Blog #57 – – “Public” opinion and the innocent media.


Blog #57 – “Public” opinion and the innocent media.

N. Gregory Mankiw, professor of economics at Harvard. writes:

“Media owners generally do not try to mold the population to their own brand of politics. Instead, like other business owners, they maximize profit by giving customers what they want.”
“These findings speak well of the marketplace. In the market for news, as in most other markets, Adam Smith’s invisible hand leads producers to cater to consumers. How likely is it that we as citizens will change our minds, or reach compromise with those who have differing views, if all of us are getting our news from sources that reinforce the opinions we start with?”

Fine as far as it goes. But four further points need to be made.

1. Multiple markets, multiple “publics.” Sure, media cater to their markets. But which markets? No media outlet can cater to all markets at once. Even if somehow media owners were devoid of any opinions of their own and scrupulously avoided injecting even the suspicion of injecting whatever opinions they had into their media – hardly likely given the strong personalities and convictions most of them have. And even if they were guided only by purely market concerns, that is, maximizing their profits, they would take into account the sources of their revenues, which include advertising. Advertisers recognize that there isn’t just one market out there, but many, and they cater to the one that will produce their own greatest profit. Newspapers, most media, looking to maximize their ad revenue, will thus cater to the audience to whom their advertisers cater. Advertisers professionally try to influence their potential markets; they don’t work on the idea that buyers will keep the preferences they start with, but try to mold those preferences to suit their clients And that pressure to please the particular pre-selected market inevitably caries the actions of the media with it.

2. The vicious circle of media and opinion. Sure thy go along with, and try to reinforce, the opinions that their selected part of the market members already holds. That indeed makes it harder for them to change, if they are only fed back what they already believe. But where did the “opinions they started with” come from? Surely they did not come from their experience in the womb, but were influenced from an early age, by what they heard, saw, were told by the media. They didn’t “start with the opinion” that ObamaCare was wrong; they got that from the media to which they were exposed. It’s not only had for them to change their opinions, as Mankiw correctly point out, it was the media that shaped those opinions to begin with. It’s indeed a classically vicious circle. The media should not be exonerated from their responsibility in what they do.
3. The innocence of media owners. It is hardly a sustainable contention that the the “brand of politics” of media owners does not affect what the media they own produces – think of Murdoch, think of Hearst, think of Sulzberger.

4. Journalistic ethics. Is it time to admit that there is no such thing as an ethics of journalism that plays any role in the media as they are in the real world, or should we perhaps recognize that reporters vary widely in their views of journalism as a profession with a set of ethics, and vary widely in the freedom they have to write their own stories without interference from the higher-ups controlling the business in which they work, with the power to hire and fire. The media is not simply another producer of a commodity on the market likes shoes and cars, but of something special, with a special public responsibility. ? Jefferson and Paine certainly thought so.

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Blog # 55c – The Blocked Questions on Inequality.


Blog # 55c – The Blocked Questions on Inequality.

[Blog #55a has tried, in outline form, to explain the existence of inequality in the U.S.A.]

[Blog #55b has asked mores specifically how that inequality came about and why it is tolerated in a democracy.]

This Blog #55c gives three examples, from different points of view, of how challenges to that inequality are blocked in the discourse about it.

The limits of Piketty.

 Thomas Piketty’s work has received deserved acclaim among economists in the mainstream, and even among some on the left. He clearly relates increased inequality to the growth of wealth and capital, Iin other words, inequality is increasing because the 1%’s share of growth is increasing. Historically, Piketty argues, as Steven Pressman, in a review in the “social justice and economic democracy committed” journal Dollars and Sense,[1] summarizes it, although inequality had been declining, “in the 1970’s or1980’s…the moneyed class revolted and began to influence policy. Top income-tax rates fell, income and wealth inequality rose rapidly.” The focus is clearly on the 1%. The conclusion is to tax it more heavily again, both its wealth and its income. But, Piketty concedes, an unlikely immediate development. Period.

What Piketty brings to the discussion is very much; what is surprisingly missing is as great. His analysis seems to cry out for answers to questions he does not ask: how does that wealth of the 1% come to them in the first place, what in the process of production that Miller refers to gives them their wealth, how come when the moneyed class revolted it was able to influence policy so strongly, why is it unlikely to be taxed down? “When the rate of return to capital (r) exceeds the growth rate of the economy (g)… more money flows to those at the top and inequality increases.” Obviously; that’s simply stating a tautology: when capital gets more of growth, non-capital gets less. Money seems to flow up-hill quite naturally, in such an economy. Wouldn’t the logical next question be, if the concern is for inequality, how could one reverse the flow? But the existence, and propriety, of the reverse gravity is simply taken for granted.

And the progressive economist reviewing Piketty has no better conclusion than to wish for “even more fire in [Piketty’s] soul for a global wealth tax.” His consolation for Piketty’s pessimism is that Malthus was pessimistic too, and look, he was wrong; maybe Piketty will be wrong too.[2] The problem is not so much that Piketty’s recommendations, or the reviewer’s wishes are wrong. Indeed a global wealth tax is well worth fighting for. The problem is that neither is pushing their questions to the next logical level of inquiry: how the difference in wealth between the 1% and the 99%, capital and non-capital, comes about in the first place.

Leveling down or leveling up.

 We read in a brief summary of how to deal with inequality dealing with “the underlying causes of our continuing high degree of poverty and inequality,” by a well and properly respected liberal sociologist and veteran of the anti-poverty wars, that the choice is between two approaches: Leveling Down the 1% or Leveling up the 99%.[3] Leveling Down, in the form of “increasing tax rates on the 1% would… ineffectively combat the continuing production of wide-ranging poverties and inequalities.. .”[4] The simple idea that levelling down the 1% might in fact be the best way to leveling up the 99%, because the profits of the 1% are built on the lower wages of the 99%, simply does not appear in the discussion. Miller might well agree that it is so; he points out that financial industries captured 40% of all business profits…and they certainly did not provide 40% of all jobs, while making a substantial contribution to income and wealth disparities.”[5] But the logical conclusion that limiting the profits of the business sector might help level up the incomes and wealth of the 99% is not pursued.

