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.

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.

 

————————–

[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 #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.

Blog #38 – Community Land Trusts: Empty, Moderate, and Full-bodied.


Community Land Trusts – Empty, Moderate, or Full-bodied?

Community land trusts,[1] as a legal form of ownership of land, can come in three different forms: empty – available to any group for any purpose; moderate – to deal with serious but limited problems for a limited group, or full-bodied – handling both immediate problems but with a broad social justice perspective pushing transformative content and actions.

The differences are significant. Community land trusts can simply be an expanded form of co-operative ownership used by those protecting an already strong position in the housing market, insulating its members from outside influences by exclusion. The legal form of land trust is available to all, and ”community” can be interpreted restrictively by the well-to-do as easily as broadly by less well-off users. Thus, community land trusts as an empty form.

At the other extreme on a scale of social justice, community land trusts have the potential to play a transformative role in our housing systems, favoring lower-income households and all those ill served by existing markets, including poor households, the homeless, African-Americans and ethnic minorities, many women, households diverse by gender relations, age, and background.  -justice focused community land trusts can whittle away at the dominance of the private market as a method of allocating housing. Community land trusts can be models of democratic governance, both internally and at a larger scale of governance. And they can help in the political processes by which public resources are allocated to establish and implement a meaningful right to housing for all. Thus, necessarily, full=bodied community land trusts .

Community land trusts may also be transformative in a quite different context: achieving effective grass-roots democracy. If extended, community land trusts may be seen as a form of neighborhood self-government, in fact controlling land uses and what goes with them in an unquestionably powerful manner, viz. having legal title to the land. But such a potential for community land trusts is not at this point seriously in the picture. The tie-in with other social movements pressing for democratization of land use controls and the planning function of government should not be ignored, however.

In between these two extremes lie a wide variety of variations in form and content. The exclusionary use of community land trusts would presumably be rejected by most. There is a danger of co-optation by interests posing community land trusts  as an alternative to public housing or rent regulation or subsidies or favorable tax treatment for those in need. Presumably, also, a formal commitment to principles of social justice and serving those in need would be part of any mainstream moderate position. But how sharply to focus their immediate goals, how widely or narrowly to devote their energies, how to use limited resources, with whom to ally and who to confront in adversarial fashion, how far and in what manner to be politically engaged, are all matters in which strategy as well as principle. Compromises will be inevitable. Thus, moderate community land trusts.

Where in this spectrum of possible community land trusts  a given effort stands seems to me to depend on three factors.

  1. How seriously is “community” taken? Community land trusts can be simply a legal form of holding title, used for tax and financing purposes, but in daily use essentially a management company, negotiating with utilities, contractors, maintenance staff, etc. Or it can be seen as a part of an effort for form and maintain a communal level of social interaction, involving not only collective democratic decision-making but a sharing of activities, of information, of social responsibilities, of political involvement. It can affirmatively work on positive relationships with its outside neighboring community, having not only neighborhood representatives on it boards but helping integrate its residents in its community, more widely defined, sharing facilities, activities, information, as circumstances suggest. Likewise, it can affirmatively look to achieve and make use of a diversity of residents, including both levels of recognition and of assimilation comfortable to each.
  2. How, and how clearly, is the constituency of the community land trust understood? A community land trust has control over who its members are, can have processes similar to those of cooperatives in interviewing potential new members. But there are general principles that must be established, and they will influence not only who is in the community land trust but what its relations with its outside community and government will be. Specifically, income levels and household composition can be defined as criteria.
  3.  If the principles of social justice are followed, it also becomes more likely that the community land trust will operate as a full-bodied trust.
  4. How does the community land trust see its political role? Every community land trust except an exclusionary one of the well-to-do faces the reality that many to whom it would like to be open cannot afford even the non-profit real costs of decent housing. The need may go from an immediate need for help even with basic costs or special needs to an on-going concern about rising costs or changed incomes limiting what a household can afford.  That inevitably means a concern with governmental subsidies, levels of taxation, utility costs, building codes, public services, public facilities. But the problems community land trusts  face are shared by a large part of the population as a whole. If the community land trust sees itself as part of a broader movement to achieve social justice in the provision of housing, perhaps as part of a broad right to housing movement, it will be more and more a full-bodied community land trust both in its inception and its ongoing daily activities.

A note on the ideological and economic aspects of community land trusts:

The idea of community land trusts resonates with an old theme in economics: that of land as a common natural resource, one not the product of human efforts, and therefore not to be appropriated by individuals for their private use, but to be shared among all. Community land trusts can be seen as an implementation of that view, at least on a small scale: no individual has the legal right to dispose of his or her interest in a community land trust for personal gain. Yet, theoretically, the ability to sell an interest in a building built on land in a community land trust at a price for that building fixed in a private market will take into account that that interest is made more attractive by its ground lease. Thus a likely profit can in fact ensue to the seller of a community land trust unit, amounting to an ability to make a private profit from a natural resource,. The market value of a building or unit in a community land trust building is technically the price of a commodity.. The land itself may be decommodified, but the right to use it is valuable, and could be realized by a sale of what is on the land and benefits a private owner from its common ownership. The land is decommodified, but not necessarily the building on it, to which the value of participation in the community land trust accrues.

