California Free Press

Off the Top of My Head

San Diego On the Way to Solving Homeless Problem

by John Lawrence

With a combination of safe sleeping and safe parking areas and also converting motel rooms into single occupancy units (SROs), San Diego is heading in the right direction for solving the homeless situation. This is combined with an ordinance that prohibits sleeping in public areas including sidewalks. Finally, a workable solution that gets the homeless off the streets, provides them with some amenities including sanitation facilities and makes the streets and city sidewalks safe for pedestrians again. As a tourist destination San Diego can't afford the spectacle of back to back tents crowding city sidewalks, and the provision of amenities in safe sleeping areas or city sponsored SROs makes the homeless at least somewhat better off than they are without any amenities on public sidewalks. The San Diego Union reported:

The properties being considered include three hotels and one apartment building.

One of the hotels is a 62-unit Ramada Inn on Midway Drive, which the Housing Commission agreed to pursue at its May 12 meeting when it unanimously agreed to apply for $18 million in Project Homekey funding. The estimated purchase price would be $11.6 million, equating to about $182,000 a unit, but adding kitchenettes and other upgrades would increase the overall cost to $29.5 million, or $469,000 a unit.

The city also is submitting a joint $4 million application with Wakeland Housing and Development Corp. to purchase a vacant 13-unit apartment building in Ocean Beach. Purchasing the building would cost $4.5 million, but rehabilitation expenses would increase the cost to $6.8 million, bringing the per-unit cost to $525,000.

The other two properties are a 107-unit Extended Stay America Hotel on Murphy Canyon Road for $40.7 million and a 140-unit Extended Stay America Hotel on Mission Valley Road for $52 million.

Essentially the city is taking the responsibility for providing public housing, something that was abandoned during the Reagan administration. The most dramatic cut in domestic spending during the Reagan years was for low-income housing subsidies. Reagan appointed a housing task force dominated by politically connected developers, landlords and bankers. In 1982 the task force released a report that called for “free and deregulated” markets as an alternative to government assistance – advice Reagan followed. In his first year in office Reagan halved the budget for public housing and Section 8 to about $17.5 billion. And for the next few years he sought to eliminate federal housing assistance to the poor altogether.

Public housing was stigmatized due to failed projects like Cabrini-Green. Cabrini–Green was home to 15,000 people, mostly living in mid- and high-rise apartment buildings. Crime and neglect created hostile living conditions for many residents, and "Cabrini–Green" became a metonym for problems associated with public housing in the United States. Now cities like San Diego are forced to take up the fallen banner for public housing under the metonym of  "housing the homeless". The state of California, however, is providing most of the funding.

Other cities have had no problem in providing low cost rental housing. Take Vienna for example, a city which has largely solved the worldwide crisis of soaring rents:

Experts refer to Vienna’s Gemeindebauten as “social housing,” a phrase that captures how the city’s public housing and other limited-profit housing are a widely shared social benefit: The Gemeindebauten welcome the middle class, not just the poor. In Vienna, a whopping 80 percent of residents qualify for public housing, and once you have a contract, it never expires, even if you get richer. Housing experts believe that this approach leads to greater economic diversity within public housing — and better outcomes for the people living in it.

People living in Vienna's social housing pay as little as 3% of their monthly salaries on rent. To boot the availability of low cost public housing keeps costs in the private housing market down.

In 2015, before they bought an apartment on the private market, the Schachingers were making about 80,000 euros ($87,000) a year, roughly the income of the average U.S. household in 2021. Eva and Klaus-Peter paid 26 percent and 29 percent in income tax, respectively, but just 4 percent of their pretax income was going toward rent, which is about what the average American household spends on meals eaten out and half a percentage point less than what the average American spends on “entertainment.” Even if the Schachingers got a new contract today on their unit, their monthly payments would be an estimated 542 euros, or only 8 percent of their income. Vienna’s generous supply of social housing helps keep costs down for everyone: In 2021, Viennese living in private housing spent 26 percent of their post-tax income on rent and energy costs, on average, which is only slightly more than the figure for social-housing residents overall (22 percent). Meanwhile, 49 percent of American renters — 21.6 million people — are cost-burdened, paying landlords more than 30 percent of their pretax income, and the percentage can be even higher in expensive cities. In New York City, the median renter household spends a staggering 36 percent of its pretax income on rent.

The article goes on:

Real estate is a place where money literally grows on tree beams. In the last decade, the typical owner of a single-family home acquired nearly $200,000 in appreciation. “Another word for asset appreciation is inflation,” the academics Lisa Adkins, Melinda Cooper and Martijn Konings write in “The Asset Economy,” “an increase in monetary value without any corresponding change in the nature of the good itself or the conditions of its production that would make it scarcer or justify an increased demand for it.” That inflation is creating a treacherous gulch between the housing haves and have-nots. Harvard’s Joint Center for Housing Studies found that, in 2019, the median net worth of U.S. renters was just 2.5 percent of the median net worth of homeowners: $6,270 versus $254,900. Last year, as higher interest rates slowed home sales and caused prices to plateau (and even soften in some overheated cities), the asking price of the median U.S. rental reached $2,000 a month, a record high, according to Redfin. Inflated rent prices line the pockets of landlords while preventing renters from saving for a down payment and ever getting off the treadmill.

Inflation in asset prices, particularly real estate, is causing more people, especially senior citizens, to fall into homelessness. The recent rise in interest rates which supposedly are aimed at curbing inflation have done nothing to bring the cost of housing down. In San Diego county, real estate is still appreciating in value despite the Fed having raised interest rates to highs not seen in recent years. It has done nothing to stop investors and hedge funds that pay cash. I reported previously:

In a deal with the Conrad Prebys Foundation, Blackstone Group, CEO'd by Steven Schwarzman, is buying 5800 rental units in San Diego. According to the San Diego Union, "The deal makes Blackstone one of the biggest real estate holders in San Diego County. It already owns $4.5 billion in assets here — including Legoland and the Hotel del Coronado. The transaction, which also includes Los Angeles-based investment firm TruAmerica as a partner, is expected to close in the next few weeks. The sale of the apartments was praised by Dan Yates, the president of the Conrad Prebys Foundation, who said the portfolio was assembled by Conrad Prebys — a San Diego developer — himself. Yates said the money from the deal will be used for grants primarily in San Diego."

Investors pay cash t buy up cheap rentals, and, therefore, the rise in interest rates doesn't affect them. They don't pay interest. They then give the tenants a 30 or 60 day notice depending on how long they've lived there. Then they refurbish the apartments and rent them out for twice the previous rent. This is the so-called "gentrification" of San Diego neighborhoods. This is why low cost rental units are disappearing just as all the SROs have disappeared. The policies now taking place by the city and county of San Diego to provide converted hotel housing and safe sleeping and parking areas will counteract this trend of higher and higher rents producing more and more homelessness. It's a policy that needs to be continued and increased. It cannot just be a one-off. Eventually, it will put a damper on the private rental market just as it did in Vienna.

Column: Desmond missed something big in criticizing hotel purchases to house homeless people

County Supervisor Jim Desmond speaks to members of the media after a Board of Supervisors meeting on April 11, 2023.

(Adriana Heldiz/The San Diego Union-Tribune)

San Diego County is a partner in the projects and would provide social services, including assistance for mental health, substance abuse

By Michael Smolens Columnist 

May 7, 2023 5 AM PT from the San Diego Union

San Diego County Supervisor Jim Desmond had tough words about the planned purchase of three extended-stay hotels to house homeless people, contending they were too expensive and didn’t address what he said is the main cause of homelessness.

“We just keep throwing more and more dollars at this problem without really getting to the root cause of mental health or alcohol abuse or drug abuse,” he said April 28 on “Fox & Friends.”

Desmond considered the proposal to spend about $157.8 million — which amounts to more than $383,000 per unit — not just too much, but counterproductive. That cost, along with the price of other housing for homeless people, has come under considerable scrutiny.

“Spending all this $157 million on more rooms, doing the same thing, causing the same problem, is fruitless,” he said.

There’s a lot to unpack here.

For one thing, that housing will include services to help people with the very kind of behavioral issues Desmond was talking about.

The specifics of this situation aside, Desmond, a Republican, is expressing widespread, bipartisan frustration at the lack of progress on reducing homelessness at the state and local levels.

Billions of dollars have been aimed at the problem in California, yet the homeless population keeps growing.

He also touched on concerns that people in all walks of life, including many who are homeless, have mental illness and substance abuse problems and need help.

But his attack on the plan by the San Diego Housing Commission, which was reprised in the New York Post, misses a few important things.

The county, which Desmond helps oversee, has agreed to provide social services for residents of these hotels when they are turned into apartments. That includes getting people assistance for various problems, including mental illness and substance abuse.

The county is a partner with the commission and the city of San Diego on the hotel conversions and was involved in negotiations over their selection from a longer list of properties.

Desmond didn’t mention that on Fox, or perhaps he didn’t know. His spokesperson said the supervisor would be unavailable to comment.

“Services specifically target the people he is talking about,” Ryan Clumpner, vice chair of the housing commission, said in an interview. “The county piece of this is what he’s criticizing.”

The root cause of homelessness, as plenty of research has shown, is the lack of housing or the high cost of housing. During his appearance on Fox, Desmond didn’t talk about the need for more housing or shelter space for people living on the street.

Further, growing efforts by Democrats and Republicans to pursue rules prohibiting public camping are hampered if there is no shelter space available. The law in many cases prohibits authorities from citing or arresting homeless people unless there are beds open.

This is not to say mental illness and substance abuse don’t contribute to homelessness, along with poverty and other economic factors.

“That’s what people really need to get into, is treatment, not just the hotel room where they can continue to use and continue in the bad habit that got them homeless in the first place,” Desmond said.

The county, which Desmond helps oversee, has agreed to provide social services for residents of these hotels when they are turned into apartments. That includes getting people assistance for various problems, including mental illness and substance abuse.

The county is a partner with the commission and the city of San Diego on the hotel conversions and was involved in negotiations over their selection from a longer list of properties.

Desmond didn’t mention that on Fox, or perhaps he didn’t know. His spokesperson said the supervisor would be unavailable to comment.

“Services specifically target the people he is talking about,” Ryan Clumpner, vice chair of the housing commission, said in an interview. “The county piece of this is what he’s criticizing.”

The root cause of homelessness, as plenty of research has shown, is the lack of housing or the high cost of housing. During his appearance on Fox, Desmond didn’t talk about the need for more housing or shelter space for people living on the street.

Further, growing efforts by Democrats and Republicans to pursue rules prohibiting public camping are hampered if there is no shelter space available. The law in many cases prohibits authorities from citing or arresting homeless people unless there are beds open.

This is not to say mental illness and substance abuse don’t contribute to homelessness, along with poverty and other economic factors.

“That’s what people really need to get into, is treatment, not just the hotel room where they can continue to use and continue in the bad habit that got them homeless in the first place,” Desmond said.

That’s an inaccurate description of what this housing is designed to do, which is provide more than just a room.

Regardless, Desmond made a troubling broad statement, suggesting mental illness is the direct result of a “bad habit.” Maybe he was thinking more about substance abuse, which can stem from personal decisions. But often there’s more to it than that.

In talking about the need to get people treatment, Desmond didn’t point out there’s an acute shortage of facilities, programs and qualified people to run them. He also could have mentioned the county is trying to do something about that, for which he and other supervisors can take credit.

The county has increased spending on behavioral health treatment by tens of millions of dollars in recent years. Looking ahead, the supervisors on Tuesday unanimously approved a groundbreaking, long-range program to train new mental health professionals and retain existing ones, according to Paul Sisson of The San Diego Union-Tribune.

Desmond bemoaned the inability of authorities to put troubled individuals into treatment if they don’t want to go.

“We have to force people, or involuntarily get them into the programs they need,” he said on Fox.

He’s not the only one who thinks that way. Last year, the Democratic-controlled Legislature passed Gov. Gavin Newsom’s plan to create CARE Courts aimed at compelling people to get treatment.

Amid considerable opposition, lawmakers also are trying to change the state conservatorship law to make it easier to put people into programs when they are unable to care for themselves or may be a threat to themselves and others. San Diego Mayor Todd Gloria has been a leading advocate for those changes.

There appears to be consensus that new approaches toward homelessness are needed, because what has been done isn’t working. Beyond that, there’s no broad agreement about what direction to go in.

There are arguments for permanent housing and less expensive big tent shelters, safe tent campsites, trailers and tiny houses. The housing commission has, among other things, pursued converting extended-stay hotels, where units have kitchenettes and more apartment-like layouts.

Those buildings also tend to meet regulations by the U.S. Department of Housing and Urban Development for this type of housing. Importantly, they can be turnkey projects converted quickly. The three San Diego hotels, which are near public transportation and grocery stores, could be occupied by the end of the year, according to the housing commission.

Building from scratch could take years to put together financing, gain approvals and complete construction. And that costs more than converting hotels, according to Clumpner.

“These homes are 30-40 percent cheaper than new & include social services,” he said on Twitter. “They’re coming from housing tourists to housing San Diegans with special needs.”

Gary Warth of the Union-Tribune reported that the $383,000 per-unit cost of the three hotels is greater than the cost of the two hotels purchased in 2020 and similar projects, but less than newly constructed affordable housing projects.

One of the more expensive projects is the 96-unit Amanecer Apartments in Linda Vista, which opened at a cost of $51.1 million, or $538,000 a unit.

The county participated in that one as well.

Off the Top of My Head

The Homeless Landlord's Van Life

by John Lawrence

Van life is somewhere between homelessness and apartment living. Rather than pay exorbitant rents, some people are living in their vans and working remotely. It makes sense to live cheaply, not be tied down and save your money. There are websites such as Bearfoot Theory which provide a how to guide for living in a van. This particular guide recommend solutions which cost a pretty penny especially for the van itself. On the other hand I was homeless for two separate one year periods in 1993 and 2005. At the same time I had my home rented out so I had a steady stream of rental money coming in. So I was a homeless landlord! Bearfoot endeavors to make life on the road glamorous which it can probably be, but she's touting a more luxurious van lifestyle than the one that suited me. However, although I took some extensive vacations in my van, primarily I was a worker with my own window cleaning and painting business. With a cell phone and voicemail I didn't miss any job requests. I had what I called a WSUV - a Work Sleep Utility Vehicle which was a Ford E-150 cargo super van, actually two different vans in each of the two periods I participated in "van life." I did some conversion work, the main thing of which was to put a 4 inch foam pad on the floor covered by indoor outdoor carpet. A double sleeping bag made for comfortable sleeping atop the foam. I couldn't stand up so the foam made it comfortable on my knees. I had built in shelves for both work materials and my personal effects including food and clothes. For the second van I had a solar panel on the roof, a microwave and a bar refrigerator. My refrigeration and microwave capabilities though were marginal. Of course I had my two ladders on the roof which were very necessary for the kind of work I did.

I had a storage room for my other stuff. It was critical to drop off my paint buckets after a job because I didn't want to have those fumes in my van while sleeping. I also didn't spend that much time in my van except for driving to and from jobs and sleeping. In the morning I did my ablutions, swam and showered at the YMCA. In the evenings I worked on my laptop or read while listening to CDs with headphones at local college and university libraries until they closed. I used their WiFi. Then I chose a parking spot on a public street and went to sleep around 10 PM. I arose at 6 AM so as to pull out of the parking spot before I attracted attention, hopefully. I had pre-scouted out parking spots. They had to be acceptable according to certain self imposed criteria. #1 They had to be level. #2 They couldn't be directly in font of someone's house. #3 I had to be able to blend in with other vehicles parked along the street. #4 I couldn't stick out like a sore thumb. #5 It had to be close to a YMCA. There were very few times in those two one year periods when I was called out by the police or Neighborhood Watch, and those times were when I got too careless about where I parked. My work van blended in more seamlessly with other vehicles than would a Mercedes 4x4 which the lady in Bearfoot Theory uses.

A couple other notes about my van: I had a simple shower curtain extension pole across the front behind the front seats with two pieces of fabric hanging down which I could open during the day and close at night for privacy. I opened the two front door windows a crack at night for ventilation and I had a rear camper type window which opened a crack also. I had a layer of dark plastic film on both the rear and side windows so nobody could see in. So I was pretty secure in my privacy while sleeping, and sleeping in a double sleeping bag with my pillows on 4 inches of foam was very comfortable. In the morning I would "deep six" my pillows in the sleeping bags and scoot them out of the way so I could access my work materials or other items more readily. I had a couple of pee bottles in case I had to go at night or couldn't make it to the YMCA in time to use the bathroom there. During the day I usually used my customers' rest rooms. In the morning after swimming and showering at the Y, I went to Starbucks for my venti mocha and drank a Kern's juice which I stored in the van.

I took a few 3 week vacations during the time I lived in my van using the same techniques - showering and swimming at a local YMCA, scouting acceptable parking spots for sleeping whether I was on the road or just staying in one place for awhile, and spending evenings at a local university library till it closed. During all these road trips I was booking jobs via my cell phone and voicemail for the week I would get back to home base. Since I was self employed in the "gig economy", I wasn't tied down in terms of my work. I could book jobs or not book jobs at my convenience. I also traveled a lot including visiting family on the east coast. During both these one year periods, I received a monthly rental check from my tenants. It was a good way to save money. In this day and age of exorbitant rents, I would recommend van living and working as an alternative. I have fond memories of my WSUV

Off the Top of My Head

San Diego Throwing Money at Homelessness With Meager Results

by John Lawrence

An article in the San Diego Union titled, "San Diego to pursue buying three hotels to house homeless people" — at a cost of $383,000 per room" appeared on April 25, 2023. Although I think buying old motels to house the homeless is a pretty good idea, when you consider the price tag, there are probably better ideas out there. Katheryn Rhodes and I did some research in 2016 which was reported in the San Diego Free Press. According to Katheryn, the City of San Diego has all sorts of real estate that it has no use for so it usually just sells it on the free market. Although the series of 3 articles was slanted towards affordable housing, these available parcels could as well be utilized as safe campgrounds and safe parking areas. In addition Katheryn did an exhaustive analysis of the pots of money the City has that are just accumulating with no specific purpose in mind. Has the City done an analysis of all the real estate the City owns that has no designated purpose that could be turned into safe parking areas and safe campgrounds? Why not?

The article reported:

It doesn’t have to be this way. The City has squirreled away millions of dollars in off-budget funds which could be used for affordable housing and housing for the homeless. Besides that the City of San Diego owns numerous parcels of land on which affordable housing including housing for the homeless could be built. Since they’re not recognizing the emergency situation that lack of housing represents, they are actually in violation of a state mandate,Senate Bill 2 from 2007, authored by Senator Cedillo which stated the following:

This bill would add emergency shelters to these provisions, as specified, and would add provisions to the housing element that would require a local government to identify a zone or zones where emergency shelters are allowed as a permitted use without a conditional use or other discretionary permit. … By increasing the duties of local public officials, the bill would create a state-mandated local program.

Safe camping areas would provide portable toilets, portable showers, security, social services and other amenities at a fraction of the cost of the nearly $400,000 per room which is the cost of each motel room the City is investing in. The article went on:

Civil engineer Katheryn Rhodes has identified several funds where the City, the County, the San Diego Housing Commission and Civic San Diego are hoarding cash that could be used for emergency shelters and/or affordable housing or even pay for Emergency Shelter Tents and Tenant-Based Rental Assistance (TBRA) Housing Vouchers. There’s $28.7 million in the Low and Moderate Income Housing Asset Fund (LMIHAF). There’s also $259 million in long-term assets that can be leveraged by using it as collateral and issuing bonds for much more.

One could note that most homeless could provide their own shelter in terms of tents which they are providing for themselves now. They just need a place to put them off the public sidewalks where they could have proper sanitation which they don't have now. The brutal fact that I have witnessed myself is that homeless people urinate and defecate on the public sidewalks. To be graphic, it's sad to see a woman with her pants down stooping over with the poop coming out of her ass in full view of other people and motorists on a public sidewalk in downtown San Diego. It used to be that you had to dodge dog shit on city sidewalks. Now you have to dodge human shit if you even have the courage to walk down some public sidewalks in the City of San Diego. Tents line both sides of Commercial Avenue with barely an inch between them. The homeless rule the streets in that area. I could hardly drive my car down that street without being run over by the San Diego Trolley which honked and honked at me till I was able to pull over without hitting some homeless person.

Seriously, people, check out the series of articles Katheryn and I wrote in 2016. The problem has only gotten worse since then.

Blackstone’s Evil Scheme to Profit Off Every American Crisis

 

 

 

How Stephen A. Schwarzman got rich, from More Perfect Union's series The Class Room

 

Narrated by JT Chapman from Second Thought

March 1 2023, from More Perfect Union

In January a massively powerful landlord sued to evict hundreds of tenants across the country. 

The landlord had bought up billions of dollars of real estate when prices were low during the pandemic–taking advantage of the economic downturn that hurt so many. 

And now that eviction moratoriums are lifting, that landlord is starting to kick people out of their homes. 

Here he is at the height of the pandemic.

Stephen A. Schwarzman is the co-founder, chairman, and CEO of Blackstone Group, the world’s largest alternative asset firm with almost a trillion dollars in assets–including real estate.  The firm has made Schwarzman very, very rich. 

And he’s not afraid to flaunt it. 

One example: his 60th birthday party reportedly cost between 3 and 5 million dollars. 

It was hosted by Martin Short. Patti LaBelle sang a song written for Schwarzman. And it was held in an exact replica of Schwarzman’s apartment built for the party.

Here’s the egregious part: Schwarzman’s big bash was in 2007, just as the economy was on the precipice of a disaster caused by people like Schwarzman. 

That same year Blackstone had their IPO, netting Schwarzman hundreds of millions of dollars instantly. 

Sensing a theme here? It’s not just COVID and recession profiteering: 

Major economic downturns and national crises have coincided with hugely profitable milestones for Blackstone… and Stephen Schwarzman

This is The Class Room from More Perfect Union, and today we’re looking at how Stephen A Schwarzman got rich.

Like many great stories of people plundering America, this one starts at Harvard Business School. 

Schwarzman was raised in the suburbs of Philadelphia then went to Yale, where he joined Skull and Bones, the infamous and… kind of corny secret society.

Then to Harvard Business School and then on to the finance world. Schwarzman landed at Lehman Brothers, then a vastly powerful investment bank shortly after getting his MBA. 

At Lehman he worked in mergers and–helping the firm scoop up other businesses–until he eventually oversaw the absorption of Lehman Brothers itself into American Express. 

He left Lehman, and in 1985 started his own firm–Blackstone. He teamed up with his Lehman colleague Peter G. Peterson, former Secretary of Commerce under Nixon.

Despite the founders’ pedigree, they tried to push the scrappy startup image in the press. The New York Times wrote in 1987 that Blackstone “operates out of cramped quarters… where secretaries and bankers share offices and boxes are stacked in the hallways”

Blackstone started as a mergers and acquisitions consulting firm before transitioning into merchant banking and private equity. 

It wasn’t a great time for investing—but Blackstone got lucky: they had finished raising money for their investment firm just days before the crash. 

And it was all part of their strategy. The New York Times pointed it out that year with the headline, “A Big Fund Ready to Capitalize on Hard Times”

In the early profile, published right after Black Monday, Schwarzman’s business partner admitted that their strategy involved taking advantage of economic downturns. 

”There are going to be fascinating opportunities… There’s a good chance the dollar will continue to fall, interest rates over the long term will go up and we will experience slow growth… You raise capital when you can raise it, and then you move in opportunistically and make investments in distressed industries.” 

It’s a business model based on profiting when everyone else loses.

If we fast-forward through 20 years of Blackstone pioneering and perfecting the private equity and leveraged buyout, tearing apart businesses to maximize profit, we get to their IPO–that’s when a company goes from private to public so that anyone can buy shares on the stock market. 

