A closer look at some of the more recent market failures
Through failure, we can explore opportunities for growth and improvement but will we be able to evaluate and identify systemic problems fast enough for us to fix them in time?
Recent market failures have brought new and potentially detrimental issues while exposing flaws that need to be resolved.
Let’s have a look at some of these challenges.
A housing market failure
An investigation was made by the Guardian and ITV News that revealed the emergence of slum-like housing conditions in England and this contributes to tenants suffering under potentially dangerous housing conditions.
Inadequate regulation of landlords and ignoring the needs of private renters could prove to be huge mistakes on England’s part.
In direct response to a shortage of rented social housing, people are starting to rent privately. This translates to an unequal and rather unfair housing market where the balance of property distribution across the market is disturbed.
In addition, housing has become a publicly funded financial asset for many overseas investors, worsening the divide. Have we, as a society, failed to provide decent, secure and affordable homes particularly for low-income demographics?
It goes without saying that we need to address these widespread market failures promptly as we are being plagued (without an end in sight) by a growing waiting list for social housing and a rise in homelessness while some 200,000 homes stand empty.
As of now, there is no minimum standard that properties have to meet before they are let out. After six months the new rogue landlord database remains empty. Should landlords who failed a “fit and proper’ test in parts of the country be allowed to let properties out elsewhere?
Is a shortage of homes a good thing?
According to many sources, because the country isn’t even close to keeping up with demands for new homes and because construction continues to lag behind the UK government’s targets, there is an indication that this failure to meet demand could buoy the market for some time.
A recent sharp drop in shares showed that homebuilders aren’t safe from uncertainty over the UK’s economic future. However, the country’s construction lag may be more important.
All of these developments are stirred by the uncertainty surrounding Brexit but the mismatch between supply and demand in many parts of the country — particularly in urban areas — may continue to be one of the factors underpinning home prices in the UK, according to Grainne Gilmore, the head of residential research at broker Knight Frank.
Factors for slow home building include limited access to land, increasing construction costs and a slow planning process. These have all been plaguing homebuilders recently. The British government announced an annual target of 300,000 homes in order to address this problem. However, neither developers nor organisations believe that’s achievable.
The UK, the EU and the US all share a growing problem; we are experiencing a market failure with regards to how we support entrepreneurs. Not investing in the right kind of people can leave a large gap to be filled.
If we often choose to invest in disciplines that we are familiar with and in people we already know are working in narrow disciplines, you may find that we fail at applying some of our most advanced technology to the largest human and social problems (since there is no prospect of immediate commercial return in these areas).
For every app that could focus on humanitarian issues like a refugee crisis or homelessness, there are a 100 more that enable generic e-commerce. This means that there aren’t enough incentives for entrepreneurs to stop solving narrow aspects of a much larger set of interconnected challenges.
Instead, we are ignoring the fact that science, technology and social issues are all intertwined and huge progress can be made if there is more collaboration.
Failing to target these market issues could ultimately lead to us throwing innovations and transformative people away. The solution may lie in shifting our definition of entrepreneurship to something more expansive.