The Landlords’ Game and the Opportunists

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 The Landlord’s Game

And the Opportunists

Most people have heard of the board game Monopoly, a game which like Marmite, children soon learn to love or hate. The playing pieces are a feature of the game, an iron or an old boot are echoes of the poor (the losers?), the top hat representing the wealthy, with wheelbarrows and sport cars to carry home the cash. Perhaps it is significant that pieces representing the poorest are being phased out, the iron to be replaced by a cat.

Today’s game, of wheeling and dealing, auctions and interest rates, is reminiscent of the cut-throat  competition of stock markets, and banking fuelled by greed and ruthlessness. And like those, the game continues until all but one is eliminated, everyone else’s funds exhausted – and if mirrored in the real world, destitute, bankrupt, and left without the means to survive. The winner meanwhile has amassed a massive wealth of cash and real estate. What a dreadful lesson to give to our children!

Landlords_Game_board_based_on_1924_patent

But this was not the original intent of the game, inspired by Elizabeth Magie in the late 1800s and known as “the Landlord’s Game”. In stark contrast to the modern game, this was designed as an example to teach others about social and economic justice. She  had studied the writings of Henry George and eventually became one of many people who took on the task of trying to teach others what she had learned from studying Progress and Poverty and George’s other works.

Collaborating with friends in her Brentwood, Maryland community, Elizabeth Magie created The Landlord’s Game. She applied for a patent, which was granted on January 5th, 1904 (No. 748,626). This was a socialist idea, designed for the benefit of all, stolen by opportunists – and changed into the game of Monopoly. How often do we allow this to happen?

magie-elizabeth-1890Lizzie explained that the game was to be a “practical demonstration of the present system of land-grabbing with all its usual outcomes and consequences.” While still a young, single woman, Elizabeth — or “Lizzie” as she came to be called — became a regular visitor to the Single Tax enclave of Arden, Delaware. This was around 1903. Whether on her own or in conjunction with other Single Taxers in Arden, Lizzie continued to work on the design of The Landlord’s Game as a way to explain how Henry George’s system of political economy would work in real life.

(from How Henry George’s principles were corrupted into a game called Monopoly)

Now Britain is suffering a massive housing crisis. There simply aren’t enough decent, affordable homes ( Shelter)  More than two million people find their rent or mortgage a constant struggle or are falling behind with payments. The UK is now more polarised by housing wealth than at any time since the Victorian era. Today’s Housing Crisis has its roots in Margaret Thatcher’s Right-to-Buy Council House Scheme, offering tenants the chance to own their own homes, but not allowing councils to rebuild the stock.  Like Lizzie’s Landlords’ Game, opportunists stole public housing stock, to make a killing, many now in the hands of MP’s lobbyists. In short, like Lizzie’s Landlords’ game, opportunists profit, while others do the work. As Owen Jones, reports in the Guardian today Right-to-Buy has been a definitive disaster.

Those council homes, sold off and not replaced found their way into the hands of private landlords – almost forty per cent, and it’s rising. One ex- council flat in Central London has been sold for £1.2 Million (Guardian) Meanwhile, homelessness soars.

The Independent reports, 14th August 2015

Almost 40 per cent of former council homes sold on the cheap under the Government’s Right to Buy scheme are now being let out on the hugely expensive private rental market, enriching a new generation of landlords.

The first national study of its kind, carried out by Inside Housing magazine, comes as the government prepares to extend full Right to Buy discounts – of more than £100,000 per property in London and £70,000 elsewhere – to a further 1.3 million housing association tenants.

Figures released by 91 councils in England under the Freedom of Information act show 37.6 per cent of flats sold to tenants under the controversial policy are being sublet at up to seven times the cost of average social rents.

v2-4-Council-Houses-Getty

Everyone needs a decent home – people should not be paying astronomical prices and working longer and longer hours for a basic human need, while others can profit, while never doing a “proper job” at all. It is scandalous that people can gain advantage from buy-to-let-mortgages, putting the dream of a home well out of reach.  Now hard working people are finding their pay is not enough to pay a rent or a mortgage, and it is predominantly working people who need Housing Benefit to get by – and that Benefit is going straight into the landlords’ pockets.  It is siphoning off public assets directly into the private sector. This is a madness, why are wages inadequate for paying for a home? In order to access rented accommodation, massive deposits first have to be secured, plunging tenants into debt before they have even moved in. House prices have risen again recently, giving an illusion of wealth to some, but an unrealistic dream for young people.  And then, let us not forget the hated Bedroom Tax, that unkindest cut of all. Monopoly is an appropriate word for the housing crisis and it is becoming increasingly difficult for young people to pay for a decent home.

