Graeme Leach of the Institute of Directors says the government's Help to Buy scheme is "very dangerous". Viewed from most perspectives, he's right. It's surely a bad idea for the state to help overpriced assets become even more overpriced.

From one perspective, however, it does make sense. High house prices help to increase the supply of labour.

Let's look at this from a Keynesian perspective. In 1930, Keynes forecast (pdf) that by 2030 real incomes per capita would be four to eight times their 1930 level. A point may soon be reached, he said, when our absolute needs are satisfied, "in the sense that we prefer to devote our further energies to non-economic purposes." He thought the working week would drop to just 15 hours.

This forecast has been half right: real incomes are now 4.5 times 1930's level. But it has been half wrong; the average working week is twice Keynes's forecast. Why?

One reason, of several, is that housing costs have risen. In 1930, these comprised just 9.5% of consumer spending. Today, they comprise 25.8%*. Our absolute need to live somewhere is keeping our noses to the grindstone.

Let's put this another way. Imagine we had a massive housebuilding boom which reduced house prices and rental costs to reasonable levels. It would then be possible for people of above-average earning ability to downshift or even completely retire after a few years. This would be especially true to the extent that, for some important goods such as music, we are close to a post-scarcity society.

The complaint that Anne McIntosh recently made about GPs - that they are scarce because many women work part-time - would be one that would be repeated across the economy. Skill shortages would bid up wages and squeeze profits.

What's more, there'd be an adverse selection effect. If we could afford to downshift in our 30s or 40s, who would choose not to do so? It'd be the narcissists (pdf) and psychopaths who gain satisfaction from occupying positions of economic power. Sure, these already are already (pdf) disproportionately prominent in boardrooms: I suspect one contributor to the banking crisis was that less money-motivated types left the industry having earned enough. But imagine how much worse things would be if their more balanced colleagues left the business.

In a sense, I agree with David Boyle:

People are less free when they have to pay half their income in housing costs or more, less in control of their lives and much less able to follow the career and life path that thrills them most...
I don't want my children eking out a living in indentured servitude to their landlord, in a job they loathe but need just to pay the rent.

However - and here Marxists disagree with liberals - the purpose of capitalist economic activity is not to increase our real freedom, but to increase profits. High and stable** house prices, insofar as they facilitate indentured servitude, achieve just this.

* I'm comparing table 24 of Feinstein's Statistical Tables of National Income, Expenditure and Output of the U. K.: 1855 - 1965 to table E1 of this pdf.

** That word "stable" matters. Rising house prices can depress the labour supply by permitting some people to retire on their capital gains.