Ryan Bourne on the British growth deterioration - Marginal REVOLUTION

Source: Marginal REVOLUTION
Author: Tyler Cowen

From the London Times (gated), he starts from my earlier MR discussion of the topic:

Yet, from a policy perspective, identifying what changed after 2008 is less interesting than what could have been done better. Cowen's question was ignited by a British entrepreneur telling him that the UK's planning laws explain much of the enduring prosperity gap to the United States. I agree, and think that Cowen understates the damage of nimbyism after 2008. The financial crisis headwinds made it more imperative to dismantle growth-stifling land-use barriers, which are becoming increasingly damaging with time.

Careful analysis by the LSE economists John Van Reenen and Xuyi Yang suggests the UK has a sharper deterioration in productivity growth than France or Germany because of weaker capital investment, which the financial crisis, Brexit and political uncertainty have exacerbated. We can't undo the financial crisis or easily overturn the public's decision on Brexit, but giving the green light to more housing, energy and infrastructure projects by liberalising land use was an obvious path to countering this investment collapse...

Prior to 2008, pharmaceuticals, chemicals, and life sciences were expanding strongly, but are increasingly hampered by land rationing and escalating rental costs, too. Savills estimated in 2020, for example, that London had 90,000 sq ft and Manchester 360,000 sq ft of suitable lab space available, compared with Boston's 14.6 million sq ft and New York's 1.36 million sq ft. Similar problems afflict efforts to build hyperscale data centres.

This is all worth a ponder. Claude 3 estimates that land rent is 12-15% of British gdp, so I still would like to see a very careful decomposition done here. I estimated the NIMBY issues accounted for about 15% of the gdp shortfall, if we relaxed NIMBY quite a bit how much upside would that create?