Yves here. While I applaud the sentiment of making sure that everyone has at least adequate housing, class stratification has become so deeply embedded in America that it’s hard to see how to make it happen. There is default housing in New York City, called shelters, and most homeless avoid them due to regimentation, lack of privacy and risks to person and the little property they have. Perhaps something like the higher-end capsule hotels in Hong Kong could be a model. Oh, but we can’t allow poor people to have nice things, even the use of minimalist nice things.
By Sonali Kolhatkar, the founder, host and executive producer of “Rising Up With Sonali,” a television and radio show that airs on Free Speech TV and Pacifica stations. She is a writing fellow for the Economy for All project at the Independent Media Institute. Produced by Economy for All, a project of the Independent Media Institute
Is housing a human right?
Or is it a privilege affordable only to those who have made it under our unfair system of market capitalism?
If you read CNBC’s recent financial advice column, you may come away believing the latter to be true. Economist and CNBC contributor Laurence J. Kotlikoff said Americans “are wasting too much money on housing,” and in order to be more financially savvy about housing he offered such innovative ideas as moving in with one’s parents, renting out part of one’s home to visitors through Airbnb, selling one’s home altogether in favor of a smaller, cheaper one, or—and this is my favorite—moving to a cheaper state.
These sorts of ludicrous solutions are typical of the corporate media’s answer to a housing crisis of epic proportions: if you can’t afford to live, just move.
The cost of homes is skyrocketing, putting homeownership out of the reach of most Americans. Reuters described how “strong house price inflation has combined to significantly increase the typical monthly mortgage payment.” And, as the Federal Reserve has started to increase interest rates, homebuyers are being stuck paying an increasing share of their mortgage as interest.
Another corporate media answer to spiking housing prices—one that Kotlikoff took for granted without articulating—is to simply let the market handle the crisis. Reuters quoted a corporate economist named Robert Frick, at Navy Federal Credit Union in Vienna, Virginia, who said, “We may be approaching a pivot point when higher home costs and higher mortgage rates cool both sales and price increases, but given the supply-and-demand imbalance, we may not hit that point this year.” Those waiting to purchase a home must apparently wait for the invisible hand of the market to balance out supply and demand and put their lives on hold in the meantime.
Rental costs are similarly skyrocketing. According to Realtor.com’s latest report, rents have jumped 17 percent from last year. The organization’s chief economist, Danielle Hale, had a similar response to Frick, saying, “With rents up by nearly 20 percent over the past two years, rental prices are likely to remain high, but we do expect some cooling from the recent accelerated pace.” In other words, at some point, rents will increase so much that people will stop being able to rent altogether, which will then lead to lower rents. Some day. Maybe.
Katie Goldstein, director of housing campaigns at the Center for Popular Democracy (CPD), explained to me in an interview that the current housing crisis is the result of “the corporate control of our housing system” where “for-profit investors and for-profit landlords are at the root of our country’s affordability crisis.” The federal government has enabled what she called “speculative behavior” in the housing market.
It’s not simply that the federal government is leaving it up to the private market to ensure all Americans are housed. It is going much further, by intervening to privilege corporate buyers of homes and rental units. For example, when the housing bubble burst in 2008 as a result of predatory lending practices, thousands of people lost their homes to foreclosures. Instead of helping people remain in their homes, the government sold many of these foreclosed properties to Wall Street investment firms at deep discounts.
These firms now control a significant portion of the rental market in the United States, raising rents in the service of turning profits. They continue to receive tax breaks and subsidies that are far greater than the amount of money the government spends on low-income housing. In other words, the federal government has adopted policies to ensure wealthy corporate interests trump housing needs—instead of the other way around.
We don’t have to live like this. And increasingly, government officials and lawmakers are being pushed to embrace the idea long championed by housing rights activists, that “Housing is a human right.”
