Stephen Hill, author of this new blog, challenges today’s politicians
to find Churchillian courage to deal with the root causes of a broken economy
and an unjust society.
All will be well. Mr. Osborne (UK Chancellor of the
Exchequer) has reached into his purse and brought out a little pocket money for
local authorities for the Spring Offensive to fix the potholes. Pocket money
because the Local Government Association reckon they need £10.5bn to fix the
backlog of repairs and Mr. Osborne’s generosity stretches to £200m…that’s £200m
back of £442m recently cut from their budgets in last year’s Comprehensive
Spending Review.
This is about as useful as rubbing anti-itch cream onto a
malignant melanoma. I only know this, because 30 years ago, a
practice nurse took a different view from the expert doctor about that spot on my forearm. For melanoma, the
treatment is immediate, radical and systemic. Excision, concentrated chemotherapy,
lymph gland removal, no sun-bathing, and reduced work and stress…well, I didn’t do so well with
the last two. Without going into the technicalities of road surfacing materials,
it does not take much imagination or daily observation to see how patching up
patches, treating symptoms not causes, will only serve till the next prolonged period
of heavy rain scours out another hole.
In an age of austerity, we could perhaps make do with more potholed
roads, but it’s not just policies for potholes that’s the problem. Everything
to do with land, planning, housing, transport and infrastructure is about short
term random fixes, with not a sign that anyone in politics understands how
whole systems work or has the courage to do what needs to be done to fix them.
It’s all pothole politics.
Contrast this approach with Winston Churchill rising from the
Liberal Front Bench, just over a hundred years ago, to deliver his (in)famous “Land
and Poverty” speech. He proposed an
annual tax on the locational value of land, to reduce land hoarding and
speculation, and to make more efficient use of land. He was supporting ‘The
People’s Budget’: the first ever budget to involve the redistribution of wealth,
and the direct cause of the Parliament Act of 1911 to limit the power of the House
of Lords.
In his 1909 pamphlet “The People’s Land”, Churchill argued
that the strength of the economy and the welfare of all citizens depended on
stable and fair land markets. “The best
way to make private property secure and respected is to bring the processes by
which it is gained into harmony with the general interests of the public”. In
his view, the inequitable accumulation of wealth ‘created’ through land value inflation
and land price speculation was one of the most powerful forces then undermining
citizens’ basic freedoms. Sound familiar?
Henry George, advocate of land value taxation, had impressed
Churchill (and Joseph Rowntree); but it was Ricardo’s Law of Economic Rent that
had provided the original inspiration. Ricardo’s classic treatise “Principles
of Political Economy and Taxation” published in 1817, explained economic rent as
the surplus profit from investment. Excess capital exploits new investment
opportunities wherever it can find them. Towards the end of every business
cycle, therefore, economic rent seeks out and pushes up the price of assets in limited
or fixed supply, notably land.
Freed from the tight prudential discipline of the local building
society manager, by financial deregulation in the mid-1980s, high demand local
housing markets became prey to speculative global capital. The latest boom-bust
cycle, ending in 2007/8 was turbo-charged by computer power and global capital’s
indiscriminate appetite for securitized property assets of any quality. It led
inexorably to a devastating and climactic explosion: the wholesale destruction
of livelihoods, savings, pensions, the collapse of housing markets and production,
and now damaging cuts in health, education, and transport investment, and the
prospect of mass youth unemployment.
Unless we can control the unregulated accumulation of inflationary
and speculative property wealth, these cycles will recur roughly every 18
years, as they have done since Ricardo’s time. It was not just Gordon Brown who
believed he could beat boom and bust, or George Osborne thinking “hopefully
we will have a little housing boom and everyone will be happy as property
values go up”. It's more than just frustrating that they and now
the
economist Thomas Piketty in his new book ‘Capitalism in the 21st Century' still don't recognise this. Piketty suggests that 200 years of evidence shows that capitalism hasn't been working. Tell that to the now unfashionable Ricardo who devised his theory, er, almost exactly 200 years ago. Apart from Churchill and a handful of others, they just never understood “It’s the land economy, stupid!"
Churchill’s analysis is truer now than it ever was. We are
where we are because we ignored his message. For politicians, the systemic imperatives
of land policy reform have always been ‘too difficult’. But now, a wasted
century later, frustrated citizens are taking action to adopt their own
home-grown reforms.
Take a young man with a small family, a modestly paid job,
and a surfboard, standing outside the houses that he and twelve other families
have built for themselves. Five years ago now, his three-bed house, in the Cornish coastal village of
St Minver, had cost him just under £100,000: one third of its market value, and
one sixth of average house prices in the village. “I had given up any idea of
living here where I grew up. I have had over thirty homes; off-season holiday
lets, caravans, friends’ spare rooms, all over Cornwall. Now I have a life,
close to my family, a job I can walk to…and the beach.”
In Cornwall, a unique collaboration between village
communities, landowners, councils, and a rural housing association has established
the Cornwall Community Land Trust, with a programme of over 120 community land
trust homes built since its start in 2006, with a further 11 projects under
construction and over 150 new homes in the pipeline across Cornwall. This has
grown at twice the pace of previous rural housing production. It is unique
because it is grounded in the genuine trust and mutual respect between the
partners; and this seems to hold good in many rural situations.
