It’s Housing, Stupid. The Liberal Case for a Housing New Deal

Sinn Féin activists and politicians holding up signs that say “Housing in Crisis” and “Housing Crisis”
The Irish housing crisis has propelled the previously fringe Sinn Féin to top of the polls

The 1992 United States presidential election introduced the political catchphrase “[it’s] the economy, stupid” — with a legacy and significance that has all but been forgotten in the haze of rapid change and confounded predictions of 21st century politics. The whole “rulebook” of political campaigning may need some updating but some old truths still hold true; what “the economy, stupid” reminds us is that a skillful politician or party can propel a dormant but transpiring crisis into a rallying vote winner. The combination of crisis with a catalyst, such as the early 90s recession, could be something to overturn an 89% approval rating and secure a healthy electoral victory like Bill Clinton’s in less than 18 months. Clinton’s victory was achievable in three easy steps:

1. Raise the issue of the economy out of hibernation

2. Relate it with an immediate and relevant crisis such as the recession

3. Associate strong action against the crisis with your candidate/party

This 1990s formula was successfully repeated just days ago:

In February 2020, mishandling of the Irish housing crisis precipitated a vote of no confidence shortly leading to the dissolution of the Dáil Éireann (parliament) and propelled Sinn Féin, before a fringe, left-wing nationalist third party, into the largest party in the Dáil. Sinn Féin’s message was simple: it’s housing, stupid. Like above, Sinn Féin:

  1. Raised the issue of the rising housing crisis in Ireland
  2. Succinctly related it to recent dissatisfaction with the government’s housing minister as well as new figures on rent rises in Ireland’s largest cities
  3. Committed to an enormous focus on housing by having their housing spokesman Eoin Ó Broin their one of their most prominent politicians, and promising in their party’s manifesto to cut and freeze rents, a large public housing programme, mortage rate freezes and abolition of property tax (among other proposals) which successfully dominated the election campaign.

While it may appear a perfect storm that may be unique to Irish politics, housing crises are bubbling up across the developed world. Rising rents and the vanishing dream of home ownership are already affecting politics in many countries, particularly the UK and the United States. The arrival of the YIMBY movement and increasing public discourse are the first signs of a powder keg ready to blow under the unfolding Western housing crisis. As with Clinton’s mastery over the economy issue, all it takes is a spark and savvy campaigning for even some pretty unlikely candidates or parties to be swept into power thanks to the votes of a growing coalition of struggling renters, live-at-home milennials and an assetless working-middle class.

To plenty of politics and economics pundits, it is accepted wisdom that the most recent populist waves across Europe and North America have been sustained by deeper economic woes with roots to the 2008 recession and perhaps even earlier. A wider malaise through poor recovery and lingering problems is even more visible looking back at the Great Depression of the 1930s and its aftermath; it brought rising support and power to communists, fascists and many other previously outsider movements following a similar formula used by Sinn Féin almost a century later.

This time-tested electoral strategy may come to the delight of radicals who can exploit crises but to liberals, moderates (and the political mainstream in general) the existing housing crisis should ring alarm bells to signal that ideologues of whatever stripe are two steps away from being in a position to enact enormous political change. Such ideologues, being on the extremes of electoral politics, are more likely than not to be a threat to democratic norms and the rule of law; extremists — to put it bluntly — are likely to behave extremely. Letting extremists seize the initiative in crisis will inevitably disempower the ruling centre-ground. However, as the Great Depression can also remind us, crisis can provide enormous benefits to an establishment that seizes the initiative first, after all, Roosevelt was fundamentally an establishment Democrat who managed to secure three landslide elections with his New Deal platform.

And what made the New Deal? As a project it was a full frontal assault on the economic crisis from every angle- it involved large scale policy shifts on the economy not just in scale but in scope, it involved short and long term relief to not only reverse but also prevent crisis. Similar terminology has been used in proposals in 2018 for a Green New Deal by Democrats such as Alexandria Ocasio-Cortez to describe the same sort of ambitious and multifaceted approaches to tackling the climate crisis. Sinn Féin had successfully manouvred to promise a de facto New Deal on housing.

A Housing New Deal can of course be a great party political asset regardless of ideology. Achievable by liberals, not just extremists, it is the kind of political action most likely to avoid scenarios where harmful housing policy is enacted, (which prior to enactment festers for years outside the scrutiny of the mainstream) as well as harmful and illiberal policy generally as a result of electing extremists.

In order to minimise harmful policy, it is paramount that liberals construct their own vision for a Housing New Deal before populist political adversaries are able to do so. The ambition and scope for a policy programme to be considered on par with the New Deal is certainly achievable while being grounded in solid economic evidence. From regulation-focused policies such as abolishing building height restrictions and liberalising zoning laws to tax-based policies such as implementing a land value tax and scrapping stamp duty, to mass scale state-funded social and affordable housebuilding schemes and even some more creative solutions such as democratising planning laws to local street level and empowering local government. There is plenty to fit into a a hefty package that will appeal and impress the electorate more than the fiddling around the edges from existing governments.

Ultimately, even if you hold uncertainty over some specific policy proposals, a programme that includes multiple policies is far more likely to succeed than any individual policy to address what is truly the burgeoning crisis of our times. Liberals would need to sacrifice the satisfaction of having their preferred solutions to the crisis proved correct in empirical isolation, but prioritising a big-tent policy programme would be more effective in tackling the housing crisis than winning academic arguments over economic theory.

But by far the most important reason to support a Housing New Deal is that the housing crisis is real and incredibly damaging on its own terms. The Housing crisis is a drain on productivity and growth, it is harming the prospects of entire generations, worsens inequality and is even shaping the fabric of social relations for people around the Western world. Ridding us of this crisis will finally begin to right what The Economist has called the West’s biggest economic policy mistake. Regardless of where you sit on the political spectrum, the consensus to provide an enormous effort to end this crisis is emerging. It has become a no-brainer that strong political change on housing can not only win votes, but also bring political stability and tackle poverty.

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