Operations Management of Bell Helicopter Company Essay

Operations Management of Bell Helicopter Company - Essay Example Bell aircraft can be found flying in over 120 nations accumulating fleet time at a rate in excess of ten flight hours every minute of the day (Bell helicopter, 2005). 1. Bell helicopter company offers a team of product support engineers and customer service representatives, fluent in many languages, who are available for the whole day and whole week to assist customers around the world, thus allowing timely diagnosis of a problem and appropriate solution. 2. Bell Helicopter Company warrants each overhauled or exchanged component to be free from defect in material or workmanship under normal use and service. Sellers' sole obligation under this warranty is limited to replacement or repair of parts which are determined to sellers' reasonable satisfaction to have been defective within 1500 hours or operation or two calendar years after installation whichever comes first and reimbursement of reasonable freight charges (bellhelicopter.com). 3. Although the company is equipped with impressive manufacturing facilities, it depends on many North American and foreign suppliers who provide more than 500 million dollars worth of components or services annually. 4. 4. The material team is composed of seasoned aerospace industry professionals who, by closely working with suppliers, ensure constant availability of quality supplies, to benefit both company's operations and its clients, while minimizing the inventory cost and the total purchase cost of these parts. 5. Aeronautical accessories Inc. provides aeronautical accessories designs, certifies, manufactures and markets a wide selection of quality helicopter parts and accessories for manufacturers including Bell, Eurocopter, Sikorsky, and others. The company supplies products directly to helicopter manufacturers for installation on new aircraft and to helicopter operators worldwide. Rotor Blade Inc. supports bell operators with quality blade repairs. RBI offers a 3-year, 2000 hour prorated warranty on every blade repair. 6. Bell Helicopter Company uses state-of-the-art equipment such as computerized and personalized systems for flight tests (CAFTA) or for new product design (CATIA) to meet its stringent requirements. The BHTCL Engineering Department possesses a unique helicopter-technology expertise. 7. The purpose of Quality Assurance in Bell is to provide total confidence that the finished product meets or exceeds given Federal Aviation or ISO 9001 regulations and that the product has been manufactured in conformity with Bell Helicopter Quality Standards. 8. The functions of Quality Assurance consist in quality-system evaluation of suppliers to ensure they fulfil company's requirements, receiving inspection, aircraft certification, non-destructive testing, gauge calibrating and corrective and preventive action programs. Quality Assurance is responsible for maintaining manufacturer approval on behalf of Transport Canada and is also responsible for the Aircraft Maintenance Organization. 9. Bell Helicopter is committed to airborne law enforcement, corporate, EMS, and Energy/Utility markets. Bell provides a specialist to ensure that customers have someone to rely on for their specific needs (2006). 10. For cost effectiveness in manufacturing, the company uses Business Objects to improve assembly operation

Accounting and capital markets Essay Example | Topics and Well Written Essays - 2000 words

Accounting and capital markets - Essay Example In the above assessment, the expected value of dividend for 2013 has been measured by taking into account a dividend growth rate that has been proposed by board of each company which is atleast few percentage above the prevailing inflation rate. The expected value has been calculated using Gordon’s formula: D1=D0 (1+g); where g is the dividend growth rate. The dividend growth rates have been sourced from annual report of each company for 2012 (Pennon Group Plc, 2012; Severn Trent, 2012; United Utilities, 2012; National Grid, 2012). The risk free return value has been obtained by taking into account yield on 10 year UK government bonds. It was considered risk free because only government bond investments are considered absolutely safe. The data has been sourced from Open Knowledge (2015) and annual value has been taken into account. The beta represents systematic risk of an organisation. In this paper, the beta value of each company against all FTSE shares has been considered (Caldwell, 2013). The price earnings (P/E) ratio reflects healthy prospects of a company in the stock market. It is calculated as: Market price of share/ Earning per Share. As per instruction of the paper, the market price of share of each company has been calculated on 01 October 2012. However, the EPS value was measured from the respective annual reports. The expected market return has been calculated as reverse of the price earnings ratio. The cost of equity herein has been calculated as: Ke = Rf + ÃŽ ² * (Rm – Rf) and Stock valuation can be largely categorised as absolute valuation model and relative valuation model. For absolute valuation, the paper has considered dividend discount model. One of the important dividend models is Gordon’s dividend growth model. This model is essentially utilised for valuation of equity stocks and is based on the notion that

Network Security Planning Assignment Example | Topics and Well Written Essays - 750 words

Network Security Planning - Assignment Example White (2001) defines Cisco SAFE as architecture in security that offers guidelines for modular networks design approach (Cisco, 2010). This approach makes its ease for network designers to understand relationships thus proceed to execute security based on one module after the other unlike the traditional approach of implementing one broad approach for the entire enterprise. Despite its advantage of maximizing control and visibility, Cisco SAFE has limitations and this paper explores these limitations in detail and their impacts on network security. With Cisco SAFE, denial of service attacks is a widespread threat especially for organizations that do not implement protocol analysis in network security design. With poor protocol analysis, the network lacks significant pattern matching with IDS guaranteeing that the rules of each protocol are followed and this results to sending of both protocol related and unrelated data streams. Consequently, traffic is not valid and is an attack that bypasses security systems or an attack crashing the system due to invalid data presence in the intended system. DoS is overcome by ensuring that IDS in Cisco SAFE has the right knowledge of ordinary system protocols like UDP, TCP, FTP, and HTTP. A second limitation is distributed denial-of-service (DDoS). Without proper configuration of Cisco’s firewall Intrusion Detection System (IDS), organizational networks are subject to DDoS attacks preventing networks from bandwidth access (World, 2002). DDoS attacks consume entire business network bandwidth by attackers while Cisco IDS offers distinctive protection against DDoS by detecting attacks proactively and mitigate them. However, Cisco IDS requires configuration after router configuration to enable it to identify and block attacks prior to the occurrence of intrusion or unauthorized transactions and this calls for effective configuration of Cisco IDS. For any

CRJS405DB4 Research Paper Example | Topics and Well Written Essays - 250 words

CRJS405DB4 - Research Paper Example These include but not limited to collation, filtering, visualization and processing of data. Collation is the major role played by Excel. It involves gathering items that are related together into a solitary location, the spreadsheet. This aids in facilitating interpretation of data as only those records that are related are kept together. The organization of data in the spreadsheet also enhances clarity and neatness of the records, making access and retrieval easy and faster. Filtering is also another important feature offered by Excel. The data sets can also be easily visualized, making the work of the managers easy and more efficient to perform. SPSS can be defined as an integrated collection of tools for analysis of data commonly used and applied by social scientist researchers ( Mckeh & David, 2004). It is a computer based software package for quantitative data analysis commonly used for analysis of statistical data and other data management tasks. SPSS offers predictive analytics, a common feature which is beneficial to all businesses regardless of their industry. This feature involves predicting changes in the future trends in selling patterns. The results are then translated quickly into a number of harmonized decisions which aid in management and planning for future trends. This helps organization to take caution of possible risks of failure in the future, thus adjusting their operations to fit the situation ( Wagner, 2011). This saves money and improves customer satisfaction, thus ensuring continued success of the business. Future losses are prevented before occurring. When one uses the data garnered in a survey as a tool to develop a profile of features to be used by the company when hiring workers and call that Ideal, it could mean a stagger in the ethics of business. This is equated to having a mold of potential employees and calling them ideal (Cooper $ Vault, 2009). Each of them will be diversified in the

The white mountains Essay Example | Topics and Well Written Essays - 1000 words

