Saturday, 21 April 2018

Is building new retail capacity in suburban Bradford such a good idea?

"We'll get that away," says the council officer about a proposed out-of-town retail centre on the site of a closing leisure centre in South Bradford. So the Odsal District Centre is the future of that part of town? For how long? And is this really the future?

I wonder if this is a false hope brought on by the prospect of a capital receipt (and a pig-headed refusal to consider the site for housing) rather than a genuine engagement with economic reality. And Bradford isn't alone in all this - up and down the country local councils are buying up retail centres, either in the name of regeneration or, more commonly, investment income.

Here's some reality from the US courtesy of the always excellent John Sanphillippo:
This new retail plaza on the side of a Northern California freeway isn’t adding needed capacity. It’s cannibalizing existing retail sales from older shopping centers. There’s a limit to how many shoe stores and kitchenware shops the area population can support. Online sales are cutting in to already slim margins. It won’t be long before this place is hollowed out and half vacant, not least because the chain stores will be offered special incentives to relocate to a new place a few miles away. That’s when city officials and developers will hatch a public private partnership to turn the venue into a “technology park” to lure in some other heavily subsidized scheme that will also prove economically wobbly.

Just down the road in the same town is a premium outlet mall that, not too long ago, was the guarantied-to-succeed cash cow favored by municipal planners. But these things just don’t perform well beyond the first tenant lifecycle, particularly when there’s a parade of similar establishments for a hundred miles in every direction. Meanwhile, this failing mall is in a location with a critical housing shortage. The median home price here is $700,000 and very few homes are on the market. Median rent is $2,900 if you can find a vacancy. Most people can’t.
Right now, investment in new retail capacity, other than for discount supermarkets, is a monumentally stupid idea - even if you've an end user lined up. Just look at what's happening in UK retail - not because of slow economic growth but because the market is changing fast. So far in 2018, 14 listed retailers have failed, 1,236 stores have closed their doors, and 13,176 employees have lost their jobs - in four months. And there's more to come if House of Fraser, New Look and Debenhams performance is anything to go by.

Out in the real world the change appears to be accelerating - "go to Amazon," my wife's friend tells her on a chance encounter at the garden centre searching for outdoor furniture, "they're much cheaper and they've got more choice." The triumph of mail order is almost complete, every day a stream of delivery vans comes through our little estate of thirty-odd houses and flats - clothes, food, furniture, everything a home could want delivered conveniently to the door. And all this is without counting the folk who, for their convenience, collect from Cullingworth's chemist or post office.

It's not that shopping is dead - we're shopping more than ever - but that we can shop with a glass of wine in hand from our sofa while muting the adverts on the telly or pausing the Netflix series we're watching. Why - given all this - would people want to drag themselves to a load of cheap sheds thrown up in suburban Bradford? The retail the will work is that which offers something we can't get from our sitting room - events, socialising, entertainment, reward - and that which is additional to a destination - the shop at the museum, the little boutique of handmade clothes by public square, the cheese stall or deli in some space near the popular restaurant.

What matters, given convenience is now an app on our phone, is leisure and pleasure, place and space. And, in no known universe are out-of-town retail sheds any kind of pleasure-led place, a destination for a trip out. People aren't going to say, "let's go to Odsal Distrct Centre it's so much fun there", yet because of an obsession with short-term value that is what we get. And sadly, in a decade or so, Bradford (and lots of other places) will be asking what to do with a half empty and increasingly redundant retail centre - just as we are with the crumbling district centres build in the 1970s, 1980s and 1990s.


Thursday, 19 April 2018

If there's a global technology race, Europe is going to lose.

This is clear from an interview in Der Speigel with Pedro Domingos, author of 'The Master Algorithm' (which, we're told sits on Xi Jinping's bookshelf alongside Marx and Mao):
My literary agent told me: "You are going to sell this book all over the world, but not in France and Germany." And that's what happened. "The Master Algorithm" was sold to Japan, China, Taiwan, South Korea. There are Polish and Russian translations. But my agent was right when he said: "The Germans and the French don't like these things."
There still isn't a German translation of the book and it's because the Europeans are terrified of technology's implications:
The picture coming out of Silicon Valley is a very optimistic one, informed by libertarian ideas. The very opposite is true for Europe: I just came back from a conference in Berlin where I was struck by the sheer pessimism. Every other session was about: "Oh, we have to fear this. Who knows what may be going on here?"
This technology - Artificial Intelligence - is our future economy, it is our escape (if Silicon Valley's libertarianism wins over Jinping's autocracy) from being what sociologist C. Wright Mills called The Cheerful Robot back in 1959 (if not it's a world more like Taylorism on steroids - Zamyatin's 'We'). Yet European governments are closing the doors to the idea - from proposals for limits on robots to government access to commercial algorithms the EU and other European governments are set against the idea of a liberal, free market artificial intelligence.

