Housing and homelessness are rightly in the spotlight following the budget. The twin issues are undoubtedly amongst the gravest threats that Irish society faces. House prices and rents are skyrocketing across the country and are becoming unaffordable for many people. Officially, there are about 10,000 people, many of them children, who do not have a home although figures do not reflect the full extent of homelessness. It is probable that people will die this winter, as they have done in previous years, for lack of shelter. It is a catastrophic situation and a terrible reflection of the state of a country that the IMF reckons is the 5th richest in the world. One might have been forgiven, then, for expecting that Budget 2019 would have included substantial measures to solve the crisis. The government could have announced a massive capital investment in a nationwide housebuilding program or perhaps implemented a tax on vacant properties. Surely, things are bad enough that it’s well past the time to get serious and actually take concrete action to tackle the housing situation.

Predictably, this did not happen. There was extra money for the housing budget (around 6,000 new homes will be built) and more funding for homeless services but the increases will do little to improve the overall picture of a housing crisis that is out of control. On the other hand, thousands of landlords will benefit from new tax breaks, so that’s nice. The fellow I voted for last time around, Independent TD Thomas Pringle, summed it up well, stating that Fine Gael “once again seeks to prioritise landlords over tenants, developers over social housing, the wealthy over low-income earners, multinationals over public services and private sector interests over individuals”.

A common explanation given for the lack of government action on housing is that the ruling party of Fine Gael and the pretend-opposition party Fianna Fáil are ideologically committed to having the private market provide the solutions to societal problems. This is the dogma of most governments around the world and is usually referred to as neoliberalism, and basically equates to a belief that government=bad, free-market=good. The government should avoid intervening too much in the economy, neoliberalism holds, as the free market will do a much better job of providing what people need. One would think, after a decade in which we witnessed the free-market collapse only to be saved by massive government intervention, that these ideas would be thoroughly discredited amongst our rulers. Unfortunately, neoliberal beliefs persist. Perhaps our leaders are not quite right in the head. Or maybe it’s got something to do with class and protecting the wealth of a greedy and selfish elite. Who knows?

Anyway, this is one obvious reason why the government response to the housing crisis is once again so derisory. However, if we delve a little deeper we find other reasons and I’m sorry to say it, but these reasons cannot be overcome by simply winning the ideological battle and evicting from government the parties of neoliberalism. The problems that might prevent the proper resolution of the housing crisis relate to the international financial economy, Ireland’s place within it, and the massive level of debt that the Irish state owes.

As a legacy of the massive bank bailouts that were inflicted on Ireland by our own leaders and by the EU, our country’s government owes over €200 billion, or about €42,000 per citizen. Payments on interest alone amount to €5 billion per year (compare that to the €146 million budgeted for homeless services!). Those interest payments might be a lot higher if the Irish government hadn’t been such good sports in the eyes of financial markets and brutally slashed public spending over several years whilst not once seeking any write-down of what might well be considered an odious debt. That our government has the confidence of financial markets allows us to borrow more money (a lot of which will be used to repay our crazily high levels of debt) at interest rates that we can afford. But retaining that confidence means that we can’t spend too much money on frivolous luxuries such as healthcare or housing because if we did, investors might get spooked and question our ability to continue repaying our debts. They would then demand a higher interest rate on new borrowings and, well, this in turn would make it harder to repay our debts, which would spook investors…and so on and so on until all the investors are spooked and we need another bailout to make sure we can repay all those poor scaredy-fat-cats in Wall Street.

Ireland’s high debt thus explains in part why the government are so reticent when it comes to spending the money needed to fix our broken health system or construct the houses that the market won’t build. Theoretically, however, it should be possible to substantially increase spending on things like healthcare or perhaps a new railway line linking Letterkenny with Milford. If the government raises extra taxes and then spends the money on cool things like not having 90-year olds dying in hospital corridors, this shouldn’t really affect our ability to repay our debts. This should definitely happen and the fact that it doesn’t reflects the neoliberal views of the two main political parties.

Unfortunately, things are a little more complicated when it comes to housing. You see, Ireland does not really have a shortage of housing. It has a shortage of housing available on the market to rent or buy. There are by some estimates 95,000 properties vacant across the country and many of these will remain vacant for some time. Basic economics tells us if supply outstrips demand, prices rise. Therefore, if all these properties are not on the market, supply is constricted and rents and house prices become more and more expensive for ordinary people. The results are annual rises in homelessness and absurd advertisements such as this opportunity to share a bed with some fellow in Dublin for only €500 per month.

