Housing word association

The week between Christmas and New Year is always a wonderful time for reading, both books and catching up on the wealth of articles bookmarked in the busy weeks before the holidays. So I’ve had time to read a new London Review of Books essay by James Meek about housing in the UK. Or rather, the housing crisis, as the title has it, in what has become the automatic word association.

As the chart in the article makes perfectly plain, there is a crisis of inadequate supply, on a scale that in the past was addressed by some substantial policy interventions. I am absolutely not a political expert, but it does seem to me that housing is one of the basics that voters will care about – something Margaret Thatcher as well as Aneurin Bevan understood perfectly well.

The Meek article ends with a quote from Julia Unwin of the Joseph Rowntree Foundation: ‘At the turn of the 20th century, the free market had provided squalid slums. We undoubtedly face the re-creation of slums, the enrichment of bad landlords, the risk of people being destitute. Beveridge had soup kitchens. We have food banks. We’ve got something that does take us back full circle, a deep divide in way of life between people who are reasonably well off and those who are poor. There’s always been a difference, but the distinction seems to be more stark now.’

Julia is one of my Perspectives authors, and I highly commend her new book  It seems to me spot on in identifying the emotion of fear – fear of becoming poor, fear of poor people – as a barrier to doing anything about poverty.

As it happens, I’ve also commissioned Kate Barker to write a Perspective on the housing crisis, due out later this year. Kate was the author of two authoritative reports on planning and housing a few years ago, and her recommendations in the run up to a UK general election campaign will be essential reading.

[amazon_image id=”1907994165″ link=”true” target=”_blank” size=”medium” ]Why Fight Poverty? (Perspectives)[/amazon_image]

There are a few other books around about housing. I’ve read Neil Monnery’s Safe As Houses which gives a very useful historical and also cross-country overview. A bit old now, but excellent on the economic analysis, is David Miles’s . David is on the Monetary Policy Committee and no doubt paying close attention to the current house price surge and mortgage conditions.There are some excellent blogs too – Alex Marsh writes one, Jules Birch another.

[amazon_image id=”B00FOU4GLA” link=”true” target=”_blank” size=”medium” ]Safe as Houses: A Historical Analysis of Property Prices (Paperback) – Common[/amazon_image]

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Poverty, fear and loathing

Economics is famously, or notoriously, abstract. It is a discipline focused on the calculating parts of human behaviour, rather than the emotions. This would have made no sense to Adam Smith. As Emma Rothschild argues in her book , “Economic life is a system of sentiments.” This is why for Smith,  followed . Economic behaviour only makes sense in the context of understanding what drives human beings.

[amazon_image id=”0674008375″ link=”true” target=”_blank” size=”medium” ]Economic Sentiments: Adam Smith, Condorcet and the Enlightenment[/amazon_image]

Julia Unwin’s book Why Fight Poverty? in our Perspectives series lies in this tradition, and makes a really important contribution to the public policy debate. She argues passionately that poverty is not inevitable, it can be reduced, but nothing will change unless we face up to the emotions that seeing poverty arouse in most of us – the fear, the shame, the sense of disgust, giving rise to the creation and retelling of myths about poor people.

[amazon_image id=”1907994165″ link=”true” target=”_blank” size=”medium” ]Why Fight Poverty? (Perspectives)[/amazon_image]

The role of ‘moral sentiments’ in addressing poverty is a timely theme on the day the Joseph Rowntree Foundation and Prospect are launching a recent set of essays (free e-book) on poverty at an event in the House of Commons. One of the chapters in Julia’s book is titled ‘Is poverty inevitable?’ The answer is no.

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Poverty, fear and loathing

One of the books I read on holiday this past week was Alan Johnson’s memoir,  It’s a very moving testament of love to his mother, who was abandoned by her feckless husband and died young, and his older sister, who subsequently brought him up despite being just a teenager herself. Born in 1950, he grew up in extreme poverty in wast London. Few people who experience that kind of deprivation – cold, damp, cramped rented housing, hunger, constant debt, second hand clothes, lack of hot water, power being cut off – write about it or are paid any attention if they do so. It was Mr Johnson’s success, via his union, in politics that gave him a voice and an audience. His story is both a great family saga, both sad and uplifting, and an unusually authentic account of being brought up in material poverty. It is especially revealing to see how hard it is for anybody – even someone as hardworking and determined as his mother Lily – to safeguard children from their circumstances. It must be heartbreaking for parents not to be able to stop their children being hungry, not to be able to protect them from the everyday violence of the streets.