Here in Britain it's not much better with the recent Facebook / Cambridge Analytica sessions, the House of Lords' risible report on AI regulation, the febrile 'we're being spied on by evil capitalists' line of national broadcasters and broadsheets, and a government that can't see how giving the state access to encrypted messaging makes that messaging useless.

We need a debate about the risks and benefits rather than about how we can control the technology - what are the downside risks of unregulated commercial AI set against the upside benefits of giving technology innovators free rein? What, as Domingos comments, is the balance between 'explainability' (this is what the algorithm does) and effectiveness?

Right now Europe, for all its brains and corporate clout, is dragging its heels and, worse, has a government in the EU that is actively opposed to both a liberal US-style technology surge and an autocratic Chinese-style approach. Whoever wins this battle, it isn't going to be Europe.


Wednesday, 18 April 2018

Facebook isn't the bad guy. Facebook makes the world (and our lives) better.

I know, this isn't the received wisdom. We're supposed to believe that Facebook is some sort of evil wall garden created to harvest our 'data' so it can make millions from 'selling that 'data'. I have to be honest here, I think that this is nonsense. For all that we should have protections from abuse, stalkers and so forth, the reality is that we get a huge social benefit from the existence of Facebook (otherwise we wouldn't all - or lots of us - be using it). Here's Alex Tabbarok with the basis for this, seemingly unpopular, opinion:
What could be more ours than our friends? Yet I have hundreds of friends on Facebook, most of whom I don’t know well and have never met. But my Facebook friends are friends. We share common interests and, most of the time, I’m happy to see what they are thinking and doing and I’m pleased when they show interest in what I’m up to. If, before Facebook existed, I had been asked to list “my friends,” I would have had a hard time naming ten friends, let alone hundreds. My Facebook friends didn’t exist before Facebook. My Facebook friendships are not simply my data—they are a unique co-creation of myself, my friends, and, yes, Facebook.
So when some self-appointed and probably self-important person tells you that Facebook should 'pay' to use you 'data' tell them (because this is true) that Facebook have paid us. They paid us by providing us with Facebook, with its social interaction, jokes, daft quizzes, community forums and cat videos. It brilliant. As Alex concluded: "Facebook hasn’t taken our data—they have created it."

And one last point, one I've being making since my direct marketing days back in the 1990s: commercial organisations want information about us (data if you insist) for one reason alone - to sell us stuff. We should be a lot more worried about why government seems to want loads of information about us - they don't want to sell us stuff, they want to control us.


Monday, 16 April 2018

A note on why land values matter...

This is a really splendid building in Bradford city centre:

As you can see it occupies a large footprint, has three stories and an imposing presence (it's also listed and in a conservation area but those details aren't relevant to my point here). It was recently sold at auction where it was listed at £670,000. I've a feeling it might have gone for less than this despite having good sitting tenants. For less than a flat in Southwark you could have all this magnificence!

The thing is that this price reminds me that land values in central Bradford are essentially zero. Imagine that's a cleared site for a second - could you build a three storey office block (even one that's not natural stone and to a high design quality) there for less than £670,000? Of course not.

The building is, however, there and this means it has value. But the sad - and it is sad - truth is that land in Bradford is pretty much valueless even if the buildings currently sitting on that land can be used and can generate some sort of yield. Forgive me for feeling that it's pretty difficult to have a commercially-driven regeneration strategy if the land values are zero or negative.

Maybe we need a different approach? Like the one here


A little knowledge is a dangerous thing...