The last Labour government should have addressed the housing crisis. The next Labour government must. It must be a priority for Labour.  Jeremy Corbyn is promising a “radical reboot” of council house building to tackle the housing crisis.  A link to Jeremy Corbyn’s Housing  Manifeso is here  Please take time to read.

Extracts

  • Evidence suggests that we need to be building at least 240,000 homes per year(the coalition government averaged 145,000). We should be meeting and building in excess of that target, with at least half comprising of council homes.
  • A National Investment Bank could support new build housing projects with low interest rates, both by councils and developers as long as tough new conditions were met on the proportion of genuinely affordable housing built. For every £1 spent on housing construction an extra £2.09 is generated in the economy.
  • We need to bring (private) rents down to make sure they take up a lower proportion of people’s income, and given that many people are likely to renting for longer and longer, we need to make sure tenants have the right to a longer tenancy. A survey by Survation in January this year showed fewer than 10% of British people are against mandatory legal limits on housing rents.
  •  Regulation of private rents should be linked to what determines whether something isaffordable. We should consider average earnings and in particular their rate of increase, not the market rate for housing. JC HOUSING MANIFESTO

From the Mirror: Jeremy Corbyn would ‘reboot’ council house building and cap soaring private sector rents to combat the housing crisis if he was elected Prime Minister. The Labour leadership front-runner says councils should be allowed to commission and build houses themselves, instead of being forced to put construction out to tender for private companies. In his housing manifesto, he proposes regulated rents for private tenants, which would be linked to local average earnings. He also pledges licensing of private landlords, and giving tenants the right to longer tenancies. Daily Mirror

On the Monopoly story, Lizzie made very little money from her innovative idea; meanwhile the big corporations cashed in. Her teachings were censored, and as today, only the views of the rich and powerful were heard. Undoubtedly, she held firm to her convictions, and showed integrity which many of our modern politicians it seems lack. There is wisdom in Lizzie’s words from which we can all learn. An essay written by Elizabeth appeared in the September-October 1940 issue of Land and Freedom, under the title “A Word to the Wise.” 

Like Lizzie, there are many intelligent, inspired and creative people with great ideas to share for the good of society. Some of these are in the Labour Party, some in our schools, universeities, factories and offices. Working people. That is where ideas grow, and where wealth grows, We should not allow opportunists to steal what is rightly there for us all. That is what socialism is all about.

The Great Housing and Welfare Swindle is discussed at length here Parts 1 ( and 2).

References and Further Reading

Monopoly and the Landlords’ Game

Quote

 The Landlord’s Game  

From @Earwiggle

Most people have heard of the board game Monopoly, a game which like Marmite, children soon learn to love or hate. The playing pieces are a feature of the game, an iron or an old boot are echoes of the poor (the losers?), the top hat representing the wealthy, with wheelbarrows and sport cars to carry home the cash. Perhaps it is significant that pieces representing the poorest are now being phased out, the iron to be replaced by a cat.

Today’s game, of wheeling and dealing, auctions and interest rates, is reminiscent of the cuthroat  competition of stock markets, and banking fuelled by greed and ruthlessness. And like those, the game continues until all but one is eliminated, everyone else’s funds exhausted – and if mirrored in the real world, destitute, bankrupt, and left without the means to survive. The winner meanwhile has amassed a massive wealth of cash and real estate. What a dreadful lesson to give to our children!

Landlords_Game_board_based_on_1924_patent

But this was not the original intent of the game, inspired by Elizabeth Magie in the late 1800s and known as “the Landlord’s Game”. In stark contrast to the modern game, this was designed as an example to teach others about social and economic justice. She  had studied the writings of Henry George and eventually became one of many people who took on the task of trying to teach others what she had learned from studying Progress and Poverty and George’s other works.  

Collaborating with friends in her Brentwood, Maryland community, Elizabeth Magie created The Landlord’s Game. She applied for a patent, which was granted on January 5th, 1904 (No. 748,626).

magie-elizabeth-1890She explained that the game was to be a “practical demonstration of the present system of land-grabbing with all its usual outcomes and consequences.” While still a young, single woman, Elizabeth — or “Lizzie” as she came to be called — became a regular visitor to the Single Tax enclave of Arden, Delaware. This was around 1903. Whether on her own or in conjunction with other Single Taxers in Arden, Lizzie continued to work on the design of The Landlord’s Game as a way to explain how Henry George’s system of political economy would work in real life.

