Doing their not-own thing: "generation rent"

This episode of The Economist's podcast explores the growing trend of "Generation Rent," where increasing numbers of people, particularly millennials, are stuck renting due to unaffordable housing prices.

1. A significant portion of the global population spends more than a third of their income on rent.
2. Rent control policies are spreading worldwide but may not effectively address housing affordability.
3. Constrained housing supply is a major factor driving up rents in many areas.
4. Innovative policies, like those in Auckland, New Zealand, show promise in controlling rental costs by increasing housing supply.
5. Long-term solutions to the housing affordability crisis must involve comprehensive urban planning and policy reform.

1: Introduction to Generation Rent

Discusses the rise of private renting in the UK and its implications. Highlights the coined term "Generation Rent" and its broader applicability. Tom Sasse: "A fifth of the population now rent privately, up from just a tenth in the early 2000s."

2: Global Perspective on Renting

Explores rental market trends in various countries and the widespread impact of high rental costs on labor markets and urban planning. Tom Sasse: "From America to New Zealand, we see millions of people spending more than a third of their income on rent."

3: The Case Against Rent Control

Analyzes the drawbacks of rent control policies through historical and contemporary examples, particularly in Stockholm, Sweden. Tom Sasse: "Rent controls... have led to inefficient use of space and retardation of new construction."

4: Housing Policies That Work

Examines successful housing policies like Auckland's upzoning, which has significantly boosted housing supply and stabilized rents. Tom Sasse: "That policy had held rents about 30% below where they otherwise would have been."

1. Consider Diverse Housing Options: Explore living in less traditional housing like canal boats or co-living spaces to mitigate high rents.
2. Advocate for Policy Change: Support local and national policies that aim to increase housing supply and affordability.
3. Stay Informed on Housing Trends: Keeping abreast of housing market trends can help in making informed renting decisions.
4. Explore Rent Control Alternatives: Engage in community discussions about the benefits and drawbacks of rent control and alternative policies.
5. Plan for Long-Term Housing Needs: Consider long-term implications of renting vs. owning and plan financially for future housing stability.

Across the rich world millions spend more than a third of their disposable income on rent. We ask why policymakers have such terrible ideas on easing the pressure. America’s bid to crimp TikTok has raised a flurry of issues far graver than social-media scrolling (9:53). And why pop stars are (again) embracing the album over the single (15:46).

People

Tom Sasse, Jason Palmer, Rosie Blore

Companies

None

Books

None

Guest Name(s):

Tom Sasse

Content Warnings:

None

Ryan Reynolds
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Jason Palmer
The Economist hello and welcome to the intelligence from the Economist. I'm Jason Palmer. And I'm Rosie Blore. Every weekday we provide a fresh perspective on the events shaping your world.

America is putting pressure on the owner of TikTok to sell its operations in the country to a non chinese owner. We look at the messy tangle of issues that raises, from foreign ownership regulations to free speech protections. And as music streaming has taken hold, the idea of albums took a hit. No longer was an artist curated collection to be consumed as a whole. Singles ruled the day and the monetizing, but some artists, thankfully, want to revive the primacy of the album.

Rosie Blore
First up, though, do you remember drawing a picture of a house as a child? A square with four windows, a door, a path, even a garden? Many of us expected adulthood to deliver a house of our own, just like that picture where we could live for the rest of our lives. That didn't quite happen. Things first started to move in the last three months of 1977.

Unknown
This garden flat in north London, three rooms, a kitchen and bathroom, sold in February last year for 21,000 pounds. It's just been sold again for 30,000. Prices began to go up. A three bedroomed house. The asking price last month was 38,000 pounds.

It's now under offer at 60,000 and up. They don't get many first time buyers in this estate. Agents in Henley, in this town, a one and a half million pound cottage is considered modest and downscaling for most buyers. What was once considered modest became out of reach for many. And lots of us don't ever make it onto the property ladder.

Rosie Blore
Welcome to generation rent. It was a british bank, Halifax, that coined the term generation rent in 2011, really to describe this cohort of people, millennials, who would be stuck in the private rented sector. Tom Sasse is a public policy correspondent at the Economist. It's in the UK that we've seen one of the most dramatic shifts towards private renting a fifth of the population now rent privately, up from just a 10th in the early two thousands. So that's an increase of about 6 million renters.

Tom Sasse
And as part of this biggest sector, you're seeing a lot of renters. About half of renters in the UK are now over 35. I feel like I've got to know before we get any further, Tom, where do you stand in all this? Are you a renter? Are you a house owner?

