Diplomats: annoying but cheap.

People have always had high expectations of America for sure. And there is jealousy too. A lot of those expectations arise from the very good work the State Department has done around the world. It is a great pity to see that Tillerson plans to largely dismantle it. Diplomats are very annoying to politicians with their cosmopolitan lifestyles and expense accounts but they are cheap and effective compared to military action.

The forty-eight percent

The forty-eight percent in the UK have sufficient common cause that they could galvanize behind one political party in the forthcoming election. If that were to happen, the first-past-the-post system would not be kind to the two major parties.

Brits who opposed Brexit, who are reticent about it, or want a ‘soft’ brexit are now being asked to galvanise around a national platform. Their demand that the next government gets and takes the best deal for Britain is very attractive, and very hard to argue with.

Brexit is a story of disaffection. 52 percent of British voters are fundamentally unhappy with their lives or how they are governed. There are important reasons why this is the case.

But for now, these disaffected people are the people the government is depending on for support. This is obviously new territory for the Tory party. It is more familiar territory for Labour and Jeremy Corbyn in particular, but he has never had to compete with the Tories for these votes. I think this will get very scrappy. The traditional parties will show a very dark side of themselves. And can you really build a national consensus on the basis of disaffection alone?

And make no mistake, this is an election about Brexit and disaffection. There is no other issue on the table. Theresa May has said as much. It doesn’t really matter who the next prime minister is. What matters is what Britain’s new relationship with Europe will be, and how it will bring its own people in from the cold.

We can’t wait any longer: get homebuilding going in Ireland

Things are pretty bad. Two public servants are moving to Abu Dhabi, so they can afford to buy a home in Dublin. We spend tens of thousands of euros to educate and train people, then they have to go to a tax haven to be able to afford to even live in our country.

We have to provide housing, and quite a lot of it, and fast. We are not building anywhere near enough. The basic problem we face is that when all costs are taken into account, new homes are too expensive to provide without government support. It is cheaper to buy a house (even at high current prices) than to build a house. There are a number of reasons for this and we need to address them for sure.

But we also need to get homes built, starting now. We need to be thinking in terms of hundreds of thousands of new homes over the next few years.

On the sidelines, there is an ideological war going on about house-building. Should the houses be built by the private sector, or by the state? The problem is that nobody at all is building houses at the moment at any scale. It is unaffordable for everybody.

There is one good thing however: the country is awash with young people ready and willing to buy a house, and with a strong economy, many of them are creditworthy and have deposits ready.

Here is what I would do:

Firstly, a straight incentive – €15,000 for every bedroom in a new build completed in accordance with building regulations and occupied by 31 December 2019 in the case of a house and 31 December 2020 in the case of an apartment. (There would also have to be conditions to avoid subsidising houses already underway). The figure would go up to €20,000 where more than 100 units are provided on the same site.

Why €15,000? Well, because for a three-bed semi, that’s enough to cover the shortfall between the price of an existing house and a new house in Dublin. The cost overall for 25,000 homes would be over a billion euros, sure, but all of that would be recovered through VAT and PAYE from the increased economic activity.

Every year after 2019, the amount of the incentive could be reduced if it is no longer required.

Secondly a finance structure is needed. Prospective home purchasers should be encouraged to put down a deposit, now, on their future home. Rather than putting the deposit with the builder, they should place it with a government scheme which would provide a guarantee for the prospective purchaser that their deposit was safe. The government could then loan the value of the deposit to the developer, secured on the land.

The government would also guarantee to purchase the property if the original purchaser ‘fell through’ and didn’t go ahead with the purchase, and if a replacement purchaser couldn’t be found. If it did exercise this option, the government would get a small discount (say 7.5 percent).

But if the economy keeps storming on, that is unlikely to happen. And even if the economy weakens and the government has to buy the houses, the country is still going to need these new homes for the long-term. These will be modern, high-quality houses. The government can rent them for the short term, and rent them later on.

Now the builder has a rock-solid, guaranteed purchaser, rain, hail or shine. With this guarantee, the builder can go to the bank and borrow the money they need to actually build the complex.

This scheme is really designed with private housing built by private developers in mind. But it can work for local authorities too. They can use this funding mechanism to build social housing, or they can use it to build houses for resale.

It can also potentially be used by people who want to buy property to let it, though the structure would need to be tailored to avoid abuse.

