Economic Update: Unaffordable Housing

 
 
[S12 E08] New
 
 
This week on Economic Update, Prof. Wolff presents updates on the 2021 record 100,000 opioid overdose deaths in the US, the savage reductions in K-12 public education, inflation's profiteers, and offers a different take on the truckers' convoy in Canada. The second half of the show features an interview with activist Rob Robinson, formerly homeless, now a professor advocating for public housing.

Transcript has been edited for clarity

Welcome friends to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives — jobs, debts, incomes — our own, and those of our children. I’m your host Richard Wolff.

I want to begin with the opioid overdose crisis in the United States. We hit a record in 2021. After the first half of the year, once the numbers are in, 2021 will be the first year that we suffer over 100,000 opioid overdose deaths. In 2020, we recorded 92,000 opioid deaths. This is an absolute crime. The basic drugs that do this to us are called fentanyl and carfentanil. They are usually taken alone, or mixed together with cocaine, or methamphetamines. Young people of all groups, African Americans, and Native Indigenous Americans, are the ones most affected. It's sort of like a horrible division of labor; COVID goes after older folks, opioid overdose goes after younger folks, and that way we kill across the board in this society.

One of the recent reports from the Commonwealth Fund makes it crystal clear what is the economic aspect of all of this. That, of course, is profit, because we live in a profit system. Profit is what the insurance companies are in the business to earn. Health care is how they go after what they're interested in, which is profit. So they do things, which the Commonwealth Fund points out, and medical professionals support, that make this opioid crisis worse, not better. I'm going to give you just two examples, to show you how horrible this all is. Some insurance companies require “prior authorization.” You know what that means? When a person is found to have overdosed and be near death, before you can give them immediately what they obviously need, you need to call the insurance company to get “prior authorization,” because otherwise you may not be covered. That means that the place to which the overdose victim is taken is hesitant to provide the care. Then there are the providers of care, who will not accept insurance, so they need cash out of pocket, which the overdosed person and his or her family can't quite manage. That these people then die, maybe saving the insurance company from having to cover what might have saved their lives — I don't even want to go there and think that — but there it is. When profit governs, you get a medical system that can't work. It didn't work for COVID, and it's not working for the opioid catastrophe that we are living through.
My second economic update has to do with yet another crisis. This word “crisis” is now happening everywhere we turn, a sign of a system that's falling apart, by the way. This time it's the crisis of K-12 public education. Let me start with this. Over the two years of the pandemic, we have had a drop in the number of teachers employed in this country of 6.8 percent. One in 14 teachers is gone from our public education system, even though the experience of the last two years — with intermittent school closures, with all the upsets of the families hit by, or threatened by, COVID — we needed more teachers to attend to the young people's needs, to get them through, not less of them. But we didn't do it as a society. We also laid off huge numbers of school support personnel — the janitors, the food preparers, the assistants, the bus drivers, all of that — and these tend to be older workers who are already more vulnerable, who have to take kids to school, or work in schools. Remember that children in schools are often not vaccinated the way older people were. It goes on and on. If this country ever meant all that talk about “shared sacrifice,” we would have taxed the billionaires to take care of the children, and the teachers, and the people who support public education. Instead, we did the opposite. We cheapened and worsened the situation.

Then there's the inflation, another crisis. As if two years of economic depression and the COVID disaster weren't enough, we are now whacking the American people with another economic failure, namely an inflation. Prices are rising. A little footnote: employers are the ones who set prices. Employers are one percent of the American people, if that much. We allow them to set prices, and you know what they're doing? They're raising them. And you know why they're doing it? It's for the same reason they do everything else — to make more profits. They don't want to tell us that, so they make up other reasons. Here is one that's my favorite. “We have to raise prices because our wages are going up.” Hello! Wages are going up by five, five and a half percent. Prices are going up by seven and a half percent. Prices are raised whenever the employer thinks he can get away with it. Workers, for example, can't do that. They have to go to a boss to get paid more, and the boss is able to say ‘no,’ or say ‘I'll give you half of what you ask’ or, if there's a union contract, ‘you have to wait for the contract to be over,’ which can be two or three years from now. So there's no question that it has nothing to do with wages. If anything, wages are what people try to get raised to catch up, at least in part, with what the inflation is doing to their standard of living.