But what are underlying causes of our continuing high degree of poverty? “The American Economy is shaping up as a low-wage economy producing …” poverty. “…the production of these low-wage jobs is a great obstacle to… contraction of poverties and inequalities.” These jobs are in the “low-wage service sector.” “Yes, we should definitely seek to improve wages in that sector,” but the better route is to reduce the role of those jobs and rather foster jobs in construction, for instance, where the pay is better.

The point here is not that Miller is wrong in his recommendations; they should be supported as part of a broad effort to reduce inequality. The point is that what is missing in his discussion is any confrontation with the simple fact that the wealth and income of the 1% are related to the lack of wealth and incomes of so many of the 99%.

Low wage jobs are simply accepted as low-wage jobs; the wages should be higher, but low wage is simply what those jobs are. The financial industry makes 40% of the profits of business. That’s too much, but it’s not an “underlying cause of inequality.” And the jobs that need creating are not simply jobs that pay well, but jobs that do useful work, not speculate better or privatize more.

No larger pie. The New York Times’ Eduardo Porter, in his Economic Scene column in that mainstream paper, believes he has the answer, gotten by “Taking a Hard-Eyed Look At U.S. Income Inequality and the Problems Behind it.”[6] At various points he quotes, apparently approvingly, Gregory Mankiw, an economic advisor to President George W. Bush and Mitt Romney, advocates focusing on “increasing educational attainment,” and holds, in as forthright a conservative statement as one would want, that “Inequality itself is the wrong thing to look at… The question is, how do we help people at the bottom, rather than thwart people at the top? … “Policies that address the symptom rather than the cause include higher taxes and a more generous social safety net,” says Mankiw. So helping people at the bottom doesn’t work, perhaps because it might thwart those at the top? “The best way to address inequality is to focus on increasing educational attainment [because] technological progress has benefitted well educated workers.” But then there are a series of comments pointing out that “education isn’t doing it” either. Nor does “technological progress” seem to be the answer either, for “the real problem is slow growth.” according to Mankiw‘s presumably hard-eyed look.

But, Porter says at the end of his discussion, apparently sympathetically, getting to “the nub of the issue,” that, “as the richest Americans capture a larger and larger share of the fruits of growth, for many people the essential question becomes: What is the point of creating a larger pie?” Well! So it is the division of the pie that counts, after all, and maybe those at the top do need to be thwarted, if the nub is to be dealt with?

Although Porter has thus gone much further than the avowedly liberal Miller in linking the growing wealth of the 1% to the poverty of the poor, charging that the rich are capturing – presumably from the poor – a large part of the pie, he seems to go back to an earlier comment in the middle of his piece, said more or less in passing: “even avowedly liberal social scientists have had a tough time figure out the negative consequences of the rise of the 1 percent.” Without noticing that he has himself just figured it out, he concludes with a classic cop-out: “That’s the post-Great Recession reality.”

 

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[1] “Piketting Wealth Inequality,” July/August 2014, p. 26.

[2] P. 37

[3] S.M. Miller, “Breaking the Low-Wage Syndrome, Poverty & Race, vol. 23, No. 4, July/August 2014, p. 9.

[4] Miller also properly points out that the effort to tax the 1% has been largely unsuccessful but does not address the question of why that is, the main point raised here.

[5] Ibid.

[6] July 30, 2014, p. B1, B8.

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Blog #55b – Why Does Inequality Have Popular Support?


Blog #55b – Why Does Inequality Have Popular Support?

The Agents of Inequality The Agents of InequalityThe Processes of Inequality: Exploitation, Dispossession, Incorporation

I have argue here and elsewhere[1] that

Social inequality is caused, not by any technical developments or by agreement that it is just or because the people wanted it, but because it directly serves the interest of the 1%, who have the power to impose it through the processes of exploitation, dispossession, and incorporation. Inequality is inevitably a matter of conflict, roughly between the 1% and the 99%. Any serious effort to reduce inequality must deal with this simple and obvious fact.

(It should be clear that we are talking about social inequality, inequalities in social relations reflecting hierarchies of power and wealth, not individual differences or inequalities in strength, wisdom, inherent abilities, virtues. It is of course what Jefferson meant in the Declaration of Independence’s ringing declaration: “all men are created equal.” They obviously differ in size, weight, talent, strength, desires, etc.; it’s the social relations among them that is in question.)

But what are the concrete processes that create social inequality, that permit the 1% to impose social inequality in society, to their benefit?

The answer, again, can be given in a few words: Exploitation, Historical Dispossession, Capitalist Dispossession (Expropriation), and Incorporation

Historic dispossession actually came first, in primitive societies and pre-feudal monarchies and empires and autocracies. The 1%, the established rulers, chieftains, monarchs, simply were entitled to take possession of what they wanted from anyone in their power. They did this through the exercise of brute force: slavery, where the masters took possession of anything of the slaves that they wished, war, where the spoils of the war were simply taken by the victors from the losers as their spoils.. The practice persisted well into feudalism, with the divine right of kinds (even Mozart built on its recognition in Figaro’s objection to the exercise of the Rights of the Seigneur in 1786!). And the dispossession of villagers’ use of the traditional commons for grazing, what we would now call privatization, was a significant part of the transition from feudalism to capitalism.[2]

Exploitation is a widely understood concept, and understood as a constitutive component of capitalism in the form of the wage relationship in production. , and focuses on the processes by which one person or group obtains the benefits of someone else’s labor through the payment of wages that do not equal the value of that labor. The profits accruing to the employer in that relationship accrue to capital, are a “return to capital” in Piketty’s sesnse, a conspicuously non-judgmental phrase for a relationship that could raise some questions of justice but which clearly benefit the 1% and the expense of a major part of the 99%, and contribute to a mounting inequality as capitalist forms of production expand and go global.

