Yesterday, in an article for CapX, he writes:
"The housing market is not just any market. Rent or mortgage payments are the single biggest item of expenditure in most people’s budget. A dysfunctional housing market is much worse than a dysfunctional beer market. It severely undermines our living standards, and it has the potential to cancel out many of the good things that happen elsewhere in the economy. And it has a much bigger impact than any other sector on our perception of whether “the system” works for us or not."
He makes what I consider to be the most fundamental point of any discussion about Britain's housing problem. It gets to the root not only, as he says, of how we are raising a new generation of socialists, but also of our immense problems of inter-generational equality. Young people feel left behind and less valuable than the elderly, and this divide is beginning to plant exactly the kind of fertile soil for another, 1940s-style socialist revolution.
My blog (or at least my previous one) has traditionally been a place of critique of youngsters and luring them out of their Left-wing tendencies. It's difficult to do because those without capital go about their lives from the outside, staring in at the warmth and comfort of those more fortunate. But I also recognise two important things. The first is that generation rent has a point: we are being short-changed on housing. And the second is that the only way to address our housing woes is to spend money building houses in places that young people are more likely to find work and actually want to live.
Of course, efforts have been made, primarily by Labour, to mobilise the youth. But these have mostly come in the form of scrapping tuition fees, raising the minimum wage for young workers and banning zero-hour contracts. These policies are regressive and, as I have written, actually stand against serving the interests of young people. In fact, they represent exactly the problem I am trying to outline. Our political parties are essentially sending a message to young voters that capitalism is here and that they ought to deal with it. 'Here, have these goodies and good luck in all your future endeavours'. They tend to imply that life isn't going to improve much and that the system is arched against them, which it oughtn't be.
Enter housing. Struggle in the modern economy is captured perfectly by housing bubbles. And the most frustrating thing about them is that they are entirely artificial; they needn't exist and can be deflated only if the Conservative Party starts to think about generation rent as much as it does the value of its voters' assets. The housing market, just like other markets, is governed mostly by simple forces: demand and supply. Whilst it is true that net migration to Britain has been a very large source of demand over the last decade, the level of immigration will subside slightly through the political instability of the Article 50 period and will no doubt stand as a red line in negotiations anyway. Domestic pressures can have a powerful effect upon politicians, who will likely point to cutting migration as solitary evidence of a successful departure from the European Union. The British Right has quite reasonably outlined the problems of migration and the impact it can have on housing prices, but to deny that it can't be dealt with in productive ways is to be disingenuous. If we scan the world, we can find evidence of countries like Japan, who simply by getting a little creative and daring to deregulate can avoid some of the problems caused by mass immigration.
The issue is that unlike other markets, housing costs have, as Niemietz points out, a disproportionate impact on our perception of living standards and the reality of the cost of living. My generation has found itself priced out of attaining mortgages and most of us feel trapped as a result. Either we are forced into many years of renting, which is essentially wasted money, or we are forced to spend longer periods of time living with our parents, which, despite being financially easier, has a negative impact on our sense of self-worth, dignity and personal freedom. It is no wonder much of this age bracket is looking helplessly up at socialism. For young people, the squeeze on housing represents the exhaustive or (often) fruitless process of capital accumulation.
Thankfully, though, there are ways to fix this. In the short-term, I am not opposed to large-scale reintroduction of social housing as an alternative to housing benefit. The problem that many who receive housing benefit experience is that lots of private landlords are wary of accepting tenants in receipt of welfare, and so prefer to house self-supporting individuals and families. The solution appears to me to be to redirect resources towards building cheaper housing. And in fact, addressing supply will bring rents down or to a plateau, which could well help to ease pressure on the welfare state. I think that when we discuss our problems with housing, we place too much importance on ownership. I don't suppose most people care whether a state or private developer built their house. What people care about is whether they like living in their house, whether it is located to their convenience and whether they have access to the security and dignity of ownership.
The reality is that building hundreds of thousands of new homes across Yorkshire isn't going to benefit working people being edged further and further out of London. Increasingly, families are having to downsize to meet costs and workers administering the very rich in the centre of London, whether they clean for them, deliver mail to them or answer phones for them, will find it more and more difficult to live close enough to the capital in order to continue working these jobs. Location matters, and the government isn't building houses where people want to live. Instead it prefers to create airbrushed policies and ridiculous slogans to give the impression that it is busy. 'Affordable housing' is especially dreadful. I shouldn't have to tell cabinet ministers that housing is only ever affordable if you can, get this, afford it. The government needs to reassess its policies on things like building across the green belt, or on removing regulations which restrict the heights permitted of terraced housing. All this regulation, excluding important health and safety protocols, disincentivises developers from constructing an adequate supply of housing.
Freeing up the green belt, for instance, would ease considerably both prices and congestion for renters and homeowners. And I don't believe the impact on the environment will necessarily be a net minus. The green belt is not the same as the countryside. Greenery is innately useful and worth keeping, but a significant portion of the green belt is dispensable. My friend Sam Bowman, Executive Director of the Adam Smith Institute, has pointed out:
"Much of the protected land close to cities like London and Birmingham is actually not very nice or good for the environment. Some 37% of London's, 39% of Birmingham's and 74% of Cambridge's green belts are intensive farmland, which because they are usually monocultures (endless fields of rape, say) are considered to be environmentally worse than doing nothing at all with the land.
The green belt gives us agricultural monocultures that most of us visit once a year or less; cheaper land would give us gardens and parks within walk of our homes. The question ought not to be whether we want green space, but where we want it."
Solutions already exist in plentiful supply. The question is how best to integrate them into public policy on housing. A fairer, cheaper and more efficient housing sector is the olive branch that ought to be offered to generation rent. If it isn't, who knows where its clamouring for socialism will lead us?