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When governments burn the future to save the past they do it with housing
In the United States, there is a clear age gradient for voting: the young vote for the left, the old vote for the right. This is partly due to changing racial composition, but not entirely. Young whites are much more likely to vote Democrat than Republican. But in Canada, this is not the case. Here, there is almost no age gradient at all in vote intentions.
A standard model for politics is a combination of (1) people’s opinions on social issues settle fairly early in life and as Cthulhu swims leftward their views end up further and further right, and (2) as people age they become more economically secure and less and less likely to benefit from redistribution.
Canada violates this model for a few reasons. Our welfare state – which spends lavishly on the old – is the lynchpin of our nationalism: “We aren’t like those damn Americans” the Boomers cry as they hold on to their OHIP cards and wait for 8 hours in an emergency room. What it means to be a Canadian these days is to support large government and this keeps the old attached to the left. The right in Canada is also pretty neutral (neutered?) on social issues so issue #1 above is not that important – at least until abortion trots out during the election.
However, this has all be throat-clearing for my actual point. Canada now has a special issue which creates cross-cutting electoral incentives by age: housing. For decades one of Canada’s selling points has been that it’s a peaceful, moderate place that is cheap to live. That has been completely destroyed over the past decade under the leadership of the Liberal Party. The Liberals are the party of the status quo and don’t see it as a problem that prices are high. Just yesterday, Prime Minister Trudeau gave an interview where he said: “Housing needs to retain its value. It’s a huge part of people’s potential retirement and future and nest egg. So yes, we need to keep housing stable and valuable”. On the policy front and despite high interest rates, the government is letting people pull money out of RRSPs (equivalent of 401ks) for downpayments, instructing the Bank of Canada (equivalent of the Fed) to buy mortgage-backed securities to make borrowing cheaper, and creating new tax vehicles for home buyers. Despite promising to lower net migration, the stats show that a record 400,000 people arrived in the first three months of 2024.
In other words, the Canadian left (the lefty NDP party is in coalition with the Liberals) is spending more and more tax money to prop up home equity and price its young people out of homes on purpose. In Canada the institutional left sees its role as protecting middle class wealth. High house prices have existed in our big cities for decades and prompted a steady stream of Canadian outmigration to cheaper places. Cities kept growing because of replacement immigration. In 2020 however due to the pandemic and a surge of workers and student immigration to rural areas, unaffordability has spread nationwide and now literally nowhere is spared. Houses in small towns hours away from major cities generally cost over $400k. This has caused a deep well of anger and despair among the young. It shows up in polling to some extent, but anecdotally: one of my friends just moved to Colombia to become a remote worker … because of housing, another one abandoned trying to get pregnant … because of housing. A friend circle I’m near to is fracturing because half of it inherited homes and the other half will rent forever, and that fact is too corrosive to the friendships. Its just too hard to watch your kids grow up in an apartment you can barely afford while your friends live in a better neighbourhood and go on vacations.
In a normal society, housing is not a politically important issue. Its just a good like any other. But if house prices rise as they have here, your society has made a Faustian bargain. The older generation become millionaires despite barely saving, but it comes at an enormous cost. Social cohesion frays, more and more GDP gets paid to parasites realtors, high land costs mean new building also consumes more and more GDP, without the basics covered young people wont start businesses, cost of living soars for the poor and young, governments face pressure to both get new buyers into homes and preserve home values which means wasting money and mass immigration, etc. And the lucky ones who see their asset prices rise? They aren’t always better off either! Most will see their kids move far away or borrow against their homes to give their kids downpayments. Housing in a world like this is a special issue because it is truly zero-sum: one person's cost of living is another person's asset. Depending who you are, you want prices to be higher or lower. This is a nightmare for governments because there is no easy third option: your policies will inevitably hurt one group or another on the single most important factor for their financial health.
In short, it’s a disaster. Given how far its gone, there is no way for normalcy to return with economic growth (it would take decades for real incomes to rise sufficiently) so there are only three end games: (1) Canada becomes like Southern England or San Francisco, a dual society of property owners and proles, (2) inflation re-ignites and incomes rise enough in nominal terms to re-establish affordability, or (3) the crash and ensuing recession. I don't know which of the three is my prior or even which to root for. The new political consensus is for government to respond with overwhelming force to economic downturns and do what it takes to protect assets, especially housing assets. Political forces are arrayed in pursuit of outcome #1. Its possible that inflation is re-establishing a limiting principle for how much this will work in future, but it may not and we get scenario #2. There may also be a sui generis event or a conservative ideological policy mix after the next election that causes #3.
I don't think this is true. Housing will always be a politically important issue, and it should be. There are so many tensions pulling different ways. Old people want to keep value and pass it to their kids, young people want affordable housing (unless they are getting the inheritance!), what type of housing and how much is something people complain about all the time. Whether it is a neighbor complaining about a single house being built too tall or a community complaining about low-rent housing. 30 years ago half the complaints I was dealing with in a local authority in the Midlands in England were about housing one way or another.
It's impossible to satisfy all the competing demands at once, which means politics. Housing is not a good like any other because you can't pick it up and move it with you. It is tied to a locale and to a community. HOA's as much as people hate them form for a reason. Where we live, how much it costs and who gets to live next to us, is probably one of the fundamental bedrocks of politics, from HOA's to redlining and segregation, affordable housing NIMBY/YIMBY.
So I would say it can be both that Canada is a normal society, that housing is a politically important issue and that getting the balance of competing interests wrong can have a huge knock on effect onto society.
It's even more obvious if you move a step down from housing to land-ownership. Who owns the land has been a political question since Ur and Leviticus.
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I think it's fair to say that things become political issues when they are broken.
In Sweden, in 1990, I doubt crime was a political issue. Now it is.
There have been times when housing wasn't on anyone's political radar. Now it's one of the most important issues is many countries. That's because housing is broken now.
1991 was actually the first time when Sweden elected a right-wing populist party to the Riksdag, and at least according to Wikipedia, they "wanted to invest heavily in the fight against drug abuse and street violence, and impose severe penalties for what it called related "gangster activity." It wanted to implement harder punishments for violent crime, and life imprisonment for the most dangerous criminals", so there must have been something there.
That wasn't really why they were elected though, since it wasn't much if a salient issue. The overriding political issue was the extremely severe financial crisis and the financial mismanagement by the social democrats, not anything else.
They were elected as combination of being a protest party, general (rightwing) economic populism and anti-immigration.
That said, there were definitely problems with crime and the great Nordic biker war started in '94.
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