Opinion – The cult of home ownership is dangerous and damaging – Adam Posen – FT.com – Best Blogs Series

This was originally posted in July 2013.

With the UK about to go to a national election it seemed to be timely to revisit the ‘cult of home ownership’. It’s important to remember that the UK’s economic growth was kick-started on the back of government guarantees to first time home-buyers.

Over the last for years, on this blog, John Gelmini and myself have been consistently critical of David Cameron’s government’s absence of cohesive strategy. Without strategy surely the pieces will come crashing down?



This is an excellent, MUST READ article by Adam Posen, president of the Peterson Institute for International Economics and is published in the FT.

via The cult of home ownership is dangerous and damaging – FT.com

The article highlights the risks at both the individual and national level of the home ownership cult, especially in the US and the UK.

These days, home ownership favors the wealthy and inherited wealth. The article cites latest research in the US that home ownership impacts mobility and aggravates unemployment. The financial crisis started in the US in 2008, and was triggered by sub-prime mortgages supporting home loans to the less advantaged. Now, once again, the big US banks are booming, and both the US and the UK governments are propping up the housing market.

Surely, the UK Government should be subsidizing language training rather than mortgage finance, and encouraging more people to go overseas to the likes of Germany where jobs are more plentiful?

Any thoughts?

New Jobs and Pay Raises Give Some Workers Reasons to Be Hopeful About 2015 – NYTimes.com

Contrast US pay rises, reported in the NYT to flat-lining of wages and salaries in the UK. This is worth a read. Check it out!

via New Jobs and Pay Raises Give Some Workers Reasons to Be Hopeful About 2015 – NYTimes.com.

Since 2008, many workers in both the US & the UK have suffered pay erosion in real terms (when adjusted for inflation).

As the serious electioneering starts in the UK, there will be intense focus on the quality of jobs in the UK, these days. Too many newer jobs are on zero-hours contracts, with no real protection nor privileges. In contrast, the public sector still has fat pensions.

Surely, it’s time for a level-playing field on public & private sector jobs in the UK?