The Case for a liberal YIMBYism

What being a liberal in Britain means today

On 15 April, the IEA’s Kristian Niemietz gave a talk at an event organised by the London New Liberals. The article below is based on his remarks.

What does it mean to be a liberal in Britain in the 2020s?

And how does that differ from what it used to mean, say, 15 years, 20 years or 30 years ago?

It is not that liberal principles have changed. There is no reason why they should: we got it right the first time. But there have been – or at least, there should be – changes in emphasis, and in where we fit in on the political-ideological spectrum. The burning issues that keep a liberal awake at night are not the same as those that used to keep our predecessors awake. And the issues you prioritise affect who your opponents and who your allies are. 

Photo by Breno Assis on Unsplash

I have been involved with the free-market think tank landscape – “Tufton Street”, if you will – since late 2008, and back then, things seemed simpler, despite the shadow of the Great Financial Crisis that was hanging over us. Back then, British liberals had a positive story which they used to tell themselves about themselves, and about their place in the country. You have heard it many times, but I will do a recap anyway. The story went about like this:

Once upon a time, from the 1940s to the 1970s, Britain was drifting towards socialism. The result was relative economic decline, with Britain squandering its initial lead, and falling behind other developed economies. Plus all the economic disfunctions we associate with that period: high inflation, unemployment, endless strikes, rationing, blackouts, the three-day week, chronic deficits, an IMF bailout, and so on. In the liberal version of events, all of this happened because Britain, the motherland of liberalism, had given up on its liberal heritage. The climate of opinion had become profoundly statist. It ranged from full-on socialism on large sections of the Left to an interventionist corporatism on the Right. Liberalism was no longer part of the mainstream discourse. It was seen as outdated. A 19^th century philosophy.

But, so the story went, Britain’s twelve or so remaining liberals did not give up. They adopted the attitude of the Principal Skinner meme: “Are we so out of touch? No, it’s the country that’s wrong!” Correctly. Because the country was, indeed, wrong, and the twelve remaining liberals were right.

They kept the flame alive, in organisations like the Mont Pelerin Society, in islands within academia, and in think tanks, such as the one I work for. They kept preaching the gospel, and eventually, it bore fruit. Liberalism made a comeback. When the failures of the statist postwar consensus became apparent, the liberals were there to offer an alternative.

Liberals were never a majority. But they had a strong influence on one current within conservatism, namely, what we would now call Thatcherite conservatism. And so, in the 1980s and 1990s, some liberal ideas were put into practice.

From a liberal perspective, the so-called “Thatcher revolution” was an imperfect and incomplete one. The size of the state did not shrink very much, and there were large areas of economic life that were completely untouched by it. The National Health Service, say. The education system. There was zero political decentralisation, quite the opposite.

But liberal-inspired reforms, incomplete though they were, were enough to drag Britain out of the worst. It was enough to halt the trend of relative economic decline, and up to a point, reverse it. The pathologies that people used to associate with the British economy of the 1970s were largely resolved.

International trends helped. Command economies collapsed in Eastern Europe, and were quietly abandoned in China and Vietnam. We seemed to have arrived at Fukuyama’s end of history.

The mainstream Left in Britain accepted this as well. “The Third Way” was essentially the Left making its peace with, not just the market economy in general, but also with this new, more liberal settlement. They accepted that there was not going to be a return to the 1970s, let alone a march towards full-on socialism. Had liberals “won the argument”? Of course not. Not even close. But we had punched well above our weight. The worst was over, and the future looked brighter. 

So far, so good. This is the story liberals used to tell themselves about themselves. You have all heard versions of before. I used to tell a version of it myself just after starting at “Tufton Street”, in the late 2000s and early 2010s.

It is a good story. It is a true story. It works well to make sense of Britain’s economic history from World War II to the Great Financial Crisis.

But there is one problem with it. 

If this is the story you tell yourself about liberalism in Britain – how do you explain what happened since then? How do you explain more than one and a half decades of near-complete economic stagnation since the Great Recession? Because this was not supposed to happen. 