The IPO made Schwarzman 500 million dollars. 

Once again months later, the greed of Schwarzman’s colleagues in finance made this happen

Because the collapse was directly linked to housing millions of working Americans had their homes foreclosed, meaning they were available to buy for cheaper-than-usual rates.

So Blackstone swooped in. According to reporting from the Neighborhood Assistance Corporation of America, “Blackstone was one of the first private equity firms to begin buying foreclosed homes in the wake of the financial crisis, fixing them up and renting them out.”

So as Americans suffered, Blackstone profited three times: their backers and investment companies were directly responsible for the crash, some of those entities got government bailouts, then after everything crashed, they bought up property at rock-bottom prices.

It’s the exact strategy Schwarzman’s business partner outlined in 1987: “you move in opportunistically and make investments in distressed industries.” 

Blackstone was able to buy millions of dollars in cheap housing, which gave a jumpstart to their real estate business. 

Post-recession exploitation was just one big push in Blackstone’s journey towards becoming one of the biggest landlords in America. 

Today, they own nearly 300 billion dollars in real estate. 

Real estate accounts for nearly half of their earnings. Schwarzman called their profiteering on housing “the most remarkable results in our history on virtually every metric.”

But then another downturn: COVID. When the pandemic that killed nearly 7 million people drove down real estate, Blackstone scooped up billions of dollars worth of homes.

And now that eviction moratoriums are starting to lift, Blackstone is kicking tenants out of their homes. And they’re happy about it: the Financial Times reported that on a global call with Blackstone staffers, the head of real estate optimistically shared that they’re allowed to start evicting people again.

They even brag about how inflation lets them jack up rents, gleefully pointing out in this investor document that rent went up more than inflation. 

Blackstone makes money when the rest of us suffer. It’s by their own admission a huge part of their business strategy. 

And Schwarzman fights to keep as much wealth as possible. When the Obama administration almost started taxing people like Schwarzman fairly, he compared them to Nazis.

That’s why he donates so much money to the GOP: they protect his interests. Blackstone earnings reports even say that a Democratic government is bad for their business. 

Blackstone admits they need unfair taxation legislation to make as much money as they do, they write to investors, “If we were taxed as a corporation, our effective tax rate would increase significantly…. it would materially increase our tax liability, which would likely result in a reduction of the value of our common units.”

And meanwhile Schwarzman tries to launder his image by making big donations to some of America’s most iconic institutions, and slapping his name all over their buildings–like at the New York Public Library, Yale, Harvard, and more. 

But like so many like him, Schwarzman will continue to exploit tax law, exploit economic tax returns, and continue to get richer while the rest of us suffer. 

Effective legislation hitting Schwarzman’s main sources of income–like carried interest–would make it harder for his entire industry to profit off working Americans’ losses.

Off the Top of My Head

Is Private Equity Firm, Blackstone Group, Taking Over San Diego's Rental Market?

by John Lawrence

In a deal with the Conrad Prebys Foundation, Blackstone Group, CEO'd by Steven Schwarzman, is buying 5800 rental units in San Diego. According to the San Diego Union, "The deal makes Blackstone one of the biggest real estate holders in San Diego County. It already owns $4.5 billion in assets here — including Legoland and the Hotel del Coronado. The transaction, which also includes Los Angeles-based investment firm TruAmerica as a partner, is expected to close in the next few weeks. The sale of the apartments was praised by Dan Yates, the president of the Conrad Prebys Foundation, who said the portfolio was assembled by Conrad Prebys — a San Diego developer — himself. Yates said the money from the deal will be used for grants primarily in San Diego."

“Conrad Prebys was a sharp businessman who found true joy in the act of giving, and I believe he would be honored to see the result of his life’s work dedicated to continuing his philanthropic legacy,” Yates wrote in an email." Billionaire Conrad Prebys died in 2016 so it's very unlikely he "assembled the deal himself." But, even if he did, and the money will be used for philanthropic grants, Conrad Prebys has his name on half he buildings in San Diego already. It seems that billionaires can't get enough of charitable giving when it gets their names on buildings even though it will probably mean that relatively affordable rental units will become unaffordable after Blackstone Group "fixes them up" and raises the rent and that the true beneficiaries will be the investors in the Blackstone Group. It is to be noted that California sanctions on evictions, put in place during the pandemic, will expire this June 30.

San Diego real estate analyst Gary London said, “To my knowledge, this is the largest real estate transaction in San Diego County history.” So the process goes like this: the tenants in Blackstone's newly acquired rental units will be given 30 day notices to leave so that Blackstone can do badly needed renovations. This is all perfectly legal. There is no need to "evict" unless the tenants refuse to leave even after given proper notice. The Union article goes on,"All the apartments are market-rate but Blackstone says it plans to partner with nonprofit Pacific Housing to provide services for residents, including after-school tutoring, financial literacy classes, and health and wellness initiatives at no cost. It did not address it directly, but the move seems to counteract earlier concern with the foundation’s sale of these holdings." The key word here is "market-rate." This means that once Blackstone puts in its "improvements," they can charge whatever rent they can get even if it's 50% more than what tenants were previously paying. This is how the game is played, and this is why there are fewer and fewer affordable apartments in San Diego. Investors buy up apartments with affordable rents and convert them into apartments at "market-rate." Ironically, Blackstone intends to provide new tenants with "financial literacy classes." Presumably this would mean tutoring them to the advisability of investing in the Blackstone Group. And what were the "earlier concerns with the foundation’s sale of these holdings." Could it be that the newly converted "market-rate" apartments would reduce the stock of affordable rental units in San Diego?

The most pathetic aspect of this deal was this: "A letter was sent to the foundation in early February from San Diego Mayor Todd Gloria, San Diego County Supervisors chair Nathan Fletcher and California Senate President Pro Tem Toni Atkins to urge them to take into account future affordability of the apartments when considering a sale." I'm sure they'll do that even if it means their investors will take a slight hit to their profuts. Get real, politicians! Your letter is a fig leaf and is worse than useless. The letter went on: “A substantial number of these units are home to working individuals and families,” they wrote, “and are some of the limited inventory in the region of non-deed restricted, naturally occurring affordable housing options for San Diegans.” And the most egregious oxymoron of the letter: "non-deed restricted, naturally occurring affordable housing options." There is no such thing as "natyrally occurring affordable housing" at least not when private equity firms like Blackstone see a profit-making opportunity. The fact that they are "non-deed restricted" means that they are fair game. In any event affordable housing is in the eye of the beholder. It means absolutely nothing unless it is deed restricted or publicly owned.

The article concludes with: "The Conrad Prebys Foundation gave more than $71 million to 112 organizations across San Diego County in March to bolster the arts, health care, medical research, animal conservation, education, and the welfare of young people. The biggest grant — $15 million — went to the San Diego Symphony." Of course! The symphony will always profit as long as billionaires want their names on more buildings and symphony programs. Meanwhile working class tenants lose.

Off the Top of My Head

The Only Way to Create Affordable Housing Is For Government to Set the Price of Rent

by John Lawrence

As long as the market sets the price of rent, rents will become increasingly unaffordable especially in highly desirable areas like San Diego. Remember public housing? Some version of this is necessary or homeless will be relegated to shelters and/or time limited stays in subsidized housing for eternity. Why isn't public housing feasible? It's NIMBYism (not in my back yard) and NMTMFTism (not my tax money for this). What most people don't realize is that the Federal government can build public housing with no tax implications because unlike state governments, the Federal government has a sovereign fiat currency, the US dollar. The only non-artificial restraint on Federal expenditures is inflation so right now is probably not a good time to allocate dollars for public housing. Of course we expect that lessons have been learned so that public housing does not degenerate into the kind of situation like the notorious Cabrini-Green development.

Crime and neglect created hostile living conditions for many residents, and "Cabrini–Green" became a metonym for problems associated with public housing in the United States. In 1995, the Chicago Housing Authority (CHA) began tearing down dilapidated mid- and high-rise buildings, with the last demolished in 2011. Today, only the original two-story rowhouses remain. The area has seen major redevelopment due to its proximity to downtown, resulting in a combination of upscale high-rises and townhouses, with some units being CHA-owned, creating a mixed-income neighborhood. Dispersal of affordable units throughout an area is necessary in my opinion to prevent concentration of crime and gangs in certain areas. There is no need for public housing to be concentrated like the Cabrini-Green development. It can be dispersed so that an area is mixed income, and less likely to attract gang activity which seems to happen in pockets of poverty.

Of course the US Federal government, based on the two party system can hardly rationalize spending money on public housing as long as Republicans have any say about it or as long as they can filibuster it to death. Progressives have been lucky to get a modicum of progressive legislation passed during the Biden administration. Biden has had to tone down much of the progressive legislation he attempted to pass at first. Nevertheless he has accomplished much. Public housing is not even on the table as a solution to the homeless and housing affordability problem. Rents just continue to increase way beyond a family's ability to pay them. State and local governments are throwing millions of dollar at the homeless problem without even putting a dent in it. It will take some radical ideas to solve it of which disbursed public housing is one. It totally goes against prevailing notions of a capitalist based, profit oriented society, not the least of which is that an ample supply of public, affordable housing units would undermine landlord profits by keeping the cost of housing in the for profit market under control. It would put a base line under housing costs.

Off the Top of My Head

Problems of American Democracy - Part 1

by John Lawrence

When my father was a high school teacher in Highland Park, NJ, he taught a course - Problems in American Democracy. So I'm hopefully carrying on a family tradition by trying to elucidate these problems which, to put it mildly, are probably much different today than they were in 1941! The big problem today is that so many people are detached from reality in terms of being in touch with what the real problems are. One of the real problems is climate change, how to get from here to net zero carbon emissions before planet earth becomes uninhabitable. Another real problem is homelessness and affordability of housing. Another real problem is the 80 million refugees in the world. Another real problem is for Americans to be concerned about world problems and not just confine their attention to what goes on inside the borders of the US.  Another real problem is physical and social infrastructure which will be addressed by Biden's Build Back Better bills. But the biggest problem of all, as I see it, is that elections every 2 years make continuity of direction for the US impossible especially when the 2 parties have become diametrically opposed. So today we have the reality that the American government could possibly swing back and forth between Trumpism and what we might call Bidenism. Back and forth between ignorance and enlightenment. To boot the American people are no longer tuned in to authoritative news sources. Too many are only tuned into social media which is greatly responsible for cultivating the divide between two American tribes - the no nothings and the do somethings.

People in the Trump camp could care less about voting for or against their own economic interests. You would think a lot of them would benefit from the initiatives that the Democrats have put forward. But either they are ignorant of them or are willing to vote against their interests just because of the tribe they belong to or out of spite. They are completely irrational. Rationality is not even on the table. Their hate and their spite rules everything as far as they are concerned. They are willing to go down numerous rabbit holes and believe all kinds of conspiracy theories because critical thinking or a concern about human welfare, their own and others, has no place in their consciousness. Their concern and understanding remains at the level of symbols like the American flag. A deeper understanding or analysis of situations is beyond them. What's more this misinformed and ignorant part of the population is significant in number and can easily be responsible for electing ignorant and conspiracy theory infused lawmakers who will do whatever is necessary to pander to their constituents. Thus America as a nation could swerve back and forth between ignorance and rationality as exemplified by Trump's withdrawal from Obama's climate initiatives like the Paris accords and Biden's reinstating them.

Contrast the instability of American democracy with the Chinese system of government in which stability is of utmost importance. They don't want anyone rocking the boat including tennis stars. While this heavy handedness does curtail some of the aspects of western notions of freedom, it preserves the priorities of the long term interests of China itself which has been going in what most experts concede is a very positive direction. According to the World Bank: "Since China began to open up and reform its economy in 1978, GDP growth has averaged almost 10 percent a year, and more than 800 million people have been lifted out of poverty. There have also been significant improvements in access to health, education, and other services over the same period." China has had the goal of eliminating poverty altogether and claims as of 2021 to have done so. According to a Chinese source which admittedly may be biased: "Through continuous efforts, the final 98.99 million impoverished rural residents in China had all been lifted out of poverty, and all 832 impoverished counties and 128,000 villages had been removed from the poverty list by the end of 2020. The strategy of targeted poverty alleviation is China's strongest "weapon" in its final battle against poverty, and a major innovation in the theory and practice of poverty reduction. China's success in poverty alleviation has proven that the problem of poverty, in essence, is how the people should be treated: the people-centered philosophy is the fundamental driving force behind this cause." Independent confirmation of these claims is unclear. The World Bank which is an unbiased source essentially agrees with the Chinese government at to its elimination of poverty: "In 1990 there were more than 750 million people in China living below the international poverty line - about two-thirds of the population. By 2012, that had fallen to fewer than 90 million, and by 2016 - the most recent year for which World Bank figures are available - it had fallen to 7.2 million people (0.5% of the population). So clearly, even in 2016 China was well on the way to reaching its target. This suggests that overall, 745 million fewer people were living in extreme poverty in China than there were 30 years ago. World Bank figures do not take us to the present day, but the trend is certainly in line with the Chinese government's announcement."

So what weapons does the US have in its arsenal for the alleviation of poverty and homelessness? Not many. Biden's Build Back Better plan will help, but the US in recent years has been more interested in funding weapons systems built by the military-industrial complex, weapons that destroy rather than weapons that build. It's only "progressives" that even care about solving the problems of poverty and homelessness in America or in doing something about climate change or about the refugee problem in the world and not just at our southern border. I note that not one Republican voted for Biden's Build Back Better bill in the House. Instead Republican leader Kevin McCarthy went on an 8 hour diatribe in a futile attempt to prevent the bill's passage.

Off the Top of My Head

The Only Workable Solution to Homelessness That Will Never Be Implemented in America

by John Lawrence

What drives the lack of a solution to homelessness is fear - fear by politicians that any humane solution will create more homelessness and fear that people in poverty will lose their fear of becoming homeless if there's a humane solution. Secondarily, there is this mindset that every homeless person needs to be housed in lumber and concrete housing which is extremely expensive to create and be given away for free. Also, landlords don't want to lose their pool of renters who may opt to become homeless and avail themselves of free housing. Meanwhile, the homeless are increasingly consuming the time and resources of police and hospital emergency rooms.

So here is my solution, and then I'll tell you why it will never be implemented. Set aside land for free campgrounds just as a city sets aside land for parks. These should be open to all people not just the "homeless" at some snapshot in time. The financial savings from not building lumber and concrete housing would be immense. These campgrounds should have basic services like rest room facilities and showers. Also trash collection and security. The homeless can provide their own tents as they already have which are strewn all over public sidewalks. This solution accomplishes two very important goals: 1) it provides a marginally better lifestyle for the homeless with much better sanitary conditions and 2) it gets the homeless off the streets and sidewalks letting the general public feel safe in using them again. The money saved in police and hospital resources would probably pay for the minimal services provided. In addition social worker services in terms of mental health, drug counseling and job search might be provided as they are even today.

So this solution would make both the general public, who could reclaim the streets and sidewalks, and the homeless, who would have a marginally better and more sanitary life, better off and the whole scenario could be implemented on a very cost effective basis. Why would it never be implemented in America? Here's why. It heightens the fear among politicians and especially conservatives that the homeless population would continue to grow unabated as more and more people would choose to live in a campground than to pay exorbitant rent. Landlords would lobby politicians because they would fear losing their tenants. People on the lowest rungs of the financial ladder would lose their fear of becoming homeless as a free or almost free solution to housing in lumber and concrete becomes available. Most of the homeless already have rudimentary transportation ^i.e. bicycles. This gives them access to bus routes which can get them around the city. Most have some income which they use for food at fast food places which, while not nutritious, at least keeps them from starving. So my solution would not necessarily include food services or transportation services.

So why would my solution never be implemented? The fear that it would swell the ranks of the homeless by attracting more people who would prefer to live at a campground rather than paying exorbitant rents. No politician wants to admit that there is any other solution than to house the homeless in lumber and concrete which will never be feasible because of cost. Taxpayers won't stand for it. If politicians and the general public could ever get over their fear of attracting even more homeless if any humane solution is implemented, the solution outlined above might be approved. It is a cost effective solution that would marginally improve the lives of the homeless while creating an alternative for all those paying exorbitant rents and at the same time opening up public spaces formerly occupied by the homeless to the general public who would be able to use the public walkways, which are today strewn with trash, without fear.

Off the Top of My Head

The Stock Market is Too Big to Fail

by John Lawrence, April 2, 2021

Just as the big Wall Street banks are too big to fail, so now is the stock market. The stock market will never take another radical dive downward because the Federal Reserve won't let it. The way the economy is shaping up Treasury bonds, which hardly pay any interest, are just a safe place to store your money and also for foreign nations which need the world's reserve currency (the US dollar) to have a savings account because they need dollars to conduct business. There is no worry that the US will have to pay off the trillion dollars in Treasuries that China owns because they need those dollars to do business with the US and other nations. If they did want to dump all their Treasuries for some reason the Fed could just create the money to pay them and effectively take the Treasuries on its own balance sheet.

So the stock market is the only game in town for those who want to actually "invest" their money. There is so much 401(k) money in the stock market that that is reason enough to never let it fail. Instead it will continue on its merry way upward while the Fed keeps interest rates at approximately zero so that not much in the way of interest will have to be paid on US debt. There is no reason to fear that Joe Biden's $2 trillion infrastructure plan will bankrupt the US. Since the US dollar is a sovereign currency, the Fed can print as much money as it wants. If international investors don't want to buy this debt, it ends up on the Fed's balance sheet which is an effective black hole from which it never has to emerge.

Then why is there all this kibuki theater about "how to pay for it," the $2 trillion infrastructure plan I mean. It's just that most Americans including most Congressmen are under the illusion that a country with a sovereign currency like the US faces any constraints in paying for anything. Well, there is one constraint - inflation. This is probably of little concern as long as the money is targeted at the lower middle class an the poor which haven't seen wages rise in 40 years. The real inflation in the economy is the asset inflation that the rich are mostly responsible for. That includes the stock market and real estate. Inflation in the stock market will be carefully controlled by the Fed. We've seen that the stock market moved up even during the pandemic. The real problem is inflation in the real estate market which has made housing unaffordable for many. It continues to get worse as the extra dollars the wealthy have to invest are driving up prices. That's why it makes sense to tax the rich ostensibly to pay for the infrastructure bill. The real reason, however, is that inequality is getting out of hand in the American and the world economy. Taxing the rich is the only effective means to reduce inequality to a reasonable level. It will also help to bring inflation in the real estate market under control.

The real problem that Biden's infrastructure bill will have to deal with is changing the nature of the US economy. When the economy was in full employment under Trump, there were still 4% unemployed. 5% unemployment is considered "full employment," but that still leaves about 15 million people out of work. Biden's infrastructure plan will put those 5% back to work. It had been considered by conservative neoliberal economists that 5% unemployment was necessary to ward off inflation, but that theory has been debunked by Modern Monetary Theory. While inflation will still be a concern with all of Biden's stimulus spending, the main concern is restructuring the US economy from an entertainment economy to a constructive labor economy. Trump's economy was arguably a full employment economy (except for the 4% unemployed), but it was an economy the jobs of which were mainly in the entertainment and military industries. In other words, in my opinion, it was an economy based on false unbeneficial values. An economy based on labor participation rebuilding American infrastructure will be an economy based on necessary and fundamentally beneficial values. This might mean that some of those presently employed in frivolous industries might be incentivized to change jobs. Reducing the entertainment and military sectors while increasing those employed rebuilding infrastructure would be, in my opinion, be a good thing.

 

Off the Top of My Head

Expand Habitat for Humanity in Honor of Jimmy Carter

by John Lawrence, November 11, 2020

The best way to build wealth among poor people is to expand a program that gets them into a house. The debt industry profits off of poor people whether it's Payday lenders, student loan debt, car loan debt, credit card debt or mortgage debt. The debt industry, aka the banking industry, profits off of poor people's debt. That's why the poor need to build wealth which will also close the economic inequality gap. Home ownership is the main way the middle class builds wealth which is then intergenerationally transferable. Habitat says "In fiscal year 2019, we helped more than 7 million people, and an additional 2.3 million gained the potential to improve their housing conditions through training and advocacy." It's not clear how many new houses that 7 million figure represents because they also help people by doing housing improvements. Looking at Habitat's Form 990 reveals some interesting data. They have annual revenues of approximately $300 million. Revenues less expenses for FY 2018 was about $13 million. Without doing an exhaustive analysis of this Form 990, it would seem that $13 million is a paltry amount of money to build new homes if in fact it all went to building new homes. It is to be noted that the CEO made about $400,000. They also seem to spend an enormous amount on advertising and fundraising.

A government program based on the Habitat model could magnify the number of new affordable homes built per year and could be combined with AmeriCorps which is already working with Habitat. Government service building affordable homes should be an alternative to military service with comparable benefits. One drawback of Habitat is that it does not serve homeless or low income families who can't afford a modest mortgage. So a government program based on the Habitat model should look at improving on the Habitat model. Another thing is that Habitat claims to be a "Christian organization." Does that mean that religiously nonChristian families are not eligible? A government program should not have connections to a particular religion but should be open to people of all or no religions. It should be nondenominational. The people who eventually own the homes have to put in a certain amount of "sweat equity." This is good because it makes the homes more affordable. A program based on FDR's Civilian Conservation Corps could employ youths in public service for 2 years building houses in return for free college education and other benefits. These homes need to be solarized and be built in such a way as to be non-emitting of greenhouse gasses.

The best way to co-opt Trump voters is to offer them economic opportunities. Promised economic opportunities (promised but not delivered) are the thing that pushed Trump over the top in 2016 in the rust belt states. A program of building houses ala Habitat not only would help poor people, who are disproportionately minorities, but would tend to placate poor whites who are mainly Trump voters. That's why programs helping the poor can't be labeled "Black Lives Matter" programs. They can't be just for black people although black people would disproportionately benefit. To design a program only for black people would further alienate Trump voters. Bringing this country together, as Joe Biden has professed he wants to do, means that all programs to help people must of necessity be color blind. Another benefit is that people who contribute to public service in AmeriCorps or the Peace Corps will tend to vote Democratic because they will have seen how Democratic programs have benefited not only themselves but other people as well.

Many people who join the military do so for the benefits and because they have no better prospects after high school. Military service for 5 years gains them a free college education plus many other generous benefits, even a pension. They also get brainwashed to vote Republican. Even those working in the military-industrial complex are brainwashed to vote Republican. As a college graduate the jobs available to me were mainly in the military-industrial complex. Once there I was pressured to vote Republican because it was believed that Republicans would expand funding for the military and hence the military-industrial complex. It was thought that a Democratic administration would cut funding for the military-industrial complex and we could be RIFd (Reduction in Force). Expanding programs in the peace industry should have the opposite effect. I left the military-industrial complex many years ago fortunately, and my economic future doesn't depend on future funding it. Many others are not in the same position.

As the nation transitions from fossil fuels to renewables, it's important that workers in the fossil fuel industry have a path to transition to new jobs. The same holds true in transitioning workers in the military-industrial complex to the peace-industrial complex. It's also important to give young people the possibility of serving their country in a way that contributes to peace and economic stability with comparable benefits instead of serving in the military. The peace industry (like building houses here and abroad) needs to become more important than the war industry. The issue of global warming in particular means that all nations of the world must cooperate and foster a spirit of cooperation while putting their antagonisms aside. Peace, renewable energy, economic development for poor and middle class people need to replace a power structure that fosters political antagonism among the nations of the world. Jimmy Carter not only wields a hammer for Habitat for Humanity in his nineties, but also put solar panels on the roof of the White House (which Ronald Reagan took down). If we had had Jimmy Carter for a second term and Al Gore instead of George W Bush (with his fossil fuel loving vice President, Dick Cheney), we would be further along the path toward replacing fossil fuels with renewable energy and further along the path of dealing with global warming.

