Make no mistake about it: the series of public sector strikes that we have experienced — and are about to see more of — are entirely linked to housing. The fact that middle-ranking public sector workers can’t, or at least don’t feel that they can, afford to live in this country is at the root of the latest industrial unrest. For the state, the message should be clear: fix housing and you more or less fix most of the grievance. In contrast, allow the continuation of the dysfunctional market for housing and accommodation in general, and you have a recipe for industrial relations war.
So if the main reason the public sector unions are on strike is the price of housing, there’s an obvious solution: link pay rises to the provision of affordable housing. If the main driver of wage demands, particularly for younger workers, is the cost of accommodation, then the obvious thing to do is link the two. Let one police the other.
At the moment, we have the ludicrous situation where all workers are seeing their take-home pay eroded by the high cost of accommodation. This leads to strikes (in the public sector) for more wages, as workers try to maintain their after-rent standard of living. It is not hard to see how this leads to a hamster-on-a-wheel scenario where higher accommodation costs lead to higher wages, which in turn lead to higher house prices, and so on.
The way to stop this is to give the state an incentive to keep house prices and rental costs down. At the moment, there is no real incentive for the state to get housing costs under control. However, if we were to link wages to housing costs, we could force the state to take the housing crisis seriously.
The original partnership model was based on traded economy-wide wage moderation for tax cuts. The state undertook to cut taxes — and in turn the unions undertook to keep wage demands moderate.
If we swap tax cuts for housing costs, we would have a mutually dependent framework for linking wages to housing. If the state can’t get housing costs under control, then wages rise across the board, the budget deficit rises, taxes rise and the government will get booted out.
Thus, the government’s entire economic strategy would become dependent on keeping housing costs down. With such a framework, the state must act to keep costs down — rather than the situation now, where it really has no skin in the game. It bears no responsibility because it doesn’t have anything to lose. It can blame developers or builders or banks or vulture funds and simply throw its hands up ineffectually as if it’s not the state’s problem.
By linking wages to housing, we break this cycle of mutually assured irresponsibility.
Maybe it is because I am in Italy, the home of Mussolini’s corporatism – the biological father of social partnership – that this idea seems to jump off the page at me.
If the public sector unions want to reinstate social partnership à la Bertie Ahern and if employers want to do something similar, then this new partnership approach can be modified to benefit everyone, not just the unions with a stake in the talks.
Such an all-inclusive approach was Mussolini’s model, after all — corporatism per tutti!
So let’s think about an arrangement where everyone gains.
Linking future wage demands to the price of accommodation would build into the housing market a massive incentive for the state and employers’ groups, as well as the unions, to actively bring the cost of accommodation under control.
When you stand back and look at the domestic economy, it’s hard not to conclude that if we sort out housing, we’d begin to sort out lots of things.
If the state — either itself, or via collaboration with private developers — could accelerate cheap house and apartment building, much of the upward pressure on costs in this country would dissipate.
By linking national competitiveness directly with accommodation costs, we would focus the minds of everyone.
This would also impact on the disruptive part-time landlord business. The one-off landlord racket sucks cash into the housing market in a haphazard way, leading to all sorts of conflicts of interests, whereby citizens are landlords and workers and voters at the same time.
In future, because individual investors would know that housing costs are now capped, there would be less incentive for the marginal investment to go into property.
In time, the provision of accommodation would become a utility, like the provision of electricity. This would be a low-yield business. The state could easily set up investment funds – as it does for renewable energy projects – to build new houses.
The national pension fund could do this, so that we have a cooperative system which sees pensions invested into housing associations that administer the building of affordable houses.
One obvious drawback of such a plan is the assumption that the state can deliver on its housing targets. If it doesn’t, we would be hostage to a wage/price inflationary spiral driven by housing costs. However, at least in this case, the source of the problem would be unambiguous, and governments would be judged on this one narrow criterion.
A country where housing anchors domestic economic policy would be one where huge innovations in building techniques would flourish. Obviously, innovation in building materials and cost controls would become much more urgent.
In fact, the only sector that would lose out is the sector that finances houses: the banking sector. But reversing the financialisation of the economy can only be a good thing, because without the destabilising impact of speculative capital, we would rule out future booms and bust.
What’s not to like?
Any takers?
