There is little doubt that two of the major problems facing Wales today are the ability of local people to afford housing and the large number of people who are economically inactive.
The way that the Assembly Government intends to deal with the housing problem is mainly through building more of what are called affordable houses; houses that lower paid workers are able to buy. But a member of the Bank of England's monetary policy committee suggested last night that this sort of policy might actually be counterproductive to tackling unemployment.
In a speech in London yesterday Professor Danny Blanchflower said that there is a correlation between high levels of home ownership and long dole queues and that the answer to both unemployment and housing problems might be encouraging more of us to rent rather than buy. Of the major industrial nations Spain has the highest unemployment and the highest rates of home ownership and Switzerland the lowest unemployment and the lowest rate of home ownership
Professor Blanchflower suggests that a possible reason why higher own ownership raises unemployment is because it reduces labour market mobility. Because it is too difficult and too costly to move to where jobs are because of the ties of an owned home, fewer of us are willing to try for jobs that might necessitate moving home.
Not being an economist like Prof Blanchflower our own Prof Dylan J-E, I can't comment on the validity of these arguments, but they sound interesting and I would suggest that looking at significantly increasing the number of decent homes built for the rental market might be something that the Assembly should seriously consider as an alternative to adding to the number of homes to buy.
Where does community come into all of this.....or maybe we are only just individuals and society/community don't count? I am surprised you are even giving him the benefit of the doubt. I suppose he is renting himself.....?
ReplyDeleteBecause it is too difficult and too costly to move to where jobs are because of the ties of an owned home, fewer of us are willing to try for jobs that might necessitate moving home.
ReplyDeleteThis does not apply in the case of Spain, where the majority of the population own property. If you own property, you can make it earn money for you. Unless of course if you are being overtaxed and overcharged for that property as in the UK. This is why Spain cannot be used as an example to back the argument in this post, and it is also a chief cause of unemployment, in that in many cases and areas across the UK getting a job is like commiting a form of financial and economic hare kiri. Frankly I think Wales would be much better of if it had the same percentage of home ownership as does Spain as well as similar living costs.
I preferred Danny when he was playing for Spurs. Of course renting or better still the American style trailer park encourages labour mobility but will it actually create employment here in Wales. No, it will just mean that Welsh folk move to England for work just as they did in the Thirties.
ReplyDeleteThe housing situation is mad of course. What's needed is to increase supply and in rural Wales at least cut demand by ensuring that most new builds are for local people only.
Unemployment? We could try self-government linlked to business friendly policies.
As I said in the original post I am not an economist, which is why I would be interested in the Prof's take on this.
ReplyDeleteOn a personal level I have never quite understood the obsession with home ownership, I was bought up on a council estate in the early 60's where many of my neighbours were "professionals": nurses, teachers, senior council workers - the sort of person who wouldn't be seen dead in a council house these days.
der said:
Where does community come into all this
I'm not sure why you think that a person who rents his/her home should be considered a lesser member of the community than a home owner.
One of the difficulties that is destroying the community spirit of the village in which I live is that, being just off the A55, it is being turned into a dormer village for the Cheshire commuter belt. If there was a good stock of decent and reasonably priced houses to rent in Cheshire, half of those who live here but contribute bugger all but congestion to the village would live in Cheshire. And the locals might not be forced out of the village to live in "social housing" in Llandudno, Colwyn Bay etc.
Anon Said: I preferred Danny when he was playing for Spurs.
ReplyDeleteWhen I read the article this morning I thought that I recognised the name, but I couldn't quite place it. But I don't think that this Blanchflower is the same one who played for Spurs in the 1960's somehow :-)
You know johnny promoting their own language hasn't really hurt the economies of the Baltic states or other small countries across Europe.
ReplyDeleteI know you are very loyal to this failed state called - at the moment at least - the United Kingdom of Great Britain and Northern Ireland - but you really should be asking yourself some searching questions. Like why did the 26 counties get out, why are Scotland and Ulster poised to get out, why has the London government handed over much of its power to Europe?
As it happens I still live on a council estate.
ReplyDeleteInflation made renting look really stupid in the period 1970 to quite recently. a nice detached bungalow that cost £2000 in the 60s would sell in my area for a hundred times that price today. People who took out a mortgage to buy that £2K house were soon looking at their housing costs being a very small % of their budget and were left sitting on a big asset. If you rented for 30 years you ended up paying out an equivalent £100,000 with nothing to show for it in terms of assets.
Oh and because the change of letting of council houses on a ponts system favoured the dysfunctional you also ended up on an estate with waifs and strays from the English cities, drug dealers, feral kids, neighbours from hell etc ... and believe me the cops and the council really don't give a shit.
Of course anti-inflation policies mean that home-ownership isn't going to be such a good bet in the future. A bit of law and order and a points system that favoured local working families might also help.
No, poorold Danny is dead. Great player. Spurs and Northern Ireland.
ReplyDelete