Let me give you an example of what's really going on. My example comes from a shipping company, Maersk, a Danish shipping company which happens to be the largest shipper of ocean-going freight in the world. Their profits quadrupled over the last year. They've had a lot of disruptions of their long overseas supply chain, but these disruptions and the price rises they were able to get away with, have made this last year the most profitable ever. You may be suffering from inflation, and you may see your income not even catching up with what's happening to prices, but it's making a lot of money for big businesses who can use the inflation. Don't forget that. We don't all go through this together.

The final Economic Update for today allows me to talk about something many of you have asked me to talk about, and some of you have seen me do some national debates and TV appearances around it. That is the convoy of truckers on the Canadian-U.S. border and in Canada that were protesting, they said, a variety of things, but included vaccine mandates, and so forth. Here's my position, because I want to make it as clear as I know how. I am impressed, and moved, when working people get together to protest things that are done to them that hurt them. We don't have anywhere near enough of that. We'd have a different and better country if workers did this much more often. For me, as a person on the Left, supporting workers when they do that is a kind of basic commitment. I recognize that people with very different political interests than mine, the opposite of mine, also would like to see truckers, or any other group of workers, go in their political directions. So, yes, people who are Nazis, people who are white supremacists, people on the extreme right wing have been celebrating those truckers, hoping thereby to attract their attention. I don't find that acceptable. I want to go in there and fight it, but I do not want to be on the side of a government that represses working people when they peacefully — which is overwhelmingly what they did — protest.

Here's what I would suggest is a way to approach this. If a trucker does not want to abide by a mandate to vaccinate, give him an alternative: test and quarantine. If he doesn't want to test and quarantine, then he has to go to a medical facility. He has to go to one that is not the one that people regularly go to, because we don't want to make people suffer who are not afflicted with COVID because somebody else doesn't want to do a mandate. That's when the freedom not to do a mandate begins to hurt other people, and we all understand that's a boundary we don't want to cross. Canada has a problem. It doesn't have, at this point, enough clinics, enough medical health facilities, to accommodate people who don't want to comply, don't want a vaccine, and don't want even to do the other things that go with it. I would like to respect those people. You know how the truckers could do that? They could become a movement to protest that there aren't enough medical facilities in Canada. They want them there. Those truckers are a small minority, since the overwhelming majority of truckers in Canada are vaccinated and have not objected. For this small number of people, let's be respectful of them. Let's provide them with an alternative, which we can — a place to go to get care if they get sick that doesn't encumber other people, with other problems that are medical, from going to their normal facilities. It means you have to have more facilities, which Canada needs anyway, as most Canadians already know. Imagine the support the truckers could get if they led the way for more medical facilities to solve their particular problem, and to do something good for the Canadian people as a whole. That would be a way for the Left, that advocates for better national health insurance, to combine that demand with these truckers, and make a useful addition to Canadian society.

Here is the irony. The Right-wing’s anti-vaxing, the Right-wing’s anti-government stance, never solves the problem. Those truckers are going to have their legitimate grievances and, if I had time, I'd go into them with you. Truckers, both Canadian and American, have seen their incomes and their job conditions savagely deteriorate over the last 30 to 40 years under the heading “deregulation of truck traffic.” That was an excuse for the big fleet owners to rip off the workers, to convert them into these little mini-businesses that own their own trucks, and cannot afford to compete. It's a tragedy for them. They need sympathy and understanding. Then they'll go in the direction we want with their demands, and not be drawn to the other side. The Left, that doesn't have its own position, that simply endorses wholesale government hostility to, and repression of those truckers, will make no friends among them. Remember the convoy is a tiny minority. The truckers we’re really talking to are the vast majority, who are vaccinated, and who are watching to see what happens with that convoy, and who takes what position in relationship to it.

We've come to the end of the first part of today's show and, as always, I want to say thank you to all of you whose support makes this possible. To learn more about all of this, go to our website Democracy At Work, where you can see our activities, buy the books we publish, subscribe to our YouTube channel, and so on. It's been a pleasure, as always. Stay with us. We'll be right back.

