As housing costs in the UK spiral out of control, Chris Johnes thinks the time has come for tougher rules to prevent the wealthiest from making housing unaffordable for the majority of people.
In the last few years, the issue of rising inequality gained prominence in academic circles or discussions on social justice… But it’s not exactly been a dominant theme in popular and political debates in recent years.
With the average home in London now costing Â£345,186, many people are finding it impossible to get on the housing ladder.
A frequent excuse for this from those in power has been that worrying about inequality is a distraction from tackling high levels of absolute poverty. Some libertarian commentators have gone further, arguing that inequality of itself does no harm.
In many ways, it can be argued that inequality doesn’t harm in the same way that absolute destitutution does. It doesn’t actually harm me if my neighbour has a bigger car or goes on a more expensive holiday. I may feel jealous or worse about myself but the tangible damage to my well-being is minimal.
But the impacts of inequality go way beyond holidays and cars. There’s increasingly little doubt that the distortion of the housing market in London is having major negative effects on the ability of ordinary Londoners to find housing that is remotely affordable. As centre right think tank Civitas reported last week, “with the average home now costing Â£345,186, it is not
only manual workers on low wages but relatively well-paid graduates that are increasingly finding it impossible to get on the housing ladder”.
Even traditional conservative institutions recognise that the scale of inequality has reached dangerous levels.
The sheer purchasing power of wealthy overseas buyers has both shaped the nature of what is built in certain areas and inflated the costs of existing homes beyond the reach of even many professional people. The sheer weight of the money belonging to a small number of people has produced major negative knock on effects for hundreds of thousands of others.
For most goods, markets are proven to be the best way of allocating economic resources, if they work for the majority of people rather than just for a tiny elite. This is especially true for essential commodities like housing, so when markets are distorted by the vast power that extreme wealth comes with, different rules for those markets are needed. And those rules may need, as Civitas argued, to curb the market power of the very rich for the benefit of the majority.
As even traditional conservative institutions recognise that the scale of inequality has reached dangerous levels, at which it starts to threaten the efficiency and legitimacy of many economies, the traditional answers to tackling inequality – better education for the poor or stronger, better funded social protection – will only offer limited answers.
We need new thinking that tackles the institutions and mindsets which have nurtured and inequality. Given that property ownership is at the heart of so much inequality, where better to start than with housing?
Photo credit: Images_of_Money/Flickr
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Author: Chris Johnes
Archive blog. Originally posted on Oxfam Policy & Practice.