Capitalist dispossession, however, accompanies the drive to ever-increasing profit (what Marx calls primitive accumulation and David Harvey calls accumulation by dispossession[3]). Colonialism is its manifestation at the international level, but is paralleled by national practices. Rosa Luxemburg spoke of “The right to take possession, oppression, looting, are openly displayed without any attempt at concealment, and implemented by force if necessary.”[4] But in its mature capitalist form it is put forward as a right, and a right available to anyone, not merely of a chieftain or king exerting a hereditary or divine right to its exercise.

Foreclosing on a mortgage effectively dispossesses the “owner” of the house of his occupancy of it, and expropriates the house to the bank or financial institution that holds the mortgage. And the force behind it is state sanctioned and applied, if not under specific legislation then by execution of judgments in courts of law. The Sheriff will enforce the order of eviction a court grants, and forcefully puts the owner’s property on the street.

Contemporary dispossession (expropriation) differs from both its preceding forms, historic and capitalist, in two major ways;

  • Contemporary dispossession is much less focused on physical dispossession, and involves a whole range of broader goods and assets, including property rights in all sorts of values which are included when one speaks of inequality. Contemporary dispossession might more properly be called expropriation, the taking of some key rights in that bundle of rights called ownership, key rights that go into the composition of wealth and power that Piketty, unlike Marx, lumps together in the term capital. The most obvious, of course, is the right to income or a share in the profits from an investment. Expropriation here is not the taking of the physical stock certificate, but the justification for not honoring a supposed “right” to a proper return on the investment. The right to an education, the right to health care, the right not to be discriminated against, the right to security of the person, the right to the sanctity of the home free of trespass, the right to vote, are all rights the 1% take for granted, but that large parts of the 99% find in practice not or barely available to them. The effective elimination of those rights in practice leads directly to the relative reduced wealth and income of the 99% and the expansion of the wealth and income of the 1%, increasing inequality by the most conventional of measures, and in a quite fundamental way. As an (critical) example, every reduction in the progressivity of taxes used to make such rights meaningful goes directly in the pockets of the 1% and the expense of those in need of those rights.
  • Contemporary dispossession in fact largely creates those very rights and values it then expropriates. Ironically, when the “owner” of a home among the 99% loses it in foreclosure, his or her very ability to purchase it was enabled through high credit by the institutions of the 1%, who end up unharmed by the foreclosure. The bank owner, surely among the 1%, itself enabled the creation of the owned homes of many of the 99% which it helped finance, and then through foreclosure dispossesses the homeowner of that home to its own benefit, widening the gap between the two. The whole process of financialization, and the credit bubble it engendered has caused harm to the 99% from which the 1% have benefited, so that their share of the society’s wealth has increased while that of the 99% has decreased. It is a case of private dispossession/expropriation.

How could the 1% get away with this, in an advanced democracy? It couldn’t happen without support, including much active support, from a large part of the population, at least in the so-called “advanced democracies.”

Incorporation is the best term I can think of for the answer. Not in the sense of forming a corporation, of course, but in the sense of absorbing any potential resistance within it, making the resistance itself part of the system it attempts to criticize. Co-optation might be an easier term, but it is co-optation at a fundamental level, deliberately provoked and nurtured out of self-interest. But then internalized as natural, inevitable, and indeed desirable by the majority whose interests are in fact badly served by it. If the key cause of inequality is what was theorized at the opening here:

Social inequality is caused, not by any technical developments or by agreement that it is just or because the people wanted it, but because it directly serves the interest of the 1%; who have the power to impose it.

The question becomes how have the 1% amassed that power, and why are the 99% not able to resist it?

But that question is simply missing from mainstream discussions of inequality, and rarely raised even in critical discussions in economics even from the left, where it might be expected but where it seems to encounter a blockage that requires understanding. Instead what critical analysis exists is incorporated in a mainstream analysis that neglects fundamental conflicts and instead pokes at the edges of the problem sometimes with sensible but limited suggestions for reform that are incorporated into the mainstream of reform discussions, but shy away from even acknowledging the deeper issues of conflicts of interest that a more iconoclastic discussion would engender. And as the discussion veers away from these conflicts at the ideological level, the political attitude towards inequality likewise veers away from unsettling proposals and ends up incorporated within the mainstream in at best mild reforms at its edges and at worst celebrating its existence.

Such incorporation into the mainstream is produced by the combination of two factors:

1) at the discourse level, suppression of the acknowledgement of conflict: the domination of public discussion of the issues by ideological analysis incorporated into an acceptable mainstream blind to the conflict-laden causes and alternatives, and spread through media practices and institutional support into the popular consciousness; and

2) at the political level, consumerism leads to acquiescence: the strong lure of artificially induced consumerism, as reality and as hope, smothers criticism and incorporates the potential critic into the mainstream of acquiescence.

At the discourse level the public discussion of inequality is strangely limited. It not only circles around partial or simply wrong answers, discussed schematically in Blog 55, Inequality is indeed spoken of in public, and even makes the best seller lists, viz. Piketty, but the public discussion almost always simply fails to address the right questions, fails to push superficial if plausible answers to their roots, to consciously recognize its roots and consequences, to acknowledge the conflicts of interests and motivations.[6]. At both the discourse and the political levels, both effectively suppress or sidetrack.

Blog #55c – The unasked questions about inequality   gives three concrete examples of this blockage of the discourse.

CONCLUSION

How is the foregoing discussion relevant to a concern about inequality? If the analysis is right, a very practical political conclusion. If inequality refers to how the pie is divided, and if inequality is to be reduced, the 1% must give up some of it to the 99%. But the acknowledgement of conflict is suppressed, not because the facts aren’t clear, but because of a simple acquiescence in things as they are, a hard wall that stops both the avowedly liberal and the hard-eyed conservative from extending the implications of their own analysis to the recognition that it will take a serious thwarting of the rich to effectively reduce the inequality of the poor.

