The impact of oversized financial sectors on fertility rates and how the sector has become an obstacle to non-financial business was explored by leading international experts at a symposium in TCD today.
Hosted by TCD’s Institute for International Integration Studies, the ‘Financialisation of Society’ symposium brought together leading authorities on the topic of the growth in the financialisation of societies from a mix of disciplinary perspectives. It took place in Trinity Long Room Hub, the Arts and Humanities Research Institute of TCD.
Speaking at the symposium, Dr Louis Brennan, director of Trinity’s Institute for International Integration Studies, commented: “The last 30 years has seen the dramatic growth of the financial sectors in much of the Anglo-Saxon world. While seen by some as a source of economic growth and dynamism, it has more recently raised concerns with evidence emerging that excessive growth in the financial sector can have a negative impact on economic growth. It is also an important factor in in the growth of income inequality and instability. Given the role that the financial sector has played in Ireland’s recent history, it is particularly instructive to have the perspectives of renowned international authorities on the sector.”
Among the speakers at the symposium was Professor Herman Schwartz from University of Virginia who explored how the financialisation of housing finance and pension systems has depresses young couples’ ability to form households and as a result has also depressed fertility rates.
In his presentation ‘Babies, Bonds and Buildings: Did Financialization Affect Fertility Rates?’, Professor Schwartz explained: “Many rich OECD countries now have fertility rates well below the replacement rate. Most attention on fertility rates looks – correctly – at work-life balance issues, but the relationship between housing finance and pension systems also affects the availability and affordability of housing.
“Liquid but segmented housing finance systems funding debt-financed owner occupied or rental housing created cheap housing, and thus earlier household formation. Earlier household formation enabled higher fertility rates, because couples that start having children earlier tend to have more children. However, the deregulation and de-segmentation of housing finance has turned houses – via mortgages – into assets. This combined with rising income inequality to produce continuous upward pressure on housing prices relative to income. Even in the relatively more liquid housing finance systems, rising house prices made it more and more difficult for young couples to afford housing. This has contributed to downward pressure on fertility.”
Professor Julie Froud, Manchester Business School, UK presented on how finance has become an obstacle to non-financial business. Her paper introduced the idea of the point-value-complex to explain how finance has become both unsafe and an obstacle to non-financial business. “The position of finance in present day capitalism is underpinned by both sovereign power, as government sponsors and protects finance, and by capillary power as omni-finance pervades much of the rest of the economy, again with the active promotion of government. The apparent success of finance becomes a problem elsewhere in the economy because the measure of success and the basis for financial calculation, including critical decisions about when and how to cash out are structured by consideration of point value,” explained Professor Froud.
European dimensions of ongoing financialisation were explored by Professor Hans-Jürgen Bieling, from Karls University of Tubingen. His presentation focused on the extent to which recent European crisis management had an impact on the growth of financial sectors within the EU.