(from How Henry George’s principles were corrupted into a game called Monopoly)

Many of Henry George’s observations ring true today. Poverty is rising in the UK, homelessness is soaring.

Now Britain is suffering a massive housing crisis. There simply aren’t enough decent, affordable homes ( Shelter)  More than two million people find their rent or mortgage a constant struggle or are falling behind with payments. The UK is now more polarised by housing wealth than at any time since the Victorian era.

Osborne’s policy is to create a mini boom in house prices, attempting to appeal to voters, who feel a windfall coming their way – the modern day monopoly player believing there is a recovery in the economy. But, just like in the game, all that can be achieved is disaster for many. Dominic Lawson (Independent) describes the policy as a dangerous political placebo, and Steve Keen labels it as a Ponzi scheme, and suggests it should be renamed “Help to Sell”. Today’s Housing Crisis has its roots in Margaret Thatcher’s Right-to-Buy Council House Scheme, offering tenants the chance to own their own homes, but not allowing councils to rebuild the stock. The Great Housing and Welfare Swindle is discussed at length here Parts 1 ( and 2). House prices have risen again recently, giving an illusion of wealth to some, but an unrealistic dream for young people. One third of the council houses originally sold to tenants are now owned by rich landlords. Now hard working people are finding their pay is not enough to pay a rent or a mortgage, and it is predominantly working people who need Housing Benefit to get by – and that Benefit is going straight into the landlords’ pockets.  This is a madness, why are wages inadequate for paying for a home? In order to access rented accommodation, massive deposits first have to be secured, plunging tenants into debt before they have even moved in. The Labour Party has pledged to tackle the unregulated agents and criticised the lack of transparency. There is certainly a need to make this a key issue in forthcoming elections. More hype about house-price rises is not going to solve this problem – as homelessness is soaring.  And then, let us not forget the hated Bedroom Tax, that unkindest cut of all.

SOME KEY FACTS OF UK HOUSING (see Guardian)

26.4m: The number of households in the UK in 2012, according to the Office for National Statistics. Following the 2011 census, the government predicted that the number of households would rise to 28m by 2016. 
2005: The peak year for home ownership. In 2005-06 home ownership peaked at 71% of dwellings (figures for England only). It declined to 65% in 2011-2012 and is expected to fall further.
58%: The increase in the number of privately rented homes between 2005-06 and 2011-12, which went up from 2.4m to 3.8m (source: DCLG English Household Survey, 2011-12).
449,000: The number of households with six or more occupants. The most common household in England – 7.9m properties – is two people living in a home.
£4.2tn: The net value of British household dwellings, after mortgages are deducted, according to Office for National Statistics figures this week. The total value has now surpassed the 2007 pre-financial crisis peak, when it stood at £4.1tn. British houses are now worth 55% more than they were in 2003, said the ONS, and make up 60% of the total net worth of the country.
£169,624 Average House price The “seasonally adjusted” average price of a home in the UK, according to the Halifax house price index for July 2013, up 4.6% on the year before. The non-seasonally adjusted figure is £172,015. This is still 14.5% below the all-time peak of £201,081 recorded in August 2007. Average house prices fell by 22% from August 2007 to March 2009.
£318,214: The average price of a property in London, according to the Nationwide house price index. That’s 2.75 times than the average for the North (£115,763), and almost three times higher than the UK’s cheapest region, Northern Ireland, where prices average £108,116. (Source: Q2 2013 Nationwide regional index).
£1,118: The average monthly rent in London in July 2013, up 5.7% from a year earlier, according to the LSL Buy to Let index. The average rent across the UK in July 2013 was £738 a month, up 11% from £663 in April 2010, the month before the coalition government came to power. Earnings have increased by around 1% over the same period.
106,820: The number of houses built in the UK in the year to June 2013, down 9% on the year earlier. In 1970, total house building in the UK was 378,230 units. Council house building has collapsed from 185,000 units then to less than 1,000 a year across most of the last decade

Extracts from Progress and Poverty make interesting reading today:-

  • Wages are not drawn from capital. On the contrary, wages are drawn from the product of the labor for which they are paid 
  • Rent, in short, is the price of monopoly. It arises from individual ownership of the natural elements — which human exertion can neither produce nor increase.
  •  If any class gets less, it is for one reason only — because the distribution of wealth has become more unequal. 
  • We must make land common property.

