had ever implemented a flat tax of this kind. Mainstream Western economists called it reckless. They wrote that the poor would carry the burden and that state revenues would collapse. Estonian economists at home told him it would not work. He did it anyway.

“The reforms compounded. By 2003, Estonia had high-speed internet across the entire country and a working digital government”

Then the numbers came in. Estonia grew faster than any other country in Central and Eastern Europe through the rest of the decade. It pulled in more foreign investment per capita than any of its neighbours. By 2000, GDP was growing 6.4% a year.

The reforms compounded. By 2003, Estonia had high-speed internet across the entire country and a working digital government. That same year, a team in Tallinn shipped Skype. A country that had inherited barely functioning Soviet telephone lines was now exporting communication software to the world.

“He didn’t know no country had tried it. He found out afterward. He said that if he had known, he might not have done it”

In 2011, Estonia joined the euro. It met every Maastricht criterion and entered with the lowest public debt in the entire EU. Balanced books, stable inflation, debt below 7% of GDP. A former Soviet republic was the most fiscally disciplined country in the room.

Years later someone asked Laar where the flat tax idea came from. He said he had read Free to Choose and assumed the West had already done it. He didn’t know no country had tried it. He found out afterward. He said that if he had known, he might not have done it.

The experts knew too much. They knew every objection, every precedent, every reason a clean break could not work. Laar didn’t know the objections, so the objections didn’t stop him. He took Friedman at face value and acted.

Latvia copied the flat tax in 1995. Lithuania the same year. Slovakia, Romania, Russia, Georgia, and Ukraine followed over the next decade. Estonia’s GDP per capita overtook Greece’s in purchasing-power terms in the 2010s. The country now produces more unicorn startups per capita than any other in Europe: 7.7 per million people, more than double the runner-up.

Reproduced with kind permission of Students for Liberty. You can find the original X thread at https://x.com/sfliberty/status/2063023739772559698?s=46, find them on X at https://x.com/sfliberty you can also find them online at https://studentsforliberty.org/.

Podcast Episode 103 – Politics in Pubs: Slaying the Stagnation Dragon

At the inaugural Politics in Pubs Central London event we were joined by Benjamin Elks of the Taxpayers’ Alliance and Alastair Mellon of the SDP for a discussion on how we achieve genuine, sustainable economic growth.

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Visit Politics in Pubs at https://politicsinpubs.org.uk/ for more on their events in London and beyond. We also have a brief write up of this event below.

Dragon Slayed – Politics in Pubs in London

On the 30^th April Politics in Pubs made its central London debut at The Warwick in Pimlico. We were joined by Alistair Mellon of the SDP, a civil engineer, property developer, and former SDP candidate, and Benjamin Elks the Grassroots Development Manager for the Taxpayers’ Alliance.

The event featured a panel discussion with our two guests on the theme ” Slay the Stagnation Dragon: Ignite Real Economic Growth!”, followed by audience Q&A.

The panel discussion started with a diagnosis of the problems we face. Alistair discussed how productivity is everything and we have major drags on the economy like sky-high energy prices and chronically low public/private investment in R&D and infrastructure. Ben talked about high taxes and spending being the core problem. Average household lifetime tax burden is now greater than £1.2 million. Taxing work/investment reduces both. He also said Welfare spending projected at £407 billion by 2030-31 is unsustainable.

The thorny topic of housing led to some disagreement. Alistair argues the private sector alone won’t deliver enough homes (historical averages ~195k/year). He favours competent state-led new towns using compulsory purchase near transport nodes. Ben stressed the need for planning reform over more state intervention, pointing to failures like Homes England which with more budget and staff, had achieved fewer homes built.

The panel discussed AI and the Future of Work. Both were relatively optimistic and mentioned new jobs will emerge through creative destruction. Focus will be needed on retraining, soft/people skills, and sectors like construction and defence.