The first conclusion: remedying inequality involves a fight, before a search for broad consensus can begin. The causes of inequality are not technical failures, or found by focusing singly on action aimed at improving the lot of the poor, or by changing the poor by education, moral suasion, example, or similar measures. Inequality is the result of real conflicts of interest. In the long run it may be to everyone’s interest, in common, to reduce inequality, but certainly in the short and intermediate run, reducing inequality will involve significant conflicts. It may not be entirely a zero sum game: the advantages of reducing inequality may include greater productivity, less social tension, more effective policy making; but it will also result in some winners and some losers. So the first conclusion: be prepared to fight, challenge the means by which the !% get their greater share of the pie to begin with, seek consensus as far as possible but only around a just answer and realize consensus is not likely to happen except at a very superficial level.

The second conclusion: The forces supporting inequality not homogeneous; the majority can be converted. In the unavoidable fight, figuring out who is on what side is key. As of this writing, it seems clear that a large number of folk, not simply defined by their economic position, support measures that buttress or even promote inequality. Taking the Tea Party, and the conservative wing of the Republican Party as examples, they support lowering taxes, reducing public services, undermining unionization, avoiding minimum wage legislation, increasing security by policing and incarceration, privatizing public services from education to garbage collection to health care, indeed to anything out of which the private sector might make a profit. And in these positions they are supported by a large part of the leaders of public discourse, not only in the media but also among pundits, academics, many religious leaders, grounded in some deeply embedded racial prejudices and social mores.

 But those who objectively end up supporting inequality can be separated analytically. and some can be significantly aroused to recognize their own interests politically. They might be separated, based on the analysis here, into at least two quite different parts: those whose interest these position serve, and those who are in reality adversely affected by them but have been incorporated, willy-nilly, into a pattern contrary to those own interests. In the first group, of which the Koch brothers are perhaps the most conspicuous example, their very material interests are served by inequality: they benefit from the inequality of the others. The 1% benefit directly from the inferior position of the 99%. But they are seduced into supporting the 1%, not only by the media and the doyens of public opinion, but also by their own benefits – their fear of losing those benefits which they already have, even with their limits, in favor of an alternative that is hardly visible on the horizon. They have been incorporated into a system harmful to their own interests by the various processes discussed in this piece. The challenge therefore is to break through those processes and convert even the bulk of the Tea Party supporters into supporters, rather than opponents, of greater equality.

Blog #55a gives an outline answer to why is there inequality.

This #Blog 55b explains why Inequality has so much Popular Support

Blog #55c gives examples of the blockage of key questions.

 

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[1] Blog #55

[2] Marx spoke of dispossession of the commons in the transitional phase from feudalism to capitalism as “primitive accumulation,” essentially the same thing.

[3]What Marx included under the concept, n Harvey’s summary, is included in Appendix A. Harvey’s trenchant discussion of its new form is in Harvey, D. 2004. “The ‘new’ imperialism: accumulation by dispossession.” Socialist Register 40: p. 73..

[4] The Accumulation of Capital, Rosa Luxemburg, quoted by Harvey, D. 2004. p. 73..

[6] Freud can be helpful here, but going beyond the general concept of mass psychology. See Herbert Marcuse, Eros and Civilization

Posted in 1%, 99%, Growth, Inequality, Loaded Language, Mortgage foreclosures, Politics, Tea Party | Tagged , , , , , , , | 8 Comments

Blog #55a – Why is there Inequality? It’s no Mystery


Blog #55a – Why is there Inequality in the U.S.A.?

An Answer in 22 and 7 words.

Piketty showed, in 648 pages, that inequality is increasing long-term. It continued in the short term:

In 2009, figures were: average net worth, top 1%;   $16,439,400   bottom 20% minus $14,000

Total Net Worth[1]      Top 1 percent              Bottom 80 percent

1983       33.8%                   18.7%

2010       35.4%                   11.1

Why is this so?

The wrong answers:

1.     Because the need for higher education and more skills is growing. Wrong because:

  1. Access to higher education and skill training is controlled by the 1%. They support education that helps them produce profit, do not support that which could lead to criticism and organization for higher pay.
  2. And higher pay and greater net worth are more related to parents’ incomes, s4ector of the economy, e.g. financial, education, social work, art, than to training and skills.

Because it is just, and criteria for justice in the distribution of income is that a person works harder, contribute more to society, is smarter, needs more, is justly entitled to have more. Wrong because:

  1. Sitting in an office is not harder work than working on an assembly line or collecting garbage, but is paid more because hedge fund managers have more power than factory workers or garbage collectors.
  2. And hedge fund managers do not contribute more to society than social workers or teachers, in fact do major damage.
  3. And there is no evidence the 1% have higher innate IQ’s than the 99%.
  4. And the 1% have more than they need, most of the 99% less.
  5. And the 1% have vastly more than the 99% to begin with.

 

 

The right answer, in 22 words.

 

The 1% are rich because they profit by keeping the 99% poorer. There is only one pie to divide, whatever its size; if the 1% take more, the rest will take proportionately less..

Why is this so, in a democracy, and so little understood?

The wrong answer:

1.     Because the people wanted it that way. The wrong answer because:

2. Wealth provides political power also. And apparent prosperity co-opts opposition.

3. And the 1% control the means of mass communication, and bury the alternatives.And presumed experts of the 1% pontificate that trickle-down will work to the benefit of all.

4. And the 1% control the use of physical force, the use of incarceration, etc.

 

The right answer, in 7 words:

 

Political and economic democracy are too limited.

Blog #55b expands on this answer. Blog # 55c gives concrete examples.

