Tuesday 25 May 2010

1984 (21): Home-Owner-Ism (3)

As we well know, the best way of running things is some form of democratic, small government free-market liberalism. The good thing about Socialist experiments is that they tend to go bankrupt after a while, and by and large are replaced with something slightly better (although question mark over Russia). The bad thing about 'capitalism' is that it goes nearly bankrupt every couple of decades (the so-called 'business cycle' or 'credit cycle') but seeing as we know the alternatives are worse, we plough on doing the same thing.

Actually, the these cycles are not inherent in free-market liberalism, they come from a much older and more deeply engrained school of economic masochism, a particularly malign form of corporatism/self-perpetuating privilege which I refer to as 'Home-Owner-Ism'.

For clarity: this has nothing to do with having a wider spread of homeownership, which is broadly agreed to be A Good Thing. In fact, it tends to lead to the opposite (the percentage of homeowners in the UK is down one or two per cent over the last fifteen years) - and boils down to the belief that 'house prices can only go up and rising house prices are good for us'. But by dressing itself up as free-market liberalism, it is what we always fall back on, even after the most dire of recessions.

So just for fun, let me illustrate this by doing a 'track changes' on an excerpt from The Theory And Practice Of Oligarchical Collectivism, which is a book-within-the-book '1984' by George Orwell:

After the revolutionary period of the fifties and sixties, society regrouped itself, as always, into High, Middle, and Low. But the new High group, unlike all its forerunners, did not act upon instinct but knew what was needed to safeguard its position. It had long been realized that the only secure basis for oligarchy is collectivism making everybody think that they are wealthier than they really are.

Wealth and privilege are most easily defended when they are possessed jointly even the Middle and Low believe that they have a share. The so-called 'abolition of private property nationalized industries and social housing' which took place in the middle years of the century 1980s and 1990s meant, in effect, the concentration of property in far fewer hands than before: but with this difference, that the new owners were a group instead of a mass of individuals included, albeit briefly, a significant number of the Middle and Low. Individually, no member of the Party very few Home-Owner-Ists own anything, except petty personal belongings, some bricks and mortar and a few hundred square yards of land, more often than not subject to a crippling mortgage debt.

Collectively, the Party Home-Owner-Ist coalition owns everything in Oceania The United Kingdom, because it controls everything planning permission and land use, down to the last brick, and disposes of the products as it thinks fit via heavy taxation of incomes and subsidies to homeownership and the banking system. In the years following the Thatcher Revolution it was able to step into this commanding position almost unopposed, because the whole process was represented as an act of collectivization privatization. It had always been assumed that if the capitalist class were expropriated nationalized industries were privatized and council housing sold off (in exchange for votes), Socialism capitalism must follow: and unquestionably the capitalists had been expropriated they had been sold off, often at a massive loss to the taxpayer.

Factories, mines, land, houses, transport -- everything had been taken away from them 'the state': and since these things were no longer private state property, it followed that they must be public private property. Ingsoc Home-Owner-Ism, which grew out of the earlier Socialist Conservative movement and inherited its phraseology, has in fact carried out the main item in the Socialist programme which had spawned The Corn Laws in an earlier century; with the result, foreseen and intended beforehand, that economic inequality has been made permanent.


OK, I'm hamming it up a bit, but it strikes me that Home-Owner-Ism is the antithesis of free-market liberalism, and in practice has a lot in common with Socialism.

Discuss.

14 comments:

AntiCitizenOne said...

I see both socialism and home-ownerism as a form of financial pollution, externalising their costs for private benefit, and removing reciprocation.

TDK said...

Home-Owner-Ism, which grew out of the earlier Socialist Conservative movement and inherited its phraseology

Except that all the main parties assume Home-Owner-Ism to be a "good thing". Along with Clause 4, Blair neutralised the old antipathy to home ownership.

TDK said...

Hmm! Strike-out html lost in posting

Mark Wadsworth said...

TDK, again, for clarity, I (like most people) think being able to afford to own your own home without taking on a crippling mortgage debt is A Very Good Thing Indeed.

This is quite distinct from "Home-Owner-Ism", which is the belief that house prices can and must only ever go up - and it is the government's job to bloody well make sure they do so, by restricting supply, taxing it lightly, subsidising local services through income tax, bailing out reckless lenders and borrowers, robbing savers to 'help' borrowers, etc etc.

J said...

