QED

[Serial_Apologist]

yep S_A but that is a 'structural' fault in the UK economy not a moral responsibility as Hammond et al accuse

Which was what I was trying to say (rather badly!)

[teamsaint]

Someone has to own the homes, whether they be those who are buying and living in them or those who buy and let them to those who live in them - and people have to live somewhere - on which bases I don't quite understand how a perceived "over-dependence on the home ownership model" (which, as you correctly note, is indeed more prevalent in UK than in some other European countries) might be thought to cause any greater problems than would a lesser dependence thereon; in other words, the problems that beset owners of housing stock are considerable whether they are the residents of those properties or the landlords/ladies. Would you care to explain that?

Unfortunately we have a structurally flawed property market, based on land prices which are artificially high.
What we really need is a property market where as many people as possible can buy a roof over their heads on the modest salaries /wages that most people earn.
People of modest means are poorly served by renting from a wealthy landlord, rather than spending the money on buying somewhere outright.
Frankly, if it is good enough for the wealthy, including landlords, its good enough for us.
Renting out property is generally in the interest of the owner.

I know this is a simplistic approach, but the principle is important. We already have a society where wealth and income are heading in one direction.this doesn't need encouraging.

[aka Calum Da Jazbo]

er what we need are a lot of council houses built to the old LCC [of blessed memory] standards not big builder hutches too small for rabbitts ....

we have now seen the market in operation and it is inefficient externalises difficulties and costs and inequitable
we should not only stop the privatisation of health and education but also re-establish mutual ownership of housing, utilities transport and retail banking and postal services and last but not least telephony and broadband ..... it is clear that the private market and public ownership are best distinguished by where the shit is dumped ... i prefer public distribution meself ... and see no need for a shareholder presence in these areas ..

[ahinton]

Unfortunately we have a structurally flawed property market, based on land prices which are artificially high.
What we really need is a property market where as many people as possible can buy a roof over their heads on the modest salaries /wages that most people earn.
People of modest means are poorly served by renting from a wealthy landlord, rather than spending the money on buying somewhere outright.

I agree with this in principle; the ratio between average housing prices and average salaries has long since made this a great problem but, since the laws of supply and demand are what drives up the former far more than the latter it's hard to see how this could be made to change. Even when the housing market is in the doldrums, average prices are way beyond the real means of most people, but the housing sale prices are also what drive up rents, so it's a pair of vicious circles that seem impossible to square. Imposing heavy taxes on rents might in theory help to improve matters to some extent over time but, in practice, as its most likely effect would be to drive landlords away from the property market by encouraging them to invest in things other than housing for rent, it might actually make matters even worse.

Renting out property is generally in the interest of the owner.

Indeed, but then isn't owning one's own home supposed to be in the interests of the owner as well (at least in principle)?

[Serial_Apologist]

Remembering, ever since "fair rents" were abolished under Thatcher, (as one does!) hard-to-obtain bedsit accommodation, even in the 1960s, ("No blacks, no Irish, no dogs"), and being forced onto the street for daring to host friends after 10 pm, the problem already embedded (no pun) in the private home ownership marketplace is further compounded by private landlordism - as we see at its most rampant in the effective return of forms of Rachmanism, and council taxpayers having to pay out for this.

As Calum rightly points out the problem was on the way to be solved in the post WW2 period of interparty consensus. In the days before civil service departmental inefficiencies and inadequate auditing that have led to "entrepreneurs" in this and other sectors grossly overcharging, let alone the unmitigated privatisations, and housing associations of the dodgier kind's advent, "in theory", authorities' monopoly intervention in land ownership, national and local, played a key determining role in keeping prices and rents down. Scarcity is part of the unplanned character of the system that makes for scrambles over shrinking housing resources, putting those lucky enough to have saved up the most at advantage over the rest.

[ahinton]

Remembering, ever since "fair rents" were abolished under Thatcher, (as one does!) hard-to-obtain bedsit accommodation, even in the 1960s, ("No blacks, no Irish, no dogs"), and being forced onto the street for daring to host friends after 10 pm, the problem already embedded (no pun) in the private home ownership marketplace is further compounded by private landlordism - as we see at its most rampant in the effective return of forms of Rachmanism, and council taxpayers having to pay out for this.

As Calum rightly points out the problem was on the way to be solved in the post WW2 period of interparty consensus. In the days before civil service departmental inefficiencies and inadequate auditing that have led to "entrepreneurs" in this and other sectors grossly overcharging, let alone the unmitigated privatisations, and housing associations of the dodgier kind's advent, "in theory", authorities' monopoly intervention in land ownership, national and local, played a key determining role in keeping prices and rents down. Scarcity is part of the unplanned character of the system that makes for scrambles over shrinking housing resources, putting those lucky enough to have saved up the most at advantage over the rest.

