How Neoliberal Financialism Pushed up the Cost of Housing in Western Countries

In previous part of this series, I made the point that over past 30 years, the living standards of almost everybody in western countries (but especially in USA) have diminished considerably. This has largely occurred due to the convergence of two factors. Firstly, the cost of the basics such as houses, automobiles, higher education and in case of USA- healthcare, have increased much faster than "official" rate of inflation. To make things worse, wages have either remained stagnant or decreased and in an increasing number of cases- the jobs have been shipped overseas without being replaced by anything comparable. Even the few well-paying jobs left in this country have become much less stable than they used to be just two decades ago. Furthermore, these changes have impacted those under 40 or 50 much harder than those above that age. So it is not just a "Millennials", "Gen Y" or "Gen Z" thing.

So now let us talk about the role of financialism aka late capitalism aka neoliberalism in creating this terminal dystopia. And make no mistake, the situation which many western countries (especially USA) has gotten itself into is, for all practical purposes, terminal. To better understand what I am going to talk about, let us compare USA (the most afflicted country) with others such as Japan, South Korea and Germany (among the least afflicted). So how is life different for the median person in the least afflicted countries when compared to the most afflicted one? Let us start by talking about the relative affordability of decent quality housing in nice or even OK neighborhoods.

If you have seen enough YouTube vlogs from expats in Japan and South Korea, one thing becomes obvious rather quickly. While many of their less expensive apartments are small- almost every single one of them is well built, adequately furnished and in areas that are not remotely sketchy. Also, apartments in these countries come in a range of sizes allowing even somebody in a menial job to have an OK place of their own. More curiously, unlike in the anglosphere, East-Asian countries have been able to ensure that the rents and prices of these apartments are linked to the real income of the people. Even somebody in Tokyo or Seoul, two of the largest megalopolises on earth, can easily find safe and affordable housing that is not too far away from their place of work and other amenities. Oh.. and they have excellent public transit systems.

Now compare this to the situation in the Bay Area, where even a shitty bachelor suite within some century old building in the Tenderloin district of SF is at least 2500-3000 $ per month. The same holds true for NYC, where anything remotely affordable in a non-sketchy area is rare or rent controlled. The same holds for other metro areas in this country such as the LA, Boston and its suburbs, Chicago and its suburbs, DC and its suburbs. But why is it so? Why can you find very affordable and OK apartments in two of most urbanized countries on earth with very little flat land suitable for building cities but not in one of less sparsely populated countries on earth with tons of open areas suitable for the expansion of cities?

But why restrict our comparison to just East-Asian countries? Even more American influenced western countries such as Germany, Czech Republic, Italy and Spain have no shortage of decent and affordable housing in their larger cities- with some obvious exceptions such Frankfurt etc. My point is that the disproportional increases in cost of housing in Anglosphere and closely associated countries (Netherlands, Switzerland) during past 30 years is an aberration even among developed countries. But why? Well.. the short answer is that this trend is the result of deliberate government policies, just as the relative inexpensiveness of housing in East-Asian cities.

The longer answer is that government policies in Anglosphere have consistently favored the interests of who have capital and land over everybody else. In contrast to that many other countries, especially in East-Asia and Europe, have decided that the well-being of the majority is as important as enrichment of a tiny minority. And let me remind you that it was not always like this, even in this country. For the first three decades after WW2, any white person with even a mediocre job could afford to rent or buy a pretty decent place to live in almost any part of the country. Sure.. those places did not have 5 bedrooms and a man-cave, but they were quite acceptable and in OK neighborhoods. Even as late as mid 1990s, the median person with a job in SoCal or the Bay Area could afford an OK house in a non-sketchy neighborhood.

But what does any of this have to do with neoliberalism aka financialism. As it turns out.. everything! The high and rising costs of housing in the Anglosphere has nothing to with the natural constraints on the ability to build more housing etc. Instead, it is about creating artificial scarcity via rules and regulations to extract an increasingly larger proportion of income from most people to line the pockets of those who already have tons of money so that they can use that extra money to play ever more elaborate sterile financial games which yield no return in the real world. Financialism is a just a form of parasitism, but one that is unable to adequately reproduce itself- just look at the poor fecundity of the so-called "elites" and "masters of the universe".

In the next part, I hope to go into how financialism fucked up healthcare, education and a whole lot more. We will also go into why boomers cheered on the deregulation in 1990s and early 2000s, which led to the rise of financialism.

What do you think? Comments?