The white mountains - Essay Example Surprising tones were displayed among the bands of earth made visible by road cut-throughs. These bones of the mountains, the strata that reveal their core construction, only serve to heighten our perception of the volume of rock we’re seeing and the weight of patient time it has taken for wind and weather to sculpt the billowing rounded crests we see emerging around every angle we look. Even the chatter in the car during the drive takes on new dimensions with the changing scenery. While we start with discussions of a suitably frivolous nature, by the time we’ve hit the true mountains our conversation has taken on new weight and purpose. We begin discussing our destination point, The Old Man of the Mountain, and how it came to be. This was a rock formation chiseled out of a cliff’s edge by wind, water, weather and the natural rock fracturing that occurs as a result of constant changes in temperature. The formation closely resembled the features of a craggy old man in profile. The formation collapsed in 2003, the year after our visit. Our stories of how we’d first heard about the Old Man and how we eventually came to the decision to visit slowly began to taper off as the grandeur of the mountains surrounding us began working on our subconscious. With the revelation of each new vista, we began losing track of our conversation, allowing sentences t o dangle without completion as we were struck silently breathless at a new view. Then, suddenly, we were there, at the lookout point just off the freeway that affords a perfect view of the Old Man in profile as he gazes over a spectacular view of Profile Lake. The lake isn’t often mentioned in descriptions of the site and makes a stunning and sometimes surprising counterpoint to the face. He exists in awesome, mystifying reality, poking out from the side of the cliff in perfect detail. It is surprising to us how

The Invisible Hand Theory Essay Example for Free

The Invisible Hand Theory Essay â€Å"The Enquiry to the Nature and Cause of wealth and Nation† by Adam Smith is one of the well-known influenced books in the economy. As express on the title of the book, it shows Adam great interest on wealth condition of a nation. He doesn’t locate the wealth on natural resources and climates but in division of labor and the â€Å"Invisible Hand† within competition of free-market. In Vietnam, healthcare, education and retirement services are opaque and inefficiency due to State monopolization. So by applying the â€Å"Invisible Hand† theory to Vietnamese market, it would be a shift of local economy. The theory â€Å"Invisible Hand† In the book â€Å"The Enquiry to the Nature and Cause of the Wealth of Nation† by Adam Smith, he expresses three arguments: the Economizer Argument, the Local Knowledge Argument and the Invisible Hand Argument. (Otteson and Meadowcroft, 2011:99) [1] â€Å"Invisible Hand† is the term which is rarely mentioned in Adam’s work but has great influence in modern economy. In details, he wrote: â€Å"†¦Every individual necessarily labors to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it†¦Ã¢â‚¬  (Smith, 1950: 9) [2], that simply means the entrepreneur is motivated by self-interest to satisfy their need but unintentionally by doing so, at the end it not only benefits himself but also to other people. People act unintentionally with local purpose in mind but it does not only to them. In contrast, Smith believes that it also includes concern about family and friends as well. Smith describe people as economizers and who want to save their time and energy while try to get enormous return of investment (Otteson and Meadowcroft, 2011:99). People use energy more efficiently benefits not only themselves but others. Since people are allowed to focus on narrow range of activities, it creates surplus in goods which they can sell or trade on the market. Furthermore, other locals may interest and imitate that so it saves time and energy for them as well. Another point is that when division of labor is accepted and people allow specializing or concentrating on their task, it will unleash hidden human ingenuity as mentioned on Prof. James Otteson’s interview Adam Smith: The Invisible Hand, 2011 [3]. For instance, entrepreneurs will figure out better ways to do things to satisfy their interest. In order to create opportunity for specialization, free up of market is essential. The competition between buyers and seller is motivated by profit for individuals, as the result both sides have to improve their products and reduce selling prices. This process of attracting customers is leading by the â€Å"Invisible Hand†. Generally, external forces such as Government interventionism is unnecessary because economy can be sustain under guidance of â€Å"Invisible Hand†. Overall, Smith saws creation of the free market as resources of higher standard of livings. (Morgan, 2010:23)[4] To sum up, the â€Å"Invisible Hand† shows that innovation and free market can generate specialization and productivity therefore improves living standards. Positive negative attributes One benefit of the Invisible hand is that it can guide free market through competition for scarce resources therefore benefits everyone since not only it makes the firms produce more quality resources but also enhances variety of products in the market with cheaper prices. (Otteson and Meadowcroft, 2011:89). As this process is repeated in other industry, people will enjoy buying as well as increase their living standards. Even though it is possible that the Invisible Hand can improve living standards but Adam Smith’s ideas only suitable for capitalism for free-market period. Later, when the economic crisis happens, people need visible hand of government intervention to balance the economy. Another disadvantage shows in total free market dominant the market by State-owned enterprises. Petrol in Vietnam for instance, Petrolimex holds nearly half of the market shares and it betrays the principle of free market. Lastly, division in people values will be deeper. (Vietnamnews, 2013)[5] Summary newspaper article Title: Public expects better quality service The author suggests that Government should â€Å"play as regulatory and supervisory role† in management of healthcare, education and retirement. In Vietnam, Government is still a major public service provider so that service users have very few options to choose. In addition, according to a survey made by Central Institute for Economic and Management, public services are facing low efficiency in allocating the funds as well as little engagement with non-State sector. As the result, quality provided remains low. In order to solve the problem, Nhung, a supervisor from Institution, suggests that â€Å"public sector should only do what private sector is unable to do† which also means open up the market for private sector to provide public service. Relevance Opaque, corruption and inefficiency Low efficient services provided by the public sectors is the fact that local people facing every day. Not only healthcare, education and retirement are State monopolized but also petrol market such as Petrolimex. Since the mid 1980s reform period, Vietnam has change from planned economy to a Socialist-oriented market economy but state sector still accounts about 70 percent of total economic activities in Vietnam. Moreover, the sector hasn’t been seen in good health in recent years. For instance, economic scandal, giant Vinashin which announced $4. 4 billion losses which is the biggest lost to the national budget (France24, 2013) [7]. Return to the healthcare system, most Vietnamese have to pay health services out of their own pocket even though it’s public service. There is another fact that patients have to bribe the doctors or they will put him in waiting list for treatment. Opaque, corruption and inefficiency exist in public sector due to lack of competition in the market. â€Å"Public sector should only do what private sector can’t do† Private healthcare or private operators may be more innovative in telemedicine which is use telecommunications to provide patients with clinical healthcare at a distance. Due to profit motive, they can be very productive while public sector meets limitation in funds so leads to low quality services and number of researches. In that case, instead of monopolizing the market, public sector should play as supervisory role as Ms Nhung said (Vietnamnews, 2013). But there is negative affect if market is open for private sector; quality of services in Vietnam highly depends on remuneration for doctors and staffs. Consequently rich people will get better services than others and that creates division in people values. Recommendations If free market is apply, private healthcare has to be more carefully regulated to ensure that it achieves national standards as well as safety, value, and efficiency. Similarity, State should have taxes, standards and a legal system to encourage the free market to operate quickly. New technology can be used in administration of hospitals. Conclusion  Even though Vietnam did change to Socialist-oriented market economy which is partly open-market, the public sector still suffers from â€Å"long illness†. It let a web of state own firms control the economic and stubbornly resistance to change. Note that free market mention by Adam Smith is base of capitalism so it can create also a political issue when trying fully applying it to Vietnam despite the fact that competition does enhance quality of services. On the whole, I would call Vietnamese market is a partly free-market since it encourages private sector in some industry but monopolizes in a few like petrol or electricity.