Interesting article. However, the Government has purposely encouraged house price inflation for no other reason than to rebuild bank balance sheets. In turn the banks have shown they have learned nothing, and why should they, as the taxpayer absolved them completely of their mistakes. Moral hazard only applies to the ordinary punter! Moreover, even a cursory glance at the accounts of BoI and AIB, to name but two, show the extent they are parochial asset financing outfits and not particularly good ones either. The recent performance of the BoI CEO, in front of a toothless Dail Committee, was an excellent… Read more »
Wonderful. Can we all go on strike because we are not happy with the cost of living in a bottleneck, market rigging, oligopoly pleasing, EU dictat run economic racket ? What do the rest of us do when we find housing expensive ? The role of militant trade union politicians like Ogle, and vote-buying politicians like Martin is also a feature. I think we have bigger problems than public sector strikes. We have a problem with a private sector that is losing it’s most capable people to the UK and the US due to income tax, and a high cost… Read more »
Here is a prediction. And it will shock you. Within 5 years Ireland will experience another financial crisis. There will be money flooding into England, and Eastern European currencies, to avoid it. Perhaps even into a resurgent Spain. The quangocrats and ar5eholes on Irish radio, making wise pronouncements will once again be looking for scapegoats. They will probably blame Trump. Maybe Farage. Perhaps Putin. But they will find a scapegoat. They will never admit that they are the problem. Perhaps the RCC can once again be used for the job. The Catholic hierarchy have proven a handy resource, for this… Read more »
The social housing model has been broken for years. The private sector housing model is also broken. The banks are exploiting the situation and are lending to those who are already wealthy (and don’t need the money), reinforcing the unprecedented transfer of wealth. If the middleclass aspiration of home ownership is eliminated, you undermine the basic foundation of a financial interest in and commitment to a stable society. A future middle class with no in-vested financial interest will not feel obligated to conform and is much more likely to rebel. A viable option is cooperative housing along the lines of… Read more »
Landlords just can’t be arsed with the 40% tax, registering with PRTB, and problem tenants who have no sense of responsibility. This is why Airbnb is crowding out long-term renters from the market. The system is broken because there is no TRUST between Landlords and the rental system. To help get the ball rolling with a fix; Immediately do the following; 1.Lower the Tax rate to 20% on rental income; supply would improve enormously overnight. 2. Quickly set up an independent body that represents landlords and threshold equally. Introduce the concept of Co-responsibility; e.g. Problem tenants that make excessive noise… Read more »
The problem with today’s Ireland is that it has no moral flag around which its citizens can rally. It is not just that it does not have a housing policy, it has no fundamental beliefs of any kind, nothing to build on, no guiding principal, neither nationalism nor religion. It used to be a nationalist theocracy, based on hatred of England and the fear of Hell. But few believe in either any more. For a long time Catholic theism was the dominant force in Ireland. Unfortunately it crowded out humanism and its demise has left nothing to replace it. It… Read more »
I disagree with the headline on this article. In fact I totally disagree. The early 2000s bench marking awards, were about the unaffordable cost of housing. The value of housing crashed as we all know in 2008 onwards. The only people, no matter what section of the economy, that need a pay rise (because of the cost of housing) are those caught in the -ve equity trap. Put another way not all animals are equal but the public sector unions would have us believe different. What % of civil servants are trying to buy houses today and what % of… Read more »
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[…] “Make no mistake about it: the series of public sector strikes that we have experienced — and are about to see more of — are entirely linked to housing. The fact that middle-ranking public sector workers can’t, or at least don’t feel that they can, afford to live in this country is at the root of the latest industrial unrest …” (more) […]
The latest “news” is that some of Silcon Valley’s finest are concerned about “Fake news”. Therefore they will stop linking to “fake news”.
Will they therefore close down urls to
– Irish GDP revisions
– US unemployment statistics
– ECB bank stress tests for the “too well connected to fail”
– AIB’s overall situation
– FF’s policy on brown envelopes
etc….
Fake news – there is a way to avoid it. Switch off the TV.
Good idea. Add in non recourse house loans and it’s a winner.
