The Housing Crisis and Neoliberalism

Listening to Morning Report this morning (25th May 2016) interview these right wing completely out of touch politicians from this government making excuses for the New Zealand housing crisis, was like a rerun of the Irish Potato famine. It so riled me – all the cliche-laden stupidity and faux “I am your leader, so trust me” emptiness and attempts to convince us there is no crisis.  Well, we’re living it.

The same dull unconcern.  The same rationalisations and talk of market supply.  Neoliberal fundamentalism without a shred of self-critique of its nonsense assumptions.  All to make the mathematics work in the model.

Underlying our crisis, and the complete inability of either government or public sector to deal to root causes, are all those hollow neoliberal assumptions that price and the ‘efficiency’ of the market are dependent on where the supply line meets the demand line.  Complexity reduced to two dimensions.  I’m sure I remember a mathematical theorem somewhere that proves that such reductionism from multiple to two dimensions is completely meaningless – like reducing the raising and love for a child’s emergence as a rounded human being to measures of calorie input and output.  With nice graphs and three significant figures demonstrating precision of course (never mind that such a framing has absolutely no accuracy).

Their nonsense keeps compounding; wrong compounds on wrong; delusion on delusion; insanity on insanity.   Bewildering in its inconsistency and blindness, the neoliberals presume government ‘interference’ will create ‘inefficiencies’ and ‘distortions’ to their ‘perfect market’, while private (i.e. non-government) commercial agents like mega-powerful corporates and slum landlords are apparently OK.  Governments are big and evil, whereas all commercial enterprises are analogous to small and powerless village bakers.  What?  So we leave it to the property developers, speculators and slumlords?  Such nice chaps.  But they donate to the party of course.  Keep the wheel churning.  Keep the spin going.

There is a pattern here.  The view of government engagement as always the problem and never the solution; the view that the private sector is always the solution and never the problem.  Black and white, reductionist, meaningless, unsophisticated attempts at some Newtonian universal that is complete bunkum.

Actually, more than one pattern.  There is the same complete disregard for life, equity, justice, meaning, or a nation’s vision to be more than just a set of ‘resources’ for the commercial mill.  The same complete disregard for what works in the real world, and what doesn’t.

There is a reason why the State is involved in housing, education, health, the social fabric, the long-term view and justice, etc.  It’s because the market patently *doesn’t* provide those core meanings, not only because it is so often most profitable to exploit and destroy function in the short-term, but also because so many of the critical foundations of a decent society require a sense of community and place, and cooperation.  The idea that life and commerce is all about competition is a nonsense to anyone who has ever been part of a team, a family, a decent workplace, a county culture.  We cooperate so strongly at some levels and compete at others.  Cooperation is integral to any cultural life.  Life is patently not about competition of individuals divorced from any society, as Neoliberals presume.

But it’s more than that.  Life is not a market.  The market should never be the first option in policy, the prime directive.  Life is the prime directive.  Life in the long term.  Our culture.  Our reason for being.  Government at its core is about protecting and conserving our people, communities and lands to ensure we can have meaningful life into an uncertain future.

That desired goal-end-outcome is the first consideration.  And then in order to provide what we desire as a people – a democracy (now there’s a thought) – we look for policies that will provide for those ends.  The market – so long as the horror of abusive commercial power is held in check – can be one policy option, one of many.  But never the only one, just as centralised government should never be the only one.

The market can *never* be an option for our future where nuance is not understood nor even identified and considered, and where power is not held in check.  Such ‘unfettered markets’ will destroy us all.  If you allow power and short-term thinking to co-exist, then you destroy all the social functions and natural systems.  It is profitable in the short-term to mine and move on.  It is profitable to extract.  It is profitable to use power to tilt the playing field in your favour.  And it is because power is not given a central place in their thinking that neoliberal economists are not aware enough of the potential degradation of our underlying social and natural systems.

Except that people were dying in the Famine – a manufactured famine created by the power systems of the day.  Yes, a famine amongst plenty.  There was more than enough food, but it was held and controlled by the powerful – those non-government powerful that neoliberalism sees as benign.  Government bad, private sector all good.   Those Irish people ‘things’ had no money to buy, so they starved ….. to death.

Great Indian Famine 1876 – 78

Look up what happened with manufactured famines in colonial India under the administration of benign commercial chaps who bought their Lordship and you will see the same pattern of disconnection from life when you look at people as things.  Viceroy of India Lord Curzon spoke these words while between one and 4.5 million died, “any government which imperilled the financial position of India in the interests of prodigal philanthropy would be open to serious criticism; but any government which by indiscriminate alms-giving weakened the fibre and demoralised the self-reliance of the population, would be guilty of a public crime.”  Prodigal philanthropy.  Weakening self-reliance.  Wouldn’t want that sort of crime on your conscience would you chaps; far better to let them die.  Let the benevolent dice of the market fall where they ought.

You can hear that echo of neoliberalism down the ages.  You can hear the moralising of benevolent dice and merit; simply the market at work, rational choice, I can buy food and a house, so I must be better.  I’d be very surprised if neoliberals teach these famine histories, or any history of complex systems tipping points into crisis.  The economy left to the market is patently not a deterministic machine, all predictable and benevolent.  There are far too many uncomfortable moral and metaphysical questions that come along when you look at the actual real empirical world outside your models.

There are yet more parallels with our housing crisis.  Crises are used by the powerful to grow their power.  If you deny those crises, you play straight into their hands.  You keep the money churn going.  The wealthy and the deal makers can see opportunity where the public suffer.  Housing, homelessness, underemployment, environment, climate change.  All denied by this government.  All for the benefit of apparently benign commercial interests – village bakers apparently.

The Anglo-Irish colonial land owners actually used their famine crisis to take even more of the victims’ land.  Shock Doctrine Version 1.0 “You want to feed your family? OK they can work in the work house, and I’ll have your last 10 acres.”  This happened, and no person with a shred of morality can excuse that as simply ‘the market’.  It is a morally criminal disgrace, whatever its legality.

[Is it any wonder the Irish rebelled in 1916, and those same colonial ‘lords’ lost all their landholding they had previously stolen from the Irish?  Another tipping point that the models cannot predict, though any understanding of humanity would recognise as inevitable.]

We have this history in all its stark reality, and the Neoliberal economists assume an infinite number of equally powerless firms and individuals in their models.  What?  They do not learn about colonisation, or the dynamics of power through history?   Or the fact that a ‘pure’ market world where governments do not temper the excesses of commercial power is not a meritocracy; it is the opposite, where the least moral rise on the pile of carcasses they help create.  How can a university give a degree to a person who knows nothing of political economy and economic history?  How?

Reducing our world to some delusional purity of markets is a pernicious evil.  It encourages power because it assumes it’s all ‘willing buyer-willing seller’ rubbish, and so those with seven corporate lawyers can rip off the worker who has none.  Fair deal?  Fair go?  When you point out this reality as a refutation of the logical bankruptcy of their theories – and all the other nonsense assumptions that have no basis in any real world near you – they will act like religious zealots and defend the indefensible.

… and we’re waiting for the next.  Will it be economic, social or environmental?  Or all three?

Chris Perley