Marcia Fudge, secretary of the U.S. Department of Housing and Urban Development (HUD), in a recent addressto the National Low Income Housing Coalition declared that “If we are to fully achieve justice in housing, we must fully accept what that means: justice in housing is everyone realizing the fundamental truth—housing is a human right.”
It was the first time that a sitting head of HUD has made such a statement, and it represents a major shift in thinking that has yet to inform government policy or percolate into the corporate media’s world view.
With “over 500,000 people [who] are homeless across the country,” Goldstein sees every homeless person as “a policy failure.” This is a correct assessment, for if housing is a human right as Secretary Fudge says, the government should be enabling community control of the housing market, not corporate control. The so-called market can only be relied upon to prioritize profits, not human rights.
Although there is a public housing system in the United States, overseen by HUD, and intended to ensure that the most vulnerable Americans have homes, the problem is that “public housing has been underfunded for decades,” says Goldstein, “even though it has been the primary source of housing for low-income people.”
To ensure that the government brings federal housing policy in line with its stated ideal of “housing as a human right,” CPD has released a new report entitled “Social Housing for All: A Vision for Thriving Communities, Renter Power, and Racial Justice.” One prong of a multipronged solution to the nation’s housing crisis, as per the report, is to “provide $1 trillion over ten years to fund the construction of 12 million new social and public housing units.”
CPD wants the government to go further than merely investing in public housing and instead adopt a broader framework of “social housing.” Goldstein says her organization is calling for a “mass social housing program,” that will “not only repair the current public housing that exists, but actually create millions of new units for people… [who] actually need it.” Social housing, as per Goldstein, is “a public option for housing.”
In other words, if the private market is making housing out of reach for increasing numbers of people, there ought to be a public option provided by the government to meet the need that the market fails to meet.
Social housing, as per Goldstein, is “permanently affordable, protected from the private market, and publicly owned or under democratic community control.” CPD’s list of principles of social housing includes “deep affordability,” “tenant unions and collective bargaining,” and “quality and accessibility.” Given that the current housing crisis disproportionately impacts people of color and women, CPD’s vision for social housing is based on racial and gender justice such as requiring that people with criminal backgrounds or immigration violations are not disqualified from accessing housing.
There are existing models we can turn to. Finland has pioneered a “social housing” program, aiming to eliminate all homelessness by the year 2027. It is already on its way, with 16 percent of all housing in the nation being owned by municipal governments. CPD’s report points out that the capital, Helsinki, has “50,000 municipally owned housing units.” This is much higher than American cities of similar size and population, such as Detroit, which has 3,700 public housing units, and Portland, which has only 450.
If the federal government is currently fueling a system designed to benefit corporate America, surely it can intervene to benefit people instead. Minnesota Representative Ilhan Omar has reintroduced a bill that invests $1 trillion into the housing system. Her “Homes for All” act is intended to “guarantee safe, accessible, sustainable, and permanently-affordable homes for all, create a true public option and affirm housing as a basic human right for every American.”
Social housing is hardly a radical idea. Goldstein, whose organization supports Omar’s plan, offers a simple basis for social housing, saying, “We think there ought to be an alternative to the corporate and for-profit system of housing.”
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https://en.wikipedia.org/wiki/Canadaville,_Louisiana ?
‘Perhaps something like the higher-end capsule hotels in Hong Kong could be a model.’
That would be a good solution for a lot of people and would get them off the street to a place that they would be safe, be able to keep clean, be in a place where they can help their education, look for work, have a lot of the pressure taken off and all the rest of it. And I have no doubt that those capsules in Hong Kong will be used to point out what that could look like. Unfortunately, I believe that as we live in a rentier capitalist system that another high-density accommodation from Hong Kong will be the reality instead-
https://www.theguardian.com/cities/gallery/2017/jun/07/boxed-life-inside-hong-kong-coffin-cubicles-cage-homes-in-pictures
Can we make a complete list of why housing is such a disaster in the US right now?
1. The asset bubble, monetary policy and low interest rates (the rentier class squeezing returns out of housing since they have a lot of cash that they can’t just park in more traditional investments).