Analysis of Affordable Housing in London

Analysis of Affordable Housing in London 1.1 Arguments and Discussions A report published recently by the Greater London Authority on the problem of affordable housing in London in June 2005, revealed that the issue of â€Å"affordable housing† (Karn and Wolman, 1992; p.16) was the most pressing matter Londoners wished to see dealt with in terms of improving London as a place to live (Greater London Authority, 2005; Section 2.3). The Barker Review of Housing Supply, not only supported this viewpoint, but it identified housing as a basic human need (Barker, 2006; p.1). Affordable housing in London is therefore a controversial and highly topical subject at the moment (Karn and Wolman, 1992; p.16) (Barker, 2006; p.7). The debate surrounding it is underpinned by various political, sociological, economic and financial factors (Greater London Authority, 2005; Karn and Wolman, 1992; p16 (Rugg,1999; p.19). This thesis will examine why there is an affordable housing shortage; who really would benefit from affordable housing and what sectors of the population are affected by problems associated with affordable housing. The concept of affordable and who really wants it will be examined in detail, since the notion of affordability is essentially so subjective that it is open to interpretation on many levels. Affordability as a concept, will therefore be examined from an ethical point of view; from an economic point of view and finally from a sociological and political point of view, since these viewpoints will all constrain and influence the ultimate interpre tation of what it means to be affordable.    The thesis will attempt to discover if any agency or individual may be blamed for problems associated with affordable housing in London and the policy context this relates to. Historical factors such as Thatcher’s ‘Right to Buy’ policy (Evans, 2004; p.20) will be examined as well as contemporary initiatives such as equity loans for certain keyworkers’ schemes (Greater London Authority, 2005; Sections 5.16). Where historical issues have impacted the contemporary manifestation of issues connected with affordable housing, these will be analysed. Specifically, the thesis will examine contemporary and historical issues relating to affordable housing through two in depth case studies. One will be on the subject of the ‘Right to Buy’ policy introduced by Thatcher and the other will relate to the definition and depth of debate contained within the idea of affordable housing. These two in depth case studies will be examined qualitatively and will be referred to throughout the thesis. There will also be an economic analysis of the problem of affordable housing, and ideas such as artificially controlling the prices of houses in London will be considered. In this sense, there will be a theoretical evaluation of who really wants affordable housing, as the research will specifically ask if it would be desirable to advocate the imposition of affordable housing upon the London housing market.   The thesis will also consider various issues which are related to the problem of affordable housing such as social and economic policies within the city itself and the social problems which are themselves shaped by shortages of affordable housing in London. Therefore various themes will be drawn out during the course of the thesis and these will include social exclusion, poverty, salary concerns amongst professional and semi-professional sectors, house prices, population and demographic cleavages, anti-social behaviour and crime (Greater London Authority, 2005, Section 5.16 ). These themes will be drawn together to ultimately address the question of ‘Who really wants affordable housing?’. 1.2 Conclusions and Recommendations At this stage the conclusions and recommendations of the chapter are that given the issues which have been highlighted above, an argument can be made that affordable housing is a controversial issue which warrants further investigation. These investigations will attempt to shed more light on the concept of affordable housing and who really wants it. The next chapter will look at the methodology   for the thesis, which will set out the means through which this may be achieved.    CHAPTER TWO: METHODOLOGY 2.1 Overview This section will explain the definition and nature of qualitative research and how it will be used in the thesis inquiry. It will outline the research methods which will be used in the research and what framework these methods will be used within. The research will be based upon a qualitative analysis of two case studies; one contemporary which will be based on the concept of affordable housing itself, and the other historical and this will centred on the ‘Right to Buy’ policy introduced by Thatcher in 1980. These case studies will be derived from examination of published texts within the field of economic and politics. These texts have been identified as an appendix to the thesis. Where quantitative information is relevant to the thesis this will be looked at, but evaluated qualitatively, since the basis of the research will be mainly qualitative in nature. Primary evidence in the form of interviews was also used. 2.2 Hypothesis There are two hypothesises which will feature in this thesis. The first is that affordable housing is needed and wanted by the economically disadvantaged within London, and these groups include the poor, the disabled and specific sectors of workers who do not earn enough money to buy their own houses within London. Another hypothesis of the study is that affordable housing is a problem which comprises many interrelated and intersecting issues; all of which may be seen as sociological, economic and political. It follows that any credible proposals in relation to lessening the problem of affordable housing must take this into account, and simultaneously address economic, political and sociological problems. The essence of this hypothesis is therefore that this is the best why to understand and to approach the description and evaluation of the problem of affordable housing in London and who really wants it. These hypothesises will be tested throughout the thesis. 2.3 Aims and Objectives Specifically, the primary aim of the study is to examine whether the above mentioned hypothesises can be supported. Overall the aim of the study is to examine the concept of affordable housing in London, and who really wants it. Primary qualitative data in the form of interviews with key workers and London residents affected by the affordable housing problem, will also be conducted in order to achieve a better understanding of the problem of affordable housing in London. Another aim of the study is to present and interpret these results. Various perspectives on the problem of affordable housing; its possible solutions and impacts will be advanced and discussed by the writer on the basis of these investigations. The study will aim therefore to use this discussion in order to achieve a more full understanding of the problem of affordable housing in London; who really wants it and related sociological, economic and political issues. Ultimately the thesis will aim to add original literature to the research pool in relation to the problem of affordable housing in London, providing a detailed and holistic overview of the problem; who it affects and how its adverse effects may be lessened. 2.4 Arguments and Discussions Definition of Qualitative Research/Explanation of Why Qualitative Research is Appropriate    There are two main categories of research methods; qualitative methods (Bryman, 1995: p20) and quantitative methods (Bornat, Chamberlayne and Wengraf, 2000; Chapter One). The best way to define one is by reference and comparison to the other since the paradigm of research enquiry is mainly split between these two different research rationales (Bryman, 1995; p95 and 20).   Qualitative research aims to explain concepts and phenomena (Bryman, 1995; p95). Specifically the concept of affordable housing will be addressed in this research. As we have seen explained above, the focus of the research will be mainly qualitative in nature. However, in what ways is a qualitative research enquiry more appropriate to this question relating to affordable housing? Qualitative research tends to be more holistic (Knowles and Sweetman, 2004; p.12) than specific which means that it seeks to understand a topic ‘in the round’ (Bryman, 1995; p.20). On the contrary, quantitative methods value specificity and outcome linked methods of research (Trout, 1998; p.113). This holistic characteristic of qualitative research fits the wider aim of this thesis enquiry, as the problem of affordable housing, its causes, purpose, its critique and its improvement are all topics which, too, must be understood and approached ‘in the round’. Therefore, while quantitative work tends to predict and hypothesise (Trout, 1998; p.113) about possible outcomes, the qualitative researcher will often embark upon their research enquiry with an open mind (Bryman, 1995; p.20), researching malleable conclusions as the enquiry unfolds. This open ended research framework therefore fits the infinitely complex dynamics of affordable housing more appropriately ( Greater London Authority, 2005; Section 1-5).   This open-ended research aim (Knowles and Sweetman, 2004; p.12) relating to qualitative research may be contrasted with the aim of quantitative research which usually seeks to be confirmatory (Trout, 1998; p.113), rather than (and also more so than) explanatory (Harrison, 2001; p.68). In this context, qualitative research may be understood as inductive (Bryman, 1995; p.20) whereas quantitative research tends to be more deductive in nature. This type of research (qualitative) tends to be situational in nature and tends to reflect given cultural and theoretical mores (Knowles and Sweetman, 2004; p.12). This imbibes qualitative research methods with a level of subjectivity which would not be appropriate in a quantitative or positivist study, since the processes under examination (Greater London Authority, 2006; Sections 1-5) often cannot be pinned down by or encapsulated within a quantitative research framework. Again these characteristics of qualitative research fit the enquiry into af fordable housing more appropriately since the levels of subjectivity involved in the arguments and theories connected with affordable housing are vast (Greater London Authority, 2006; Sections 1-5).   