[1] G. William Domhoff, at http://www2.ucsc.edu/whorulesamerica/power/wealth.html

Posted in 1%, 99%, Abundance, Inequality, Justice, Politics, Poverty, Property Rights, Social Justice, Uncategorized | Tagged , , , , , , , , | 2 Comments

Blog #54 – Community Land Trusts as Transformative Housing Reforms


Community Land Trusts as Transformative Housing Reforms

That New York City has a housing problem is rather well known. The devil here is indeed in the big picture as well as in the details. 47% of the city’s low-income renters[1] pay more than half of their incomes to obtain housing. Imagine what paying half your income just for housing means for the ordinary person, let alone one with limited income. 24% live in overcrowded quarters, more than 1.5 persons per room in the standard definition. Neighborhoods are clustered by race, ethnicity, income, household composition –what impolite critics call segregated, one of the most segregated (84.3 on the widely used dissimilarity index, where 100is completely segregated. Only Gary, Detroit, and Milwaukee, of the 314 other metropolitan area in the United States, are more segregated.[2] 224,000 units were in physically poor conditions. 164,000 units were vacant but not available for sale or rent, according even to the official figures.[3]There were 15,993 mortgage foreclosures in the city in 2013;

Bloomberg News[1] headlined the fact:

FORECLOSURES SURGING IN NEW YORK-NEW JERSEY MARKET.

Community Land Trusts may have a significant effect on New York City’s housing crisis, may affect struggling and even prospering neighborhoods, may achieve significant savings in the city’s budget for housing while increasing the afford housing supply for families in trouble. But their long term impact may go further, and be a transformative new way of looking at the housing market and its limits, and model the way it can best function to serve the needs of all the city’s resident.

 

The federal government has, in its fashion, responded to such problems; New York City has the highest number of public housing unit, owned and managed, and maintained (in niggardly fashion) by the New York City Housing Authority itself. New York State has, if reluctantly, permitted the city to establish limits on the rents that can be charged for a declining portion of the city’s large renal stock. Mayor Bloomberg responded by pushing for extensive new construction of units, with a minor allocation to those most in need. Mayor de Blasio has put forward an extensive and expensive new housing plan that envisages 200,000 new units, and more, in the next 10 years.

 

But of course, when we say “New York City has a housing problem,” hat does not mean everyone in the city has a problem. The New York Real Estate Board holds that the real estate market has rebounded from the bursting of bubble that the industry, with the active encouragement of the financial sector, itself produced so recently. Rents going up are good news for landlords, if bad for tenants.[5] Mortgage foreclosures by banks and other financial institutions provide opportunities for big operators to buy up homes at a bargain, throwing home owners willy-nilly onto the rental market, shattering hopes of accumulating wealth by investing in “asset building” in a housing market sure only to go up, not down. At the same time, a Rent Stabilization Board makes sure rent regulation won’t prevent landlords from covering the costs when they go, protecting the profits from their investments, regardless of whether that means their tenants chances of meeting their basic needs are widely jeopardized. Talk of inequality!

 

A tiny new non-profit, called NYCCLI, somewhat incongruously pronounceable as “nicely,” the New York City Community Land Initiative,has just been incorporated in New York. What does it hope to offer to deal with this situation? Quite a bit, it turns out. NYCCLI’s formal incorporation papers describe it purpose as “advocating for community land trusts.”

 

And what is a community land trust? A community land trust is a trust that typically owns land, on which the housing unit or units are leased, for 99 years, to a limited equity co-op which provides homes for households, typically lower to moderate income, who occupy the buildings as members of such a co-op and have all the rights a home owners would have except for the right to sell the unit at a profit. Their sales price is set by a formula approved by the trust, typically permitting recovering the purchase price plus improvements plus some cost-of-living adjustment, but excluding the value of the land, which of course remains with the trust. The trust that owns the land also sets some basic rules for its use, basically to ensure that the housing on it will be permanently available to household who need it at the most affordable rents possible. The board that runs the trust is typically composed 1/3 each of residents of it housing, residents of its neighborhood, and supporters, who may come from government, advocacy groups, or technical experts who may be helpful to the trust. [6]

 

What good are community land trusts? They have four major advantages:

 

First, they make possible the creation of affordable housing on a permanent basis, especially for lower income households. CLTs make a key trade-off: they give up the possibility of speculating on an abnormal increase in the dollar value of the home in return for the security of knowing there is no threat of loss if housing prices go down and no danger of eviction if the cost of occupancy become unaffordable because of job loss or ill health or other circumstances beyond a household’s ability to control. And unlike almost all currently existing affordable housing programs, if a community land trust receives public subsidy, its benefits remain permanently available to their targeted low/moderate income recipients, and do not expire after a fixed time period of 20 or 30 or 40 years, and costs for such future residents have been permanently fixed to exclude any increases in the speculative value of the unit.

 

 

Second, community land trusts build communities and stabilize neighborhoods. They provide for deeply democratic management of their housing. By having not only residents but also neighbors and supporters from the wider community on their boards, they can provide diversity, establish priorities for expenditures, achieve efficiencies of scale, and put the strength of the trust behind individual members falling on hard times

 

Third, community land trusts represent a whole new approach to the principles governing the way housing is distributed, occupied, and used in a democratic society, limiting the intensity of the inequality induced by a private market which sees housing as a commodity to be bought and sold for its exchange value, for the profit it may produce, instead of for the needs it may satisfy, its social use value. NYCCLI’s approach can help change housing from a symbol and magnifier of inequality to address at least in part one of inequality’s main causes.

 

But fourth, and in the long run perhaps most important, they can be transformative.

 

Community land trusts challenge the arrangements of a housing market used to the pleasures and pains of speculating on housing value, which is, economically, fundamentally speculating on the value of a given location, and instead see housing as a necessity of a decent life and a supportive environment for all. And they provide the same opportunity for “wealth creation” or “asset building” as does buying a house with a mortgage and paying off the mortgage: put the equivalent of what is put into paying off the mortgage principal and interest on the land into a savings account or other good investment, and you have the accumulation with perhaps even less risk. Putting this together, they can move from seeing housing as a commodity, valued for its exchange value, the profit it can produce, and see it rather as a necessity of life, even perhaps up to a certain configuration as a public good.