The discussion was pragmatic, and positively policy heavy. Both were also critical of the political establishment (both main parties). Alistair is more focused on targeted state action and industrial strategy, while Ben focuses on tax cuts and spending restraint. There was however common ground on productivity, energy, defence, and the need for competence/accountability.

The Q&A was a lively discussion across the room picking up on many of these themes.

Thanks to both our guest, if you are keen to know more and watch out for future dates in London.

A slap in the face for working people – Budget 2025

The Libertarian Party UK published the note below following the budget.

“the budget ensures rising wages and inflation push more people into higher tax brackets without the need for an explicit rate rise. This is effectively a hidden tax increase”

Well, what a slap in the face for working people yesterday, as Rachel Reeves unveiled the heftiest tax rises in decades. A quick run-down of some of the LPUK NCC’s response to the budget announcement:

For London and South East co-ordinator Marco Bocci, Reeves’ claim that “We beat the forecasts and we will beat them again” is “the best phrase of the budget yet. She should do stand up comedy, Rachel from accounts.”

Let’s pick apart some of the main points:

𝗦𝘁𝗲𝗮𝗹𝘁𝗵-𝘁𝗮𝘅𝗮𝘁𝗶𝗼𝗻 𝘃𝗶𝗮 𝗳𝗿𝗼𝘇𝗲𝗻 𝘁𝗵𝗿𝗲𝘀𝗵𝗼𝗹𝗱𝘀

By freezing income-tax and National Insurance thresholds until 2031, the budget ensures rising wages and inflation push more people into higher tax brackets without the need for an explicit rate rise. This is effectively a hidden tax increase, subverting transparency and voter consent.

𝗜𝗻𝗰𝗿𝗲𝗮𝘀𝗲𝗱 𝘁𝗮𝘅 𝗯𝘂𝗿𝗱𝗲𝗻 𝗼𝗻 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁, 𝘀𝗮𝘃𝗶𝗻𝗴𝘀 𝗮𝗻𝗱 𝗽𝗿𝗼𝗽𝗲𝗿𝘁𝘆

Raising taxes on dividend income, property and investment returns (plus a “mansion tax” on high-value homes) deters capital formation, penalises asset ownership and discourages saving. This amounts to state appropriation of individuals’ legitimately earned returns.

“taxing a previously legal and popular method of efficient retirement saving. This closes off a voluntary, private route to long-term financial security”

£𝟮,𝟬𝟬𝟬 𝗮𝗻𝗻𝘂𝗮𝗹 𝗰𝗮𝗽 𝗼𝗻 𝗡𝗜-𝗳𝗿𝗲𝗲 𝗽𝗲𝗻𝘀𝗶𝗼𝗻 𝗰𝗼𝗻𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗼𝗻𝘀

Anything above that limit will now attract full employee and employer NI, effectively taxing a previously legal and popular method of efficient retirement saving. This closes off a voluntary, private route to long-term financial security, raises the cost of saving, and pushes individuals towards greater reliance on state-approved pension structures rather than personal choice.

𝗘𝘅𝗽𝗮𝗻𝘀𝗶𝗼𝗻 𝗼𝗳 𝗿𝗲𝗱𝗶𝘀𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗼𝗻 𝗮𝗻𝗱 𝘄𝗲𝗹𝗳𝗮𝗿𝗲 𝘀𝗽𝗲𝗻𝗱𝗶𝗻𝗴

The abolition of the two-child benefit cap and increased welfare, while framed as support for “vulnerable families,” expands the size and scope of the welfare state. This redistributive spending infringes on property rights and encourages dependency on the state.

𝗥𝗶𝘀𝗲 𝗶𝗻 𝘁𝗵𝗲 𝗺𝗶𝗻𝗶𝗺𝘂𝗺 𝘄𝗮𝗴𝗲

Raising the over-21 rate to £12.71 an hour from April 2026 will only put more pressure on already struggling employers to increase wages for others, and is a de-facto endorsement of rising unemployment. The resulting inflationary pressure will only further deepen the cost of living crisis.