I'm neither renter or house owner. I'm one of the people trying to find something in between. So I actually live on a canal boat in London. Wow, a canal boat. That is a subject for another time, then.

Rosie Blore
I'm interested. You talked about these dynamics in the UK. Are they specific to Britain, or are they typical of what we're seeing elsewhere? Not really specific to Britain. From America to New Zealand, we see millions of people spending more than a third of their income on rent, and the rental sector growing in a lot of those countries.

Tom Sasse
And that's true from social democracies, places like Sweden, where I went reporting for this piece, through to anglophone countries that have tended to prioritize home ownership. There's a bunch of reasons for this, really. Over the last ten to 15 years, you saw millennials entering the jobs market at a time when it was pretty difficult to find jobs. You've seen rapid inflation in house prices and rising rents, along with tighter mortgage rules in the aftermath of the financial crash. So all of those things put together have made it harder for this group of millennials to get themselves onto the housing ladder, which is going to pose a really big problem for governments across the rich world.

In America, in 2022, which was the last year for which we've got data, more than half of people in the private rented sector were being charged more than 30% of their gross income. So that leaves you with a lot less money to spend on things that you would like to. And it also has big spillover effects on things like the labour market. So I was in Stockholm. It's got one of the best public transport systems in the world, but one in five businesses there say that high renting costs are making it hard to find people to fill jobs.

Really big problem to the success of cities. That makes this a pretty big political problem. What's anyone trying to do about it? So, a big tool being discussed in places all around the world at the moment is rent control. So, in 2022, the scottish government introduced a rent freeze across Europe.

In places like France and Germany, you've seen rent controls being tightened in response to unaffordability. And then people in America will be familiar that cities like New York and San Francisco have long had controls on existing tenancies. But actually you're also seeing that spread now. So cities like Boston and states like Oregon and California have started to look at introducing new laws. So you're really seeing this idea of rent control spread, politicians seeing it as an answer to this rising unaffordability in the rental sector.

Rosie Blore
And is rent control an answer? Not really, no. So it can be pretty popular politically. After all, cheaper rents sound pretty good, right? But actually, economists have long seen it rather differently and that they've had a bit of a problem with this as a policy.

Tom Sasse
And that goes right back to the second world war, when rent controls were getting popular for the first time. And Milton Friedman became a very famous economist, and he warned that they would lead to what he described as haphazard and arbitrary allocation of space, inefficient use of space and retardation of new construction. And since then, liberal economists have tended to regard them as a bit of a zombie policy. And I mentioned, I went to Stockholm, and really, no city today demonstrates those sort of things that Friedman warned of better than Stockholm, because it's got one of the strictest systems of rent control in the world and it's completely broken. So you have this very powerful tenants union that negotiates directly with landlords the rent for those places as much as 50% below the market, and then you have this enormous queue to get one of these apartments.

So when you turn 18 in Sweden, you join the queue. And in central Stockholm, the waiting list is 20 years. Across much of the rest of the city, the waiting list is around ten years. So this queue allocates scarce, cheap housing to exactly the sort of people who don't need it, people who are in their forties, and then it creates all these other strange distortions. So once you've got a rent controlled apartment, you refuse to move, even if you need to upsize, you find all sorts of clever ways of keeping it in your family or passing it on to who needs it.

So it's sort of created this system in Stockholm and in Sweden more widely, that isn't really working, but at the same time has proved really difficult to reform. I feel like we're often talking about Sweden as the kind of place where things do work and that we should all be following. So rent controls aren't working in Sweden. What's the answer then? Well, rent controls aren't always equally harmful.

They've gone particularly wrong in somewhere like Stockholm, partly because they've been combined with constrained supply of housing. So you've got a lot of the neighbourhoods around Stockholm refusing to build new housing. And when you have that combination of rent controls and constrained supply, it can be particularly damaging. We've seen a lot of countries try and introduce a slightly different manner of rent control. So the first generation of rent controls sought to just limit rents and freeze them, and those were the most destructive.

That's what stopped all sorts of building and created real problems. What a lot of countries are trying to do now is limit increases from year to year within a tenancy, and that can work reasonably well in some places, but it still creates problems because it still encourages people not to move, it still encourages landlords not to invest in upkeeping their properties. And what you're seeing is some people in America on the left getting very excited about cities that have got quite tight rent control policies, like Vienna, where you've got about 80% of the city living in rent controlled apartment blocks. And the New York Times actually called Vienna a renters utopia. But actually, that city's planning laws have made it really easy to build there and keep adding apartment blocks.

