Thursday, 19 February 2009

How long is the world's washing machine cycle?

We use an analogy in the climate change book about the washing machine of the concrete world. 

Until we throw our abstract ideas, hopes, dreams, plans and theories through a couple of wash-rinse-spins in the Real World we've really very little to judge them by, other than ethics.

Simple theories can produce real-time concrete feedback from which we learn quickly - children building block towers don't have to wait to find out whether their positioning of the next block is just right or just wrong.

But most of what we do as adults doesn't bring real-time feedback at all. The greater the impact of the decision the more likely its consequences will only be visible shortly before, or even after, our deaths.

What I find astounding is how dramatically our judgement, our felt-truth about whether something, or even someone, is good or bad, can change - without them making any new decisions. The city dealers and heads of our banks who until a few months ago were generally considered to be entitled to their fat salaries on account of the huge profits they were producing suddenly appear to be greedy, ignorant and foolish. They haven't done anything different or new, and if there was a 'tipping point' then it was simply the first visible crack which led us to look more closely at the real state of their affairs.

It has also become clear that while they were happy to personally make vast sums of money on profitable deals they were not prepared to lose vast sums of money when they didn't come up trumps.

I have no doubt that mums and dads of people high up in the banking industry felt proud of what their kids had achieved. Would you want to tell your neighbour your child was a stockbroker today?

To me, the most intriguing aspect of what the washing machine has spun for us recently is that 'we', in our hundreds of millions, could not bring ourselves to do the simple addition that revealed the house of cards before.

I am not unsympathetic at all to those whose jobs and homes are lost or in jeopardy, but home ownership and investment in business had become some sort of bizarre pyramid sales scheme in which most people were hoping for their slice of free pie, without really recognising the nonsense of it. They were prepared to be winners without really acknowledging that such gains require a balancing loss and the creation of losers too.

Looking around the UK today I think we're all losers - we've pumped our housing market up to a level where the only practical option for most families is for both parents to work full time. I have no concept of how single parents begin to approach buying a modest family home with a small garden. Never mind the social change of women in the workplace, the economic truth is that looking after our own children, whatever the gender of the carer, has become unrealistic. But don't worry, we've all made 100k of pretend money which we can't unlock without going back to renting or moving into a caravan.

And who has really profited, while houseprices spiralled and mortgages grew larger and larger? Oh - the same estate agents and bankers who kept forecasting houseprice growth! Goodness, what a co-incidence. I don't suppose they had any selfish interest in selling that concept did they?

What if the value of our homes was actually about right ten years ago? What if we agreed en masse that ethically a home should be a place to raise a family, live a life, be a citizen, not a financial investment? What if, in order to have a generation of children who can grow up with values about kinship, we had to not just sit back and watch house prices trickle down but actively engage in a discussion about what a home should cost in the UK such that an average family can afford to have at least one adult raise those kids?  What if we held our banking industry to account for their part in house price hysteria and instead of just bailing them out with cash directly, we provided that fluidity to them by paying off a chunk - proportionate to the disparity between the perceived value at sale and the ethical value we agree on - of every mortgage taken out in the last decade?  I don't have a mortgage... but I'd still vote for that to happen.

The truth of the concrete world is that we can only add value by adding value. Industries which don't add value can only ever be sustainable by taking a reasonable charge for the convenience of service, allowing those who add value to get on with adding value even more efficiently. Stockbrokers don't add value. Mortgage brokers don't add value. Estate agents don't add value. They are middle men, no different and somewhat less honest than folk selling fruit on a market stall. The idea that they should be rewarded for this as if they were brilliant surgeons, engineers, inventors or scientists - simply because their lemons are more expensive - is one of the capitalist felt-truths which I hope this washing machine cycle has scrubbed away.


Glory von Hathor said...

I may have to come back and read this again later.

I got up to the house of carbs, before realising I haven't eaten dinner.

Kahless said...


sheepish said...

Very well put. We have been saying for some years that "IT" couldn't last. Borrowing to pay off borrowing, unsustainably high mortgage lending etc. And we all end up paying and for a very long time too. But will the lessons be learnt, we can but hope!!!