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Housing for the people

George Edwards

American author Laura Gottesdiener has posed a question that is at the heart of campaigns for public housing being waged in various countries today (including the USA) as banks buy up more and more housing stock: “Can a society truly be a democracy if housing is not considered a right?”

So-called “property developers” have been joined by equally predatory private equity “investment companies” all of whom see housing not as a right but as a guilt-edged opportunity to make profits, by trading on people’s need for a roof over their heads. In the process, they are buying up working class housing, expelling the former residents and “gentrifying” the area in order to attract middle-class people as either tenants paying higher rents or as purchasers able to pay profit-driven prices.

This is a phenomenon seen all over the capitalist world but predictably is most visibly evident in the heartland of capitalism, the USA. As public advocacy group the California Reinvestment Coalition (CRC) notes: “The volume of these investor purchases of property is unprecedented. Since 2012, large investment companies, mainly private equity firms, have raised and/or invested $25 billion to purchase as many as 150,000 single-family homes throughout the United States.”

CRC unites over 300 organizations across California alone to advocate for public and (naively, in my opinion) corporate policy that “advances economic justice and equity”. Surely they must be aware that economic justice is hardly a prime concern of capitalist corporations?

Be that as it may, CRC points out that “from 2013 onwards, Wall Street has issued more than $8 billion of securities tied to almost 60,000 homes owned by companies such as Blackstone, Colony and American Homes 4 Rent. These securities are similar to the [infamous] Wall Street subprime securities that fuelled the housing crisis.”

American investigative reporter Aaron Glantz has written a new book which exposes the predatory, self-serving practices of key members of the Trump administration when it comes to housing policy, including Treasury Secretary Steven Mnuchin and Trump associate Tom Barrack, founder of Colony Capital, Inc. Its title doesn’t leave much to the imagination: Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream.

As CRC observes, “Following the foreclosure crisis after the 2008 housing bust, Wall Street speculators bought up foreclosed properties, seeing an opportunity to make big profits off the suffering of others. Private equity firms like the Blackstone Group and Barrack’s Colony Capital purchased tens of thousands of foreclosed properties that had been previously owned and lived in by families. What were once opportunities for people to own homes and build wealth, have become rental empires for the wealthy to squeeze profits from working families.”

Here’s a statistic to consider: nine large Wall Street firms together are the absentee landlords of more than 200,000 single family homes in the US.

Comments CRC: “It is now more difficult than ever to buy a home as these corporate landlords swoop in, and it follows disturbing trends that disproportionately impact low-income communities and neighborhoods of color.” Racism, as we all know, is very much alive and well in “the land of the free”. Aaron Glantz reported in the journal Reveal that Black applicants for home loans were denied home loans at significantly higher rates than whites in 48 US cities, Latinos were denied at higher rates in 25 cities, Asians in nine cities and Native Americans in three.

Nevertheless, CRC frankly admits that they know “it’s unrealistic to expect corrective action coming out of Trump’s Washington. This administration has chosen to go in the other direction — proposing to make it even harder to prove discrimination in housing and lending. President Trump has appointed his real estate cronies to key posts in his administration, overseeing much of the US economy and ensuring that it’s tilted to benefit the wealthy few.” They include banker Steve Mnuchin (OneWest/CIT) as Treasury Secretary, Wilbur Ross as Secretary of Commerce and Joseph Otting as bank regulator. These are the very people who have been responsible, as CRC notes, for “displacing our communities and throwing people out of their homes over the last 15 years”.

Naturally, given the similar economic make-up of the two countries, many of the campaigns being waged by American housing advocates are equally applicable in Australia.

These include pushing for the imposition of speculation taxes and vacancy taxes for homes that “remain in the hands of corporations, yet sit empty in our neighborhoods”. That would certainly stir up the property speculators! Almost as much as another of their demands: rent control. We used to have rent control in Australia. I used to work with a chap who lived in a rent-controlled flat in the well-to-do Sydney suburb of Double Bay. He could not possibly have afforded to live there if his rent had not been kept by law well below what “the market” would have charged!