2. Obama admin giveaway of people’s homes to private equity.
3. Residential zoning restrictions on apartments including even on studio and one bedroom apartments in places that allow apartments.
4. The starving of public housing since the 1970s.
5. Federal industrial policy that has concentrated growth in the biggest major metros while letting Cleveland, Buffalo, etc al die, meaning a housing crunch for some and abandoned buildings for others.
6. The lack of tenant organizing compared to many other countries.
7. Perhaps the dream of home ownership is behind number 6?
8. All of the racism and classism behind number 3.
Well for completeness, I would add there is an alarming lack of family connection. People used to show up at a relation’s door expecting to be taken in. Apparently not now.
In addition to Robert’s comment, I’d add the horrors of being a tenant in most of the US. Look at Germany for renter rights that take away the need to buy simply to get continuity of housing.
A few more for the list:
1. Reducing real estate taxes (e.g. prop 13 in CA). This encourages land speculation, since the speculators can hold property off the market without much penalty. It also increases home prices, since 80% of the inflation in housing stems from land inflation. See Rethinking the Economics of Land and Housing by Josh Ryan-Collins, Toby Lloyd and Laurie Macfarlane. That’s an MMT-savvy study.
2. True, Nixon put a moratorium on building federal affordable housing, but Reagan cut HUD’s affordable housing budget by 75%. This was at the same time Reagan was cutting the top marginal (rich people’s) taxes roughly in half, and, with his successor, raising payroll taxes eightfold.
3. Setting up affordable housing programs as designed-to-fail from the beginning. See https://ggwash.org/view/78164/how-public-housing-was-destined-to-fail
I would add one more:
Hatred and visceral fear of poor people.
Don’t forget our mini moguls Air B &B, who allow hones to be ‘rented’to vacationers other than a stable family or even 3 people sharing the house.
A statement of principal sounds like a good thing. However, “housing is a human right” is exactly the kind of thing I’d say if, on one hand, I want an enormous budget and, on the other hand, I have no intention of making systemic change or rocking any boats.
How about a “SMART” goal instead, such as “Everyone enjoys the shelter of a comfortable home, when they need it, without question and without exception”? Create ever more public housing, and don’t stop until the goal is achieved.
Right now we act as if, for good people, the market will provide. If public housing is only needed by the maladapted and otherwise undeserving, then of course we should limit its capacity and make those people jump through hoops to use it. And of course you better not get too comfortable because we’re kicking you out as soon as you’ve had enough time to get back on your feet.
We’d all be better off if we accepted public housing as normal and ordinary, and made public investment accordingly.
I also am extremely skeptical of the HUD director saying “housing is a human right” and doing anything about it. They are just words that she knows will appeal to some people.
As I keep mentioning my Southern town is building–practically all at once–a huge amount of new housing with hardly any of it appearing to be for the poor. And the rental terms, as published in the newspaper, often specify financial checks for lease that many likely can’t meet. In fact this trend toward gentrification of old mill villages and the like will probably decrease low income housing rather than increase it. The result may be a big oversupply of new rentals aimed at the wrong market as new middle class residents fail to appear. One thinks back to 2008 when the banks simply wanted the loans with no thought to whether they would be paid back. Will the poor and homeless get those nice new apartments after all as the vacancy rate drives down rents?
Like all those high end condos and apartments that San Francisco has? That are not being rented? I mean really, it almost as if someone wants capitalism to fail by building and then locking up housing, even housing just sitting there gathering dust in the heavily populated Bay Area. I know much of it is for wealth storage, money laundering, tax purposes, and sometimes just as a getaway spot for a wealthy person, but it seems to be more than that. Perhaps, some people are using the Chinese method of investing in buying junk quality housing as wealth storage.
It is almost like those giant stones some Pacific Islanders would use as money. They were of a certain stone from a one specific island, hard to transport, or quarry into the right shapes. Thus limiting the supply like with using gold. IIRC, someone had gone to the great effort needed to create the money, but on the way back it fell off the boat and into the Pacific Ocean.
