Sunday, April 06, 2008

Panmure House: Express Your Support Now - Please

Some discussion on the web about the sale of Adam Smith’s residence in Edinburgh has been disappointing, including from people who should have known better.

Economics gets a bad press when it pontificates as if nothing else mattered in the world than the price of something. In this context, neoclassical economists and, sad to say, some libertarians, have spoken without knowing anything about what is actually going on, who believe that it is merely a house sale, and speak as if this is an pre-school exercise in demand and supply of a commodity without any human beings present.

The facts are that the current owners, Edinburgh City Council, of the property – Panmure House, just off Edinburgh’s ‘Royal Mile’ in which Adam Smith lived from 1788-1790 – are seeking to consolidate their share of the City’s property portfolio in order to invest £1.6 million into renovating their other properties with a view to improving their services as the Families and Childrens department.

Under Scot’s law property is sold by sealed bid auction. In this case they are seeking offers over £700,000 for Panmure House, along with two other significantly sized properties in other parts of the City, with a view to raising £1.6 million from all three properties for their current budget. The offer date for Panmure House was 12 noon on 4 April.

Under law a seller does not have to accept the ‘highest or any bid’ and this is particularly so when property is listed as of historical or as some other unique interest attached to it. It may also be the case that the offer price of a bidder is accompanied by certain conditions – ‘subject to survey’ or ‘subject to planning consents’. Panmure House is ‘A listed’, or in the highest protective category (much as I assume the White House as a casino or Arlington Cemetery as a parking lot are so regarded by mainstream USA).

Those who wish to change the use of Panmure House would need to obtain planning consents which could take time – a year or more if the changes were controversial – and a structural survey condition that could take a month or so. Such conditions provide the buyer with an ‘opt out’ from the obligation to purchase. In contrast, a bid that had no conditions attached (other than the City Council proving it had title to sell the building) could be more attractive than, say, a higher bid.

Clearly, those vulgar philistines who suggested that the house must go to the ‘highest bidder’, irrespective of what they intended to do with it – one cretin said ‘so be it’ if it was opened as a Macdonalds; even Alex Tabarrock, of the usually reliable and venerable Marginal Revolution, claimed Panmure Hause ‘must’ be sold to ‘highest bidder’, betraying an affinity with neoclassical economics at its most barren and simultaneously an ignorance of the Scottish planning process, and what we mean by the word, civilisation.

To assert, as some did too, that Adam Smith would have it no other way (where do they get such ideas from?) is plain daft. Adam Smith’s question would almost certainly have been: ‘for what do you intend to purchase the property’ and then he decide whether your proposal was socially beneficial and adhered to the law (without law and justice ‘society would crumble to atoms’ – Moral Sentiments) and was it educational (‘a little school in every parish – Wealth Of Nations)?

The decision to sell will be taken in consultation by politicians (fortunately a disparate group of environmentally-minded Liberal democrats and heritage-conscious Scottish National Party elected members), the fulltime officials of the Council, and the City’s Planning Department. They will examine all the bids and sort them according to their offer prices and any of their ‘conditions’. They will also take notice of any representations made to them regarding the sale by the general public.
I cannot predict the outcome, as I do not know the financial details of any of the bids, nor their attached conditions (if any), nor the intentions of the bidders or their bona fides.

I do know that I, along with all other Scottish citizens, have a legal right to offer my views (I live and vote here, meeting my longstanding condition to only express on Lost Legacy such views about where I vote) on this kind of matter.

My view is that if there are bids from persons or institutions that are in excess of the ‘offers over’ the £700,000 asking price of the City Council, which are unconditional, that fully accept the ‘A’ list restrictions, that in addition offer a ‘public duty’ commitment to restore Panmure House and to use it for educational purposes, especially education about Adam Smith and the Scottish Enlightenment, and project the modern application of political economy to all levels of education, from schools to post-graduate institutions, and that the faithfully restored last home of Adam Smith will remain accessible to the people of Scotland and to the many visitors that Edinburgh attracts, then their bids should be considered to be in preference to any bids that may quote a higher bid price and have ‘get out’ conditions, or envisage ‘change of use’ permissions, and those that are purely speculative, and do not share the preferred bids intentions.

I bow to no one in claims to be a Classical economist and to understand how markets work, and I need no lessons from vulgar neoclassical epigones who resort to promoting their cartoon characterizations of what economics is about.

To register your support for the Panmure Project follow this link HERE for more detailed information. The City Council meetings deciding the future of Panmure House take place this week in Edinburgh; so please add your names and affiliation and send them to: as soon as possible.

Thank you.



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