...almost none is a disaster. Here's the House of Lords on Artificial Intelligence:
“These principles do come to life a little bit when you think about the Cambridge Analytica situation,” he told the Guardian. “Whether or not the data analytics they carried out was actually using AI … It gives an example of where it’s important that we do have strong intelligibility of what the hell is going on with our data.”
The HoL (or one of its committees) has published a call for regulation of AI because of scary foreign monopolies:
In a wide-ranging report, the committee has identified a number of threats that mismanagement of AI could bring to Britain. One concern is of the creation of “data monopolies”, large multinational companies – generally American or Chinese, with Facebook, Google and Tencent all named as examples – with such a grip on the collection of data that they can build better AI than anyone else, enhancing their grip on the data sources and creating a virtuous cycle that renders smaller companies and nations unable to compete.
It's not at all clear as to whether the committee's concern is data collection and use (for which we have the new GDPR regulations and the Information Commissioner) or artificial intelligence. They produce a vague set of 'principles' (including one lifted straight from 'I Robot' - one wonders whether they read the book) and then present the standard response of fussbuckets:
“Of course, if in due course people are not observing these ethical principles and the regulator thinks that their powers are inadequate, then there may be a time down the track that we need to rethink this.”
Ah. "Nice AI you have there, would like to see it damaged"!

Judging from the principles, the nonsense about Cambridge Analytica and the threat of unspecified regulation, what we have here is the classic approach of the ignorant - "I've never tried it but I don't like it" - combined with regulatory authority - "we don't know what it does so we'd better stop it just in case". And if you don't think they're ignorant, suck on this...
“We want there to be an open market in AI, basically, and if all that happens is we get five or six major AI systems and you have to belong to one of them in order to survive in the modern world, well, that would be something that we don’t want to see.”

Saturday, 14 April 2018

Why houses are expensive.

I like Peter Hitchens, he offers the same iconoclastic hammer to the centre-right's certainties as his brother did for the centre-left. Among Hitchens' common themes is a harking back to a time when we had full and steady employment, low levels of crime, stable communities and trust in institutions. Quite rightly, Hitchens tells us that these things are good things and that conservatives - whether of that party or not - should be concerned to get them back.

Sometimes, however, this enthusiasm for the essential elements of conservatism leads Hitchens to the realm of fantasy:
The homeowners of Britain are being lied to, and unfairly smeared to try to get us to accept a hideous and irreparable destruction of green space in suburbs and the countryside. They are also being blamed personally for a problem they did not cause, in a nasty war on the middle-aged. They should resist this.
This opening gambit is familiar, a justified reaction to the now too common trend of blaming 'baby boomers' for all the ills of modern society and especially for houses being so expensive. Hitchens tells us that this ain't so and the fault lies with "grabby developers", mass immigration, the "epidemic of divorce", the success of London, right-to-buy, and what he calls "targeted inflation".

Now, leaving aside the 'positive money' argument that Hitchens uses in his "targeted inflation" argument, it's hard not to see some truth, at least in the creating of demand for housing, in this list. And, as the rules of supply and demand tell us, increasing demand will raise prices if new supply isn't readily available. The problem with Hitchens argument is that he lays all the blame for house price increases on increasing demand for housing (whether as a home or as an investment) and none of the blame on the lack of housing supply.

Or more importantly, land supply. Because it is how much land we have on which to build (taking as read the increased demand Hitchens describes) that determines how much the homes built on that land will cost. After all it costs pretty much the same to build a house in Kensington as it does in Burnley but the former will sell for a few million while you'll be lucky to get a hundred grand for the house in East Lancashire.

And the supply of land for housing, across most of England, is something determined by government. Moreover, for nearly 70 years, the government - national and local - has determined that most of the land in places where people want to live will have a 'presumption against development'. Not to protect special beauty, heritage or environment but simply to prevent 'sprawl' and encourage denser development in the existing towns and cities. The name for this policy - and it's popular right across the English-speaking world - is urban containment. I saw this described in a school debating competition on this subject as a 'tourniquet for the city'.

Urban containment- even when we're laissez faire on densities - doesn't work. Indeed, it's one of the primary reasons for the housing crises in London, San Francisco, Sydney, Auckland, and Madrid. Here's work from Australia's reserve bank on the subject:
According to the research, and assuming typical mortgage provisions, (Note) the urban containment effect (our term) adds from $150,000 to nearly $500,000 to house prices in major Australian metropolitan areas --- this is not the house price, but the additional impact of urban containment ... The urban containment adds up to $29,000 to annual payments on the average house in Australia’s major metropolitan areas
In the UK this uplift would be between £80,000 and £275,000 - this is the cost of that tourniquet and represents, when multiplied by the hundreds of thousands or properties involved, billions in lost opportunity for the UK (and those other places caught in urban containment's web). And remember, simply making development more dense doesn't solve the problem (partly because building upwards is expensive but most because densification simply increases land values which are the source of our problem in the first place).

