Cheap foreign Labour

[The Future’s Blue!]

At some point(long after we have gone) people will finally have to act to change how the world operates. A system of ever increasing populations, infrastructure, consumption and growth will collapse.

The problem is no one currently in power needs to get off the ride. They are benefitting from it too much.

Is the reason that the rich are making themselves so wealthy something to do with the likes of Musk, etc, trying to get off this planet?

 

[inbetween]

You can't control price without increasing the supply. That's the point. No one wants to increase the supply of affordable homes, that's the issue, and it would take a National Resolution. To do what it takes to build them and (you are quite right) the associated infrastructure.

But, lacking this resolution, it's no use people banging on about how much the state spends on benefits because effectively a large chunk of the population (mostly working despite the propaganda) has to be subsidised. Many jobs are (objectively) financially unsustainable, so, therefore, the government has to make up the difference to enable people to live.

While our industry is generally below ideal levels of productivity, this is a long-standing problem. I remember Mr Heath banging on about it while I was still at school. No government has sorted it since and I doubt any will in the foreseeable future. Again, huge investment would be needed, but it's more likely we shall remain a low-wage, low-investment economy. Real wages are, if anything, declining rather than increasing for most people.

That being the case, the only way to square the circle is to fundamentally reduce the cost of housing, which means vastly increasing the supply. Alternatively, just accept that many people will always be propped up by benefits paid for out of tax.

I am not sanguine about anything happening BTW as this country is not very good at grasping nettles. We are much more likely to woman and whine about certain people 'living off the state' while ignoring the truth that many wealthier people are 'living off the state' thanks to their companies and properties being indirectly subsidised.

There's no such thing in reality as an affordable home. A house costs whatever it costs to build but then the value attached to it is completely dependent on many things. The biggest problem for developers is the cost of land and that's mainly what drives prices. A lot of people think that new houses are valued like old houses such as based upon location etc but it's not, the price of land is everything.

The government has the same problem. It could start a nationalised builder which builds affordable houses sold at build cost but that's the easy part. Take the London area for example, a single house sized plot of land could sell for perhaps £500k so who pays the £300k difference when the government builds and sells a house at a more affordable price of £200k? Such a programme would cost the taxpayer hundreds of billions.

I don't think that housing is a major problem, the problem is mostly with prices rises in everything else which is thrown into the mix. Anyone could accept an expensive house if they could get to their job easily and cheaply but you can't do that either. The government however has far more control over this than the housing market. It could make rail cheaper and better, it could of done the same with the energy system last year but it just refuses to do it.

 

[Gremlin]

The UK is reliant upon it but what do we do as a nation and as an economy going forwards?

Do we carry on with the reliance and form immigration policy around it knowing rightly or wrongly it does not sit well with many or do we pay real living wages knowing that yes, we have money in our pockets but that goods and services will also cost more?

For me we have to get away from this minimum wage reliance that has become the norm for many businesses which thinks £10.42 an hour for 5% of the workforce and nearly 2 million jobs is in anyway good for them or the economy.

We have business essentially propped up by the welfare state and it has to stop.

If you take a job like fruit picking, unless the wages go up very significantly no Brits want to do the job. But if the wages do go up to the required level then so does the overall cost of production and the producers are undercut by cheaper foreign imports (probably using the cheap labour not used in the UK). So, people then say, close to markets to foreign imports - but that doesn't work with all the free trade deals we are trying to do with the producer countries.

The whole thing is a mess.

 

[BrianW]

Houses are actually relatively cheap to build, that's how developers make huge profits.

The issue of land ownership is indeed a problem. This country is almost unique in never having had land reform. A small minority of families control vast acreages that they never worked for but were 'granted' in ancient times for 'services' like murdering people or handing over their daughters to the king's bed. In addition, we have stringent rules about the 'green belt' which further rations the available land. Finally, we have not, traditionally, built at the same density as most European nations.

I am not suggesting that this is easy to solve. It isn't. In fact, I started by saying that solving it is politically impossible. But it is, nevertheless, the root of the problem, or of many problems. The inflexibility of the labour force. The (natural) demand for higher wages, even when they can't be 'afforded'. The high level of benefits that the government has to fund to square the circle. The deep and growing dissatisfaction of the younger age groups and their increasing alienation from 'the system'.

I'm not in charge, so it's no use my saying what I would do about it. But I'm in no doubt at all that housing is way, way too expensive and out of all proportion to typical salaries. I would suggest a modest house (not a mansion, but not a shared room either) should cost no more than 3 or 4 times the local average wage. Rents should be in proportion. They are not, because the market has failed.