Differences between qualitative and quantitative research may also be explained by arguing that qualitative research is process related (Bryman, 1995; p.20) with a relative lack of control (Knowles and Sweetman, 2004; p.12) over the various processes which are to be understood, whereas conversely variables are strictly controlled within the framework of a quantitative research framework (Trout, 1998; p.113). Others have explained the differences between qualitative and quantitative enquiries by arguing that the former is anthropological in nature (Bryman, 1995; p.20) (since it has a focus on society and sociological forces), while the latter; quantitative research being more ‘scientific’ (Trout, 1998; p.113). Qualitative research methods are also appropriate to this enquiry into affordable housing since they are unstructured (Knowles and Sweetman, 2004; p.12) and discursive (Bryman, 1995; p.20), allowing a researcher room to analyse possible outcomes/rationales/explanations (Knowles and Sweetman, 2004; p.12) as well as the ones which will potentially be accepted as the most credible. Colloquially, this characteristic of qualitative research leads many to regard it as a ‘soft’ subject’ area (Bryman, 1995; p.20) which lends itself well to the area of social science research as opposed to ‘hard’ subject areas such as maths or physics which may be described as more tangible (Trout, 1998; p.113). However, this particular dichotomy between qualitative and quantitative research methods discredits qualitative research for no better reason than those who critique qualitative research in these terms fail to understand that concepts and phenomena which may be described in tangible, or ‘scientific’ terms do not take precedence over research enquiries into what is not tangible. Simply because a concept may be difficult to understand in isolation, as qualitative subject matter often is does not mean that it is not capable of being understood credibly. Simply because qualitative subject matter may be understood credibly in different ways by different people does not strip each differing rationale of validity simply because another explanation may be pointed to. It must also be remembered that the objectivity of quantitative research often precludes the existence of other explanations of research phenomena, not because there are no valid alternative explanations but because the nature of quantitative enquiry is not always equipped to cope with multi-faceted concepts, whose existence and form may only be conjectured upon and not encapsulated within a given explanation. Concepts and phenomena are not always thoroughly understood through mere extrapolation, which is what makes the pragmatic and open-ended nature of qualitative enquiry universally important and specifically pivotal to this thesis enquiry into affordable housing.   These points should however, in no way, be interpreted as a critique of quantitative methods. Indeed, quantitative statistics and studies will be widely consulted as a vital part of the thesis enquiry (Greater London Authority, 2005; Sections 1-7). It just happens to be the case that qualitative research is a more appropriate means to seek to explain the particular context and rationales underpinning the issue of affordable housing in the context of this particular study. The points, mentioned above regarding the qualitative/quantitative aspects of the wider research paradigm are therefore merely a defence of the qualitative method which will form the main bedrock of this research design. 2.3 Sources and Framework  Ã‚   This thesis will rely upon   primary data gathered through interviews with interested parties and stakeholders in the area of affordable housing. Specifically, groups such as local residents and key workers in London will be interviewed and an interview with a Housing Association in Notting Hill will be conducted. The methodology for this thesis will also rely on sources, such as Government reports and current debates, reports/sources from interested parties in the non-profit making sector, case-studies and contemporary and historical books. These sources will all be used to contextualise the two case studies which, as has been explained previously, form a pivot of the thesis. Archival research in the form of retrieving and consulting relevant press publications and speeches through these means will also be important. The research will therefore be primary and secondary in nature, and it will mainly make wide reference to qualitative/phenomenological material. Reference will also be made to quantitative and empirically derived data. Examining the range of sources which have been explained above will ensure that the research engages the subject with the necessary degree of depth and theoretical perspective. 2.4 Conclusions and Recommendations The conclusion of this chapter is that qualitative research is ultimately more compatible with the overall research aims and objectives.   Primary and secondary qualitative research will be used to gather the information needed to comment on the validity of the hypothesises outlined above.     CHAPTER THREE: LITERATURE REVIEW PART ONE: DEFINITIONS; AND THE PROBLEM OF AFFORDABLE HOUSING IN LONDON 3.1.a Arguments and Discussions What Does the Concept of Affordable Housing Refer to? Affordable Housing has been defined by Plymouth City Council as: ‘Low cost market, and subsidised housing..that will be available to people who cannot afford to rent or buy houses generally available on the open market†¦.that definition should be framed to endure for the life of the plan, for instance through reference to the level of local incomes and their relationship to house prices or rents, rather than to a particular price or rent applicable at that one point in time (http://www.plymouth.gov.uk ).   Affordable housing causes particular demographic cleavages such as the inaccessibility of certain areas of London to what are referred to as key or essential workers such as teachers, nurses, police officers and employees of the health and social services (Greater London Authority, 2005; Section 5.16) (Karn and Wolman, 1992; p.16). This problem of inaccessibility means that these groups are ‘priced out of the market’ which means that on the salary that is typically earned by people in their jobs, it is difficult to find a house which is affordable (Karn and Wolman, 1992; p.16).  Ã‚   The problem of affordable housing has also defined as ‘infrastructure needs’. These needs have been elaborated on in the following way: ‘The changing face of London’s population has immediate implications for every aspect of London life-education.transport and infrastructure.employment and employability, competitiveness and culture†¦Housing provides a useful example..London has 42 per cent of England’s most overcrowded households..’ (Greater London Authority, 2006; Section 2.8).  Ã‚  Ã‚   Affordable housing therefore refers to a situation where there are not sufficient numbers of houses being built to satisfy the level of demand there is for these types of houses and accommodation in general (Greater London Authority, 2006; Section 5.17 and Karn and Wolman, 1992; p.16) (Barker, 2006; p.7). This situation (some would say artificially) increases the price of property within certain areas affected by affordable housing shortages. These are essentially the mechanics of affordable housing. This definition therefore goes to the heart of what the concept means in practical and real terms. However, this definition does not encapsulate how malleable this concept of affordable housing can be when it is viewed from particular standpoints. The concept of affordable housing is particularly linked with certain social and economic problems, such as social exclusion, poverty and crime (Pacione, 1997; p.7 and Rugg, 1999; p.19). This is also supported through the primary research findings of the writer. An interview with Kate Bond revealed that she was suspicious of the social problems which are associated with affordable housing developments and is reluctant to allow her children to play in these areas (Interview One, 2006; p.1). Affordable housing can therefore also be interpreted from a purely ethical standpoint, in which case it would refer to the wider problem of housing shortages being linked to problems such as poverty, crime and low wages for certain sectoral groups. In terms of economics (and this will be looked at in more detail in the next section) this ethical perspective it somewhat suspended from the analysis and the problem becomes one which is defined in terms of how certain factors such as supply, demand, resources and money shape the concept of affordability in terms of the housing sector. These issues of definition are important to an analysis of affordable housing since, if one is to examine the question of who really wants affordable housing, it is imperative to extrapolate the concept in sufficient detail. Therefore, the problem of affordable housing and its theoretical underpinnings and context will be examined alongside a discussion of what the concept essentially means to different people, as the next section, an economic analysis of the problem of affordable housing and who really wants it, will elucidate. 3.1.b Economic Analysis of the Problem The price of housing in a free-market economy is determined by supply and demand. The supply of houses increases, other things equal, as the price of housing rises. The reason for this is that as the price of housing rises, other things equal, producers will find it profitable to allocate more resources to the production of houses relative to the production of other things they might otherwise produce. However, as the price of housing rises, other things equal, the demand for housing falls. The reason for this is that as the price of housing rises, other things equal, consumers will find it advantageous to substitute away from the consumption of houses towards the consumption of other goods that are now relatively cheaper to purchase. The price of housing, known as the â€Å"equilibrium† price, is the price at which these two forces, demand and supply are equal. This is how economists’ typically analyse markets (Landsburg, 2002; ch.1). How does the price of housing adjust to ensure that â€Å"equilibrium† is reached? If demand exceeds supply, then there is more demand for housing at the existing price than producers are willing to supply at that price. In such circumstances, economists say that purchasers of houses are â€Å"rationed† – not everyone who wants to buy a house at the existing price can get one. These potential purchasers start competing with one another by offering suppliers a slightly higher price for a house than was the case in the market initially. This has two effects; first of all, the higher price induces more supply, and secondly, the higher price lowers demand. This means that the â€Å"excess demand† in the market that existed initially falls as a consequence of competition between rationed purchasers. Naturally, this process of competition will continue until prices have been bid upward sufficiently to ensure that demand and supply are equal. At this point, no-on e is rationed and excess demand falls to zero. Of course, this process can be reversed.   