I am really unsure about the Help to Buy scheme, essentially a mortgage with a 5% deposit and a subsidy from central government. State backed mortgages they may not be, but the direct involvement of government in personal lending products they certainly are.
Of course, the strategy makes sense. Help to Buy qualifies more people to buy houses that keeps construction going, keeps mortgage funding flowing from the banks, houses being filled and the economy growing. But the economy grows on false money, created money, money that is being owed to financial institutions. It is a replica of the very crisis this scheme, and others like it, pretend to move away from.
Economic growth on false prosperity does not make anyone richer.
New methods of home ownership are entering the market, and many are taking them up. Shared ownership schemes are proving popular, allowing for first time buyers to pay a few grand deposit and a few hundred quid a month towards owning 40% of a property after 10 years. What happens afterwards depends on the developer.
We ought to remember what happened to the housing market in the past few years. The many people who now owe more than their property is worth (especially outside of London), are literally throwing money away. Those who took out 110% mortgages in 2008 with Northern Rock and Bank of Ireland now find themselves with a difficult predicament. These crazy assumptions seem to be sneaking back into our discourse.
While rates are historically low and a whole host of people take out new mortgage lending, we ought also to remember the impact of a single percentage rise in the base rate…putting around £150 onto mortgage payments every month. Scary stuff. Zombie businesses are out there, those who are only surviving because rates are low…are there also zombie mortgage holders?
Our benevolent state has done it again, saving us poor consumers from the grasp of terrorising, heartless corporations…Hurrah! SSE was recently fined £10.5m for misleading customers with regards to the value of the service they provide. No doubt ofgem (the seemingly indestructible quango) will be fishing around for some more easy money. I fear that the whole situation may be getting a little out of hand. How many more industries will bureaucrats investigate to justify their expensive jobs?
The whole ritual is counterproductive, and insulting to consumers. In a time when government wants companies to grow and employ people, and the markets to be fairer (which we all know they will never be so long as government interferes…) they single out major corporations, then encourage customers to ride the wave of the compensation culture. How much is this going to cost SSE? The impact will only be that they will have to lay people off, prices will go up as customers seek to migrate, and whole regulatory frameworks will be amended. In terms of cost/benefit, it’s really a no brainer. All we will see is the financial free-for-all that comes with enforced compensation rulings. Take PPI…where people who claimed and received payment are still compensated for the misselling of the product. And this government claims it is pro-business? Businesses will only survive if they are allowed to make independent decisions and be judged by consumers, not government. Footfall will always answer questions. Like those who buy a cheaper car because he tyres are lower quality…the customer will ultimately decide.
But that decision is steadily being taken out of our hands. The state now decides what is good for us, how we choose things, and the quality of the services we receive. What choices do we have left?
PPI has set a worrying precedent, and this recent ofgem fine continues the trend…but we will continue to be told that our benevolent state is “cleaning up” an economy that was only broken by them.
As Britain takes the chair of the G8 these coming months, what will be their focus? Our Prime Minister has said, simply…taxation. He believes that taxation is an “important part of development” in countries with emerging economies, unstable political regimes and highly homogenous populations. To say the act of legally deducting individuals wages, and spending money on their behalf (because its always easier), is a piece in the magical development puzzle is quite typical of the British “state is the only benevolent institution” psyche.
Our view of the world is always fixed on how we live, compared to how others live. We measure others against ourselves. To do this is sheer folly. No wonder they say that one must travel to appreciate all that is good in the world. We say The USA is barbaric because guns are legal, we say Africa is inhabitable because of unstable governments, we say China is tyrannical because its people are “brainwashed” into honouring their masters, we say France is harsh because its top rate of tax is 75%. Oh, we believe, if only everybody was like us.
Yes, if only. If only states claimed earned cash from their citizens to spend frivolously on public works projects that decay for a few decades and are then destroyed. If only that claimed cash could be used to feed the hungry and house the poor, to create an attitude of dependency and irresponsibility. If only it could be used to prop up falling businesses that are kept alive simply because their home country doesn’t want it to die. Ah, taxation. Indeed, an important part of development…towards state power.
Government is obsessed with telling us bodies are independent, and hence have no interest (or direct line) into government itself. We hear this, but know it isn’t true. The Monetary Policy Committee at the Bank of England for example, “independent”, but we all know it doesn’t make it’s own decisions…the Office of Budget Responsibility, “independent”, but basically the Coalitions economic champion.
And so it is with the press regulator. “Independent” indeed, and of course it will remain so. Instead, the government have given a new body a royal charter to regulate the regulator. Bureaucracy really does know no bounds. I wonder if the chain will ever end. The political implications of basically deciding what is written in newspapers and what pictures can be included in magazines are obvious, so instead government will do it by proxy.
Picture is ‘Newspaper Vendor’ by Neil Irons (1987)
Today’s ruling that the Governments work programme is unlawful is just another tale in the saga of failed Government work programmes, and emphasises the true demise of the idea, and importance, of work. The idea of the work programme was to give people experience in order for them to be prepared for the real world of work, a placement in Poundland, unpaid maybe, increases the likelihood of longer term work at the end of it.
But money for very little, or even nothing, is so engrained into the British psyche that the programme was immediately, and flippantly, dismissed as “slave labour”. Never mind the amount of unpaid internships thousands of students do in order for them to gain experience, never mind the companies that only employ people who have had voluntary experience, and never mind the fact that work itself does more to increase happiness that anything else.
We forget that money comes from somewhere, it is earned, it is traded, saved, spent. Despite our governments best efforts to have us believe otherwise, money is not unlimited. Companies pay wages when companies succeed. The private sector flourishes when the conditions are right, and wages go up. Why don’t we in Britain understand that a wage isn’t a right, it is privilege, and is given after hard work? Is it the decades where he public sector grew fat with wages but shrank in productivity? Probably. We still believe that laziness, sloppiness and time wasting ought to be rewarded. We still believe that choosing not to work is merely a matter of taste, rather than the shirking of a fundamental responsibility.
We have to take a moment to celebrate reaching 100 posts on this page. The blog has evolved steadily throughout the pas few years, and I hope to continue plugging away with it. The story began in university (as most “stories” do) while studying for my degree in politics and social history. My studies opened my eyes in so many ways, allowing me to piece together the fragments of thought that prevail in modern politics. When I got into marriage, became a graduate and started employment, my mind was continually evolving, and my outlook continued to expand.
From the early days of Meticulous Ridiculous, where all we did was poke fun at politicians, to the current days where I actually try to present a coherent argument, I have enjoyed it. Many topics have filled these electronic pages. The turning point for me was a second year project on child protection policy. I was always a fervent reader of texts, from here, there and everywhere, and everything I found on child protection opened my eyes to the helplessness of state intervention. I have written many times on that particular subject, and I am sure I will do again.
We have a government that believes that their power can eradicate every social ill, and their control influence every kind of social exchange, be it economic or personal. I believe that the state isn’t always the answer, and just as we say society should do something about this, or society should do something about that, we should realise what that actually means. If government took care of us all, then surely we would be the poorest nation of all. The future is hopeful in that people are beginning to realise the folly of trusting the state, and the crookedness of managed economies. In Britain, new ideas are spreading, championed by articulate people who are attracting new and younger followers.
Another century of posts hopes it carries on!