Off the Top of My Head

The Intergenerational Transfer of Wealth

by John Lawrence, July 26, 2020

Too often when we talk about "family economics" it's all about budgeting, saving for the future, making payments on debts etc. It's never about wealth accumulation. It's as if the average person is not supposed to be accumulating wealth - just paying their bills. There are staggering differences in intergenerational transfers of wealth between black and white families. According to the Brookings Institute, "At $171,000, the net worth of a typical white family is nearly ten times greater than that of a Black family ($17,150) in 2016. Gaps in wealth between Black and white households reveal the effects of accumulated inequality and discrimination, as well as differences in power and opportunity that can be traced back to this nation’s inception." Most middle class families accumulate wealth by means of home ownership. Poor people, both black and white are usually renters who don't accumulate any wealth to pass on to their children. So each generation starts from scratch, from zero.

Government programs by and large, while supporting the poor at some basic level have nothing to do with putting them in a position to accumulate wealth. It is assumed that, if they can just pay their bills, they will be able to rise above the poverty level. But then the intergenerational transfer of wealth is zero. A good program would be not just affordable housing, but affordable ownership of housing. The government could have expedited this in 2008 by supporting mortgages instead of letting them be foreclosed on. It bailed out banks instead. Government sponsored programs which subsidize home ownership for black people would be an effective form of reparations. Not to mention that it would also be an effective means to lift poor white families not only out of poverty in the sense of being able to pay bills to support a comfortable lifestyle, but also as a means to create wealth so that, intergenerationally, children would be starting off from a higher level - not zero.

There are many ways that black families have been denied the ability to participate in the American Dream. Efforts by Black Americans to build wealth can be traced back throughout American history. But these efforts have been impeded in a host of ways, beginning with 246 years of chattel slavery and followed by Congressional mismanagement of the Freedman’s Savings Bank (which left 61,144 depositors with losses of nearly $3 million in 1874), the violent massacre decimating Tulsa’s Greenwood District in 1921 (a population of 10,000 that thrived as the epicenter of African American business and culture, commonly referred to as “Black Wall Street”), and discriminatory policies throughout the 20th century including the Jim Crow Era’s “Black Codes” strictly limiting opportunity in many southern states, the GI bill, the New Deal’s Fair Labor Standards Act’s exemption of domestic agricultural and service occupations, and redlining.

Wealth was systematically taken from black families or impediments were placed in their way so that things that white people were able to do were not allowed to black families. Consequently, a legacy of poverty was passed down from generation to generation. A culture of poverty perpetuated itself with possibly some government help to obtain the bare essentials. Too often single parent families became the norm. Too often the discourse was kept at the level of paying for the necessities of life and not wealth creation. Being poor has even been thought of as something noble. It's even praised in the Christian tradition. The Bible says: “No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money." And "It's easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of heaven."

I am not talking about "wealth" as the accumulation of things like expensive real estate, yachts and the playthings owned by the very rich. I am talking about wealth in the sense referred to earlier that a middle class family accumulates by virtue of home ownership and then passes on to their children when they die. So this might be a few hundred thousand dollars or more, but not enough to support a "lifestyle of the rich and famous." The point is that the cycle of intergenerational poverty can be broken by this transfer of wealth. Of course another way out of poverty is education but not when you have to go into hundreds of thousands of student loan debt in order to get it. That is a debt trap, and there are many others laid for poor people - payday loans, for example - in the same way that once the slaves were freed and became share croppers, they ended up indebted to their landlords who in most cases were their former owners.

Habitat for Humanity has a great program for building houses and then making a formerly poor famiiy the owner of the house. This makes it possible for wealth creation for that family in the traditional way that most white families have created wealth for themselves - home ownership. This is not merely the creation of affordable housing but the creation of the affordable ownership of housing. There's a big difference. This program should be greatly expanded and replicated by government if government wants to help black families in particular end the intergenerational cycle of poverty.

 

 

The Real Choice: Social Control or Social Investment

by Robert Reich

Tuesday, July 21, 2020

Some societies center on social control, others on social investment.

Social-control societies put substantial resources into police, prisons, surveillance, immigration enforcement, and the military. Their purpose is to utilize fear, punishment, and violence to divide people and keep the status quo in place — perpetuating the systemic oppression of Black and brown people, and benefiting no one but wealthy elites.

Social-investment societies put more resources into healthcare, education, affordable housing, jobless benefits, and children. Their purpose is to free people from the risks and anxieties of daily life and give everyone a fair shot at making it.

Donald Trump epitomizes the former. He calls himself the “law and order” president. He even wants to sic the military on Americans protesting horrific police killings. 

He has created an unaccountable army of federal agents who go into cities like Portland, Oregon – without showing their identities – and assault innocent Americans. 

Trump is the culmination of forty years of increasing social control in the United States and decreasing social investment – a trend which, given the deep-seated history of racism in the United States, falls disproportionately on Black people, indigeneous people, and people of color.

Spending on policing in the United States has almost tripled, from $42.3 billion in 1977 to $114.5 billion in 2017.

America now locks away 2.2 million people in prisons and jails. That’s a 500 percent increase from 40 years ago. The nation now has the largest incarcerated population in the world.

Immigration and Customs Enforcement has exploded. More people are now in ICE detention than ever in its history.

Total military spending in the U.S. has soared from $437 billion in 2003 to $935.8 billion this fiscal year.

The more societies spend on social controls, the less they have left for social investment. More police means fewer social services. American taxpayers spend $107.5 billion more on police than on public housing.

More prisons means fewer dollars for education. In fact, America is now spending more money on prisons than on public schools. Fifteen states now spend $27,000 more per person in prison than they do per student.

As spending on controls has increased, spending on public assistance has shrunk. Fewer people are receiving food stamps. Outlays for public health have declined.

America can’t even seem to find money to extend unemployment benefits during this pandemic.

Societies that skimp on social investment end up spending more on social controls that perpetuate violence and oppression. This trend is a deep-seated part of our history.

The United States began as a control society. Slavery – America’s original sin – depended on the harshest conceivable controls. Jim Crow and redlining continued that legacy.

But in the decades following World War II, the nation began inching toward social investment – the Civil Rights Act, the Voting Rights Act, the Fair Housing Act, and substantial investments in health and education.

Then America swung backward to social control.

Since Richard Nixon declared a “war on drugs,” four times as many people have been arrested for possessing drugs as for selling them. 

Of those arrested for possession, half have been charged with possessing cannabis for their own use. Nixon’s strategy had a devastating effect on Black people that is still felt today: a Black person is nearly 4 times more likely to be arrested for cannabis possession than a white person, even though they use it at similar rates.

Bill Clinton put 88,000 additional police on the streets and got Congress to mandate life sentences for people convicted of a felony after two or more prior convictions, including drug offenses. 

This so-called “three strikes you’re out” law was replicated by many states, and, yet again, disproportionately impacted Black Americans. In California, for instance, Black people were 12 times more likely than white people to be incarcerated under three-strikes laws, until the state reformed the law in 2012. Clinton also “reformed” welfare into a restrictive program that does little for families in poverty today. Why did America swing back to social control?

Part of the answer has to do with widening inequality. As the middle class collapsed and the ranks of the poor grew, those in power viewed social controls as cheaper than social investment, which would require additional taxes and a massive redistribution of both wealth and power.

Meanwhile, politicians whose power depends on maintaining the status quo, used racism – from Nixon’s “law and order” and Reagan’s “welfare queens” to Trump’s blatantly racist rhetoric – to deflect the anxieties of an increasingly overwhelmed white working class. It’s the same old strategy. So long as racial animosity exists, the poor and working class won’t join together to topple the system that keeps so many Americans in poverty, and Black Americans oppressed.

The last weeks of protests and demonstrations have exposed what’s always been true: social controls are both deadly and unsustainable. They require more and more oppressive means of terrorizing communities and they drain resources that would ensure Black people not only survive, but thrive. 

This moment calls on us to relinquish social control and ramp up our commitment to social investment.

It’s time we invest in affordable housing and education, not tear gas, batons, and state-sanctioned murder. It’s time we invest in keeping children fed and out of poverty, not putting their parents behind bars. It’s time to defund the police, and invest in communities. We have no time to waste.

Off the Top of My Head

Racist Economics

by John Lawrence, June 8, 2020

Is it racism when the schools in predominantly black neighborhoods are worse than schools in predominantly white neighborhoods? Schools in many parts of the country are funded with local property taxes. It stands to reason that property values in poor neighborhoods are less than property values in rich neighborhoods, and, therefore, property tax revenues and hence school funding is less. So the worse schools are found in poor "predominantly black" neighborhoods. A word you hear often these days is "predominantly". Nothing is totally black and white, but, when black people are affected in a way that is greater than their percentage of the population, one could say it is a "predominantly black" situation. When police arrest black people at a greater rate than they do white people, we could say that the police are a racist institution.

It has been said that the only mistake that the looters at the current protests made was that they didn't form a hedge fund first before they started looting. Martin Luther King said, “The black revolution is much more than a struggle for the rights of Negroes. It is forcing America to face all its interrelated flaws—racism, poverty, militarism, and materialism. It is exposing the evils that are rooted deeply in the whole structure of our society. It reveals systemic rather than superficial flaws and suggests that radical reconstruction of society itself is the real issue to be faced.” Republicans have breathed a sigh of relief that so far the Black Lives Matter movement has had little to say about poverty, economic inequality, militarism and materialism. Some though are getting to the heart of the problems in our society that affect us all but affect black people "disproportionately."

Writing in the New Yorker Keeanga-Yamahtta Taylor said:

The [1992] uprising in L.A. shared with the rebellions of the nineteen-sixties an igniting spark of police abuse, widespread violence, and the fury of the rebels. But, in the nineteen-sixties, the flush economy and the still-intact notion of the social contract meant that President Lyndon B. Johnson could attempt to drown the civil-rights movement and the Black Power radicalization with enormous social spending and government-program expansion, including the passage of the Housing and Urban Development Act of 1968, which produced the first government-backed, low-income homeownership opportunities directed at African-Americans.

By the late nineteen-eighties and early nineties, the economy was in recession and the social contract had been ripped to shreds. The rebellions of the nineteen-sixties and the enormous social spending intended to bring them under control were wielded by the right to generate a backlash against the expanded welfare state. Political conservatives argued that the market, not government intervention, could create efficiencies and innovation in the delivery of public services. This rhetoric was coupled with virulent racist characterizations of African-Americans, who relied disproportionately on welfare programs. Ronald Reagan mastered the art of color-blind racism in the post-civil-rights era with his invocations of “welfare queens.” Not only did these distortions pave the way for undermining the welfare state, they reinforced racist delusions about the state of black America that legitimized deprivation and marginalization.

The 1990s saw Democrats agreeing with Republicans that problems in the black community were largely caused by overly generous social programs. President Bill Clinton promised to "end welfare as we know it." Senator Joe Biden jumped right on board the push to reduce welfare programs by saying, "“the culture of welfare must be replaced with the culture of work. The culture of dependence must be replaced with the culture of self-sufficiency and personal responsibility. And the culture of permanence must no longer be a way of life.” Biden championed the 1994 “crime bill” that pledged to put a hundred thousand more police on the street, called for mandatory prison sentences for certain crimes, increased funding for policing and prisons, and expanded the use of the death penalty. By the 1980s Ronald Reagan decried "welfare queens."

Taylor continues:

So, though Biden desperately wants us to believe that he is a harbinger of change, his long record of public service says otherwise. He has claimed that Barack Obama’s selection of him as his running mate was a kind of absolution for Biden’s dealings in the Democrats’ race-baiting politics of the nineteen-nineties. But, from the excesses of the criminal-justice system and the absence of a welfare state to the inequality rooted in an unbridled, rapacious market economy, Biden has shaped much of the world that this generation has inherited and is revolting against.

More important, the ideas honed in the nineteen-eighties and nineties continue to beat at the center of Biden’s political agenda. His campaign advisers include Larry Summers, who, as Clinton’s Treasury Secretary, was an enthusiastic supporter of deregulation, and, as Obama’s chief economic adviser during the recession, endorsed the Wall Street bailout while allowing millions of Americans to default on their mortgages.

Biden was chiefly responsible for the 2005 bill that took away bankruptcy protection from student load debtors (presumably disproportionately black). Credit card companies, many of whom are headquartered in Biden's state of Delaware, have been major Biden campaign contributors. Biden was known as the Senator from MBNA. Biden should just turn over the Democratic nomination to Bernie Sanders who has been on the right side of issues which are now coming to the forefront in American life.

Taylor continues:

In 1968, King, in the weeks before he was assassinated, said, “In a sense, I guess you could say, we are engaged in the class struggle.” He was speaking to the costs of the programs that would be necessary to lift black people out of poverty and inequality, which were, in and of themselves, emblems of racist subjugation. Ending segregation in the South, then, was cheap compared with the huge costs necessary to end the kinds of discrimination that kept blacks locked out of the advantages of U.S. society, from well-paying jobs to well-resourced schools, good housing, and a comfortable retirement. The price of the ticket is quite steep, but, if we are to have a real conversation about how we change America, it must begin with an honest assessment of the scope of the deprivation involved. Racist and corrupt policing is the tip of the iceberg.

We have to make space for new politics, new ideas, new formations, and new people. The election of Biden may stop the misery of another Trump term, but it won’t stop the underlying issues that have brought about more than a hundred thousand COVID-19 deaths or continuous protests against police abuse and violence. Will the federal government intervene to stop the looming crisis of evictions that will disproportionately impact black women? Will it use its power and authority to punish police, and to empty prisons and jails, which not only bring about social death but are now also sites of rampant COVID-19 infection? Will it end the war on food stamps and allow African-Americans and other residents of this country to eat in the midst of the worst economic crisis since the Great Depression? Will it finance the health-care needs of tens of millions of African-Americans who have become susceptible to the worst effects of the coronavirus, and are dying as a result? Will it provide the resources to depleted public schools, allowing black children the opportunity to learn in peace? Will it redistribute the hundreds of billions of dollars necessary to rebuild devastated working-class communities? Will there be free day care and transportation?

In short we need good paying union jobs (Green New Deal) that will deal with the issue of climate change (Green New Deal), forgiveness of student loan debt (the least Biden can do since he was largely responsible for creating the situation), Medicare for All (since hospitals in black neighborhoods compare unfavorably with those in white neighborhoods), public housing (to end homelessness and guarantee everyone the right to have a roof over their head). If we want to solve the problem of institutional racism in this country, we need to address the fundamental problems of economic inequality. Where do we get the money? Not only by defunding the police which claim the lion's share of local budgets, but by demilitarizing the bloated military-industrial complex and taxing the rich at 1955 levels (91%). The Federal Reserve can always take a few more trillion on its balance sheet; it has taken trillions on its balance sheet already and given the money to the big banks. How about Quantitative Easing for the people? Economic inequality is a problem which affects black people disproportionately (there's that word again), but the solution of which will contribute to the benefit of white people as well.

Off the Top of My Head

President Trump: "We're All in This Together"

by John Lawrence, March 17, 2020

Does that include the homeless, Mr. Trump? Are the homeless over 65 being asked to shelter in place? Does that mean that they keep their same place on the sidewalk? Does it mean that they social distance 6 feet from the next homeless person? Or does it mean that gatherings of 10 or more in homeless shelters need to disperse? Does it mean we should close down the homeless shelters? Does it mean that NIMBYS who don't want parking lots open to homeless people living in their vehicles need to shut their mouths? We want to know, Mr. President. Youth wants to know.

There are 500,000 homeless Americans living on the streets. Are they being asked to shelter in place? It's ridiculous. Rather than have a crash program to put them into single room occupancy units (SROs), they are not even mentioned, not even considered in the President's speech, nor of those of his "team." The coronavirus should sound a clarion call to do something about the homneless situation. Where do you think a pandemic would spread? Probably among the dense crowding of homeless people in San Diego, Los Angeles and Seattle. Especially places where it has been raining a lot. I saw a policeman stop his squad car in the middle of traffic the other day, turn on his patrol lights and deliver a sandwich to a woman who was sitting alone on the sidewalk in the pouring rain. God bless him! My rider told me that his family were all police and they did that a lot. If so, good on them. I know the police are dealing with the homeless a large part of their time which costs money. Also the emergency rooms. Probably bbetween the police and the emergency rooms more money is spent on the homeless than it would cost to put them in SROs.

A few short years ago there was an outbreak  of hepatitus A among the homeless in San Diego and elsewhere. The Washington Post reported:

The hepatitis A outbreak in Los Angeles, Santa Cruz and San Diego, long considered a model of savvy urban redevelopment, is the extreme result of a booming state economy, now driving up home prices after years of government decisions that made low-cost housing more difficult to build.

Unlike in some other large U.S. cities, the homeless population in San Diego has been rising sharply, outstripping the local government's ability to manage its scope. State lawmakers passed more than a dozen measures in the recent legislative session to address the state's lack of affordable housing, none of which will help resolve the crisis in the short term.

Nowhere is the need more urgent than in this prospering city, where the number of people living on the streets rose 14 percent in the past year, tracing a hepatitis A outbreak that thrives in unsanitary conditions. Health officials believe an epidemic that has infected more than 500 people statewide since March began in San Diego County, where 19 people have died as a result of the disease, nearly all of them homeless.

So the hepatitis A outbreak was an epidemic, a few short steps from a pandemic. Washing stations were provided then, and washing stations are being provided now, but so far nothing much has been done about the homeless situation in San Diego and elsewhere. Measure C on the ballot recently, which would have provided $25 million a year to address various issues dealing with the homeless population, failed because it didn't quite achieve a two thirds majority. It garnered about 64% of the vote while it needed 67% to become law. So close but no cigar. So now what? More hand washing stations evidently.

Governor Newsom has moved hundreds of homeless people into hotel rooms “to get people out of these encampments.”. This was after a homeless person died from the coronavirus. The Mercury News reported:

Officials have also said they plan to distribute trailers around the state where homeless people can shelter or be quarantined. And on Monday Newsom said shelters were working to create distance between beds to help stop the spread of the virus.

California has more than 100,000 residents who sleep on the streets on any given night, including thousands of people in the Bay Area.

“We will overwhelm ourselves if we don’t move with real urgency in this space,” he said.

Newsom said his team had identified more than 900 hotels that could be suitable for housing the homeless. His team, he said, was in the process of negotiating to convert some of them into temporary living quarters for the homeless.

Now that there is some urgency in dealing with the homeless situation, you'd think that the state would move to a more permanent solution or are they waiting for the coronavirus to subside so they can just let the homeless go back to living on the street. By the way, "Officials also said that homeless people would be exempt from a Bay Area-wide order to shelter in place. But they urged homeless people to seek shelter and said local governments should work to make shelter available as soon as possible." Really??

UPDATE:

From Voice of San Diego:

Supervisor Nathan Fletcher also noted the county is working to secure at least 2,000 motel rooms for vulnerable San Diegans – whether they are homeless, nursing home residents or simply don’t have a safe place to stay – who may be awaiting a test result or showing symptoms of coronavirus but not require hospitalization.

As of Monday, Fletcher said, the county had secured 227 rooms and the Regional Task Force on the Homeless is working to obtain more motel rooms for homeless San Diegans who are at risk of coronavirus who have not been referred by a healthcare provider.

Off the Top of My Head

Mike Bloomberg Might Have Better Spent $500 Million on Housing the Homeless

by John Lawrence, March 7, 2020

Mike Bloomberg spent $500 million on TV ads to advance his candidacy for President of the United States. His campaign lasted about 3 months from November 24, 2019 to March 4, 2020. That means he spent an astonishing $500 million in 101 days or almost $5 million per day. This is enough to gag a maggot that so much money was pissed down the drain. But it will hardly affect Bloomberg's net worth at all. He started 2020 with $58.4 billion so now he still has around $58 billion remaining and growing daily. He should be able to recover the $500 million he spent on his campaign in short order. So the $500 million amounted to basically just a rounding error. Each year his company, Bloomberg LP, which is privately owned by him,  makes $8 billion. So $500 million means nothing to him.

However, it would mean a lot to those 500,000 people who sleep on the street each night. Micro apartments are typically 200 square feet and are the equivalent of a single room occupancy unit (SRO) meant to be occupied by one person. The national average to build apartment construction is $125 a square foot. So a 200 square foot unit could be built for $25,000. Michael Bloomberg, instead of wasting $500 million on a foolhardy pursuit, could have built micro units which would have housed 20,000 homeless people. Scale that up by 10 and he could house 200,000 homeless for $5 billion, a mere 8.6% of his personal fortune. If he got one other billionaire involved, say Jeff Bezos, they could solve the homeless problem between the two of them, and they would hardly feel a blip in their accumulation of money which is continuing at the rate of $22 million a day for Bloomberg and $215 million a day for Bezos.

On the other hand, if there were a wealth tax which taxed away most of the billions that these billionaires own, say, leaving them with a net worth of only $1 billion, the same thing could be accomplished by the Federal government as well as all the other things Bernie Sanders and Elizabeth Warren have been talking about. I give Bezos, Bloomberg and the other billionaires credit for their entrepreneurial activities which have contributed greatly to the nation and to the world, but I think that anyone should be able to get by on one billion dollars. Invested at 10%, this gives them an income of $100 million a year. Isn't that enough?

I am a member of Amazon Prime, and I enjoy shopping from home so I certainly take advantage of Bezos' creation. Yet there is no way he can spend all the money he's making, and this holds true for Bloomberg as well although I am not a user of his product. In addition to contributing mightily to economic inequality, billionaires are completely distorting the political process with the result that the average middle class person in America, if there are any of them left, has virtually no power in the political process which is controlled by rich campaign contributors and lobbyists who have unlimited money to spend.

Off the Top of My Head

Affordable Housing or Public Housing?

by John Lawrence, February 7, 2020

We here a lot of talk about how we need more affordable housing, but what they are talking about is housing provided by the free market. Affordable housing and the free market are oxymorons. The free market builds houses for profit. Any profitably built housing in today's market is almost by definition unaffordable, and most developers have taken advantage of whatever subsidies government has offered with the result that housing is only getting more unaffordable. Public housing, on the other hand, is housing built by government which can charge whatever rent they want to. They can charge zero rent for the homeless if they want to or charge modest rents for people with modest incomes. Although public housing was built in the past, hardly any is being built today, but it is the only solution that would really work.

Public housing would act as a damper to privately developed housing. Since it would be priced cheaper than the market, it would tend to bring down the price of housing on the market. Market forces today are just propelling the price of housing upward. Public housing as a competitor in the market would bring the cost of market based housing down.

There have been problems with public housing in the past. The most notorious public housing development was the Cabrini-Green project in Chicago. Over the years, crime, gang violence and neglect created deplorable living conditions for the residents, and "Cabrini–Green" became a metonym for the problems associated with public housing in the United States. The last of the buildings in Cabrini–Green were demolished in 2011. Any public housing built today should have both security and proper maintenance. We might ask why was the Cabrini-Green project "neglected?" Proper maintenance and security would both have to be provided to insure the safety and comfort of residents.

But the real problem is that Republicans will block, to the extent they are able, any expenditure of public money on anything. They don't want government competing with the free market. That's why the problem of homelessness has not been solved. Market based housing will never be affordable by the homeless and increasingly it's becoming unaffordable for the lower middle class which is one disaster away from slipping into homelessness. The US already has a Department of Housing and Urban Development so we don't have to reinvent the wheel. It is just totally underfunded. That's the problem. Of course it is another department that Republicans want to get rid of. The budget for the Department of Housing and Urban Development (HUD) is $44.2 billion in fiscal 2019, a complete drop in the bucket compared to the trillion dollar budget of the military and the military-industrial complex.