Imagine that at the existing price the supply of houses exceeds the demand. Now it is the producers of houses who are â€Å"rationed† – not everyone who wants to sell a house at the existing price can. As before, these potential sellers start competing with one another by offering purchasers a slightly lower price for a house than was the case in the market initially. This has two effects; first of all, the lower price induces less supply, and secondly, the lower price raises demand. This means that the â€Å"excess supply† in the market that existed initially falls as a consequence of competition between rationed sellers. Just like the previous case, this process of competition will continue until prices have been bid downward sufficiently to ensure that demand and supply are equal. At this point, no-one is rationed and excess demand falls to zero (Landsburg, 2002; ch.7). What are we to make of this analysis from economics? Economics helps us to understand how prices are determined. They are determined by the forces of supply and demand operating through the mechanism described above. But can this give us some insight into the concept of â€Å"affordability†? Not really. The notion of â€Å"affordability† is one that does not make sense within the discipline of economics. This might be a weakness of economics, but it might also be that the concept itself is meaningless. Let me explain. In economics, the equilibrium price of housing (also known as the â€Å"market† price) is the price that is desirable from a social point of view. It can neither be too high or too low. Provided that the housing market is a so-called â€Å"competitive† market then the equilibrium price is the one that society ought to want (Landsburg, 2002; ch.8). How does economics reach this surprising conclusion? It does so from noting that at the equilibrium price, all gains from trade in the market are maximised (Landsburg, 2002; ch.8). In other words, despite claims that economics is a â€Å"positivist† subject, it is committed to a specific normative theory of good (Hausman and McPherson, 1996; Ch. 1 and 8). That theory says that what is socially desirable maximises the gains from trade. What does this mean? Let us return to the excess demand example mentioned above. Imagine that at the initial market price, purchasers of houses are â€Å"rationed† – not everyone who wants to buy a house at the existing price can get one. It is simple to demonstrate that at this price, the increase in price needed to induce producers to build just one more house is strictlyless than what potential purchasers would be willing to pay a producer in order to build that house (Landsburg, 2002; ch.8). Given that this condition is satisfied, it is always possible for a mutually beneficial trade to occur between a potential buyer and a potential seller.   To illustrate this, imagine that a producer of houses (a builder, say) needs the price of houses to rise from  ¿Ã‚ ¡100,000 to  ¿Ã‚ ¡118,000 in order to find it profitable to build 11 houses as opposed to 10. If there is a situation of excess demand in the market whenever the price of a house is  ¿Ã‚ ¡100,000 then it is always possible to show that the maximum price someone would be willing to pay in order to induce the producer to build the additional house is strictly greater than  ¿Ã‚ ¡118,000. If that price is, for example,  ¿Ã‚ ¡150,000, then the two parties can trade to their mutual advantage. Imagine that the potential buyer offers the producer a price of  ¿Ã‚ ¡125,000 in order to build the house. This is a price the producer will happily accept. He or she would have built the house for  ¿Ã‚ ¡118,000 but instead gets  ¿Ã‚ ¡125,000 – the producer is better-off by  ¿Ã‚ ¡7000. Economists say that â€Å"producer surplus† rises by  ¿Ã‚ ¡7000 (Lands burg, 2002; Ch.8).   Similarly, the buyer gets the house for  ¿Ã‚ ¡125,000 but was willing to pay  ¿Ã‚ ¡150,000 for it. The buyer is better-off by  ¿Ã‚ ¡25,000. Economists say that â€Å"consumer surplus† rises by  ¿Ã‚ ¡25,000 (Landsburg, 2002; Ch.8). An important insight from economics, as seen in this example, is that mutually advantageous trade is possible. Trade is not necessarily a zero-sum game. How does this relate to the idea that the equilibrium price is the socially desirable one? It does so in the following way. As the excess demand in the market is gradually eliminated through upward movement in prices, the scope for mutually advantageous trade between buyers and sellers shrinks. Remarkably, when the excess demand for houses vanishes and the market is in equilibrium, no more mutually advantageous trades are possible. The price that would induce a producer to build an additional house is equal to the maximum price someone would be willing to pay for it – neither consumer surplus nor producer surplus can rise if this trade takes place. At the market equilibrium, all gains from trade have been realised and no more are possible. Economists refer to this state as one of â€Å"economic efficiency† or â€Å"Pareto efficiency†. (Landsburg, 2002; Ch.8). The above analysis is the main reason why economists (admittedly with some caution) advocate the use of free markets. If a market is competitive then it will produce on its own devices an equilibrium that is socially desirable (if one accepts the principle of economic efficiency). Adam Smith referred to this general idea (albeit in a different context) as the â€Å"Invisible Hand†. He said â€Å"Every individualgenerally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention† (Smith, 1776; p.243). Smith’s idea is that people acting in their own self-interest may produce unintended consequences which, surprisingly, can serve the social good. In the example above, individuals through competition with one another push the market price towards its equilibrium value, and this value is socially desirable. However, to do this was not the intention of the individuals involved. They were just competing with one another and trading with sellers for their own private benefit. How does this analysis help with the problem of â€Å"affordable housing†? From an economic point of view, affordability is a meaningless concept. It is simply not a social objective for things to be affordable, rather the government should seek to promote competition in the housing market and then leave the market to its own devices. This conclusion of economics is striking and quite at odds with other perspectives on this problem. I will argue that affordability is an important problem, and that something fundamental is missing from the economic approach to housing. Within economics what is missing is some notion of â€Å"equity†, or a concern for how the gains from trade are distributed across different people. To illustrate this point, imagine that the equilibrium price of a house in a competitive housing market is  ¿Ã‚ ¡200,000. Then those who are willing to pay  ¿Ã‚ ¡200,000 or more for a property will get one, and the situation will be efficient from an economic point of view. However, this might not be the â€Å"ethically appropriate† way to allocate houses to people. The reason is fairly obvious. What someone is willing to pay for anything is constrained by their income. A rich person might be willing to pay more for a house than a poor person, but this does not mean that it is better th at the rich person gets the house as opposed to the poor person. This is sometimes referred to in economics as the â€Å"equity-efficiency† trade-off. This is the idea that less efficiency is the price we have to pay sometimes if we want to ensure a more equitable distribution of goods across people (Landsburg, 2002; Ch.8). Policies designed to promote affordable housing fall into this category. The people who will gain the most from them are people on low income, who cannot guarantee that they will be allocated a house through the market mechanism. 3.1.c How is the Problem of Affordable Housing Addressed? Various policy initiatives have been introduced to ameliorate the problem of affordable housing in London. These will be discussed in this section. These policies and whether they have a positive impact upon the community will also be evaluated in this section.   One such policy   takes the form of Section 106 of the Town and Country Planning Act 1990 (which became operative in 1947 (Jackson, J., 1963; p.18 ), which seeks to address the problems which may arise in relation to affordable housing and the provision of local services (Monk, S. et al., 2005; p.24-27).   