Hey there, time traveller!
This article was published 10/12/2012 (1683 days ago), so information in it may no longer be current.
Once upon a time, economists used an informative and all forgiving condition when discussing or proposing economic theories with respect to the workings of a market economy — ceteris paribus. A Latin term which economists used to mean “all other things being equal.” “All other things being equal,” then this should happen or be true. And if something did not unfold as theory or logic suggests then the fault was that all other things were not equal. A condition which the market itself cannot or will not correct without intervention of some kind. An intervention which is usually friendly and managed by governments but sometimes disastrous and uncontrolled when left to the devices of the market.
The concept is useful when discussing the issue of affordable housing in a market economy. In theory there should be a balance between the supply of and the demand for housing (meaning shelter, whether rented or owned). This balance should exist with respect to any cost or purchase level whether it be for a multi-million dollar home or shelter costing $360 per month whether in the form of rent or mortgage payments. A balance which is dependent upon the requirement for 1) individual income being adequate to purchase shelter in the market and 2) shelter being available at a cost commensurate with the income of individuals. Both conditions are necessary. However, this balance does not exist in Brandon (a condition that is not unique to Brandon). A condition which is somewhat irrelevant to those that can afford housing at market levels but a condition that is demoralizing and debilitating for those that cannot afford housing at market-prescribed levels.
Legislation with respect to minimum wages, labour, apprenticeships, unionization, wage loss insurance, health care and education are part of the arsenal of governments which directly or indirectly affect the issue of maintaining individual income levels to be able to afford the necessities of life including housing. Rent controls, land grants, mortgage insurance (CMHC) are policies which are directed at maintaining housing costs at affordable levels. The Manitoba government’s proposed Bill 7 is focussed on ensuring that the market will offer affordable housing. Social assistance programs, which include housing subsidies, are, in essence, an admission that not enough or nothing can be done to address the problems of the market economy which create affordable housing issues.
Organizations and associations also intervene and operate in the market. Most of these direct their energies at lobbying governments for policies and programs. Some such as co-operatives, Habitat for Humanities and the CMHA become directly involved in the construction of affordable housing. The Samaritan House, Helping Hands, the Christmas Cheer Board, churches provide food, clothing and other amenities which essentially are subsidies to individuals so their respective incomes can cover other essential costs such as rent. To this group must be added citizens associated with these organizations through work or volunteering or gifts and citizens who support governmental programs and policies and the reluctant tax-payer who makes government programs possible.
The primary actor in the market economy is private industry. Which explains why many government policies are directed at private industry. Private industry is the major source of income revenue for individuals. Private industry is also the major actor in constructing and selling (rent, purchase) shelter. Although Adam Smith (the apparent father of free-market economic theory) thought that private industry would ensure, for its own sake and survival, that wages would be sufficient to address the needs of every worker this is not true in today’s economy. Nor is it true that private industry (except in certain circumstances) offers shelter at prices that are affordable to individuals with lesser financial means. Does this mean that private industry must mend its ways?
The easy answer is yes but with an important caveat and maybe even nonsensical. Private industry thrives on profit which in micro-economic terms means minimizing costs and maximizing revenues. A model which virtually negates any private industry involvement in the provision of affordable housing particularly for those who cannot afford even the least costly that the market has to offer. Yet if private industry is a part of the problem then they must also be part of the solution. And running away from the problem is not a solution.
All other things are never equal which results in, amongst others, the problem of affordable housing. Do we as a society want to address the problem? A question directed at and necessarily answerable by every component of society. If the problem does not belong to society then we will continue the piece-meal approach through governments, organizations and the increasingly reluctant tax-payer who paradoxically assigns the responsibility to governments while lobbying for less taxes. But if society decides to own the problem, the genius of society will find a way.
Rosemarie and Chester Letkeman