Blog #91: Explaining the Election in 10 sentences – preliminary


Explaining the election (in parentheses: to pursue):

1. A critical shift in the organization of the economy post 1968, from industrial to hi-tech capitalism (occupational structures?).
2. Leaving many dependent on the old economy hurt and at a loss, largely the white working class, hold-over racism and sexism accentuated as scapegoats. (foreclosures, evictions, bankruptcies, struggling suburban homeowners – not the really poor, homeless)
3. They reacted with anxiety and an emotional attachment to the past Deep Story (their traditional identity?)
4. They blamed, quite rightly, “the” establishment, although not clear as to its membership, pushed by media etc. to blame “government” (social media, TV, not press?)
5. Trump as politician picked up on this, despite his own membership in the new establishment (motivation? pathological egotism? Business).
6. The anxious white ex-working class built up a deep story, a vision, abetted by Trump and the media that was heavily emotional (shaping identities?)
7. That story, built on real anxiety-inducing experience, mis-interpreted history, and built a psychological/ideological barrier that facts and reason could not penetrate (high school or less education?). Trump offered the charismatic fairy tale leader, believe me, trust me, not them, they have failed you (over 30 years? 8. Since Reagan? since Johnson?)
9. Hillary offered no vision that addressed the grounded anxiety (health care costs? Real unemployment levels?).
10. But Trump’s allegiance as a businessman is and always was to the new elite establishment, and he will unify the Republican Party around it. The holdouts will be those with a personal repugnance to Trump’s personal behavior, which they will swallow. (social circles, clienteles, customers, tenants?)

The Blog #90 series will deal with some of these isssues in more detail.

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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.

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

Blog #30 – Transformative Proposals in Nine Areas


Blog #30: Beyond Immediate Proposals: Some Transformative Provocations

The last blog, Blog #29 began with the puzzle that the United States faces deep-seated problems today: problems of poverty, inequality, discrimination, poor education, unemployment, unaffordable housing, unaffordable health care, social aggressiveness and exclusion, insecurities of all sorts, all in a country that claims the values and has the  resources to remedy them.  The answer suggested was that the situation was partly the result of shortfalls of democratic procedures, partly the result of inequalities of wealth and power, but that both of these rest on an ideologically and culturally blocked awareness of fundamental causes and available alternatives – a blocked consciousness that needs to be directly addressed.

That blog  argued that, in dealing with the tea party (as a stand-in for the defenders of the status quo}, it would be most effective to combat those blockages by starting with the problems that are generally acknowledged, pushing some immediate steps towards solutions, but constantly linking those steps to a critique of a frame in which they ought to be embedded, showing how logically the immediate leads to more and more radical and even utopian visions of what in the long run needs to be done.

Some examples, not presented as developed proposals for the formulation of demands or platforms, but as examples of the approach that might be taken, follow. [1]

A: Efficiency-only reforms: reforms that simply make existing programs or policies more efficient, eliminate waste, trim costs, but change neither the thrust of the program not the power relations in which it is enmeshed.

B: Liberal reforms: reforms which expand or modify a program, using market mechanisms wherever possible, and without challenging its structural causes or the power relations in which it is embedded.

C: Radical reforms: reforms which drastically modify programs and expand their aims, challenging the power relations in which they are embedded

D: Transformative Claims: claims, going beyond specific reform proposals which address their structural causes and links to systemic issues, directly challenging the power relations in which they are embedded and serve.

[These examples are suggested only as illustrative, and are thus far really only perfunctorily sketched. For each, there are groups and individuals who have gone much further in working out demands and claims, at all levels, who should be consulted on each issue.  The point here is only to suggest the kind of differences to be found on each, and in each case running along a non-exclusive spectrum from dealing merely with efficiency-only to presenting the need for full-scale transformation. More detail and other examples would be welcome.]:

        Higher education:[2]

A: Efficiency-only reforms: Standardized conditions of private loans

B: Liberal reforms: Provide a public option for loans; provide substantially increased public grants

C: Radical reforms: Limit scope of private for-profit institutions.

D: Transformative Claims: Make higher education free.

2.      Mortgage foreclosures[3]:

A: Efficiency-only reforms: Higher reserve requirements of banks; judicial review of sloppy paper work.

B: Liberal reforms: Expand opportunities for voluntary renegotiation of loans; subsidize lowering of interest rates and writ-downs of loans; regulate rents taking into account landlords’ finances.

C: Radical reforms: Require write-down of loan principals; mandate continued occupancy at reasonable rents after foreclosure; facilitate non-profit ownership; regulate rents taking into account occupants’ finances.