For Chairman Andrew Withers, “The overall picture is sucking £26bn out of the productive economy to prop up a dying Welfare State all in the name of ‘fairness.’ The main beneficiaries will not be children in poverty, but the employment of tens of thousands of middle class bureaucrats working in quangos.”

“The overall picture is sucking £26bn out of the productive economy to prop up a dying Welfare State”

Mercia co-ordinator Martin Day congratulates Reeves on “hammering the poor hardest in an effort to balance the books. Government spending MUST be cut.”

Though a separate issue, party leader Alex Zychowski notes that “yesterday – the day before the budget – Labour signalled their intention to abolish trial by jury – an insidious attempt to use the assault on our paychecks to take the light off this egregious assault on our ancient freedoms.”

More on that in the coming days, but to close our analysis, a simple but accurate summary from Northern co-ordinator Dan Clarke: “this budget is a disgrace.”

“hammering the poor hardest in an effort to balance the books. Government spending MUST be cut.”

You can learn more about the Libertarian party at https://libertarianpartyuk.com/.

Originally posted on 26^th November at https://www.facebook.com/share/p/1Cw2x799jL/?mibextid=wwXIfr

Image from Grok.

A Theoretical Proposal for Fiscal Discipline and Debt Management – an interview with Josh L. Ascough

UK public sector net debt was at 96.4% of GDP as of the end of August 2025 and the level of debt at its highest since the early 1960s. These problems are not unique to the UK and many time writer for the Croydon Constitutionalists, Josh L. Ascough released a new book ‘A Theoretical Proposal for Fiscal Discipline and Debt Management‘ that addresses this issue seen across the western world. We speak with Josh.

“government or specific politician is looking to obtain a political legacy by creating a large infrastructure project; I think a certain HS2 project comes to most people’s minds”

Can you give our readers a brief overview of the book?

A Theoretical Proposal for Fiscal Discipline and Debt Management examines the risks of unconstrained debt spending by governments by examining the inevitable trade-offs and what is referred to as GAP (Government Agency Problems) that occur when governments have, in practice, no limit to their debt spending. Some of these are over-investment of government projects, where loose access to debt financing can encourage governments to maintain investment in projects whose costs have risen beyond their initial evaluation and assumed benefits, and legacy, where a government or specific politician is looking to obtain a political legacy by creating a large infrastructure project; I think a certain HS2 project comes to most people’s minds when they hear these two. And finally, the book ends with proposal a fiscal rule to limit the level of debt spending.

Your book proposes a 1.25 Rule, without giving away too much, what are the basics of the rule?

The 1.25 is a fiscal ratio that targets a maximum level of debt spending in relation to the nominal tax revenue the government receives and works in a similar fashion to the debt-to-equity finance in corporate finance models. For a simple example if we suppose the government revenue is 500 billion, then according to the ratio the government would have a maximum of 625 billion it could spend via debt. This would create the incentive for governments to effectively and efficiently allocate public resources into areas that will have long-term benefits with high long-term payoffs while still maintaining enough debt spending for initial investments into public works and as a reserve for crisis.

“create the incentive for governments to effectively and efficiently allocate public resources into areas that will have long-term benefits with high long-term payoffs”

This is your second book, your first being ‘Inflation and Monetary Policy: Understanding the Origins and Costs’. What were a couple of key points from that book?

A major point was that when working on a novel approach to the Environmental Kuznets Curve; which measures the relationship between income per capita and environmental degradation, and typically shows that as countries become richer, they reach a certain point where they’re able to afford more environmentally friendly and sustainable policies and sources of energy. However the problem is the curve uses nominal income rather than being adjusted for inflation, and so the work I did showed that when adjusted for inflation, many countries are in what I called a treadmill state, whereby inflation continues to erode the purchasing power of income per capita, leading to a continuing loop of environmental policies being unaffordable; so those who argue for more environmental protection policies should first look to stabilise and reduce inflation.