It's all about priorities. Tokenism for housing for the poor. Trillion dollar budgets for war and war related activities. Section 8 rental assistance is a joke. The website for San Diego says "Selected applicants will be placed on the waiting list by date and time of application submission, by order of preferences. The wait to receive assistance [for Section 8 rental assistance] may be 8-10 years or more, depending on the funding levels..." Most of the applicants are dead before they become eligible.

If we get serious about affordable housing, we will build public housing. That's housing that is government owned and operated as opposed to developer built and privately managed "affordable" housing. For single people, housing similar to Single Room Occupancy hotels (SROs) is adequate. Tenants share a kitchen, toilets or bathrooms. SRO units range from 80 to 140 square feet. They  may have a small refrigerator, microwave and sink. There has been an increasing displacement of SRO units aimed at low-income earners due to gentrification, with SRO facilities being sold and turned into condominiums. Between 1955 and 2013, almost one million SRO units were eliminated in the US due to regulation, conversion or demolition.

SROs need to be rebuilt as public housing units. For families, obviously, larger units should be made available. Homelessness in America should be regarded as a crime and a shame. In addition to health care and education, having a home should be a human right. So says the 1948 United Nations Declaration of Human Rights. Of course the official US policy is that it doesn't agree. Rather that's the Republican policy. Democrats, led by Bernie Sanders, are coming around to the position that maybe the US should agree with the UN Declaration also.

Off the Top of My Head

Turkish Groups Are Building 10,000 Houses for Refugees While US Builds Zero for Homeless

by John Lawrence, January 26, 2020

January 23, 2020 - NY Times reports:

ANKARA — Turkish aid groups have begun building more than 10,000 houses in Syria's northwestern province of Idlib to shelter growing numbers of people displaced by fighting, while Turkey seeks to prevent a new influx of migrants fleeing from Syria.

The houses are being erected near a Syrian village next to the Turkish border, an area so far spared from the air strikes and fighting which have uprooted hundreds of thousands of people.

Syrian and Russian forces have bombarded rebel-controlled targets in Idlib this week despite a deal between Turkey and Russia, which back opposing sides in the conflict, for a Jan. 12 ceasefire. On Thursday Russia said hundreds of Syrian militants launched attacks on Syrian government forces in Idlib.

Turkey already hosts more than 3.5 million Syrian refugees and fears that the fighting in Idlib - the last notable rebel stronghold in Syria after almost nine years of conflict - could drive millions more across the border. ...

"We provide food and clothes to the families on the migrant trail, but we also need to provide them shelter throughout the winter months," IHH Deputy Chairman Serkan Nergis said.

Nergis said the houses would provide better shelter than the existing tent camps near the border. The houses "will begin hosting their guests in a few days", with the goal of accommodating 60,000 people, Nergis said. ...

Turkey's Kizilay aid group also said this week it will build 1,000 emergency housing units in Idlib, which would be completed in 2-3 weeks.

Meanwhile, the US, both at the state and national levels, dithers for years and years and has not built one house for the 500,000 homeless people in the US. If Turkey can build 1000 housing units in 2-3 weeks, it seems that the US should be able to build just one here in the 30 years this crisis has been developing. There is also the issue that the US should be doing more to help Middle East refugees since the American military did a lot to create them.

However, the best that the City of San Diego and other California cities can do is to provide safe parking lots so that homeless people with vehicles can park them there and sleep there. It's a far cry from some Third World country able to build 1000 houses in 2-3 weeks. The US and California in particular have been dithering for years while housing prices and rents have skyrocketed to the point that only hedge funds and a few rich people can afford to buy a house any more. The hedge fund Blackstone boasts on its website: "We are a global leader in real estate investing. We seek to utilize our global expertise and presence to generate attractive returns for our investors and to make a positive impact on the communities in which we invest."

The Sothebys International Real Estate site says: "The Sotheby's International Realty® network provides access to luxury real estate and homes for sale worldwide. Our website lets you search property listings globally, and includes a large inventory of luxury homes for sale. Our listings include all types of homes, including houses, condos, townhomes, villas and more. We can also match your lifestyle choices such as waterfront, golf, island, vacation, mountain and many others." Berkshire Hathaway Home Services boasts "Berkshire Hathaway HomeServices is a real estate brokerage franchise network designed for today’s real estate market. From first time homebuyers to high-end residential markets to middle-market communities to commercial real estate, our franchisees are down to earth, nimble and local experts. This network of members and agents wouldn’t be a part of the Berkshire Hathaway HomeServices network if they weren’t."

All the free money the Fed is pumping into the economy, which hedge funds have access to, is driving up the cost of real estate just as it is bidding up the stock market. These guys know that so they buy low and as the real estate market appreciates, they sell high and higher. This effectively prices the little guy out of the market - both the home buying market and the rental market - creating  ever more homeless people including those who have at least one asset - their car. The homeless are really US internal refugees. Other countries like Turkey actually help refugees and build houses for them in their home countries so they don't flood across the border. The US neither builds homes for its homeless population nor does it build homes for poor people in Central America who are attempting to flood across US borders.

Off the Top of My Head

Homelessness is What Happens When You Let the Free Market System Take Over

by John Lawrence

In an article in The California Sunday Magazine titled "3 kids. 2 paychecks. No home." about a family with two working parents that can't afford a 2 bedroom apartment in Salinas, the industrial and economic center of Monterey County, California. Salinas is the hometown of John Steinbeck and where the Steinbeck Museum is located. Steinbeck was one of the most prolific of American authors. He wrote "The Grapes of Wrath" among other novels about the homeless and poverty stricken families in the Great Depression. He wrote about the homeless guys in Monterey who lived in a place they called the Palace Flophouse in "Cannery Row" Many of his books were turned into movies including Grapes of Wrath starring Henry Fonda, Jane Fonda's Dad.  Jane Fonda at age 81 is still getting herself arrested in Washington, DC for protesting about climate change.

So what's new? Steinbeck wrote about the poverty in the Salinas Valley. Candido and Brenda and their 3 kids are living out of a Toyota Sienna in a Salinas Food 4 Less parking lot.

"Now they were in the parking lot of Natividad Medical Center, just outside the emergency room. The lot was well lit, and there were bathrooms in the ER waiting room, open 24 hours. The hospital staff was mostly welcoming. At night, however, after everyone fell asleep, Candido had been noticing the tiny flicker of a lighter in a nearby pickup truck and the profile of an older man. Candido kept the van’s dome light on and made sure its doors were locked."

Steinbeck's "The Grapes of Wrath" was burned and banned. Steinbeck received death threats and the FBI put him under surveillance. He was called a communist. That was before he was awarded the Nobel Prize for Literature. The book was banned in many libraries and copies were symbolically burned in towns across America. There is in America a refusal to acknowledge the rights of its poorest citizens to a life of the barest necessities for them and their children. Steinbeck wrote about poverty in the 1930s and 40s. He probably thought that his novels might have convinced enough Americans that every citizen should be entitled to a basic level of existence, but he would have been wrong about that. Almost 100 years later the situation has only gotten worse for the homeless.

"Mornings were the hardest. Everyone was achy, tired from a bad night’s sleep, and on this morning, too, it was all they could do to keep to their routine. Brenda and Candido insisted on maintaining a semblance of order. “We’re not like some people,” Candido would tell the kids. “We wash our clothes. We don’t pee outside. We keep ourselves clean.” In the hospital bathroom, while Candido got ready to go to work and Brenda stayed behind with Adelene, Frankie helped wash and dress Josephat, brushing his brother’s teeth, then his own. Breakfast was whatever Pop-Tarts or granola bars were left over from the food bank. Finally, they straightened up the van, pulled the seats back into position, and put on their seat belts, Adelene in her car seat, Frankie and Josephat in their boosters. They drove the 15 or so minutes into town, fusing with the early traffic, indistinguishable from all the other families starting their day.

"When the van stopped, the boys hopped out. They went around to the trunk, grabbed their backpacks off the built-in clothing hooks, hugged their parents, and walked through the front gate of their elementary school."

Wages for working people haven't gone up indexed for inflation since the Reagan revolution of 1980 which ushered in the second Gilded Age. Meanwhile, billionaires have accumulated more and more money not by building railroads like Jay Gould did in the first Golden age or by developing the steel industry like Andrew Carnegie did, but by manipulating financial instruments. In many cases these financial industries were hedge funds which took over industries like the Hostess Baking Company, manufacturer of Twinkies, loaded it with debt, paid themselves handsomely and then let the industry go bankrupt while thousands of employees lost their jobs. Hedge funds engage in vulture capitalism which seeks to strip a functioning company of its assets, while management and executives feast on the carcass before it is stripped bare and the employees are left to rot, many of them on the streets.

"Today, the region’s 91,000 farmworkers live with stagnant wages (the median pay for farmworkers is $12.79 per hour) and the constant threat of ICE (the majority of these laborers are undocumented). Public health officials describe an epidemic of malnutrition among the workers and their families, and hunger has become widespread. The perverse irony that “The Valley That Feeds the Nation,” the title of a colorful mural in nearby Soledad, is now struggling to feed itself has been lost on nobody. Activists argue that a lack of fair wages in agriculture, in particular, is a key driver of this food insecurity. But for now, charity is what the industry is willing to offer. Last year, at the Food Bank of Monterey County, much of the 12 million pounds of emergency food assistance it provided was donated by agricultural companies"

The Salinas Valley supplies the world with lettuce. Recently this lettuce has been banned because it has been contaminated with E. Coli. bacteria. A spokesman for the CDC said, “Heading into the Thanksgiving holiday, it is critically important to avoid buying or eating romaine lettuce from the Salinas growing area so you can protect yourself and your family.” Is this divine retribution for the many years that wealthy agricultural corporations have refused to pay their workers a living wage? A living wage would be one that allowed its workers to rent a 2 bedroom apartment in Salinas.

"By far the greatest difficulty facing Salinas families, though, is the disappearance of affordable rental housing. In recent years, tech workers from the Bay Area have been relocating to Monterey County, and there are currently plans for a commuter rail that would run from the heart of Silicon Valley to Salinas. This influx of higher-earning tenants into an already congested market has led to a rise in rents, which in turn — together with the exclusionary zoning, no-fault evictions, and barriers to new construction that have beleaguered the rest of the state — is creating unprecedented housing instability among Salinas’s working poor. Over the past eight years, there has been a 37 percent loss of low-rent units in the city, while rents have shot up by almost 60 percent since 2014 — roughly four times the national average. According to the National Low Income Housing Coalition, the “housing wage” necessary to afford a modest two-bedroom apartment in Salinas, whose costs now exceed those of Miami and Chicago, is $29.62 per hour."

It should be pointed out that waiting for the free market to build housing that poor people can afford is like Waiting for Godot. In the play, of course, Godot never arrives. The only trend line in the case of housing is for more and more people especially older and sicker people to be kicked out onto the street. That is the absolute right of landlords to do so if the tenants cannot come up with the rent. In California there is a tiny glimmer of hope, however, as a rent control law will go into effect January 1, 2020. This law will limit rent increases to 5% a year, small comfort to those whose wages will not go up by that amount and who cannot afford the inflated rental prices in the first place.

"Increasingly, the city’s residents have found themselves bereft of adequate shelter altogether. “There’s always been poverty here,” said Reyes Bonilla, who runs Community Homeless Solutions, a local nonprofit. “But homelessness on this scale? It’s an entirely new thing.” He added that many of those coming to his organization for support defy the stereotypes about homelessness: The vast majority of them are working and have simply been priced out of a place to live. Families are doubling and tripling up in overcrowded, substandard conditions; they’re resorting to garages and toolsheds, cars and abandoned properties. In Monterey County, approximately 8,000 schoolchildren were homeless last year, more than San Francisco and San Jose combined. For many of these kids, the safest, most dependable part of their lives is the school they attend."

If there is little hope for a better life even among families in which 2 parents are working full time, what does this say about the future of America? It is the recipe for more gang violence, more drug trafficing, more lives lived on the lam. If one cannot support one's family by legal means, people often resort to illegal means and violence usually goes right along with it. This is the recipe that has been followed in poverty stricken areas of Honduras and Guatemala resulting in mass migrations to the US border of people fleeing poverty and violence. But here, even if they got in, they would only find more poverty and the result of not even having a roof over their heads which they probably had where they came from where rents are not so outlandish.

The US could do a lot to ameliorate this situation not only here but abroad as well. Instead, America is focused on spending a trillion dollars a year on a military-industrial complex whose main job is to use violence towards poor people who have been driven to violence because they have no hope their situations will ever get better any other way. Economic inequality is only getting worse with larger and larger shares of GDP going to those who already have more money than they could possibly spend in a 100 life times while the poor, if they're lucky, live out of Toyota Siennas.

Off the Top of My Head

Free Housing for Military Members, But Not Enough Money to Build Housing for Homeless and Low Income

by John Lawrence, November 25, 2019

Military families get basically free housing while hundreds of thousands of homeless people roam the streets. It's called Basic Allowance for Housing, and of course, there's an acronym - BAH. BAH covers 95% of housing expenses with service members paying 5% of their housing expenses out of pocket. Recently it has come to light that some service members are suing Hunt Military Communities, a private developer that provides military housing because of mold, mildew, cockroaches etc. What piqued my interest was how little these military families pay for this housing, not the mold and mildew affected kind but the kind that looks like normal housing in a normal community and is up to adequate standards, and why are these communities created by private developers who stand to profit from their relationship with the military?

It stands to reason that private developers like Hunt Military Communities would not provide adequate maintenance in order to increase their profit margins just like any other private developer of rental housing, but that's entirely another issue. Providing off base military housing is a big deal. Approximately 65 to 70 percent of service members live in housing in the private sector. So in addition to the cost of building such housing, US taxpayers are also paying to profit private developers, a cost that could be saved if everyone lived on base in housing build by the DoD itself. Under the question, "Why is DoD interested in privatizing military housing?" from the Office of the Assistant Secretary of Defense for Sustainment - Facilities Management - Military Housing Privatization Initiative website, we find this interesting promotion for privatized military housing:

The MHPI [Military Housing Privatization Initiative] program was created to address two significant problems concerning housing for military service members and thier families. The first problem was the poor condition of DoD-owned housing. At the beginning of the program, DoD owned worldwide approximately 257,000 family housing units both on and off-base. Over 50 percent of the units needed to be renovated or replaced because over the past 30 years they have not been sufficiently maintained or modernized. The second problem was a shortage of affordable private sector housing of adequate quality.

This situation led to a decline in readiness and morale among Service members. DoD was unable to address the critical housing needs because of existing budgetary constraints. Using the traditional approach to military construction, it would cost taxpayers nearly $25 billion and it would take 20 years to solve this housing problem. MHPI provides a creative and effective solution to addressing the quality housing shortage. For DoD, MHPI results in the construction of more housing built to market standards, for less money than through the military construction process. Commercial construction is not only faster and less costly than military construction, but private sector funds significantly stretch and leverage DoD’s limited housing funds. At the same time, developers and financiers are interested in participating since privatization opens the military construction market to a greater number of development firms, stimulates the economy through increased building activity, and the projects can provide a continuous inflow of capital to investors over a long period of time.

What a bunch of mumbo jumbo in praise of the private sector! I wonder how much lobbying real estate developers did to get the law changed so that this private/public partnership could be enacted on February 10, 1996 as part of the National Defense Authorization Act for fiscal year 1996. It is obviously very lucrative for private developers like Hunt Military Communities. These developments, which amount to public housing, look like any other private development. Housing is provided on a huge scale for members of the military practically for free, but there is not enough government money available to build public housing for the homeless and for low income communities who are increasingly being forced into homelessness as rents are increasing each year. Senior renters are especially vulnerable. What are they supposed to do if their money runs out before their life does?

The above website touts private housing for the military: "DoD provides “on-base” privatized housing or military construction housing only when the private sector cannot provide adequate affordable housing." Wow, do they love the private sector except when the publicity for this boondoggle is negative such as it presently is for Hunt Military Communities. The article from Military Times went on:

Citing all-too familiar scenarios ranging from houses overrun by cockroaches to mold-blackened walls, eight military families have filed a lawsuit against a privatized housing company alleging fraud in connection with their homes that were uninhabitable.

The complaint, filed Tuesday in federal court in San Antonio, alleges that Hunt Military Communities failed to properly maintain the houses at Randolph Air Force Base and Laughlin Air Force Base, Texas, “subjecting tenant service members and their families to atrocious conditions, including pervasive mold and other airborne toxins.” It alleges the company was aware of the condition of the houses, but misled the families by leasing houses that were uninhabitable and not safe for human occupancy.

The families are from the Army, Air Force and Navy.

The lawsuit cites examples of human waste deposited under houses because of plumbing that was disconnected for years; mold growing on the rim of a child’s toothpaste tube in a mold-infested bathroom; floors detaching from walls, leaking roofs, and asbestos and lead-based paint filling the air.

Many of the service members and their family members have fallen ill with a variety of respiratory and other symptoms, have lost nearly all their personal possessions because of mold contamination, and paid their full base housing for the “woefully substandard” housing, according to the lawsuit.

I guess privatized military housing is not all it was cracked up to be. Maybe government built housing both for the military and low income and homeless community would be a better option. At least that option should be explored.

To Solve Multiple Crises at Once, Sanders and Ocasio-Cortez Unveil 'Green New Deal for Public Housing'

Published on Thursday, November 14, 2019

by Common Dreams

"This bill shows that we can address our climate and affordable housing crises by making public housing a model of efficiency, sustainability, and resiliency."

by Jake Johnson, staff writer

 

2 Comments

Democratic presidential candidate Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) field questions from audience members at the Climate Crisis Summit at Drake University on November 9, 2019 in Des Moines, Iowa. (Photo: Stephen Maturen/Getty Images)

Framing the climate crisis as both an existential threat and a "tremendous opportunity" to fundamentally transform American society, Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez on Thursday unveiled a Green New Deal for Public Housing that would eliminate carbon emissions from federal housing, invest $180 billion over ten years in retrofitting and repairs, and create nearly 250,000 decent-paying union jobs per year.

"Faced with the global crisis of climate change, the United States must lead the world in transforming our energy system away from fossil fuel to sustainable energy," Sanders, a 2020 Democratic presidential candidate, said in a statement.

"We can create millions of jobs in this country by actually rising to the challenge of addressing what this crisis is going to represent."
—Rep. Alexandria Ocasio-Cortez

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"The Green New Deal is not just about climate change," the Vermont senator added. "It is an economic plan to create millions of good-paying jobs, strengthen our infrastructure, and invest in our country's frontline and vulnerable communities. This bill shows that we can address our climate and affordable housing crises by making public housing a model of efficiency, sustainability, and resiliency."

The 54-page Green New Deal for Public Housing Act (pdf), which Sanders and Ocasio-Cortez will introduce at a press conference Thursday afternoon, was co-sponsored in the Senate by Elizabeth Warren (D-Mass.) and Jeff Merkley (D-Ore.) and endorsed by more than 50 climate and affordable housing organizations.

In an interview with the Washington Post Thursday, Ocasio-Cortez said the bill demonstrates that fighting the climate crisis "is not a jobs versus environment paradigm."

"We need electrical workers. We need construction workers. And it doesn't have to just be fossil fuel pipelines that create these kinds of jobs," said the New York Democrat. "We can create millions of jobs in this country by actually rising to the challenge of addressing what this crisis is going to represent."

Today is a very big day!

We’re unveiling our FIRST-ever Green New Deal infrastructure bill!👷🏽‍♀️🌎

The GND for Public Housing Act will:
🏙 Decarbonize the entire US public housing stock
👨‍👨‍👧‍👦 Improve quality of life for residents
📈 Create 100s of thousands of jobs in the process https://t.co/z8h3EPby00

— Alexandria Ocasio-Cortez (@AOC) November 14, 2019

According to a summary (pdf) released by Sanders' office, the legislation would:

• Transition the entire public housing stock of the United States, as swiftly and seamlessly as possible, into zero-carbon, highly energy-efficient developments that produce on-site renewable energy;
• Address the substantial public housing capital backlog by ensuring all public housing is brought up to safe and sanitary condition;
• Expand federal programs to provide residents with meaningful work investing in their communities;
• Expand resident councils so that public housing residents have a seat at the table for important decisions regarding their homes; and
• Repeal the Faircloth Amendment, which limits the construction of new public housing developments.

HuffPost's Alexander Kaufman called the bill "one of the boldest efforts yet to legislate the Green New Deal movement that, since its debut in mainstream politics with a series of protests a year ago, has reframed the global climate policy debate, providing a popular alternative to the market-friendly dogma that's dominated Western politics for decades."

Last weekend, Sanders was joined by Ocasio-Cortez, who endorsed the candidate's presidential bid last month, at a rally in Iowa focused on the climate crisis and the need for a Green New Deal.

According to a Data for Progress analysis released Thursday, the Green New Deal for Public Housing Act "would retrofit over 1 million public housing units, vastly improving the living conditions of nearly 2 million residents and creating over 240,000 jobs per year across the United States."

"These green retrofits would cut 5.6 million tons of annual carbon emissions—the equivalent of taking 1.2 million cars off the road," Data for Progress found. "Retrofits and jobs would benefit communities on the frontlines of climate change, poverty, and pollution and the country as a whole. Our analysis shows the legislation would create 32,552 jobs per year in New York City alone."

In a statement, Ocasio-Cortez said the legislation would "improve the quality of life" for all public housing residents.
 
"I am proud to begin the hard work of codifying the Green New Deal into law with my friend and colleague, Senator Bernie Sanders," Ocasio-Cortez added.

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The American Dream Is Alive and Well—in China

by Ellen Brown

Posted on June 14, 2019 from Web of Debt blog

Home ownership has been called “the quintessential American dream.” Yet today less than 65% of American homes are owner occupied, and more than 50% of the equity in those homes is owned by the banks. Compare China, where, despite facing one of the most expensive real estate markets in the world, a whopping 90% of families can afford to own their homes.

Over the last decade, American wages have stagnated and U.S. productivity has consistently been outpaced by China’s. The U.S. government has responded by engaging in a trade war and imposing stiff tariffs in order to penalize China for what the White House deems unfair trade practices. China’s industries are said to be propped up by the state and to have significantly lower labor costs, allowing them to dump cheap products on the U.S. market, causing prices to fall and forcing U.S. companies out of business. The message to middle America is that Chinese labor costs are low because their workers are being exploited in slave-like conditions at poverty-level wages.

But if that’s true, how is it that the great majority of Chinese families own homes? According to a March 2016 article in Forbes:

… 90% of families in the country own their home, giving China one of the highest home ownership rates in the world. What’s more is that 80% of these homes are owned outright, without mortgages or any other liens. On top of this, north of 20% of urban households own more than one home.

Due to their communist legacy, what Chinese buyers get for their money is not actually ownership in perpetuity but a long-term leasehold, and the quality of the construction may be poor. But the question posed here is, how can Chinese families afford the price tag for these homes, in a country where the average income is only one-seventh that in the United States?

The Misleading Disparity Between U.S. and Chinese Incomes

Some commentators explain the phenomenon by pointing to cultural differences. The Chinese are inveterate savers, with household savings rates that are more than double those in the U.S.; and they devote as much as 74% of their money to housing. Under China’s earlier one-child policy, many families had only one heir, who tended to be male; and home ownership was a requirement to score a wife. Families would therefore pool their resources to make sure their sole heir was equipped for the competition. Homes would be purchased either with large down payments or without financing at all. Financing through banks at compound interest rates doubles the cost of a typical mortgage, so sidestepping the banks cuts the cost of housing in half.