And the population hasn't increased very much at all since the second world war in Vienna. So seeing Vienna style rent controls as the answer to problems in Manhattan or London is really rather sort of missing the point. So I feel like you're telling us to get excited about planning here, which is not something I normally expect to hear. That's right. I mean, the thing is, in anglophone countries, it is constrained supply.

That has been the big factor driving up rents, and some jurisdictions have actually figured this out. So, in 2016, Auckland in New Zealand, which had some of the least affordable housing in the world, passed a law upzoning about three quarters of their land for more dense development. And they were particularly trying to support new apartments and building near to public transport and the city centre and commercial areas. And this huge housing boom followed, so that added about 44,000 homes above what would have otherwise been built in just seven years. And a study from last year suggested that that policy had held rents about 30% below where they otherwise would have been.

So I think generation rent is here to stay. This affordability crisis isn't going to go away anytime soon, but actually we can see that there are some policies that could help them. Thank you, Tom. Next time I look forward to discussing generation houseboat. Thank you.

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Jason Palmer
Just the other day, a defeated looking guy came up to me and asked if I could help. He was drowning in debt. I said, I'm sorry, Donald, but I can't help you. My opponent's not a good loser, but he is a loser.

Holly Berman
These are some of the videos posted daily to Joe Biden's TikTok page. Holly Berman is a news editor at the Economist. His election campaign clearly wants you to know that the president is funny, but viewers have a joke of their own. Isnt he trying to ban this app? Well, he is, isnt he?

So the government says its not banning TikTok, but it has given TikTok an ultimatum that is to sell to a suitable non chinese owner by January or shut down. Thats because it says that TikTok, which is owned by a chinese firm called ByteDance, is controlled by a foreign adversary and is therefore a national security threat. Politicians say China is using TikTok to steal Americans data and spread propaganda. And what does TikTok, or what does ByteDance say about those charges? So TikTok denies these charges as actually suing to try and block this for sale.

And actually so are some of its users. So you've got eight content creators suing the government too, on behalf of TikTok's 170 million american users. TikTok says that divestment is just not possible commercially, legally, technically, for one, China could block it. It also claims that in naming TikTok and ByteDance, it's singling out and banning TikTok, and that violates the First Amendment rights of its american users. So imposing restrictions on speech in favor of national security is a tangly thing to do.

I spoke to Ashi Gorski of the ACLU, and she says the bar is extraordinarily high for doing that. And that's because it requires concrete evidence that TikTok poses this imminent serious threat. And that's something that many people argue the government has not provided. So we know that lawmakers were briefed on TikTok's risk in private, but little has been made public. The dispute is probably going to get to the Supreme Court, but in the meantime, the ramifications of this tussle are becoming a lot clearer.

Jason Palmer
Go on. What are the ramifications, then? So some of them actually go beyond TikTok. And the law names TikTok. It names ByteDance, but it also includes criteria for a president to add other companies to the list of restrictions.

Holly Berman
So any platform with more than 1 million monthly active users in America, and is at least 20% owned by a foreigner based in one of four adversary countries, so that's China, but it's also Iran, North Korea and Russia, could be targeted. So we spoke to Raja Krishnamoorthy, who's a democratic congressman who is one of the bill's co sponsors, and he says that the bill simply brings social media up to date with foreign ownership limits on other media. So here what we're doing is we're applying that threshold to a new medium, social media. And so we're just updating these very old laws for new circumstances. However, some people worry that the scope of this law is just too broad.

Jason Palmer
Too broad in the sense that the government has too much a hand in what does and what doesn't get in front of american eyes. Yes. So what some people are worried about is that the president has discretion over this law, so any different administration can make different rules for how to apply the law. So some people think that video games and other messaging services could potentially be in the line of fire here. Other people reckon the government could, in theory, widen the definition of an adversary country, which would expand things even further.

Holly Berman
And aside from all of that, a lot of people expect other countries to cite this move as a justification for targeting foreign apps. Elsewhere. You've got a situation where another country's government is claiming that a social media company is platforming or censoring certain views, and it might say, well, America took this action against TikTok and say, America shuts TikTok down, we'll do the same thing here. And that could actually fragment the global Internet further. So it seems clear for the moment, anyway, that this is a matter for the courts to decide.

