The Implosion of the Retirement Contract

by Eric Schliesser on February 13, 2024

One structural source of weakness in contemporary liberal democracy is that it does not seem to be able to solve some important, even bread and butter, policy challenges.  That it does not do so with the threat that global warning involves is, while highly regrettable, no mystery. It’s very difficult for democracies to take non-existing voters’ needs seriously, especially when there are powerful lobbies who have an interest they don’t. But other sources of democratic disenchantment are more puzzling.

I have in mind, especially, the accessibility of housing in popular, urban environments relative to income of younger workers, especially. I call this the “accessibility problem.” People find themselves living with their parents or with many roommates for financial reasons long after they had expected to do so. This is true in most OECD countries (see here).+

For a long time I used to think this was caused primarily by a toxic combination of rent-control, restrictive zoning laws (and building codes), mortgage deductions, and easy money by central banks (which lead to asset price inflation): all of which reduce supply and increase price of housing as population grows. Perhaps, as our very own John Quiggin suggests, lack of investment in social housing, too. Undoubtedly all of these play a contributory role. But even in places where these causes are absent or less present the accessibility problem is a hot political issue.

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