The liberal story I have just told has a happy-ish ending. It is not a story of liberal triumph, far from it. But it is not a story that ends in defeat either. 

It is a story which changed liberals’ relationship with the status quo. From the 1940s to the 1970s, British liberals could define themselves against the status quo. They could point at Britain’s economic problems, and they could honestly say: “This is your mess, not ours. You broke it, you own it. We told you so.”

A liberal in post-Thatcher Britain has a more complicated relationship with the status quo. No, we do not have to “own” everything that is wrong with the country. We are not nearly as influential as the people who hate us think we are. But neither can we claim to be smash-the-system radicals. The Austrian Economist Fritz Machlup once said that “In an illiberal society the liberal must be a reformer in order to obtain freedom; in a liberal society he must be a conservative in order to maintain freedom”. To which we could add: a liberal in present-day Britain has to be a bit of both.

In 1975, Britain had a rating of 6.3 out of 10 on the Economic Freedom Index. Today, Britain scores 7.9 out of 10. That’s not fantastic, but it’s not communism. It’s not the reason why we’re poorer than Austria, who score 7.6, and it’s not the reason why we’re no richer than France, who score 7.5. We’re not where I want us to be, but we’re not where Owen Jones wants us to be either. Britain is, contrary to popular Twitter opinion, not run from Tufton Street, but neither is it run by Novara Media. It’s a similar picture if we look at the Ease of Doing Business indices: Britain is not fantastic on any of them, but it’s not terrible either. It’s certainly not so terrible that you would expect 18 years of near-stagnation on that basis. 

And I don’t think many self-described liberals did expect it. Imagine there had been a poll in 2010, asking: “How optimistic or pessimistic are you about Britain near-to-medium-term economic future? Do you think that in 2025, Britain will be a noticeably richer country than it is today?”

I suspect most self-identified liberals would have said: Britain will not be a star performer, but it will do no worse than most other developed economies, and probably a bit better than average. So yes – we absolutely would have expected the Britain of 2025 to be a noticeably richer country than the Britain of 2010. That’s probably what I would have said, if someone had asked me in 2010. Maybe there’s an old article from me from 2010, in which I did predict precisely that. In which case I hope nobody ever finds it. Because it would clearly have been completely wrong.

But why was it wrong?

If you are a socialist, the answer is very easy: neoliberalism has failed. We neoliberals, a socialist will say, have been in charge of the country for four and a half decades, and we have run it into the ground. They will say that we broke it, and that we now have to own it. That this is our mess. 

As a liberal – how do you answer that, without committing the same fallacy that the socialists commit? Without sounding like “But that wasn’t real neoliberalism – real neoliberalism has never been tried!”?

If you now want to argue that Britain is a million miles away from liberalism, and that therefore, the status quo has nothing to do with you, then you also have to repudiate the story I told earlier. We would have to disown the positive story that liberals used to tell themselves about themselves. We would have to argue that this positive interpretation of our own history, in which we liberals had achieved great victories and punched above our weight, was mistaken. We would have to “retcon” a version of events in which liberals never really achieved much, in which liberals were always the unfashionable outsiders, and in which the status quo has always been an illiberal one. I don’t think we should do that, even if we could get away with it. Because it would be intellectually dishonest.  

So – what is the reason why Britain’s economy refuses to grow? What’s the story here? Is that a story of “too much liberalism”, or of too little?

I’m a think tanker, and we think tankers sometimes have a tendency to overcomplicate things. I’d argue that in this case, the answer is remarkably mundane. It’s not so much a capitalism-vs-socialism, or a markets-vs-state-direction issue (except maybe indirectly – I’ll get to that). No: the reason why Britain doesn’t grow is that Britain deliberately starves itself of the key inputs for growth. Simply put, economic activity has to take place somewhere. It needs physical space. It needs premises, infrastructure and energy. And Britain refuses to provide those.

We’re not building enough houses. We’re not building enough offices. We’re not building enough retail outlets. We’re not building enough infrastructure. We’re not producing enough energy.

The English housing stock is 3.4 million units short of the EU average, and those housing units are also, on average, much smaller than their EU counterparts. Electricity generation per capita is about a third below the EU level. The length of the road networks, in km per 1000 people, is about a third below the EU level.

