Monday, 11 January 2016

The Campaign To Save This Popular Norwich Pub Is Short-Sighted


It seems that in my city there is a popular music pub called The Owl Sanctuary, which has been bought by property developer Richard Pratt with the intention of building flats. However, because of the weight of discord by its regulars, and a concomitant petition to boot, it seems to be that even though the sale of the building has gone ahead in a mutually agreed transaction between property owner and property buyer, Norwich City Council has declared it an 'asset of community value' and is looking to give it protection against it being demolished and turned into flats. The result of this is that the 'community' (basically a lot of indie/goth pub drinkers) will now be allowed to band together to bid to buy it.

Alas, this is another one of those classic cases whereby only the tangible benefits (to those connected to the pub) are being focused on, and not the tangible and intangible costs (to just about everyone else). If the pub goers had more familiarity with things like Marshall improvements and Pareto efficiencies, they may understand that this sale should go ahead, and that the council shouldn't involve themselves in such ill-conceived ideas of deciding what are community assets.

Given that Marshall improvements and Pareto efficiencies are usually along the same lines in terms of optimal outcome, I will just use Pareto's model to explain. Pareto-efficiency is the measure by which an action occurs that if it makes someone better off it makes someone else simultaneously worse off. An event or action is called 'Pareto-superior' if it can make someone better off without making anyone worse off. Now although economies and societies are vastly more complex than simplified Pareto models can fully capture, they can usually do a competent job of informing us when ideas are good and bad in terms of inefficiency and consumer/producer surpluses.

The reason economists are best at knowing whether ideas are good or bad is because economic thinking attunes people to seeing where the market will naturally facilitate a more optimum outcome. Suppose between them Jack and Jill have enough potatoes and sausages for 20 platefuls of bangers and mash, but Jack has all the potatoes, and Jill has all the sausages. A mutually beneficial allocation of resources through trade means that both Jack and Jill can have 10 meals consisting of bangers and mash. Without the trade, Jack would simply have 10 boring meals consisting of potatoes, and Jill would have 10 boring meals consisting of sausages. Because Jack and Jill are best equipped to look after their own interests, nobody has to tell them to undertake a trade.

Obviously most market situations are more complex than that, but a simple application of the same principle can show us why the Owl Sanctuary transaction should go ahead. Who is made better and worse off if the Owl Sanctuary is converted into flats? We know the people connected with the pub - basically the manager, bar staff and customers - are made temporarily worse off because a handful of people have to find new jobs, and a larger group no longer have their venue in which to perform, drink and socialise. But just about every one else is better off: the two people involved in the buying and selling of the property (as well as those collecting fees), the builders involved in demolition and construction, all the other people involved in property development, and all the people that buy the properties once the project is complete. What will also be a benefit to Norwich as a whole is that the land on which the properties are built will be used more efficiently than if left as it is.

Don't misunderstand, I'm not unsympathetic to the people that are against the loss of their highly-valued pub - there are pubs I value too, and I would be sad to see them demolished. But being sad to see them go is an emotional feeling, it is not the same thing as saying what the most efficient outcome is in net terms. Because, in net terms most people gain, and even the few that temporarily lose will adjust and adapt to the changes, because by and large the things valued in this situation are not bricks and mortar, they are people.

What will happen without the needless council intervention is that the sale of the Owl Sanctuary pub will generate further opportunities for other music-friendly pubs to take its place, or perhaps offer a pub looking to become more established on the music scene the chance to fill the gap. Basically, whatever happens, the market transactions, without the intervention of the city council, would have all worked out fine in the end, as people are pretty good at adapting to changes by themselves, without needing the government to hold their hand.

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