Those factors alone, however, cannot explain the difference in home ownership rates between the two countries. The average middle-class U.S. family could not afford to buy a home outright for their oldest heir even if they did pool their money. Americans would be savers if they could, but they have other bills to pay. And therein lies a major difference between Chinese and American family wealth: In China, the cost of living is significantly lower. The Chinese government subsidizes not only its industries but its families—with educational, medical and transportation subsidies.

According to a 2017 HSBC fact sheet, 70% of Chinese millennials (ages 19 to 36) already own their own homes. American young people cannot afford to buy homes because they are saddled with student debt, a millstone that now averages $37,000 per student and will be carried an average of 20 years before it is paid off. A recent survey found that 80% of American workers are living paycheck to paycheck. Another found that 60% of U.S. millennials could not come up with $500 to cover their tax bills.

In China, by contrast, student debt is virtually nonexistent. Heavy government subsidies have made higher education cheap enough that students can work their way through college with a part-time job. Health care is also subsidized by the government, with a state-run health insurance program similar to Canada’s. The program doesn’t cover everything, but medical costs are still substantially lower than in the U.S. Public transportation, too, is quite affordable in China, and it is fast, efficient and ubiquitous.

The disparity in incomes between American and Chinese workers is misleading for other reasons. The “average” income includes the very rich along with the poor; in the U.S., the gap between those two classes is greater than in China. The oversize incomes at the top pull the average up.

Even worse, however, is the disparity in debt levels, which pulls disposable income down. A survey after the 2008-09 credit crisis found that household debt in the U.S. was 136% of household income, compared with only 17% for the Chinese.

Another notable difference is that 70% of Chinese family wealth comes not from salaries but from home ownership itself. Under communism, all real property was owned by the state. When Deng Xiaoping opened the market to private ownership, families had an opportunity to get a home on reasonable terms; and as new homes were built they traded up, building the family asset base.

Deng’s market liberalization also gave families an income boost by allowing them to become entrepreneurs. New family-owned businesses sprang up, aided by affordable loans. Cheap credit from state-owned banks subsidized state-affiliated industries as well.

“Quantitative Easing With Chinese Characteristics”

All this was done with the help of China’s federal government, which in recent decades has pumped massive amounts of economic stimulus into the economy. Unlike the U.S. Federal Reserve’s quantitative easing, which went straight into big bank reserve accounts, the Chinese stimulus has generated new money for productive purposes, including local business development and infrastructure. Sometimes called “qualitative easing,” this “quantitative easing with Chinese characteristics” has meant more jobs, more GDP and more money available to spend, which in turn improves quality of life.

The Chinese government has done this without amassing a crippling federal debt or triggering runaway inflation. In the last 20 years, its M2 money supply has grown from just over 10 trillion yuan to 180 trillion yuan ($11.6T), a nearly 1800% increase. Yet the inflation rate of its Consumer Price Index (CPI) has remained low. In February of this year, it was just 1.5%. In May it rose to 2.7% due to an outbreak of swine fever, which drove pork prices up; but this was a response to shortages, not to an increase in the money supply. Radically increasing the money supply has not driven consumer prices up because GDP has increased at an even faster rate. Supply and demand have risen together, keeping consumer prices low.

Real estate prices, on the other hand, have skyrocketed 325% in the last two decades, fueled by a Chinese shadow banking system that is largely beyond regulatory control. Pundits warn that China’s housing is in an unsustainable bubble that will pop, but the Chinese housing market is still more stable than the U.S. subprime market before 2008, with its “no-doc no-down” loans. Chinese buyers typically put 40 to 50% down on their homes, and the demand for houses remains high. The central bank is also taking steps to cool the market, by targeting credit so that it is steered away from real estate and other existing assets and toward newly-produced goods and services.

That central bank intervention illustrates another difference between Chinese-style qualitative easing and Western-style QE. The People’s Bank of China is not trying to improve banking sector liquidity so that banks can make more loans. Chinese economists say they don’t need that form of QE. China’s banks are already lending, and the central bank has plenty of room to manipulate interest rates and control the money supply. China’s central bank is directing credit into the local economy because it doesn’t trust the private financial market to allocate credit where local markets need it. True to its name, the People’s Bank of China seems actually to be a people’s bank, geared to serving the economy and the public rather than just the banks themselves.

Time for More QE?

 In early April, President Trump said in one of his many criticisms of the U.S.  central bank that he thought the Fed should be doing more quantitative easing (expanding the money supply) rather than quantitative tightening (shrinking the money supply). Commentators were left scratching their heads, because the official U.S. unemployment rate is considered to be low. But more QE could be a good idea if it were done as Chinese-style qualitative easing. A form of monetary expansion that would allow Congress to relieve medical and educational costs, grant cheap credit to states to upgrade their roads and mass transit, and support local businesses could go a long way toward making American workers competitive with Chinese workers.

Unlike the U.S. government, the Chinese government supports its workers and its industries. Rather than penalizing China for that “unfair” trade practice, perhaps the U.S. government should try doing the same. China’s legacy is socialist, and after opening to international trade it has continued to serve the collective good, particularly of its workers. Meanwhile, the U.S. model has been regressing into feudalism, with workers driven into slave-like conditions through debt. In the 21st century, it is time to upgrade our economic model from one of feudal exploitation to a cooperative democracy that recognizes the needs, contributions and inalienable rights of all participants.

___________________________

This article was first published on Truthdig.org. Ellen Brown is an attorney, founder of the Public Banking Institute, and author of thirteen books including Web of Debt and The Public Bank Solution. Her latest book is Banking on the People: Democratizing Money in the Digital Age, published by the Democracy Collaborative. She also co-hosts a radio program on PRN.FM called “It’s Our Money.” Her 300+ blog articles are posted at EllenBrown.com.

The Radical Vision of a 'Homes Guarantee' for All

from truthdig, October 22, 2019, by Celisa Calacal

Rep. Alexandria Ocasio-Cortez, D-N.Y. (Eduardo Munoz Alvarez / AP)

In late September, New York Democratic Rep. Alexandria Ocasio-Cortez unveiled The Place to Prosper Act, one plan out of a larger policy package called “A Just Society,” dedicated to protecting and enforcing tenants’ rights. That same month, before the introduction of that plan, Democratic presidential candidate Sen. Bernie Sanders had released his own housing plan to address this country’s growing housing crisis through such proposals as a national rent cap and a $70 billion investment into public housing.But before these two progressive leaders publicized their plans, a grassroots coalition of affordable housing advocates came out with its own housing policy, called a Homes Guarantee, dedicated to eradicating homelessness and providing affordable, sustainable housing for all Americans.

But before these two progressive leaders publicized their plans, a grassroots coalition of affordable housing advocates came out with its own housing policy, called a Homes Guarantee, dedicated to eradicating homelessness and providing affordable, sustainable housing for all Americans.

At its core, the Homes Guarantee seeks to tackle the growing housing crisis in large cities and small towns across the U.S. by decommodifying housing and divorcing the need for housing from its current market-based, capitalist-driven system. To accomplish this, the Homes Guarantee calls for building 12 million new social housing units—a public option for housing, in which rents are set at below-market rates—over the next 10 years and offering at least 600,000 “permanent supportive housing” units, which combine affordable housing with social services to help people who face chronic homelessness. The plan also calls for a $30 billion reinvestment in public housing over the next five years, a stark contrast to the federal government’s massive disinvestment in public housing over the past few decades.

In late September, New York Democratic Rep. Alexandria Ocasio-Cortez unveiled The Place to Prosper Act, one plan out of a larger policy package called “A Just Society,” dedicated to protecting and enforcing tenants’ rights. That same month, before the introduction of that plan, Democratic presidential candidate Sen. Bernie Sanders had released his own housing plan to address this country’s growing housing crisis through such proposals as a national rent cap and a $70 billion investment into public housing.

While the left has seen bold visions in the form of the Green New Deal and “Medicare for All” to address the climate crisis and health care, respectively, it hasn’t yet seen a similar plan or movement to address the housing crisis in the U.S. The coalition behind the Homes Guarantee hopes to change that.

“We want it to be in the same string of other progressive demands, like Medicare for All, Green New Deal,” said Tara Raghuveer of the grassroots movement People’s Action, who helped put the plan together. “We think it is that vision—what is the boldest set of structural reforms? It’s a Homes Guarantee.”

The publishing of the Homes Guarantee, in addition to Ocasio-Cortez’s Place to Prosper Act and Sanders’ plan, reflects a growing effort by grassroots advocates to demand more political action addressing the housing crisis impacting millions across the country.

Off the Top of My Head

California Paves the Way for Public Banks!

by John Lawrence, October 4, 2019

While the rest of the nation dithers and wrings their collective hands over Trump, California is moving forward passing a bill on rent control, gig workers and now PUBLIC BANKING. Thanks to Ellen Brown's pioneering work, California will now become the second state in the nation (after North Dakota) to have a public bank. This means that billions of dollars won't be sent to Wall Street any more but will stay in the state. More money will be available for affordable housing, student loans at affordable rates, infrastructure and tax relief. Just possibly savers may finally get a reasonable rate of interest on savings accounts. And when the next financial crisis comes, California will weather the storm in much better shape than the rest of the nation just as North Dakota did in 2018.

This was hailed as a “stunning rebuke to the predatory Wall Street megabanks that crashed the global economy in 2007-08.” “Today’s signing sends a strong message that California is putting people before Wall Street profits,” said Assemblyman David Chiu (D-San Francisco), who co-authored the bill (AB 857) with Assemblyman Miguel Santiago (D-Los Angeles). “We finally have the option of reinvesting our public tax dollars in our communities instead of rewarding Wall Street’s bad behavior,” he said. “This new law prioritizes communities and neighborhoods by empowering localities to use public dollars for their own public good: from investing in affordable housing projects and building new schools and parks, to accessible loans for students and businesses,” Santiago, the bill’s co-author, said in a statement.

At first the law limits to 10 the number of public banks that can be actualized. That means that probably only California's largest cities will create them. Certainly Los Angeles, San Francisco and San Diego should be among the first to go through the rigorous process of forming a public bank. The LA Times reported:

The law provides a path for cities and counties to pursue a public-bank license that has several “checks and balances built in, with layers of oversight and accountability” said Sushil Jacob, a senior attorney with the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area. The committee is part of the California Public Banking Alliance, which pushed for the new law.

For example, the city or county would have to establish a separate corporation with an independent board of directors, and it would have to obtain approval from the Federal Deposit Insurance Corp. to obtain deposit insurance, Jacob said.

The new public bank and its business plan also would need approval from the state Department of Business Oversight, and “the public has to be given the opportunity to weigh in on the [bank’s] viability study before a local agency can approve it,” he said.

“There also are startup costs involved, such as hiring consultants and developing a business plan,” and it’s expected that the state’s largest cities and counties, such as Los Angeles and San Francisco, would be among the first jurisdictions to apply, Jacob said.

The process likely would take one to two years, he added.

If this process works well for cities and counties, the next step would be the establishment of a public bank for California as a state and not just allow them in cities and counties. There is a lot more money involved at the state level than at the local level like the CalPERS pension fund and state tax revenues. The California Public Employees' Retirement System (CalPERS) is an agency in the California executive branch that "manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families". In fiscal year 2012–13, CalPERS paid over $12.7 billion in retirement benefits, and in fiscal year 2013 it is estimated that CalPERS will pay over $7.5 billion in health benefits. As of June 30, 2014, CalPERS managed the largest public pension fund in the United States, with $300.3 billion in assets. As of 2018, the agency had $360 billion in assets.

Next City reports:

Today in the U.S., state and local governments hold $502 billion in bank deposits (not to mention $4.3 trillion in state and local public pensions). Progress on public banks in California will be closely watched in other states and cities where organizers and public officials have been pushing for public banks — including Washington State, New Mexico, Michigan, New Jersey, the District of Columbia, New York City, Philadelphia, Chicago, the Twin Cities, Portland, Seattle, and elsewhere.

Ellen Brown's latest book is "The Making of a Democratic Economy." She has also written "Banking on the People - Democratizing Money in the Digital Age," "The Public Bank Solution," and "Web of Debt." She is largely responsible for the public banking movement. Other articles on public banking have appeared in the San Diego Free Press: Public Banking: How a Public Bank Could Benefit San Diego – Part 4.

The bugaboo in this whole thing could be the need for Federal Deposit Insurance. Trump could get his hands in there and put the kabosh on the whole thing. However, the need for a marijuana bank is an incentive to follow through on the creation of public banks as well as a distaste for Wells Fargo and all the illegal behavior they have been involved in. Jamie Dimon and Lloyd Blankfein are not amused.

Off the Top of My Head

The Poor Have Gotten Poorer

by John Lawrence, October 3, 2019

How much poorer can you get than to be homeless? In Ken Burns excellent documentary on country music we find Dolly Parton saying she grew up in a shack with no running water, no electricity and no indoor plumbing. Loretta Lynn said much the same thing about growing up in Butcher's Hollow. At least they had a roof over their heads. Today's 500,000 American homeless, which includes men, women and children, have none of the amenities most people take for granted and this represents progress? In 1946 when Dolly Parton was born, a lot of people didn't have indoor toilets. My Grandparents bought their first house around that time, and they has an outdoor toilet. They were not poor. My Grandfather worked for the Lehigh and Hudson railroad as a station agent and there was even an outdoor toilet at the station. Big deal!

My Grandfather put in indoor plumbing, but at first they got their water from a community well and hauled it a short distance to their house. They did have electricity though thanks to that socialist program that socialist President Franklin D Roosevelt was responsible for - the Rural Electrification Administration. Before that they just had kerosene lamps. Today's American homeless are worse off than many of the world's people who are living in refugee camps. Many of these refugees have had their homes and livliehoods destroyed by American bombs. Take the Nizip 1 refugee camp for example. 30,000 Syrian refugees live in tents provided by the Turkish government. Each unit has a small kitchen, bedding and a TV. People share toilets and showers. They are better off than American homeless, thanks to Turkey, no thanks to America.

American homeless are really refugees living in the US without the provisions of many refugee camps elsewhere in the world. Even with an income of $1000. a month, you are too poor to rent a room in San Diego. I googled "rooms for rent in San Diego" and trulia.com came up with a whole lot of them for about $1000. a month. Many homeless people actually have incomes around that, but still can't afford to pay 80-100% of their income for a roof over their heads. Public housing projects have been demolished in the US. At one time the Cabrini-Green project in Chicago housed 15,000 people. It has been torn down because it became a hotbed of crime. Many other public housing projects have followed suit. But it didn't have to be this way. Most of these housing projects including Cabrini-Green were poorly managed or actually mismanaged. They did not have proper management, oversight, maintenance or security. Today they have largely been eliminated with the result that homelessness has skyrocketed.

They've tried to gentrify public housing by making it a public-private partnership with the result that poor people can't afford it. Section 8, where they give out a housing voucher for part of the rent, is an abysmal failure since there is a waiting line a mile long to get it, and many landlords don't want to rent to section 8 vouchered people. So trying to integrate poor people into the surrounding communities has been just as big a failure as was public housing. The lesson is that, if you're going to provide public housing, you have to provide a whole lot more than just housing. You have to provide security, social workers, proper oversight and maintenance, in short social programs to help people get their lives on track, employment - everything necessary to provide a salubrious and healthy environment. Otherwise, the gangs take over.

All of these other things, the overhead so to speak, can be provided to help homeless people get their lives back on track even if housing is the last thing in the loop. I have suggested campgrounds, which could be provided at minimal cost compared to housing, with adequate sanitary facilities, security and social worker assistance to make life at least livable until housing can be found or built. Instead of a Housing First approach, it would be a Housing Last approach, but sanitation, security and help with whatever problems they have first. Sanitation facilities and lockers could be provided at minimal cost. They could be portable so that none of these campgrounds need to be set up as permanent facilities. Getting people's lives on track and finding employment will allow them to take the first steps to being reintegrated back into society.

Finally, public housing needs to make a comeback because there is no limit to how far rents can be raised in a capitalistic society. Public housing with controlled rents would also compete with private housing to keep prices down. Housing projects are not necessarily bad if proper management and oversight is provided so that crime doesn't flourish there. Especially for families with children, people need a healthy environment for their children to grow up in so that the next generation doesn't repeat the same mistakes as the previous one. There needs to be hope. One last thing. Homelessness has become a lifestyle, even a culture. That needs to change. The US can't afford to have a permanent underclass and still be one of the world's leading nations.

Off the Top of My Head

Federal Reserve Policies Lead Directly to Increased Global Warming

by John Lawrence, September 21, 2019

An expanding economy means more greenhouse gasses will go into the atmosphere increasing global warming. It means more energy consumption which means more fossil fuel utilization. What we really need is a contracting economy to forestall climate change. That means less consumption, less cars on the road, lower GDP. But every economist wants to grow the economy which means exacerbating climate change. The Federal Reserve is trying its best to to expand the economy using its tools of lower interest rates, but this isn't working so well any more.

In a recent article Ellen Brown said:

Bargain-basement interest rates are supposed to stimulate the economy by encouraging borrowers to borrow (since rates are so low) and savers to spend (since they aren’t making any interest on their deposits and may have to pay to store them). But over $15 trillion in bonds are now trading globally at negative interest rates, yet this radical maneuver has not been shown to measurably improve economic performance. In fact  new research shows that negative interest rates from central banks, rather than increasing spending, stopping deflation, and stimulating the economy as they were expected to do, may be having the opposite effects. They are being blamed for squeezing banks, punishing savers, keeping dying companies on life support, and fueling a potentially unsustainable surge in asset prices.

The Fed is punishing savers with these low interest rates. Many people outside the US are having to pay banks to store their money. That's what negative interest rates are all about. And savers are being discouraged from saving. They are being incentivized to take on more debt in order to keep the wheels humming in the economy. Just the opposite is needed. People need to save and pay down their debts, not be encouraged to go into more debt and not save. Asset prices, meaning home prices and the stock market, are at record levels. Because of the Fed's policies, housing is becoming unaffordable for more and more people. That's why there are so many homeless in the US, mainly in California but actually all over. They are basically economic refugees who can't afford to pay rent even if they have a job.

So what to do about the Fed's failing policies? Some central bankers want to go “direct with money to consumers and companies in order to enliven consumption,” putting spending money directly into consumers’ pockets. They want to expand the economy at all costs, but getting consumers to consume more (consumption is 70% of GDP) will only increase global warming. What the world really needs is for consumers, at least in America where consumption is already sky high compared to other countries, to consume less.

The four components of gross domestic product (GDP) are personal consumption, business investment, government spending, and net exports. Rather than increasing personal consumption which adds to GDP, what needs to be done to decrease global warming is to decrease consumption and increase government spending. Government spending needs to be increased in the following areas: infrastructure which is 4 trillion dollars behind what needs to be repaired and improved, conversion to solar, wind and other forms of renewable energy which can be undertaken by government directly or subsidized. Conversion of electricity generation plants to renewable energy, conversion of transportation systems to renewable energy in the form of electric cars and trucks or high speed rail. High speed rail would decrease air travel which is a major polluter. Encouragement of public transportation would decrease emission of GHGs.

So keeping GDP up by not doing what the Fed is doing - lowering interest rates and encouraging people to consume more and to go into debt more - but actually by a Green New Deal would actually accomplish the twin goals of higher GDP and lower greenhouse gas emission which would reduce climate change. The Fed's policies shortsightedly are only leading to increasing climate change.

Off the Top of My Head

The Solution to Multiple Application Fees for Renters

by John Lawrence, August 3, 2019

Tyrone Poole was taking a course to become a firefighter in Portland, Oregon. Then his luck turned bad. He fell, had a bad leg injury and ended up in the hospital. He couldn't pay his hospital bills, was evicted from his apartment and had nowhere to go upon being discharged from the hospital.

Oregonlive.com takes up the story:

He couch-surfed for a while. But his friends grew tired of taking care of him. One night, around 10 p.m., a friend told Poole he could no longer stay.

"I grabbed all my stuff and left,'" Poole said. "I was carrying my entire life with me on crutches."

He hobbled a few miles toward a MAX station, each step like walking on glass. By the time he arrived, he could barely stand. He laid down and vomited.

A police officer found him, Poole said, and assumed he'd been drinking. Poole explained his injury, and the cop offered him a ride.

"He would have taken me anywhere," Poole said. "But there were no more places."

The officer drove Poole to the YWCA close to midnight. Poole said the workers weren't happy -- there's a shelter protocol, and everyone else was asleep -- but they pulled out a semi-broken cot and set it up in the gym.

"It was the lowest moment of my entire life," Poole said. "Even the homeless shelter is telling me I shouldn't be there."

From there it was an endless round of applying for apartment rentals. Although the YWCA gave him a voucher for one year's rent in return for working at the Y, Poole couldn't find an apartment. At each one he applied, he had to pay an application fee. For four months the applications were all denied.

Poole tried to tell managers he had a year of guaranteed rent. But they saw his drawbacks: Poole had been evicted while in the hospital. His car and his storage unit had been repossessed. His credit was bad. And because his doctors had yet to clear him for work, he had no income.

Poole knew some property managers take chances, but there was no way to find out who would accept him without applying. Each application cost about $20.

Poole thought there must be a better way. People with bad credit are just throwing their money down a rathole if their credit is bad, and this is the primary criterion a landlord uses to decide whether to rent to someone. You can't discriminate on the grounds of race, ethnicity, religion, national origin or anything else, but you can discriminate on the grounds of poor credit. So a landlord will accept an application along with an application fee from anyone knowing that he will likely not rent to that person. It gets even worse. In El Cajon, where I live, the current rate for an application fee is $25.00 per adult living in the apartment. It is often the case that there is a third adult involved, a mother or a mother-in-law, for example, to help pay the rent . The application must be run on each adult so that is $75.00 upfront in application fees.

Poole's idea was to create an app whereby renters would submit their information and a one time fee.  Then the app would match them with criteria from multiple landlords. So that's how the website oneApp was born. Prospective renters could find out immediately which landlords would find their application acceptable and go from there. Poole was lucky that the Portland Economic Development Commission was shifting its focus to black entrepreneurs. He had an idea, but no coding skills, no capital and no business experience. Nevertheless, he impressed the right people and his venture was funded.

In Portland nearly half the city’s residents are renters and the average rent grew by 4.6 percent last year. The median rent price for an apartment in Portland is now $1,879 a month, according to a Zillow analysis. Tyrone has a contract with the City of Portland to provide the services which expedite poor rental applicants in finding an apartment. A one time rental fee of $35.00 matches them with available apartments and the $35.00 is refunded by the landlord on move-in.

Street Roots reported:

The data and information OneApp collects on its apartment listings, including rents and screening criteria, as well as basic demographics on prospective tenants could be a boon to policymakers and housing advocates. Currently, information on Oregon and even Portland’s rental inventory is spotty. Peterson said OneApp has already aggregated a list of nearly 100 different screening criteria landlords and property managers use when evaluating tenants. “You can start to break each category into its own,” he said, such as how many past evictions a particular property management company will consider. The website could also provide data on the average credit score or the average debt that a tenant has and compare it to their income. That data, he said, could help the Portland Housing Bureau, elected officials and policymakers “understand how the market of renters match up with the market of available units.”

The City of Portland has a contract with Tyrone to provide oneApp services to the City of Portland. You can access them from the  website of the Portland Housing Bureau. He is also branching out to other cities. Why not San Diego and LA?

Off the Top of My Head

Comic-Con and the Homeless

by John Lawrence, July 22, 2019

Last week was the Comic-Con convention at the San Diego convention center. There were hordes and masses of people all over downtown. The conventional traffic lights were inadequate to control traffic so the City hired an army of human traffic controllers. Many streets were blocked off so any kind of egress or ingress was virtually impossible so that the denizens of virtual reality and 5G could have their annual party. A few blocks away were the denizens of homelessness but they might as well have been  far away from the madding crowd.

