Comments on: It’s government that gums up markets http://blog.iea.org.uk/?p=581 institute of economic affairs Wed, 08 Sep 2010 21:42:56 +0100 http://wordpress.org/?v=2.8.5 hourly 1 By: Richard Wellings http://blog.iea.org.uk/?p=581&cpage=1#comment-27288 Richard Wellings Thu, 15 Oct 2009 11:04:38 +0000 http://blog.iea.org.uk/?p=581#comment-27288 To follow up on Mark's point, a lot depends on housing costs. Outside London the rent for a one-bedroom social-sector flat is often as little as £55 per week, while in the private sector, even in London it is possible to rent a room in a house share for £65 per week. At these rent levels a person will still be better off in full-time work at the NMW (assuming travel costs are not too prohibitive), so the minimum wage can still have an effect. Of course, many younger people live with their parents, while a high proportion of older IB claimants are owner-occupiers - in these cases the dead hand of housing benefit may have no effect. To follow up on Mark’s point, a lot depends on housing costs. Outside London the rent for a one-bedroom social-sector flat is often as little as £55 per week, while in the private sector, even in London it is possible to rent a room in a house share for £65 per week. At these rent levels a person will still be better off in full-time work at the NMW (assuming travel costs are not too prohibitive), so the minimum wage can still have an effect. Of course, many younger people live with their parents, while a high proportion of older IB claimants are owner-occupiers – in these cases the dead hand of housing benefit may have no effect.

]]> By: Mark Wadsworth http://blog.iea.org.uk/?p=581&cpage=1#comment-27278 Mark Wadsworth Thu, 15 Oct 2009 10:19:53 +0000 http://blog.iea.org.uk/?p=581#comment-27278 Governments. You should elaborate on point 4; people calculate that a single person would need to earn £15,000 a year to be better off in benefits than in work (assuming they're getting full housing/council tax benefit). This sets an even higher floor than the (pointless) NMW, as does the close-to100% marginal tax/benefit withdrawal rate. Governments.

You should elaborate on point 4; people calculate that a single person would need to earn £15,000 a year to be better off in benefits than in work (assuming they’re getting full housing/council tax benefit). This sets an even higher floor than the (pointless) NMW, as does the close-to100% marginal tax/benefit withdrawal rate.

]]> By: D.R. Myddelton http://blog.iea.org.uk/?p=581&cpage=1#comment-27050 D.R. Myddelton Wed, 14 Oct 2009 10:24:25 +0000 http://blog.iea.org.uk/?p=581#comment-27050 When I wrote a book on inflation accounting (called 'On A Cloth Untrue'),I thought of asking the publishers to price it in 'real' terms, so that the nominal price would increase every month in line with the Retail Prices Index. Of course that was only a thought: it would hardly have been practicable! And anyway, why should prices stay constant even in real terms? Of course there is the convenience argument, that one doesn't want prices always to be jumping about all over the place. And prices aren't the only variable -- aspects of 'quality' may change too. But perhaps more markets should be like the foreign exchange markets, where fluctuations in price are readily accepted. When I wrote a book on inflation accounting (called ‘On A Cloth Untrue’),I thought of asking the publishers to price it in ‘real’ terms, so that the nominal price would increase every month in line with the Retail Prices Index. Of course that was only a thought: it would hardly have been practicable!

And anyway, why should prices stay constant even in real terms?

Of course there is the convenience argument, that one doesn’t want prices always to be jumping about all over the place. And prices aren’t the only variable — aspects of ‘quality’ may change too.

But perhaps more markets should be like the foreign exchange markets, where fluctuations in price are readily accepted.

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