It was not truly lost as they knew exactly where it was. It was just inaccessible being at the bottom of the ocean. The stones already in use were hardly ever moved and almost impossible to steal, but it was just noted who had what stones. Sooo, it was decided that since the new boulder/money had almost made it to the island, and since all the other items were usually just put into storage in some out of the way place…
Really, I think much of real estate is being used like that giant carved stone at the bottom of the Pacific Ocean. It just that the stones could only be used as convenient form of money (remember, everyone knew who had what or at least trusted individuals did: Bob and Jane owns that stone over on the path near the x creek and John owns two at the small beach, etc) and not as something else necessary. Unless we are using hard cash, it is all electrons, so who are the smart ones?
I’m always amused by how local actions that get described in those communities as progressive and forward-thinking and bold become transformed, as they are framed nationally, into solutions that are really corporate in nature. This one (the author’s favorite corporate solution to affordable housing) stuck out to me from the above article: the idea that affordable housing can be had by moving to a cheaper state.
This idea–that there is a yuge population of residents just itching and able to move to somewhere for more affordable housing–drove the economic and subsidy models of most mid-market and small cities for the past 2 decades, where the emphasis was on building the sort of world-class amenities and housing stock that they (country bumpkin urban progressives w/ fetishes for Brooklyn, San Fran, Paris, etc.) imagined these movers would want. In my city, this idea of capturing the global movers was usually framed by progressive leaders as, “Lexington is an affordable city, so how do we….”
Affordable housing is a desired goal and should be a basic human right. However, HUD has virtually no impact on anything related to producing affordable housing now. At one point in the 70’s and 80’s HUD was a key participant. When I started working in affordable housing in the early 70’s HUD had many knowledgeable and committed staff. That is until the Bill Clinton administration when HUD was headed up by sleazy Andy Cuomo who totally “reorganized” it and significantly reduced staff so many of the people who knew how to do things left— laid off or retired. HUD then deteriorated to a Clinton/Cuomo agency hiring new PMC type staff who knew nothing and thought they had all the answers.
Not sure how a nation wide effort could be mounted now. Marcia Fudge might be well intentioned but she knows nothing about producing affordable housing. Her slogan is meaningless word salad. It is clear that Wall Street and big money developers are thought to be the answer and, of course, they have their own interests to promote. How could it all be changed after 30 or more years of nothing of substance being done to solve the affordable housing crisis. The NGO’s out there are acting in a typical manner with words and no solutions. Sad!
I don’t know if it was on NC that I first saw this, but this LA apartment building for the homeless looks really cool to me:
https://ktla.com/news/local-news/look-inside-las-new-steel-container-apartments-for-the-homeless/
It appears that everyone has forgotten the debacles of public housing ideals developed in the 60s. Have you forgotten how LBJ promised that welfare would only raise our taxes by less than 1% and that it would only be a temporary measure to help folks get jobs and take care of themselves.
There is no basic human right of affordable housing. That is not written anywhere except in talking documents and spewing from talking heads of those supporting government stealing from those who work. America was founded on a work ethic and now it is a government acting as the baby mom for millions of those unwilling to work or for those who have invaded our country and are suckling on outrageous handouts by the government.
If you think that housing is a right, spend your extra bucks on taking care of someone instead of asking grandmas in Iowa to take another reduction in their lifestyle.
Can we agree that wages have not kept up with the cost of living and for decades? When I was a child, homelessness was rare and now there are over 150,000 homeless Californians, most of them native to the state.
Saying housing is not a right and demanding that people just get jobs ignores the “wages have not kept pace with housing for decades” bit. It ignores that almost any full time job fifty years ago meant that you could get housing. It also ignores the many employed homeless living in their vehicles or on the streets. At two thousand a month for a cheap one bedroom apartment in California, that should not be surprising.
