Economics has achieved much; there are large bodies of often nonobvious theoretical understandings and of careful and sometimes compelling empirical evidence. The profession knows and understands many things. Yet today we are in some disarray. We did not collectively predict the financial crisis and, worse still, we may have contributed to it through an overenthusiastic belief in the efficacy of markets, especially financial markets whose structure and implications we understood less well than we thought. Recent macroeconomic events, admittedly unusual, have seen quarrelling experts whose main point of agreement is the incorrectness of others. Economics Nobel Prize winners have been known to denounce each other’s work at the ceremonies in Stockholm, much to the consternation of those laureates in the sciences who believe that prizes are given for getting things right.
Like many others, I have recently found myself changing my mind, a discomfiting process for someone who has been a practicing economist for more than half a century. I will come to some of the substantive topics, but I start with some general failings. I do not include the corruption allegations that have become common in some debates. Even so, economists, who have prospered mightily over the past half century, might fairly be accused of having a vested interest in capitalism as it currently operates. I should also say that I am writing about a (perhaps nebulous) mainstream, and that there are many nonmainstream economists.
Economic inequality
Even the Tories’ political education department had no real objection to the further reduction of the tiny private rented sector that existed in the 1970s. It wrote: “The accelerating decline of the privately rented sector is quite irreversible. The private landlord, as he exists now and has existed, will, within a generation, be almost as extinct as the dinosaur. There is nothing that can be done about this.” Conservatives in the 1970s merely sought to retain a handful of petty landlords, who ought to be entitled to a “fair return” if they let out a spare room or two, but they recognised that private renting tends to be an expensive, poor-quality and economically wasteful way of accommodating the population. The near-death of landlordism was one of the good news stories of the last century.
But the task that Thatcher and her successors set themselves was to undo that progress. The present system was designed, as the supreme court noted in a tenant’s 2016 human rights challenge, to ensure that “the letting of private property will again become an economic proposition”. It should have been obvious to everyone that a market that had achieved such positive effects by its collapse would produce equal and opposite consequences as it was reinflated.
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The yimby argument has always seemed flimsy. Its strange logic is that speculative developers would build homes in order to devalue them: that they would somehow act against their own interests by producing enough surplus homes to bring down the average price of land and housing. That would be surprisingly philanthropic behaviour.
When we complain, rightly, that cities such as Vienna are so much more livable than anywhere in Britain, we must acknowledge that landlordism is holding us back. Our insistence on pursuing policies that ensure that letting private property is an “economic proposition” not only drives up prices for would-be homeowners, but it stands in direct opposition to a programme of municipalising and decommodifying the homes that already exist. It also inflates land values, making new state-led building projects unfeasible. If we want a Viennese-style existence we can only achieve this, as we did 50 years ago, by driving the landlords out. Which is only fair: we have given them a very good innings.
Four years ago, the U.S. entered the Covid-19 pandemic. Forbes published its 34th annual billionaire survey shortly after with data keyed to March 18, 2020. On that day, the U.S. had 614 billionaires who owned a combined wealth of $2.947 trillion.
Four years later, March 18, 2024, the US has 737 billionaires with a combined wealth of $5.529 trillion, an 87.6 percent increase of $2.58 trillion, according to IPS calculations of Forbes Real Time Billionaire Data. (Thank you, Forbes!)
As 2023 ends, Britain may not be facing a famine, as people are in north-eastern Nigeria, South Sudan, Yemen or Somalia, but that is a low bar. The UK’s current levels of food insecurity will damage physical and mental health and increase health inequalities for years to come.
The Food Foundation tracks moderate or severe food insecurity in the UK, which is defined as how many people in the past month had smaller meals or skipped meals; had been hungry but not eaten; or had not eaten for a whole day – each because of lack of access or inability to afford food. In June 2023, the latest tracker, 9 million adults in the UK, 17% of households, experienced moderate or severe food insecurity (a massive rise from 7.3% in June 2021). Nearly a quarter of households with children experienced food insecurity.