I had a length session with a Quotable Values valuer on Friday. Our making of public noises led him to ringing and requesting a meeting. He was a pleasant enough, middle-aged bloke. ‘I’m just the messenger,’ he said when I compared him with Tom Shand, the minister who had closed the Blackball coal mine in 1964. As he explained the methodology (and I questioned him very thoroughly), it left me feeling exhausted. I suspect it would be the same if I had a session with a stockbroker or a currency trader. It is a methodology based on statistics: last twelve months of sale compared with the last QVs, seeing a trend, checking the trend against more historic sales and more recent sales, looking at similar areas, looking at the specific characteristics of each house (age, construction, section size and shape, notifiable improvements, presentation – at which point a subjectivity enters the scene), checking out the figure arrived at by dividing the QV by the floor area thus arriving at a value per square metre and judging its reasonableness. I am sure there are similar characteristics with stocks and shares.
Of course the market can be manipulated. Ten Blackball houses could be bought at above QV by an investor for two million dollars in order to lift the value of the town. If twenty other houses were surreptitiously bought by a subsidiary of the investor, then there could be a killing to be made.
In our case, he dropped the market value for improvements by $20,000 across the board, before making individual adjustments. Our 3 bedroom house, connected to national-standard sewerage, water, broadband and electricity supply, with garage, sheds, tunnel house and ¼ acre of land, is now worth less than a second hand campervan (or six funerals, or two expensive weddings, or if the NZ dollar moved by 1 cent against the US dollar and someone had seven million to play with – the same money could be made in a morning at no cost to the investor). This is obviously absurd, along with other absurdities: the subprime mortgage crisis leading to the Global Financial Crisis, considering SERCO as a contractor for CYFS, charter schools, subsidising sheep farms in Saudi Arabia, selling dairy farms to the Chinese, signing the TPPA for a possible small economic gain but giving up essential elements of sovereignty, allowing 300,000 children to live below the poverty line, everyone congregating in Auckland while rural areas are gutted – the list goes on.
The difficulty is confronting the psychotic flows of capital, which are not rational , yet are portrayed as rational. In fact, political discourse is largely about trying to justify the absurdities which arise. The psychotic creates a world based on his omnipotent desires, unmediated by others’ realities, no matter how harmful this world might be. Before neo-liberalism took hold, governance was at least partly based on people’s needs and rights: people need, and have the right to, an acceptable level of housing, food, heating, work, education, healthcare, recreation, transport for essential movements and were provided for in old age or when otherwise unable to work. These can be sensibly measured. Desire is left to energise human relationships, dreams and extravagances.
But now, value is a measure of the benefit provided by a good and service to an economic agent. What is the maximum amount of money a person will pay for the good and service, the purchase of which will mean the person has to give up something else. Desire creeps into every provision of need, advertising hypes up the benefit and increases the level of desire, and the availability of credit hikes up the amount of money available. As a consequence we have the spreading contagion of consumerism and commodification. When I was a child, most people bought or built a house to live in. They wanted the value to keep pace with inflation. There were no obvious investors and you passed on some of the value acquired over a lifetime to your kids when you died. It worked well, although it could lead to post-funeral family squabbles. And the mortgage could be paid from one wage. At times, things could be tough, for example, during a strike, leading some to link home ownership to a more compliant workforce. But now, this private capitalism has gone crazy.
Last year’s Kiwi/Possum community-based theatre production was called A Brief History of Madness. I based the script on Foucault’s Madness and Civilisation, in which he looks at the status and treatment of madness in different historical periods. We narrowed it down to two periods: Seaview Asylum in the 1930s compared to now, when Social Impact Bonds are being trialled (investors investing in the outcomes of programmes to treat mental dysfunction – a truly insane concept). I wondered about the audience interest in this subject matter. It proved, in fact, the most popular of our plays to date. Why? Certainly because everyone is vulnerable to mental illness, but perhaps, more compellingly, because, as this valuation episode reveals, we live in a mad system.