Pope Francis likes to talk about how we have created an “economy of exclusion.” For example, in his apostolic exhortation Evangelii Gaudium, Pope Francis wrote, “Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘thou shalt not’ to an economy of exclusion.” Interestingly, when Pope Francis raises this question, he is accused of being anti-capitalist or anti-free market.
He has invited dialogue; therefore, supporters of a free economy should respond. An economy of exclusion is something that we should find unacceptable. But do markets exclude people, or are people excluded from markets? Perhaps the public needs to consider that the remedy is an extension of markets. People can be excluded from markets because of disorder, civil conflict, and war. But often people are excluded from markets because of government – sometimes in league with business interests or other self-interested groups operating through the democratic system.
There is no country in the world where exclusion from markets is not a problem, at least to some extent. Whether it be the crony capitalist economies that are characteristic of many low- and middle-income countries or the dysfunctional labour markets in much of southern Europe, it is the least-well-off who suffer.
In Britain, there is a specific, serious problem of this kind which has a huge impact on the living standards of the poor. The land-use planning system ensures that the better-off can use their influence to prevent houses being built.
The system by which it is decided whether land can be used for housing or business development in Britain has been entirely controlled by the state since 1947. Huge swaths of land are designated “green belt” on which development is not permitted. In most other areas, it is extremely difficult to build houses.
The result of this is a chronic shortage of houses. The UK also has amongst the smallest dwellings in Europe. (See Morgan and Cruickshank, Quantifying the extent of space shortages: English dwellings, Building Research & Information, 2014, 42:6, 710-724.) Furthermore, the housing stock is of poor quality, with many people living in an accommodation that is inadequate by modern standards.
A shortage of supply, of course, leads to high prices. The UK, together with Australia, is an outlier when it comes to the problem of high housing costs, and it is a problem driven entirely by the government creating an “economy of exclusion.” This situation, it should be noted, is not a natural consequence of the UK’s relatively high population density. If the regions of Switzerland, Belgium, Germany, Holland, and the UK are ranked by their density (excluding single conurbations), no UK region appears in the top 10. Indeed, less than five per cent of the southeast of England comprises buildings or transport infrastructure. (The problem of housing costs is greatest in the southeast. However, the southeast is less densely built on than the West Midlands and in Surrey - one of the most expensive areas for housing - more land is used for golf courses than housing.)