Finance sector Keynesianism.

It was claimed recently by a senior research fellow at Harvard University's John F. Kennedy School of Government, on purely ideological grounds, that, "Despite popular but ill-informed claims to the contrary, the slow-burning crisis in housing prices really is at the end of the day about an insufficient supply to meet demand," the implication being that building massive amounts of "market rate" housing will reduce housing prices.

This argument assumes that building dwellings whose price is not limited by the cost of constructing them is the only way a population can house itself.

But history, including Canadian history, demonstrates this is not the case. The record is too extensive to repeat here, but interested parties should begin by reading a Sept. 3, 2019, New Statesman article, "Inside the Vienna model of social housing" and Greg Suttor's 2016 book "Still Renovating: A History of Canadian Social Housing Policy."

Free market fundamentalists ignore the monopoly pricing power of real estate holding companies that control thousands of units by accumulating houses and apartment buildings small holders sell upon retirement, creditors holding foreclosed properties unload, or asset managers trade, as well as the fact that very wealthy holders leverage single- and multi-household dwellings as sources of liquidity.

The markets that determine housing prices are asset markets, especially derivatives markets, where large amounts of money chase rents (unearned income). On-the-ground, physical people pay for this asset-price inflation as the dwellings they inhabit become more expensive beneath their feet.

The euphemistically-phrased claim that, "The post-financial crisis era of ultra-low interest rates turbocharged demand for housing, and supply failed to adequately respond," overlooks the fact that government reduced interest rates effectively to zero and transferred trillions in worthless securities to its balance sheet – rather than to mark its victims' odious, fraudulently inflated debts to market – precisely to keep the finance sector's demand for housing assets arbitrarily from collapsing, a perverse stimulus exercise in what one might call "Finance sector Keynesianism."

By their own admission, as reported in a Nov. 29, 2012, Western Investor article, "Developers aim small to score big," for-profit housing developers cannot build affordable housing. There is not room to reprint it here. It is online.

All of this matters for one simple reason: BC's government is ramming through a massive "market rate" housing construction program that not only will not reduce housing prices, but will fuel unrestrained housing price inflation into the unforeseeable future.