Another key point would be Nominal Gross Domestic Product (NGDP) targeting which ties to my second book, as I suggest combining the 1.25 rule as a fiscal policy with NGDP targeting as a monetary policy. In the first book however NGDP targeting is suggested as an alternative to inflation targeting and as a second-best solution to a truly free banking system, as it is able to emulate the monetary equilibrium that the free banking area naturally provided, but as a proxy, and would be able to respond to supply and demand shocks more appropriately than inflation targeting.

“those who argue for more environmental protection policies should first look to stabilise and reduce inflation”

How can people get these books, and more generally get in touch? (you don’t have to answer the get in touch part unless want)

People can find these books on Amazon for relatively cheap prices, the first is £12.99 and the newest book is £7.99. I keep prices down for my work as the money from them isn’t as important to me as getting the research and the final work out into the public.

A Theoretical Proposal for Fiscal Discipline and Debt Management – https://www.amazon.co.uk/Theoretical-Proposal-Fiscal-Discipline-Management/dp/B0FWRLPV3R/ref=sr_1_1

Inflation and Monetary Policy: Understanding the Origins and Costs – https://www.amazon.co.uk/Inflation-Monetary-Policy-Understanding-Origins/dp/B0F91P73RV/ref=sr_1_2

You can read more from Josh on our site at https://croydonconstitutionalists.uk/category/josh-l-ascough/

How we can really revive British industry

Sam Bidwell on how we can really revive British industry.

“By the late 19th century, Britain was falling behind the United States and Germany. GDP growth slowed to less than 1% between 1899 and 1914”

People across the political spectrum say that the UK needs an industrial strategy. In fact, it was industrial strategy that killed our industry in the first place – Attlee is more to blame than Thatcher.

According to the popular narrative, British industrial decline started in the 1970s and 1980s, as free trade and neoliberalism shifted us towards a more globalised economy. Today, advocates of industrial strategy argue that Government needs to intervene to redress the balance.

In fact, Britain’s relative industrial decline starts much earlier. By the late 19th century, Britain was falling behind the United States and Germany. GDP growth slowed to less than 1% between 1899 and 1914, while productivity growth fell by two-thirds between 1871 and 1914.

Though it had led the way on industrialisation (more on this later), the UK couldn’t compete with the mass production of the US and Germany. Britain had fewer natural resources and a more skilled workforce, while American firms could rely on cheap resources and cheap labour.

Britain’s relative industrial slowdown was accelerated by the Great Depression. Heavy industry declined by a third between 1929 and 1930, with unemployment doubling from 1 million to 2.5 million. In cities like Glasgow, unemployment rose as high as 30 percent.

“In the Midlands and parts of the south, industry boomed in the 1930s – with specialisms in automobiles and household electrical goods. In 1936, Leicester was actually the second-richest city in Europe”

The decline was particularly acute in the industrial areas of Britain’s Victorian heyday, such as Lancashire, Yorkshire, South Wales, and Scotland. Coal production in Lancashire fell by 43%. Ship production in the north-east of England fell by 90% between 1929 and 1932.

But that didn’t mean that industry was declining everywhere. In the Midlands and parts of the south, industry boomed in the 1930s – with specialisms in automobiles and household electrical goods. In 1936, Leicester was actually the second-richest city in Europe.

It was true that Britain couldn’t compete with the mass production of the US and Germany – but it could lead the way again on high-quality, high-skilled industry. The social effects were incredible – between 1923 and 1937, Birmingham’s workforce grew at double the national rate.

“The Attlee government saw the success of the Midlands as damaging to traditional industrial regions. In 1945, it passed the Distribution of Industry Act”

From 1911-1954, the West Midlands grew its economic output faster than any other region of the country – by the 1960s, Birmingham wages were higher than in London. Nearby Coventry fared similarly – in 1953, it had an unemployment rate of 0.8%. British industry was back.

And then came the industrial strategists. The Attlee government saw the success of the Midlands as damaging to traditional industrial regions. In 1945, it passed the Distribution of Industry Act, which aimed to push development away from ‘congested’ areas like the Midlands.