 

The different tenures of housing and the legal and financial relationships householders have to the housing they occupy have major implications for the way people live. Community land trusts can provide a form of home ownership for a resident that combines the privacy and security and insulation of the American Dreams’ single family suburban house with the solidarity and support and social richness of the ideal urban life-style. Immediately, to reach the lowest income groups, they will need some public support for acquisition or basic running costs, and they richly deserve such support.[7] In the long run, transformatively, they can benefit not only their residents but the neighborhoods and the housing system

 

[1] http://www.bloomberg.com/news/2014-02-26/foreclosures-climaxing-in-new-york-new-jersey-market-mortgages.html

[2] Censusscope, available at http://www.censusscope.org/us/rank_dissimilarity_white_black.html

[3] The Census Bureau’s Housing and Vacancy Survey for 2011,. The count by Picture the Homeless suggests a significantly higher figure.

[4] http://www.bloomberg.com/news/2014-02-26/foreclosures-climaxing-in-new-york-new-jersey-market-mortgages.html

[5] The Real Estate Board summarizes:

“,,,notable gains this quarter, as compared to the second quarter of 2013, included: the 19-percent-increase in the average sales price for all homes in Brooklyn to $715,000; the 15-percent-boost in coop sales in Queens; and the 13-percent-increase in the average sales price for a coop in New York City to $768,000. The residential market in Manhattan also remained strong with the average sales price for all homes increasing by six percent to $1,491,000 year-over-year” http://www.rebny.com/content/rebny/en/newsroom/press-releases/2014/REBNY_2014_2Q_Report_Improving_Economy_Drives_Residential_Sales.html

[6] Detailed information is available from the national Community Trust Network, whose website, at http://cltnetwork.org/, contans extensive references to further materials, as do NYCCLI’s own educational materials.

[7] And remember the enormous subsidy that inures disproportionately to higher income households from the mortgage interest deduction in our income tax system.

Posted in Critical Theory, Gentrfication, Housing | Tagged , , , , , , , , | 7 Comments

Blog #53 – Density, Inclusionary Zoning, Housing Planning: Cautions on de Blasio’s Plan


Density, Inclusionary Zoning, Housing Planning: Some Cautions on  the           de Blasio Plan.

Mayor de Blasio’s Housing Plan is a far better plan than anything we’ve had since LaGuardia, and worthy of full support. But there are four large issues that need to be addressed, some in its principles, some in implementation: Density, Growth, Equity, and Comprehensiveness.

Density leads to gentrification and displacement, if not controlled [1]. There is a natural tendency look to the market to determine where increased density will work, to support increased density by zoning decisions, infrastructure investment location, tax policies, eased building height and FAR requirements, support for mega-projects, where the market indicates there is effective demand. That means, specifically, where there is the proverbial rent gap: where increased real estate values, particularly land values, suggest higher profits are to be gained by improvements, whether modernization and upscaling or higher and more dense new construction. Permitting such “improvements” thus is synonymous with increasing the prices of housing, not only in the locations made more dense, but in their surroundings. That in turn means one of the principal causes of gentrification and displacement is is advanced by public policy.

But there are good ways and bad ways of increasing density, if the purpose is to address housing needs in an equitable fashion.

Bad:

  • Permitting demolition of low-rise low-rent housing in favor of denser more expensive housing.
  • Permitting new housing in public housing sites for occupancy at market rates, where low-rent, i.e. subsidized housing could be built. Increasing density in already gentrifying neighborhoods.
  • Permitting densification without neighborhood rent regulations, fair and strictly enforced.
  • Permitting open and undeveloped space to be built on without regard to existing neighborhood use and needs.
  • Disregarding unbiased neighborhood opposition and community-based planning goals.
  • Increasing congestion and pollution without adequate transportation provision.
  • Providing bonuses permitting development beyond existing planning limitations

Good:

  • Increasing density by requiring that partially-occupied and vacant properties being held off market for speculative purposes be made available for occupancy, at affordable rents.
  • Improving public housing.
  • Increasing the supply of subsidized housing.
  • Controlling against the displacement effects of gentrification by rent regulation strictly enforced.
  • Make every program increasing density subject to open Community Board review, with over-riding of its vote only by a super-majority of Planning commission and City Council.
  • Investing in remediation of brownfield sites while preserving compatible industrial or commercial uses providing benefits equitably distributed.
  • Complying with community and city-wide planning standards regarding contextual development, light and air standards, accessibility provision and congestion avoidance.

Inclusionary housing can lead to neighborhoods further functionally segregated by race and income, if not controlled, and can be an inefficient use of governmental subsidies if provided. Inclusionary housing only works where the market is strong enough so that a developer or landlord can make a profit from market prices high enough to cover the provision of below-market rate units. Thus, it will only work in higher income neighborhoods, predictably more non-Hispanic white than the in the city as a whole. That effect will be particularly strong the lower the income of the target population to be benefited, in the development, because it will require a greater cross-subsidy, hence higher market rate units, hence even more likely non-Hispanic white. . And if it is limited to already higher income neighborhoods, it is likely to increase the concentration of significantly segregated residences in the city if it provides bonuses for buildings which result in a net increase of the proportion of high-income uses in the larger community. A very delicate balancing is required, with opposing dangers.

Further, the higher the effective subsidy needed, the higher the rents/prices of the market rate units needed to make inclusion profitable. If owners are permitted to select the tenants providing meting inclusionary requirements, they will discriminate in favor of the highest permitted income and the most “responsible” (“acceptable” ) tenants, creaming among applicants by considerations other than the need for housing. With the large majority of residents of an inclusionary development paying market plus rents, their demands on neighborhood facilities and services will be very different from those of the residents of the below-market rate units, to the latters’ disadvantage. Identifying the below-market rate units as such permits a likely stigmatization and pressure to separate out their residents. The worst case scenario might be the equivalent of servant’s quarters in a private residence.

But there are good ways and bad ways of designing and implementing inclusionary zoning, if the purpose is to address housing needs in an equitable fashion.

