Heaven forbid that I should excuse bankers who corruptly exploited the property boom, but let’s get the whole bizarre story in perspective. Bailing-out the banks is no different from bailing-out the people who are excluded from their rightful access to employment. Such bail-outs are the price that our pathological culture – the one we inherited from the aristocratic rent seekers – is prepared to pay to keep a rotten system afloat.
Our economy rewards the pursuit of windfall gains from land while penalising employees and their employers. That is the logic of the system, for which we all pay a heavy price. The Welfare State, for example, was an experiment in bailing-out millions who would otherwise be excluded from a decent standard of living.
The rules set centuries ago by those who enclosed the commons prescribe permanent poverty, and the only way to ensure some semblance of social stability was to create the dependency system cloaked in the language of caring for disadvantaged groups. So when the bankers overreached themselves and threatened to bring down the financial sector, it was logical that taxpayers should be dragooned into bailing them out.
That predatory style of economics is now being reaffirmed by governments such as Britain’s. Having successfully camouflaged the real cause of the crash of 2008 – blame bad regulation rather than rent-seeking – taxpayers’ money is now being poured into re-starting the next property cycle. More than a thousand first-time buyers, for example, have received subsidies from local governments to get them on the “property ladder”. The influx of new buyers is the vital first step in triggering the next round of land speculation.
Bending Our Minds
To rationalise the rent-seeking, politicians deploy fanciful myths. Thus, Britain suffers from a housing shortfall. Never mind the nearly 1m vacant dwellings that could be brought back into use under the correct fiscal incentives! And so, Britain’s planning minister, Nick Boles, says that the shortage would be solved if construction was allowed to take place on a further 1,510 sq. miles of countryside.
The increase in urbanisation from 9% to 12% of England is presented by Boles as necessary to relieve what he calls the “housing crisis”. The facts are not allowed to confuse the authorised narrative – more land speculation must be accepted to quench the appetite of the rent seekers.
Even if Britain’s builders constructed on double the amount of land prescribed by Boles, many people would still be priced out of the homes they need. There would still be a perceived shortage. That shortage is prescribed by a tax regime that is designed never to deliver sufficient housing, whether the population is increasing or shrinking.
Covering up the Risk
Government agencies like HM Treasury make sure that they do not reveal the risks associated with tax policies that institutionalise the apparent shortage of jobs and homes. There is no audit of the losses inflicted on nations by the deadweight policies that protect the vital interests of those who profit from the Predator Culture.
So holding up the banks as exceptional is another device for camouflaging a corrupted system. Bank of England Governor Sir Mervyn King, for example, claims that banks fail to disclose the level of their risks in their balance sheets. Why should they, when the UK’s Treasury does not disclose the level of risk which it imposes on the nation with the policies that it champions? Why single out the banks when the Bank of England itself fails to offer assessments of the risks inherent in the monetary system over which it presides?
We are all taken for a ride by an economic ideology that disguises risk in the confident expectation that bail-outs will keep the system afloat. We all lose, and we are all allowed to complain so long as we do not expect fundamental changes to the rules of a dirty game.