The Government required that any factory set to be opened or expanded in a ‘congested’ area would be reviewed by the Board of Trade – which would aim to push industrial development back to places like Lancashire and South Wales. The results were predictable – and depressing.

“In 1946, the West Midlands Plan set Birmingham a population target lower than its current population. In 1964, Harold Wilson restricted the development of office space in Birmingham for 20 years”

Of the ‘Industrial Development Certificates’ rejected by the Board of Trade, just 18% actually relocated to declining industrial areas. 49% of refused projects downsized their ambition to avoid government oversight. 31% of projects were scrapped entirely.

For every job re-directed to old industrial areas, several more were prevented. In 1946, the West Midlands Plan set Birmingham a population target lower than its current population. In 1964, Harold Wilson restricted the development of office space in Birmingham for 20 years.

“Forcible relocation of growth, and subsidy for declining industries, left British industry inefficient and uncompetitive”

Industrial strategy also meant subsidising inefficient ‘old’ industries, such as coal and steel, at the expense of new industries, such as cars and household electrical products. The nationalisations of the 1940s and 1960s were designed to preserve old industry at all costs.

Forcible relocation of growth, and subsidy for declining industries, left British industry inefficient and uncompetitive. The burgeoning ‘advanced manufacturing’ boom of the 1930s was killed by the nostalgic, backwards-looking industrial strategy of the late 1940s.

These inefficient and expensive controls were eventually lifted by the Thatcher governments. Yes, British industry did shrink in the 1980s. But if it had been allowed to adapt, improve, and emerge organically in the previous decades, it would have remained competitive.

“we shouldn’t try to decide where industry ought to be based on pre-conceived ideas about where growth “should” happen. Industrialisation completely changed Britain’s economic geography”

If we actually want British industry to succeed, we shouldn’t follow in the footsteps of the 20th century industrial strategists. We should learn from the conditions which birthed British industry in the first place – which actually means less government control, not more.

First, we shouldn’t try to decide where industry ought to be based on pre-conceived ideas about where growth “should” happen. Industrialisation completely changed Britain’s economic geography – cities like Liverpool and Manchester barely existed before the 18th century.

People were able to move to where economic opportunity emerged – and the we didn’t try to direct that growth. Today, that means liberalising our housing market – allowing housing supply to emerge where people want to live, not where the Government thinks that they should live.

“Our current regulatory environment punishes companies that trial new products here, with lengthy processes of consultation, review, and assessment. Instead, we should be removing regulatory blockers”

Second, we should embrace and encourage investment in innovation. The Industrial Revolution was driven by investment in new technologies designed to reduce dependence on high-cost labour – such as Watt’s steam engine, which could do the work of 21 manual labourers.

Our current regulatory environment punishes companies that trial new products here, with lengthy processes of consultation, review, and assessment. Instead, we should be removing regulatory blockers – and reducing tax on innovative firms in cutting-edge fields.

Third, we should make it easier to build the infrastructure that powers industrial growth. In 1846 alone, Parliament approved around 9,500 miles of private railway construction, the equivalent of 63 HS2s. We must relax planning rules around major infrastructure projects.

Fourth, we must address energy costs. The Industrial Revolution was powered by cheap coal – low energy costs kept industry competitive. Today, the UK has the highest industrial energy costs in the developed world – killing businesses in energy-intensive sectors such as steel.

“The Industrial Revolution was powered by cheap coal – low energy costs kept industry competitive. Today, the UK has the highest industrial energy costs in the developed world”

This also has enormous implications for our ability to host AI infrastructure, which is similarly energy-intensive. If it wants British industry to compete, the Government should make energy cheap – particularly by bringing down construction costs for nuclear energy.

Finally, we should not try to direct the economy based on what we think industry “should look like”. We should not be picking winners – whether sectors, businesses, or regions of the country. This will be expensive, and it won’t work – as 20th century industrial decline shows.