San Diego’s convention draws more than 130,000 people each year and is estimated to generate an economic impact of more than $140 million for the city. The only reason those numbers haven’t grown is because the convention organizers cannot fit any more attendees into the exhibition center. So the dilemma for San Diego is to add to or build another convention center or else lose the Comic-Con convention altogether. While the city makes $140 million on providing every conceivable amenity for convention goers, the homeless sit sprawled all over the sidewalks without anywhere to go or anywhere to be. The City of San Diego cannot even afford to set aside one decent campground for them. Resourcefully, some have taken advantage of the hidden recesses of Balboa Park, but they must live under the constant fear of being found out and evicted.

In Balboa Park the old Sports Museum, which didn't make it financially, has been converted into a Comic-Con museum. There were hordes of people lined up there as well. A separate amusement right outside that museum allowed people to have the full Batman experience. You dressed up like Batman and then jets of air propelled you into weightlessness so you could fly like Batman and hover as well. The roar of the sound was deafening, but I guess that's the price you pay for a good amusement. I'm wondering what that cost for each individual participant. Balboa Park itself was overrun with tourists. Vacant parking spaces were non-existant.

Last week it was the Pride parade that brought hordes of tourists to San Diego. On the same day the Over the Line tournament, which is one big beerfest, was held on Fiesta Island in Mission Bay. Hordes were in attendance there as well. All summer Bayside Summer Nights is being staged by the symphony on Embarcadero Island. Semi-hordes are in attendance there. Parking lots and valet parkers are dismayed because so many are taking Ubers to these events so they don't have to pay outrageous sums for parking. As an Uber driver, I don't mind taking people from outlying areas to these events even though I get stuck in traffic. However, after dropping them off, I turn off my Uber or I would get calls from those parked a couple miles away where they can park for free and then call an Uber to get them to the event. The Uber driver then gets stuck in a lot of traffic in return for a very meager payout. Petco Park is another destination that a lot of people Uber to in order to attend Padres baseball games. Hordes are always in attendance there.

With all the "events" in San Diego happening weekly, you would think that the City could provide adequate resources for the homeless. The so-called "America's Finest City" should actually be called America's Finest Tourist City or America's Finest destination to go and amuse yourself. The homeless languish on the streets not far away from the convention center. Not that they aren't consuming their share of resources. The police are constantly being called to deal with some homeless situation. A fair share of police resources goes to dealing with the homeless. And then the medical system is spending tons of money as the homeless frequent emergency rooms to get basic health care situations taken care of. At the Bayside Summer concerts I have marveled at the 50 or 60 port-a-potties lined up for paying customers only, but not one port-a-pottie is available to the homeless. They have to hide out in the crevices of the city or sprawl in the "homeless neighborhood" on 17th street. Those taking the back way to Petco Park or the I-5 southbound entrance are forced to go through "homeless town." It's as distinct a neighborhood as any other. Tents and shopping carts abound. There is no money out of the millions the city makes off of events to provide a decent campground with adequate sanitation services much less an actual single room apartment.

The economic divide in America has produced those who are extremely rich and those who are extremely poor. Local, state and federal governments cannot even provide adequate facilities for those who can't afford a market rate apartment. They are afraid that, if they do, the homeless will all flock here even though studies have shown that a majority of the homeless were homed here before they became homeless. Did it ever occur to the City Fathers that a regional approach in which cities all over the West Coast might provide decent facilities might make the distribution of homeless more acceptable? In other words they wouldn't all have to flock here to get decent treatment. Or how about a national approach? Guess that will never happen The nation as a whole is only concerned about military might and a weaponized dollar. The American culture is more concerned with Bat Man then it is with solving the homeless problem or any other problem for that matter. We are literally Amusing ourselves to Death while climate change will eventually diminish the amusement of us all. The homeless will just have to continue fending for themselves unless and until they can hire a lobbyist to knock on Congresspersons' doors in Washington, DC. or get the Mayor and City Council to listen to them.

San Diego’s Land Barons Are Not Capable of Solving the Housing Affordability Crisis

by Doug Porter, Words and Deeds blog

June 14, 2019

The housing market in San Diego is just a few short steps away from being a disaster. Take the latest guesstimate (8,000) of unhoused humans in the county and city, multiply it by twenty five, and it’s possible to visualize being just one stock market crash away from dystopia.   

If your budget is highly stressed because of housing costs, you may as well make contingency plans for being homeless in San Diego.

This includes 28% of the renters (who pay more than half their income for housing) in San Diego County, according to statistics from the Census Bureau’s American Community Survey. Multiplying the number of rental units by the average number of occupants and taking .28 of that number leaves us with roughly 397,000 humans facing homelessless.

Assuming half of those people can find another place, often by doubling up occupancy with others, we’re still left with over a potential 200,000 homeless humans.

Obviously this is an extreme scenario, destined to be torpedoed by somebody with other statistics or insights that I lack. But the point I’m making about huge numbers of people living on the precipice of disaster remains.

An article in the business section of the San Diego Union-Tribune by Philip Molnar started me down this rabbit hole of housing despair.

Despite all the yammering about build, baby, build, the number of residential permits pulled locally is down 58% from last year. It’s down 70% for multifamily units.

We’re told the reasoning behind the slowdown is because rents are not increasing fast enough.

Real estate analyst Nathan Moeder is quoted in the UT account:

• “Projects are having a hard time achieving feasibility, so it means a lack of new projects in the pipeline,” he said. “Developers used to be able to count on long-term inflation of rents. But, we’ve pretty much hit a ceiling.”
• Rents had increased at a rate of 2.7 percent annually as of the first quarter, said real estate tracker CoStar. That compares to 6.1 percent at the same time in 2017 and 4.6 percent in 2018.
• Moeder said he doubted San Diego County would return to the levels of homebuilding seen in recent years, despite calls by housing advocates to increase supply. Even Mayor Kevin Faulconer’s latest proposal to increase housing density near transit stops, Moeder said, would mostly be smaller, in-fill projects — not the scale needed to address housing shortages.

According to the Payscale Index, wage growth in the San Diego metro area was a half of a percent (year over year) for the first quarter of 2019. That figure represented a .7% decrease in wage growth over the last quarter of 2018. And real wages nationally are 9% lower than in 2006, before the last recession.

So if wages weren’t increasing as fast as the needed amount of rent charged by developers, the long term prospects don’t look good for increasing the amount of available housing.

Added to the rent inflation/ability to pay factors are the rising costs of construction.

The Trump administration’s tariffs on goods from China are the equivalent of a $2.5 billion-a-year tax on the entire U.S. home-building industry. Impacted are stainless steel and iron, molded glass paving blocks and tiles as well as lead, nickel, building stone, cement and copper. Items critical to HVAC infrastructure are also part of the new tariffs (from air compressors to heat pumps), as are interior materials for flooring, walls and furniture.

***

Matt Strabone’s most recent Show in Progress podcast featured three guests with different perspectives on solutions for the housing shortage.

Jim LaMattery, realtor/spokesperson for anti-development group Raise the Balloon, argued for more forethought on changes making it easier to change zoning rules and build denser housing.

Maya Rosas, president of the YIMBY Democrats of San Diego County, advocated for building as much new housing as possible.

And Andy Kopp, described as “a public housing advocate,” dared to discuss the third rail of NIMBYism, namely getting the government more involved in financing construction.

If you listen to the podcast, you’ll discover that nobody was absolutist in their positions, meaning the usually irrational parts of such a discussion were left out.

***

While San Diego and California’s housing shortage is driven somewhat by local ordinances and neighborhood opposition to new construction, there are bigger issues at play.

Nationally we have built 7 million fewer homes in the 10 years since 2009 than needed to break even. There is also a shortage of an additional 7 million units of affordable rental housing. It’s no wonder prices keep rising: The law of supply and demand cannot repealed.

The way the economy is presently structured, with near-stagnant wage growth, even if those residential units had been privately built, they couldn’t be rented/sold. Developers know this, which is why they’re not building.

Where the private sector is incapable of solving a societal problem, it becomes necessary for the government to step in.  

The elephant in the room is racism.

Public housing has been used as a weapon, its residents demonized to the point where even the discussion of such a thing is enough to create panic in some quarters.

So let’s not call it public housing. Let’s call it social housing.

Social housing is public housing, but only in the sense that it is government-financed. European social housing is subsidized yet serves middle-class as well as low-income households, thereby avoiding the stigma associated with America’s public housing.

There are countries all over the world that do this successfully.

California suffers from the aftereffects of Constitutional Article 34, which prohibits the construction of public housing projects without a public vote.

Here’s a quick summation, via Pacific Standard:

• There’s no better example of the tyranny of the ballot measure than Article 34.
• An amendment to the California state constitution passed by public referendum in 1950, Article 34 states that: “No low rent housing project shall hereafter be developed, constructed, or acquired in any manner by any state public body until, a majority of the qualified electors of the city, town or county … approve such project by voting in favor thereof at an election to be held for that purpose, or at any general or special election.”
• It’s California’s original housing sin, a binding not-in-my-backyard clause that has forced municipalities to adopt creative workarounds to build low-income housing. That it was enacted before the Fair Housing Act or even Brown v. Board of Education raises questions about the historical purpose of the rule. But today, it’s a powerful weapon for communities that want to keep low-income families out—a legal path to de facto segregation along race and class lines. When it comes to housing, California’s progressive reputation doesn’t apply.

Efforts are underway to repeal Article 34 via the 2020 ballot. In the meantime, as Andy Kopp explains in the aforementioned podcast, there are workarounds, things that can be started today.

What’s true for California is true for the nation, as this excerpt from Smithsonian Magazine demonstrates:

• In the early 20th century, a number of cities, particularly border cities like Baltimore, St. Louis, and Louisville, Kentucky, passed zoning ordinances that prohibited African-Americans from moving onto a block that was majority white. In 1917, the Supreme Court found in Buchanan v. Warley that such ordinances were unconstitutional, but not for racial reasons. The Court found it unconstitutional because such ordinances interfered with the rights of property owners.
• As a result, planners around the country who were attempting to segregate their metropolitan areas had to come up with another device to do so. In the 1920s, Secretary of Commerce Herbert Hoover organized an advisory committee on zoning, whose job was to persuade every jurisdiction to adopt the ordinance that would keep low-income families out of middle-class neighborhoods. The Supreme Court couldn’t explicitly mention race, but the evidence is clear that the [Commerce Department’s] motivation was racial.
• Jurisdictions began to adopt zoning ordinances that were exclusive on economics, but the true purpose was, in part, to exclude African-Americans. So they developed ordinances that for example, prohibited apartment buildings from being built in suburbs that had single-family homes. Or they required single-family homes to have large setbacks and be set on multiple acres, all as an attempt to make the suburb racially exclusive.

Ryan Cooper at The Week set forth some principles for what publicly financed housing should look like going forward.

• 1) Abandon the Stalinist, gigantic apartment block model. These are more expensive, require a lot more land and maintenance, and tend to be built on mad-architect lines with a total disregard for functionality. Worse, they concentrate poverty, a known factor for all manner of social ills.
• 2) Public housing should be ordinary. Though obviously it should be built efficiently, public housing ought to appear just like any other building. Abolish the “projects” stigma.
• 3) Public housing should be dispersed. Smaller buildings ought to be spread out all over the place, not just in the poorest districts. Though the super-elite residents of Georgetown would collapse in paroxysms of rage to hear it, there ought to be a good number of units there as well. Indeed, rich neighborhoods are particularly well-suited to public housing. Poor people need the high-quality services and schools a lot more than rich people do.
• Again, this is only part of the solution. But while there is broad agreement that additional construction should be brought to bear on housing supply, advocating for public housing is typically met with scorn or sheer bewilderment. On the contrary, these are two great tastes that taste great together.

To those thoughts I’d like to add the caveat that social/public housing should not be run by government. History (think Chicago) shows housing agencies rarely get the funding or oversight needed to maintain safe and sane living spaces.

Non-profit or cooperative models are the way to go here. Making sure the people living in properties have a say in keeping them well run is smart.

San Diego has unbuilt land. I pass the San Diego Unified School District headquarters on a daily basis and dream of what good could be done there. They could find a way to facilitate a complex including their offices and affordable housing for educators and staff. It’s more likely they sell it for quick cash and move the headquarters somewhere else.

WE can solve the housing problem. But as long as it’s ME (Nimbys), ME (developers), ME (short sighted public officials) in control, nothing is going to happen.     

I’ll close with a few thoughts from Henry Kraemer and Peter Harrison at Data for Progress, published as It’s the Housing, Stupid at Buzzfeed:

• True reform to the American housing system would be incomplete without restoring our commitment to homes as places to live, instead of shelters for capital.
• Doing that will take eliminating tax privileges for rental properties, dismantling speculative real estate practices, and encouraging alternative ownership models.
• Federal tax subsidies for purchasing, operating, and reselling rental property attracts speculators eager to flip buildings, which raises rents and destabilizes neighborhoods.
• Progressives should pare down rental property depreciation to just long-term building improvements or investments in decarbonization. Rent and the sale of the property should be taxed like wages to keep landlords from disproportionately benefiting from the rising property values that stem from public investment and land scarcity, and incentivize holding on to buildings and tenants for longer.

Off the Top of My Head

by John Lawrence, June 17, 2019

Despite Billions Spent on Homelessness, the Problem Only Gets Worse

Homeless numbers increased 12% in the city of Los Angeles last year and 16% in Los Angeles county. Last year, the county says it housed 21,631 people — more than in any previous year. It also prevented an estimated 5,600 people from falling into homelessness. However, even more fell into homelessness than were housed, and the cause is not mental illness or drug addiction. The cause is THE RENTS TOO DAMN HIGH, just like the man said. Why isn't he running for President?

The LA Times reported:

But the frightening news is that as fast as the county bailed people out of homelessness, more fell in. There were 3,886 veterans who were homeless in 2018. About 2,800 got housing. And yet, this year the number of veterans counted as homeless was still 3,874. There are more people living in cars, vans and RVs, and there are 17% more people in tents and makeshift shelters on the streets than were counted in 2018. Of the 14,075 “chronically homeless” people on the street last year, 4,902 got housed. Yet those who remained were joined by so many more people who graduated into chronic homelessness — defined as having a disability and living on the streets for at least a year — that the overall number went up 17%.

This is directly attributable to the fact that hedge funds are moving into the rental market. They are buying up real estate that average people no longer can afford and then jacking up the rents. They can do this because they have access to interest free money just like the Wall Street banks do with whom they are associated. You and I would have to pay interest on a mortgage. Hedge funds borrow billions of dollars, interest free, and then either speculate with the money or buy up assets like real estate.

The New Republic reported:

If you’ve signed a lease in the past year, there’s a good chance your landlord wears a tailored suit and works on Wall Street. One of the hottest trends in the financial sector is known as “REO-to-rental.” Over the past couple years, hedge funds, private equity firms and the biggest banks have raised massive amounts of capital to buy distressed or foreclosed single-family homes, often in bulk, at bargain prices. Their strategy is to convert them to rental units for a while before reselling them when prices appreciate. The Wall Street firms are scooping up properties in the hardest-hit areas, promising high returns for the rental revenue streams—up to 10 percent annually —and starting bidding wars that have driven up some prices well above national averages. It’s the next Wall Street gold rush, with all the warning signs of a renewed speculative bubble.

So hedge funds, which have access to unlimited amounts of money interest free, because of their in cahoots with Wall Street which is in cahoots with the Fed which is funneling them the money, is having a devastating effect on the real estate market, driving up prices, turning everyone into renters and forcing those who cannot afford high rents out into the streets or into RVs and other vehicles. Perhaps one should start a business converting cars into sleeping accommodations. There probably would be a huge market for it.

This is all leading to the creation of three classes: the rich who can afford to buy property, the middle class who will all be renters and the homeless who will live on the streets in tents or in cars, vans or RVs. As more jobs disappear due to automation, more and more people will not be able to afford to pay rent so the ranks of the homeless will grow. Society will not be able to keep up with the demand for public housing. They don't want to call it public housing and they don't want to build it so for now they call it rent assisted housing and try to get the homeless housed in the commercial rental market which means that public money is being used to contribute to investor profits instead of doing something about containing rent increases or making rents more affordable or building public housing.

The American Dream Is Alive and Well—in China

From truthdig, June 13, 2019

by Ellen Brown

Michael Levine-Clark / CC BY-NC-ND 2.0

Home ownership has been called “the quintessential American dream.” Yet today less than 65% of American homes are owner occupied, and more than 50% of the equity in those homes is owned by the banks. Compare China, where, despite facing one of the most expensive real estate markets in the world, a whopping 90% of families can afford to own their homes.

Over the last decade, American wages have stagnated and U.S. productivity has consistently been outpaced by China’s. The U.S. government has responded by engaging in a trade war and imposing stiff tariffs in order to penalize China for what the White House deems unfair trade practices. China’s industries are said to be propped up by the state and to have significantly lower labor costs, allowing them to dump cheap products on the U.S. market, causing prices to fall and forcing U.S. companies out of business. The message to middle America is that Chinese labor costs are low because their workers are being exploited in slave-like conditions at poverty-level wages.

But if that’s true, how is it that the great majority of Chinese families own homes? According to a March 2016 article in Forbes:

Due to their communist legacy, what they get for their money is not actually ownership in perpetuity but a long-term leasehold, and the quality of the construction may be poor. But the question posed here is, how can Chinese families afford the price tag for these homes, in a country where the average income is only one-seventh that in the United States? Under China’s earlier one-child policy, many families had only one heir, who tended to be male; and home ownership was a requirement to score a wife. Families would therefore pool their resources to make sure their sole heir was equipped for the competition. Homes would be purchased either with large down payments or without financing at all. Financing through banks at compound interest rates doubles the cost of a typical mortgage, so sidestepping the banks cuts the cost of housing in half.

Those factors alone, however, cannot explain the difference in home ownership rates between the two countries. The average middle-class U.S. family could not afford to buy a home outright for their oldest heir even if they did pool their money. Americans would be savers if they could, but they have other bills to pay. And therein lies a major difference between Chinese and American family wealth: In China, the cost of living is significantly lower. The Chinese government subsidizes not only its industries but its families—with educational, medical and transportation subsidies.

According to a 2017 HSBC fact sheet, 70% of Chinese millennials (ages 19 to 36) already own their own homes. American young people cannot afford to buy homes because they are saddled with student debt, a millstone that now averages $37,000 per student and will be carried an average of 20 years before it is paid off. A recent survey found that 80% of American workers are living paycheck to paycheck. Another found that 60% of U.S. millennials could not come up with $500 to cover their tax bills.

In China, by contrast, student debt is virtually nonexistent. Heavy government subsidies have made higher education cheap enough that students can work their way through college with a part-time job. Health care is also subsidized by the government, with a state-run health insurance program similar to Canada’s. The program doesn’t cover everything, but medical costs are still substantially lower than in the U.S. Public transportation, too, is quite affordable in China, and it is fast, efficient and ubiquitous.

The disparity in incomes between American and Chinese workers is misleading for other reasons. The “average” income includes the very rich along with the poor; in the U.S., the gap between those two classes is greater than in China. The oversize incomes at the top pull the average up.

Even worse, however, is the disparity in debt levels, which pulls disposable income down. A survey after the 2008-09 credit crisis found that household debt in the U.S. was 136% of household income, compared with only 17% for the Chinese.

Another notable difference is that 70% of Chinese family wealth comes not from salaries but from home ownership itself. Under communism, all real property was owned by the state. When Deng Xiaoping opened the market to private ownership, families had an opportunity to get a home on reasonable terms; and as new homes were built they traded up, building the family asset base.

Deng’s market liberalization also gave families an income boost by allowing them to become entrepreneurs. New family-owned businesses sprang up, aided by affordable loans. Cheap credit from state-owned banks subsidized state-affiliated industries as well.

“Quantitative Easing With Chinese Characteristics”

All this was done with the help of China’s federal government, which in recent decades has pumped massive amounts of economic stimulus into the economy. Unlike the U.S. Federal Reserve’s quantitative easing, which went straight into big bank reserve accounts, the Chinese stimulus has generated new money for productive purposes, including local business development and infrastructure. Sometimes called “qualitative easing,” this “quantitative easing with Chinese characteristics” has meant more jobs, more GDP and more money available to spend, which in turn improves quality of life.

The Chinese government has done this without amassing a crippling federal debt or triggering runaway inflation. In the last 20 years, its M2 money supply has grown from just over 10 trillion yuan to 80 trillion yuan ($11.6T), a nearly 800% increase. Yet the inflation rate of its Consumer Price Index (CPI) has remained low. In February of this year, it was just 1.5%. In May it rose to 2.7% due to an outbreak of swine fever, which drove pork prices up; but this was a response to shortages, not to an increase in the money supply. Radically increasing the money supply has not driven consumer prices up because GDP has increased at an even faster rate. Supply and demand have risen together, keeping consumer prices low.

Real estate prices, on the other hand, have skyrocketed 325% in the last two decades, fueled by a Chinese shadow banking system that is largely beyond regulatory control. Pundits warn that China’s housing is in an unsustainable bubble that will pop, but the Chinese housing market is still more stable than the U.S. subprime market before 2008, with its “no-doc no-down” loans. Chinese buyers typically put 40 to 50% down on their homes, and the demand for houses remains high. The central bank is also taking steps to cool the market, by targeting credit so that it is steered away from real estate and other existing assets and toward newly-produced goods and services.

That central bank intervention illustrates another difference between Chinese-style qualitative easing and Western-style QE. The People’s Bank of China is not trying to improve banking sector liquidity so that banks can make more loans. Chinese economists say they don’t need that form of QE. China’s banks are already lending, and the central bank has plenty of room to manipulate interest rates and control the money supply. China’s central bank is directing credit into the local economy because it doesn’t trust the private financial market to allocate credit where local markets need it. True to its name, the People’s Bank of China seems actually to be a people’s bank, geared to serving the economy and the public rather than just the banks themselves.

Time for More QE?

 In early April, President Trump said in one of his many criticisms of the U.S.  central bank that he thought the Fed should be doing more quantitative easing (expanding the money supply) rather than quantitative tightening (shrinking the money supply). Commentators were left scratching their heads, because the official U.S. unemployment rate is considered to be low. But more QE could be a good idea if it were done as Chinese-style qualitative easing. A form of monetary expansion that would allow Congress to relieve medical and educational costs, grant cheap credit to states to upgrade their roads and mass transit, and support local businesses could go a long way toward making American workers competitive with Chinese workers.

Unlike the U.S. government, the Chinese government supports its workers and its industries. Rather than penalizing China for that “unfair” trade practice, perhaps the U.S. government should try doing the same. China’s legacy is socialist, and after opening to international trade it has continued to serve the collective good, particularly of its workers. Meanwhile, the U.S. model has been regressing into feudalism, with workers driven into slave-like conditions through debt. In the 21st century, it is time to upgrade our economic model from one of feudal exploitation to a cooperative democracy that recognizes the needs, contributions and inalienable rights of all participants.

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Ellen Brown is an attorney, chairman of the Public Banking Institute, and author of twelve books including "Web of Debt" and "The Public Bank Solution." Ellen Brown is an attorney, chairman of the Public Banking Institute, and author of thirteen books including "Web of Debt" and "The Public Bank Solution." Her latest book titled "Banking on the People" is out now. She also co-hosts a radio program on PRN.FM called “It’s Our Money.” Her 300+ blog articles are posted at EllenBrown.com."

