Friday, September 28, 2007

Blanchflower doesn’t think its good for people to own their own home!!

Reducing home ownership cuts unemployment

No wonder matey boy Blanchflower is doing everything he can to prop up the house prices afterall what a terrible thing it would be if the masses instead of a few BTLers owned property!!!

Posted by matt_the_hat @ 02:45 PM (1405 views)
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26 thoughts on “Blanchflower doesn’t think its good for people to own their own home!!

  • So how does this square with Ireland, which is operating at almost full employment (OK, maybe not for much longer) and yet has maintained its traditional high rates of home ownership? Blanchflower conveniently mentions Ireland as having high unemployment coupled with high home ownership but in the 1990s but ignores what happened in Ireland in the last decade.

    What he also ignores, of course, is the negative impact a housing boom has on labour mobility. If your home has gone up in price phenomenally you’ll be reluctant to sell up for fear of being ‘locked out’ of the market. Equally there are plenty of people who can afford a home in Scotland / N. England but couldn’t dream of affording in the S-E of England so they’ll never sell up to move there as they can’t afford to. That was always the case but in a housing boom, the trend becomes even more pronounced. Keeping house prices stable would be a much more effective way to increase labour mobility so people have less fear of selling up / buying in.

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  • wow, what a fool.

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  • Downsized And Waiting says:

    Blanchflower is a moron who hasn’t a clue what he’s talking about – from the article:

    “In a speech in London, he said countries with the highest levels of home ownership had the longest dole queues, and that there was no evidence that deregulating labour markets was the cure for unemployment.”

    Err, sorry, but I recently spent a year living in Berlin where hardly anybody owns their own home, most people rent instead. Yet the unemployment rate there is massive – something like 20%.

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  • What a dumb article in every way. There is no proof of causality for the two variables. You might aswell say the Spanish eat Tapas and that’s why unemployment is higher there. Further, the sentiment: “Higher home ownership raises unemployment, presumably because it reduces labour market mobility” is horrible. So to serve this great capitalist machine we should be constantly and fretfully moving around wherever a new contract for a year or two pops up. What about our communities? Our children?

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  • Did you say “tool”?

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  • If the guy believes this piece of statistically flawed data then we are really in the doggies doo doo.

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  • inflation is eating my savings says:

    There is an element of truth in this.
    Less home ownership=greater mobility= greater ability to pick up any slack (assuming there is some) in the labour market=reduced unemployment.
    Or am I missing something?

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  • “Higher home ownership raises unemployment, presumably because it reduces labour market mobility. Homeowners are relatively immobile, partly because they find it much more costly than private renters to move around.”

    A fully paid-up central banker on the UK’s monetary policy committee actually giving legitimacy to the Broken Window Fallacy.

    http://en.wikipedia.org/wiki/Broken_window_fallacy

    This is incredible. It’s like a Nobel Prize winning chemist claiming to have cured aids by telling people not to have sex.

    This clearly shows a lack of understanding of the basics of economics thinking gained over the last 300 years!

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  • It may be easier to move around the country if you rent, but there are other factors other than home-ownership which affect mobility. What about children’s emotional & educational stability; what about extended families (free baby-sitters & childminders).

    It would be interesting to see if someone can use statistics to “prove” that hotter climates produce workers with a more laid-back approach to life, and colder climate encourage people to work hard to keep warm. 😉

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  • Okay, to explain it another way, what Danny-biy Blanchflower should ask himself is “what are the hidden costs of denying people ownership of their own homes?”

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  • inflation is eating my savings said…

    There is an element of truth in this.
    Less home ownership=greater mobility= greater ability to pick up any slack (assuming there is some) in the labour market=reduced unemployment.
    Or am I missing something?

    While I agree in principle, there are a number of issues. Primarily, the cost of housing either to rent or buy. Blanchflower seems to be missing this point, maybe because it does not directly affect him. In our area, we find it difficult to attract nurses, teachers or public servants, because there is no low cost accomodation to rent or buy. So, it follows, that we would not be able to attract any lower paid people. Maybe Mr Blanchflower should go back to basics.

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  • Or we can think of it this way…

    Less home ownership=greater mobility= more people can move to a better country where they can afford a home =less people in the uk=reduced unemployment (not in % terms though).

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  • We are always being told that our levels of unemployment are much lower than those of Germany and France where renting is far more common. Yet Danny boy states “countries with the highest levels of home ownership had the longest dole queues”. My suspicion is that it makes sod all difference

    Has he been flown over specially to make this speech or is he going to hang around for a few days waiting to put his two penneth worth (quite literally) into the MPC meeting

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  • The underlying assumption is ominous. Is the the government there to serve the interests of the people; or are people here to serve the interests of the government?