Reproduced with kind permission of Sam Bidwell, Director of the Next Generation Centre at the Adam Smith Institute, Associate Fellow at the Henry Jackson Society, although views are his own. Sam can be found on X/Twitter, on Substack, and can be contacted at s.bidwell.gb@gmail.com. This article was originally published as a X/Twitter Thread at https://x.com/sam_bidwell/status/1859560533608874311

How capitalism built Manchester

Sam Bidwell on how capitalism built Manchester.

“In c. 79AD, a Roman fort was constructed on the banks of the River Medlock, the first settlement in modern Manchester. The area remained largely depopulated and impoverished throughout the medieval period”

I\n 1700, Manchester was an obscure village of fewer than 10,000 people – by 1900, it was a metropolis, the world’s first industrial city. Its remarkable growth is testament to the power of trade, industry, and British ingenuity.

For most of its early history, Manchester was entirely unremarkable. In c. 79AD, a Roman fort was constructed on the banks of the River Medlock, the first settlement in modern Manchester. The area remained largely depopulated and impoverished throughout the medieval period. The one exception to this trend came in 1363, when a small community of Flemish weavers, from modern-day Belgium, settled in Manchester. These weavers helped to establish Manchester as a local centre for textile production – which would one day power the city’s growth.

Under Queen Elizabeth I (1553-1603), the Crown began supporting the English wool trade. The Queen’s support for the trade was so fervent that, from the 1570s until the 1590s, Englishmen were required to wear woollen caps to church on Sunday, in order to support the industry. With its existing tradition of textile production, Manchester benefitted from this support – and began exporting cloth to Europe, via London. Nevertheless, it was still an obscure Lancashire village – paling in comparison to its counterparts in neighbouring Yorkshire.

During the English Civil War (1642-1651), Manchester was a hotbed of support for the Parliament. On the Restoration of the Monarchy in 1660, Manchester lost Parliamentary representation, as a reprisal for its support for Cromwell. No MP was to sit for Manchester until 1832. And so, without any local government or representation in Parliament, Manchester looked set to fade into obscurity as a textiles-oriented market town. In the 1720s, Daniel Defoe described Manchester as “the greatest mere village in England”. But change was afoot.

“With its history of textile production, Manchester was well-placed to turn these raw imports into high-quality material exports. It also had ideal geography, with canals connecting the city”

By the early 18th century, Britain was in the midst of a revolution. Developments in agricultural technology meant that more food was being produced than ever before – with fewer people needed to work in farming. As a result, more people moved to the country’s urban centres. At the same time, Britain’s trade with the outside world was expanding rapidly – including in places such as India. This meant that the country had more access to new raw materials than ever before – and more markets for the export of consumer goods. Enter Manchester.

With its history of textile production, Manchester was well-placed to turn these raw imports into high-quality material exports. It also had ideal geography, with canals connecting the city to the port at Liverpool, and to the coalfields of Lancashire.

Raw goods could be imported to Manchester, processed, and then sent elsewhere for sale. The city began to boom, growing from 9,000 people in 1717 to 25,000 people in 1773. In 1781, Richard Arkwright opened the first steam-powered textile mill in the city. Throughout this period, Manchester and the surrounding towns in Lancashire were responsible for processing 32% of cotton produced globally. And the need to sell finished textile goods prompted the creation of new transport infrastructure, which connected the city to the world.

In 1761, the world’s first industrial canal opened, connecting Manchester to the coalfields at Worsley. In 1824, one of the world’s first public bus services opened in Manchester. And in 1830, the world’s first passenger railway connected Liverpool to Manchester. Canals and railways transported Manchester textiles to the port of Liverpool, allowing them to be exported. Meanwhile buses and trams enabled the city’s workforce to reach their workplaces. By 1930, Manchester Corporation Tramways operated the 3rd largest tramway in the UK.

The city also came to be known as a commercial hub, with warehouses and markets springing up across the city. In 1815, Manchester had 1,819 distinct warehouses, housing both raw materials and goods for sale. Many of these warehouses still dominate the city’s skyline today.