Where a major developer wishes to obtain planning permission for a development in a given area, it is the case that such developments will put pressure on local services such as schools or hospitals this Act seeks to ensure that some of the cost of such developments are borne by the developers who wish to develop the area (Monk, S. et al., 2005; p.24-27). Section 106 of this statute therefore provides that agreements may be reached between local planning authorities and developers in relation to planning permission, where the developer is required to make financial contributions towards the local services in the areas where the planned developments are to be built (Monk, S. et al., 2005; p.24-27). However, this statute has been criticised, especially by Kate Barker (2006; p.11), as being in drastic need to reform to make it more simple and certain. The Barker Review also recommended in relation to Section 106, that it be scaled back to address the direct impacts of developments (Barker, 2006; p.11). Also, Housing Associations in London such as the Keystart Housing Association, Tower Homes, Metropolitan Home Ownership and London Str Analysis of Affordable Housing in London Analysis of Affordable Housing in London 1.1 Arguments and Discussions A report published recently by the Greater London Authority on the problem of affordable housing in London in June 2005, revealed that the issue of â€Å"affordable housing† (Karn and Wolman, 1992; p.16) was the most pressing matter Londoners wished to see dealt with in terms of improving London as a place to live (Greater London Authority, 2005; Section 2.3). The Barker Review of Housing Supply, not only supported this viewpoint, but it identified housing as a basic human need (Barker, 2006; p.1). Affordable housing in London is therefore a controversial and highly topical subject at the moment (Karn and Wolman, 1992; p.16) (Barker, 2006; p.7). The debate surrounding it is underpinned by various political, sociological, economic and financial factors (Greater London Authority, 2005; Karn and Wolman, 1992; p16 (Rugg,1999; p.19). This thesis will examine why there is an affordable housing shortage; who really would benefit from affordable housing and what sectors of the population are affected by problems associated with affordable housing. The concept of affordable and who really wants it will be examined in detail, since the notion of affordability is essentially so subjective that it is open to interpretation on many levels. Affordability as a concept, will therefore be examined from an ethical point of view; from an economic point of view and finally from a sociological and political point of view, since these viewpoints will all constrain and influence the ultimate interpre tation of what it means to be affordable.    The thesis will attempt to discover if any agency or individual may be blamed for problems associated with affordable housing in London and the policy context this relates to. Historical factors such as Thatcher’s ‘Right to Buy’ policy (Evans, 2004; p.20) will be examined as well as contemporary initiatives such as equity loans for certain keyworkers’ schemes (Greater London Authority, 2005; Sections 5.16). Where historical issues have impacted the contemporary manifestation of issues connected with affordable housing, these will be analysed. Specifically, the thesis will examine contemporary and historical issues relating to affordable housing through two in depth case studies. One will be on the subject of the ‘Right to Buy’ policy introduced by Thatcher and the other will relate to the definition and depth of debate contained within the idea of affordable housing. These two in depth case studies will be examined qualitatively and will be referred to throughout the thesis. There will also be an economic analysis of the problem of affordable housing, and ideas such as artificially controlling the prices of houses in London will be considered. In this sense, there will be a theoretical evaluation of who really wants affordable housing, as the research will specifically ask if it would be desirable to advocate the imposition of affordable housing upon the London housing market.   The thesis will also consider various issues which are related to the problem of affordable housing such as social and economic policies within the city itself and the social problems which are themselves shaped by shortages of affordable housing in London. Therefore various themes will be drawn out during the course of the thesis and these will include social exclusion, poverty, salary concerns amongst professional and semi-professional sectors, house prices, population and demographic cleavages, anti-social behaviour and crime (Greater London Authority, 2005, Section 5.16 ). These themes will be drawn together to ultimately address the question of ‘Who really wants affordable housing?’. 1.2 Conclusions and Recommendations At this stage the conclusions and recommendations of the chapter are that given the issues which have been highlighted above, an argument can be made that affordable housing is a controversial issue which warrants further investigation. These investigations will attempt to shed more light on the concept of affordable housing and who really wants it. The next chapter will look at the methodology   for the thesis, which will set out the means through which this may be achieved.    CHAPTER TWO: METHODOLOGY 2.1 Overview This section will explain the definition and nature of qualitative research and how it will be used in the thesis inquiry. It will outline the research methods which will be used in the research and what framework these methods will be used within. The research will be based upon a qualitative analysis of two case studies; one contemporary which will be based on the concept of affordable housing itself, and the other historical and this will centred on the ‘Right to Buy’ policy introduced by Thatcher in 1980. These case studies will be derived from examination of published texts within the field of economic and politics. These texts have been identified as an appendix to the thesis. Where quantitative information is relevant to the thesis this will be looked at, but evaluated qualitatively, since the basis of the research will be mainly qualitative in nature. Primary evidence in the form of interviews was also used. 2.2 Hypothesis There are two hypothesises which will feature in this thesis. The first is that affordable housing is needed and wanted by the economically disadvantaged within London, and these groups include the poor, the disabled and specific sectors of workers who do not earn enough money to buy their own houses within London. Another hypothesis of the study is that affordable housing is a problem which comprises many interrelated and intersecting issues; all of which may be seen as sociological, economic and political. It follows that any credible proposals in relation to lessening the problem of affordable housing must take this into account, and simultaneously address economic, political and sociological problems. The essence of this hypothesis is therefore that this is the best why to understand and to approach the description and evaluation of the problem of affordable housing in London and who really wants it. These hypothesises will be tested throughout the thesis. 2.3 Aims and Objectives Specifically, the primary aim of the study is to examine whether the above mentioned hypothesises can be supported. Overall the aim of the study is to examine the concept of affordable housing in London, and who really wants it. Primary qualitative data in the form of interviews with key workers and London residents affected by the affordable housing problem, will also be conducted in order to achieve a better understanding of the problem of affordable housing in London. Another aim of the study is to present and interpret these results. Various perspectives on the problem of affordable housing; its possible solutions and impacts will be advanced and discussed by the writer on the basis of these investigations. The study will aim therefore to use this discussion in order to achieve a more full understanding of the problem of affordable housing in London; who really wants it and related sociological, economic and political issues. Ultimately the thesis will aim to add original literature to the research pool in relation to the problem of affordable housing in London, providing a detailed and holistic overview of the problem; who it affects and how its adverse effects may be lessened. 2.4 Arguments and Discussions Definition of Qualitative Research/Explanation of Why Qualitative Research is Appropriate    There are two main categories of research methods; qualitative methods (Bryman, 1995: p20) and quantitative methods (Bornat, Chamberlayne and Wengraf, 2000; Chapter One). The best way to define one is by reference and comparison to the other since the paradigm of research enquiry is mainly split between these two different research rationales (Bryman, 1995; p95 and 20).   Qualitative research aims to explain concepts and phenomena (Bryman, 1995; p95). Specifically the concept of affordable housing will be addressed in this research. As we have seen explained above, the focus of the research will be mainly qualitative in nature. However, in what ways is a qualitative research enquiry more appropriate to this question relating to affordable housing? Qualitative research tends to be more holistic (Knowles and Sweetman, 2004; p.12) than specific which means that it seeks to understand a topic ‘in the round’ (Bryman, 1995; p.20). On the contrary, quantitative methods value specificity and outcome linked methods of research (Trout, 1998; p.113). This holistic characteristic of qualitative research fits the wider aim of this thesis enquiry, as the problem of affordable housing, its causes, purpose, its critique and its improvement are all topics which, too, must be understood and approached ‘in the round’. Therefore, while quantitative work tends to predict and hypothesise (Trout, 1998; p.113) about possible outcomes, the qualitative researcher will often embark upon their research enquiry with an open mind (Bryman, 1995; p.20), researching malleable conclusions as the enquiry unfolds. This open ended research framework therefore fits the infinitely complex dynamics of affordable housing more appropriately ( Greater London Authority, 2005; Section 1-5).   This open-ended research aim (Knowles and Sweetman, 2004; p.12) relating to qualitative research may be contrasted with the aim of quantitative research which usually seeks to be confirmatory (Trout, 1998; p.113), rather than (and also more so than) explanatory (Harrison, 2001; p.68). In this context, qualitative research may be understood as inductive (Bryman, 1995; p.20) whereas quantitative research tends to be more deductive in nature. This type of research (qualitative) tends to be situational in nature and tends to reflect given cultural and theoretical mores (Knowles and Sweetman, 2004; p.12). This imbibes qualitative research methods with a level of subjectivity which would not be appropriate in a quantitative or positivist study, since the processes under examination (Greater London Authority, 2006; Sections 1-5) often cannot be pinned down by or encapsulated within a quantitative research framework. Again these characteristics of qualitative research fit the enquiry into af fordable housing more appropriately since the levels of subjectivity involved in the arguments and theories connected with affordable housing are vast (Greater London Authority, 2006; Sections 1-5).   