If the market doesn't give us affordable housing ...

April 11, 2019 (826 words) :: An elegant way to fix the housing crisis would be to take housing out of the market sphere. Here's one way we could do that.
Tags: housing

This post is day 101 of a personal challenge to write every day in 2019. See the other fragments, or sign up for my weekly newsletter.

I was reading a truly horrifying LA Times article on rising rents in Inglewood, California: One of California’s last black enclaves threatened by Inglewood’s stadium deal. As Angel Jennings reports:

Tomisha Pinson, who lives next door to the new L.A. Rams and Chargers stadium and entertainment complex, received a notice that the monthly rent on her two-bedroom Inglewood apartment would spike from $1,145 to $2,725.

“It makes you feel pushed out, like, ‘We don’t need you guys no more, the upper class is going to be moving in,’ ” said Pinson, 43, a mother of two who takes in foster children.

And some background on why this is happening:

Lack of rent control makes Inglewood an attractive investment opportunity. Owners have been able to jack up rents or kick out month-to-month tenants with just 60 days’ notice. Two-thirds of the city’s residents are renters. About a quarter who live here are older than 55. Many are on fixed incomes.

A little more history here: last November, California residents voted on a ballot measure called Prop 10, which sought to expand local government authority to enact rent control laws. It failed. This is a damn shame, because rent control could be an important tool in preventing this. According to the LA Times piece, the city of Inglewood recently adopted a 45-day moratorium on evictions as well as rent increases above 5%, but this is an emergency measure, pulled out in times of desperation. It won’t do much to help those who have already been evicted, and neither will it alter the housing landscape for those who are already homeless, or who will be once the temporary ban is lifted.

However, rent control can be a very powerful tool. In fact, I would argue that it could function as a transitional policy - a non-reformist reform, even - toward a decommodified housing market (i.e., public housing, where the goal is not profit). You start by setting moderate rent control laws, but then keep pushing for stronger laws, by reducing the capped amount, or expanding the coverage. The goal is to make it hard for anyone - private landlords, developers, companies that manage apartment buildings - to turn a profit simply by providing housing, by dramatically limiting the amount they can charge. If framed correctly, and if properly fought for, this could be a hugely popular policy (who likes having 1/3 of their income going to rent?).

Ah, but then, wouldn’t the lack of a decent profit opportunity dissuade capital from functioning in this sphere - the equivalent of a capital strike in housing? Wouldn’t landlords stop renting and developers stop building if they couldn’t make enough money to make it worthwhile?

Eventually, yes, this would probably happen. But this doesn’t have to be a bad thing - in fact, it could be an opportunity. If private developers simply won’t build, then surely that’s a failure of the market, which makes a strong argument in favour of the state stepping in to build public housing instead. If landlords would prefer to keep their buildings empty rather than rent them out for only a tiny revenue stream, then perhaps the buildings should be taken over by the state and turned into public housing. (The latter is actually how the public housing program started in New York City, by clearing out the existing tenement buildings!)

I got this idea from an article in Catalyst about basic income by David Calnitsky: Does Basic Income Assume a Can Opener?. For Calnitsky, the threat of capital flight could actually be turned into a good thing:

[…] capital flight may become an opportunity to leverage the polity into socialism. Those firms or industries at risk of exit should be scapegoated and specially targeted for nationalization. This brings additional revenue for the growing dividend and serves as appropriate comeuppance for defecting industries […]

In this case, enacting a series of harsh (but gradual) rent control policies could be a way to convert a failing market into a public service. Kind of like collective bargaining, but for rent. We would be using a technique that the right has perfected - i.e., privatisation - only turning it around on its head, in order to maximise public utility over private wealth. It’s like the reverse of what Noam Chomsky has said about the standard privatisation playbook:

That’s the standard technique of privatization: defund, make sure things don’t work, people get angry, you hand it over to private capital.

It’s not as catchy, but ‘publicisation’ could be the left’s response - taking the same playbook but directing it toward a completely different ideology. Clamp down on rampant profiteering; landlords and developers get angry and stop providing housing; then take over the units and hand them over to people who need housing. If the market won’t provide affordable housing, then perhaps it’s time to remove the market.

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