Has the nation suddenly become infested with people who want to want to be miserable or are there other reasons?
Your libertarian-propertarian delusions are duly noted. Look around you and see what they hath wrought.
With the exception of those for elders, housing projects are a locus of crime wherever they are located. As are homeless shelters and permanent homeless housing to a lessor degree. People naturally resist them and are tarred as NIMBYs.
Biden’s resurrection of the Obama era Affirmatively Furthering Fair Housing program is being carried out by the Democratic Machine in California though regional housing “needs” laws, which force every county to suspend single family zoning statewide, and in certain metropolitan counties, allow for tens of thousands of new housing units, with a percentage of low income units in them. Thanks to Citizens United, developers bought the state legislature:
Here’s an example: in an area with chronic water rationing, fire evacuation dangers and gridlocked traffic.
HCD required the Bay Area to plan for and revise local zoning to accommodate 441,176 additional housing units during the 2023-31 period. The approved final RHNA plan distributes this requirement among the region’s nine counties and 101 cities and towns.
https://abag.ca.gov/our-work/housing/rhna-regional-housing-needs-allocation
That’s not true. From a study of actual homeless people who’d been incarcerated:
https://pubmed.ncbi.nlm.nih.gov/30372505/
Another issue is that some people who are homeless in past would have been institutionalized for chronic mental health conditions.
It is not an either/or with mental illness, addiction, and crime. Doing so oversimplifies reality, which is usually more complex than what people want it to be. Many people become homeless because of illness, but homelessness is often the cause of mental illness and addiction for being homeless is traumatic and stressful. If you are healthy before eviction, you are often not with in a few months, and the longer you are, the worse your health becomes.
Also, American public housing is just Those People housing, the poors or the minorities, the inconvenient ones, and jams them all into poorly maintained housing. It artificially separates the whole community into separate easily to ignore parts.
I have to tell you I was in NYC when the state dumped mental health cases on the street. There were highly visible disturbed people all of a sudden. This was not intense anxiety or depression, which I can easily see homelessness creating. This was various flavor of psychosis. One woman on Third Avenue would scream at the top of her lungs, pounding her head with her fists, and then start crying.
I am not about to say that many are not homeless because of their mental health. I am just pushing back on the “it’s all the crazy persons’ fault” while ignoring everything else. It reminds me of Hillary Clinton’s Deplorables speech. It’s too easy to blame others for what happened while ignoring all the things that guided, greased, and caused their personal disasters and walking away. Much easier.
On getting housing for everyone, may I suggest the public housing of Vienna? It started in Red Vienna. I think that its success arises from it being public housing and not poor people housing. We would have to deal with the massive corruption before we could even try to do something like this, but it is a suggestion.
That is the absolute opposite of my point and is your projection.
It’s a disgrace that governments dump people who need help and we as a society once did help on the street.
I make no claims that dumping the mentally ill and our mental “health” is not one of the reasons for our homeless crisis. I can just walk down Golden Gate Avenue near the methadone clinic or along the plaza especially at the library and be disabused. Hell, the entire lower half of Market perhaps from the trolley on up where all the tourists line up (it’s such a marvelous thing for them to see, I’m sure. For me, it is embarrassing.) I have been seeing this through out the Bay Area for decades. Use to be able to know if someone was talking to the invisible friends in their heads, but then came cellphones.
But that is the thing. It has been happening and getting worse for decades. The closing of the hospitals by California and elsewhere happened forty years ago and right after that, they started to tear down much of the SROs (single resident occupancy) everywhere. I still remember the fight over the wrecking of International and its rooms. Something like a million of those rooms nationally went away. Those were the equivalent of pod hotels, but the pods will have the same problems as the SROs. Then the massive (75%?) of HUD’s budget by President Reagan. Then add all the NIMBYs and the developers desire and clout to not build apartments especially for the lower classes. The cost of housing has been rising faster than inflation and wages for decades in California. It has become like a game of musical chairs with the losers in their car or on the street.