Heathrow Airport is, in a sense, the perfect summary of the state of Britain. Heathrow was privatised in 1987, alongside British Airways. That was at a time when most of the EU was still reluctant to allow market forces in that industry, so Britain was a pioneer of liberalisation in this respect. This was followed by a broader liberalisation of air travel.

The results were great. New airlines entered the market, competition increased, productivity increased, prices dropped, new airline routes were opened up, passenger numbers went through the roof. A great free-market success story. Real liberalism has been tried, and it worked.

But then, gradually, the capacity constraints started to bite, and growth slowed down. There’s only so much activity you can squeeze into two runways. That’s the bottleneck.

Now, what would you make of it if a socialist said: “See, Heathrow isn’t growing, so clearly, privatisation and market liberalisation have failed. Clearly, we need to renationalise the entire sector, and put it under state control! What, you don’t accept that? So are you saying that it wasn’t real privatisation? Are you saying that real market liberalisation has never been tried?”

That would be a nonsense argument. Of course it was “real”, of course it worked, and of course it could still work today. But there simply is no system – not capitalism, not socialism, not anything else – under which planes can take off and land without runways.

That, in a way, is what makes the British situation so frustrating. We’ve got the complicated institutional stuff right. We’re just too dumb to put some tarmac on the ground! And that perfectly sums up the state of the whole country. Heathrow is Britain.

Britain chokes off growth by needlessly depriving itself of the physical space in which economic activity can take place. And that cancels out a lot of the good stuff that Britain gets right. Therefore, I would argue that in Britain, the key ideological dividing line of our time is NIMBY vs YIMBY. Are you one of the people who want to give Britain room to grow? Or are you one of the people who want to block progress, because you think it’s inconvenient, messy or grubby?

What does this mean for liberals? What is the relationship between YIMBYism and liberalism?

I’d simply say, YIMBYism is very easily compatible with liberalism, but it is also compatible with other political philosophies. You can be a centre-Left, social-democratic YIMBY. That’s a perfectly consistent outlook. You can be a conservative YIMBY. That’s also a perfectly consistent outlook. I’m not saying that there are YIMBYs everywhere on the political spectrum – there aren’t – but YIMBYs can be found in a variety of places, and no single ideological tribe can claim sole ownership of the YIMBY label. Nor should they try to.

But there is definitely a space for a distinctly liberal YIMBYism. We can argue that the rot set in the moment we collectivised land use rights. The original sin was moving away from the liberal principle of individual private property rights. We abandoned the “your property, your choice” principle, and replaced it with “democratic decisionmaking” by “the community”.

Our communitarian opponents say that we liberals are dogmatic individualists who don’t believe in “the community”. They are right. If “the community” is a bunch of NIMBYs, then to hell with “the community”!

Liberal YIMBYism is not new. In 2002, the IEA published the book Liberating the Land: The Case for Private Land-Use Planning by Mark Pennington. That is an early manifesto of liberal YIMBYism. But it was not the first of its kind.

In 1998, the IEA published John Corkindale’s Fifty years of the Town and Country Planning Acts: Time to privatise land development rights?, an even earlier manifesto of liberal YIMBYism. But it was not the first of its kind either.

We can trace liberal YIMBYism back all the way to 1988, when the IEA published the book No Room! No Room! The Costs of the British Town and Country Planning System by Elan Evans, which we have recently republished. Although maybe too moderate in its conclusions, that may well have been the original manifesto of liberal YIMBYism.

So liberal YIMBYism has been there the whole time. Nobody needs to reinvent the wheel. It’s more about what you do with that wheel once you have it. A quarter-century ago, the capacity constraints which now hold back the British economy were already being felt, but they were not yet absolute. It was possible to treat them as one issue among several. It was possible to be concerned about them without being obsessed by them.

That’s the difference between then and now. If you’re not obsessed with this issue by now, you’re just not paying attention. These capacity constraints are not just choking off economic dynamism and prosperity. If we do not remove them, they will choke off liberalism, too, despite all the good things we achieved in the past.