Finance, housing and the ageing population

Last week I went to a meeting in London to talk housing and the ageing society. I was invited to do a quick three minute introduction to the financial aspects of the topic of housing and an ageing population. I thought I’d write up my remarks and amplify them a bit. I’ve also reordered the points a little so they flow better. And, for no real reason other than it’s a bit of a change, I’ve posted at Medium rather than here (click on the title below to go to the post). I’ve also, for a bit of a change, added references to some of the recent work in the relevant academic literature.

Finance, housing and the ageing population

The economics we need, not the one we’ve got

econafterthecrisisA little late in the day I’ve just finished Adair Turner’s Economics after the crisis: objectives and means, published in 2012. It is based on Turner’s 2010 Lionel Robbins lectures.

Economics after the crisis is a thoughtful book which makes a number of relatively simple but profound points.

The early pages note some of the findings emerging from the literature on happiness. In particular, it examines the paradoxical finding that there is an apparent disconnection, once national income per head reaches a certain level, between further rises in average incomes and reported levels of happiness. More money on average doesn’t appear to make people happier.  Turner notes some of the mechanisms that could generate this finding. He notes that trends towards increasing income and wealth inequalities, which seem to accompany market-based economic growth, exacerbate the problem.

These empirical results present a challenge to simplistic views about the desirability of pursuing economic growth as an overriding policy objective. Turner argues that a proper understanding of the conventional economic arguments means they don’t justify the policy anyway. It is a radical simplification of these arguments that gets used to justify simplistic policy prescriptions associated with uncritical marketization.

And that is before you consider the arguments from behavioural economics about the importance of relativities in consumption. Some of the new behavioural economics thinking moves you even further from conventional thinking on growth. [Read more…]

The Big Society and Community Politics: My Contribution to #SLFconf

[This is the text accompanying my presentation to the Social Liberal Forum Conference: “Liberalism, Equality and the State”, City University, 18/06/11. Not all of it was delivered on the day, because of the way the session panned out and because there’s too much of it. My thanks to my co-contributors Mark Pack, Simon Hebditch and Lee Chalmers – and to everyone who attended – for a really interesting session.]

“ … a tale told by an idiot, full of sound and fury, signifying nothing” (MacBeth, Act V, Scene V)

David Cameron clings tenaciously to the Big Society as the organising concept behind his approach to state and society. He does so in the face of almost universal indifference and incomprehension from political opponents, the public, and many on his own side of the House. One is tempted to invoke the above quotation from Shakespeare and leave it at that.

That would, however, be unfair. It would also be a mistake.

Because the Big Society could signal something significant. Although not, perhaps, what its architects intend.

My aim here is to reflect a little on the idea of the Big Society, the consequences of the context in which the idea comes forward, and what it might have in common with the more venerable Liberal idea of Community Politics. In considering these issues it is essential to distinguish clearly between intention and outcome. The pursuit of the Big Society has the potential to set in train processes that may lead to outcomes quite unlike those intended or sought. [Read more…]

Curtailing access to Employment Tribunals – a liberal approach to fostering economic growth?

There is little disagreement that the economic growth figures for 2010 Q4 were very poor. When set alongside the performance of other developed economies they look even more anaemic. The Government is promising that the 2011 budget will be a budget for growth. But the Government is already bringing forward more focused initiatives with the justification that they are geared towards fostering private sector growth. Most recently Vince Cable has announced proposals for changes to employees’ access to Employment Tribunals.

The core proposal is that a worker will need to have been employed for two years, rather than the one year at present, before they are eligible to take a case of unfair dismissal to an Employment Tribunal. Defending a case that goes to Tribunal is expensive for employers, on average it is estimated to cost around £4,000. The argument is that the expense and bureaucratic nature of the process can act as a deterrent to taking on additional workers, particularly for small businesses. Lifting this burden will, the Government hopes, encourage employers to be more bullish in expanding their workforce.

