We’ve got an Auckland housing affordability and a housing supply crisis. We’ve got an economy overloaded with private debt. Headlines report an anxiety epidemic, a P epidemic and an obesity epidemic all at once. Scientists show we’re in the midst of various environmental crises.
In many ways these are all linked. But it’s not that the housing market is on a sugar or P fuelled binge, even though it seems like it. For those already with a toehold in the Auckland property market, buying more houses is an individually rational choice. There’s more money to be made in housing investment than in most jobs, and low interest rates mean debt has a small price to pay compared with escalating capital gains. Poorly managed sprawl, and transport and urban design contribute to unhealthy personal and social health outcomes. Modern lifestyles are taken up with commuting and sedentary work. International markets set up incentives for concentrated investment in certain sectors like farming which then of course leads to concentrated adverse effects.
The free market means we have access to easy global credit, housing pressure driven by positive tax incentives, sugar filled junk food and liquor stores on every street corner, and a political-economic regime that owes more loyalty to transnational megacompanies protected by grand sweeping international agreements, than to its own voters.
Great efforts are made to liberate, enable and empower market forces, and let no domestic legislation, tax or tariff stand in the way of trade. The market is seen as a solution to everything from poverty to conservation of threatened species.
But if the free market is king, and wields the hallowed invisible hand that leads to the optimum distribution of goods for society, it doesn’t explain why the dairy sector warrants government subsidies for immigration schemes, or why roads get more subsidies than rail, or why debt levels are unsustainable but banks are too big to fail. Except that free market ideology is a thin disguise for preferential treatment of some (private) sectors and the disadvantage of others – often those with genuine public or environmental good.
So we have almost less investment in public good services such as environmental protection than we do in commodifying that environment through tourism promotion or development. Regulations are supported only insofar as they actually sustain and protect economic development – with the minimum done necessary to avoid the worst injustices with maximum profit. The welfare state and education systems support the latent workforce with the potential and skills for deployment in jobs as, when and if the economy requires them, but not for freedom of thought or self-determination.
In other cases, as Joseph Stiglitz argues, often the reason the invisible hand is invisible, is because it’s not there. The market isn’t delivering the optimum outcomes beneficial for society as a whole, but rather, externalities that either go unaddressed, or require rate and tax payers to pick up the tab, so that either the environment, the public or future generations pay the price for corporate profit.
So it is with obesity caused by the advertised, state sanctioned proliferation of junk food, and the tragic effects of alcohol harm; Environmental effects caused by overfishing, overfarming, polluting, point and non-point source contamination; The private car culture; Economic effects of a distorted investment market that favours housing speculation and sprawl. 99 people died at work last year because business profits come before workplace safety. The invisible hand is invisible or at least ‘hands off’ when it comes to protecting worker’s safety or security outside the limited sphere of operations required to meet minimal operating and reputational requirements other than to maximise profits.
With all these consequences for health, home availability and affordability, and environmental survival, the free market isn’t really free. Many laws and taxes are socially regressive and have relatively disproportionate impact on poorer people rather than companies or land owning upper classes. (Note the low taxes paid by big corporations in NZ, and also the harsher penalties for crime that apply to certain ethnic and social groups – ie those who aren’t professional white men). The ‘free’ market imposes massive costs on the environment, the commons, future generations and workers both here and in developing countries. The free market is freer for some than others. That same hand that’s almost invisible for protecting workers and the environment is conspicuous, flexed and clenched into a fist when it comes to protecting private property and profits.
But that’s part of the neo-liberal agenda’s success. It tells a convincing lie, that unhindered the market delivers what’s best for society. That if we all worked harder, longer, for greater parts of our lives, we could be rich too. That individuals are responsible for whether they find themselves with either extreme wealth or poverty. That if you’re a young person, you too can enter the housing market if you just forego that BMW, $200 bar tab and twice yearly trip to Bali. The lie tells us that private contractors provide as good a service for essential public works such as hospital food and prison management, even schools, as traditional public service providers.
But market failure is alive and well. In all those epidemics and crises of effects and externalities that have arisen from market activity, we see the negative side of the free market, profit imperative. In building roads, irrigation schemes and tourism infrastructure, in minimising workplace health and safety rules and worker protection, in the installation of private contractors in public services, this is a system that privatises the profits of trade, and socialises the costs.
But inequitable distribution of profits and costs, and unsustainable economic development in the interests of the few shouldn’t be read as a failure of leadership by this government. That’s what the government was elected by its supporters to do. As long as the government keeps delivering on those expectations, for lower taxes, higher house prices and the preconditions for more (even unsustainable) growth, they’ll continue to be re-elected.