Bad:

  • Permit the market to determine where inclusionary housing will be provided.
  • Implement it particularly in transitional neighborhoods where the probability and disadvantages of gentrification are greatest.[2]
  • Let owners determine selection of residents for below-market-rate units.
  • Permit external identification of affordable units, or their isolation.
  • Ignore neighborhood impacts of construction, and neighborhood needs for facilities and services.
  • Make inclusionary development financially profitable by allocating public subsidies , including tax and other benefits, to support their rentals, effectively reducing the pressure on market-rate rentals and reducing cross-subsidy effect.
  • Provide as bonuses deviation from neighborhood planning and construction standards and limitations, e.g. height limits, zoning restrictions.
  • Permit obligation to provide below-market rate units to expire.

Good:

  • Make inclusionary housing mandatory, and target city programs of support in such a way that they draw on the developer’s profits over subsidies to support them.
  • Require a high enough number of below-market-rate units in any building to permit the provision of neighborhood facilities and services for the needs of all residents.
  • Permit city control of tenant selection for below-market units, perhaps using Housing Authority waiting lists and criteria.
  • Hold to planning-established limits on height, set-backs, etc. avoiding the granting of zoning and building exceptions’ or bonuses for inclusionary developments.
  • Provide for major participation in design and implementation of proposed beneficiaries in need of affordable housing.
  • Make every program subject to open Community Board review, with over-riding of its vote only by a super-majority of Planning commission and City Council.

Conclusion: Inclusionary housing can be an excellent program, but requires caution in its application. The devil is in the details. On-going effective participation of intended beneficiaries in need of housing is key in design and implementation.

A good Housing Plan requires long-term considerations beyond its immediate measures.Desirable provisions of a housing plan for New York City might include a city-wide housing plan developed as part of the city’s comprehensive planning process, that would deal with goals and standards for decisions on the location of housing and population distribution and density. Such a plan should deal explicitly with issues of segregation and equity among income groups and by race, color, ethnicity, age and gender. Zoning should be an important part of the implementation of such a plan, and specifically should include consideration of income-targeting land use allocation, as in providing income targets in the definitions of residential zones.

It should be comprehensive, and consider issues such as: zoning regulations facilitating for low income housing; Rent regulations. Tax action policies, taxing profits fairly, holding down depreciation deductions to match reality, surtaxes on flipping housing units, taxing quick turnover sales as ordinary income, making real estate taxes progressive, conforming to binding 197-a comunity plans, calling for equity impact statements on planning decisions, adopting clear city equity standards.Make a housing plan part of the city’s planning process, including goals for an agreed-upon equitable distributing of locations for housing development.[3] Adopt anti speculative warehousing legislation to deal with the full use of vacant units. Give due weight to the need for open space and active public political uses as well as recreational and passive. Integrate with regional considerations.

A general concern with the plan may arise from the process envisaged to put it into effect. The de Blasio Plan states:

“the City will conduct the analyses required for development of a mandatory inclusionary zoning program that satisfies sound land-use planning and legal principles, then will engage a broad group of housing stakeholders to solicit their input into the modifications and expansions of the Inclusionary Housing Program, and will work with stakeholders moving forward to ensure that the program functions smoothly to support development while also meeting the needs of communities” p. 31.

But if all “stakeholders,” regardless of their position, resources, and needs are treated as equals, equity is ill served, and inequalities are as likely to reinforced as reduced. A more robust arrangement for public participation is required, in which community and grass-roots active participation is supported.

A comprehensive look at the extent of the long-term over-all need for better affordable housing will show that the de Blasio plan is only one step, although an important one, in meeting the full need.[4] The private profit-driven market should be brought in to contribute. But to rely on public-private partnerships to solve the problem is ultimately a refusal to recognize that it will not do so, and cannot be expected to do so. Ultimately public provision is an inescapable necessity. The private housing sector should contribute to the necessary resources, by tools like mandatory inclusionary zoning, and certainly by progressive taxation, but the responsibility to pursue equity in housing is a public, not a private, responsibility.

Growth is not per se desirable. There is an underlying assumption running through the plan that considers growth to be a value for itself, development to be per se a good thing, even though it is often qualified as having “serving community needs” or “serve low and moderate income households.” It is an assumption that deserves examination. New York City today is a city where “growth” is largely led by its financial sector, whose prosperity becomes a threshold factor in the establishment of priorities.

Growth, generally, is desirable that reduces inequality.[5] Is growth desired if it increases inequality? Or increases segregation? Both short and long term factors come into play, and perhaps complex economic analyses, but should equity not be of fundamentally importance, rather than growth for its own sake?

Framing an equitable plan for housing is a complex process. De Blasio’s plan is a major step forward. But there is more to be done.

[1] For a look a the historical treatment of density in New York City’s development, see Marcuse, Peter. 1993. “Density and Social Justice: Is There a Relationship? A Historical Examination” Columbia Documents of Architecture and Theory (D), vol. Three, pp. 50‑87.

[2] De Blasio’s plan speaks of focus on transitional neighborhoods, p.8 but it also calls for it “in all medium and high density districts where rezonings provide an opportunity for significantly more housing.” P.30

[3] The plan speaks encouragingly of following policies “that [satisfy] sound land-use planning and legal “Principles; p. 31. They need to explicitly deal with issues of equity and segregation. “

[4] The data in the Plan itself support this conclusion, as well as the detailed figures from the Housing and Vacancy Survey and studies of the Furman Center and a number of other sources.

[5] Reducing inequality is well known as a key de Blasio concern, and that is reflected frequently in the plan, e.g. p. 26, but requires concretization in application.

Posted in Examples, Gentrfication, Growth, Housing, Inequality, New York City, Planning, Uncategorized | Tagged , , , , | 3 Comments

Blog #52 – Place, Not Race: The Slippery Slope of Non-Affirmative Action


Place, Not Race: The Slippery Slope of Non-Affirmative Action

Sheryll Cashin argues that “we should use place, rather than race, in diversity programming” – specifically, in admissions policies to higher education.[1] She admits that that there is “an achievement gap that has made race-based affirmative action necessary,” but, because ”affirmative action is on life support” in the present Court, she argues that “the use of place, rather than race, in diversity programming will better approximate the structural disadvantages many children of color actually endure.” But she is on a slippery slope, where justified disappointment with the Supreme Court’s decision in the Schuette case and efforts to get around it lead acceptance of it as permanent public policy and to a questionable legal strategy of injecting place, seeing it as race at one remove as a substitute, mistaking a spatial indicator of the existence of racism for racism itself, and in the process abandoning the political recognition of racism as an ongoing evil still needing to be fought by all possible means, including affirmative action itself. A possible legal ply because rationalized as an empirically justified retreat from the recognition of racism as an evil in itself.