Needless to say, tenants – people who were not property owners − were all for rent control; on the other hand landlords – people who think the public’s need for shelter is merely another opportunity to make a bundle − were bitterly against it. Curiously, it was their view that prevailed with capitalist governments in Australia. Now why does that not surprise us?

If housing is a right, as we said at the beginning of this article, then it follows that it cannot be left to the discretion of profit-hungry corporations to provide housing for people. One of the first acts of the new Soviet government after the Bolshevik revolution of 1917 was to eliminate private ownership of housing. Before the Revolution, the rulers of Russia had not been bothered by whether their “subjects” had somewhere to live. Poor peasants often had no housing at all; instead, they had to dig a hole in the ground, cover it with branches, and live there!

In fact, a crushing housing shortage was one of the most severe problems the new Soviet government inherited from pre-revolutionary times. Solving it took a couple of decades of extreme hard work and sacrifice, but by the late 1930s they were able to declare it licked! Then came the War and the complete destruction of not just thousands of towns and villages, but entire cities. To cope with the two successive housing shortages (post Revolution and post WW2), the Soviet government had the benefit that in the USSR, all housing was owned by the state and was made available as rental property, and most importantly rents were fixed as a percentage of your income – a very low percentage.

But that was in the days of Socialism, when the idea of turning a right into a commodity was anathema. Capitalism, of course, operates on the opposite principle: if it’s not capable of becoming a commodity it’s not worth having!

Working people, however, know that turning their rights into commodities, at the mercy of the “market”, benefits no one but the boss and the financial speculator. In the 19th century, as capitalism developed, working class communities grew up so that workers would be handy and able to service the centres of industry and commerce. In other words, working people lived close to their work. The result was the growth of cheaply made housing for working people, especially in inner city areas.

These small, grimy dwellings often lacked basic amenities including indoor plumbing, but they were, perforce, close-knit communities whose members depended on one another. However, in the second half of the 20th century, property speculators combined with well-meaning social reformers to promote the benefits of “slum clearance”, replacing admittedly sub-standard housing with modern dwellings. Too often, unfortunately, their concentration on the physical form of the housing lost sight of the vital importance of the human element.

Entire inner-city communities were uprooted and dispersed. In Britain, vast tracts of former “workers’ housing” were simply bulldozed and on the bare, windswept spaces left behind, tower blocks were erected, in which the residents were not only alienated from each other but even from the district itself.

Surprisingly perhaps, no less a person than Prince Charles was moved to write an excellent and highly critical book about this destruction of communities and the socially stultifying effects of confining people in the ugly, soulless residential blocks that in England are incongruously called “estates”. In Australia and the USA, instead of wholesale demolishing of inner-city working class housing, it has often been “gentrified”: renovated, and converted into upmarket pads for middle class professionals and the like. The former working class tenants could no longer afford to live there even if they were allowed to return.

The one major instance where this syndrome was not dominant was during the time of the Whitlam government, when DURD – the Department of Urban and Regional Development – took over the Glebe estate in Sydney and carried out a wholesale yet sympathetic renovation of the whole suburb. But we all know what happened to the Whitlam government, don’t we?

Everywhere else, gentrification for profit is the order of the day. Workers are obliged to move to the suburbs and spend much more time travelling to and from work. Affordable housing activists in the USA and Australia are engaged in a similar fight: to stem the tide of housing displacement, to win people the right to stay in their homes and to stop profit-driven practices that displace residents and fuel neighbourhood gentrification.

Paulina Gonzalez-Brito, the executive director of CRC, says of the banks and “property developers” who are busy making money out of people’s need for housing, “These modern-day robber barons have tipped the scales in their favour at the expense of working families; it’s time to tip them back. We must halt Wall Street predation on families struggling to keep a roof over their head.”

Gonzalez-Brito refers to “Wall Street predation” as though it’s a peculiarly New York (or at least, American) phenomenon, but we know that preying on people’s basic needs is fundamental to capitalism everywhere. However, even under capitalism, if the working class and its allies unite to fight for their right to decent affordable housing they can of course with much effort achieve great improvements, and this is a struggle that not only meets people’s needs but focuses attention on just who the system serves. As such, the struggle for your right to “a home of your own” − whether owned or rented − is a significant aspect of the struggle for Socialism. One more reason to fight to change the system!