This new life comes through the decade long investment of independent foundations,
the Building and Social Housing Foundation, Tudor, Nationwide, Esmee Fairbairn,
Carnegie UK and now Oak from the USA, all promoting action research and transformational social
change in the interest of democracy, civil society and social justice.
In East London, Citizens UK and their partners, the East
London CLT may be on the brink of achieving a 13 year campaign to see a CLT on
the Queen Elizabeth Park, promised but not yet delivered by successive Mayors
as part of the Olympic Legacy. But they haven’t been sitting on their hands in
the meantime, and have fought their way into the redevelopment of the Greater
London Authority’s St Clement’s Hospital in Mile End (by extraordinary and unplanned coincidence the site of a former home of David Ricardo) with a pioneering way of selling
and reselling homes linked rigidly to local median incomes: a still small voice
of sanity in a London housing market that everyone now calls ‘mad’. “People
come to us looking for a secure home, with costs that they can genuinely
afford. Most are now privately renting and don’t know from one six months to
the next where they’ll be living or what they’ll have to pay. Thinking of their
home as a speculative ‘investment’ is simply not a priority. The need for
security and certainty is a more basic and natural need”, says Paul Regan,
chair of the CLT.
But here and elsewhere in urban areas, citizens have been and still are frequently
met with condescension, suspicion and irritation at their presumption;
conveniently depersonalised and disempowered with the label of ‘communities’. What
business do they have meddling in the production of their own homes? This is
the proper job of mainstream politicians and housing providers. Who are these ‘communities’?
Whom do they represent?
We should admire these disruptive citizens for their courageous disrespect of the status quo, and the people
who seek to protect it, or know no better. In many parts of the country, the mainstream
provides housing many times more expensive than most people can afford, and has
been losing more social rented homes than have been built each year for a
generation, until 2008. Even with the prospect of 165000 new ‘affordable’ homes
by 2018, there will still be one million less affordable homes then than there
were in 1980, but with 7 million more people to house. That was a huge effort, with
enormous transaction costs, and still the poorest are being made to move home
if they have a surplus bedroom. No one has been looking single-mindedly enough,
as Churchill, Bevan and Beveridge would have done, at the “Why is there a
queue?” question, rather than “How do we manage the queue?” question. As it is,
many homeowners now gain more in untaxed house price increases than they pay in
tax, leaving disadvantaged renters and the unhoused to carry the whole burden
of their own welfare, or what’s left of it. This is not an achievement for any politician
to be proud of.
The new CLT homeowners in north Cornwall, East London and elsewhere
are Ricardian economists, choosing to forgo any increase in the land value of
their homes, giving up the surplus profit on land. When politicians fall back on ‘the politics
of choice’, for want of anything better, promoters of CLTs and CLT homeowners have made the one choice that politicians dare not offer. They
are the true agents of Beveridge’s vision for a Welfare State in which its
citizens take “private action for social
advance”.
Community land trusts can only be a small part of the
answer. All citizens must act. The home ownership ‘revolution’ has made
hoarders and speculators of us all. Churchill would despair at the structural
inequalities and poverty that we have created through the absence of policy and
lack of political courage.
Unless politicians and citizens direct our collective will to reforming land
policy and housing markets, we will fail utterly in the task of rebuilding our broken economy and building
the just cities and society of the future.
Postscript
Reading more about the Piketty book and its reviewers, it feels like they are all completely missing the
point…seemingly almost wilfully…about land. They look as though they are about
to name the problem...land price and debt...and then, as neo-classical economists cannot bear to actually say the words. For a good old-fashioned academic
catfight, read this interview for Naked Capitalism with Prof. Michael Hudson, a
died-in-the-wool classical economist, and spot on about the dimension that’s
missing in Piketty and Krugman et al.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
This is my first blog under this title. If Churchill seems an unusual
reference point for ‘Building just cities’, try reading his Land and Poverty Speech and election pamphlet The People's Land . They seem curiously modern.
Today is also the start of a two month Churchill Memorial
Trust Traveling Fellowship, to the USA, to meet citizens’ groups, community organisers
and the politicians with whom they work. The title is ‘Strengthening civil
society institutions through new forms of land ownership’, and its purpose is
to construct better narratives for politicians and citizens about their
relationship and shared responsibilities, based around these headline questions
for the research:
- How
can participative democracy be recognised by politicians, public bodies
and professionals as having as important a role to play in civic life,
policy making and practice, as representative democracy? Can politicians
learn to be more generous and respectful in their dealings with citizens?
- How
can citizens become more effective agents of the changes needed to improve
their quality of life, and rehumanise
the process of development, especially in urban areas?
- Are
Community Land Trusts (and similar citizen led housing organisations),
merely a small and interesting way of meeting very local needs, or could
they be a phenomenon with global significance? How can citizens (re)claim
their ‘right to the city’, and the right to a genuinely affordable home
related to income, as the foundation of a normal healthy life? Are they
powerful witnesses to the failures of economic and fiscal policy, and of
land markets to meet both social and economic need?
I’ll be writing
about my experiences over the next eight weeks and then ‘what happens next’.
Stephen Hill, Cambridge MA. April 9th
2014