If it’s houses, that they will build. Expensive luxury condos and high-end apartments that often sit empty, they will build. Places for most people, not so much.
I can even point to all the expensive police used to control the homeless, the mentally ill, the addicted, and the car dwellers often by storing the problem people in jails; the costs for doing so is more than needed for mental health or giving people an entire studio apartment. If you add both the cost of policing and emergency healthcare, it is cheaper to do both. I think adding full coverage Medi-Cal would be less as well.
The whole system is the problem. People on social security or disability use to be able to rent an SRO or a room in a house or apartment. It’s very difficult now, if not impossible, and only if you can find one. If you have any problems at all, the constant struggle for getting housing is just going to make them worse. Mental, physical, mental or emotional.The only people doing well are the developers and those who own including many of the retirees.
But hey, you are right. The Morality Police think that healthcare and getting homes would be coddling the poors and some people would be getting away with something. As if there is never always someone ripping the system. Like those investors and the banks; screw the destitute for I got mine and taxes, taxes, mumble, something, mumble.
I just love living in perpetual fear of homelessness and get to be entertained by all those suffering people on the streets or in tent neighborhoods. Seeing the occasional family is such a treat. The entire Bay seems to be like this. The City of Saint Francis just concentrates it and makes it unavoidable. So painfully real.
Can we stop the World now? This ride is making me sick and I want another one.
There are tons of public housing projects in East Asia (e.g., Japan), and they’re not “a locus of crime”. Perhaps when a nation has a very different Gini coefficient it makes a difference?
Like that infamous locus of crime, Singapore. /S
Perhaps when a country lacks a constitutional “right to bear arms” and enjoys common sense gun control it makes a difference?
Matthew Desmond’s “Evicted” demonstrated convincingly to me that homelessness causes mental illness–for perfectly understandable reasons. Do I deny that mentally ill people may sometimes become homeless due to their mental instability? Not at all. But Desmond’s book illustrated to me how the stress of having no home would tip many people over the edge from functioning, to not. Certainly, I doubt I could survive it.
https://bookshop.org/books/evicted-poverty-and-profit-in-the-american-city/9780553447453?aid=8691
Loathing and fear of poor people is a cancer on this society.
To resolve housing matters on a universal rather than an ad hoc basis, we need a sample community law that individual states and localities can adopt that establishes community housing under the control of a board of directors that is elected directly by the citizens and is not under the control of the governments. Such institutions, having their own budgets, again, separate from the government budget, should be set up to succeed rather than fail. In other words, they should have contracts with worker owned maintenance cooperatives to ensure that the housing never deteriorates into slum conditions, and whatever other service organizations that may be needed to perpetuate the system.
Private equity firms should not be permitted to own residential properties.
Am filing with the NYS Human Rights Commission against such a landlord.
I think its a disservice to frame the problem in terms of making housing more affordable rather then making everyone more able to afford a home*. Inequality is the worst its ever been with possibly the exception during the railroad baron days–that’s the problem. Sure, government policy like cheap interest for the super rich contributes to unaffordable housing, but thats one small government policy in a sea of government policy that results in the status quo. Most of these policies dont directly affect the housing market (like outsourcing middle class jobs) and yet still put housing and other human rights like healthcare out of reach for millions of people
*Some policies like Nimbyism do genuinely contribute to unaffordable housing–but anytime you being in corporate interests or the rentier class you negate that reason. Clearly someone can afford the house and rent it out so it is not actually unaffordable. The problem is therefore how wealth is divided
Finding out how capitalism works could help.
Introducing the equation.
The dynamics of the capitalist system have become a bit of a mystery and the equation can really help out.
Disposable income = wages – (taxes + the cost of living)
What does the equation do?
The equation puts the rentiers back into the picture, who had been removed by the early neoclassical economists.
Employees want more disposable income
Employers want to maximise profit by keeping wages as low as possible
The rentiers gains push up the cost of living.