The Government is also concerned that there has been a dramatic increase in cases taken to Employment Tribunal. The total number of claims rose between 2008-09 and 2009-10 by 56 per cent to 236,000. The Government suggests that its new approach will also be more effective in dealing with weak and vexatious claims. There is, of course, an implication there that the recent growth in claims is stuffed full of frivolous claims.

But is that a sensible inference for us to draw? [Read more…]

Housing demand – a role for status concerns?

Housing is a complex commodity. Economists think about the demand for housing as having both a consumption and an investment component. Trying to integrate the two components is a challenge. But is this approach sufficient? Economists differ in their views on the success of conventional approaches to understanding housing markets, particularly in the light of the recent experience of the house price crash. There is enough debate to suggest that exploring new angles could be valuable. More specifically, does the analysis of housing demand need to embrace social status concerns?

Interest in status concerns as a driver of demand is by no means new or novel. It is most likely self-evidently important for those interested in the sociology or anthropology of consumption. Even in the economics community it is an issue that has recurrently, albeit intermittently, attracted attention. [Read more…]

The great unmentionable: in-work poverty

The Government’s strategy for addressing poverty and inequality is geared towards tackling benefit dependency and making the transition into work easier. In this respect there is a great deal of continuity with the rhetoric, if not the practice, of the previous Labour administration.

The publication today of this year’s Monitoring Poverty and Social Exclusion by the Joseph Rowntree Foundation ought to give anyone convinced by the Government’s strategy pause for thought. The report shows that the overall number of children living in poverty has fallen (to, a still pretty shocking, 3.7m) and the number of children in workless households has fallen to 1.6m. This is most likely because of the rises in tax credits and child benefit under Labour. At the same time it shows that the number of children in poverty who are living in working families rose slightly. They now account for 58% of the total.

One of the authors of the report, Tom MacInnes, comments that “it is simply not possible to base anti-poverty policies on the idea that work alone is a route out of poverty”.

[Read more…]

You can’t act on what you don’t know (until too late)

Yesterday’s hardcopy of the Guardian reports that the Government is only planning to release the full Equality Impact Assessment for its policy of cutting Housing Benefit on the day that the legislative changes are brought forward. Critics have already argued that the policy is being rushed in so it is unlikely that the impact has been fully analysed. If it is true that the impact assessment is not going to be available until so late in the day then it means that even the partial picture the government has assembled is not, in practical terms, available to assist effective scrutiny. Impact assessment should start as early as possible in the policy making process. Earlier stages of the Impact Assessment process for the Housing Benefit changes were acknowledge by the Department for Work and Pensions to be incomplete. Which makes data that emerge later in the process even more significant. [Read more…]

Equalities out, “fairness” in?

So Theresa May has announced, outside of Parliament, that the Government will not be implementing the socio-economic duty for public bodies which was originally part of Labour’s Equalities Act 2010. The tone of the announcement was rather different from the signals the Government were giving back in July when it looked like they were going to continue with the equalities agenda set by the previous government. Back then the only part of the Equalities Act that was apparently under scrutiny was the proposed requirement upon employers to publish pay data, which had the potential to expose the existence of a gender pay gap. While that part of the legislation is still looking vulnerable, the focus of Ms May’s current displeasure is the socio-economic duty which she has dismissed as ‘politically motivated’.

It appears that Lib Dem Lynne Featherstone followed up her Minister’s statement by describing the socio-economic duty as “new and unnecessary” and continued: “I said at the time that this was a weak measures, that it was gesture politics and that it would not have achieved anything concrete”. On the one hand, it is disturbing that a Lib Dem is being taken as supporting the Tory line on an equalities issue. But, on the other hand, Featherstone’s point appears rather different. It is not that the socio-economic duty was unnecessarily interventionist – “socialism in one clause” – in the way the Tories are claiming but that it was an inadequate mechanism for addressing entrenched inequality: too weak rather than too strong, [Read more…]