On Budget Day - Housing Through The Looking Glass

[james armstrong]

THE MIRROR WORLD OF GOVERNMENT HOUSING POLICY
The Housing policy is by any standard a Government failure.

THE GREATEST HOUSING PROBLEM IS WESTMINSTER, IN THE HOUSES OF PARLIAMENT
by James Armstrong, Dorchester
18th March 2007

The Iraq war is unlawful- mistaken if in reaction to non existent WMD or  a failure of policy , if the policy was to enable a democratic regime.
The Afghan war has been raging for six years- as long as the World War II - with as yet no success or improvement in the Afghan's lot.
Trident arouses massive protest and with all the government hype is 
unpopular EU membership is so unpopular that it contributed to the defeat of the Conservative government.
Massive C A P payments of £3bn every year since 1973 to a tiny minority- the landowner /farmers would be unpopular  with the millions in housing stress if it was widely known.

WHY ARE THE GOVERNMENT'S ACTS SO UNPOLULAR?
Why does a government which derives it legitimacy from The People's will, act in so unpopular a manner?
Could it be that   the government has a different agenda from The People?  
If so this would be serious - undemocratic and would forfeit legitimacy.
Having to submit to an election every five years is not so onerous. 
Especially when the government chooses the date  of the  election, has 
massive resources of the state, the control of propaganda and patronage and also private funding for the party machine.
What does it get in exchange  that would justify it turning its back for five years at least, on the electorate?

WHO INFLUENCES THE GOVERNMENT?
We know that the electorate is shamefully in the dark for many major 
decisions foreign policy is run by a mature establishment in the shape of the Foreign Office- professional ambassadors-  embassy staff..
The army and the services have an entrenched historical  role in 
military decisions.
The arms industry fuels wars.
The landowners are constitutionally represented in the monarchy, in 
house of Lords , in local government and in many official and unofficial 
agencies.
The City is massively influential. The banks and  finance houses, 
generate employment, make huge profits, and have a vital role in industry and in stimulating  High Street spending through advancing credit - the rising house prices   give access to credit for homeowners.

THE MIRROR WORLD OF MONEY
Here is another world in which  the Government can operate  and it has 
attractions which the world of people does not hold.
It is local to Westminster. Located in the prosperous  centre- the City  in the capital city - London - in the heartland of the Nation- the most populous and most prosperous South East    It has a world role wider than that of the Foreign Office, it is corporate not individual, it is powerful. 
Unlike 'people' it does not need a raft of welfare legislation- pensions, health, education, housing ,Children's Acts nor Social Services. Nor does it require a vast criminal system of courts, police  and  prisons.   In short it is a success story. A money
And profit making machine.  The world of money is a mirror  world to that of people in which money itself can generate profits with the minimum need for regulation and the Government cannot help looking at itszelf in this mirror.
It is to this world of success and power that politicians address their attention.  The role of The People is as consumers and electors. Once the politicians have been given access to this world by the once every five years vote it is in the interests of. politicians to concentrate their policies on nurturing the City  which is large and powerful  enough to influence the world and compact  enough to be  influenced personally.
Policies can be disguised from the the  electorate which can be mollified by spin, deceit, secrecy and propaganda.

THE MIRROR WORLD EXPLAINS THE HOUSING CRISIS
This explains the crisis in the housing market.
Building houses is not rocket science.  It is one of the defining activities of civilisation.  And as old as man.     The crisis suits the City.  The crisis stresses The People. The government housing policy is designed to stress the The People and benefit the City . The principle goal of stressing The People is to  drive them to work, to encourage them to get into debt which weakens and stresses them  and  diverts them into consumerism and entertainment and away from informed attention to the ulterior activities of the Government.


THE BIG HOUSING LIE
The big housing lie, is that the stress can be relieved by 'affordable 
Housing'  which is underfunded and restricted so that most people don't qualify  because  they are not poor enough or they are too poor to afford the repayments. In  any case the supply of  'a.h's' is quite inadequate . A  campaign of lies easily diverts attention , in this complicated market, away from  covert  Government malpractice to plausible popular causes.


WHO  BENEFITS FROM THE CRISIS?
The principle way of benefiting the City through housing are:
1 to drive up the price and value of houses  (the banks and city 
institutions hold a huge portfolio of houses-  the title deeds of every  mortgaged house is held by the mortgagee not the occupier /"owner".
2 to drive up the price of land  - many or most corporations own land and property 3 to increase the banks' mortgage income and fees from mortgage advances and closures.
The housing market can be regulated in price and quantity which influences the value of the pound and the inflation rate which in turn regulates the economy,  employment, trade and the 'feel good' factor - this is of course an incidental  popular  consideration  but the government has no compunction of throwing an occasional sop to the voters if this suits the bank and its own prolongation in power.

THE CRISS BENEFITS THE LANDOWNERS.
There is a land monopoly which is endemic in  British history.   Feudalism has been replaced by pseudo feudalism- control of the population by denying them access to the land for the necessary activities of life- employment, agriculture, and housing.

IT BENEFITS THE BANK OF ENGLAND  
Which concerns itself with stimulating the economy and maintaining the foreign exchange value of the pound -while  keeping inflation low. This   normally requires  a policy of high  interest rates. High house prices however stimulate the economy and the inflation rate can be kept low by arbitrarily excluding  house price inflation from the Retail Price Index. This is political jugglery since housing costs are real and felt in people's pockets because they are the largest item in household expenditure. Housing is important as the largest industry of Gross Domestic Product. The rate of house price inflation approaches ten percent per annum when the  target rate for the  Bank of England is one percent.   
Normally inflation stimulates the economy but interest rates have to rise to choke this off. The negative side of this is that  the pound falls in value (Harold Wilson and Liam Britain knew this too well) The unique benefit of house price inflation is that it is localised domestic inflation only - it is confined to the housebuyer's pound- with the foreign exchange value unaffected.  High house prices are the alchemist's dream and the political economist's lode stone.

HIGH HOUSE PRICES BENEFIT THE CHANCELLOR
Stamp duty revenue goes up as house prices rise.  The economy apparently booms. The City smiles.

THEY BENEFIT THE NATIONAL HOUSE BUILDERS  The buidlers  make more money from building less houses. Their landbanks increase in value to the extent that they make more profit from their land than from building  and they transfer their activities to amassing landbanks-  Persimmon had 16 years' supply of land with  planning permission or potential p.p. in 2003. The Government turns over responsibility for building houses totally to the big builders whose interest it is not to build too many - the price would fall!
And with it the value of their land banks.

THEY DO NO HARM TO POLITICIANS  
Their  popularity increases since they apparently benefit the houseowners- or those who can manage their mortgages. 
Although some forget that nearly 1 million people were repossessed in the nineties' crash. That  every boom is followed by a bust is to-morrow's worry.

IN THE MIRROR WORLD HIGH  HOUSE PRICES ARE THE POLICY  NOT THE PROBLEM
The solution is to recognise  out of reach  house prices and low supply as both a housing and constitutional  problem. We need to change the structure and focus of government not just to  raise the supply of houses.

THE GREATEST HOUSING PROBLEM IS WESTMINSTER, IN THE HOUSES OF PARLIAMENT
James Armstrong
18th March 2007

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