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