Housing absolutism limited by Prime Ministerial corruption

It was said of King Louis’s pre-Revolutionary France that it was history’s greatest example of absolutism limited only by corruption—that is, absolute rule limited only by the favours serfs could extract from the petty chisellers around Louis’s court—the absolutism chaining up and emasculating the people; the corruption being the only thing allowing them to breathe.

A story involving a Prime Minister, a series of developers, some local town planners and several large paper bags full of money suggests modern Ireland could well provide one of history’s second great examples—and a model lesson from which our own students of central planning could learn.

You see, in the “boom” period of the former Irish Tiger, the boom was largely based on gobs of borrowing being poured into great gobs of house buying—raising house prices in the few places town planners allowed houses to be built until those houses eventually became unaffordable.  This situation was the same virtually all around the world, but in Ireland (for many reasons both good and very, very bad) it was taken to extremes. So much so that

the country's real estate market…, prior to the Recession, was among the fastest growing in the world.  Here is a graph showing what happened to real estate prices in Ireland over the past 20 years:

Here we thought that America's housing market readjustment was bad!  Ireland experienced the largest property price increase among Europe and North American countries with values quadrupling over the period between 1997 and the peak in 2007.

Now, naturally, this being Ireland, former Taioseach (Prime Minister) Bertie Ahern (who was at this time the darling of his party but who now faces expulsion from it) wanted in on this deluge of apparent riches—so he adopted the time-honoured method of mayors, councillors, town planners and politicians through the ages:  in simple terms he had land around the tightly zoned city of Dublin held off the market by his town planners by having it zoned for anything other than housing, land which he released only after those paper bags full of cash came his way from developers.*

The payments, which are rumoured to be in the hundreds-of-thousands, finally came to light during a 15-year inquiry concluding Ahern “failed to truthfully account” for all the money washing through his bank account when he was Prime Minister. “Much of the explanation provided by Mr Ahern,” drily concluded the Tribunal, “was deemed by the tribunal to be untrue.”

Perhaps the moral of this story is not the obvious one. Sure, the former Taioseach is a lying, thieving toe-rag—but which politician isn’t?   The fact is that politicians should not be in any position to grant favours like this, because they should not have the power to withdraw the rights of land-owners in the first place.

And even more: since Dublin is still ranked by Demographia as being Seriously Unaffordable, fully four years after Ireland’s boom has turned to bust—and since this is almost wholly attributable to mostly due to the unnecessary, politically inflated constraints put on land supply by planners and politicians—it’s just a bloody shame the amount Ahern was taking wasn’t in the millions. Because only then might enough land have been rezoned to help make housing in Dublin affordable again.**

Such is the way things work in a system of absolutism limited only by corruption.

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* Don’t think NZ is immune to corruption like this. Ask yourself how town planners decide how fringe land around our major cities eventually gets rezoned—or how the land on which so many of Henderson’s car yards were first built were first re-zoned to allow it. And if you answered “by a rational analysis taking into account the interests of all stakeholders” then it seems you’ve learned nothing at all by being a regular reader of this blog.

** And if you don’t see lessons here for our local situation, then you really haven’t learned anything at all from being a regular reader here.