Lizzie made very little money from her innovative idea; meanwhile the big corporations cashed in. Her teachings were censored, and as today, only the views of the rich and powerful were heard. Undoubtedly, she held firm to her convictions, and showed integrity which many of our modern politicians it seems lack. There is wisdom in Lizzie’s words from which we can all learn. An essay written by Elizabeth appeared in the September-October 1940 issue of Land and Freedom, under the title “A Word to the Wise.” Even in her declining years, she was urging surviving Single Taxers to action:

What is the value of our philosophy if we do not do our utmost to apply it? To simply know a thing is not enough. To merely speak or write of it occasionally among ourselves is not enough. We must do something about it on a large scale if we are to make headway. These are critical times, and drastic action is needed. To make any worthwhile impression on the multitude, we must go in droves into the sacred precincts of the men we are after. We must not only tell them, but show them just how and why and where our claims can be proven in some actual situation….

The 24th August 2013 – A National Day of Action –

Mass “Sleep Out” in 45 towns and cities across the UK.

References and Further Reading

The Strategy of The Bedroom Tax

We are told that George Osborne treats politics as a game of chess:

… it is one of those three-tiered chessboards. The lower tier is tactics, the art of winning day-by-day scuffles. The middle tier is strategy, which is planning for the next election. The top tier is grand strategy.’ http://www.economist.com/blogs/blighty/2012/03/george-osbornes-budget-0

It is obviously essential that the policies and day-to-day tactics of this ‘Tory’ government be confronted but it needs to be understood that activity within each layer of the board is predicated on the intentions of the topmost…

For example, the ‘Bedroom tax’ is the strategy.  The strange rationalization… that government is trying to ‘reduce overcrowding’… is the tactic.

But the grand strategy is the age-old one of dispossessing low-income people from the high value land that they occupy… the long-term aim is social cleansing of the inner city.

The dire impacts of the ‘Bedroom tax’ on individuals are heartbreaking but the real targets are the social housing associations whose viability are threatened by the likely large scale rent arrears… and their subsequent difficulties in arranging finance:

‘The social housing sector is an intricate machine; significant manipulation of policy and funding levers without fully understanding the potential impacts, is likely to cause major disruption to the way the sector works, both in terms of its ability to support its tenants and its ability to attract investment for development of new affordable housing.‘ (1)

 

Why would the Tories want to cripple housing associations and clear the inner city? …Just think of the rents that private landlords will be able to charge for newly acquired ex-social housing in Kensington and Chelsea… and the prime locations that will become available for purchase.

But perhaps more importantly, it moves away potential ‘trouble’, creating much more easily defended areas for the wealthy (just like the heavily defended citadel in Soylent Green).  By relocating individuals and families to cheaper areas, the assault on social housing also provides the means to break up natural communities of mutual support.  Public protests and rioting are invariably urban phenomena, as we saw in the London riots.

Boris may have said that there would be ‘”no Kosovo-style social cleansing” of the city’s low income households on his watch, but he has diverted 80% (£93.3 million) from affordable housing programmes to the Mayor’s Housing Covenant, which aims to help middle income earners into homeownership.

In war, the first casualty is truth

 … and as Warren Buffett said:

“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”  

References:

  1. Council of Mortgage Lenders’ Response to SSAC call for Evidence – Universal Cride/ Housing Benefit in Social Sector Part 1
  2.  Soylent Green, George Osborne and Plutonomy

ConDemed: The Great Housing and Welfare Swindle Part 1:

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ConDemed: The Great Housing and Welfare Swindle Part 1:

A Potted History of the Context of UK Housing & Welfare Policy

By Marxist Nutter previously published here:

Introduction: The Rise and Rise of the New Right

A dangerous new hegemony is emerging from the right and it has been made possible through New Labour’s sedimentation of the Thatcherite hegemony. This new hegemony is the hegemony of austerity.

This hegemony has wide reaching effects in terms of the UK economy and social policy; however nowhere is it more pronounced than in housing. Before going on to look at the effects of the New Right on housing and welfare in the UK, let us first recall its history.

The Thatcher government was responsible for the biggest ever sell off of public assets in the form of the ‘Right to Buy’ (RTB) scheme. Since the 1940s local authorities had been building large amounts of social housing which was affordable for the people of Britain and by the 1980s social housing constituted a very large and important national asset.

Condemed image 1

(Graph reproduced from http://www.significancemagazine.org/view/index.html)

Thatcher’s RTB sought to sell off social housing to enable social tenants to become home owners. As these social homes were never replaced and building of social homes has been in long term decline, there has been a substantial change in the tenure mix of UK housing, much of which can, to a large extent, be attributed to Thatcher’s RTB policy.