[amazon_image id=”0593069641″ link=”true” target=”_blank” size=”medium” ]This Boy[/amazon_image]

It would be a mistake to think that this kind of poverty is history. Conditions are somewhat better than in the 1950s and 60s, but it is still hard for most of us to appreciate the lives of people on low incomes. This column by food blogger Jack Monroe recounts how scarily easy it is, too, to become poor – as she points out forcefully here, she did not fall in to any of the usual tabloid blame categories. Julia Unwin, Chief Executive of the Joseph Rowntree Foundation, has written a marvellous book, , out soon in a new series I’ve been editing, in which she highlights both the standard failure of imagination about poverty, and the fear that either makes us unwilling to think about the lives of people who do not have enough money, or turns into loathing and blame.

[amazon_image id=”1907994165″ link=”true” target=”_blank” size=”medium” ]Why Fight Poverty?: And Why it is So Hard (Perspectives)[/amazon_image]

I think she’s right to draw our attention to the emotional baggage we bring to the subject, and the barriers to tackling poverty created by our unacknowledged fear. I do recommend reading .

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More bankers needed?

“Half the world is unbanked,” is the title of an early chapter of a new book, , edited by Robert Cull and others. Counterintuitive as it seems, for those of us living in countries with too much banking, too little banking is a big problem. For a long time the best, indeed one of the only, books on the issue of financial services for the truly poor has been  edited by Daryl Collins and others (see also the terrific Portfolios of the Poor website for additional material).

[amazon_image id=”026201842X” link=”true” target=”_blank” size=”medium” ]Banking the World: Empirical Foundations of Financial Inclusion[/amazon_image]

Collins has a chapter in this new book, on measuring what financial services poor people use. It starts with an example about how important basic financial services can be in helping people earn more – a study of fertilizer use in western Kenya, where the biggest barrier to using fertilizer is timing savings in order to have enough money available to buy the fertilizer at the right time. I think access to secure means of savings is fundamental – far more important than microcredit, which has been so much the focus of research and policy debate so far.

Although I’ve not yet read all the chapters in this book, it collects together a number of empirical studies piecing together the evidence that will be needed to help develop inclusive financial services. It includes a number of intriguing ones – such as using biometrics for identification and security purposes. This is interesting because – although the chapter doesn’t address this issue – global anti-money laundering and ‘know your customer’ regulations – are wholly paper-based, which excludes people with no fixed address, no bills addressed to them, few formal documents at all, and no access to photocopiers. It is worth asking whether alternative approaches ID schemes could offer adequate security to serve the real purposes of such regulations. (I think the digital money guru Dave Birch has written about this although I can’t track down the link at present.)

I also like it that the book has a section called ‘Cautionary Tales’, included as a warning against ‘silver bullet’ thinking (“All we need to do is X and we will end poverty”). Not all financial services boost growth or encourage entrepreneurship, and some can be harmful. The examples here are the disappointing effect of remittance flows into Vietnam and the damage done by easy access to mortgages in some of the lower income Eastern European economies.

The final chapter, by the editors, lists ten unanswered questions, the first of which is the need for much more evidence on whether and how access to financial services has a beneficial impact for people on low incomes; which financial services are most valuable; why do ‘micro’ services struggle to scale up; and does growing access to financial services increase the risk of financial instability? As this list indicates, there is much that we don’t know, and the answers are relevant to financial inclusion within the rich economies as well as in low income countries. However, this book is a welcome addition to our present state of knowledge and will be of great interest to people working on this aspect of development.

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The economics of poverty

I’ve been looking through the new , edited by Philip Jefferson. It isn’t a book to read from cover to cover and review, as a handbook, and I’ve only read two of the chapters. Still, this looks like a useful resource for economists interested in two fields, development economics and income dynamics. In fact, this is something I particularly like about the book, that it includes some research on developing countries alongside the US (although a shortcoming is that its developed world focus is very US-centric). Surely, to the extent that we think economics should aspire to any universality, the economics of poverty must have some application to poverty in any country? So there are chapters by Martin Ravallion (about global patterns) and by Gary Fields (about low earnings in the developing world – he wrote the excellent , which I reviewed here) and by Juliet Elu & Gregory Price about gender inequality in sub-Saharan Africa.

The overlap between development economics and the economics of poverty in western societies is surely fruitful territory. One of my favourite books is , a sort of ethnographic, diary-based study of how poor people in India and South Africa actually handle money. A study of this kind would be most helpful in assessing concerns about payday lending in the UK; these short-term lenders are clearly satisfying an otherwise unmet demand. What financial needs of people on low incomes, exactly, are conventional financial services unable to address and is there really a policy or regulatory gap, or is payday lending actually a market solution?

The Handbook also has some cross-cutting chapters that look interesting, on subjects like obesity, healthcare, housing and place-based policies. I read and liked the chapter on the need to get the best from both economics (analytical & empirical rigour) and sociology (illuminating detail and understanding of social networks/capital) in studying poverty.

[amazon_image id=”0195393783″ link=”true” target=”_blank” size=”medium” ]The Oxford Handbook of the Economics of Poverty (Oxford Handbooks in Economics)[/amazon_image]

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