Is this the full solution? No. We also need to address the problem of land costs. And to do that, we may ultimately need to replan our transport networks to open up new land. We may need more flexibility in the planning laws. But it provides for immediate action and will mobilise the talent and capital we have available already.

Combined with a plan to utilise vacant housing in the most sought after areas of the country, and perhaps some form of site value tax to incentivise use of vacant or underused land, this would put us well on the way to building hundreds of thousands of homes for our growing population.

Where soft power comes from.

The question came up in a discussion with RP Eddy on Facebook, why does Donald Trump, a master of brand and marketing if there ever was one, is so against building the international brand of the US, through ‘soft power’ of diplomacy and international relations.

The answer, I think, is that Donald Trump believes that America’s ‘soft power’ (its influence and ability to get things done where others can’t) derives from its latent ‘hard power’ (the fact that America keeps a powerful military on alert, worldwide). In fact, this is not true, and the reason for America’s influence is that the US is basically trustworthy in its international dealings and follows through on things it says it will do (it is far from completely trustworthy, but maybe 60 or 70 percent of the time, it carries through which is still a lot better than the international batting average. This is not because of moral superiority, by the way, but that the US has many resources to draw on, and considers its options and its actions quite carefully.)

If Trump, as president, believes American soft power mainly derives from military power, then as a new president, he has to demonstrate that power somewhere to prove that he is ready to use it.

By the end of the year: providing some relief in the Dublin property market

The Dublin rental property situation is desperate, with population growing but little being built. Here is a simple first step to provide immediate relief, through a change in the tax code. It could be in place before the end of July if there is the political will.

Despite the crisis, there are reckoned to be 20,000 vacant homes in Dublin alone. If these could be brought onto the rental market, it would make an immediate difference to the housing problem.

UPDATE: latest statistics from CSO for vacant homes in Dublin counties for 2016 are now provided below. There are said to be over 32000 properties vacant.

over 32000 vacant houses in Dublin

over 32000 vacant houses in Dublin

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Emotion Trumps (sometimes)

RP Eddy pointed me at this article about emotional intelligence not always being a good thing. It made me think about Donald Trump. The interesting thing about America’s forty-fifth president is that he has proven to have an awareness of and insight into the emotional life of American voters that others (certainly not the Clinton campaign) simply do not possess.

But his big weakness is also that he is so emotionally sensitive. Look at his demeanour at the press event with Angela Merkel. Did the usually sober Frau Dr Merkel hide in a cupboard and shout ‘boo’ at him, or make ‘comrade’ jokes? Something had deeply upset him. The same week, Enda Kenny, the Irish prime minister called out Trump’s immigration policies to his face (though in a nice friendly way) and he wasn’t fazed at all.

This week, the Telegraph reports that “According to US officials Mr Trump acted from his gut after seeing horrific pictures of child victims in Idlib.” And further: “The signal was unmistakable – if he finds something unacceptable, anywhere in the world, he will not hesitate to use force.”

No one doubts the horrors in Syria. But if you are putting America First, and American interests are not directly at stake, then why get involved? It is an emotional decision, not a rational one. The signs are that the consequences have not really been thought through.

Housing 160,000 more people in Dublin

There is a somewhat lily-livered leader in the Irish Times today about housing. I say that because it is big on telling us what we must avoid, but it doesn’t face up to what we do in order to avoid it. There are some ‘right-on’ ideas about the government having to play more of a role, but that’s about it.

There is a shortage of houses. Dublin’s population is growing at a pretty fast clip, and has been for decades, through good times and bad. There are 160,000 more people in the county than there were 10 years ago, and yet we have build hardly anything. We could easily absorb 100,000 extra housing units in Dublin.

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2016: the year the dream came through.

Osama bin Laden’s dream came through in 2016. This was the year that 9/11 and 7/7 turned out to have been a complete and resounding success for Al Quaeda. America is now in the hands of an unsteady reactionary. Britain is abandoning the union which sealed peace in Europe. The whole middle east is rife with miitary, economic and political turmoil and is the site of a confrontation between the old superpowers.

What’s an algorithm, what’s the problem?

I was at re:publica the other day and someone confidentially asked me: what exactly is an algorithm. Why is Frau Merkel herself upset and concerned? So here’s the understandable explanation.

In the old days, decisions of all sorts were made wholly by humans. If you applied for a loan, for instance, the bank would look at your proposal, but also look at who you were. Had they heard of you or your family? What is your background? And so on.

But then something new happened.

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