D: Transformative Claims: Remove housing from the speculative market through public acquisition or facilitation of conversion to private non-profit, limited equity, cooperative, or community land trust ownership, with adequate subsidies to cover maintenance and utilities at levels affordable to lower-income occupants; confiscatory taxation of speculative profits; aggressive expansion of public housing. Housing should be treated for its use value, not its exchange value.

3.      Public Space:[4]

A: Efficiency-only reforms: Administer to protect surrounding property values.

B: Liberal reforms: Provide, expand, and administer to protect surrounding property values and quality of life of neighbors; regulate use by reasonable police measures; give zoning bonuses where privately provided.

C: Radical reforms: Provide, expand, and administer taking into account needs of surrounding community; Protect use against police repression, Require private provision in connection with new construction.  Protect right of use by homeless.

D: Transformative Claims: Provide, expand, and administer adequately to satisfy the needs of the population as a whole; give priority to uses appropriate for the exercise of political democratic rights; mandate public use for these purposes of private property where necessary. Provide supportive permanent housing for homeless users.

4.      Health

A: Efficiency-only reforms: Planned decentralization/consolidation. Computerize records; permit cross-jurisdiction private insurance in a transparent marketplace.

B: Liberal reforms: Finance Medicare and Medicaid properly. Permit unified bargaining with pharmaceutical companies; subsidize insurance, providing a public option.

C: Radical reforms: Medicare for all. Buy out private hospitals and care facilities at asset, not income, values. National Health Service

D: Transformative Claims: Eliminate fee for service provision, comprehensive national health care system, without access restrictions, paid for routinely as a public service, like police and fire protection.

5.      Jobs and Labor Relations

A: Efficiency-only reforms: Full appointments to NLRB; adequate information to workers;

B: Liberal reforms: Adequate inspections and enforcement of FLSA, health and safety standards; facilitation of discrimination cases. card checks for elections; indexing minimum wage levels

C: Radical reforms: Living wage requirements for all jobs; expanded public service jobs; ceilings on management and ownership incomes and benefits

D: Transformative Claims: Requirement of worker participation in decisionmaking in ownership; public provision by public employees of all essential services.

6.      City Planning:[5]

A: Efficiency-only reforms: independent technically qualified City Planning Commission with adequate staff

B: Liberal reforms: Advisory community planning boards

C: Radical reforms:  Community Planning Boards with decision-making powers

D: Transformative Claims: Public ownership of land, city-wide Assembly of Planning Boards with decision-making power over all land use issues.

7. Homelessness

A. Efficiency-only reforms: Screen applicants for shelter eligibility; track applicants; police supervision of shelters;

B. Liberal reforms: Expand shelter system; provide social service consultations.

C. Radical reforms: Provided expanded affordable housing opportunities; staff transitional housing where needed; provide homeless persons input into policy and administration.  Policy;

D. Transformative reforms: Establish and implement a legal Right to Housing for All, including direct public provision and stringent rent controls.

8. Municipal Budgeting

A. Efficiency-only reforms: Putting the capitol budget within the jurisdiction of the City Planning commission.

B. Liberal Reforms: Giving Community Boards or Councilmanic District assemblies a decision-making role in expenditures within their districts.

C. Radical Reforms: Providing a comprehensive city-wide Participatory Budgeting process affecting both operating and capital budgets

D.Transformative Reforms: Expanding a Participatory Budgeting proeess to cover revenues/tax policies locally and adopting national legislation prohibiting tax evasion by cross-border evasion and prohibiting local-level competition in tax programs.

 9. Worker Ownership and Co-operatives

A. Efficiency-Only Reforms. Permit NLRB-supervised elections for union representation

B. Liberal Reforms. Permit Card-check Voting. Aggressively enforce rights to organize and bargain.

C. Radical Reforms. Provide for majority worker ownership, in stock or co-operative form, of individual firms.[6]

D. Transformative Reforms. Strengthen or transfer to democratically controlled public ownership entire sectors of the economy and of production and services provision. [7]

Many other examples could be given, and the above certainly need further development. The point is that, at whatever level of reform is strategically immediately attainable, the principles behind the further levels should always be on the table, including the arguments for the most transformative. They may seem utopian goals here and now, but there is no historical or material reason why any of them are not reachable. Insisting that they be acknowledged even in the midst of the more immediate objectives is at least a small step in the direction of getting there.

Blog #31 will hesitantly suggest some New Rules for New Radicals as possibilities for moving to implementation of such transformative reforms.


[1] My debt to Andre Gorz and the concept of reformist and non-reformist reforms should be clear.

[2] See Andrew Ross’ discussion, described in Dan Schneider, “Occupying Student Debt,” Dollars and Snse, Jan-Feb 2012, p. 6

[3] See further Marcuse, Peter. 2009. “A Critical Approach to the Subprime Mortgage Crisis in the United States: Rethinking the Public Sector in Housing.” City & Community, vol. 8, No. 3, September, pp. 351-357.