Governments push up taxes to gain more revenue
I’ve let the CBI have a quick peek at the equation.
Disposable income = wages – (taxes + the cost of living)
Two seconds later …..
They realise the UK’s high housing costs push up wages and are actually paid by the UK’s employers reducing profit.
Employees do get their money from wages, so employers are actually paying through wages.
The UK’s high cost of living makes UK labour expensive and raises the cost of doing things in the UK.
The early neoclassical economists took the rentiers out of economics.
Hiding rentier activity in the economy does have some surprising consequences.
How does free trade actually work?
Why is it so much cheaper to get things made elsewhere?
The interests of the rentiers and capitalists are opposed with free trade.
This nearly split the Tory Party in the 19th century over the Repeal of the Corn Laws.
The rentiers gains push up the cost of living.
The landowners wanted to get a high price for their crops, so they could make more money.
The capitalists want a low cost of living as they have to pay that in wages.
The capitalists wanted cheap bread, as that was the staple food of the working class, and they would be paying for it through wages.
Of course, that’s why it’s so expensive to get anything done in the West.
It’s our high cost of living.
Disposable income = wages – (taxes + the cost of living)
Employees get their money from wages and the employers pay the cost of living through wages, reducing profit.
High housing costs have to be paid in wages, reducing profit.
The playing field was tilted against the West with free trade due to our high cost of living
The early neoclassical economists had removed the rentiers from economics so we didn’t realise.
That’s why it’s so much cheaper to get things made elsewhere.
The interests of the rentiers and capitalists are opposed with free trade.
No one told the Americans.
“Income inequality is not killing capitalism in the United States, but rent-seekers like the banking and the health-care sectors just might” Angus Deaton, Nobel prize winner.
Oh dear.
No wonder all their forms off-shore and import back into the US leading to a massive trade deficit.
What’s the good news?
The Chinese are using neoclassical economics.
The dynamics of the capitalist system were a bit of a mystery.
Davos 2019 – The Chinese have now realised high housing costs eat into consumer spending and they wanted to increase internal consumption.
https://www.youtube.com/watch?v=MNBcIFu-_V0
They let real estate rip and have now realised why that wasn’t a good idea.
The equation makes it so easy.
Disposable income = wages – (taxes + the cost of living)
The cost of living term goes up with increased housing costs.
The disposable income term goes down.
They didn’t have the equation, they used neoclassical economics.
The Chinese had to learn the hard way and it took years, but they got there in the end.
They have let the cost of living rise, and they want to increase internal consumption.
Disposable income = wages – (taxes + the cost of living)
It’s a double whammy on wages.
China isn’t as competitive as it used to be.
China has become more expensive and developed Eastern economies are off-shoring to places like Vietnam, Bangladesh and the Philippines.
Neoliberalism is a global ideology; everyone is making the same mistakes.
I believe in free markets.
Where did it all go wrong?
Relying on price signals from the markets.
“Everything is getting better and better look at the stock market” the 1920’s believer in free markets
Oh dear.
In the 1930s, they were wondering what had gone wrong with their free market beliefs and worked out what had happened.
What had inflated the stock market to such ridiculous levels in 1929?
1) Share buybacks
2) The use of bank credit for margin lending.
The US stock market is doing really well with share buybacks and margin lending driving prices ever higher.
A former US congressman has been looking at the data.
https://www.youtube.com/watch?v=7zu3SgXx3q4
He is a bit worried, hardly surprising really.
We didn’t realise we were making the same mistakes they made last time.
What is the fundamental flaw in the free market theory of neoclassical economics?
The University of Chicago worked that out in the 1930s after last time.
Banks can inflate asset prices with the money they create from bank loans.
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf
Henry Simons and Irving Fisher supported the Chicago Plan to take away the bankers ability to create money.