The jewel in Manchester’s crown was the Cotton Exchange, first opened in 1727. This vast building was the beating commercial heart of the city, a site for the sale of textiles and the financing of new industrial businesses. In 1851, it was granted the “Royal Exchange” title. In 1867, the Royal Exchange was rebuilt, with funding provided by a consortium of notable Manchester industrialists. The Exchange which still stands today began construction in 1867, and was finished in 1921 – financed, start to finish, by private donors.

“Manchester became the hub of the Anti-Corn Law League in 1839, which argued for the removal of protectionist tariffs on food”

More than almost any other city in Britain, Manchester’s urban landscape was shaped by industry, trade, and private finance. This wasn’t just the product of textile wealth. This building, on Mosley Street, was built in 1880, to house the Manchester and Salford Bank.

The city didn’t just benefit from trade liberalisation – it exported it, too. Manchester was a hub of 19th century economic liberalism. Prominent advocates of free trade, such as Richard Cobden and John Bright, were based in the city. Indeed, Manchester became the hub of the Anti-Corn Law League in 1839, which argued for the removal of protectionist tariffs on food. The Corn Laws were eventually repealed in 1846 by Conservative Prime Minister Robert Peel, partly thanks to the League’s campaigning.

“It’s also testament to the ways in which private sector growth can improve public space and enhance civil society. The city’s University, for example, was founded as a private institute”

As Manchester develops today, it’s worth remembering how the city came to exist in the first place. From obscure market town to global metropolis, Manchester’s growth was powered by building, growth, and private industry. Manchester exists because of business and capitalism. It’s also testament to the ways in which private sector growth can improve public space and enhance civil society. The city’s University, for example, was founded as a private institute in 1824, and expanded in 1846 on the basis of a bequest from textile merchant John Owens.

Rather than rejecting development, we should recognise the opportunities that change can bring. Just as our ancestors pursued growth and change, so should we. Our cities used to some of the greatest in the world – they can be again

The British invented the modern world

“Englishman Jethro Tull developed a horse-drawn seed drill, which allowed seeds to be sowed in neat rows Tull’s drill laid the foundations for modern mechanised agriculture”

Few other countries can boast such a proud legacy of innovation and invention – for centuries, we have led the way on the development of new technologies. Some of the world-changing innovations birthed here in Britain.

In 1668, Englishman Sir Isaac Newton built the world’s first reflecting telescope Newton’s discovery was based on his understanding of prisms and optics. It allowed scientists to develop a sophisticated theory of colour, and paved the way for the modern telescope.

In 1701, Englishman Jethro Tull developed a horse-drawn seed drill, which allowed seeds to be sowed in neat rows Tull’s drill laid the foundations for modern mechanised agriculture, allowing farmers to plant more crops with fewer men – which increased productivity steeply.

In 1761, Englishman John Harrison invented the marine chronometer, a device which allowed sailors to accurately calculate longitude while at sea Harrison’s chronometer revolutionised navigation, and made long-distance sea travel much safer.

In 1764, James Hargreaves invented the ‘spinning jenny’, a textiles-weaving frame The spinning jenny allowed workers to produce cloth on an industrial scale, producing 8 times as much as an individual worker. This laid the foundations for industrial mass-production.

In 1776, Scotsman James Watt launched a new design for a steam engine Watt’s design built on earlier steam engines – but was far more efficient, both in terms of power produced and fuel consumption. Watt’s engine powered the industrial expansion of the 19th century.

In 1798, Englishman Edward Jenner pioneered the concept of the vaccine, producing an effective smallpox vaccination In Jenner’s time, smallpox killed around 10% of the global population. Jenner’s work has probably saved more lives than the work of any other individual.

In 1804, Cornishman Richard Trevithick invented the first working steam locomotive, which he tested in Merthyr Tydfil, Wales Trevithick’s locomotive was later improved upon by Robert Stephenson. Stephenson’s 1829 ‘Rocket’ formed the basis of the modern steam locomotive.