What makes the typical community land trust radical is not the separation of land from building and its character as natural resource, but rather the restrictions that the classic community land trust, moderate to full-bodied, imposes on those leasing the right to occupy from the trust. Those restrictions typically regulate the price at which a housing unit in a community land trust can be sold. In these community land trusts , the leases to occupant members either prohibits the occupant from selling the unit except at a price established by the board of the trust, or gives the trust itself the right to buy at a fixed and limited price if the unit is put up for sale. . In this way community land trusts operate as would a limited equity co-op; the separation out of land ownership is simply another way of controlling collectively the price of units in it, as well usually as the characteristics of new buyer occupants. It is the restrictions in the permitted sales of units in a community land trust which make it an ideologically radical idea, and the terms of that restriction set the extent of the radicalism. If limited to an original price, originally set not aiming at a profit, and usually increasing only to the extent of the occupants own investment of money or labor in the unit, that makes it radical, for it effectively takes the unit out of the housing market and eliminates its use as a provider of private profit. A resident of a classic community land trust has virtually all the rights of a home owner, except the right to sell at a profit.  It turns housing into a set of use values, rather than of exchange values.[2]

Community land trusts may also be transformative in a quite different context: achieving effective grass-roots democracy. If extended, community land trusts may be seen as a form of neighborhood self-government, in fact controlling land uses and what goes with them in an unquestionably powerful manner, viz.having legal title to the land. But such a potential for community land trusts is not at this point seriously in the picture. The tie-in with other social movements pressing for democratization of land use controls and the planning function of government should not be ignored, however.

All this has two implications. One is that such a community land trust cannot be seen as a “creator of wealth.” The opportunity to benefit from a speculative increase in the value of land is denied the owner. That may make a community land trust less attractive to some, but may be welcomed by others, and should in any event be clear in the use of the community land trust form of ownership. The other implication is the need for thoughtful consideration of how permitted sale prices are established. While the principle of non-speculation is clear, its definition is not quite. Specifically: typically, the seller is allowed to recover his or her purchase price plus investments. But usually that purchase price is adjusted by some formulae, such as changes in the cost of living, benchmarked to some measure of the rate of inflation, at least on the up side. That means it has some characteristics of an investment that does have market advantages: it is protected from erosion by inflation. It has the additional market advantage, the more full-bodied the community land trust is, of having collective backing against personal misfortune; foreclosure is technically impossible and eviction for non-payment of rent is handled more humanely than it is in the market, again to varying degrees. That benefit is of course realized to some extent in directly market terms when it comes to financing; a bank is likely to recognize the stability provided by the collective responsibilities and spread out risk inherent in the community land trust form as opposed to conventional single-family home ownership.

So “decommodification”  is not complete, but is certainly ideologically challenged by the use of the community land trust form, and its extent will vary with the details of the trust instrument and the leases given pursuant to it.

And if the above economic analysis is right, it provides some solace for potential participants in a community land trust that, while they may not accumulate speculatively-driven wealth by participation, they do achieve definite economic advantages in terms of security, both of occupancy and of return of original investment.

My own take, again if the above analysis is correct, on implications for community land trust practitioners:

Be clear who your constituency is. (Point 1 above.)

  1. Stress the “community” in community land trusts when presenting them. (Point 2
  2. Be clear and up front where you stand on the importance of social justice in the spectrum between moderate and full-bodied community land trust.  (point 3)
  3. Be politically active in coalition formation with other social justice oriented organizations and actors, and join with them both in obtaining the necessary support and subsidies for community land trusts  and in supporting other housing rights organizations program proposals for governmental action in the housing field, particularly on financing and rent regulation and affirmative non-discrimination. (Point 4.)
  4. Be up front about community land trusts’ impacts on wealth accumulation (minimal) and its other economic advantages: security of tenure and investment.  (Note on ideological and economic aspects.)

pmarcuse.WordPress.com  Blog#38.

[1] A community land trust is a legal form in which the ownership of land is held in the form of a trust and separated from the ownership of any structures that may be on it, which are privately (often in the form of a co-op or mutual housing association) built, occupied, and managed, subject to the term of a land lease from the trust. The trust is typically controlled by a board in which the actual users of the buildings on it are the primary members, together usually with representatives of the neighboring community and/or relevant government representatives. The leaseold interest with the users of the building have can be sold  subject to the provisions of the lease from the trust, which typically limits its resale price and must approve the buyer. An excellent fact sheet,  which also contains further useful links,.is at http://picturethehomeless.org/publications.html,,

[2] The myth that home ownership per se is a reliable way to accumulate needs to be dispelled. Home owners accumulate wealth only through two aspects of home ownership: one is savings, the other is speculation. The savings are essentially the forced setting aside of money to pay off a loan, the mortgage. Alternate investments of savings might do even better, and be subject to less risk. The other source of additional wealth creation from home ownership lies in the possibility of capturing the increase in the value of the house, which is fundamentally of the location on it is built, for the physical building itself depreciates. Again, that’s a speculative investment, and not always a safe one, as today’s economy shows. And see the historical experience recounted in Sclar, Elliott, Matthew Edel. and Daniel Luria. 1984. Shaky Palaces: Home ownership and Social Mobility in Boston’s Suburbanization.  New York Columbia University Press 1984.

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