Housing and land

Housing is a human essential, not a speculative investment.

To fix the housing problem permanently we need to strip the asset value out of housing. That means recognising that housing is a human essential, like food, that should be affordable and easily accessible. It’s not an asset to be bought, sold and exploited for financial gain.

The way to do that is to make housing land available at its real agricultural value and make sure it stays that way every time the house is sold on. This is not a new idea. Something similar happened between the 1920s and the 1950s, which is why so much great affordable housing was built in that period. All that was lost when those homes got sold off at market prices after the 1980s.

Corporate governance

Business is a form of economic activity framed by a set of rules. Those rules can be changed.

Economic activity happens all the time, whenever we’re doing anything useful or worthwhile for ourselves, our families or our communities. Business is a way of organising that activity within a group, so that people can share resources and be more productive.

Worthwhile activity within a group generally requires a much larger financial investment than an individual would need, so the rules are designed to favour investors, to encourage people to invest and receive the profits from the business.

But it doesn’t follow that people setting up in business are only in it for the money profits. There are not-for-profit and co-operative businesses as well as those making money for their owners, and even these owners are often keen to operate more inclusively and sustainably.

Rules that favour money-investors over workers, suppliers, customers and other stakeholders (as well as the environment) make that difficult. When money-making is the sole objective, it’s normal for companies to operate to the lowest standards and with the lowest wages that the rules will allow. So it’s hard to stay in business if you want to do something different.

Companies are “legal persons”, but unlike real people they have no human characteristics to help guide their behaviour. Instead they’re guided by company law, which says that they exist to get the best financial return for their shareholders. That law could change, so that money-making becomes only one of a range of social and environmental priorities that companies exist to serve.

That’s why rules matter. Most companies will obey a legal standard provided it’s the same for everyone. If we want a system of business that works for everyone we simply have to change the rules.

Money and banking

Money isn’t real. It’s invented by the state. And the state decides who gets it.

At the moment money is poured into the top of the wealth pyramid, with banks creating new money at low interest rates backed up by the government’s famous “quantitative easing”. This is good news for wealthy investors, from whom the money is supposed to “trickle down”, but instead it shoots back up again in higher rents, costs and prices, cutting off the flow of money to worthwhile activity.

To fix the problem we need to turn that pyramid on its head, directing money at the people who do the doing and making, the fixing and caring, the serving, the cleaning and the running around.

We can do that by ensuring that new money is only created when it serves a worthwhile purpose, which means that it improves the quality of people’s lives directly. Investing smaller sums much more widely, instead of large sums in a few places, gives people the opportunities and choices they need to build real value for themselves, their families and their communities.

Public services

Is the National Health Service a cost, or a benefit?

When it comes to public services, the cost in money terms is easily calculated but the benefit is not. And that cost mostly goes on people. Buildings and equipment are useful, but ultimately it is people who teach, care for others and make them better.

To describe teachers, doctors, nurses and carers as a “cost” is frankly a bit weird. A cost is something one wants as little of as possible. But with these vital services you want as much of them as you can get.

This goes to the heart of Britain’s economic sickness. The key symptom is the idea that economic activity is only beneficial if it leads to the accumulation of money-wealth. Health-carers and teachers don’t do that, which is why schools and the NHS are permanently short of cash.

But teachers, doctors, nurses and carers do something much cleverer and much more useful. They take money-wealth and they turn it through their work into real-life wealth – literally life rather than death, in some cases.

The more of that real-life wealth that can be created, the richer society becomes. The trick, therefore, is to allocate to these services not as little money as possible but as much as they can productively use to make society as rich as possible in real-life terms.

That is still a judgement call: it is possible to allocate too much money. But allocating insufficient money is not a saving to society. On the contrary, it makes society poorer by making the education and health services less productive than they would otherwise be.

Public services are not a cost to society, but a wealth creator. Money is merely the tool that makes such wealth creation possible.

Measuring wealth

The economy gives value to money activity without considering whether its consequences are good or bad. But where money is not involved it gives no value at all.

So, ripping out rainforest to graze cattle creates economic value, whereas leaving the forest to do its thing to keep the planet habitable creates no economic value at all.
The clean up after an environmental disaster, like an oil slick, creates economic value, but not having a disaster in the first place creates no value at all. And the economy does not acknowledge the loss of value to the eco-system that the disaster causes.
A person who ends up in intensive care after a heart attack causes masses of economic value to be created. If they drink and smoke, then all that spending creates even more. But if they consume moderately, take a brisk daily walk and stay healthy, then the economy takes no notice.
And it doesn’t notice anything that is unpaid, either. Housework; child-rearing; gardening; DiY; volunteering; self-learning – all of these and many others do not qualify as economic activity at all.

We get what we measure…

When it comes to politics and public administration, targets matter enormously because we get what we measure. If we think that increasing the number of financial transactions in the economy is the only thing that is making us richer, then all the policy effort will go in that direction. But if we measure the economy differently – if we only measure worthwhile activity that contributes to people’s lives and relationships – then that effort will be redirected towards creating positive outcomes in people’s lives.

Return to the top of the page, or read about the four pillars of human politics