Condemed Image 2

(Graph reproduced from http://www.statistics.gov.uk/hub/index.html)

Research shows that the RTB policy enacted in the 1980s has led to unintended consequences such as the proportion of social homes, sold under RTB, that have ended up as private rented accommodation as opposed to owner occupied, in contradiction to the initial policy aims which were to turn social rented homes into owner occupied homes. Recent estimates suggest that the effect of RTB properties ending up in the private rented sector may have increased benefit expenditure by as much as £2bn per year (Sprigings and Smith 2012). What was once a valuable national asset is now a tool for the generation of private profits which have been subsided by the tax payer, first through the RTB discounts themselves and now through benefit contributions paying for the high private rents being charged by the new owners of what was once social housing.

RTB was certainly an advantage to the generation who were able to buy the council homes under the scheme (and who benefited from significant rises in the value of their property) and is now an advantage to private landlords able to command high rents due to the lack of supply of affordable housing. RTB however has been very costly to the treasury.

Today, the cost of housing benefit is an important political issue; but it is the tenants of the remaining social homes especially who are constructed as the reason for this (as the problem) and not the policy that transferred public assets to private ownership. Certainly, not all in receipt of housing benefit are social tenants, many live in private rented accommodation and some in former social housing which was sold under RTB, and yet this distinction is often blurred in public discourse. It is also true that the majority of people in receipt of housing benefit are either retired or in low paid work, yet in public discourse housing benefit is often linked with unemployment. This is because the New Right have succeeded in framing the housing and welfare debate in a certain way.

The New Labour Years: A New Hope

Thatcher’s greatest success was how she dragged the entire political spectrum to the right by articulating together a critique of Keynesianism with her vision of a strong state and a free market (see the work of Stuart Hall for more details). Thus when even the broken electoral system of the UK managed to reject the Conservatives in 1997, it was unable to reject Thatcher, as her ghost haunted the Blair government even more than the Major government. Labour were never able to challenge neo-liberal orthodoxy. The neo-liberal interpretation of reality had, by this time, become ‘common sense’ – this is perhaps the simplest definition of hegemony. Hegemony is where a single contingent interpretation of reality emerges from a field of multiple possible interpretations to become ‘common sense’ (See Howarth, D. and Stavrakakis, Y. for more details.

By 1997, the prevailing view at the top of the Labour party was that there was no public appetite for socialist principles or an opposition to capitalism, and in order to maintain credibility with the electorate the party must accept a ‘common sense’ view of the world. Privatisation and the fetishisation of the private sector were (and still are) the order of the day. Nationalisation was off the table (let alone workers seizing control of the means of production). Councils, despite successes in previous decades, were viewed as inadequate vehicles to drive affordable housing development.

This new common sense is well articulated in the book On The Edge edited by the Third Way philosophers Will Hutton and Anthony Giddens, (both huge influences on New Labour).

The world’s top corporations …have become not only centres of concentrated economic and financial power; they have become the bearers of the prevailing laissez-faire, globalist ideology. As their economic power grows, so does their political and intellectual reach, at the expense of the nation state that once balanced private economic power with public purposes and national stabilisation policies. The very economic success of global corporations is taken as proof that their world- view has to be correct: that global laissez-faire is the optimal way to organise a modern economy.

[An aside: It is also worth noting (because) that this was not long after the collapse of the USSR and Francis Fukuyama’s famous declaration of the End of History.]

Blair and Brown believed they were largely impotent in the face of the power of global capital and that the only possible way to deal with the neo-liberal reality was to try and mitigate the worst effects of unrestrained capitalism especially for the poor and low paid. New Labour introduced Working Tax Credits in 1999 (as Working Family Tax Credits – see O’Reyes on discourse of Hard working families in Torfing and Howarth eds ) and by the time the coalition came to power Tax Credits accounted for the greatest slice of welfare expenditure. Therefore the biggest single aspect of government welfare expenditure goes to people in work. This fact is rarely mentioned in public discourse, as it does not fit neatly within hegemonic framing of the problem. The second largest aspect of the government’s welfare bill is housing benefit and increasingly housing benefit claimants are also workers in low paid jobs. New Labour, through Tax Credits and Housing Benefit, were thus attempting to address the problem, that increasingly wages in the UK were not sufficient to cover the cost of living, for many low paid workers. Therefore one may argue that rather than subsidising households, New Labour policy was subsidising employers to pay low wages (and thus allowing the UK to be more competitive in the global labour market) by providing benefit payments which allowed workers to cover the cost of living near and/or travelling to their jobs – costs which were/are increasingly not being met through their wages alone.