In 1807, Scotsman Alexander Forsyth pioneered the process of ‘percussion ignition’, the basis for modern firearms Forsyth’s work allowed weaponry to progress from the flintlock mechanisms of the 18th century – resulting in faster-firing and more effective guns.

In 1824, Englishman Joseph Aspdin patented the process of modern cement-mixing Aspdin’s patent made it far easier to build at-scale. His initial process was later improved upon by his son, William Aspdin, who created a product more akin to today’s ‘Portland cement’.

In 1841, Scotsman Alexander Bain patented the first ever electric clock Bain’s electrical clock enabled more accurate timekeeping – as, unlike older models, his clock did not require consistent adjustment. Bain also worked on an early fax machine, from 1843 to 1846.

In 1876, Scotsman Alexander Graham Bell received a patent for the first modern telephone On 10th March 1876, the first intelligible telephone call was made. On 10th August 1876, Bell made the first long-distance call, from Brantford, Ontario to Paris, Ontario.

“Welshman Edgar Purnell Hooley patented tarmac Hooley’s design combined tar and macadam, a paving material invented in the 1820s by Scotsman John McAdam. Today, about 70% of the world’s paved roads are made of tarmac”

In 1878, Englishman Joseph Swan produced the first successful lightbulb Swan’s bulbs were the first used to illuminate homes and public buildings – including London’s Savoy Theatre, in 1881. Swan was also responsible for producing early electric safety lamps for miners.

In 1902, Welshman Edgar Purnell Hooley patented tarmac Hooley’s design combined tar and macadam, a paving material invented in the 1820s by Scotsman John McAdam. Today, about 70% of the world’s paved roads are made of tarmac.

In 1928, penicillin was discovered by Scotsman Alexander Fleming Penicillin was the world’s first antibiotic, and was critical in the development of modern anti-bacterial medicine. An estimated 500 million lives have been saved by Fleming’s invention.

In 1926, the first working television was invented by Scotsman John Logie Baird Baird also achieved the first trans-Atlantic TV transmission in 1928, and the first colour TV in 1944. Baird’s work was also instrumental in the development of modern fibre-optics.

In 1930, Englishman Frank Whittle invented the first modern jet engine, patenting his design in 1932 Whittle was an RAF pilot officer, with a knack for engineering. His engine first flew in 1941 – and would go on to revolutionise air travel.

“Englishman Tim Berners-Lee developed the World Wide Web While WWW was not the first ‘internet’, it did allow the internet to go global”

In 1943, a team of British codebreakers designed the ‘Colossus’ computer, the world’s first programmable digital computer Colossus was initially designed a codebreaking tool – but it would serve as the foundation for modern computing in the post-war years.

In 1952, British aviation firm de Havilland flew the world’s first commercial jet liner, the Comet The Comet had first flown in 1949, but debuted commercially three years later. This marked a new era in civil aviation, and birthed modern air travel.

And in 1989, Englishman Tim Berners-Lee developed the World Wide Web While WWW was not the first ‘internet’, it did allow the internet to go global. Today, around 5.3 billion people use the internet, a development which has totally revolutionised how we live and work.

“Our energy policy makes it impossible to develop energy-intensive industries like AI. Our regulatory policy stifles innovation and creativity”

For literally centuries, the British have been at the cutting-edge of innovation and technology. From modern transportation to modern medicine, the British built the world that we live in today. Given the quality of our human capital, we should still be leading the way…

…but thanks to policy, we risk falling behind. Our planning system makes it impossible to build anything, including new lab space. Our energy policy makes it impossible to develop energy-intensive industries like AI. Our regulatory policy stifles innovation and creativity.

Many of the great innovations in this thread would have been impossible to develop today. Most importantly, we shouldn’t shy away from technological progress. Our greatness was largely the result of our willingness to embrace and advance change, innovation, and modernity.

If we want to be great again, we must embrace the future – and allow the natural quality of our people to flourish. That means less regulation, cheaper energy, and more enthusiasm for change. We’ve built the modern world before – and we can do it again