富不过三代

In sealed bid auctions in Scotland the seller is not obliged to accept the ‘highest or any bid’, and being a public authority, funded by taxes, it is obliged to consider whether the bid is ‘clean’ (no conditions) or conditional. The private developer imposed the restrictive condition that her bid was ’subject to a structural survey’ of the building built in the 1690s. The EBS bid was ‘unconditonal’ and the money is due on the exchange of contracts (or ‘missives’ in Scotland) in about two weeks time, after the Scottish Government approves of the sale.

The private developer’s bid may be withdrawn if the structural survey, carried out by her surveyors over the next moth or two, shows substantial costs of restoration, leaving the Council to start the bidding over.

The bid documents required bidders to state their intended use of Panmure house. EBS intends to renovate the building (at its own risk and expense), and use it as an education centre for post-graduate research, a library and seminar rooms (open to other universities to hire). It will have a business plan and will undertake income earning activities only.

EBS is not supported by public funds; all of its income comes from commercial educational work in post-graduate education (currently 6,800 students across the world, and 10,000 graduates).

Many Blogs have jumped in to shout about ‘free markets’ but they appear to know nothing of the private enterprise of EBS, a separate unit within a publicly funded university, from which it receives no subsidies - it pays for any university services it uses (over a £1million a year), and uses it annual ‘profit’ for EBS’s charitable objects.

Perhaps you may wish to change your stance? I am sure Adam Smith would approve - in his day universities received no government funding.

Gavin

As for insurance, an interesting point is if you live all the way to your natural end, then the insurers have ‘won’, because the premiums are set such that they profit when people live out their lives without incident.

So the only way you can profit from buying life insurance is to die before the sum of insurance payments exceeds the insured amount. For example, if you are insured for $10,000 with an annual premium of $1,000, then you have to die within 10 years to make a ‘profit’ (I ignore the time value of money to keep it simple).

Hence, you can view insurance as a sort of betting game between you and the insurers. The insurers are putting their bets that you live long enough to pay all your premiums, and you are putting yours on dying before that. Viewed in this way, that is why the paradoxical situation arises where the more premiums you pay, both your life and death increases in value. Your life increases in value to your insurers, your death increases in value to you (or actually, your beneficiaries).

The increased value of your death is exactly the reason why insurance payouts are one of the main motives behind murders these days. If you are insured for a huge sum, then I suggest you keep away from the beneficiaries listed in the contract as much as possible.

Hmmm. If so, should we still buy insurance and increase our value of death?

But then again, buying insurance could be a way of valuating how much we think our life is worth. So the more premium we pay, means our life is worth more, but so is our death, right?

What do you think?

Thanks for the comment. I admit I know much less about the matter than you do, since I am not intimately connected with the matter. But perhaps the lack of emotional connection also helps in viewing things in perspective.

With regards to Sir Alan and the decision to bid for the property, what you have said is rather inconsistent from what the parties have told the press (or given how the media works these days, what the press has reported them saying). Which brings me back to my point that talk is cheap - not yours, but talk in general.

I fully understand that the “loss” of the property will be a big blow to you and your fellow academics if it is sold. But I’m saying that by looking from the broader perspective - which economists like you and me are so trained in doing - the public as a whole benefits from the sale of the property when it is sold to the highest bidder i.e. the one who wants it most.

Lastly, I think the link between my desire for job security and the desire of others in protecting Edinburgh’s architectural heritage is tenuous at best, but I would say that I welcome all competition

P.S. I fully support your drive to preserve the property.

Good point, I was deciding on what payoff to give for quite a while. I finally decided on the payoff for the current self being -1 as long as he smokes, whether it is in the first or second period. This is intuitive, as once you start smoking you “undo” the good work of not smoking beforehand.

But I agree fully that we should save for the future - that brings up the whole intertemporal consumption model again…

Panmure House is an ‘A listed’ property in Edinburgh and is in the highest protected category. Sir Alan Peacock has no quarrels with the house being sold on the market; his objection was the way it was described by the seller as a ‘development opportunity’, which in ordinary parlance means anything from knocking it down for an apartment block, or worse, to letting it go the ruin as an investment before replacing it with ‘tat’.

The price tag is not just £700,000 - it’s an ‘offers over bid’, a sealed bid auction. After which there would be restoration costs, perhaps of a similar amount.

Some of us would like to see it bought for around £700,000 and restored by non-public funding (private subscription) to be rested for educational purposes connected with the works of Adam Smith and his friend David Hume, academic research projects, and international meetings.

I visited it today with Sir Alan and others from Heriot-Watt University, preliminary to a decision on whether to bid. I visit it regularly when showing academic and journalsts visitors to Adam Smith’s Edinburgh.

We never ‘tried but failed to buy it’ nor are we ’sad’, and the house in today’s market is probably ‘ [may be] ‘worth the magic number of £700,000.’ Ours is not ‘cheap talk’. You are talking about something you apparently know nothing about.

I trust you are not a typical economist who talks big about ‘free markets’ but nevertheless has, or seeks, the job protection of academic tenure, while denying such privileges to others seeking to protect Edinburgh’s architectural heritage.