Photo by Craig Hastings

Parents, teach your children about supply and demand

Too often, young people are turkeys voting for Christmas

Artillery Row

Last week it was revealed that UK net migration hit a record high of 745,000 in 2022, having been previously underestimated by the Office for National Statistics to be 606,000.

The usual suspects — the right wing commentariat and Conservative MPs — were up in arms about the data. There was a silence from the people who will be most affected by these figures, however. That is, from young Brits.

Over the last few years, I can’t help thinking that, in addition to a housing crisis, we have a crisis of understanding amongst Gen Z and millennials. There is a refusal or inability to grasp supply and demand economics.

Nowhere is this more obvious than attitudes to housing, where immigration continues to exacerbate shortages. It’s estimated that we need four million more homes at least to alleviate the crisis, hardly something 745,000 new people a year helps with.

Still, even when whippersnappers are standing in queues with tens of others, or reading about record rent, they will rarely acknowledge demand as a driver of their woes. This is largely because it means talking about the “i word”: immigration.

Part of me thinks the silence is because politicians have socialised them into believing that talking about this makes them “racist” or “Far Right”. On less contentious issues you also see young people ignore the relationship between supply and demand, though.

Take Michael Gove’s Renters (Reform) Bill in February this year, which proposed to end Section 21 (no fault evictions), a cruel measure that means landlords can get rid of tenants at a second’s notice. When the ban was first announced, there was a sense of jubilation in the air. I don’t think it’s unfair to say that many young people think regulation, including rent controls, are the answer to housing sector woes.

Droves of young people continue to go to university, without good employment prospects

That’s until you look at figures from last year, which show an 38 per cent increase in evictions. It’s also estimated that 35,000 households will be evicted by the time the practice is banned in England. The simplest explanation is that landlords, dealing with growing mortgage costs, now see the market as too risky, and they are selling up ahead of the ban. Far from it being a good thing, meaning that young people suddenly have access to more homes for purchase, cash buyers are best placed to snap up the resulting properties.

When young people — the loud, noticeable ones at least — lobby for better housing conditions, they often focus their efforts on rent controls and red tape. They don’t seem to think that these measures might strangle supply further, or that they might be better focussing on controlling demand.

What’s strange is that young people understand supply and demand in more trivial contexts, such as when they are buying tickets to a Taylor Swift concert. They may complain about how many others were in the queue and bemoan being left empty handed. Somehow this logic goes completely out of the window when applied to the most meaningful parts of life.

Careers are another prime example. Despite it being well known that we have too many graduates for the number of graduate jobs, droves of young people continue to go to university, often choosing subjects that don’t have good employment prospects. Make no mistake: if a parent or teacher told their child not to bother doing an arts degree, due to the low employment prospects, and to pursue something with better economic returns, they would immediately become an oppressor of dreams and ambition. Conversely, the adult who tells them to “follow your heart” or “reach for the stars”, even if it leads to them stacking supermarket shelves, was an inspiring hero.

Even growing singledom amongst young people can be traced back to problems with understanding supply and demand. Both sexes, perhaps overinfluenced by Hollywood films and TV shows about hot young things, can sometimes overestimate the supply of whichever sex they are attracted to. Thus, they hold out for the “perfect” person, until ultimately missing the boat.

It’s not particularly exciting to see the world as a series of supply and demand equations. Life has lots of random elements, and that’s part of the fun. The pendulum has swung too far on misunderstanding supply, though, when no one can dare mention that almost a million people a year may not fit in a country with a four million backlog in homes.

Earlier this year the Prime Minister caused mass outrage by announcing plans for teenagers to study mathematics until the age of 18. The inability amongst youths to comprehend demand and supply may be the biggest argument for his policy yet.

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