In the last couple of weeks or so I’ve been to two meetings that have been playing on my mind. Both were broadly political, but scrupulously non-partisan. Featuring presentations by academics, the emphasis was upon empirical evidence and sound fact – what interpretations we then came to was entirely our own. So not much like ‘real politics’, then.
The first of these meetings was a presentation by Michael Edwards of the Bartlett School at UCL. He’s the author of a government-commissioned report, a Future of Cities Working Paper, on housing policy. Edwards prefaced his comments with the observation that the development and implementation of housing policy really needed to be done by thinking long term, and with due regard for the bigger picture. Housing is not ‘a thing’ in itself, but part of the economy and society in much broader ways.
I don’t want to summarise Edwards’ arguments – the paper he wrote is available to read online (and I recommend it). Two things in particular struck me about his presentation. The first came when he was presenting a range of graphs and charts. The changes in housing tenure made one’s heart warm to the 20th Century. In the early decades private rental was the norm, with only a tiny proportion of people being owner-occupiers. But from well before the mid-century there begins to be the growth of social housing, until, by the 1970s it is a major provider of homes to people. That was the high point of the Welfare State, when no one needed seriously to fear homelessness or unemployment. It was also an era of relatively flat income distribution and high direct taxation.
During that period the nation’s wealth resided more in incomes than in property. Houses were for living in, and money was for spending and saving – and, crucially, for taxing. We had to pay for the social security provided by an enabling state.
But Edwards’ graphs showed that now wealth resides much more in property than in pay – and that property is not equitably distributed.
That’s when the first lightbulb came on in my mind. We taxed incomes with some zeal when that’s where wealth resided. So why haven’t taxes shifted to property, now that that’s where the filthy lucre has fled? Property taxes need to be more finely calibrated to reflect property values and also to ensure a fairer burden of taxation. After all, at present a low-paid worker in a home that someone else (the landlord) owns, pays a proportion of property tax (Council Tax), which is a bit like an unemployed person paying income tax. It’s crazy. The tax on a new one bedroomed flat in a provincial city may well be as high as the tax on a million pound plus home in one of the smartest London boroughs. That can’t be right.
The other point that intrigued me was Edwards’ use of the term ‘financialisation’. It may be common usage in the field of public policy these days, but I hadn’t previously heard it used to describe a culture in which the norms and practices of the finance sector (banks) trump all other values and considerations.
Which brings me to Brexit. My second meeting was on the implications of Brexit, held at Aston Business School. There were three speakers, Simon Green, Carolyn Rowe and Helena Farrand-Carrapico, all academics with interests in European politics.
As with Edwards on housing, the speakers stuck to the evidence. And the evidence, once again shows how the politicians who make policy do so with little or no regard for that evidence.
Green observed that the mere fact of having a referendum on leaving the EU had in itself, and regardless of the outcome of the vote, destabilised Europe. Once the unthinkable is not only thought, but has been put to the ballot, so the idea spreads. The ‘Exit contagion’ (my alarmist phrase, none of the speakers used such emotive language) has appeal to populists and nationalists in many parts of Europe.
Rowe looked at how the ‘out’ and ‘remain’ votes are distributed using poll data and the Social Attitudes Survey, and Farrand-Carrapico explored the implications of Brexit for security. Both showed the depressing detachment of political belief from likely outcomes.
What no one quite explored is what the Brexit camp rally want. Their vote will probably come from people who see ‘Europe’ as a way of talking about immigration, but beyond the grass roots I don’t see many Brexiteers who really give a damn about immigration. Like Home Office ministers employing illegal immigrants as cleaners, their attitudes in practice are likely to be at odds with their rhetoric (just as their shameless use of the NHS to promote ‘leave’ is jaw-dropping cant).
The Brexit backroom boys and girls are in reality the core of the Financialisation Party. That Brexit, and even the prospect of such, is destabilising is part of its appeal. As a child-economist from the IEA said excitedly of the Tata withdrawal from Port Talbot, “why worry about it? Everything creates value.”
That phrase – ‘creates value’ – is the one that matters. Millions of people in insecure, poor quality rented housing ‘creates value’ (an income stream to rentiers). Brexit-induced turmoil on the markets ‘creates value’ (someone will make money from it). ‘Creates value’ is a harmless sounding phrase which means the transfer of wealth from those who have least to those who have most.
Housing, Europe, anything else you care to mention, are all linked by the culture of financialisation. Until we call it what it is – legalised theft – it will continue on its rotten, parasitic way.