It is an unavoidable problem with representative democracy that the people who get elected, the people who wield power are active types. They are people who like to do things. Worse they are people who find it very hard to sit on their hands and do nothing, when nothing is very often a very good thing to do. Junior minister and Labour party sparkler, Alan Kelly is a man intent on doing things.
All the world, that is Leinster House and the papers are agog and fearful that we maybe on the road to another housing boom. It seems that the price of houses has gone up and this is scaring the horses. At the same time there is a shortage of housing in Dublin and a real dearth of cheap rental accommodation.
Well one very good reason for steep and rising rents is that fact that a government not long ago made cheap rents illegal. Across Europe it is understood that the first home young folk have after leaving mom and pop will be small and basic. In Italy , the monolocale , or one room apartment is what you get until you move up the earning ladder or get another income in to help. Twenty five or thirty square metres of cosiness. In Ireland we had the bed sit. Which in truth was rather more squalid than designed, but it was cheap and they were plentiful. Now they are in practice illegal and this has substantially contributed to the problem of housing in cities. Now students and young workers compete with local income families for the same types of property and after the crash no one has been building even those.
Why is no one building? Well reason might be that average second hand prices are, even after the up surge, in and around what it would cost a builder to build a new house. What is one the highest cost components in building? Land. Why is land so expensive? Because of the murky mad lottery system which we called planning permission. Yet the new proposals give more power to local authorities and planners. It is a recipe for corruption.
The idea that idle land should be taxed into use tells us so much about the mindset of our rulers. They call hoarding what we call saving or investing. They already punish people who hoard money in savings accounts or pension funds. Now they will punish those who buy land as an investment but refuse to sell it when the county council thinks they should. Of course we all know that county councils will know far better than the market what prices should be and where houses should be built. If we learned nothing from the crash it is that you get bad outcomes if you allow the hoi polloi to live where they want and in whatever kind of house they want. No it is time for full on fascist management of this industry. Experts will decide from now on.
Leaving to one side the fact that once again mortgage payers are being stiffed with the bill for social housing, and letting alone the inevitable malinvestment and misdirection of resource that will occur how depressing is it that here we are seven years down the road and still not one person in power seems willing to understand what caused the housing bubble. No, we are stuck in the magical mud of animal spirits and greedy developers.
So we are going to be cursed many times over by our politicians desperately solving problems that don’t exist and in ten or twenty years time we shall have another crisis and be amazed and shocked. But don’t worry even twenty years in the future we will have a Dail full of men and women who will leap into the breach and do something.