DR. RICHARD WOLFF: Welcome back, friends, to the second half of today's Economic Update. I am very happy and proud to bring back to the microphones, and our cameras, Rob Robinson. Rob is a formerly homeless community organizer and activist based in New York City. His work focuses on changing people's fundamental relationship to land and housing. He works with social movements around the world. He’s the U.S.-Canada Coordinator of the International Alliance of Inhabitants, an alliance of 12,000 members worldwide, which supports a zero evictions platform. He lectures regularly at several universities and law schools. He is currently an Adjunct Professor of Urbanism in the Design and Urban Ecology Program at Parsons New School University in New York City. First of all, Rob, thank you very much for taking the time to join us today.

ROB ROBINSON: Thank you for the invitation.

WOLFF: Good. Let's jump right in. Everything I read tells me that there is a housing crisis in the United States today, whether you look at homelessness, or the incredible increase in rents, or the rising cost of housing, or ability to afford a mortgage, and all the rest. It's kind of overwhelming. I want to begin by asking ‘how bad is it?’ in terms of where you sit, and how you see it. Is there a storm coming of people needing housing, but either being unable to get it, or unable to afford what they're required to pay for it?

ROBINSON: Rick, I'd respond to that by saying there's been an ongoing storm. We've always had a housing crisis in this country, and particularly amongst people who were in the lower economic scale. It's been a challenge for people of color to achieve a mortgage, to achieve housing. I think there is somewhat of a myth behind housing that still exists in this country, and is a big part of the problem. That is “housing is the way to wealth,” that “owning a home is the way to wealth.” What we've seen is COVID has exacerbated an ongoing issue, and has really pushed to the forefront the number of people that are ‘underwater.’ By that I mean, 50 percent or more of their income goes towards securing housing. It's an ongoing problem, and it's a problem that we haven't been able to find a solution for.

WOLFF: It's remarkable listening to you. One of the most successful housing stories in the modern world is the story of Vienna, Austria, where half of the housing in that city is public — either publicly owned rental housing, or publicly subsidized. Half is private, half is public, but because of the enormous power of the public, they shape the rents anybody can get. That’s because everybody has an option to go to a public housing. In the public housing, there's a rule in the law that you cannot be charged for rent more than between 20 and 25 percent of your income. That is not violated. What that means is they don't have the problem you just identified here in the United States. Is there anything going on in this country now to try to deal, for example, with the inordinate cost of housing for people, at a time of rising rents and an inflation? It really is overwhelming, but is there anything going on that might begin to address this?

ROBINSON: I think many of us, people like myself — activists, some policy makers, and even some legislators — are looking at that Vienna model. We know that public housing, which we've had in this country, which came as a result of the Depression, was the way to give people a decent, affordable, and dignified place to live, but our government has been stepping back from that responsibility. We need our government to take that responsibility back on again. Social housing works. Public housing works. We have the models all around the world. Now there are some cities that are pushing models that are a problem. The biggest problem of all, Rick, is the commodification of land and housing. Until we can remove land from a market system, that's the only way that we're going to be able to maintain the cost of housing. So what do I mean by that? There are different models. The community land trust is probably the predominant model right now. Removing it, giving a community land in perpetuity for 90 or 99 years and, on top of that, you build mutual, or cooperative, housing. So we've seen models work, but we don't have enough of them. We don't have enough of them, because of this belief that the market is going to solve all of our problems, when we know it can’t.

WOLFF: Again, it just always blows my mind. People don't want to face the fact that if you allow a Capitalist enterprise to enter and do something, what you're inviting is an enterprise that tells you (they don't hide it) “we're in this business to make money, we're in this business to make a profit on our bottom line.” By bottom line they mean “that's our number one goal.” That means they're not in there to provide housing for human beings as part of a community's commitment to one another. They're not there for that. They're not even claiming to be there for that. You have the people who defend them saying, “Well, by some magic, we're supposed to believe that if it's good for profits, well, it's good for everybody.” Yet we know very well that we've had a profit-driven housing system, and yet you have to tell us what you're just now telling us.