Differences between qualitative and quantitative research may also be explained by arguing that qualitative research is process related (Bryman, 1995; p.20) with a relative lack of control (Knowles and Sweetman, 2004; p.12) over the various processes which are to be understood, whereas conversely variables are strictly controlled within the framework of a quantitative research framework (Trout, 1998; p.113). Others have explained the differences between qualitative and quantitative enquiries by arguing that the former is anthropological in nature (Bryman, 1995; p.20) (since it has a focus on society and sociological forces), while the latter; quantitative research being more ‘scientific’ (Trout, 1998; p.113). Qualitative research methods are also appropriate to this enquiry into affordable housing since they are unstructured (Knowles and Sweetman, 2004; p.12) and discursive (Bryman, 1995; p.20), allowing a researcher room to analyse possible outcomes/rationales/explanations (Knowles and Sweetman, 2004; p.12) as well as the ones which will potentially be accepted as the most credible. Colloquially, this characteristic of qualitative research leads many to regard it as a ‘soft’ subject’ area (Bryman, 1995; p.20) which lends itself well to the area of social science research as opposed to ‘hard’ subject areas such as maths or physics which may be described as more tangible (Trout, 1998; p.113). However, this particular dichotomy between qualitative and quantitative research methods discredits qualitative research for no better reason than those who critique qualitative research in these terms fail to understand that concepts and phenomena which may be described in tangible, or ‘scientific’ terms do not take precedence over research enquiries into what is not tangible. Simply because a concept may be difficult to understand in isolation, as qualitative subject matter often is does not mean that it is not capable of being understood credibly. Simply because qualitative subject matter may be understood credibly in different ways by different people does not strip each differing rationale of validity simply because another explanation may be pointed to. It must also be remembered that the objectivity of quantitative research often precludes the existence of other explanations of research phenomena, not because there are no valid alternative explanations but because the nature of quantitative enquiry is not always equipped to cope with multi-faceted concepts, whose existence and form may only be conjectured upon and not encapsulated within a given explanation. Concepts and phenomena are not always thoroughly understood through mere extrapolation, which is what makes the pragmatic and open-ended nature of qualitative enquiry universally important and specifically pivotal to this thesis enquiry into affordable housing.   These points should however, in no way, be interpreted as a critique of quantitative methods. Indeed, quantitative statistics and studies will be widely consulted as a vital part of the thesis enquiry (Greater London Authority, 2005; Sections 1-7). It just happens to be the case that qualitative research is a more appropriate means to seek to explain the particular context and rationales underpinning the issue of affordable housing in the context of this particular study. The points, mentioned above regarding the qualitative/quantitative aspects of the wider research paradigm are therefore merely a defence of the qualitative method which will form the main bedrock of this research design. 2.3 Sources and Framework  Ã‚   This thesis will rely upon   primary data gathered through interviews with interested parties and stakeholders in the area of affordable housing. Specifically, groups such as local residents and key workers in London will be interviewed and an interview with a Housing Association in Notting Hill will be conducted. The methodology for this thesis will also rely on sources, such as Government reports and current debates, reports/sources from interested parties in the non-profit making sector, case-studies and contemporary and historical books. These sources will all be used to contextualise the two case studies which, as has been explained previously, form a pivot of the thesis. Archival research in the form of retrieving and consulting relevant press publications and speeches through these means will also be important. The research will therefore be primary and secondary in nature, and it will mainly make wide reference to qualitative/phenomenological material. Reference will also be made to quantitative and empirically derived data. Examining the range of sources which have been explained above will ensure that the research engages the subject with the necessary degree of depth and theoretical perspective. 2.4 Conclusions and Recommendations The conclusion of this chapter is that qualitative research is ultimately more compatible with the overall research aims and objectives.   Primary and secondary qualitative research will be used to gather the information needed to comment on the validity of the hypothesises outlined above.     CHAPTER THREE: LITERATURE REVIEW PART ONE: DEFINITIONS; AND THE PROBLEM OF AFFORDABLE HOUSING IN LONDON 3.1.a Arguments and Discussions What Does the Concept of Affordable Housing Refer to? Affordable Housing has been defined by Plymouth City Council as: ‘Low cost market, and subsidised housing..that will be available to people who cannot afford to rent or buy houses generally available on the open market†¦.that definition should be framed to endure for the life of the plan, for instance through reference to the level of local incomes and their relationship to house prices or rents, rather than to a particular price or rent applicable at that one point in time (http://www.plymouth.gov.uk ).   Affordable housing causes particular demographic cleavages such as the inaccessibility of certain areas of London to what are referred to as key or essential workers such as teachers, nurses, police officers and employees of the health and social services (Greater London Authority, 2005; Section 5.16) (Karn and Wolman, 1992; p.16). This problem of inaccessibility means that these groups are ‘priced out of the market’ which means that on the salary that is typically earned by people in their jobs, it is difficult to find a house which is affordable (Karn and Wolman, 1992; p.16).  Ã‚   The problem of affordable housing has also defined as ‘infrastructure needs’. These needs have been elaborated on in the following way: ‘The changing face of London’s population has immediate implications for every aspect of London life-education.transport and infrastructure.employment and employability, competitiveness and culture†¦Housing provides a useful example..London has 42 per cent of England’s most overcrowded households..’ (Greater London Authority, 2006; Section 2.8).  Ã‚  Ã‚   Affordable housing therefore refers to a situation where there are not sufficient numbers of houses being built to satisfy the level of demand there is for these types of houses and accommodation in general (Greater London Authority, 2006; Section 5.17 and Karn and Wolman, 1992; p.16) (Barker, 2006; p.7). This situation (some would say artificially) increases the price of property within certain areas affected by affordable housing shortages. These are essentially the mechanics of affordable housing. This definition therefore goes to the heart of what the concept means in practical and real terms. However, this definition does not encapsulate how malleable this concept of affordable housing can be when it is viewed from particular standpoints. The concept of affordable housing is particularly linked with certain social and economic problems, such as social exclusion, poverty and crime (Pacione, 1997; p.7 and Rugg, 1999; p.19). This is also supported through the primary research findings of the writer. An interview with Kate Bond revealed that she was suspicious of the social problems which are associated with affordable housing developments and is reluctant to allow her children to play in these areas (Interview One, 2006; p.1). Affordable housing can therefore also be interpreted from a purely ethical standpoint, in which case it would refer to the wider problem of housing shortages being linked to problems such as poverty, crime and low wages for certain sectoral groups. In terms of economics (and this will be looked at in more detail in the next section) this ethical perspective it somewhat suspended from the analysis and the problem becomes one which is defined in terms of how certain factors such as supply, demand, resources and money shape the concept of affordability in terms of the housing sector. These issues of definition are important to an analysis of affordable housing since, if one is to examine the question of who really wants affordable housing, it is imperative to extrapolate the concept in sufficient detail. Therefore, the problem of affordable housing and its theoretical underpinnings and context will be examined alongside a discussion of what the concept essentially means to different people, as the next section, an economic analysis of the problem of affordable housing and who really wants it, will elucidate. 3.1.b Economic Analysis of the Problem The price of housing in a free-market economy is determined by supply and demand. The supply of houses increases, other things equal, as the price of housing rises. The reason for this is that as the price of housing rises, other things equal, producers will find it profitable to allocate more resources to the production of houses relative to the production of other things they might otherwise produce. However, as the price of housing rises, other things equal, the demand for housing falls. The reason for this is that as the price of housing rises, other things equal, consumers will find it advantageous to substitute away from the consumption of houses towards the consumption of other goods that are now relatively cheaper to purchase. The price of housing, known as the â€Å"equilibrium† price, is the price at which these two forces, demand and supply are equal. This is how economists’ typically analyse markets (Landsburg, 2002; ch.1). How does the price of housing adjust to ensure that â€Å"equilibrium† is reached? If demand exceeds supply, then there is more demand for housing at the existing price than producers are willing to supply at that price. In such circumstances, economists say that purchasers of houses are â€Å"rationed† – not everyone who wants to buy a house at the existing price can get one. These potential purchasers start competing with one another by offering suppliers a slightly higher price for a house than was the case in the market initially. This has two effects; first of all, the higher price induces more supply, and secondly, the higher price lowers demand. This means that the â€Å"excess demand† in the market that existed initially falls as a consequence of competition between rationed purchasers. Naturally, this process of competition will continue until prices have been bid upward sufficiently to ensure that demand and supply are equal. At this point, no-on e is rationed and excess demand falls to zero. Of course, this process can be reversed.   