“Simons envisioned banks that would have a choice of two types of holdings: long-term bonds and cash. Simultaneously, they would hold increased reserves, up to 100%. Simons saw this as beneficial in that its ultimate consequences would be the prevention of “bank-financed inflation of securities and real estate” through the leveraged creation of secondary forms of money.”
https://www.newworldencyclopedia.org/entry/Henry_Calvert_Simons
The IMF re-visited the Chicago plan after 2008.
https://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf
When you use the money creation of bank credit to fund the transfer of existing assets it inflates the price.
Margin lending will pump up the stock market.
Mortgage lending will pump up the real estate market.
The UK eliminated corset controls on banking in 1979, the banks invaded the mortgage market and this is where the problem starts.
House prices have been roaring away ever since.
Free markets need to be kept free of the money creation of bank credit.
We didn’t realise they were making the same mistakes they made last time.
“We think there ought to be an alternative to the corporate and for-profit system of housing.”
I would prefer this statement: “There has to be an alternative to the corporate and for-profit system of housing, and we’re going to hold the Democrats’ feet to the fire until we get it.”
Maybe, someday, we can get the Democrats to do something. Right now, we need to stake, decapitate, burn, and scatter the ashes after dumping holy water on the Democratic party. The whole party with its system of nonprofits, donors, think tanks, and sycophants is a major problem.
I would add locally funded education. Education is at least half the local budget and it’s what drives local politicians to do whatever they can to raise revenue almost all of which comes from the real estate tax. In the forty years we’ve lived in the exact same home my real estate tax has increased a factor of 10. It exceeds my state income tax and is closing in on my federal tax. Any chance we can get state and federal to pay for education?
Half the population of the US has, by definition, an IQ less than 100. There is essentially no economic place for these people in the US. Would you rather hire an eager above normal IQ Honduran or a below mean IQ domestic with poor work habits? Years ago the Post Office was often thought of as that sort of job. Demands for efficiency and production have eliminated the vast number of jobs that can be done adequately by lower IQ, lower skill individuals. Outsourcing labor either out of the country or to new arrivals means those losing the work fall into desperate circumstances, often homeless. A national jobs guarantee paying a basic minimum wage tied to housing costs and living costs would really help or perhaps housing tied to employment. We do not need to hire non citizens to do lawn mowing and leaf blowing or agricultural work. We need to use our own labor, even if it is more expensive and less efficient.
Is IQ, whatever that is, important?
Where is the “we?” and where is the political apparatus to offer that goal?
I would never argue that we do need these things, yet I see a lack of sailors, in our current polity, looking for those shores.
Having watched my lifelong love get the waders on about this approach, read this:
https://housingevidence.ac.uk/wp-content/uploads/2021/06/ALACHO-HR-PAPER.pdf
If TLDR, it is about policy, not morality.
There is a history of public housing in the USA. And it is instructive.
Public housing was constructed from the great depression and the second world war into the 1960s/70s. Building of these developments was sponsored by local, state and federal governments. Some of the developments were quite nice in a modest way, well-designed, and people were happy to move into them, but there was an application process and tenants were selected. With the coming of the Vietnam and civil rights era, construction of new public housing ceased. Then as time passed, maintenance of the existing public housing became the issue. It was undermined by policies of racial segregation and with whites fleeing the cities to buy starter homes in the suburbs b/c they could get mortgages, while blacks were trapped in neighborhoods with redlining.
Local govs began to treat federal funding for public housing more as a block grant for their city rather than money to reach the public housing community. The federal government passed policies that concentrated poor families in public housing. This had the effect of reinforcing the policy of “benign neglect” – which was ultimately not so benign. Now what remains of public housing is in very sad condition and some is on track to be condemned for lack of proper maintenance when it mattered.
Disinvestment was led by state and local contributions drying up altogether. This left the federal government alone providing funding. At the same time federal interest turned more toward supporting private landlord section 8 vouchers instead of public housing — I think b/c that pleases wealthy campaign donars more.
Yes, when you really look into it … it is a page from American history, rife with capitalism, racism, privatization of a public good, and mixed interests between local and federal governments, each pointing the finger at one another.