Meanwhile New Labour encouraged local authorities to either sell off their housing stock to housing associations (Large Scale Voluntary Transfers or LSVTs) or to separate out the management function of social housing from other council functions through the creation of arms-length management organisations (ALMOs). LSVTs had access to credit which local authorities did not and due to changes to the housing funding regime ALMOs had access to funds to improve their neglected (council) housing stock. In addition, the Audit Commission and its inspection regime was used as a hammer to bash housing providers, of all kinds, ‘into shape’. Therefore through a combination of heavy handed inspection and regulation, the availability of grant funding and various ‘public-private’ solutions, and the diversification of social housing (through the Housing and Regeneration Act) to include certain home ownership and near market rented ‘products’ (an so open the door to cross subsidisation within the housing sector), New Labour were able to improve the quality of a great deal of the nation’s (remaining) social housing stock. However, once again, a big part of the New Labour solution involved throwing money, not at the problem per se, but the symptoms caused by the problem. Grant funding of new build social housing was expensive and did not generate anything like as many new homes as the local authority led building programmes of the mid 20th century. The Audit Commission may have improved standards, in some cases, but was an expensive and unwieldy beast that hammered in a ‘one size fits all’ approach to housing management through its Key Lines of Enquiry (KLOE) inspection regime and so arguably stifled innovation meaning that many of the (perceived) advantages of privatisation were perhaps not fully realised.

All in all the New Labour approach of avoiding the problem and mitigating its effects was very costly and involved a great deal of public and private borrowing; but nevertheless did succeed in insulating the nation’s poor and low paid from the worst effects of global capitalism.

The Credit Crunch: The Revenge of the Markets

New Labour’s approach was to mitigate the effects of global capital and not challenge it, for they felt impotent to do so. There was also, no doubt, an element of hubris to their approach in the form of their belief in neo-liberal doctrine; the inexhaustibility of cheap finance and the mistaken notion that they had ‘put an end to boom and bust’. I have noted how they used the benefit system to subsidise low wages and allow British businesses remain competitive in a global marketplace. This combined with the easy availability of credit, underwritten by rising house prices, allowed the majority of people to not perceive the effects of long term wage stagnation. For this reason the stagnation of wages was not commonly constructed as a problem within mainstream politics or the media. This stagnation was caused by the greater problem, of which it was a symptom, which is global capitalism – the very problem that ‘common sense’ dictated was impossible to address, and indeed did not ‘feel’ like a problem for much of their time in power. New Labour, in a sense, constructed a ‘house of cards’ from the benefit system which was propped up via government borrowing and masked by the availability of credit to ordinary consumers. This ‘house of cards’ was how New Labour sought to reduce the effects of the core problem it either did not perceive or felt it could not address. The housing benefit bill continued to rise as did rent levels. New Labour were both paying for the increasing costs of lack of affordable housing supply (through benefit payments) and, at the same time, paying out grants to address this problem. This, in retrospect, was a very expensive and ineffective (in terms of the generation of new housing supply) approach. It also generated a ‘slow burn’ of resentment among the population, who perceived more and more people ‘living on benefits’; living in better quality housing at the expense of the public purse. This resentment probably was exacerbated by issues with immigration, which I do not have the space to discuss here; but was also, for the most part, mitigated by the availability of cheap credit for many people and, for home owners, the fact the increasing price of their property was offsetting their mortgage.

However, in 2008, with the global financial crash, New Labour’s house of cards came tumbling down. The over-exposure of private lenders to risks based on the over-valuation of certain financial products (many of which, based in the last instance, on house values) became apparent. This phenomenon first arose in the USA, but due to the inter-connected nature of global capital, its effects penetrated every aspect of the global markets. With banks in trouble suddenly what was impossible for manufacturing firms years earlier became possible; and the government found billions of pounds to bail them out. The availability of credit was so crucial to the neo-liberal project and to New Labour’s ‘house of cards’ that the banks could simply not be allowed to fail. There are numerous issues that could be discussed at this juncture such as: the contradiction that high salaries/bonuses are justified due to the risks entrepreneurs take; yet when push came to shove these risks were borne by the state, the issue that global capitalism meant it was impossible for government to save manufacturing industries and people’s jobs, yet when the finance industry was in trouble suddenly the impossible became possible; however although these are fascinating topics, discussing them in depth would lead this article astray.