Cashin’s suggestion of the greater emphasis on place, theoretically by-passing the Supreme Court’s objects to using race per se, is certainly a possibility lawyers can explore where affirmative action is actually the goal but seems legally blocked. But it is itself a vulnerable approach. Logically, if racial composition of an applicant’s place of residence is i one of the factors considered in defining what characteristics of a place should give be given extra weight in judging an application of admission, then race is indeed still being taken into account, and the approach will fall victim to the Supreme Court’s present slim majority’s apparent dedication to color-blindness. Indeed, HUD’s interest in mapping that “combines basic demographic data (age, race, disability status, English proficiency, and poverty)” is explicit in the reference to race, and may yet be successfully challenged before the present Supreme Court.[2]

The very title of Cashin’s book and subsequent article reveals the problem: “Place, not Race.” “Place Reveals Race” would be defensible, added to an already substantial body of scholarship showing the ongoing existence of discrimination and segregation by race in shaping geographic patterns. Instead, the proposal substitutes place equity for racial equity. Inequity of place is certainly statistically correlated to inequities of race, but the causal path goes from racism to spatial pattern, not vice versa.[3]

The issue of racism, and of affirmative action as among possible remedies, is not simply a legal issue. It is inherently political. Cashin’s defense for dropping consideration of race in college admissions is that including it “raises the question of whether the marginal benefits of getting more blacks into elite institutions… are worth the political costs of continued racial division.”[4] She advocates “race-neutral reforms” as the path to creating a racially diverse politics in which “white working class whites and people of color share a common agenda,” an eminently desirable goal, but until it is reached ducking the question of racism is not race-neutral, but supports the status quo.

To suggest that it can be avoided by measures dealing with poverty, “neighborhood characteristics,” “oppositional culture,” or other characteristics of place, should be recognized as questionable policy. Justice Sotomayor’s dissent in the Schuette case is eloquent testimony to the continued importance of race. Taking race out of the equation diminishes the opportunity to address racism. Cashin’s implicit legitimation of the practice is counter-productive.

A New York Times story,[5] seen after I wrote the above, reinforces the point. It compares an “economic diversity” approach with a “racial diversity” approach, favoring the latter as an alternative to affirmative action in college admissions, and citing the Cashin book as a source. The article doesn’t pretend to compare either approach to an affirmative action approach. In the figures it presents, black/Hispanic comes out at 10% of admissions, in “racial diversity”, using income as a factor, and 16% with “economic diversity,” using income as a factor. Even completely randomizing, Black/Hispanic are at least 30%. There’s no doubt affirmative action would produce a much higher result.

But beyond that, the logic is treacherous. The “economic diversity” approach includes “parents’ income education, and occupation.” Blacks and Hispanics are of course disproportionately in the low end of those categories include a majority of whites. If race were also taken into account, the proportion of blacks admitted would be substantially higher, and if race were the sole factor, even much higher.

Logically, the argument is strange. It is in the first place passing strange to hold that race, a constitutionally protected category, cannot be considered and positively addressed in admissions policies, but parentage or occupation, not constitutionally protected, can.[6] And if the standard of success is indeed measured by the proportion of black/Hisp in the student body under the different approaches, and if it is accepted, as it should be, that race enters clearly into parents’ income, education, and occupation, then if one wants to remedy the injustices of racism, one has to isolate it as a factor in income, education, and occupation as well as in applications for college admission. The best indicator of how racism has affected the lot of applicants to college is to look at the percentage of black/Hisp admissions compared to their percentage in the population as a whole. Assuming the good will of college admissions officers, using parents’ incomes as a criteria in admissions indeed favors blacks/Hisp, because race affects income, but so do other factors; it’s not a 100% correlation. If one want to deal with the impact of race, one needs to deal with race, not just with one partial correlative of race. Adding other partial correlatives, e.g. place, or occupation or education, helps only marginally.

Lawyers in constitutional litigation of course have to deal with Justice Roberts’ vacuous proclamation:

“The way to stop discrimination on the basis of race is to stoop discriminating on the basis of race” [1].

as best they can. But perhaps the court will one day go back to Justice Blackmun’s “In order to get beyond racism, we must first take account of race. There is no other way. And in order to treat some persons equally, we must treat them differently.” [8]

In the meantime, it should be remembered, certainly by social scientists and professors, that the purpose of affirmative action is not simply to get more black/Hispanic applicants into universities, but to help end racism, the unconstitutional discrimination against individuals because of their race.

[1] “Place, Not Race: Affirmative Action and the Geography of Opportunity.” Poverty and Race Research Action Council, vol. 23, No. 3, May-June 2014.

[2] Indeed, another well-reasoned argument for “Community-Driven Exclusion Mapping” by Peter Gilbert, in the same issue cited above, is explicit in its advocacy of racial composition and segregation in viewing patterns of housing use.

[3] It is unclear if Cashin shares this view. She writes: “…racial and economic segregation beget racial inequality,” p, 2. “Beget” may simply be an unfortunate choice of words.

[4] Op. cit., p. 10.

[5] David Leonhardt, “If Affirmative Action is Doomed, What’s Next?” New York Times, June 17, 2014, p.3.

[6] Countless anti-discrimination laws explicitly list race as a protected category, and a statistical evidence showing impact by race is widely allowed in evidence to help judge the existence of an impermissible disparate racial impact.

[7] Parents Involved in Community Schools v. Seattle School District No. 1, 551 U.S. 701 (2007).

[8] Regents of the University of California v. Bakke, 438 U.S. 265 (11978)

 

Posted in Justice, race, Social Justice | Tagged , , , | 3 Comments