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

Who says we can’t afford the NHS or Social Security?

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By Prue Plumridge

Yesterday in Parliament, we witnessed a shameful spectacle when only 48 Labour MPs voted against the Welfare Bill.  The extreme centre, as Tariq Ali referred to it in his book ‘The Extreme Centre: A Warning’, once again failed to vote for the well-being of the citizens of this country.   Not content with abstaining over Workfare in the last government, a majority of Labour MPs did so again.  Neoliberalism rules in the Labour party in all but those very principled individuals who chose to put their heads up against the flow and say no.

We are told time and time again, that we can no longer afford our NHS or our social security system.  We are told that we must reign in expenditure, reduce the deficit, balance the books and even achieve surplus.  Our politicians like to remind us regularly that we cannot not leave the debt to future generations.  Deficit has become the bogeyman of our times and austerity its friend.

We accept this because we have an incomplete understanding of how our economy and money systems work.  Our politicians (through ignorance and design) use the analogy of the household budget to explain why we can no longer afford public sector services and our social security system.  Notice I make a distinction between the terms social security and the oft used word ‘welfare’ which has become so tainted in recent times.  The connotation of welfare to mean skivers and scroungers has been cleverly used by politicians and the media alike to divide people who either don’t know or have forgotten its origins. Along with the mantra – there is no money – it is used to justify the dismantlement of the safety net for when we are at our most vulnerable and worse still the selling off of every aspect of our publicly provided services to the private sector.

It seems to me that if we are to challenge the view being pedalled by our politicians and many mainstream economists that we can’t afford our public services, and create a decent society for all we need to go back to basics and gain an understanding of how our economy really works. Not the household budget model which serves as a useful means to deceive people who, quite understandably, identify with Micawber the Dickens character in David Copperfield, who said:

Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

We are always told by politicians that tax funds our expenditure – meaning that our expenditure on things like infrastructure, the NHS, and Social Security is limited by that income.  We need to start dispelling these pernicious myths which are rooted in our ‘gold standard’ past which demanded that you had enough gold to back your national currency.  This arrangement was abandoned as far back as 1971 and yet we are still running our economy and money system as if it were still in place.

Last year, Dr Stephanie Kelton gave a presentation to students in Kansas City in which she challenged these ideas.  She used the Monopoly game analogy to explain where money comes from and how the system really works and pointed out that balancing budgets will only suppress growth because it removes money from the public sector’s balance sheet which in turn acts as a drain on the real economy.  By which she means the labour, equipment and other resources that produce the goods and services we all rely on.  Spending (as she says quite clearly) equals income to someone. She also explains that we are not going to leave a huge debt to future generations, as is being claimed by those politicians who either don’t understand or wilfully misunderstand the reality. The real issue is not affordability but how we ensure future economic prosperity through improving productivity.

This is what she had to say:

 ‘When you play the game monopoly, you open up the rules, set up the cards and ask who is going to be the banker. So how does the game start? Why doesn’t the banker collect taxes to get the game going? Because no-one has any money yet.  So what does the bank do first?  It has to issue the money before it can collect anything back or the game can’t even begin.  So the spending, the issuing of currency has to come first.  And then you read the instructions and it says the bank collects taxes, fines, loans and interest and the bank never goes broke. If the bank runs out of money the bank may issue as much as needed by writing on any ordinary paper.  It’s exactly what it means to be the monopolist. That’s why they call it Monopoly.  Money has to be spent before it can be collected back.

So you start playing the game and you move you pieces around the board and you land on Community Chest or Chance, you draw your card and oh oh pipes burst, pay $50 – there goes a leakage. You keep on playing, you land on another one and oh oh tax is due pay $100. This game will end very quickly if there isn’t a replacement for the money that is leaking out – so every time you pass GO you collect $200. Why does the monopoly game tell the banker to put in $200 each time you go around? To keep the game going. To let the game continue.  You can save in Monopoly in the form of real estate investment. Every time you buy a hotel or a house you pay the banker some money and it’s out of the game – it’s leaked out.  Every time you pay taxes it’s money that has leaked out of the system. The banker has to spend out more than it collects otherwise the game will quickly come to an end. Which is to say that if the banker is not deficit spending the game will end much sooner.”

Dr Kelton goes on to point out that even Alan Greenspan, former Chairman of the Federal Reserve knows perfectly well that a government cannot go bankrupt.  He made this quite clear when he said under oath as chairman of the Federal Reserve ‘a government cannot become insolvent with respect to obligations in its own currency.  A fiat money system like the ones we have today can produce claims without limit”.  When faced with a question posed by Congressman Paul Ryan on social security (although as Dr Kelton says it could refer to defence spending, education spending, infrastructure spending or student debt), as to whether personal retirement accounts would help to achieve State solvency  (whilst also disingenuously suggesting that social security was going broke and that it would be a good time to move towards personal savings account or in more plain language privatisation), Alan Greenspan replied that there was nothing unsustainable about social security because there is nothing to prevent the federal government from creating as much money as it wants and paying it to someone.  However, the real question, he said was, will the real assets be there in the future that those incomes can be employed to purchase? There are, we all know, demographic changes taking place – a shrinking work force and a growing population of retiring baby boomers which it is claimed is the reason why we need reform and privatisation.  It is, however, a red herring and the real issue is that with fewer working people producing the goods or services how will we ensure that there are enough for future generations to purchase.  If there are not, then competition for a smaller pool of output would then lead to inflation.

Therefore the questions we should be asking are not whether there is enough money but whether we are we making the necessary investments in education and technology or indeed will there be enough resources to ensure that we can continue to be productive particularly in respect to the finite nature of our planet’s resources and how should we manage it? To repeat, the debate can never be about affordability. These are perhaps the real questions for us as a society.  What sort of world do we want to live in? One where greed and inequality increases and poor people are dehumanised and impoverished?  Or one which is fair and just and treats citizens with respect and dignity whilst also recognising some of the really serious issues we face about the future viability of our planet home?

It is clear from recent announcements in the House of Lords and by government ministers that we are being prepared for the eventual complete privatisation of the NHS and our social security system, both to be replaced by insurance schemes.  Not because they have to but because of erroneous ideology which suits the politicians and their corporate friends.

The trouble is, as Mark Twain puts it ‘It is easier to fool people than to convince them that they have been fooled” and it is time to wake up to the deceit which is being practised upon us by those who should be leaders and not exploiters. We have an obligation to ensure that people understand what is happening and why it is happening.  We need to educate ourselves and pass it on.  Otherwise the lie will be perpetuated remorselessly until there are no options left.

References:

http://www.theguardian.com/politics/2015/feb/20/tariq-ali-interview-renationalise-the-railways

Tariq Ali: The Extreme Centre: A Warning

Dr Stephanie Kelton Angry Birds https://www.youtube.com/watch?v=d57M6ATPZ

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