One reason why there are so many vacant properties in Ireland is that in the wake of the financial crisis vulture funds bought up a lot of the housing stock at extremely low prices. A vulture fund is “a fund which invests in companies or properties which are performing poorly and may therefore be undervalued”. They make their money by holding on to these assets until the price rises to an extent that their insatiable thirst for profit might be quenched by selling the asset. In the meantime, since they don’t want to bear the administrative costs of being landlords, they have been evicting people out of their “assets” and onto the streets.

How the vulture funds came to occupy such a position in our housing markets is a sad tale of corruption and of political and economic leaders selling out the interests of ordinary people to an international financial elite. I won’t go into it now. The important thing is that “we are where we are”, as Fianna Fáil used to say whilst fucking us over.

The problem is that any attempt to massively increase the supply of housing stock is going to hit the investments that these funds have made (if supply goes up, house prices go down). And any attempt to introduce a tax on vacant properties would be similarly disastrous for a group whose whole modus operandi is to leave houses vacant whilst prices are rising.

So what? Fuck ‘em, one might urge, they won’t go hungry. The issue, however, is that they are by and large the same class of people, and in many cases likely the same individuals, who own the debt that Ireland has issued. And if they get pissed off, they can punish us. “I see”, a fat cat might remark to himself between slugging flutes of champagne and hoofing lines of cocaine, “now that my best-bud Michael Noonan has left the building these Irish are not so kind to me and my friends, let’s see how they like a bit of fiscal crisis!” This jackal, and his fat-cat-vulture-jackal friends, might then go about attempting to sell all those bonds that the Irish government issued, sending a signal to the markets that now might be a good time to offload Irish bonds, particularly since the Irish government no longer seem so conducive to protecting the interests of international finance.

As the Irish bonds flood the market, the cost of borrowing would rise for the government and the result might well be a fiscal crisis akin to what happened during the last recession. New rounds of austerity would follow and there would be a decisive end to the nascent, albeit lopsided, economic recovery that Ireland has been experiencing. Solving the housing crisis means taking some serious risks.

Is this likely to happen? Not with Fine Gael or Fianna Fáil in power. As noted, they are ideologically opposed to a government-led solution to the crisis anyway. I would also imagine that the Department of Finance are finely attuned to the risks of upsetting global financial investors and would reign in the more clientelist tendencies that might tempt the centre-right parties to try some meaningful solutions to the crisis. The real problem, to think hypothetically, arises if after a year or so of protests on housing a new government assumes power and sets out to implement some of the policies that the left have been advocating. The scenario where investors start dumping bonds might become a reality and the new government could soon find itself in serious difficulty. Indeed, financial speculators would jump at the opportunity to demonstrate to the world that a genuine left-wing government would prove disastrous.

What’s to be done then? The way I see it, unless there is the sudden and unexpected revolutionary overthrow of capitalism across multiple nations, we as a society have two main options. The first is that we accept our straitjacket; that we continue with piecemeal market-oriented reforms combined with as much palliative action on homelessness as we can muster, all the while hoping that inflation and economic growth will in time lessen the burden of debt on the state. Perhaps, in five, ten or fifteen years (or twenty or thirty) the problem of housing our citizens becomes more manageable. The downside of this approach is that we will have had a whole generation that largely misses out on the benefits of having secure and affordable housing. This scenario, which is the current track we’re on, means we are not really a democracy any more. We are what sociologist Wolfgang Streeck refers to as a “consolidation state” which is a state “whose commercial market obligations take precedence over its political citizenship obligations”. On the plus side, we will have pleased our financial masters and would have thus avoided the fiscal meltdown that upsetting them risks. Of course, if the global economy crashes again that fiscal meltdown becomes likely once more, no matter how much bootlicking we do.

The other option is that we attempt to solve the crisis through taxing wealth and using the proceeds to build houses. Combine this with taxes on vacant properties and rent controls, and the housing crisis could be brought under control. Homelessness would go down and a lot more people would have decent, affordable housing. That sounds great but the risk inherent in such an approach is that our spurned vulture fund friends might engineer a situation whereby the fiscal sustainability of the state is once more jeopardised—severe austerity and recession follows, and the government is in any case no longer capable of solving the housing crisis since it hasn’t two pennies to rub together anymore. In fact, a whole range of other problems (health, lack of trains in Donegal, etc.) would be exacerbated.

Our massive debt means international financial markets have the ability to engineer this situation with relative ease and on the balance of probability would likely do so in the event of even a moderate left-wing government attempting serious state-led solutions to the housing crisis.

So there you have it: damned if you do, damned if you don’t. It’s up to you, would you rather be deaf or blind?