My interpretation of events was that, faced with a dislocatory event that threw New Labour ‘common sense’ into disarray, Gordon Brown’s administration fell back into the conventional wisdom of Keynes. There was also, no doubt, a realisation that their entire house of cards was built on the availability of credit and as such the government felt compelled to do all it could to sure up the banks and encourage them to keep lending. Certainly there is some evidence to suggest that Brown’s small scale Keynesian stimulus was a more effective short term response to the crisis than current Coalition policy. Whatever the reasons, the decision to bail out the banks transferred the private debt crisis into a sovereign debt problem. This certainly impacted the ability of any future government to continue with the approach to housing and benefits pursued by New Labour during the late 90s and early 21st century.

The New Right Strikes Back
The other result of this crisis was that the issues of wage stagnation were no longer as well masked by credit. The resentment of the welfare system was also made more acute as people on middle incomes started to feel the pinch (although this did not happen right away). As much as I think this was a factor it is an inadequate explanation for the increasing feeling that the benefit regime was too generous.

It seems probable, if not likely, that at least some of those who are resentful of the benefit regime would also be on low wages and so are the major (in monetary terms) beneficiaries of the system. Therefore the growing resentment with welfare and benefits from those who gain most from the system appears irrational. What is crucial here is how the argument was framed. The media, to the great benefit of the forces of fiscal conservatism, managed to construct the credit crunch as a problem with public spending. In fact the data do not seem to support such a simplistic interpretation. Certainly New Labour had, as I have already noted above, pursued a very expensive approach to dealing with the effects of wage stagnation, however the massive gap between revenues and spending (the budget deficit) that happened in 2008 was largely due to a huge drop in revenue from taxes (see graph below) and to a lesser extent from the decision to prop up the banks (the financing of which is often excluded from the measurements of public spending).

condemed3a

(Graph Reproduced from http://falseeconomy.org.uk/)

The discourse that the New Labour had ‘run up the national credit card’ gained currency (became hegemonic) and became the dominant, if misleading on a number of fronts, interpretation of the problem. This then allowed for another very clever sleight of hand. Drawing on a certain pre-existing resentment with the welfare system, beefed up with evidence that welfare spending was set to increase massively (for the reasons outlined above) the new Coalition government (that came to power in May 2010) were able to detract emphasis and public anger which, at the time, was well and truly aimed at banks, MPs and the wealthy (interests strongly aligned with the Conservative Party) and direct it toward welfare recipients. This involved a slippage in how the evidence was constructed and presented through conflating the ever increasing benefit bill with a very small hardcore group of unemployed benefit claimants. As we have seen, the increasing benefit bill was/is in fact driven by the combination of stagnant wages and increasing house prices, which in turn is caused by global market pressures and the lack of affordable housing supply (caused in part by the RTB policies of the 1980s). Unemployment benefits actually make up a very small proportion of the overall benefit bill and are lower than most comparable nations.

Benefits in the UK are comparatively lower than other industrialised countries; with one of the lowest benefit rates relative to earnings. In addition the actual value of benefits in the UK has declined over the last thirty years due to a change in the policy of up-rating benefits.

Source

So the Coalition government (together with the right wing press) successfully and misleadingly conflated the rising cost of benefits with the image of the ‘lazy scrounger’ who has no job and ‘lives off’ benefits and thus developed a hegemonic discourse of the ‘lazy scrounger’ who is responsible for the rising cost of welfare expenditure. The reason why the coalition has been so successful in hegemonising this interpretation is due to what we can call (following the French Psychoanalyst Jacques Lacan) the ‘fantasmatic’ dimension of the discourse. The notion of the benefit scrounger closely follows the contours of the ‘stolen enjoyment thesis’ identified by political theorists David Howarth, Jason Glynos and Yannis Stavrakakis. The theory is quite complicated here and not easily put in a ‘nutshell’, so I will quote at length:

