Game On – let’s wargame the housing crisis

You often hear politicians accusing each other of “playing games” with social and economic policy – especially when it comes to housing. But you have to wonder, if that were literally true, would it be such a bad thing?

With so many vested interests and political ideologies in play, maybe it’s time we let loose the dogs of logic on the housing crisis.

A friend who studied economics at a British university back in the 60s – before everyone had a computer in their pocket – recalls being shown a table bearing various interconnected liquid-filled glass tubes of different colours.

It you poured more water in one vessel the levels of all the others changed to some degree.  The intention was to show how public spending affected inflation, unemployment and interest rates.  It was pretty crude.

Much later, a computerised wargame organised by another UK university saw business people, politicians, military leaders and social activists pitted against each other in a weekend-long hypothetical combat scenario.

The most striking outcome that I recall from newspaper reports was that the numbers of theoretical fatalities were much lower from the military side than the corporate bosses’ or politicians’ efforts. The military knew they had to protect their major assets, which just happened to be people.

More recently, I was introduced to the principles of game theory, which – and I know I am guilty of gross simplification – predicts outcomes based on the reasonable logical choices and mutual benefit or otherwise of all “players”. I use quotes because game theory is a mathematical principle, rather than having much to do with fun.

So I wondered if anyone in Canberra or the other state capitals has war-gamed the housing crisis? And by that I mean, run computer trials on the possible outcomes of different actions by all the individual and collective stakeholders, based on their self-interest or mutual benefit.

Currently the debate is dominated by so many single-focus pressure groups, each with its own agenda, that a clear strategy for the future is impossible to discern. The loudest voices tend to prevail rather than any superior logic.

The maelstrom mix of profit and loss, population, inflation, economic growth, labour costs, materials and supply, quality control, affordability, taxation (including negative gearing) and demographics make housing policy an impossibly complex machine with many moving parts.

Add politics and ideology into the equation and it’s a tossed salad in which positive outcomes tend to be a matter of luck, rather than design.

For instance, if the federal and state governments start pumping money into housing, will that lead to a shortage of materials and skilled labour? And will that push prices up too?

And haven’t they already done that by embarking on massive public works which suck up skills and materials like there’s no tomorrow?

Also, if part of the answer is to make it easier for skilled migrants to settle in Australia, doesn’t that exacerbate the housing problem?

Have laudable efforts to drive dodgy developers out of apartment building caused fewer apartments to be built, pushing up prices?

Will the accelerated demand for multiple new homes in Victoria and Queensland provide a safe haven for the duckers and divers of high-rise construction?

Someone on the Flat Chat forum wrote recently that we should leave it all up to market forces, but isn’t that how we got into this mess in the first place?

In an age when we trust scientists and doctors less than ever, the opinions and theories of mathematicians and economists have little chance of being taken seriously.

But someone needs to look at the big picture. It’s time to get our war game on and if it ever happens, I’ll be happy to file reports from the front line.