Thursday, September 16

What sinks us

In a country that lags behind Europe in access to housing, the alarming headlines are linked to timid price drops and stimulants, to anticipated increases. The returns achieved by renting a home in Spain are more than double the profitability obtained by the IBEX 35 and multiplied by 13 that offered by the 10-year government bonds. Madrid and Catalonia offer less profitability than the Spanish average, but “they are reliable values” and “the main epicenters for investment”, it is also where funds and Socimi have a greater presence, well above the Spanish average, which is related to that the rental cost is 82% higher than the average in other urban areas. Like the currency, housing has two sides, on the one hand, it is a basic need to live and on the other a market good in which to invest. The more unbalanced the balance is in favor of the market good, the more difficult it is to live in it.

While in 2008 spending related to housing in Spain accounted for 27% of total annual spending, in 2020 it was already 35 out of 100 euros (INE). But not only does spending on housing increase, the distance between the increase in house prices and the rise in wages has also increased: in the last 35 years the price of housing has grown by 659% while salaries 291% have done so. This increase in the budget for housing leads to a reduction in consumption in other sectors of the economy, so much so that even the OECD warns that high house prices are hampering the recovery.

In other words, the weight that rentism has on the Spanish economy is an unproductive burden that harms the entire country: the more money goes to rent, the less money circulates elsewhere and the less money remains in the pocket. Not only does it limit the disposable income of citizens by curtailing their freedom of choice, it not only harms other sectors, it also discourages investment in sectors that promote a productive model that generates more wealth, improves quality of life and reduces climate impact. Second, the excessive weight of rentism that absorbs money in its dead hands limits job creation. According to the calculations of the economist Carlos Martín Urriza, director of the CCOO’s economic cabinet, the over-effort in the payment of housing rents is 3,912 million euros per year, which prevents an increase in occupation by 20,000 jobs.

So, if it discourages investment in sectors that create more wealth, if it reduces consumption in other sectors, if it reduces the disposable income of citizens, if it prevents job creation, if it causes bubbles, pain and evictions, if construction groups e Real estate agents are among those that pay the least in corporate tax with an effective rate on profits of 2.7%, how is it possible that rentiers enjoy such good health in our country? Because it is a very powerful sector that has large speakers, true, but that is not a sufficient explanation, nor is it to say that “people are deceived”. These are arguments that solve everything by alluding to absolute power and blaming people for living alienated, but they give up understanding that in all this there is a rationality and a logic that keeps a sense.

The core problem that plagues the Spanish economy is housing, but it is also the main source of wealth in Spain. Housing is a social and economic issue, but above all it is what best encapsulates the Spanish ethos, namely, the being and feeling of a country that, in our case, has its roots in the Francoist project. Precisely for this reason, because of its nuclear importance and because it has become a second skin, it is so difficult to politicize housing. It’s so embedded in common sense that it seems unquestionable, as if ending this dynamic is like ending well-being. Rentism is a State project whose objective was to create the ideal conditions for real estate developers to be able to transact with the property: “The Ministry has in its hands the most effective of resources: protective legislation, and it must use it to that all the houses that are built with state aid be built oriented towards the fastest and most efficient system of access to the property. ” (Arrese, minister of housing in 1959) The State as guarantor of the benefit and not of the right to housing.

Spain is a European anomaly that allocated public money to housing with the aim of privatizing it, which is why our public housing stock is so meager. It is based on the generalization of an idea that is realized as a self-fulfilling prophecy: everyone wants the value of homes to rise, also those who only own – or with a mortgage – their main home, because if they wanted to sell it in the future they would want to do it for more money than it cost them in their day; if the price increases, your wealth increases. The truth is that this rise in prices, which you think will benefit you in the future, also negatively affects you when it comes to renting and buying a home in the present because you have to allocate more money.

But the heirs also want the prices of those flats to rise since, added to the low birth rate where less must be distributed and the uncertainty about the future, a large part of the hopes of income and future security goes through inheriting the family property and to be able to sell it for a higher price than it allows, either to pay his own outstanding mortgage or to move his own residence to the inherited home. In this way, it is easy to understand how the interest of the real estate sector is assembled with that of a part of the population and the support against inheritance tax, also among those who are not affected by it, but aspire to see each other one day in the situation in which they would be harmed. Housing has become the proto-welfare state in our country, the only cushion that will save you, but it does so on the basis of weighing down the productive development of the country, widening inequality, expelling people and crushing conditions of life.

It is a matter of locating security and the role of the State, deciding whether it resides in the speculative brick and institutions intervene with a private purpose, or if security is located in welfare policies with a public purpose. The model, which fits like a puzzle with infrastructure and tourism, laminates the personal, social and productive development of the new generations, stagnating the country in sectors of low wages and precariousness, causing in turn a loss of the educated population that emigrates to other countries with the economic cost that this entails. We continue to be immersed in a productive and cultural trap that prevents the development of the welfare state and impoverishes us, but which, in turn, is presented as the only truly existing security. Moreover, the destruction of the public, understood as synonymous with well-being and its reconversion into charity for the poor, only reinforces this same belief and removes another possibility of the country.

The Franco regime put the State to work for the real estate sector seeking to sell its products so that people could become owners, then the bank loan did it, which allowed a lot of housing to be sold at high prices and generated the bubble that we have all assumed. Now, in the midst of the crisis dragged on since 2008, the State is once again presented as the actor that supports the triangle that stagnates Spain: ensuring sales at high prices among low-income people. The structural situation is always the same, how to intervene in a scenario where the priority is to build and sell high in a context of low wages, since you do not want to change the latter? With the State subsidizing rentism and with a regressive social protection model where 30% of public transfers go to the richest quintile of the population, while the poorest quintile receives only 12%.

Now we read that real estate developers ask the Government for guarantees of more than 11,000 million euros to “unblock mortgages to young people.” In all its historical versions, the point is for the State to keep the party private, in this case ex ante and no, as has happened since 2008, post festum– The aim is for all of us to be guarantors to keep home prices high along with guaranteed sales in an environment of insolvent demand. Let the State be the one that makes a demand that nothing in labor and wage instability solvent solvent, instead of using the State to modify the endemic situation of vital and labor insecurity. That the State is the guarantor of endorsing the real estate business entails two major problems, the first is the underdevelopment of the welfare system and, linked to this, the waste of huge amounts of public money that, instead of being invested in modifying the productive structure , in social rights and in expanding the public housing stock, it falls down the unproductive drain that subsidizes rentism.

This model is a limit for democracy and a hindrance to the economy: living captive of the brick slows us down because it discourages investment in more productive, more sustainable and wealth-generating sectors, such as the green economy, mobility or energy rehabilitation . It also limits citizens’ freedom of choice and action: instead of creating a public housing system, they preferred to privatize public housing. Access to a basic basic good, such as housing, cannot be left at the mercy of rulers who use political power to free the market and hijack democracy. For freedom to be worthy of the name, public institutions have to guarantee its exercise to the entire population, and that goes through access to affordable and safe housing; a country with low prices and high wages is better than one with high prices and low wages.

We need a more powerful rationale than the current one, one that connects living better, more effectively and safely with social rights, public services, generating more wealth, reducing climate impact and working less. The right to live well, understood as a premise and not as a promise, implies that the general good is considered in one’s own interest. It is the simple difficult to do.

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