The promise of a full enjoyment which escapes our attempts at identificatory capture and which serves as the motor of desire is linked to what Lacan calls the objet petit a, the object-cause of desire, and it is this object which forms the centre-piece of a subject’s fantasy. When Lacanians say that fantasy supports reality …, they tend to mean that the credibility and salience of any object of identification relies on the ability of the fantasmatic narrative to provide a convincing explanation for the lack of total enjoyment. Ontologically, of course, this lack of total enjoyment is necessary. However, in the subject’s economy of desire this ‘truth’ must be actively forgotten, and it is this dialectic of confrontation with, and denial of, lack, which gives rise to the logic of fantasy. Indeed, oftentimes the cause of the lack of enjoyment is attributed to someone who has ‘stolen it’. Romantic nationalist histories, for example, are frequently based on the supposition of a golden era (Ancient Greece and/or Byzantium for modern Greek nationalism, the Jewish kingdom of David and Solomon in many versions of Jewish nationalism, etc.). During this imagined golden age, the nation was prosperous and happy, only to be later destroyed by an evil ‘Other’, someone who deprived the nation of its enjoyment. Typically, nationalist narratives are rooted in the desire of each generation to try and heal this (metaphoric) castration, and give back to the nation its lost full enjoyment. The identity of the evil ‘Other’ who prevents the nation from recouping the enjoyment it has lost shifts as a function of historical context. It may be a foreign occupier, those who ‘always plot to rule the world’, some dark powers and their local sympathizers ‘who want to enslave our proud nation’, immigrants ‘who steal our jobs’, etc. In this view, the obstacle to full enjoyment shifts depending on the specificity of the fantasmatic narrative at stake, but the formal logic remains the same.

Source

‘Benefit scroungers’ are, as such, constructed as the (horrific) obstacle preventing the majority from enjoying ‘full enjoyment’ – ‘the evil ‘Other’’ (illustrative example). In this ‘fantasy’ the benefit scrounger is constructed as the reason for high government spending and while they (the benefit scrounger) enjoy a ‘champagne lifestyle’ courtesy of the state, we (non-scroungers) are having to make sacrifices and cut backs. The fantasy is thus that if the ‘benefit scroungers’ are dealt with (the obstacle is overcome) then the nation will be better off and the majority can reach full enjoyment by no longer having to make cut backs. It is thus that ‘benefit scroungers’ are constructed as the obstacle – as stealing our enjoyment – the reason that we must live as we do and not as we would like to. This can be further sedimented by the fact that people often report knowing somebody ‘who never works and enjoys sitting in the pub, living the high life on benefits’. This allows them to give a real ‘face’ – an example – in which they can fully emotionally invest in as the target – as the ‘they’ which are stealing ‘our’ potential full enjoyment. See the following as an example of how this fantasy is constructed at the fringes of official discourse.

Mr Bateman’s daughter Jessica, 18, who is from a previous relationship, said she was ashamed of her ‘useless’ father. She said he walked out on her family when she was five years old. ‘I am so ashamed of him. That family seems to be living the life of Riley, when my family works hard to earn a living and can’t afford half of what they can,’ she said. ‘They go out for McDonald’s meals that cost £60 a go and yesterday one of Joanne’s daughters had a stretch limo ride for her 13th birthday. ‘If my dad can ride that motorbike he has in his back garden then he can sit on a till somewhere. It is just pure laziness.’

From the Daily Mail

Articles such as this back up tough government policy on welfare, allowing government MPs to draw on the vilification of people on benefits without explicitly vilifying them themselves. Consider, for example, the following David Cameron quote, in the context of the Daily Mail quote, above:

We should ask this question about housing benefit: if you’re a young person and you work hard at college, you get a job, you’re living at home with mum and dad, you can’t move out, you can’t access housing benefit. And yet, actually, if you choose not to work, you can get housing benefit, you can get a flat. And having got that, you’re unlikely then to want a job because you’re in danger of losing your housing benefit and your flat.

(David Cameron on the Today Programme September 2012)

The coalition (aided by right wing media at the margins of official discourse) have also a managed to conflate the ‘benefit-scrounger’ with the social housing tenant. However this has not been a simple process. In fact the social construction of social tenants has oscillated wildly under the current government depending on which policy they seek to emphasise. When advocating a policy that seeks to ‘re-invigorate the Right to Buy’ social tenants were seen as aspirational and hard-working; however when it came to welfare reform they were benefiting from a subsidised public asset. A key part of this process is the creation of the term ‘a culture of dependency’ which was best expressed by a Policy Exchange report which blamed social housing for poverty and dependency on benefits.

[…]evidence of the dependency caused by social housing under the existing system comes from the fact that even in 2007, before the recession began, 63% of social housing tenants in housing associations were reliant on Housing Benefit to pay their (already subsidised) rent Source

This short quote is full riddled inaccuracies, not least that social rent is somehow subsided, which is, by no means, an uncontroversial assertion. I have already noted, elsewhere, the approach to evidence taken by the author of this report…

Having briefly outlined the context of current UK housing and welfare policy, Part 2 will focus on present policy and briefly examine strategies for challenging it.