ROBINSON: I think the big part of that, Rick, is the narratives, the prevailing narratives, that housing is the way to wealth, and so many people in society believe that, right? So me, as an African-American, knowing the history of struggle for people of color, when I go into an African-American community and say “housing no longer is the way to wealth, that's an old narrative that we have to change,” people look at me, and they've absorbed these narratives so deeply you can't tell them otherwise. I agree with you. Capitalism has told you there is no compassion in Capitalism, but when I get in front of people, they ask me “why?” “Why did they do this to me?” Because it's all about greed. They want to satisfy their own needs. They don't care about you and I. I think a big part of this is education. I've been blessed to be surrounded by theorists — Marxist, Anti-Capitalist theorists — that have helped shape the way I think about housing, but it is hard to get a big section of the society to think about that. I do think there's a shift. Things are changing. Things are getting better, but it is a narrative that we have to keep pushing out and recreating new narratives, which is why I actually became an activist. I was like, “Okay, I'm not i'm not believing that, right?” It’s the same thing around homelessness. I'm formerly homeless, as you read my bio to open it up, and people will give you these reasons why people are homeless. Well, none of those reasons fit me. That is the prevailing narrative. Then I need to change that narrative, right? I'm different than what you're presenting, and I think that's a big part of this. We have to find a way to educate the masses, and really get them to understand this.

WOLFF: Well, I want to pick up on one point you made. It seems to me, and please correct me if I've got this wrong, that in many ways African Americans were the last ones that were able finally, at least in some numbers, to become homeowners, to buy a home, to get a mortgage from a bank, and all of that. Then we watched in the aftermath of the so-called “Great Recession” of 2008 and 9, that these last ones to get it were the first ones in massive ways to lose their homes. How has the housing crisis of the country impacted, in particular, the African-American community?

ROBINSON: It has impacted them deeply, as you said. They bought into the narrative. They bought homes. Let's say you bought a home in the late 1990s then, all of a sudden, here comes this 2008 economic crisis. All the equity you built up was suddenly sucked out. Don't forget, we have a history in this country of things like redlining, predatory lending. So there were a lot of those folks who were given mortgages that would probably set them up to fail, unbeknownst to them. Just because we don't have maps, and banks with red lines along them anymore, doesn't mean the person can't go on a computer screen and get the same type of information. Technology’s a little bit different. We didn't have computers back when redlining was predominant, and red lines were up on the wall, but they have computer maps right now. So they're interviewing a prospective tenant or a client, to take a mortgage, and he's looking at a computer screen. “Oh! You're from East New York, Brooklyn. I got to give you a predatory loan.” So you set the person up to fail, but I think we saw in a very clear way that equity was taken away from folks after 2008-2009. I think what the big mistake that a lot of us have made, including activists and organizers, is fighting for principal reduction on mortgages. That would give you some immediate relief, and the big argument was, “reduce my principle to the actual value of my house now, because since the financial crisis it's now worth $300,000 or anyone's worth $200,000.” Banks can create those situations that benefit themselves anytime they want, so if you fight for principal reduction, they give it to you. They gave it to you pretty easy after 2008, which means they can regenerate another crisis anytime they want. So we need to understand that we need to change that fundamental relationship that we have with land and housing. As a market commodity, it doesn't work for a lot of us. We need to understand that, and we need to understand the meaning of that. In a city like New York, and I see that beautiful building sitting behind you, air rights are for sale. That tells you how bad commodification is. If you want to go up, it’s $500 a square foot. You can go up as high as you want. It is really insane, and what is happening with the market will never solve our problems. It will only dig us into deeper holes. To wrap this up neatly, you asked a question at one point about Vienna where the government says you should only pay about 20 to 25 percent of your income for housing. Our government says 30 percent. I led you to say that. There are many people in this country that take 50 percent of their income for housing. They're underwater. They’re buried by this process.

