Cultural costs of high house prices

Much has been written about how high house prices are reducing (pdf) home ownership and depressing real incomes. This is an economic menace: it depresses productivity and increases economic instability (pdf). But I wonder: does it also retard cultural and technological change?

I ask because the emergence of youth culture as we know it in the 1950s was the product of the fact that the post-war economic boom put money into the pockets of young people. As Billy Bragg says:

What happened in 1955, '56 was the first generation of British kids who were born during the war left school. And they left school at a time of high employment. So they were able to find work pretty quickly. So they were getting paid more, sometimes more than their parents. And they, you know - the only expense they had was giving housekeeping to their mom. So they had a lot of money to spend things on. So sales of cosmetics, of records, of clothes kind of took off in the mid-'50s. And this generation really is the first generation to identify themselves as distinct teenagers.

Friedrich Hayek said a similar thing. In The Constitution of Liberty he wrote that economic progress takes place “in echelon fashion.” New goods at first are “the caprice of the chosen few” and they then spread. He thought the “chosen few” were the rich. But they can equally well be younger people who are more open to new products and experiences: grandparents, for example, have iPads because their children and grandchildren got them first.

All this implies that if the incomes of the young are squeezed by high housing costs then we’ll see less cultural or technical progress. And this, I suspect, is just what we’ve got. The distinctive products and experiences we associate with millennials are small beer – literally so in the craft beers served in what we oldsters call short measures: coffee, avocado toast and free apps. This is not the stuff of cultural dynamism.

There’s more. Art and culture, as much as industry, benefits from agglomeration effects – the ability of creative people to live near each other. In the 60s and 70s countless musicians moved into rundown New York apartments where they could live cheaply whilst they honed their craft and waited for their break. Today, this is no longer possible in New York or London unless you have rich parents. As Chris Stein has said:

The biggest shame is that everybody’s gotta have a job to live in the city now. There’s no time to make art. How can you keep your credibility if you have some stupid job you hate and still be a radical?

Cheap housing gave us Blondie and Philip Glass. Expensive housing gives us Mumford and Sons*.

What it gives us in greater numbers, though, are drones - commute, work, sleep: repeat for 50 years. I know that PR-based surveys are unreliable, but it’s not wholly surprising that so many millennials are suffering quarter-life crises.

In this sense, expensive housing has totalitarian tendencies: it enforces uniformity. For some, this might be a feature not a bug. For those of us who value diversity, however, it is certainly not.

Now of course, all this is necessarily speculative. It’s a story about what hasn’t happened. But then, that is the very nature of opportunity cost: we don’t see the road not taken. And the road closed by high housing costs might well have been a pleasant one.

* I’m not saying that a rich background precludes musical genius; Nick Drake and Townes van Zandt are obvious counter-examples. It’s just that if you draw your talent only from the rich then you have much thinner pickings.   

Comments

[cjcjc]

"Today, this is no longer possible in New York or London unless you have rich parents."
Are no other cities available or suitable?

I don't know about "cultural progress" (whatever that means) but is there less technical progress now than in the 70's?

[Miguel Madeira]

"is there less technical progress now than in the 70's"

Measured by observable reality, no; measureb by productivity growth statistics, I think yes.

[Blissex]

«"Today, this is no longer possible in New York or London unless you have rich parents."
Are no other cities available or suitable?»

And this is the key to the whole story, one that amazingly very few Economists make...

The story of high house prices in the UK is that they happen only in the south-east and London because all the jobs are there, as this quote indicates:

https://www.scotsman.com/news/ben-judah-don-t-be-fooled-by-the-london-mirage-1-4220426
«But British professionals have to dream about London. In 2013, a full 45 per cent of advertised graduate jobs were in the capital and since 2010 a full 79 per cent of private sector jobs created were there.»
«But whether Scottish cities follow London backwards into a world of landlords, touting kerbside labourers and struggling renters – is a political choice.»

There is no "housing crisis" in the UK, there is instead extreme inequality in job opportunities.

And that is part of the thatcherite package that has dominated UK politics since 1980.

[Blissex]

«"is there less technical progress now than in the 70's"
Measured by observable reality, no; measureb by productivity growth statistics, I think yes.»

