David Boyle, a government advisor and fellow of the New Economics Foundation think-tank, said that youngsters can no longer expect the same level of affluence as their parents.
Speaking at the Hay Festival he warned that Britain will be left with a ‘tiny elite and a huge sprawling proletariat’ who have no chance of ‘clawing their way out of a hand-to-mouth existence.’The Telegraph (UK)
He predicted that the average house price will reach £1.2 million by 2045, putting a home beyond the range of most people as wages fail to keep up with huge increases.
Boyle said that the traditional middle classes will need three or four jobs just to be able to pay soaring rents. People will no longer have the space or time to pursue cultural interested...
Boyle claimed that one of the major problems was Margaret Thatcher abandoning The Supplementary Special Deposit Scheme, known as the ‘corset’ which limited how much banks could lend for mortgages.
Although the scheme kept house prices low in the 1970s, Boyle said it was unlikely that today’s buyers would accept having to wait for months for a mortgage.
Instead, he suggests a ‘parallel’ housing market were new homes were sold at the initial price for 100 years.
He predicted that without such a radical solution, mortgages will be inherited and only be paid off by the grandchildren of the original buyer.
“We were rationing mortgages in the 1970s, that’s what kept prices low and I don’t know if we will accept a time again when you have to wait,” he said.
Boyle said the rise in Ukip was fuelled by disaffection of the middle classes.
“You saw this huge revolt. I think what happens when you suppress the dreams of the middle classes is you get rather peculiar and very dangerous political movements beginning to emerge,” he argued.
“That doesn’t forgive people voting in the neo-facists but it does somehow explain it.
Middle classes will disappear in next 30 years warns Government adviser
Sarah Knapton, Science Correspondent
6 comments:
He has a point.
Granted, no person can predict the future (that I am aware of), however, I cannot fault his argument.
If they want more affordable home prices in the long term, pressure their central bank to raise mortgage interest rates and fiscal authorities to lower property taxes on residential property.
raise mortgage interest rates and fiscal authorities to lower property taxes on residential property.
Why do you think raising interest rates would tend to have downward pressure on prices while higher taxes would have a reverse effect? Wouldn't higher taxes also create downward pressure on prices? I'm sure it goes against the grain for you, but higher taxes might be better in this instance because the tax revenue presumably goes to public purpose rather than to bank profits. A correctly conceived LVT would, I believe, result both in more affordable housing and improved public infrastructure. But, as Michael Hudson has pointed out, trying to do LVT as another layer of taxation without getting rid other ones would not have the desired effect.
"He has a point. Granted, no person can predict the future (that I am aware of), however, I cannot fault his argument."
Arguments like this assume the continuance of a trend.It is also presumed that what cannot continue, won't, and that something will happen. Assuming that something will happen to return the situation to "optimal," or even "normal" is baseless. So the argument is to address it as a design problem and come up with a suitable design solution that this practical politically.
I doubt anyone thinks that the so-called middle class is just going to roll over and disappear into a sea of have-nots with a few haves owning and controlling everything. Not in a democracy anyway. There will be a political revolt before then.
People will pay whatever they can finance for a house. Raising rates lowers the amount that can be financed. Builders respond to higher rates by making smaller houses.
If you really believe that Property taxes are a Panacea, why not have a property tax that exempts the median value of a two or three bedroom average quality house and then soaks the rich and business on the luxury value of their 10,000 sq ft mc mansion or mineral property? Or that pegs property tax rates for a family to median wages? If politicians don't create economic conditions that raise incomes, they don't get raises for their firemen, police, and teacher pension funds that ensure they get re-elected?
Property taxes as they exist in the United States are used as tool of regressive redistribution to keep the poor poor despite all the claims otherwise. Food and shelter are basic human rights, putting a big tax on basic human needs to pay for luxuries of marginal public purpose like higher education, parks, port facilities, stadiums, fat pensions for public employees and the like takes logical leaps of creativity about what is in the public interest.
And Upper Looting Class will be hiding in plain sight, as of 30 years ago. :(
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