7Itís the Economists, Stupid
One matter the Office of Fair Trading will not be investigating is the extent to which the housebuilder monopoly and housing scarcity are deliberately engineered by the Treasury and the Bank of England to stimulate the UKís parasitic and growth-dependent economy. Free market economists like to see high house prices because these provide collateral for loans which increase consumer spending. This is Eddie George, former Governor of the Bank of England, March 22 2007:
"In the environment of global economic weakness at the beginning of this decade, we only had two alternative ways of sustaining demand and keeping the economy moving forward ó one was public spending and the other was consumption. We knew that we were having to stimulate consumer spending ..."
Why? Because public spending, on council houses for example, is unaffordable for a government committed to running down agriculture and industry and instead buying all its goods in a globalized economy. Consumer spending power can be created out of thin air, by increasing the value of everyone's house. Here is Larry Elliot in The Guardian, 9 July 2007:
"Britain is a country where the speculator is king. We consume more than we produce; we import more than we export; we prefer to invest in nonproductive housing rather than in plant and machinery.
. Three parts of Britainís institutional framework lie at the heart of all this. The first is the ability of the commercial banking system to create credit; the second is the tax and planning system that ensures that demand for housing tends to exceed supply ... and the third is the limited liability corporation."
Ė from The Land Newsletter Summer 2007