Imagine that at the existing price the supply of houses exceeds the demand. Now it is the producers of houses who are â€Å"rationed† – not everyone who wants to sell a house at the existing price can. As before, these potential sellers start competing with one another by offering purchasers a slightly lower price for a house than was the case in the market initially. This has two effects; first of all, the lower price induces less supply, and secondly, the lower price raises demand. This means that the â€Å"excess supply† in the market that existed initially falls as a consequence of competition between rationed sellers. Just like the previous case, this process of competition will continue until prices have been bid downward sufficiently to ensure that demand and supply are equal. At this point, no-one is rationed and excess demand falls to zero (Landsburg, 2002; ch.7). What are we to make of this analysis from economics? Economics helps us to understand how prices are determined. They are determined by the forces of supply and demand operating through the mechanism described above. But can this give us some insight into the concept of â€Å"affordability†? Not really. The notion of â€Å"affordability† is one that does not make sense within the discipline of economics. This might be a weakness of economics, but it might also be that the concept itself is meaningless. Let me explain. In economics, the equilibrium price of housing (also known as the â€Å"market† price) is the price that is desirable from a social point of view. It can neither be too high or too low. Provided that the housing market is a so-called â€Å"competitive† market then the equilibrium price is the one that society ought to want (Landsburg, 2002; ch.8). How does economics reach this surprising conclusion? It does so from noting that at the equilibrium price, all gains from trade in the market are maximised (Landsburg, 2002; ch.8). In other words, despite claims that economics is a â€Å"positivist† subject, it is committed to a specific normative theory of good (Hausman and McPherson, 1996; Ch. 1 and 8). That theory says that what is socially desirable maximises the gains from trade. What does this mean? Let us return to the excess demand example mentioned above. Imagine that at the initial market price, purchasers of houses are â€Å"rationed† – not everyone who wants to buy a house at the existing price can get one. It is simple to demonstrate that at this price, the increase in price needed to induce producers to build just one more house is strictlyless than what potential purchasers would be willing to pay a producer in order to build that house (Landsburg, 2002; ch.8). Given that this condition is satisfied, it is always possible for a mutually beneficial trade to occur between a potential buyer and a potential seller.   To illustrate this, imagine that a producer of houses (a builder, say) needs the price of houses to rise from  ¿Ã‚ ¡100,000 to  ¿Ã‚ ¡118,000 in order to find it profitable to build 11 houses as opposed to 10. If there is a situation of excess demand in the market whenever the price of a house is  ¿Ã‚ ¡100,000 then it is always possible to show that the maximum price someone would be willing to pay in order to induce the producer to build the additional house is strictly greater than  ¿Ã‚ ¡118,000. If that price is, for example,  ¿Ã‚ ¡150,000, then the two parties can trade to their mutual advantage. Imagine that the potential buyer offers the producer a price of  ¿Ã‚ ¡125,000 in order to build the house. This is a price the producer will happily accept. He or she would have built the house for  ¿Ã‚ ¡118,000 but instead gets  ¿Ã‚ ¡125,000 – the producer is better-off by  ¿Ã‚ ¡7000. Economists say that â€Å"producer surplus† rises by  ¿Ã‚ ¡7000 (Lands burg, 2002; Ch.8).   Similarly, the buyer gets the house for  ¿Ã‚ ¡125,000 but was willing to pay  ¿Ã‚ ¡150,000 for it. The buyer is better-off by  ¿Ã‚ ¡25,000. Economists say that â€Å"consumer surplus† rises by  ¿Ã‚ ¡25,000 (Landsburg, 2002; Ch.8). An important insight from economics, as seen in this example, is that mutually advantageous trade is possible. Trade is not necessarily a zero-sum game. How does this relate to the idea that the equilibrium price is the socially desirable one? It does so in the following way. As the excess demand in the market is gradually eliminated through upward movement in prices, the scope for mutually advantageous trade between buyers and sellers shrinks. Remarkably, when the excess demand for houses vanishes and the market is in equilibrium, no more mutually advantageous trades are possible. The price that would induce a producer to build an additional house is equal to the maximum price someone would be willing to pay for it – neither consumer surplus nor producer surplus can rise if this trade takes place. At the market equilibrium, all gains from trade have been realised and no more are possible. Economists refer to this state as one of â€Å"economic efficiency† or â€Å"Pareto efficiency†. (Landsburg, 2002; Ch.8). The above analysis is the main reason why economists (admittedly with some caution) advocate the use of free markets. If a market is competitive then it will produce on its own devices an equilibrium that is socially desirable (if one accepts the principle of economic efficiency). Adam Smith referred to this general idea (albeit in a different context) as the â€Å"Invisible Hand†. He said â€Å"Every individualgenerally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention† (Smith, 1776; p.243). Smith’s idea is that people acting in their own self-interest may produce unintended consequences which, surprisingly, can serve the social good. In the example above, individuals through competition with one another push the market price towards its equilibrium value, and this value is socially desirable. However, to do this was not the intention of the individuals involved. They were just competing with one another and trading with sellers for their own private benefit. How does this analysis help with the problem of â€Å"affordable housing†? From an economic point of view, affordability is a meaningless concept. It is simply not a social objective for things to be affordable, rather the government should seek to promote competition in the housing market and then leave the market to its own devices. This conclusion of economics is striking and quite at odds with other perspectives on this problem. I will argue that affordability is an important problem, and that something fundamental is missing from the economic approach to housing. Within economics what is missing is some notion of â€Å"equity†, or a concern for how the gains from trade are distributed across different people. To illustrate this point, imagine that the equilibrium price of a house in a competitive housing market is  ¿Ã‚ ¡200,000. Then those who are willing to pay  ¿Ã‚ ¡200,000 or more for a property will get one, and the situation will be efficient from an economic point of view. However, this might not be the â€Å"ethically appropriate† way to allocate houses to people. The reason is fairly obvious. What someone is willing to pay for anything is constrained by their income. A rich person might be willing to pay more for a house than a poor person, but this does not mean that it is better th at the rich person gets the house as opposed to the poor person. This is sometimes referred to in economics as the â€Å"equity-efficiency† trade-off. This is the idea that less efficiency is the price we have to pay sometimes if we want to ensure a more equitable distribution of goods across people (Landsburg, 2002; Ch.8). Policies designed to promote affordable housing fall into this category. The people who will gain the most from them are people on low income, who cannot guarantee that they will be allocated a house through the market mechanism. 3.1.c How is the Problem of Affordable Housing Addressed? Various policy initiatives have been introduced to ameliorate the problem of affordable housing in London. These will be discussed in this section. These policies and whether they have a positive impact upon the community will also be evaluated in this section.   One such policy   takes the form of Section 106 of the Town and Country Planning Act 1990 (which became operative in 1947 (Jackson, J., 1963; p.18 ), which seeks to address the problems which may arise in relation to affordable housing and the provision of local services (Monk, S. et al., 2005; p.24-27).   Where a major developer wishes to obtain planning permission for a development in a given area, it is the case that such developments will put pressure on local services such as schools or hospitals this Act seeks to ensure that some of the cost of such developments are borne by the developers who wish to develop the area (Monk, S. et al., 2005; p.24-27). Section 106 of this statute therefore provides that agreements may be reached between local planning authorities and developers in relation to planning permission, where the developer is required to make financial contributions towards the local services in the areas where the planned developments are to be built (Monk, S. et al., 2005; p.24-27). However, this statute has been criticised, especially by Kate Barker (2006; p.11), as being in drastic need to reform to make it more simple and certain. The Barker Review also recommended in relation to Section 106, that it be scaled back to address the direct impacts of developments (Barker, 2006; p.11). Also, Housing Associations in London such as the Keystart Housing Association, Tower Homes, Metropolitan Home Ownership and London Str