What is the solution to the housing crisis? Preston Byrne, author of an Adam Smith Institute Briefing Paper entitled Burning down the house, knows what it is not:
Government is not the solution to the housing crisis.
That being the subtitle of his Briefing Paper. In his penultimate paragraph, he expands on that thought:
… government is not the solution to the housing crisis: government is the housing crisis.
Byrne is giving my next Last Friday of the Month talk, on Friday 25th, in other words at the end of this coming week. His talk will be entitled “Mortgage Subsidies: Why They Didn’t Work in America and Won’t Work Here.”
I’m guessing that this, the italicised preamble at the top of this Briefing Paper, is a further clue to what he will be saying:
Help to Buy will not end the housing crisis. The government’s plans to increase liquidity in the housing market will do little to solve the UK’s long-run housing supply shortage – and do much to aggravate high housing prices while improperly using the state as a risk transfer mechanism. Liberalisation, not intervention, is the best long-term solution for the distorted British housing market.
So, not a bundle of laughs. But Byrne, an American who is now a London-based securities lawyer, is an engaging speaker, and I doubt it will be quite such a grim evening as the above quotes suggest. There is, after all, humour to be found in watching politicians carefully placing banana skins in front of themselves, and then running enthusiastically over them. Even if we’re the banana skins.
More Preston Byrne ASI verbiage here, on this and other subjects (see the links top right).
The government “cheap money” (monetary expansion) policy, and the special schemes (such as the ones Brian mentions) push the price of housing UP.
Just as government subsidies for renting (such as the multi billion Pound “Housing Benefit”) push UP private rents (as far back as David Ricardo this would have been understood) and are a landlord subsidy.
If government really wants to “help end the housing crises” it should GET OUT of these matters.
Wasn’t El Gordo’s brilliant economic policy to flood the country with immigrants and build housing for them?
Crisis is a word almost exclusively the domain of government. The market, the truly free market, sufficiently discounts future risks so as to deftly avoid the term, by means almost wholly unanticipatable by government.
But wait! Consider the beauty of the standard Soviet (and now Russian) apartment building, in all its pastel glory: entire cities, from the Black to the Chukchi Seas, filled with the same building! Who says government can’t build inspiring architecture? Onward, England!
PfP I went to Zagreb in the then SFR Yugoslavia in the summer of 1988, and had a surreal day just wandering around. I found myself in amongst some Yugoslav tower blocks, amidst sellers of grilled corn cobs (ubiquitous, I discovered) and I thought ‘These blocks are hideous… but they look better than Kidbrooke in London.’
We beat Tito at his own game.
An earlier version of the above posting described Preston Byrne as “an American lawyer”, but this has now been changed to “an American who is now a London-based securities lawyer”, to avoid any suggestion that Byrne is US qualified, which he is not.
Help to buy is doing exactly what it’s intended to do.
Keeping house prices high.
Keeping the serfs either rent slaves or debt slaves.
Who does it benefit, the banks, the 0.3% that own 70% of all UK land and the landlords.
…and his “name” is George – how clever!
“Who does it benefit, the banks, the 0.3% that own 70% of all UK land and the landlords.”
Oooo…and what percent of all-of-the-above are, say….English?
Housing blocks in former communist countries are often ugly – although they can be improved a lot if you paint them in colours other than grey, and plant nice gardens near them – but there is usually one difference between them and British housing estates. This is that they are just places where normal, respectable people live. There are shops in the basements, and a normal economy of economically beneficial activities going on in and around them. Housing estates in Britain (and much of western Europe) are often not like that.
The government has a sort of state-backed mortgage policy at the moment (George Osborne unveiled it in his last annual budget). Now, of course there are differences in terms of lending rules and so on, but broadly speaking, the UK is copying the very things (like Freddie Mac and Fannie Mae) that helped cause the current disaster (lending to those who should not be borrowing the amounts concerned without a full market test of risk).
Should be a good discussion.
I do not think it can be a good discussion J.P. – because (as you know) only an idiot would defend this policy of Mr Osborne – or a lot of his other policies.
For example, who would defend “HS2” (spending tens of billions of Pounds on a government railway between London and Birmingham and then from Birmingham to Manchester – when there already is a railway to these places and trains on the new railway will not even stop anywhere between the cities).
The Spectator magazine has managed to find some government defenders.
Matthew Paris – who will denounce opposition to wasting tens of billions of Pounds of taxpayer money as “homophobia” (because he plays the Gay card with every debate on every issue).
Steven Norris – whose opinions are whatever he is PAID to say.
And Sir Richard Leese – the (Labour) leader of Manchester City Council (people who have been a shower of s…. all my life).
Is a “good discussion” to be expected from them?
No.
Nor from defenders of the government’s credit bubble housing policy.