[4] See my blogs #3, 4, and 5.

[5] Tom Angotti, New York for Sale: Community Planning Confronts Global Real Estate. Cambridge: MIT Press, 2011, provides excellent background.

[6] Gar Alperovitch,

[7] See Alliance for a Just Society.

Blog #1a – Towards a Comprehensive Housing Policy


Towards a Comprehensive Housing Policy – Outline Draft

I.

Certain variables need to be taken into account in designing immediate steps to deal with the consequences of mortgage foreclosures. Some depend on a careful evaluation of the specific conditions of each case; others are essentially policy decisions depending on the criteria considered in determining objectives of the program.

As to specific situational variables, some or all of the following factors might need to be considered:

1.     The strength of the private market;

2.     The physical characteristics of the housing: single or multiple family, lot   size, need for renovation

3.     The nature of ownership, stage in foreclosure of units

4.     Neighborhood density of problems

5.     Organization of participants

6.     Prevalence of fraud and predatory lending

As to criteria chosen as desired, a formulation such as the following might be appropriate:

The following provisions should only apply to mortgages on homes under a specified ceiling value, perhaps $250-,000S 300,000, varying by area depending on area housing costs, and for occupants under a specified income  and wealth level, established in relation to prevailing housing costs in the area as routinely established by HUD.

1.               Prevent Evictions

On an emergency basis, there should simply be a national moratorium on evictions, for a specified time, with the permanent provision, common among civilized nations, that no household may be evicted if there is a showing that there is no other accommodation available to them meeting adequate standards of occupancy.

2.               Force  Renegotiation of Excessive Mortgage

Where a home occupant is able to pay a reasonable mortgage on reasonable terms, but has entered into an unreasonable mortgage, give a bankruptcy court the power to rewrite the terms of the mortgage, short-term balloon payments, adjustable mortgages geared to unrealistic expectations, etc. Do not subsidize mortgagors to permit them to continue payments on mortgages. Such subsidies run to the benefit of the bank or mortgage holder, whose inadequate professional appraisal and processing of the loan permitted to the difficulty to occur, and should bear the consequences of that failure.

3.               Increase regulation of mortgage-backed securities

Some argue that securitization of mortgages is itself a cause of the present foreclosure crisis. That is true to only a limited extent: by obscuring the valuation of the underlying security, d, behind a cloud of interim investors the numerous other mortgages of different origins and also unreviewed valuation, the ultimate investor has inadequate information on which to act, and ends up investing simply on the generalized belief that mortgages must be sound investments because they are in real estate which will always go up in the long run.

But given adequate oversight over the valuation of the underlying mortgages, something already done by Fannie Mae and Freddie Mac,, and in the implementation of CRA requirements,[1] it is desirable to have a secondary market in mortgages, and the broader a capital market is brought into the picture, the better.  The underlying problem is that housing is being treated as a commodity, and hence financed in reliance on its exchange value, rather than its necessity, Thus, whether a mortgage is securitized or not, if the exchange value goes down and the occupant has a large mortgage on it,, the occupant will be in trouble. That is true whether a bank r other lender owns it or an investor in China.

Securitization, as far as housing is concerned, is simply a smokescreen that accentuates and conceals the real problem of the commodification of housing.

4.               Permit foreclosures while protecting occupants.

Subject to the prohibition of evictions as above, if a mortgage is at a figure substantially over the value of a house, i.e. where the occupant is “under water,” permit a managed foreclosure and sale, without reimbursing the lender for any loss that may have resulted from its excessive loan but explicitly permitting the occupant to remain in occupancy under one of the alternate tenure forms discussed in Para. 5.

5.               Provide for alternate forms of tenure for foreclosed properties.

Provide for government purchase of foreclosed property or property at risk of foreclosure (up to a specified dollar limit and with consideration of special circumstances) for transfer to non-profit ownership or public housing, with provision for continued occupancy by the previous owner

Establish guidelines for the creation of alternate forms of tenure, including non-speculative home ownership,  limited equity coops, community land trusts, and tenant-managed public housing, and provide funding for research, legal work, and administrative costs to non-profit entities willing to develop and/or implement such alternatives. Within the various governmental programs of subsidy and support, give priority to grants directed to the support of such endeavors. Provide general financial support and enabling legislation as needed for the formation and operation of land trusts, coops, condominium associations, , mutual housing association–provided that the following conditions are met:

a. no profit on sale or from rental,

b. a right to pass on to family when occupant vacates, but otherwise a collective selection of successor occupant with guidelines for continuing availability and affordability for those in need, within specified income categories