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  • the more debased and debauched the currency the more desirable it is to own a home as a hedge against inflation.

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  • >> Less home ownership=greater mobility= greater ability to pick up any slack (assuming there is some) in the labour market=reduced unemployment.

    How about high unemployment = excess resource = low wages = low asset prices = easier to buy property for those in work = high home ownership

    Stats is stats…generally less than 50% reliable 😉

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  • “My suspicion is that it makes sod all difference”

    Yep.

    I reckon my alternative (totally made-up without statistics) theory about climate is more accurate!
    COLD: Switzerland – Britain – France – Spain HOT (Forget Germany – not sure it fits!)

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  • I doubt whether a society of renters would be altogether good for the economy.I know I spend fnug all on the house I rent and I certainly know my Landlord does. Weren’t we being told in the early 2000s that new home purchases were propping up retail sales through all the money spent on houses after purchase.Anothet thing about mobility,rents are a hell of a lot higher in the south than the rest of the country still making the south a no go zone for many people.

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  • I like it Su – I can see the headlines now…

    “Global Warming to reduce worker productivity by 20% shock!”

    “Minister for Employment says ‘this could make us like the french'”

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  • Being a Devils advocate, you can phrase the broken window fallacy the other way.

    People spend money inflating the value of unproductive housing assets, rather than investing in productive shares.

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  • su, that’s a politically incorrect thing to say but I see the reasoning …

    My Japanese wife once said something with a similar logic “Why are they doing Feed The World again? It didn’t work last time and nothing’s changed now”.

    On the other hand, I’m not sure Norwegians or Canadians are significantly more hard working than anyone else

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  • David Blanchflower is actually correct. For an economy to function smoothly, people need to be able to get to where the jobs are. They can achieve that either by driving stupidly long distances (as seen increasingly in America, the “supercommuters”) to their jobs; or by moving house to be nearer their employer.

    Renters can move house very easily – they just give their landlord a month’s notice and go. Owners find it much harder to move because buying and selling a house takes a bare minimum of 12 weeks, often much longer. Companies expect new employees to start within four weeks (longer for more senior positions), so for many owners when they change jobs to a different city, they often rent a small property there first while they wait for the house to sell. In countries such as Spain the private rental sector isn’t so well-developed, so people are unable to move out — instead they are trapped either living with their parents or living in hard-to-sell houses. In Switzerland by contrast some 2/3rds of the population are private renters, this is because the rules are more favourable to tenants than in pro-landlord UK.

    The alternative would be to have fast and cheap public transport. In London for example, even property owners can change jobs quickly and easily because they don’t have to move – most jobs are within easy reach by public transport. This keeps unemployment down in London; the few claimants in London are either lazy or lying (or both).

    Countries like Switzerland have good fast clean affordable public transport; and tenant-friendly laws. Sadly I can’t see Britain ever having those.

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  • Yorkshireman, we can also say that less freedom and perhaps the reintroduction of slavery would a) reduce unemployment, b) reduce the demand for housing, c) reduce labour costs and d) increase mobility of said slaves. But then again why is this a problem in the UK where our great labour government is presiding over the lowest (though somewhat fiddled) unemployment figures for a generation and we can import as many mobile low cost workers as we care to let sneak in from eastern europe!

    There was plenty of mobile labour in the great depression of the early 1930’s when unemployment was high and that had had nothing to do with housing ownership but plenty to do with bad economics and starvation.

    Utter tripe.

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  • Inbreda.

    I think you have something there. Gordon will be so relieved to know that increasing unemployment has nothing to do with the economy, but global warming.
    He might even rekindle The Auld Alliance…Scots and French working (or not) together.

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  • Waitinginspain says:

    Sorry inbreda, it would take an aweful lot more than that to make ME like the French. They would have to start washing, for one thing!

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  • inflation is eating my savings says:

    >It would be interesting to see if someone can use statistics to “prove” that hotter climates produce workers with a more laid-back approach to life, and colder climate encourage people to work hard to keep warm

    There was a study in Italy on this (North vs. South). Was strongly suggestive.

    >There was plenty of mobile labour in the great depression of the early 1930’s when unemployment was high and that had had nothing to do with housing ownership but plenty to do with bad economics and starvation.

    As I said, there needs to be slack- otherwise home ownership is less important. Is there slack now? In some fields- but not medicine for example. I know several mobile and talented registars who cannot find a job.

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