Broadly speaking, I can agree with quite a bit of this, in principle. However, there are two fundamental points that I think are being overlooked in this part of the argument. Firstly, on the assumption that the notion of "authorities' monopoly intervention in land ownership, national and local" refers mainly to local authorites, the problem that such local authorities is that many of them find it hard or impossible to fund the aqcuisition and maintenance of land and housing and simply cannot just charge the local taxpayer unremittingly in order to try to enable them to do so. Secondly, no mention is made here of the fact that market forces will still be at work, just as they have been, regardless of what local authorities might do; OK, if such local authority action drives speculative property investors away, then I can accept that this might not happen, but then we'd all be faced with a situation where property and land values might be a lot less than they are now but still very few people coould afford them. Gone are the days when national and local government can depend largely on the monies provided for their respective use by their taxpayers in order to achieve what they believe that they need to achieve; much of it's done far more on borrowings these days. Effectively, then, local and national government authorities are no better off in principle than people with mortgages who find themselves overstretched or people with exorbitant rent bills who are likewise overstretched. It's the same for quite a few employers who pay their employees' salaries in part out of borrowings and who contribute to those employees' pension funds out of yet more borrowings (albeit less so these days, with final salary schemes having become akin to gold dust). I remember years ago an accountant telling me of a rule of thumb that he frequently imparted to his clients (of whom I was not one, incidentally): "never regard your own home as an investment and never borrow to fund your pension"; wise advice indeed, but very hard for many people to follow nowadays.

[Serial_Apologist]

Broadly speaking, I can agree with quite a bit of this, in principle. However, there are two fundamental points that I think are being overlooked in this part of the argument. Firstly, on the assumption that the notion of "authorities' monopoly intervention in land ownership, national and local" refers mainly to local authorites, the problem that such local authorities is that many of them find it hard or impossible to fund the aqcuisition and maintenance of land and housing and simply cannot just charge the local taxpayer unremittingly in order to try to enable them to do so. Secondly, no mention is made here of the fact that market forces will still be at work, just as they have been, regardless of what local authorities might do; OK, if such local authority action drives speculative property investors away, then I can accept that this might not happen, but then we'd all be faced with a situation where property and land values might be a lot less than they are now but still very few people coould afford them. Gone are the days when national and local government can depend largely on the monies provided for their respective use by their taxpayers in order to achieve what they believe that they need to achieve; much of it's done far more on borrowings these days. Effectively, then, local and national government authorities are no better off in principle than people with mortgages who find themselves overstretched or people with exorbitant rent bills who are likewise overstretched. It's the same for quite a few employers who pay their employees' salaries in part out of borrowings and who contribute to those employees' pension funds out of yet more borrowings (albeit less so these days, with final salary schemes having become akin to gold dust). I remember years ago an accountant telling me of a rule of thumb that he frequently imparted to his clients (of whom I was not one, incidentally): "never regard your own home as an investment and never borrow to fund your pension"; wise advice indeed, but very hard for many people to follow nowadays.

And as my grandfather told my dad, "Never invest in property, son"; but surely the argument in favour of government monopoly (national or local authiority" is in its potential determining effect on prices, and of course a knock-on effect on costs down the chain which could to some degree obviate the need to resort to borrowing. This could be one counter-cyclical way of "reining in" the tendency for spending to constantly spiral exponentially and land in places and pockets where it will not be used productively.

[ahinton]

And as my grandfather told my dad, "Never invest in property, son"; but surely the argument in favour of government monopoly (national or local authiority" is in its potential determining effect on prices, and of course a knock-on effect on costs down the chain which could to some degree obviate the need to resort to borrowing. This could be one counter-cyclical way of "reining in" the tendency for spending to constantly spiral exponentially and land in places and pockets where it will not be used productively.

I'm not quite certain as to precisely what you're advocating here by the term "government monopoly"; how would a government "monopolise" property prices with a view to determining them and on what market basis (compared to other assets) might it seek to do this, given that the government doesn't own the property concerned (apart from local government ownership of the housing stock that it rents out)? - but perhaps I'm missing somthing here, so do please explain what you mean here.

[Serial_Apologist]

I'm not quite certain as to precisely what you're advocating here by the term "government monopoly"; how would a government "monopolise" property prices with a view to determining them and on what market basis (compared to other assets) might it seek to do this, given that the government doesn't own the property concerned (apart from local government ownership of the housing stock that it rents out)? - but perhaps I'm missing somthing here, so do please explain what you mean here.

Monopoly of land and property ownership, on the basis of size matters, gives the owning body price-determining powers right through an economy, whether that body be a multinational or a government. Such a body is in a position to buy in bulk, thus reducing prices to the council tax or income taxpayer - in this area at least, notwithstanding recent scandals re precurement in the MOD - was what I was thinking of, ahinton.