Where appropriate andf no effective private land trust exists, stablish municipal land trusts, with general operating administrative expenses covered by local government, to take the initiative in implementing the above programs

6.               Empower public housing authorities to play an active role.

Public Housing Authorities have long experience in the management of housing, and their abilities should be enlisted in the management, and sometimes in the ownership, of foreclosed homes. They need to be provided with adequate funds for that purpose; it may be that the existing funding formula for public housing need only be tweaked to make this possible.[2]

7.               Community-based planning

Planning for the treatment of properties in or threatened with foreclosure should be in local hands, subject to Federal guidelines. Where local bodies exist, e.g. Community Boards in New York City, those bodies should be given primary authority and responsibility for the implementation of Federal policy, and the discretion to tailor such policies to local circumstances and desires, democratically developed.

8.               Public funding.

Provide guaranteed continuing subsidies to all those paying more than 25% of their Expand substantially funding for the Neighborhood Stabilization Program.

Expand substantially the amount of money available to purchase foreclosed homes, and provide for their continued non-speculative ownership for the benefit of their present occupants  and future households in need of housing.

9.               Provide for local democratic participatory bodies to participate in the management of all Stimulus funds.

Planning for the treatment of properties in or threatened with foreclosure should be in local hands, subject to Federal guidelines. Where local bodies exist, e.g. Community Boards in New York City, those bodies should be given primary authority and responsibility for the implementation of Federal policy, and the discretion to tailor such policies to local circumstances and desires, democratically developed.

10.            Anti-warehousing and condo conversion legislation.

Legislation against warehousing of residential units, modeled after but stronger than New York City Council legislation (instigated by Picture the Homeless) that would provide for requisitioning of empty units for the homeless.

11.            Expiring subsidies

A right of purchase for present residents of housing built with now-expiring subsidies in Federal and state programs, at a price permitting a limited return on equity to commercial owners, and a continuing subsidy as needed after purchase.

12.            National Housing Trust Fund

Support for the National Housing Trust Fund, with earmarked source of funds to subsidize affordable housing construction, emphasizing low-income housing.

13.            Rent regulation

Strengthen rent regulation where it exists, and new regulations where it doesn’t.

14.            Gentrification

Anti–gentrification legislation designed to preserve what affordable housing there is., through a combination of zoning, building regulations regulatilng modernization, rent regulation, and subsidies.

15.            Taxes

Some combination of anti-speculation taxes (taxes with high rates on profits made after property is held for one year or less, reducing slowly over x years), flip taxes, and windfall profits taxes, with proceeds earmarked for housing purposes State action on this objective will be key.


[1] Other experience with regulation may be found in: Title VIII of the Civil Rights Act of 1968, The Equal Credit Opportunity Act of 1974, the Home Mortgage Disclosure Act of 1975, as well as the broader community Reinvestment Act of 1977. But in the end, deregulation did not cause the problem; it merely allowed it to metastasize. The existence of what needs to be regulated is the problem.

[2]

The Rich Default on their Mortgages

The difference between speculative ownership and residential ownership


The New York Times headlined its article:  “Biggest Defaulters on Mortgages Are the Rich” (David Streitfeld, front page, July 9, 2010).  It seemed surprised. It shouldn’t have been.

There’s an important point that needs to be stressed in the account: these are largely investors engaging in strategic defaults. not  “homeowners” defaulting on mortgages. They are, to put it simply, landlords; these aren’t their homes that they are so heedlessly giving up. They are speculators in real estate, assuming, as the article says, that “real estate would never drop.” When the plain-talking owner of a $2 million house in Houston, quoted as a “plain-talking exception,”  says, “I just decided to let it go, give it back to the bank. I just didn’t feel like it was a good investment,” this isn’t a homeowner speaking, but a businessman talking about making or losing money.

The ownership of housing has two characteristics: it provides a home, shelter, privacy, hoped-for safety, a reflection of personality, for a resident homeowner, and it is an economic asset for the person having title to it. While the two are usually the same person, these two attributes of “ownership” are quite separate, although often confused. If you consider a house only as an asset, of course you would let it go if that’s the most profitable way of dealing with it. If you live in it as your only residence, your considerations are quite different.

If we could only keep these two aspects of ownership separate:  protect homeowners who have mortgages on homes that they need to live in, and take a quite different position as to landlords who own housing only on the speculative hope its value will rise, we’d be way ahead of the game. Of course resident homeowners also would like to make a profit when they sell; but that’s a different order of priorities from being secure in having a place to live. Limited equity ownership, community land trusts, and similar forms of ownership might be one answer.

Peter Marcuse

See the hyperlink: http://graphics8.nytimes.com/images/2010/07/09/business/09rich_graphic/09rich_graphic-popup.gif