Why these crash programmes to build houses won't work

brickie.jpg

There's any number of plans out there to create massive housebuilding programmes. There's even that lovely Corbynite idea that the Bank of England should just print lots more money to pay for them: along with an insistence that this simply won't be inflationary. Nope, not at all. Because there's slack in the economy, you see? And yes, there is most certainly slack in the economy. But spraying money around and the inflationary effects of doing so does rather depend upon whether there's slack in that part of the economy that you're spraying money at:

Two-thirds of British building companies have had to turn down work because they do not have enough skilled tradesmen, according to a survey by the Federation of Master Builders. The trade body for construction firms said that 66pc of its members have had to refuse new business because of a lack of resources while almost half have been forced to outsource work. The bosses of some of Britain’s biggest housebuilding companies have spoken out this week about the shortage.

Thus the problem in housebuilding is more of a structural one than a short term financing one. Meaning that just spraying money at the sector will only raise wages of those in short supply to do the work. And that is, erm, inflationary, isn't it?

So perhaps it isn't a very bright idea to simply print more money to firehose into this sector then?

Previous
Previous

Expressive voting and the paradox of Corbyn

Next
Next

Victory for vaping