Good Lord, a sensible Government policy

Wonders will never cease, eh?

The government is to launch a \”house swap\” programme, reminiscent of Norman Tebbit\’s call for the jobless to \”get on your bike\”, in an attempt to encourage people to move around the country to find work.

The controversial plan to tackle the unemployment crisis means people living in social housing will be helped to uproot their families in order to chase jobs. Details of the scheme are yet to be finalised, but it is understood the plan would involve a nationwide database of house swaps and the removal of any barriers to people in social housing moving between regions.

It\’s a well known idea (the Oswald Hypothesis) that high home ownership rates increase unemployment. The reason being that it\’s easier to move from one rental to another while chasing a new job than it is to sell up and buy again while chasing a new job. Thus home ownership which is \”too high\” (that point being highly arguable) will increase unemployment by reducing the mobility of the labour force.

Note that according to this logic Gordon Brown increased unemployment by raising stamp duty on housing transactions: he drove a tax wedge into the market and made it even less liquid. Thanks Gordo.

OK, fine, but what has this to do with social housing?

Well, of the three forms of housing tenure, private rental, private ownership and social rental, the last is the most immobile. It\’s hard enough to change houses within a specific LA and virtually impossible to get onto the list of another LA. I\’ve been told by someone who works in the field (Hi Antonia!) that while it\’s theoretically possible it takes at minimum several years.

So, let\’s go and free up this market a bit, make it easier for social tenants to move across LA boundaries and thus increase the mobility of the labour force.

It\’s not a huge effect, to be sure: from memory it\’s something like a 10% increase in house ownership rates leads to a 1% (ie, from 3% of the labour force to 4%) over the cycle rise in the unemployment rate. How a change in the mobility of social tenancies will map onto that I\’ve no idea. But still a welcome change, no?

13 thoughts on “Good Lord, a sensible Government policy”

  1. How a change in the mobility of social tenancies will map onto that I’ve no idea. But still a welcome change, no?

    We won’t know if we don’t try. But who’s willing to bet against some people fighting it and hoping it fails just because its the evil Tories who are proposing it?

  2. The cry will be “I have right to stay here!” – to continue to live amongst friends, relatives and in an area where the crier grew up and went to school. Years ago, there was a concerted effort to persuade Scousers out of “miserable” property in Liverpool to places like Runcorn and Warrington, where “purpose built, modern” social housing, and jobs, awaited. Didn’t work anything like as well as hoped for.

    Every Northerner knows that on balance there are more jobs further south, but there’s a belief that the jobs should come to them. “The Guvvermunt should do something”.

    Maybe enabling mobility will work, but the Northerner in me (the one that did move) doubts it. And anyway, the place is full of Southern jessies.

  3. How is it going to work? So someone in social housing wants to swap their home in the North-East for one in Surrey or West London where there are lots of jobs. Do they need to find someone who wants to do this move in reverse? Or will there be an increase in people living in social housing in South?

  4. I don’t understand why everyone thinks people need to be so mobile. Never has the economy been so geographically independent. We don’t need to cluster around coal pits any more. You can open a cake factory anywhere, or design websites anywhere, or make cars anywhere. So why are there “jobs” in some places and not others? This is a rather profound question. I don’t think making people rush about all over the country, or indeed the world, is really addressing it. The question is why nobody is starting businesses in area A, and there are (supposedly) a shortage of workers in Area B[1]

    There could be many explanations. One cynical one might be that fat-cat capitalist bastard nasty persons are more interested in forcing wages down than in creating economic growth, so they want worker competition intensified. Forcing down wages doesn’t actually help the economy, but it does help the old balance sheet. But that’s very cynical, and I’m sure that nobody would really want to do that.

    A couple more ideas might be-

    There is more entrepreneuralism in some areas than others. Essex Man, descendent of costermongers, is more likely to seek out entrepreneurial opportunities (cruelly disparaged in popular culture, as in Only Fools and Horses) whereas Clydeside Man sits on his bottom waiting for somebody else to create a job. Thus, there is more work in Essex than Clydeside.