Mark,

It would be interesting to hear your views on the future of the housing market. Though it is not my speciality, I can't see how it can sustain an increase in civil service or general unemployment, interest rates and then higher taxes and general austerity. These things are not compatable and keeping house prices up will be detremental to any other form of economic activity: keeping wasteful jobs, high inflation/low interest rates, etc.

My theory: unemployment will cause people to not be able to pay their mortgage/rent forcing house/rental prices down. The same with an increase in interest rates. It's mind boggling just how few people won't look further than 3 years and have taken out a mortgage or want to because interest rates are low and are willing to pay close to what they can afford now. As an aside they also say it's impossible to lose money on property as it will always go up eventually.

Foreclosures will push down the price of houses through forced selling by the banks and supply outstripping demand. People will also be/feel taxed more and therefore have less disposable income to spend on rent/mortgage. This may also cause wealth creators and rich foreigners to move out of London, freeing up the most desirable and seemingly bullet proof (pricewise) housing.

I guess within a couple of years we will be able to see which way this is going to go, though obviously it can't be sustainable in the long run. Bubbles never are....

Hektor

TDK said...

Agreed on diff. But Labour liked the house price boom for same reasons the Conservatives did - feel good factor. I think this marked an ideological break from the past, when they would have focused on the concerns of those unable to afford their own property. Brown liked the boom.

Mark Wadsworth said...

EKTWP: I wish I knew! I am gambling on house prices drifting downwards for several years, maybe I'm wrong?

TDK, exactly. But at least the Tories are sincere about Home-Owner-Ism and it benefits their core voters; Labour did it for naked political advantage and sod their core voters.

Either way, it was, is and always will be a transfer of wealth from young to old; from productive economy to monopolists; from poor to already wealthy; and from future to present.

Lola said...

H-O-Ism isn't just like Socialism as such. It's just that leftyism (aka socialism) trends equally to totalitariansism with rightyism; latent oligarchism. See present day Russia for how this works out in practice.

IMHO Libertarianism sits at the top of a circel with leftyism/rightyism going round and down each side to the bottom, that is totalitarianism.

Now then, how does this fit with H-O-ism? Well I think H-O-Ism is the tool by which the unholy triumvirate of employers, government and fractional reserve banks keep us enslaved. The reason that there is no popukar informed discussion about Georgist tax theories is that 'they' are worried that 'we' might find them out, and rebel.

Well, that's my theory anyway.

Mark Wadsworth said...

L, that is a perfectly good theory, only I am still not sure who "they" are in this context.

I strongly suspect that "they" are in fact all of us, i.e. the ordinary people who believe that house prices can and must only go up, and that this is good for us.

The others (i.e. the easy targets like bankers, politicians, estate agents, BTL landlords, NIMBYs, landed gentry etc) just cash in on this rather irrational belief, in the same way that religions prey on irrational beliefs and basic fears, such as the fear of dying.

In fact, the Home-Owner-Ist desire to 'leave the family residence to the children' is actually a desire to achieve a kind of immortality.

Roue le Jour said...

TDK 16:26 "Brown liked the boom."

That is because New Labour is not the party of the working poor but the party of state employees, a good many of whom have mortgages.

"...making everybody think that they are wealthier than they really are."

Thanks for reminding me of that, Mark.

It ties into something I thought about Polish plumbers. It goes like this: homeowner summons plumber, get quote, calculates plumber earns as much as he does and complains the artisans are over paid. In reality it is the homeowner who is in error. He is not middle class, he is just a clerk with a mortgage, and there is no reason he should earn significantly more than a tradesman.

Lola said...

MW I was being deliberately vague with 'they'.

Sorry about all the typos - it was late.

Mark Wadsworth said...

RLJ, exactly. People who whine about plumbers earning too much ought to retrain as plumbers.

L, I didn't mean you were being vague, I've heard lots of theories about who is behind Home-Owner-Ism and I think it's cock-up rather than conspiracy, but some people gain a lot more from it than others.

bayard said...

"He is not middle class, he is just a clerk with a mortgage, and there is no reason he should earn significantly more than a tradesman"

Even if he was the Earl of Hampshire, there is no reason why he should earn more than a tradesman. Nor is there any necessary reason why the MD of a business should earn more than his best tradesmen, and some fairly good ones why he shouldn't.

Anonymous said...

Surprised you didn't pick this up really. Should be good for discussion too...

;)