WOLFF: I can add, just because I'm an economist, I can add another dimension that people should be alerted to. Private equity funds and hedge funds have been moving into the housing business in a big way for at least 10 or 15 years now. They’re buying up houses that are being foreclosed by banks on people who can't maintain their mortgages, and then reorganizing them as rental properties. Which means that for folks, it's never been more true than now what you said. They've got to break their narrative, because what they're now doing without knowing it, is if you're a homeowner of a private single or two family house, you have a new competitor. You don't just have other people like you that have houses. You have an enormous investor, backed by huge big banks that are heavily invested, and they can drop the price for six months. They'll survive. You won’t, and they’ll then buy your house from you at a depressed price. That's what Capitalists have always done to one another, and that's what those guys are going to be doing in the years ahead, and makes it even more true what you said.

ROBINSON: I’d like to name and shame. Blackstone Equity Partners leads that parade. They own the most housing in the world, and they do it just for that — for real estate investment trusts, for REITs. So yeah, let's name and shame whenever we can.

WOLFF: Absolutely. All right, last question. We're really running out of time. In that terrible fire in Baltimore a few weeks ago, one of the statistics that jumped out at me was the fact that the Fire Commissioner there said that that the fire happened in an abandoned building, and that there were 15,000 abandoned buildings in Baltimore, or at least in that section of Baltimore. Is there a way to repurpose abandoned buildings so as to create public housing at a much lower cost?

ROBINSON: That’s an argument I've been making, and others like me have been making, for years. I came from a group in New York called Picture The Homeless which actually did a vacant property count in 2006, and again in 2011, and found that there was enough vacant property in New York City to create apartments for the 50,000 people that were in shelter every night. So it's thinking outside of the box, a reinvestment of the money. New York City spends 1.2 billion dollars a year to temporarily house people in shelters. I think cities like Baltimore have the same problem, maybe not to that degree. Yes, I totally agree with you. There needs to be thinking outside of the box. How can we take these vacant spaces and create permanent new housing? To New York's credit, regarding hotels that have closed since COVID, there are big conversations happening now at a pretty high level to turn those vacant hotels, to purchase those from the hotel owners to turn them into apartments. You know, we really need to push these types of ideas.

WOLFF: Rob, as always, we've come to the end of our time. I want to thank you enormously for sharing what you have to say. The housing crisis is an enormous kind of hatchet sitting over this whole country, without people being willing to face it. Thank you again, very much. And to all of my viewers and listeners, I hope you learned from today's program and, as always, I look forward to speaking with you again next week.


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About our guest: Rob Robinson is a formerly homeless community organizer and activist based in New York City. His work focuses on changing people’s fundamental relationship to land and housing. He works with social movements around the world including the Movement of People Affected by Dams in Brazil (MAB), the Landless Workers Movement in Brazil (MST), Abahlali baseMjondolo in South Africa (the Shackdwellers movement) and the Platform of People Affected by Mortgages in Spain (the PAH). Rob is the USA-Canada Coordinator of International Alliance of Inhabitants, an alliance of 12,000 members worldwide which supports a Zero Evictions Platform. As a longtime member of the US Human Rights Network, his work is framed in international human rights law. In the US he works with communities on several social issues including, poverty and debt, police violence against the poor, gentrification and access to broadband. He is a regular guest lecturer at the City University of New York Graduate Center. He has lectured at several US law school human rights institutes, including University of Miami, Northeastern University Massachusetts, University of California at Berkeley and Harvard. Rob is currently an adjunct professor of Urbanism in the Design and Urban Ecology program at Parsons New School University.


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Showing 1 comment

  • Edward Dodson
    commented 2022-03-02 12:16:57 -0500
    Solving the “housing crisis” requires solving, once and for all, the age-old “land question.” Land is part of our common weal. Land should never have become a commodity to be bought, sold and mortgaged. Putting land into land trusts is a strategy that mitigates but does not solve the problem. The real answer is the public capture of location rental values. Every parcel or tract of land has some potential annual rental value based on natural and societal advantages associated with the location. This rental value must be collected to pay for democratically-agreed upon public goods and services. Do this, and exempt housing units (which are depreciating assets) from taxation, and good things will happen. Land prices will fall and over time fall dramatically as there is no imputed or actual rental value retained by the holder of the deed to be capitalized into a selling price. As economist Mason Gaffney wrote years ago, the annual tax on the assessed value of a housing unit equates to a sales tax imposed year after year after year.
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