‘Affordable’ – a case study in the use and misuse of language
At least this gives us an insight into Piketty’s thinking, however. But what are we supposed to do when words or phrases are given an entirely different meaning from their conventional definitions in order to subliminally promote a particular political objective?
Consider the term ‘affordable’. To ‘afford’ something in an economic sense is to have enough resources or money to pay for something. It reflects the purchase of a good being inside my budget line. I can afford to go to football matches or cricket matches. Quite a lot of people could afford to go on a holiday to New York but would choose not to because of the sacrifice of other things that are necessary. Most people, however, cannot afford to buy a luxury apartment in New York – it is beyond their budget line: though some of course can.
But this term, affordable, is often used very differently in certain public policy debates. In his book What Money Can’t Buy, for example, Michael Sandel suggests that ticket touting is unfair because ‘people of modest means…can’t afford to pay $150’ for tickets to events. As Deirdre McCloskey has outlined, what he really means here is not that most people cannot afford $150 – which is well inside most people’s budget constraints – but rather that it would be more difficult for them to afford it than it would be for somebody who was wealthier.
When people talk about something being ‘affordable’ in public debates, they do not seem to mean ‘affordable to anyone’ – that some people would be placed to be able to purchase something – but actually ‘affordable to everyone’, that things are so cheap that we are all able to buy them without having to forgo much else. And it’s this definition – this perceived ‘right’ to access cheap stuff, which leads inevitably to ‘affordable’ in public policy debates meaning ‘subsidised by taxpayers’.
Consider the term ‘affordable housing’. The cost of housing is a real problem in the UK as far as a large proportion of the population is concerned. This can be seen from the growing ratios of house prices to incomes which are higher here than many other countries or even in the UK historically. Demographia (2014) shows for example that only two regions of the UK (Belfast and Falkirk) have house price to median income multiples of between 3.1 and 4 – regarded as ‘moderately unaffordable’. The rest are above 4 – with certain areas such as London, Dorset and Devon with median multiples above 7. For many people, then, homes in these areas are outside of their budget constraints. They are unaffordable. Clearly, though, the houses are affordable to others. No builder would build an unaffordable house.
However, the term ‘affordable housing’ is instead used as a synonym for ‘social housing’. This itself is a phrase that has had its meaning changed as part of attempts to change the political debate (what is a non-social house exactly?). What people really mean is either subsidised housing or, possibly but more rarely, simply cheap but unsubsidised housing.
A lack of ‘affordable housing’ is thus nothing really to do with affordability, but refers to the availability of state-subsidised tenure. This is an important distinction because the policy implications of being in favour of more affordable housing in a broad sense differs from the policy implications of being in favour of cheaper housing for particular groups. A policy of making housing more affordable to more people might involve making more land available for development. A policy in favour of what commentators describe as ‘affordable housing’ may actually lead to housing being less affordable to others. Subsidies for housing increase the demand for housing and, for a given supply, will raise the price of unsubsidised housing. This is the case whether the subsidies are explicit or involve requiring a certain number of houses in a development to be affordable.
Similarly, discussion of ‘affordable childcare’ follows a similar pattern. One could attempt to make childcare broadly more affordable by pledging to reverse the formal regulatory system imposed on home-childminders over the past decade or so. But if your aim is really to subsidise childcare for certain groups, then this can increase the total cost and reduce take-home pay for other families, even if the private costs for some families who are able to use subsidised childcare are reduced.
Other examples include President Obama’s decision to call his signature healthcare legislation the ‘Affordable Care Act’. The Affordable Care Act should really be described as the ‘Subsidised Care Act’. It makes care more expensive for some and less expensive for others. The Act makes no real attempt to deal with the underlying problems that have caused the cost of healthcare to rise in the US.
This problem is an extension of the tendency identified many times by Hayek for socialists to redefine words in order to enhance the perceived credibility of their arguments. In this regard, a good test of whether a word is meaningful in a particular context is to ask whether its opposite is meaningful. For example:
Socialists and interventionists often describe themselves as ‘progressive’. Yet would any party believe in regressing? Progressive is simply used as a synonym for the state taking more income from people in the form of tax and regulating people’s lives to a greater extent.
Likewise, the Blair government was very much in favour of an ‘integrated transport policy’. Yet is anybody in favour of ‘unintegrated’ or disintegrated transport? The key question, of course is whether the provision of a service is best integrated by the market or by a central planner in Whitehall.
The word ‘affordable’, for similar reasons, should be consigned to the political lexicon dustbin. Nobody is in favour of unaffordable housing; nobody wishes to build unaffordable homes; but not everything will be affordable to everybody. Thus we need a proper debate about whether we should subsidise housing, or allow more housing to be built. We’d all benefit from policy ideas being defined explicitly and debated without trying to redefine the English language.