Off the Top of My Head

The Rent is Too Damn High!

by John Lawrence

It's the reason so many people are living on the street or in their vehicles. Rent control's time has arrived, my friends. Right now in San Diego and most cities in California, a landlord can double the rent overnight. There is no rent control. That is about to change, at least in Los Angeles where a rent control law is going into effect. The scenario is very simple. Wealthy investors and hedge funds are moving into the real estate business. They identify marginal properties on the periphery of good neighborhoods, then move in, buy them up, rebuild or renovate and upgrade or upscale the area. They then can double the rent having converted cheap real estate into more expensive real estate. This process upscales and upgrades marginal neighborhoods, but outprices tenants who were already living there.

The New Republic reports:

If you’ve signed a lease in the past year, there’s a good chance your landlord wears a tailored suit and works on Wall Street. One of the hottest trends in the financial sector is known as “REO-to-rental.” Over the past couple years, hedge funds, private equity firms and the biggest banks have raised massive amounts of capital to buy distressed or foreclosed single-family homes, often in bulk, at bargain prices. Their strategy is to convert them to rental units for a while before reselling them when prices appreciate. The Wall Street firms are scooping up properties in the hardest-hit areas, promising high returns for the rental revenue streams—up to 10 percent annually —and starting bidding wars that have driven up some prices well above national averages. It’s the next Wall Street gold rush, with all the warning signs of a renewed speculative bubble.

Since hedge funds have unlimited monies available to them - they can borrow money at 0% interest -, they can pay premium prices for distressed and marginal properties, then tear down a one family home and build 16 apartment units on the same property. This process has been going on for years but now it's at an accelerating rate. There is a snowball effect: the more a neighborhood gentrifies, the higher property values become, the higher rents become. So renters are being priced out of the market. Single room occupancy hotels, the last resort of the poor, are being converted to regular hotels and other more expensive rentals. In San Diego there is much soul searching and hand wringing over the closure of one of the last SRO hotels. Voice of San Diego reported:

City housing officials are rushing to aid dozens of residents who will soon be booted from the downtown Plaza Hotel, the latest historic single-room occupancy hotel set to shut down in anticipation of a redevelopment project.

For the first time, the Housing Commission board earlier this month voted to sink up to $500,000 into relocation assistance for low-income San Diegans who must move out within weeks – a move that a top official there described as “the right thing to do” amid a regionwide affordable-housing shortage.

Despite that assistance, the closure follows a familiar pattern: Low-income San Diegans paying meager rents – in this case, $635 to 780 a month – will be left to find new homes as their small units are demolished or converted into more lucrative hotel rooms or apartments.

Many of the people kicked out of these SRO hotels will inevitably end up on the streets. Rents will skyrocket as a city loses its cheap neighborhoods and the city's neighborhoods gentrify. At least in Los Angeles they have temporary rent control.

The Los Angeles County Board of Supervisors voted 4 to 1 recently to extend—and expand—an ordinance that bars landlords from raising rents more than 3 percent in most apartments built prior to 1995.

Originally set to expire on June 18, the measures will now remain in effect until December 31. That gives county officials more time to flesh out a permanent ordinance, and Supervisor Sheila Kuehl said it would continue to help “prevent people from slipping into homelessness.”

A provision that requires landlords to have “just cause” before evicting tenants was also expanded to cover all rental units in unincorporated Los Angeles, including single-family homes. That primarily means that tenants can’t be booted unless they have not paid rent or have violated the terms of their lease.

It seems that rent control is an idea whose time has come. Without it rents will continue to skyrocket due to the hedge fund money coming into the market and the aggressive stance that these entities are taking in tearing down marginal housing and replacing it with higher priced units.

San Diego’s Housing Crisis: Looking Beyond ‘Build, Baby Build’

From Words and Deeds by Doug Porter, February 25, 2019

Sometimes building more housing stock really just means more investment opportunities instead of more places for people to live…

 

Mayoral Candidate Cory Briggs’s critique of the YIMBY (Yes In My Back Yard) movement is, as I said on Friday, not something we should dismiss as advocacy for the status quo. 

This is not the status quo as a tenet of the Church of Unlimited Parking Spaces, or homeowners believing their property values are endangered by hordes of public transit riders. 

The danger in the city’s rush to spur more housing construction is the probability of ‘same old, same old’ rules of the game applying, wherein the rest of us get stuck with paying for the consequences/impacts of such development. 

In other words, the status quo is exactly what we should be worried about. 

I have long marveled at how the power of the magic hand of the free market gets muddled when it comes to housing. Part of this can be explained by the scarcity of land in big cities. 

Developers would like us to believe they’re mostly building ‘market rate’ housing –meaning it’s affordable by an increasingly small segment of the population– because fees and regulations stand in the way.

It’s also true the current cycle of capitalism devalues labor. Real wages for the bottom 90% or so of the population haven’t kept up with increases in the cost of housing even as productivity increases. 

From 2010 to 2018, median rental prices for a one-bedroom apartment in Los Angeles increased 84%, while median wages during the same period only rose 11%. 

A significant portion of reported increases of income at the bottom tiers of the workforce has come from legislatively increased minimum wages, along with companies grudgingly paying more as a public relations ploy.

But I think there’s something right under our noses we might be missing. Like maybe we have more housing built than we realize.

A night time drive through the canyons of cool looking cribs in downtown San Diego (and other cities) offers some insight in what may be a root cause of our housing crisis.

Did you ever notice how many of those units in newer construction are dark at night? 

Seriously. Drive by older tall buildings around town after dark and see how many units have their lights on. Now drive downtown and make the same survey of newer construction. 

It suggests to me that lots of those condos have absentee owners. They’re bought as investments, not living spaces. And if you happen to be wealthy enough to pay cash, the other costs of ownership are likely less than the probable return from appreciation.

The Treasury Department’s Financial Crimes Enforcement Network is significantly expanding its investigation into whether foreign buyers are using shell companies to buy U.S. real estate in order to launder money. 

Recently, the threshold for additional reporting for cash purchases (including wire transfers and cryptocurrency) in 12 cities around the country including San Diego has been lowered to $300,000. This comes after a pilot study found more than 25% of transactions involved a “beneficial owner” who is also the subject of a “suspicious activity report,” which is an indication of possible criminal activity.

Although the volume of foreign all-cash purchases for high end real estate has fallen since the recession, Chinese consumers have been the top foreign buyers in both units and dollar volume of residential housing for six years straight, according to the National Association of Realtors, and now they expanding to new, lower price tiers.

These purchases aren’t foreign syndicates looking to launder money– overseas (especially Chinese) buyers are increasingly middle class families looking to protect their new-found wealth.

Out of town buyers, according to a recent study, can have the effect of increasing real estate prices (4.9%), rents (8.9%), and decreased local revenue (.34%). 

A solution putting more housing on the local rental market and increasing revenue for localities is to place a surcharge on property taxes for non-residents.  

From a recent article in Fast Company:

When Vancouver passed a tax on homes that sit empty for more than six months out of the year–apartments that serve as pieds-à-terre or investments for the rich, for example–it made a difference: The city recently reported that the number of empty properties dropped 15% between 2017, when the law took effect, and 2018. More than half of those homes went back on the rental market, presumably to avoid the tax. The city also raised more than $38 million, most of which will go to affordable housing programs.

A new study suggests that something similar could happen in other cities–and that in expensive, dense areas where it’s difficult to build new housing, an empty house tax might be an effective way to make housing more affordable. The research focused on London, where housing has become significantly more expensive in the last couple of decades, and where property has become a popular investment for people who live overseas. In the most expensive neighborhoods, the study found, as many as 30% of the housing can be empty or “low use.”

A recent article at CityLab looks at what people in Berlin are doing to address a severe housing shortage and spiraling rents. 

In one of Europe’s largest cities proposals are under consideration for limiting how many units a landlord can own, stopping rent rises for five years, and of re-nationalizing real estate.

As Berliners grow increasingly frustrated with rising rents, there’s a question making the rounds in local politics that could seriously shake things up: Should there be a limit to how much housing a landlord can own?

Following months of intense debate (and some action), the German capital is considering whether landlords with more than 3,000 units should be barred from operating in the city. 

Opinion polls show a majority of Berliners favor such a move, and activists are about to start preparations for a referendum on the subject. If voted through, the plan could give citizens the power to make Berlin’s biggest landlords break up their portfolios, in the hope that this could prevent galloping rent rises and provide tenants with better service.

The proposal is just one of several moves in a city that could be on the cusp of a housing revolution. Over the past few months, the German capital has been trying out several plans to keep housing affordable. In effect, these plans would transfer large sections of the city’s rental homes from private owners to the public sector.

I realize the concept of government taking over real estate is something unlikely to happen in California, even if the GOP thinks we’re trying for a socialist utopia.

However, the increasing concentration of ownership of rental housing by large corporations has to be acknowledged at a minimum. 

The defeat of a ballot measure (Proposition 10) repealing the Costa Hawkins Rental Housing Act allowing cities to expand with rent control was largely financed by by some of the nation’s largest real estate investors, not the mom and pop owners appearing tv ads

None of these alternatives to build, baby build is perfect. What works elsewhere may not work here. 

I’m sure it won’t take much effort to find studies contradicting those I referenced in this post. I still think these are ideas worthy of consideration. 

We need more data, a sense of urgency, and politicians willing to make bold moves, in addition to rational densification.

 

Off the Top of My Head

Homeless Sent From Pillar to Post

by John Lawrence, December 8, 2018

Rains in San Diego forced evacuation of a homeless shelter in Barrio Logan. A little over 2 inches of rain in a day caused major flooding in San Diego. At one point the precipitation rate was 2 inches an hour. This is nothing compared to rainfall totals in some parts of the world. Tropical Storm Harvey dropped more than 51 inches of rain on Houston over a 4 day period. Still with this modest amount of rain, some parts of San Diego were underwater including a tent that was used as a homeless shelter.

The LA Times reported:

Rain and floodwaters Thursday night prompted the evacuation of more than 300 homeless people from a tented shelter in the Barrio Logan area near Petco Park, a shelter official said.

The flooding at the shelter run by the Alpha Project occurred amid heavy rain and a countywide flash flood warning from the National Weather Service. The Alpha Project’s 324 clients — the shelter was at capacity Thursday — were taken to a temporary shelter at San Diego County Credit Union Stadium in Mission Valley.

“It was major flooding — there was nothing that we could have done,” Alpha Project Chief Operating Officer Amy Gonyeau said. “The water was like 3 feet high in places. It was really crazy. I’ve never seen it like that.”

According to the National Weather Service, downtown San Diego received 2.27 inches of rain between 8 p.m. Tuesday and 8 p.m. Thursday.

The homeless are vulnerable to flooding events as they struggle to make do with whatever makeshift possessions they have to make themselves safe and secure. The majority are not in any kind of shelter, but are out in the open. The US and San Diego in particular does not want to put an end to homelessness because that would be an admission that the richest country in the world has people living beneath the poverty level and beneath what was considered the absolute bottom of poverty levels 50 years ago.

There is a solution, however. The Statesman reported:

Austin-based Icon has raised $9 million to build affordable houses around the world using 3D printing.

Icon is partnering with New Story, a San Francisco-based nonprofit that seeks to end homelessness by building sustainable communities.

During South by Southwest 2018 in March, Icon unveiled a 650-square-foot 3D-printed house that took less than 24 hours to build using robotics.

Icon was a winner at the 10th annual SXSW Accelerator Pitch Event, taking first place in the Social and Culture category.

The company said it will use the seed funding to develop robotics, software and advanced materials to further its goal of providing affordable, resilient and sustainable homes to people worldwide.

“It’s our mission at Icon to re-imagine the approach to homebuilding and construction and make affordable, dignified housing available to everyone throughout the world,” Jason Ballard, co-founder and CEO of Icon, said in a written statement.

“We’re in the middle of a global housing crisis and making old approaches a little better is not solving the problem,” Ballard said. “We couldn’t be happier with the team of global investors who are supporting Icon in our belief that the homebuilding industry needs a complete paradigm shift.”

Now this is a creative use of robotics to solve an actual societal problem. What will happen when housing can be build automatically with no labor costs in 24 hours? Let's get on with it. The solution to homelessness is just around the corner. Now as to where to put them ....

Homeless in California from the LA Times

Essential California Send to friend | Open in browser   Good morning, and welcome to the Essential California newsletter. It’s Tuesday, Sept. 4, and here’s what’s happening across California:   TOP STORIES When Los Angeles City Council members vowed to back a minimum number of new homeless housing units in each of their districts, it was clear hitting those numbers was going to be easier in some parts of L.A. than in others. Months later, some council districts have neared or breezed past the number, while a handful remain far from that target. Councilmen Gil Cedillo, Jose Huizar and Curren Price, who represent districts covering downtown, parts of the Eastside and South L.A., have already exceeded the goal. Los Angeles Times — A dramatic photo essay on L.A. landmarks and the homeless. Where do you take visitors in Los Angeles? Wherever you go, you’re almost sure to encounter homeless people. They are fixtures at almost every landmark, part of the landscape that defines the urban expanse. Los Angeles Times   Joseph Fabozzi, 50, lives under lifeguard towers in Long Beach. (Luis Sinco / Los Angeles Times)   — Dealing with the issue of homeless encampments and the brush fire danger. Los Angeles Times — The struggle of having a job and being homeless. One of the hardest parts: Can you tell your boss? LAist — San Francisco is trying a new way to track its homeless population. San Francisco Chronicle

 

Why Normal People Can't Afford a House

From Yes magazine

by Tracy Matsue LoeffelholzChris Winters posted Jun 04, 2018

Off the Top of My Head

Should Billionaires Help to House the Homeless?

by John Lawrence

Wouldn't it be nice if capitalism were modified so that those who are super successful would have their earnings capped at, say, $100 million, and whatever exceeded that went to build affordable housing for the homeless? Is any invention worth a billion dollars? Can anyone spend more than a hundred million? The capitalist system is set up in such a way that successful entrepreneurs attract huge amounts of capital from investors. Are they rich because people buy their products? No, they are rich because rich people buy their stock.

A person's riches should be capped and the excess should be spent on society in general. Society is getting the short end of the stick while rich entrepreneurs get more money than they could possibly spend. A wealth tax would accomplish the same goal. The system as it exists today sucks because it is set up in such a way that the rich get richer, and the poor lose their jobs and their housing. Most of the successful companies today use the internet and automation to eliminate jobs. The more jobs they eliminate, the more Wall Street likes them and bids up their stock.

Then besides this, Trump and the Republicans give them huge tax breaks. The tax burden is borne by the middle class and the poor while the rich corporations buy back their own stock making them even richer.

Bloomberg reports:

Why are people like Bill Gates, Jeff Bezos and Mark Zuckerberg so incredibly rich? Sure, they’re great businesspeople, and they had the right ideas at the right time. But most importantly, when their businesses succeeded, they owned a large portion of the equity.

Equity, or stock, is the riskiest type of asset ownership. It’s the most volatile, and it’s the first to get wiped out when a company goes bankrupt. But it also has unlimited upside -- the gains can, in theory, be infinite. It’s the entire upper tail. So of course the largest fortunes that we see -- the richest individuals -- were made through equity ownership.

But the big payouts to other stockholders are also responsible for much of the vast increase in wealth inequality. In 1980, the richest 5 percent of Americans owned half of the country’s wealth. In 2012, it was almost two-thirds.

Stock represents nothing more than rich people, who have access to cheap interest free money spewed out by the Federal Reserve, spending that money to buy stock which bids up the price. Then they cash in and pay off the loan. Riches are generated not by a company selling goods and services to the general population, but by financial manipulation of stock values. Any sane society would limit these types of activities since they do not further the interests of society in general. The net result is money creation that goes immediately into the hands of the rich making them even richer and in a position to control the political system, setting up the laws so that they favor the rich even more.

Off the Top of My Head

The Road to Serfdom

by John Lawrence

The Road to Serfdom is a book written by conservative Austrian economist Friedrich Hayek in which he contends that socialist type governments will lead everyone down the road to becoming serfs. Well just the opposite is occurring nowadays. The very success of free market capitalism has led us down the road to fantastic economic gains for some and serfdom for the masses. No one is arguing that the Bill Gates', Jeff Bezos' and Mark Zuckerberg's of the world haven't worked hard and made tremendous contributions to economic development. The problem is that the economic gains that people like these are responsible for have not been widely dispersed, but have been concentrated in the hands of a few people leading to an economic divide far greater than that of the Gilded Age and the robber barons.

Imagine if one man invented a robot that did all the work of the world. He would probably be very successful and make a lot of money. But this would also have the consequence that he would have eliminated workers from the face of the world. Therefore, those redundant workers would have no work and no income. Something like this is happening today. The automation of society and the very success of some has concentrated economic gains in the hands of a few people while the former workers have effectively become serfs scraping a few crumbs off the floor.

Economic inequality is accelerating exponentially, and capitalism, not socialism, is paving the Road to Serfdom. The jobs that haven't been automated are low paying service type jobs: retail in the eroding retail industry, baristas for Starbucks, caregivers, teachers, health care workers. While major industries concentrate their power by mergers and acquisitions and stock buybacks, the rest of us get by on menial jobs.

The net effect is that housing and rents get bid up in desirable areas by those on the wealthy side of the economic divide and more and more people are forced into homelessness. The only solution to this lack of affordable housing is for the government to build affordable housing. The free market won't do it. But that's socialism, n'est pas?. What, you think that the free market can't solve every problem? Well, you're right. It can't solve this one. Socialist type government solutions must come into play just in order that the haves can enjoy a downtown area not populated by people pissing and shitting all over the streets and leaving needles for tourists to step on.

Capitalists never fear, however. Mixed economies work the best as evidenced by the Nordic countries which combine entrepreneurialism with a safety net so that no one can fall too far down the ladder. In the US though you can fall as far as gravity will carry you. There is no bottom. So we have a growing homeless class which would have been unimaginable in the days of Lyndon Johnson and his War on Poverty. Those poverty stricken that he was concerned about at least had roofs over their heads.

Off the Top of My Head

Seattle Wants to Provide Affordable Housing for Homeless Paid for by Taxing Amazon

by John Lawrence, May 5, 2018

Seattle, is the nation's 18th largest city, but it has the third highest homeless population. Only New York and Los Angeles have more homeless people. The Seattle government is proposing to build low income and affordable housing by means of taxing big business, Amazon being the most conspicuous. High Tech corporations were supposed to be a panacea, bringing in high paid jobs. But the dystopian effect has been that high paid employees bid up the rents making them unaffordable for those at the bottom. San Francisco and San Jose, Silicon Valley in general, have experienced the same phenomenon.

Amazon occupies more than 20 percent of Seattle’s Class A office space, and has more than twice the footprint of the next-biggest U.S. corporation in any city (Citi’s 3.7 million square feet in New York). Seattle councilmember Mike O’Brien, one of the bill’s sponsors, estimated that Amazon might pay $20 million a year under the resolution, which is projected to raise $75 million next year. In other words, it’s kind of an Amazon Tax. 

Not taking this laying down, Amazon is fighting back. In effect the world's richest man, Amazon CEO Jeff Bezos, is saying, "How dare they tax us?" In a counterpart to the saying, "If you build it, they will come," Amazon is saying, "If you tax us, we will go." They are planning to take their business elsewhere to a more favorable clime, where the taxes are low, and the skies are not cloudy all day.

Last week Amazon reported a quarterly profit of $1.6 billion, but Jeff Bezos doesn't want to spend his profits on housing the homeless. He wants to spend his fortune on space travel, the only enterprise big enough to match his outlandish fortune. He'll literally send dollars into outer space totally ignoring the goings on here at home, on the home planet. Seattle has asked Amazon to take some responsibility for the city's social ills, but Bezos and Amazon, well, they would rather fly the coop. Who needs Seattle when other cities are offering generous tax credits if Amazon will locate its headquarters there?

Slate reports:

But in a good number of cities, the bad old days of abandonment [by businesses] are out of sight, while homelessness, hunger, and poverty remain. If the city’s chief mission is to create a business-friendly environment, it seems that in many places, the mission has been accomplished. Instead, many on the urban left—epitomized by mayors like New York’s Bill de Blasio or Jackson, Mississippi’s Chokwe Lumumba—increasingly see the city as the vanguard of the welfare state. Local initiatives like the minimum wage and sick leave are popular examples of this trend.

But the road ahead is tough: States bar meaningful local action. CEOs continue to make threats. Fragmented metro areas have given companies leverage, even just to move next door. And most corporations have polycentric structures that make them both more flighty than their predecessors and also less appealing as a target for redistribution.

In a way, Amazon’s predicament in Seattle—for now the only place it really calls home—is a callback to the realization that major U.S. manufacturers had after the World War II: Size is an advantage, but concentration is a vulnerability. When automakers downsized and relocated south and west in the ‘50s and ‘60s, they were largely responding to costs imposed by labor, not local governments. But the money-saving benefits of decentralization were the same then as they are now, while the drawbacks—challenges in communication and transportation—have largely evaporated.

Corporations are driven by quarterly profits. Wall Street would shun Amazon if they voluntarily gave up profits to house the homeless. Jeff Bezos evidently has no social conscience. The world's richest man is only thinking about space. Solving problems here on earth has no interest for him.

 

Off the Top of My Head

Ben Carson Exacerbates Homeless Crisis

by John Lawrence, April 28, 2018

HUD Director Ben Carson is doing everything he can to accelerate the homeless crisis by initiating draconian restrictions of public housing. This will force many vulnerable people out on the streets increasing the ranks of the homeless. He is thus hastening the crisis of capitalism which will have to deal with the consequences of a growing proportion of the population taking up residency on the streets of large urban areas. Once the average US citizen starts to take notice of the growing homeless population and the Federal government's deisire not only not to do nothing about it but to make it even worse, people will start to demand that something be done at the Federal level. They will not want to tolerate living in cities where they have to step over the homeless and piles of feces in order to gain entrance to the ball park.

The US currently spends a trillion dollars on its military and military-industrial complex and gives enormous tax breaks to its richest citizens and corporations. So it doesn't have any money left to provide decent services to its population or for infrastructure. The philosophy is that infrastructure that services the rich will be paid for by means of taxes which go to serve local rich populations only, in other words very targeted taxes or users' fees. In this way infrastructure in general can be ignored. The poor and homeless can be treated with benign neglect until their growing numbers start costing more in terms of local police and emergency room services. At some point it becomes more cost effective to address their real human needs.

This is why the next Democratic Presidential candidate should adopt Bernie's agenda which comprises reasonably priced housing, free college and universal health care. They don't have to explain to the average person how they're going to pay for it. The average person only wants to know what they are getting. Fiscal responsibility comes later as long as the Democrats control Congress as well. They sure will offer much more in terms of fiscal responsibility than the Republicans, who have run up the national debt profligately, have.

Housing and Urban Development (HUD) Secretary Ben Carson Leaves People Nowhere to Go

“It is absolutely unthinkable that the Trump Administration’s response to the crisis is to make things worse with draconian rent increases and work requirements.”

By Tara Raghuveer / People’s Action Blog 

75 low-and moderate-income tenants and manufactured homeowners repeatedly disrupted Housing and Urban Development (HUD) Secretary Ben Carson at a speech in Las Vegas on Wednesday, asking, “where will we go?”

Carson’s response? Instead of offering solutions, he insulted poor tenants, saying “This is a perfect example of what happens when the swamp gets ahold of people.”

The disruption took place on the same day as Secretary Carson announced that HUD wants the poor to pay higher rents for public housing, not receive credit for health and child care, and meet work requirements to keep their units.

Carson’s proposals triple the rent for people on housing assistance and require that residents make the money to pay rent by at least 15 hours of work at the federal minimum wage level.

These changes will affect millions of individuals and families, and especially seniors and the poorest residents of public housing who are already ravaged by frozen budgets and budget cuts. The proposal will bring crippling new burdens to the poorest and most vulnerable people – many of whom may entirely lose the already-precarious roofs over their heads.

