The value of my home has increased tenfold since I bought it in the 1980s. Where did all that lovely loot come from? Not from my labour. But someone had to create it. Millions like me – owners of mini plots of land under our houses – are as much to blame for the economic crisis as “greedy” bankers. But when did you last hear a politician censure voters for getting rich without lifting a finger?
Over the last 10 years, in Britain alone, the value of residential property more than doubled to £4.1 trillion. The bulk of that increase was not due to “bricks and mortar”. According to Savills, the up-market estate agency, the biggest gains were concentrated in London and the South East. And the wealth gap is widening, with values slipping further behind in the regions. Location really is the key. In some parts of London, land is worth over £20m per hectare. That compares with under £100,000 per hectare in the North, Wales and Devon in the South West.
Bricks depreciate with time: as their values drop, the value underneath the buildings rises to make many salary earners asset rich. We cashed in that value during the good times: equity withdrawal. We went on spending sprees –lavish holidays, fancy cars and second homes purchased out of the rise in house prices.
Chickens Come Home…
But someone had to pay. The US has 43.2m people on food stamps – 14% of the population. If that’s not a national disgrace, I don’t know what is. Nearly 10% of the working population is unemployed. Shops selling luxury goods are recording boom times – down-market outlets are struggling.
In Britain, 1.5m people have never worked in their lives, about 600,000 of them aged between 20 and 24. The despair of the young is reaching levels last seen in the depression of the 1930s. But the over 45s are secure: their “nest-eggs” may have gone down in value a bit, but they still provide the biggest cushion for hard times.
But governments refuse to make the link between land and the collapse of their economies. No politician dare point an accusing finger at me, for fear of losing my vote. So the economy will not be subjected to the corrective measures that are needed to prevent the next boom/bust.
Governments claim that their economies now show signs of recovering. Europe, meanwhile, will have to manage yet more sovereign debt crises as whole nations are declared bankrupt in 2011. The people who make policy are locked in the state of denial that will prove fatal for many more people who will lose jobs this year because politicians refuse to direct their gaze at the ground beneath their feet. This leaves China and India free to forge ahead, tipping the scales even further in favour of Asia.
When are we going to talk about charging governments with treason?