[aka Calum Da Jazbo]

but you are applying a RoI set of criteria to judge the issue .... there are other criteria
i am no fan of local authorities, too many too small and too buggins but that is another issue

you must not confound essential social policies with the rules of the bankers ... they specialise in theft essentially not efficiency or effectiveness

[ahinton]

Monopoly of land and property ownership, on the basis of size matters, gives the owning body price-determining powers right through an economy, whether that body be a multinational or a government. Such a body is in a position to buy in bulk, thus reducing prices to the council tax or income taxpayer - in this area at least, notwithstanding recent scandals re precurement in the MOD - was what I was thinking of, ahinton.

OK, well, thanks for the explanation, from which it is at least clear where you're coming from even if equally unclear how you'd get there!

If A owns a property for which he/she paid at a certain rate broadly determined by prevailing market conditions at the time of purchase, how could any state-sponsored monopoly come in afterwards to determine the value of what that person has purchased in good faith, especially when it could not do so had the person concerned instead purchased some jewellery or some intellectual property rights or a business or three or something other than some housing stock? - and, for that matter, how could such a government enforce the continued future use of such property AS housing stock if its agenda were to be to reduce its intrinsic value to the person who purchased it in good faith? Can you not imagine the sheaves of European-wide human rights breach lawsuits that would almost certainly be instigated en masse by such people who had purchased housing stock in good faith only to have it substantially and arbitrarily devalued by the incumbent government in the country of purchase? And, in any case, what makes you think that devaluation by a government would be inured against contrary market forces inflation? Whatever governments will try to do, the law of supply and demand will out in the end, in most cases; in other words, if enough people want something enough, its price will rise simply by virtue of the fact that they do.

Another factor is that, even were a government enabled to exercise that much control over who sells what of their own property to whom and at what prices, many prospective purchasers would simply back off from purchasing such property in the first place because they could not be certain as to how commercially successful their purchases might be in the medium to long term.

[aka Calum Da Jazbo]

an 11+ for our politicians

We might add an insight from another 20th-century economist, Michal Kalecki, who wrote a penetrating 1943 essay on the importance to business leaders of the appeal to “confidence.” As long as there are no routes back to full employment except that of somehow restoring business confidence, he pointed out, business lobbies in effect have veto power over government actions: propose doing anything they dislike, such as raising taxes or enhancing workers’ bargaining power, and they can issue dire warnings that this will reduce confidence and plunge the nation into depression. But let monetary and fiscal policy be deployed to fight unemployment, and suddenly business confidence becomes less necessary, and the need to cater to capitalists’ concerns is much reduced.

Let me add yet another line of explanation. If you look at what Austerians want—fiscal policy that focuses on deficits rather than on job creation, monetary policy that obsessively fights even the hint of inflation and raises interest rates even in the face of mass unemployment—all of it in effect serves the interests of creditors, of those who lend as opposed to those who borrow and/or work for a living. Lenders want governments to make honoring their debts the highest priority, and they oppose any action on the monetary side that either deprives bankers of returns by keeping rates low or erodes the value of claims through inflation.

Finally, there’s the continuing urge to make the economic crisis a morality play, a tale in which a depression is the necessary consequence of prior sins and must not be alleviated. Deficit spending and low interest rates just seem wrong to many people, perhaps especially to central bankers and other financial officials, whose sense of self-worth is bound up with the idea of being the grown-ups who say no.


from here

choose one:

a austerity is good for people because it is good for bankers
b austerity is good for bankers
c austerity is not good for demand and employment
d employment and demand are good for people



see also this review of Debt The First Five Thousand Years [read it!]

[Simon]

Oh for heavens sake. When will some of you lot get real?

The majority of all government is operated on behalf of special interest groups. Democracy is an illusion, a lollipop for the gullible.

It's even easy to see for whom - just use the acid test "cui bono?"

Politicians don't all start like that, to be fair. Some go into it, baby eyes opened wide, wanting to change things for the better. For a time, it sometimes works. But then they become jaded, enmeshed in "helping" things that they believe in. Then the help becomes a bit more than help, and any misgivings are "sweetened" a bit... and the slippery slope beckons.

We don't have it quite so blatantly here as elesewhere, perhaps. In the middle east, where I've spent much of the year up to now, "gifts" are customary - but woe betide you if they are given with the expectation of doing something against the interest of others. So the argument beforehand has to be rather clever... In the USA, as most will know, paid "lobbyists" work full-time to influence senators and congressmen on behalf of various others, be they businesses, charities, individuals, social groups or unions. What the verb "influence" covers is of course a very wide range of activities. In other countries, you simply put something into the waiting open hand...

But the fact that it's not as open in the UK is irrelevant. It's still widespread. The annoying thing about some of the comments on here is that it seems to be viewed as just the preserve of conservatives, big business and banks. That's a complete fallacy. You only have to look at Haringey and Brent to see examples of at best incompetence.

