The Left ties itself into knots over the issue of market choice, mostly because the Right have hijacked the idea that only in the market can you have choice, a choice that can only be provided by the private sector. These knots are not just academic. In Britain we see the New Labour Government and their progressive critics locked in an increasingly bitter dispute about choice in the NHS and public services as a whole. Without commenting on the particulars of that debate, it is certainly the case that there is much confusion over the political concepts of ‘markets’ and ‘choice’. If it can work through these problems, the Left could eventually become the champions of both.
Leaving aside the important, but theoretical questions of the market, let’s start with a simple assertion: any process that involves allocation of resources is, or has the characteristics of, a market (I accept that this assertion alone would be worthy of many and lengthy disputations). So using this assertion, let’s look at one ‘choice’ that a few fortunate people are able to avail of in the housing market.
Threshold operates a highly successful housing programme in Gilabbey Court in Cork. The scheme assists prospective first-time buyers by providing them with quality rental accommodation while actively assisting them to save for home purchase.
A major problem for families in the rental market is obtaining quality accommodation. Such housing is costly and they may have to sacrifice their ability to save for home-ownership. Therefore, many are forced to live in cheaper, sub-standard accommodation in order to save. The vicious circle is, though, that cheaper housing may still limit their ability to save (increased heating costs, for example, in poorly insulated rooms). If they try to purchase a home it may be with crippling mortgage costs or in out of the way places where they pile up transport-to-work-and-amenities costs. Everywhere they turn they face obstacles. And part of the reason is the lack of choice.
At Gilabbey Court couples and families can rent quality and affordable accommodation for up to two years while saving for a home. Threshold works with tenants on budgeting, money management and various housing options. If tenants purchase a house on leaving the scheme they will get back half of all their rent paid in the form of a housing grant.
The scheme is highly successful: Ninety-nine percent of Gilabbey Court tenants succeed - Threshold has assisted nearly 70 couples and families to purchase a home of their own. A recent study showed that most participants stay at Gilabbey Court for the full two years. The average house purchase grant/rent rebate is €7,600 while the average deposit saved by tenants is €15,000. The typical price paid for a house in 2002 (most recent data) was €165,000. Successful tenants state that owning a home of their own would have been impossible without Threshold’s assistance.
This is not charity housing (which many might interpret as ‘for the poor’). Gilabbey Court comprises seven two-storey houses built around a private courtyard located right in Cork City. Each house is equipped with all the modern conveniences including central heating and outside storage shed. This is a long ways away from what passes as accommodation in much of the private sector.
Indeed, this type of housing option is not available on the ‘open’ market or provided by the local authority sector. It, thus, constitutes a new choice for tenants in the marketplace.
We have become fixated on the idea that the ‘market’ provides choice. In reality, the record is rather uneven. Certainly in the housing sector with an undeveloped rental sector; most people are forced to take their chances in the home-purchase market. It’s a case of making the best of what are, in practical terms, extremely limited options.
Markets do not automatically provide choice. They can just as easily contract into effective monopolies or oligopolies. There may simply be no choice because there is no profit, or potential providers are not familiar with the market opportunities. It may be that while an enterprise is successful, it could actually be more successful doing something else entirely (e.g. running a profitable shop, a successful pub or busy petrol station may still not be as lucrative as selling off the land to property developers – an option which entails a lot less work). There are any number of reasons why there are gaps in the market, gaps that have nothing to do with ‘oppressive’ government regulation or tax. Ignorance, risk-aversion, lack of capital or just plain laziness are factors to be taken into account.
Here is where a project like Threshold comes in. Goods and services purchased and consumed in the market can originate from a host of providers. In this case, a campaigning organisation. There is no reason why local authorities could not ‘enter the market’ using the same model. They could draw upon the experience of Threshold to set up similar schemes. Or they could contract out to a group like Threshold to do it for them. There may even be, in very controlled circumstances, a role for private investment. We are only limited by our ability to think creatively about market opportunities, once we get away from the misleading notion that markets and choices is something only the ‘private’ sector can do.
Gilabbey Court is not the solution to the housing market. But then, in the marketplace, there is no one solution. Solutions are as many and varied as the people and organisations that produce and consume. So whether that choice is offered by ‘private’, ‘public’, ‘social organisations’ or whatever, let’s break free from the desultory mindset that demands a pre-determined demarcation between the public and private sphere. For in truth, the more one examines all type of markets the more one sees that the distinction between those spheres become terribly blurred.
To paraphrase Mao Tse-Tung - let a hundred market choices bloom. For at the corner of St. Finbarrs Road and College Road in Cork, Threshold is showing us, in a small but verifiable way, how more choices can enrich peoples lives.