Jason Palmer
I mean, what does that battle look like? Yeah, so, I mean, it's hard to say. A lot of it. We will just have to wait to see what comes out in court. One important thing to note is that in TikTok's lawsuit, it claims that it had been negotiating a draft national security agreement with the Committee on Foreign investment in the United States.

Holly Berman
And in that agreement, it claimed that it gave authorities an extraordinary option, it says, to suspend the app if it was found to violate the terms of that agreement. TikTok claim that the Biden administration ignored that effort, and they say that they ignored the billions of dollars that's invested in project Texas, which is a collaboration with Oracle and Austin tech giant, which would wall off Americans data from Bytedance. So you've got two things kind of in play here. You've got TikTok's immediate future in America and what that means and how that might play out in court. But actually you've also got these bigger questions that are being raised alongside this battle that is going on.

Jason Palmer
And all the while, for all of the rending of garments. About these big questions. Mister Biden's campaign is still using the platform for its own ends. Yes. So while this is all happening, the Biden campaign is still memeing away on TikTok.

Holly Berman
And actually now Trump, who attempted to ban TikTok under an executive order in 2020, has also just joined. Within his first day of joining, he had over 2 million followers. For comparison, Biden at the time was at about over 300,000 followers, so there's a huge gap there. And the Maga Super Pac is already on TikTok. So all of this would be very funny if the stakes weren't so high.

Jason Palmer
Holly, thanks very much for your time. Thank you, Jason.

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Billie Holish was only 13 when she released Ocean Eyes, so to her, something like a cassette or a cd probably seems charmingly retro.

Jason Palmer
David Bennon writes about music for the. Economist, so she's only ever known 21st century music industry norms, and she might seem an unlikely champion of the album format. She declared that her new album should be seen as a cohesive piece of work and ideally listened to in its entirety from beginning to end. No singles were released in advance of the album as a mouse bouche for famished fans, but that hasn't stopped hits like lunch.

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She's not the only hit maker emphasising the album rather than its component parts.

In March, Ariana Grande advertised her album Eternal Sunshine with just once single, yes, and stressing that she wanted listeners to experience the album in full this time.

When Dua Lipa released her first self titled album in 2017, it was preceded by six singles and followed by two more. She scaled that back for her latest record, radical optimism, with singles such as Houdini.

Taylor Swift, the most influential figure by far in music, has issued four successive sets of new material with no advanced singles, but with highlights like Fortnite. Two of these were surprise releases, albums announced just ahead of their arrival, which again emphasizes the primacy of the album format.

On the face of it, this emphasis on the album might seem a direct reaction to the rise of streaming and playlists and the consequent fragmentation of music. In some aspects, the music business has come full circle to the days before the mid 1960s, when individual songs were its currency. The single was the dominant format, and the ubiquity of jukeboxes playing seven inch records fulfilled a similar function to streaming today. Listeners would effectively rent rather than physically own music, while their habits and preferences could be easily tracked and turned into data.

For decades after the birth of recorded music in the 1920s, the single was the only thing that mattered, mainly because it was the only thing there was. Early gram fam records could hold just a few minutes of music on each side. As technology improved, playing times increased and groups such as the Beatles came to see LP's that is long players as statements of ambition. From the mid 1960s onwards, albums became something to be appreciated as complete works of art. So it's notable today that younger women artists are emphasizing the importance of the album as they mature and progress.

For all their merited ascendancy in today's pop music, they still face an unjust but deeply embedded perception, which is a divide going back to the album's 1960s emergence as the purported benchmark of musical artistry, that the single is somehow frivolous and ephemeral and inherently girly. While the album is serious and substantial men's business, in the 1970s, acts including Pink Floyd and Led Zeppelin could shift LP's by the millions while seldom releasing singles at all. Perhaps what is new is that because of the streaming environment, singles now account for 65% of a hit rock album's total consumption, to use the buzzword of the day, and that's including streaming as well as physical purchases. But for a pop album, that figure rises to 85%, so you can see why somebody like mosalish would become concerned about people not hearing the album as a single piece.

The current crop of pop stars has discovered that a deluge can be better than a drip feed. Stars can encourage fans to buy their record on vinyl and stream the album, too, so the artist and their label partner twice, and by releasing the songs all at once, artists enjoy the kind of chart dominance that sporadic singles don't provide. But this emphasis on the album by the biggest female acts does suggest that singles remain useful for pop's aspiring princesses. But they're not so popular with the queens.

Rosie Blore
That's all for this episode of the intelligence. We'll see you back here tomorrow.

Janice Torres
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