Convergence or Path Dependence?

Another very general idea prevalent in comparative studies of all kinds is that of ‘convergence’, as mentioned in Chap. 1. This implies that different countries have different systems and policies because they were developed in isolation, in differing circumstances and political contexts, but that in the face of common challenges a common logic will drive them to adopt increasingly similar policies. Just as globalisation forces businesses to adopt similar technologies, products and methods to compete, by analogy globalisation also exposes national policy systems to both information to enable and pressures to adopt similar measures. So some of the literature on comparative housing systems is concerned with convergence as a theme. However, a companion concept in these literatures is that of ‘path dependence’, which in simple terms says that the policy and system choices made today are not made on a clean slate, but are in practice strongly conditioned by how you got to where you are today—the pathway in other words. In general, it is argued that in housing policy, path dependence remains very important.

For some comparative studies, there are obvious reasons to expect to find significant convergence. For the former socialist countries of Central and Eastern Europe, for example, the collapse of Communism led to a sharp disjuncture and change of regime, with a general thrust of moving towards a more capitalist market economy model. Therefore, we would expect to see a significant degree of convergence with Western European models and patterns in terms of housing tenure, for example. In practice, the disjunction was so sharp as to lead, paradoxically, to what might almost be termed ‘overshooting’, as a consequence of the particular path followed. In most countries affected, former public housing was rapidly privatised, leading in some cases to a form of ‘super-high’ home ownership societies. Yet in other ways some of these countries have not adopted all the trappings of a mature Western style home ownership society, as seen, for example, in very low take-up of US-style mortgage systems, whilst at the same time social housing systems may have atrophied (Stephens and Norris 2013). Another example illustrates clear evidence of path dependence in the face of circumstances where one might have expected convergence. This is the continuing contrast between British and German private rented housing sectors, for instance. Paradoxically, in Germany there is much regulation of rent increases and of tenancy rights (including security of tenure) but a very large, diverse and good quality private rental sector continues. By contrast in the case of the much more deregulated British market the sector remains smaller and focussed on shorter- term investment and tenancy horizons, with consequent limitations on quality, satisfaction and scope (Kemp and Kofner 2010). The essence of the difference is that Germany has experienced stability over a long period, both in economic performance (growth, inflation, interest rates and house prices) and in the regulatory regime governing private renting, so that investors there are predominantly long term in their outlook, rather than preoccupied with liquidity and being able to realise capital gains at a particular point in the market cycle. At the same time, there is a large body of higher- and middle-income households happy to rent for long periods, without such strong expectations or aspirations towards home ownership.

This example may be a particular illustration of a more general phenomenon—basic concepts in housing, like ‘tenure’, may have different meanings in different countries, and may not be correctly understood or judged without significant awareness of context and history (Stephens and Norris 2013). To take another more general example, ‘social housing’ takes different forms, has different histories and has different contemporary connotations in different national systems. In some countries, there was a period when public or social housing accounted for a large proportion of total housing stock or new investment, and people living in it were drawn from across the social spectrum, with even some bias towards higher social groups and some exclusion of the poorest. This is rarely the case now, but the extent to which social housing is regarded as a narrow, ‘residual’ tenure for the very poor still varies a great deal. There is a similar spectrum on the supply side in terms of the type of body responsible for ownership and management of social housing—an arm of the state, a charitable non-government organisation, a cooperative, a ‘social enterprise’ or, indeed, a commercial company. Debates about the implications of the increasingly ‘hybrid’ character of these organisations, which are important agencies in the implementation of social-oriented housing provision, have preoccupied academics and practitioners (Malpass 2010; Mullins et al. 2012). What do these organisations prioritise—business growth or social mission? How are they held accountable and to whom? In using such vehicles, are governments trying to ‘have their cake and eat it’, treating them as arm’s length ‘private’ entities whose borrowing/ investment do not count as public expenditure, whilst at the same time closely regulating them in order to direct their activities closely? Is such a muddying of the waters between public and private compatible with ‘a level playing field’ in globalised or regionalised single markets? This issue has been tested in the European courts in respect of Dutch Housing Associations, whose activities have been significantly constrained as a result (Priemus and Gruis 2011), and more recently in England where a ruling by the national statistical agency led to housing associations being reclassified as ‘public sector’ in 2015.

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