The activists confronted Secretary Carson inside the Manufactured Housing Institute’s spring meeting in the Paris Hotel in Vegas, and held a press conference and rally outside.

Inside the room, low-income senior Jeliner Jordan was one of those to interrupt Carson’s speech. She asked, “If you increase rents and cut the HUD budget, where will I live?”

“Trump’s lackey Ben Carson demonstrated that he doesn’t care about people like me who he is sworn to serve,” said Jordan, a senior housing resident in Chicago and a grassroots leader with Jane Addams Senior Caucus and People’s Action.

“His words insulted me, and patronized all of us who struggle to pay our rent. His villainous policy proposal today just affirms what we already knew: Carson will continue putting people out of our homes and deepening the housing crisis that is devastating our communities.”

“Today Ben Carson insulted us while telling the corporate investors in attendance that they should keep profiting off the housing crisis. Ben Carson’s job is to help solve the housing crisis for people, not profiteers. We came to Las Vegas today to remind Secretary Carson to do his job,” said Patricia Norberg, a manufactured homeowner from Delaware and a grassroots leader with MHAction. “Corporate and private equity investors associated with MHI say ‘jump’ and Carson says ‘how high?’ We’ve had enough.”

“The nation’s housing crisis has reached emergency levels. A person working a full time minimum wage job, can’t afford a two-bedroom apartment in any county in the U.S. More than half of all Americans spend over 30 percent of their income on rent and utilities, and I’m one of them,” said Kendra Moore, a Section 8 tenant in Los Angeles and a grassroots leader with POWER and People’s Action.

“It is absolutely unthinkable that the Trump Administration’s response to the crisis is to make things worse with draconian rent increases and work requirements. We insist that Congress reject the proposal and we demand a HUD that’s fully funded to meet 100 percent of the real needs of American people.”

“Carson is out of touch and patronizing. He thinks poverty is a state of mind. He needs to do his job and push for a massive reinvestment in community-owned and public housing. We need him to make a true commitment to alleviating the conditions of poverty and the dismantling of the racist structures embedded in our housing system,” said Trenise Bryant from the Miami Workers Center and Homes for All. “And we, those who are directly impacted by the crisis and live with it every day, need to be at the center of the conversation and decisions made to solve it.”

The group, representing a multiracial, multigenerational collection of housing justice organizations from across the country, demanded that Ben Carson turn his attention to the housing crisis that threatens them, their families, and millions of people in America every day.

The group told Carson to do his job to faithfully execute the mission of his department, and to advocate for a radical rethinking of the HUD budget to meet one hundred percent of our community’s housing needs.

Groups participating in the event included: MHAction, People’s Action, CarsonWatch, Center for Popular Democracy, Right to the City/Homes for All, POWER, LA Community Action Network, Long Beach Residents Empowered (LiBRE), Miami Workers Center, Jane Addams Senior Caucus, Progressive Leadership Alliance of Nevada, Make the Road Nevada, Make it Work Nevada, SEIU Nevada, NextGen America, For Nevada’s Future,Make the Road Nevada, Alliance of Californians for Community Empowerment, and New York Communities for Change.

Tara Raghuveer is Housing Campaign Director for People’s Action. This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.

Off the Top of My Head

California Homeowners Make Money While They Sleep While Renters Pay Increasing Rents

by John Lawrence

It's no secret that equity in California homes is skyrocketing while renters pay skyrocketing rents. In an article in the LA Times, A new California gold rush for homeowners, the poorhouse for renters, Steve Lopez writes:

"California was always a model of stark contrasts in the realm of haves and have-nots. But as rents rise and wages stagnate, a majority of L.A.-area renters are paying more than one-third of their income on rent while thousands are paying 50% or more, with no end to these trends in sight.

"Meanwhile, tens of thousands of homeowners in Los Angeles and Orange counties have enjoyed super-low interest rates and seen their equity rise to all-time highs. Roughly one decade after thousands of people lost their homes in the housing crash, 96.4% of Californians with mortgages owe less than their homes are worth."

That's one of the unfortunate aspects of capitalism - uncontrolled price increases. As long as rich people can afford any price for housing, they will not only live in multi-million dollar mansions, they will pay any price to buy up cheaper housing and rent it out. Thus, average wage earners will pretty soon fall into the class of renters because they will no longer be able to afford to buy a home. AND their rents will continue to go up.

Lopez asks: "do those who have prospered owe anything to those who have fallen further behind, including teachers, nurses, laborers and others essential to both our economy and our best definition of community?" I guess not much as government, especially Republican inspired government has as a core principle of its philosophy "devil take the hindermost" or "money talks, shit walks." There is not much sympathy or empathy for those who just aspire to a middle class job and a middle class life style as their parents did. With the financialization of the economy, there is not much hope for those who just do regular jobs, for those who work hard, play by the rules and aspire to home ownership, a secure retirement and sending their kids to college. Those who want to go to college can mire themselves in tons of student loan debt and start out life as debtors. That's the "free market" solution.

There are all kinds of watered down solutions for building "affordable housing" most of which will just enrich real estate developers because government officials don't want to provide it at government (read taxpayer) expense unless some developer can make a bundle off of it. So the short term solution for most people is to just move out of the state to a locale (hint: there are many of them) where housing is cheaper. For government to build affordable housing (read: public housing), they would be betraying one of the primary principles of Ronald Reagan: let the free market prevail. It would be "socialized" housing and America is not about to become socialist even if tens or hundreds of thousands have to live on the streets while those lucky or fortunate enough to have invested in a house 30 or 50 years ago can walk right by them going about their business.

Sacramento Report: Dems Fear GOP Tax Plan Endangers Newly Passed Housing Solutions

from Voice of San Diego

November 10, 2017

0

 

San Diego homes / Photo by Sam Hodgson

California Democrats and affordable-housing advocates are in panic mode over House Republicans’ tax reform bill.

The current version would end separate bond and tax credit programs that helped fund nearly 20,000 affordable units for homeless people, seniors and low-income families statewide last year.

In California, the state has both 9 percent and 4 percent tax credits to allocate through the Low-Income Housing Tax Credit Program. A Voice of San Diego analysis found that the 4 percent credits have helped finance more than 20,000 units in San Diego County over the last two decades.

The program allows low-income housing projects to apply for tax credits and look for investors to buy them. Investors, usually banks, then bid for those credits, thus investing in the affordable housing developments and helping to finance them.

State Treasurer John Chiang, Assemblywoman Lorena Gonzalez Fletcher and many advocates fear the proposal ending the 4 percent tax credit would be a devastating blow to recently passed state measures meant to address California’s housing crisis.

Measures including a $4 billion state housing bond, a law meant to help house thousandsof Californians with serious mental illnesses and San Diego Sen. Toni Atkins’ hard-fought legislation to bankroll housing with a new real estate document fee all count on the tax credit’s existence.

House Republicans’ tax proposal would dash those plans.

The California Housing Finance Agency projects the number of units produced by the state bond alone could be more than halved if the tax bill passes – from a projected 50,000 new affordable units to as few as 15,000.

And Chiang estimated Thursday that California could produce 300,000 fewer affordable housing units over the next decade than initially projected if the bill passes.

Gonzalez Fletcher acknowledged state lawmakers have far more work to do to address the state’s housing crisis but said the tax proposal could cripple efforts already in play.

“It’s devastating to think that all of that political heavy lifting could be for nothing and that we’d be back to square one on how do we inject necessary resources into this issue,” Gonzalez Fletcher said.

Countless homeless-serving nonprofits have also factored the tax credit into their plans for projects meant to house the homeless.

Father Joe’s Villages, San Diego’s largest homeless serving nonprofit, has said its $531 million plan to produce 2,000 new units counts on the tax credit.

“This isn’t just some complicated tax idea that they don’t understand works,” Chiang said after a press conference in San Diego Thursday. “No, this is real. This has local community implications, real-life implications.”

– Lisa Halverstadt

Housing Affordability Crisis

by John Lawrence

San Diego Has Money in the Bank But Refuses to Build Affordable Housing

With money in the bank San Diego refuses to build housing for the homeless or housing the homeless could afford. The most affordable housing used to be the single room occupancy units in downtown, but those have been torn down to make room for luxury high rise condos. Therefore, poor people have been displaced, and many of them have transitioned into homelessness. With rents sky high, typically $1500. for a two bedroom, many cannot put together first and last month's rent plus a security deposit. Landlords can be choosy and decline those with poor credit.

Recently, a Hepatitus A epidemic has broken out among the homeless due to the deplorable sanitary conditions in which they live. No public rest rooms has led to urination and defecation on the streets, the same streets that tourists and residents walk down. This has gotten the attention of the Mayor and the City Council members who don't want San Diego to get a bad rep. Consequently, hand washing stations have been provided as well as keeping some rest rooms in Balboa Park open 24 hours a day. Other solutions have been hurried into readiness such as three large circus type tents and smaller tents on what amounts to a parking lot. I'm sure the homeless will not want to be crowded together in one large circus tent where they probably won't be able to bring pets. The small tent solution, with sanitation facilities and security seems much more copacetic and practical. There at least they will have their own individual domiciles such as they are.

“The county of San Diego is holding over $100 million in unspent Mental Health Services Act funds,” state Sen. Ben Hueso said.

Real estate is one of the central areas of the FIRE economy. That's what the last two letters of FIRE stand for. It's one of the central pillars of capitalism. You don't want the government to build your house for you, do you? That's the sector for private enterprise. Then why are rents so damn high? They're so damn high that people are evicted on a daily basis for non-payment of rent. The homeless population grows. And why is the price of the median house over $500,000? Average people can't afford to buy and they can't afford to rent. So government gingerly steps in to "solve" the housing crisis in California. In other parts of the country rents and housing are more affordable.

So now the state government, being careful not to say that the housing crisis is the fault of the capitalist system running amok, takes baby steps so that it can claim that it is doing something about affordable housing. Their real view, that they won't mention, is that the solution is for people who can't afford housing in California to move to some other state where they can. Half measures and half steps is what government's both state and local are proposing so it looks like they are doing something while not really doing much of anything.

California state bills SB-2 and SB-3 are just token measures to ameliorate the affordable housing crisis. In effect state and local lawmakers don't consider it a crisis. These bills make it seem like lawmakers are doing something about affordable housing while being careful not to impact the "free market." In fact you can't have government subsidized housing except on a token basis without impacting the free market.

Hepatitis A outbreak among homeless a byproduct of California’s housing crunch

From the Washington Post:

 

By Scott Wilson October 25 at 5:51 PM 

A homeless man sleeps along 14th Street in the East Village area of downtown San Diego on Sept. 26. (Sandy Huffaker/For The Washington Post)

SAN DIEGO — California’s exorbitant housing costs are driving a public-health crisis here, as a ­developing-world disease is racing through homeless encampments in cities along the coastThe hepatitis A outbreak in Los Angeles, Santa Cruz and San Diego, long considered a model of savvy urban redevelopment, is the extreme result of a booming state economy, now driving up home prices after years of government decisions that made low-cost housing more difficult to build.

Unlike in some other large U.S. cities, the homeless population in San Diego has been rising sharply, outstripping the local government’s ability to manage its scope. State lawmakers passed more than a dozen measures in the recent legislative session to address the state’s lack of affordable housing, none of which will help resolve the crisis in the short term.

Nowhere is the need more urgent than in this prospering city, where the number of people living on the streets rose 14 percent in the past year, tracing a hepatitis A outbreak that thrives in unsanitary conditions. Health officials believe an epidemic that has infected more than 500 people statewide since March began in San Diego County, where 19 people have died as a result of the disease, nearly all of them homeless.

Extremely rare in the United States, and rarely fatal when it does occur, hepatitis A attacks the liver and causes symptoms such as fever, nausea and jaundice. It is spread when a person ingests food or water tainted by the feces of someone who is infected — that is, it is a virus that stalks the unclean places where the poor are often consigned to live. California Gov. Jerry Brown (D) declared a state of emergency as the result of the outbreak this month.

“An epidemic like this in California — are you serious?” said Timothy Berry, 48, who lives amid the mattresses and tarps lined up along 16th and Island streets outside God’s Extended Hand mission.

Berry lives below the brushed-steel apartment buildings that in recent years have remade this city’s downtown, on streets that crews now power scrub with bleach. Portable toilets and hand-washing stations mark downtown corners in the shadows of buildings where sea kayaks are visible through the glass balconies of $2,000-a-month studios.

The first of three large, city-sanctioned tents opened earlier this month to bring some of the more than 9,000 homeless people into sanitary conditions, at least temporarily. A vaccination program that already has protected more than 65,000 residents continues with guidance from the Centers for Disease Control and Prevention, which has called this outbreak the deadliest since it began tracking the disease in the United States two decades ago.

Paulina Bobenrieth, a nurse with the public health department, gives a hepatitis A vaccine to a homeless man in San Diego on Oct. 4. A hepatitis A outbreak has killed numerous homeless people and sent hundreds to hospitals. (Sandy Huffaker/For The Washington Post)

But the long-term solution is simple and elusive: constructing more housing that those on the streets, and the estimated 500,000 San Diego County residents living a missed paycheck away from homelessness, can afford.

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Off the Top of My Head

No Rest Rooms in Downtown San Diego Plus Thousands of Homeless Equals Hepatitis A Outbreak

by John Lawrence

What did they expect to happen? To be blunt people were living on the streets, the same streets tourists and residents were plodding down, and they were shitting and pissing all over the streets and sidewalks. I say again: what did they expect to happen? People were going to Padres games, spending hundreds of dollar on tickets, food, beverages and merchandise and they're walking over streets contaminated with human and animal waste products. Don't forget a lot of homeless people have pets. They had nowhere to go either.

San Diego didn't used to provide public rest rooms for anybody, much less the homeless. It's just that they couldn't afford to. They spend millions of dollars on everything else, but they couldn't afford public bathrooms. If you couldn't afford to patronize some profit making establishment where you could use the bathroom, you were just out of luck. You had to go in the bushes. That's just what thousands of homeless have done... and the sidewalks.

European cities provide public rest rooms on practically every corner, even the poorest cities. San Diego, by contrast, set up a Portland Loo and then decided that there was too much crime going on there and took it away. Most European public bath rooms have attendants who oversee the operation and make sure it stays clean and safe. Of course San Diego never thought of that. These European bathroom attendants were probably not paid very much, but at least they had a job. Suppose San Diego could afford that?

Now the LA Times reported that Los Angeles County health officials declared a hepatitis A outbreak, days after a public health emergency was announced in San Diego County, where at least 16 people have died of the highly contagious virus. It has been known for some time that the homeless were running up huge bills for taxpayers to pay at San Diego emergency rooms, but that and the extra costs for police were not enough to persuade local "leaders" to provide housing and sanitary living conditions for those who couldn't provide it for themselves. So public expense, public safety and now public health evidently are not enough motivation for the public to do something about the homeless situation. As has been pointed out, the City has the money in various funds, but it won't spend it on housing for the homeless.

The San Diego Union reported:

Councilman David Alvarez, one of the memo’s co-authors, said the city is sitting on “literally hundreds of millions of dollars” it could spend on housing.

“Unfortunately, the mayor has refused to take action on this issue,” Alvarez said. “We are seeing more and more money coming back to the city in the general fund. ... This was intended to be used for more housing and it hasn’t been.

“You’d have to ask the Mayor’s Office why they don’t want to use it for that purpose.”

Katheryn Rhodes and I did a series of articles on money the City of San Diego has squirreled away in the LMIHAF fund and other funds that it is supposed to use for affordable housing but won't do it. Something like $30 million altogether. It seems the Mayor doesn't want his reputation tarnished by catering to the homeless. It would be unseemly. So tourists and downtown residents living in million dollar condos will just have to take the Hepatitis A risk on themselves.

 

Bills on housing costs head to Brown

From the LA Times:

Approval of package aimed at California’s affordability crisis is historic, but unlikely to make a huge dent.

By Liam Dillon

State Sen. Toni Atkins (D-San Diego) receives congratulations from Sen. Scott Wiener (D-San Francisco) after her housing measure was approved by the state Assembly on Thursday. (Rich Pedroncelli / AP)

SACRAMENTO — California lawmakers sped to the close of the legislative session on Friday, addressing one of their signature issues with a sweeping package of bills aiming to address the state’s crippling housing costs.

The bills are an effort to raise billions in funding to help finance the construction of thousands of new homes for low-income residents, while also easing local regulations on home building — a necessary move, lawmakers said, to help middle-class Californians who are now overwhelmed by costs.

“I’ve read study after study after study outlining this crisis,” said Assemblyman Richard Bloom (D-Santa Monica), one of the leading legislators on housing issues. “We’re here to do something about it.”

Three measures, Senate Bills 2, 3 and 35, comprise the key parts of the housing deal. Under SB 2, those refinancing their homes or filing other real estate documents — aside from home and commercial property sales — will pay a starting fee of $75 with a maximum of $225 paid per transaction. The measure is expected to raise about $250 million a year to finance the construction of affordable housing.

SB 3 places a bond measure on the November 2018 statewide ballot with $3 billion set aside to also finance low-income development, and an additional $1 billion for veterans home loans.
SB 35 would require cities and counties to limit environmental, planning and other reviews on land already zoned for a developer’s proposed amount of housing.
Gov. Jerry Brown is expected to sign the three bills.

“This comprehensive approach does what’s long been needed in California — build new homes and improve access to housing,” Brown said in a joint statement over the summer with Assembly Speaker Anthony Rendon and Senate President Pro Tem Kevin de León.

Capitalism Run Amok: The Housing Crisis

by John Lawrence

Real estate is one of the central areas of the FIRE economy. That's what the last two letters of FIRE stand for. It's one of the central pillars of capitalism. You don't want the government to build your house for you, do you? That's the sector for private enterprise. Then why are rents so damn high? They're so damn high that people are evicted on a daily basis for non-payment of rent. The homeless population grows. And why is the price of the median house over $500,000? Average people can't afford to buy and they can't afford to rent. So government gingerly steps in to "solve" the housing crisis in California. In other parts of the country rents and housing are more affordable.

So now the state government gingerly steps in, being careful not to say that the housing crisis is the fault of the capitalist system running amok, with baby steps so that it can claim that it is doing something about affordable housing. Their real view, that they won't mention, is that the solution is for people who can't afford housing in California to move to some other state where they can. Half measures and half steps is what government's both state and local are proposing so it looks like they are doing something while not really doing much of anything.

So now the state government gingerly steps in to solve the housing crisis

California state bills SB-2 and SB-3 are just token measures to ameliorate the affordable housing crisis. In effect state and local lawmakers don't consider it a crisis. These bills make it seem like lawmakers are doing something about affordable housing while being careful not to impact the "free market." In fact you can't have government subsidized housing except on a token basis without impacting the free market.

So what does San Diego Mayor Kevin Faulconer propose? Reducing developers' fees, streamlining red tape and letting people build "granny flats." A free market approach, if I ever saw one, guaranteed to help mainly developers and homeowners with enough money to actually construct a granny flat on their own property. Lisa Halverstadt has run down the various developer incentives in her article Areas of Consensus Emerge Among the Crush of Housing Plans.

While the free market is failing to provide affordable housing in California and state and local governments are providing token measures, the only real albeit unspoken solution is for those who can't afford California real estate to leave the state and go to other states where housing is affordable. So only the rich will be able to afford a really nice climate with plenty of sunshine, no tornadoes and no flash floods. Watch out for those sea level rises though.

 

 

California SB 2 Building Homes and Jobs Act

This bill before the California Legislature is too vague and diluted to do any good.

by John Lawrence

Here's how it starts:

"Under existing law, there are programs providing assistance for, among other things, emergency housing, multifamily housing, farmworker housing, home ownership for very low and low-income households, and downpayment assistance for first-time home buyers."

Well, existing law is so diffuse and vague I wonder how many people are actually being helped. Moreover, the proposed bill is still sufficiently diffuse and vague that I wonder how much of an improvement it represents.

Here's the next sentence:

"Existing law also authorizes the issuance of bonds in specified amounts pursuant to the State General Obligation Bond Law. Existing law requires that proceeds from the sale of these bonds be used to finance various existing housing programs, capital outlay related to infill development, brownfield cleanup that promotes infill development, and housing-related parks."

So they can issue bonds for a whole bunch of vague programs which may or may not help actual people. So what?

OK. Now they get to what this bill is about. Basically it authorizes raising more money for affordable housing. Again it's vague. Exactly how is this money going to be spent and what do you mean by affordable housing? And by the way the only thing this has to do with jobs is that the construction workers doing the actual building will have jobs. Big Deal.

"This bill would enact the Building Homes and Jobs Act. The bill would make legislative findings and declarations relating to the need for establishing permanent, ongoing sources of funding dedicated to affordable housing development. The bill would impose a fee, except as provided, of $75 to be paid at the time of the recording of every real estate instrument, paper, or notice required or permitted by law to be recorded, per each single transaction per single parcel of real property, not to exceed $225."

Then the bill gets a little more specific about how the money is to be spent but not much.

"The bill would, upon appropriation by the Legislature, require that 20% of the moneys in the fund be expended for affordable owner-occupied workforce housing and 10% of the moneys for housing purposes related to agricultural workers and their families, and would authorize the remainder of the moneys in the fund to be expended to support affordable housing, home ownership opportunities, and other housing-related programs, as specified."

So what exactly is owner-occupied workforce housing? Is that as opposed to housing for people not in the workforce? Is it for owners that need help paying their mortgages? Is it for building new housing for new owners? Again the wording is so vague that this could be twisted six ways to Sunday. And why are agricultural workers singled out for help? As opposed to workers in other industries? What's the hook here? If I grow vegetables, am I an agricultural worker? These legislators need to get their heads straight about what affordable housing actually is, how this impinges on market rate housing and what are the criteria for people they actually want help. Otherwise, it will just be another giveaway to developers who are happy to take government money.

The rest of the bill is just a bunch of bureaucratic gobbledygook not worth mentioning here. I really think the government, in this case the California state government, needs to take full responsibility for housing those who cannot afford to house themselves, and this includes homeless people first. As long as developers and other private corporations take their cut, the money raised will not go as far as it would with full fledged public housing, a concept that state legislators need to wrap their heads around.

The Cost of a Hot Economy in California: A Severe Housing Crisis

From Capital and Main: https://capitalandmain.com/affordable-housing-introduction-to-a-crisis-0222

From the New York Times:

By ADAM NAGOURNEY and CONOR DOUGHERTY

JULY 17, 2017

SACRAMENTO — A full-fledged housing crisis has gripped California, marked by a severe lack of affordable homes and apartments for middle-class families. The median cost of a home here is now a staggering $500,000, twice the national cost. Homelessness is surging across the state.

In Los Angeles, booming with construction and signs of prosperity, some people have given up on finding a place and have moved into vans with makeshift kitchens, hidden away in quiet neighborhoods. In Silicon Valley — an international symbol of wealth and technology — lines of parked recreational vehicles are a daily testimony to the challenges of finding an affordable place to call home.

Heather Lile, a nurse who makes $180,000 a year, commutes two hours from her home in Manteca to the San Francisco hospital where she works, 80 miles away. “I make really good money and it’s frustrating to me that I can’t afford to live close to my job,” said Ms. Lile.

The extreme rise in housing costs has emerged as a threat to the state’s future economy and its quality of life. It has pushed the debate over housing to the center of state and local politics, fueling a resurgent rent control movement and the growth of neighborhood “Yes in My Back Yard” organizations, battling long-established neighborhood groups and local elected officials as they demand an end to strict zoning and planning regulations.

Now here in Sacramento, lawmakers are considering extraordinary legislation to, in effect, crack down on communities that have, in their view, systematically delayed or derailed housing construction proposals, often at the behest of local neighborhood groups.

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