There’s nothing like being ignorant of basic economics, is there?

Why Theresa May’s pledges won’t fix the UK’s housing disaster
Matt Wilde
Rent controls are drastically needed to stop people being priced out of homes. But the Tories are wedded to the free market and won’t let down their landlord friends

Guess the source?

Matt Wilde is a research fellow in the Department of Anthropology at the London School of Economics

Pity they didn’t ask someone who had been through the economics department of the same place:

For, as Assar Lindbeck (who is both Swedish and a socialist) has pointed out, “next to bombing, rent control seems in many cases to be the most efficient technique so far known for destroying cities.” Which is why, when asked, 93 per cent of economists insist that a ceiling on rents reduces the quantity and quality of housing available. That two-decade wait for a flat in Stockholm could be a clue. But, of course, the more economists agree on a point, the more folk and political economics seems determined to ignore them.

The underlying logic is impeccable. Those supply and demand graphs at the beginning of your Economics for Dummies textbook are not optional extras; they are descriptions of our universe. Artificially reduce the price of something and demand will rise, supply will fall, and there will be shortages. Nicolas Maduro insisted that food be nice and cheap and Venezuela has no food. Another clue.

The market clearing price of something is the market clearing price. If you wish to reduce that price then you must either choke off demand or increase supply. Which is why all those economists keep insisting that if you wish to lower rents then work out some way to build more things that can be rented (insisting that we just have fewer people is not considered socially acceptable these days).

Sigh.

Instead of, you know, the anthropologist?

The truth is that the UK’s housing crisis is not merely a problem of supply and demand, but of class inequality being reproduced through property relations. Perhaps it is the prospect of the present system being curtailed that some find so terrifying.

18 thoughts on “There’s nothing like being ignorant of basic economics, is there?”

  1. So Much For Subtlety

    Theresa May’s pledges won’t fix the UK’s housing disaster

    He is right about one thing – May’s pledges won’t fix the UK’s housing disaster. In fact nothing May will do will fix it.

    But not for the reasons he thinks. The idea that May or the Tories are interested in a free market solution is laughable. We know that the Tories cannot free up land because it offends too many Tory suburban voters. We know that May is a weak and confused leader with no real principles.

    So if someone offers me decent odds I would bet that she is more likely to introduce a National Housing Service than a free (or even freer) market in housing. But as she is weak, I guess what we will see is a very long and expensive inquiry that gets some semi-retired judge a gong and perhaps a seat in the House of Lords while only greatly enriching some QCs.

  2. The Unused Testicle

    Henceforth, I shall be a plumber specialising in research fellows.

    Let me at your pipes! I know nothing about plumbing but I consider it fascist and elitist for you not to phone me for that reason! And since you all believe in MMTs, I’ll charge you a fucking fortune!

  3. So Much For Subtlety

    What we need is retrospective salary control for LSE academics. Their wages should have been frozen in 1952 and not been allowed to rise ever since.

    Needless to say, they should also not have the right to withdraw from the market place. They should be teaching the same workload even if they want to retire.

    (Actually to be honest academic wages have been frozen but more 1982 than 1952. No one in their right mind would become an academic at the LSE these days)

  4. SMFS – for those with a doctorate in a subject there is private industry (who want results), occasional government specialist job or being an academic.

  5. I’ve asked this before & I’ll ask it again. What f***ing housing crisis?
    A housing crisis would be favelas on Hampstead Heath & cardboard cities in Tube stations. See any?
    What there is is a shortage of housing at prices those aspire to have housing can afford. In which case there’s always been a housing crisis & there will always be a housing crisis.

  6. BIS – the housing crisis is very real for hacks in London who are jealous of their mates with proper jobs and mortgages. Even though they’d rather spend their earnings on lattes and charlie.

  7. In their defence, in the good old days when I lived in London you could afford a flat as well as coke and posh coffee.

    If London’s public housing was cleared of illegals, recently arrived enriching peasants and the permanently unemployed (who could be relocated to where they came from or South Shields as appropriate) the property market might look quite different.

  8. @ MC
    What has South Shields done to deserve that (apart from voting Labour, but as there are scores of towns that vote Labour that ain’t enough)?

  9. @BiS

    “What there is is a shortage of housing at prices those aspire to have housing can afford. In which case there’s always been a housing crisis & there will always be a housing crisis.”

    And that’s the allocations problem- there’s a shortfall in housing (according to some), but that’s something that can be closed in a parliament, just through the housebuilding that goes on now.

    The problem is more that the folks occupying the 28% of stock that is socially managed and owned won’t shift from larger properties into smaller ones, and the public sector offered incentives are trivial in comparison to the p[rivate sector.

    Solution- give them their homes and let the market allocate them.

  10. What is it with Anthropology and Sociology? They all seem to be raving hard Left loonies. Do these ‘disciplines’ (giggle) attract that sort or do they simply turn you into a loony through long exposure?

  11. @john77 -OK, perhaps it might be kinder to relocate social housing tenants from London to a range of cheap and cheerful destinations around the country. So each town only gets a couple of hundred to erm.. welcome.

    It would free up acres of London for working people, generate a ton of money for the public sector and give the opportunistic youth of South Shields a better chance of moving to London in order to get on.

    It is a tribute to the utter moral bankruptcy of British state that it will fund housing for someone who moves to London from Lagos but not for someone who moves there from Lincoln.

  12. So Much For Subtlety

    Incidentally, it seems the “Tory” Theresa May has decided to make it easier for doctors to take your organs without your or your family’s consent.

    Because of course all your vital body parts belong to the state to take and use as they see fit.

    Whoever made her leader of the “conservative” party was taking the p!ss.

  13. @ MC
    Yes, good idea.
    Especially as all those on £60k a year would move back to London and pay a fair rent instead of sponging off taxpayers earning less than half as much.

  14. Rob,

    I once had a conversation with a woman who was a business prevention officer at a small-ish asset management firm. Turned out she’d originally trained as an anthropologist, and had initially enjoyed the work/research, but had left the field upon discovering that;

    All her colleagues were basically bat-shit insane.

  15. “business prevention officer”

    I used to meet a lot of those (not all of them were anthropologists, however).

  16. On the drive home there was an interview on the wireless with a chap living in a one-room flat in London. He had a job as an accounts managed. When asked: why don’t you move out of London to somewhere cheaper? The reply was: I’d like to, but then I’d be unemployed.

    NO YOU WOULDN’T!!! YOU’RE AN ACCOUNTS MANAGER. BUSINESSES HAVE ACCOUNTS TO PROCESSES EVERYWHERE.

    Even if he didn’t get a non-London accounts job, he could get a non-London labouring job and still be better off.

  17. Why Theresa May’s pledges won’t fix the UK’s housing disaster

    £2Bn for social housing – aka rent below market rate = subsidy

    £10Bn for “Help To Buy” scheme = £10Bn increase in house prices with the £10Bn going to sellers.

    May & Hammond copying Cameron & Osbornes idiotic socialist gesture politics at the expense of the tax-payer.

  18. @MC, October 5, 2017 at 9:30 am

    If London’s public housing was cleared of illegals, recently arrived enriching peasants and the permanently unemployed

    South-Shields? No, Bradford, Rochdale etc where their fellow RoPs & Savages reside.

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