I suspect that "observable reality" here is qualitative, and "productivity growth statistics" are the quantitative counterpart.

That is there is still quite a bit of research with lots of tiny incremental improvement coming up, but they don't add up to much, while in the past there have been a few huge big boosts that have diffused through production processes (mostly the adoption of coal and then oil to power machinery).

[Dave Timoney]

So, after the enemy without and the enemey within, Maragaret Thatcher finally killed the NME.

(I'll get my coat)

[Ryan Dunn]

This is a really excellent post and chimes with my own experience as an art school grad. Along the same lines I wonder whether one of the most effective ways that a government could support the arts is obliquely through unemployment and housing benefit. As I discovered after graduating in 2008 just as the economy collapsed, our social safety net is now so meagre that it is almost impossible to survive on unemployment benefits, whereas in the past provided enough stability for artists like JK Rowling, Morrissey and Noel Gallagher to hone their craft over a number of years before going on to become cultural phenomena (and repaying the Treasury many times over). This is maybe yet another reason to support universal basic income, as it has the potential to rejuvenate our stagnating arts.

[Ralph Musgrave]

I always enjoy articles by members of the political left on house prices: they nearly always fail to mention immigration. But in this case there is even more irony, namely that immigration allegedly "culturally enriches" us (i.e.genital mutilation, wife beating and hate preachers are culturally enriching apparently).

But hang on: it now seems high house prices result in cultural impoverishment. Thus in addition to be culturally impoverished by wife beating etc, it seems the cultural effects of immigration (via house prices) are even more damaging.

Now for a very different point: I saw some study recently which claimed that the "economies of agglomeration" effect has become more powerful. That might help explain the increasing attractions of London.

[PaulS]

The US version of this, of course, is that living anywhere but hugely expensive Manhattan, Brooklyn, San Francisco, or Los Angeles, is becoming anathema.

The "agglomeration effect" terminology is an easy out that signals an utter lack of recent technical progress, or at least an utter refusal to make productive use of recent technical progress.

The big, easy, general inventions tapered off to almost nil during the 1970s and 1980s (even the integrated circuit - the chip - was invented all the way back in 1959 IIRC.) No, we are now reduced to gawping at Apple moving the stop button from place to place, or replacing it with some arbitrary, hard-to-remember gesture, and pretending this represents astonishing progress on the same order as the jet aircraft. But worse still, we are being reduced to cramming into awful dormitories - "SRO hotels", really, which were outlawed in New York around 1955, but seem to be coming back in spades - in overcrowded London, San Francisco, Los Angeles, and Manhattan.

Apparently we can't possibly exchange ideas with each other unless we're all jammed together in a heaving, suffocating crowd, as if life could only ever be structured as a Medieval fair. Pleasant places with room to breathe are simply out of the question. All our vaunted progress in communication seems to be utterly for naught - it's as if the internet, Skype - nay, even the plain old telephone or even ancient postal service, had never existed.

Though, actually, I suspect a big underlying problem is billionaires. A self-respecting billionaire may well not wish to live in a lowly Wigan or Podunk. But since they nonetheless get to run everyone's life with little restraint, it follows that there will be no jobs, no means of self-support, except in fantastically expensive prestige spots where they can strut their stuff in a manner they deem fitting to their godly, even Trumpian, status.

After all, recent "progress" is almost exclusively in miniaturizing computer chips. It does nothing to reduce the immense cost of stacking even awful dormitory rooms hundreds of feet in the air, and little to reduce the cost of shipping food, water, and other supplies over huge distances into gargantuan overconcentrations of people.

You get to use the technological progress you have, not what you wish you had. As long as "we" go on refusing to use what we have - improved computer chips and communication - in favor of gross neo-Medieval overcrowding, housing costs (and problems) will continue their inexorable ascent into stratospheric absurdity.

[Phil]

It's a common error, but drones are the bees that *don't* work; they're male & exist only to mate with the Queen. Bertie Wooster was a member of the Drones Club.

I guess people thought "there's a type of bee that does nothing but work" (there is, they're called 'worker bees') and then thought 'drone' must be the word for them - after all, it sounds a bit like 'drudge', with bonus overtones of factory noise pollution. 'Tain't.

