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juvenal

Sharply Pointed Article On Osborne's Disastrous Housing Policy

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03 June 2013

In the introduction to Gray’s Anatomy, a collection of his best essays over the past quarter-century, the anti-utopian writer John Gray gives a modest proposal for the purpose of politics. “Politics,” he writes, “is the art of devising temporary remedies for recurring evils. It is a series of expedients, not a project of salvation.”

For governments, the motto might be “First, do no harm”, and the mode of thinking that of the mechanic: identify the problem, find a solution, fix it. There are limits to this approach in politics. All the great advances of modernity were the result of a marriage between high ideals and low cunning. Politics isn’t management consultancy. But Gray’s intellectual framework does, I think, help us to comprehend an emerging disaster, which is George Osborne’s housing policy.

“Housing” lacks poetic resonance. But in Britain it is the great scandal of our times. Property prices were one of the four domestic booms — along with immigration, public spending and private debt — that fuelled the years of growth preceding the crash. Property also played a major part in the crash.

It is a primary source of inequality, because those who own assets have such an advantage over those who don’t. It transfers money from the young and poor to the old and rich. And housing benefit costs £24 billion each year.

So the problem is vast. Luckily, the solution is obvious: build, build, build. Forcibly deport all nimbys and build for England and St George. A massive programme of residential construction, particularly in and around London, would increase supply, reduce prices over the medium-term and create jobs for the young and low-skilled. Nor would it destroy English land, 90 per cent of which is unspoiled.

Yet confronted with the twin nuisances of nimbyism and planning regulation, Osborne has chosen otherwise. Rather than devise and apply the remedy, he is exacerbating the problem.

The Funding for Lending Scheme, which subsidises the cost of mortgages, has been augmented by a Help to Buy scheme that forces taxpayers — me and you — to underwrite billions in mortgages to people who can’t afford a house.

These are among the stupidest policies ever devised in Whitehall, and a barely disguised admission of failure. It will benefit current rather than future owners, create distorting subsidies that are hard to remove, raise rather than reduce property prices, sustain our addiction to debt, and further inflate an asset bubble.

Politicians inflate asset bubbles for the simple reason that owners of assets are more likely to vote. But there has never been an economic bubble in history that didn’t eventually meet a pin. The trick of modern democracy is to make sure the pin arrives after you have left high office. This is the Chancellor’s gamble: that he can enjoy the bubble and delay the pin. It is myopic, selfish and inexcusable.

London’s poor suffer the consequences most of all. Britain’s housing policy is a moral, social, economic and geographic catastrophe. Yet by deluding the middle class into thinking they are getting richer, it might also be political gold. Sometimes, democracy stinks.

twitter.com/amolrajan

Edited by juvenal

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Wonderful clarity. If this writer can see it and we can see it, then it stands to reason the politicians can see it.

No it doesn't. The mainstream public believe that high house prices genuinely create wealth. Considering the type of people who go into politics then I can see no reason why most politicians should be any different or be any more capable than most of the public. In fact, overall, I'd argue they're less capable since few of them have had careers prior to politics.

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As far as I can see, Cameron and Osborne don't expect to win the next election. Actually, they are just rich boys enjoying their time as leaders - but have no urgent programme they got elected for - and so it wouldn't really bother them if they didn't get elected.

I suppose they could think along the lines: Gordon left us a problem - let's leave Ed Miliband an even bigger one, and stuff them up from day one!

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  • 238 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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