Procure the future - for everyone

In prior articles we laid out five silver bullets using the power of procurement at a national scale

1.     How our current thinking about money limits us. A simple change of mind and language will mean we realise there’s no shortage of funding.

2.     How there are many examples around the world, and even in our own history where we have used more modern methods to create massive housing supply.

3.     How the COVID impact on our education and other sectors is actually a boon, gifting us capacity to massively retrain and upskill a generation.

4.     How we can learn from other countries who don’t have massive house price inflation by opening up land and devolving from central to local government  

5.     How we could stop policies that are counterproductive

In this last article we will talk about the last silver bullet.

Remember COVID in 2020? Who could forget? During the peak of the crisis we did a few things we might forget to do sometimes. We pulled together. We agreed on a plan. We considered ourselves one team. We were kind.

OK, so here’s the punchline as a simple metaphor. Imagine a buffet, at some event or festivity. The tables are laden with food and drink. There’s enough for everyone. I could well imagine your parents bringing you up with an instruction something along the lines of “you can have seconds, when everyone else has had firsts”.

So, if shelter is a universal human right, for the team of many millions, in a place where there is plenty of land, shouldn’t we be kind and say that you can have a second house, when everyone else has had firsts?

We have ended up in quite a mess, a problem so large it will take a national conversation to solve it, and the collective will to secure a decent society for the future. It will take time to deflate the balloon. How might we engineer a reasonable way to create house price deflation? How might we talk our collective selves down from the precarious mountain of debt?

Part of the solution is dealt with above, with massively increasing supply. However, for those that are currently invested, how do we engineer a suitable transfer without beggaring either the current over-invested generation or the under-invested future generation. Once again, we can procure it.

As a government with a sovereign currency we can’t run out of money. In theory, the government could procure the existing debt and reallocate it. This might be unwise, lumbering into the market with an endless supply of money. That is where we are right now with commercial banks offering money at 5,000 year lows. Creating the funds and giving it to the current players would only exacerbate the land hoarding, debt mountains, rentier behaviour and debt peonage. We need a different circuit.

The government could spend the funds into existence. A consolidated national loan fund – not a private bank owned offshore - could manage the payments and balances. This entity could progressively assume the current liabilities. We’d need a way to incentivise the current over invested to release some of their stock into more widely distributed ownership, but if there was an incentive created from a more fair way of levying contribution at the local level (see articles four and five) this would induce the over-invested to progressively divest.

Those induced to sell into the fund could then be further incentivised to take the windfall but only if it can be invested in assets that generate cash flow (and not another house). The fund can then be used to transfer the houses offered up to those that don’t have one and finance them into it.

Dear Prime Minister

Naturally, this is merely a series of short posts with a bunch of large, and frankly heterodox ideas. I hope it sparks some debates and creates impetus for investigation by a wider audience.

As one of our MPs noted earlier this year, we are locked into this world only by our own ideas. Having small ideas has frustrated the nation for the last 50 years (as noted by another ex MP). Sounds like it’s time for some fresh thinking and bold action.

Be kind, kia kaha, kia toa. Let’s build a better future

References

https://gimms.org.uk/2021/02/21/an-accounting-model-of-the-uk-exchequer/

https://www.newsroom.co.nz/the-case-for-a-modern-debt-jubilee