[Cjcjc]

I could be wrong but none of Rowling nor Morrissey nor Gallagher honed their craft in London or New York?

[Emma]

Probably the most pernicious example of white, heteronormative oppression extant in the world today is the propaganda surrounding the myth that avocados are edible. I would rather put lube on my toast.

If someone told me I had to live in NYC or London or Los Angeles or face a firing squad, I'd have to sit down and think about it. Not that these cities —or cities in general — aren't wonderful in many ways, of course! Just. No.

I cosign for a minimum income and/or a jobs guarantee as a means of supporting artists; I also don't know why such a thing as an empty, foreclosed-upon house is allowed to exist. Making profits off real estate at the expense of the homeless seems nearly as ghoulish as the concept of health insurance re: actual sick people.

I was lolling at Ralph's clownish xenophobia, also, and then I remembered that America is entirely a nation of immigrants itself. Not so funny now, is it, Ralph? Not so funny at all. The U.K. is 80 years out from a Polish or Syrian Donald Trump, Ralph. Tops.

Here all day for Debbie Harry.
(Hope I spelled her name right.)
I don't know why you changed the photo!

[George Carty]

Ralph, if immigration was the cause of high house prices then we would have seen collapses in house prices in the places where the immigrants came from that didn't happen.

http://www.yppuk.org/2012/06/house-prices-and-immigration.html

[Andrew Dodds]

Blissex -

If the problem is London centric, then why is my unremarkable house in an average part of North Somerset (no rail station), currently valued at £320,000? Never mind if you want to live in Bristol..

But rents are the real problem.. everywhere is expensive enough to require near-full-time work, even places like Stoke on Trent.

[Blissex]

«If the problem is London centric, ... But rents are the real problem.. everywhere is expensive enough to require near-full-time work, even places like Stoke on Trent.»

There are two separate stories here, the bigger one is that the government subsidizes jobs only in the M25 area, and it has these effects, consider this map of real average house price changes 2005-2015 by region:

http://loveincstatic.blob.core.windows.net/lovemoney/House_prices_real_terms_lovemoney.jpg
http://www.lovemoney.com/news/53528/property-house-price-value-real-terms-2005-2015-uk-regions

and what government policy on M25 jobs has meant:

https://www.theguardian.com/commentisfree/2017/may/14/theresa-may-victory-must-not-get-in-way-clear-ideology
«47% of the UK population live in areas as productive as the former East Germany. Outside the south-east, the UK has a massive infrastructure deficit: per head, its just 40% of the OECD average.»

https://www.scotsman.com/news/ben-judah-don-t-be-fooled-by-the-london-mirage-1-4220426
«But British professionals have to dream about London.
In 2013, a full 45 per cent of advertised graduate jobs were in the capital and since 2010 a full 79 per cent of private sector jobs created were there.»

So the big story is that the tory master and voter classes are heavily invested in M25-area property and want to make the most of it.

The lesser story is that one of the tools they have used, extraordinary debt expansion, from an article by Steve Keen:

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.53.09.png

is a bit too blunt: regulations about debt "secured" by collateral mean that only loans to banks and mortgages to property speculators are cheap, but they don't quite distinguish by geographical area.

This has meant that even outside the M25 area prices are often unaffordable, even if much lower than the M25 area, simply because there is so much credit sloshing around the bank system.

[Doug]

'...for artists like JK Rowling, Morrissey and Noel Gallagher to hone their craft over a number of years before going on to become cultural phenomena...

Yes, let's call Morrissey and Gallagher 'cultural phenomena', a great euphemism for vastly overrated arseholes.

When it comes to immigration, it would be great if we could instigate a cultural exchange i.e. for every immigrant, we get to choose someone to get slung off these islands. Can I suggest Musgrave and his 'nationalist' chums be high up on the list.

[asquith]

"I’m not saying that a rich background precludes musical genius; Nick Drake and Townes van Zandt are obvious counter-examples"

And Gram Parsons!

[Avraam Jack Dectis]

.
Culturenomics Begins .....
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[Avraam Jack Dectis]

Culturenomics: https://m.facebook.com/story.php?story_fbid=1228251960638829&id=100003621095394