“But reversing the financialisation of the economy can only be a good thing, because without the destabilising impact of speculative capital, we would rule out future booms and bust.´´ Great line David McWilliams. Now take all the of preceding article and mentally (if not physically) rip it up because it is a load of meandering rubbish and start a new article with the sole idea quoted above, but expand and develop and explore in a rigorous fashion, referencing the actual history of Irish State policies with relation to social housing and financing of other housing ( i.e. direct and indirect… Read more »
The housing crisis is not exclusive to the public service employees. The housing crisis stifles the domestic economy for all 4.8 million stake holders. Sons, daughters and ability to save for retirement. Public service employees earn 30% more than the private sector employees and have access to 30% higher mortgages for their shelter needs. For the last 30 yrs RTE sound bites tell us that public servants are victims and have exclusive hardships in paying their bills. In 2008 the national debt was 50bn and cost 1.5bn a year in interest. It is now 200bn and costs 7bn a year… Read more »
[…] The public sector strikes are really about housing (DavidMCWilliams.com) […]
McWilliam’s suggestion has merit. One aspect that I do question is the continual bashing, by McWilliams, of small landlords; and his desire to eliminate them from the group of people who supply housing. Without such landlords the current situation would obviously be much worse. Would anyone suggest that every main-street and corner shop should be closed to facilitate Tescos and a government run grocery business? How about eliminating all chemist shops so one has to purchase medicine in a hospital; or preventing all doctors or solicitors from having a private practice? It isn’t the job of landlords to provide cheap… Read more »
In terms of affordability: Daft.ie has 14 residential units for €100K or less (1 and 2 bed units) in County Dublin.
And the Jackeens can take their pick of 151 properties in the €100K to €200K range (although a few of these are auction reserves prices).
That seems pretty affordable.
Observation. This article has generated the most fractious comment/debate of any article I have read here I’m trying to understand why but the emotions I’m sensing are frustration, desperation and some anger too. Frustration first – It doesn’t seem to matter what happens, “The System” just carries on doing the same things. Desparation -At the inability of the “The System” unwillingness to recognise that people are desparate and need help. Anger – At the GREED make that SELF RIGHTEOUS GREED of the public unions. Deco – Five years is very optimistic. A lot of damage could be done in the… Read more »
Melania is going to stay in New York.
.
Ivania — one of Trump’s daughters — is going to base herself in Washington.
.
So, the specualtion is that Ivania will feature as the new 1st Lady of USA for next 4 years at least.
Yee may as well consider this handle on the beautiful Ivania as early as … now.
But, it is her husband “Mr. Kushner” who yee should really consider.
.
http://henrymakow.com/2016/11/ivanka.html
My suggestion for some easing of the housing market is for 3rd level institutions to provide sufficient housing for their students directly or through partnerships with business. As a student in Dublin and Galway it was a problem to find decent housing. Limerick was so bad, but that was a while ago. I always thought it was a shame they didn’t turn the Ballymun Towers into student housing for DCU. While this wouldn’t be a cure-all it would relieve some of the pressure, shouldn’t be too controversial, and should pay for itself and more. It could also be used as… Read more »
Institutional State of the Irish State “institutionalised” the private debt of the Irish Nomenklaturum-Landlords / Landlord-Nomenklatura of which the following are among the main players traditionally here in the Land of Rogues & Robbers : Garda-Landlords / Landlord-Gardai Garda-Teachers / Teacher-Landlords other Civil SERPENT-Landlords / other Landlord-Civil SERPENTS . And, now the Civil SERPENTS are bullying the nation present & future to give them even more opulent salaries & extras than they currently steal from these generations. . At this stage, the government should build top-class condominium villages as outlined by me in previous discussions to David’s articles ; Dwellers… Read more »
[…] The public sector strikes are really about housing (DavidMCWilliams.com) […]
David
They are not listening.
Just like Donald they will do their own thing
[…] The public sector strikes are really about housing (DavidMCWilliams.com) […]
[…] The public sector strikes are really about housing (DavidMCWilliams.com) […]
[…] The public sector strikes are really about housing (DavidMCWilliams.com) […]
[…] The public sector strikes are really about housing (DavidMCWilliams.com) […]
[…] The public sector strikes are really about housing (DavidMCWilliams.com) […]
I’m in Argentina right now where wages are very closely linked to inflation through strong unionization. People claim they’re always 5-10% behind inflation so always losing out. So this idea is in use but the people here still feel it’s not working, bear in mind that inflation was around 30-40% until recently. I like this idea because I left Ireland as a result of runaway rental increases.