If we are to have a debate about urban containment it needs to be on an informed basis - one that recognises the social and economic costs of these policies. It isn't good enough simply to list the reasons why there's more demand for housing and then shout:
...the rape of the Green Belt and the overdevelopment of the countryside will mean our children inherit a blighted country, almost unrecognisable as the beautiful, civilised place my generation inherited from our forebears.
This is splendid polemic but doesn't answer the question as to how we offer the same deal to the next generation - how do they get that stake, a real tangible stake, in their land and culture? I agree entirely that some of the development we get today is pinched, crammed, and dominated by brick and concrete with little space for garden, greenery or the margins when kids can build a den or play out the make-believe that ten-years-olds invent. But this overdevelopment is caused by the lack of land, by the containment. London's 1890s and 1930s suburbs - the places Hitchens' waxes lyrical about - were built with space and openness because the land was cheap, there weren't planners with clipboards and rulers to tells them what they could or couldn't do. Why would future developers not do the same given space and a free rein?

The social cost of urban containment isn't a joke either - this is America, which is worse than Britain, but anyone visiting our cities will see this happening:
Homelessness has long been a San Francisco problem, and with home prices rising, it’s arguably worse now than ever. A January report on claimed that the city’s homeless count is close to 6,700, and a local advocacy group estimates the count at 12,000. The problem is all very visible throughout the city, and increasingly, in Oakland and Berkeley, with open drug use and fights blaring out from the encampments that rest along sidewalks and below underpasses. A recent U.N. official, after visiting the Bay Area, said that in some ways, the city’s treatment of the homeless is worse than what she saw in the slums of India.
For sure, there's other reasons for homelessness than just high rents but getting a roof over peoples' heads should be a start. And, right now, someone losing their rented place in London, is going to find it really hard to get another place, for the first time in my lifetime people are on the streets solely because there isn't a home available for them to live in.

It seems likely that we will keep these policies - the rage in Hitchens' polemic really does reflect how people feel - but I hope, in doing so, that we won't carry on pretending that there isn't a social cost to having urban containment. We'll keep large swathes of countryside - much of it not especially special - while cramming more folk into unsustainable city living, having more homelessness and a generation embittered by their inability to do what their parents did, buy a house.


Friday, 13 April 2018

What devolution isn't...

First let me tell you what devolution is:
Of course, certain responsibilities, such as enforcing and interpreting the Constitution, conducting foreign relations, providing national security, monetary and fiscal policy, and regulating inter-state commerce must remain at the assigned federal level. States also retain critical responsibilities under their own constitutions and must deal with some issues on a multi-community basis. But, Constitutional Localism argues for a system which prefers that decision making be as close to the citizens as possible. That is where consensus and effective solutions are most likely to emerge.
I know, I know, it's America and they've a federal system and it's different over there. But the principle is absolutely clear - as many decisions as is possible should be made as close as you can get to the people affected, at a level where those people not only know who the decision makers are but, as Tim Worstall once put it, know where they go for a beer on a Friday night (Tim called it Bjorn's Beer Effect).

Devolution is not about directing some national government funding through some sort of regional or city-regional polity overseen by a grand and self-important mayor (whose eye is as likely to be on national power as it is on the interests of the millions his mayoralty serves).

Devolution is not about a grand committee of council leaders administering, with a nod to unelected business representatives, some sort of national government provided fund intended to promote local growth (even local growth badged as "inclusive").

Devolution is not about allowing local councils to keep local taxes but not to set the level of those taxes or having that level capped. Or for that matter not letting them set rents for their houses, charges for their services or fees for their functions.

Devolution is not having a system of local government where a National Government Minister can, almost on a whim, intervene or impose on the local council simply because of some negative press coverage.

Devolution is not having local government as, essentially, a mere agent of national government policy (and a convenient scapegoat for when that national policy turns out not to work very well).

Devolution is not a system where the policies of services local councils are providing get determined by unelected national inspectorates and QUANGOs.

And devolution isn't scrapping small, locally-focused councils and creating huge, less accountable, less transparent and less accessible authorities.

Instead of arguing for actual devolution back to local councils, what we have is an unseemly scramble to get one of those there mayors (a painful and, as yet inconclusive, process here in Yorkshire). Not because having a mayor is a good idea, improves democracy, extends accountability, and increases public participation. Nope, we want a mayor because, without one, we might miss out on some crumbs of investment from national government - cash for shiny new trains, subsidies for our pet (and valueless) 'green economy' schemes and money for us to carry on pretending that there's any relationship between universities and business innovation. This is not devolution, it's just a pretty pathetic game of 'chase the money'.

We could do so much better.