That said, it's not all hopeless. Once the most pressing interests have been satisfied, or somehow bought off, many politicians do try to do what they think is right for the people. They may misjudge, they may be misguided and they often will be thwarted by civil servants who are themselves beholden to special interest grouips or to their own ideals, but in my experience they will try.

At an individual level, the few politicians whom I have known well have said that it's a relief to work for a single individual case and show a good result - it makes them feel that they can achieve something real, as opposed to rubber-stamping policies whose rationale they don't necessarily grasp.

But beyond corruption of politicians, a threat that (in my view) is also dangerous is the corruption of the bureaucracy. My previous employers put together a figure for the increase in lawyers, legal workers and their assistants throughout the UK and employed as solicitors or by government offices in 2006. The increase, from 1986, had been fivefold. And I think that increases will continue, as all that lawyers have to do to necessitate more of them is to make more laws and introduce more complexity. It's a self-perpetuating cycle. The EU and its HR legislation was a major bonus, of course - for which lawyers and their lawyer friends in the government had been pushing for some time.

The powers of local government are also awesome, and in my view need watching - do you know that a local council can have you jailed for non-payment of a debt that you don't owe? Have you tried to reason with, say, a local authority highways department, staffed by people who may not even have a decent degree? A pal of mine once got a world-renowned traffic expert to assess a local road situation in his village. He also got the local MP as well as the chairman of the Commons Select Committee on Transport to attend a meeting, at which the whole situation was aired and the report presented. All agreed, with no dissenters from the community either. It was a cut and dried case - I know, because I also attended the meeting. Guess what the two individuals from county highways did. That's right - completely ignored it.

So there we are. Get rid of the special interest groups and we have a chance of a fairer society. But it won't happen any time soon - and it isn't just the fault of a) public schools, b) the coalition or c) Rupert Murdoch. Whatever some of you fondly imagine...

Keep smilin' though! It's spring.

bws Simon

[teamsaint]

Not completely their fault............but a), B), and C), are influential and powerful...............and they have no excuse for not attempting to address the situation.

[Serial_Apologist]

Oh for heavens sake. When will some of you lot get real?

The majority of all government is operated on behalf of special interest groups. Democracy is an illusion, a lollipop for the gullible.

What, always, Simon?

The annoying thing about some of the comments on here is that it seems to be viewed as just the preserve of conservatives, big business and banks. That's a complete fallacy. You only have to look at Haringey and Brent to see examples of at best incompetence.

Wouldn't you agree that that is like comparing an avalanche to an upset dustbin? What people who are unable to see beyond the neighbour's garden gate can't get is that it is all a question of scale and priorities.

That said, it's not all hopeless. Once the most pressing interests have been satisfied, or somehow bought off, many politicians do try to do what they think is right for the people. They may misjudge, they may be misguided and they often will be thwarted by civil servants who are themselves beholden to special interest grouips or to their own ideals, but in my experience they will try.

At an individual level, the few politicians whom I have known well have said that it's a relief to work for a single individual case and show a good result - it makes them feel that they can achieve something real, as opposed to rubber-stamping policies whose rationale they don't necessarily grasp.

But beyond corruption of politicians, a threat that (in my view) is also dangerous is the corruption of the bureaucracy. My previous employers put together a figure for the increase in lawyers, legal workers and their assistants throughout the UK and employed as solicitors or by government offices in 2006. The increase, from 1986, had been fivefold. And I think that increases will continue, as all that lawyers have to do to necessitate more of them is to make more laws and introduce more complexity. It's a self-perpetuating cycle. The EU and its HR legislation was a major bonus, of course - for which lawyers and their lawyer friends in the government had been pushing for some time.

The powers of local government are also awesome, and in my view need watching - do you know that a local council can have you jailed for non-payment of a debt that you don't owe? Have you tried to reason with, say, a local authority highways department, staffed by people who may not even have a decent degree? A pal of mine once got a world-renowned traffic expert to assess a local road situation in his village. He also got the local MP as well as the chairman of the Commons Select Committee on Transport to attend a meeting, at which the whole situation was aired and the report presented. All agreed, with no dissenters from the community either. It was a cut and dried case - I know, because I also attended the meeting. Guess what the two individuals from county highways did. That's right - completely ignored it.

So there we are. Get rid of the special interest groups and we have a chance of a fairer society. But it won't happen any time soon - and it isn't just the fault of a) public schools, b) the coalition or c) Rupert Murdoch. Whatever some of you fondly imagine...

Keep smilin' though! It's spring.

bws Simon

Which is a very longwinded way of saying all problems are down to yes men (and women) who toe the line like the obedient blinkered little hypocrites they've been brought up to be and never thought to question.

Just keep smiling, Simon.