While this idea is great for renters, most home owners and European governments want high inflation. Surely that’s the easiest way out of this massive debt that both have taken on.
[…] The public sector strikes are really about housing (DavidMCWilliams.com) […]
The employees just love the man.
https://www.youtube.com/watch?v=ehnxzya4OdI
Taking down the “false news” MSM
https://youtu.be/UyGrhNr8xZw
https://youtu.be/UAbvGW2XQUU
“The mainstream media is up in arms over “fake news” but the reality is that almost everything the mainstream reports is in a sense fake. Global warming is fake. Vaccines do not work as advertised. Central banking is fake too.”
http://www.thedailybell.com/news-analysis/the-fake-news-about-central-banking/
http://news.goldseek.com/GoldSeek/1479827640.php
By Darryl Robert Schoon
Today’s rising interest rates and trillion-dollar losses in global bond markets are prelude to what is to come, i.e. rising inflation with higher interest rates ending in the bursting of the global government bond bubble……..
Nepotism rules, and always has. Who else would you Trust. Only the loyalists with you from the beginning. Not the turncoats and backslappers , that’s for sure.
https://spectator.org/the-importance-of-jared-kushner/
https://fitzinfo.wordpress.com/2016/10/29/trump-controlled-by-mossad/
[…] The public sector strikes are really about housing (DavidMCWilliams.com) […]
Of course, the figures submitted by the Irish State’s Civil Service to the OECD would not be ethical, vis., No mention of the abundant Freebies No mention of scams pulled on the general public visiting hospitals whereby they are charged monies — & massively too — for using the car park of hospital whereby the monies secretly go to top-up the already opulent salaries of the Bitches & Bastards of hospital management. No mention of the fact that Garda-Landlords / Landlord-Gardai can receive full salary of Garda when they retire after 20 years of “corruption” & be employed in another… Read more »
“They don’t yet appreciate that Brexit marked the beginning of a major anti-globalization movement that was seconded by the Trump victory. More importantly: Italy is the “death knell.” ”
http://economyandmarkets.com/markets/foreign-markets/harry-dent-unpredictable-will-crack-heads-italy/
David the only statement I agree with in your article is the headline – the public sector strikes are really about Housing. You forgot the corollaries: 1) the housing crisis is really about Dublin 2) the demand for housing in Dublin is really about the failure of Ireland to devise and implement a flourishing regional strategy in Ireland (and will become about the failure of Europe to devise an intelligent strategy re immigration) 3) mostly the REITS are making money on property in Dublin 4) while Dublin is an overpopulated city, Ireland is an underpopulated country and has been since… Read more »
[…] The public sector strikes are really about housing (DavidMCWilliams.com) […]
http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=301
Of all countries, India is best placed to be able to use a gold based money system. In fact it is basically what they have done for thousands of years.
It is especially being used today as the Indian government tries to limit the use of cash, the fiat currency.
“If Trump fails, the only solution is for the American people to become more radical.” PCR
“Economic success depends on tax revenues that go into public investments, and regulations that protect the environment and public health. And true economic success results in high wages.”
http://www.newsweek.com/robert-reich-california-trumpland-nemesis-524127
Particularly for Pat Flannery ; A poster who is a true Detective Colombo investigating the Civil Service RACKET in post-colonial Irish State. . More useful statistics ; And, with figures superimposed onto map of individual countries of Europe. Again, I recommend that readers copy & paste into word-processing document & redact accordingly for to help inform the public of how the Civil SERPENTS are going to bleed the nation even more than they do presently with current opulent salaries for in most cases useless job performance & oft-times mendacious activity against the citizens, & with the bail-out of “their ostentatious… Read more »
US Gross (heavy on Gross) national debt up 150% in last 10 years
http://www.acting-man.com/?p=47922
http://investmentresearchdynamics.com/gold-and-monetary-populism-the-oligarchs-mortal-enemies-the-peoples-salvation/
Will the people awake in time to use the powerful weapon of private money to defeat the oligarchs. If not there is a rapid slide into economic servitude followed by physical enslavement already taking place. In India the government is so determined to control people it has demonitized its large banknotes. It is contemplating banning the importation of gold or even ownership of gold in a nation with a multi century tradition of wealth accumulation using gold.