 

[Kompany Car]

Houses are actually relatively cheap to build, that's how developers make huge profits.

The issue of land ownership is indeed a problem. This country is almost unique in never having had land reform. A small minority of families control vast acreages that they never worked for but were 'granted' in ancient times for 'services' like murdering people or handing over their daughters to the king's bed. In addition, we have stringent rules about the 'green belt' which further rations the available land. Finally, we have not, traditionally, built at the same density as most European nations.

I am not suggesting that this is easy to solve. It isn't. In fact, I started by saying that solving it is politically impossible. But it is, nevertheless, the root of the problem, or of many problems. The inflexibility of the labour force. The (natural) demand for higher wages, even when they can't be 'afforded'. The high level of benefits that the government has to fund to square the circle. The deep and growing dissatisfaction of the younger age groups and their increasing alienation from 'the system'.

I'm not in charge, so it's no use my saying what I would do about it. But I'm in no doubt at all that housing is way, way too expensive and out of all proportion to typical salaries. I would suggest a modest house (not a mansion, but not a shared room either) should cost no more than 3 or 4 times the local average wage. Rents should be in proportion. They are not, because the market has failed.

The definition of affordable housing, according to any government documents isnt home ownership, its part ownership (normally 50%) or social rental. The UK, as you are probably well aware, is reasonably unique in that people actually aspire to buying their home.

What's missing is good quality long term rentals at affordable prices not necessarily houses for people to buy.

At the end of the day you, without a revolution, you wont get a step change in wealth distribution and land/property ownership, the only way it can be done is slowly, but that requires all parties to agree its the right thing to do, which is highly unlikely.

 

[inbetween]

The definition of affordable housing, according to any government documents isnt home ownership, its part ownership (normally 50%) or social rental. The UK, as you are probably well aware, is reasonably unique in that people actually aspire to buying their home.

What's missing is good quality long term rentals at affordable prices not necessarily houses for people to buy.

At the end of the day you, without a revolution, you wont get a step change in wealth distribution and land/property ownership, the only way it can be done is slowly, but that requires all parties to agree its the right thing to do, which is highly unlikely.

Indeed and this is reflected most in the cities where the rental market is at its most prominent. Funnily enough the cities are also the dominant market for young people who mostly rent. None of these young people want to buy though because most of them will move out once they get older and need space to start families.

The only reason that young people will ever buy at this level is under the assumption that later down the line they can sell but that's a self-defeating argument really if house prices must fall. Imagine that you buy a flat for £200k in your 20's and then some idiotic government brings in something which crashes the market... You now cannot move out because you can't sell at a high enough price.

There are millions of average people young, old, rich and poor who are praying that the housing market does not crash. The only people praying for it to crash are those who naturally aren't on the ladder and have nothing to lose if it. They will however change their tune when it's their own money at risk.

There is an argument for affordable housing but that in itself generates its own demand and will never be enough. If the average house nowadays is worth £300k and the government builds and sells equivalent houses for £200k then of course there will never, ever be enough of them.... And still the supply problem hasn't changed.

 

[Grassland Blue]

Houses are actually relatively cheap to build, that's how developers make huge profits.

The issue of land ownership is indeed a problem. This country is almost unique in never having had land reform. A small minority of families control vast acreages that they never worked for but were 'granted' in ancient times for 'services' like murdering people or handing over their daughters to the king's bed. In addition, we have stringent rules about the 'green belt' which further rations the available land. Finally, we have not, traditionally, built at the same density as most European nations.

I am not suggesting that this is easy to solve. It isn't. In fact, I started by saying that solving it is politically impossible. But it is, nevertheless, the root of the problem, or of many problems. The inflexibility of the labour force. The (natural) demand for higher wages, even when they can't be 'afforded'. The high level of benefits that the government has to fund to square the circle. The deep and growing dissatisfaction of the younger age groups and their increasing alienation from 'the system'.

I'm not in charge, so it's no use my saying what I would do about it. But I'm in no doubt at all that housing is way, way too expensive and out of all proportion to typical salaries. I would suggest a modest house (not a mansion, but not a shared room either) should cost no more than 3 or 4 times the local average wage. Rents should be in proportion. They are not, because the market has failed.

I would sooner give rent money to the council than a private landlord.
Post thatcher, not so many council houses left though....

 

[mosssideblue]

Okay has let himself go a bit