    Or, it might be that there is now far too much of the economy reliant on the State, both directly and indirectly. The South East has no particular geographic advantages, but it is closest to the Government money cannons, so the constant flood of new money into the region creates a constant North/South disparity. As ane fule no (at least if he’s read his Mises), in an inflationary regime “new” money has greater purchasing power than “old” money, which ratchets wealth from poor to rich. Thus, the South East has more “jobs” because statism sucks the wealth geographically towards where the State hands out its largesse; i.e. towards the City of London and political centre.

    Anyway, there doesn’t seem a specific reason in a free market why all the businesses and thus jobs would be in one area, so something funny is going on.

    [1] If somebody can point to this place with zero unemployment, I’d like to see where they are pointing to on the map, precisely.

  5. @ Tim
    Of course it’s a good idea which some people have been promoting for years
    @ Matthew
    Doesn’t need to be a straight swap – you can have a triangular swap or a quadrilateral one or even a one-ended chain when a vacancy arises because a council tenant has died without leaving a family member able to claim hereditary rights to the tenancy.
    @ Ian B
    The south-east has transport cost advantages when processing imported materials or producing goods for export or services to government. In the 50s heavy industry was up north or in Scotland or Wales because (initially the nearness to coal mines and iron ore outweighed other transport costs) the lower wage rates balanced transport cost disadvantages. Under the Wilson government, trade unions insisted on national wage rates (and various other economic burdens) cumulatively crippling northern-based industries.

  6. The south-east has transport cost advantages when processing imported materials or producing goods for export or services to government.

    I daresay it has. On the other hand, a quick look in my kitchen tells me that I purchase beans from Kenya, corned beef from Argentina, lamb from New Zealand and pickled onions from the Ulan Bator, so I’m not entirely convinced by localist arguments, you know.

  7. “It’s hard enough to change houses within a specific LA..”: my friend who worked in the council offices said it wasn’t all that hard – all you had to do was go to bed with Councillor Murphy.

  8. There are long waiting lists for council housing, aren’t there? Surely this is the problem, that council housing is too attractive, relative to privately rented or owned property?
    You won’t be able to solve the mobility problem if people think they’ve won the lottery when they get their council house and cling onto it for dear life.

  9. “Doesn’t need to be a straight swap – you can have a triangular swap or a quadrilateral one or even a one-ended chain when a vacancy arises because a council tenant has died without leaving a family member able to claim hereditary rights to the tenancy”

    So there are large numbers of empty council houses in the S.East which at the moment can’t be filled?

  10. Doesn’t need to be a straight swap – you can have a triangular swap or a quadrilateral one or even a one-ended chain when a vacancy arises because a council tenant has died without leaving a family member able to claim hereditary rights to the tenancy”

    I’ve got a feeling this turns into one of those NP-Incomplete problems (or whatever they’re called) like the Travelling Salesman Problem where you need like a trillion years of every computer in the Universe working on it to get a solution once there are more than half a dozen properties involved.

  11. Ian B, one answer is that the economy isn’t that geographically independent. I recall some research that patents, when citing other patents registered by other people, were much more likely to cite another patent the closer it was, ie more likely to cite within the same country than across countries, more likely to cite within in the same city than in other cities, more likely to cite within the same zipcode than in other zipcodes (American study), more likely to cite within the same building even. Innovation flows with geographical closeness. My own work keeps trying to persuade us all to work from home, and we keep refusing because of the advantages of face-to-face contact (and in my case my knowledge that if I work from home I do housework instead).

    And skilled workers have reason to prefer clustering – get laid off in London and you have far more places to potentially work than if you get laid off in some rural area. Which is good if you own a mortgage, or have a spouse with their own career they can’t drop at a moment’s notice.

    So you can open a car factory anywhere, say, but you’ll have an easier time finding mechanical engineers and designers if you open within commuting distance from a big city.

    Of course, some people manage to make telecommuting work, it’s just not as common as the available technology would imply.

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