The State of the Union speech each year is a missed opportunity by an elected official to really be honest and thorough Why is it our political leaders will never solve our societal problems? Here’s why. Plus, a set of proposals that would.
|January 31, 2014||Posted by Edward Dodson under Uncategorized|
|December 31, 2013||Posted by Edward Dodson under Uncategorized||
We are reminded constantly of the accelerating concentration of income and assets into a smaller and smaller number of individuals and households. Thoughtful people understand the threat this poses to the stability of any society. An ideological filibuster prevents a sincere and objective debate over the causes and what ought to be done to redirect our society under policies that strengthen equality of opportunity. The just society is as elusive as ever.
Only by what can be described as herculean efforts by caring people are the impoverished millions in our society not left to starve, not left without access to some form of housing, not left without access to medical care, and, essentially, not left without access to the “goods” necessary for a decent, human existence.
The United States has never lived up to its promise as a land of opportunity. Entrenched privilege has plagued this society from the very beginning. A “rentier class” enslaved some, forced others to work under long-term indenture, turned still others into sharecroppers. And, when the extraction of raw materials evolved into industrial enterprise, rentiers formed company towns from which few workers ever escaped.
We seem to have forgotten just how much of this legacy still exists.
A reprieve of sorts emerged after the Second World War. Veterans were repaid for their sacrifices by subsidies to acquire educational credentials or specialized skills. Millions of new families started in the late 1940s were offered the opportunity to become property owners in the countless new housing subdivisions that changed the landscape surrounding every major city. The post-war boom was not enjoyed by the nation’s racial minorities, however; their struggle for equal protections under the law and some degree of economic opportunity remained out of reach for another quarter century.
What seemed like genuine progress peaked in the mid-1970s, was killed off by years of stagflation, and the past brought forward with the resurrection of institutionalized privilege beginning with the election of Ronald Reagan to the U.S. Presidency.
The struggle continues, but the power of the rentier class is unabated, untouched, and defended by some of the most highly educated members of our society. It might help if one could not obtain an advance degree in economics or political science or law or sociology or history without a thorough understanding of moral philosophy.
|January 9, 2007||Posted by Edward Dodson under Uncategorized|
by Ed Dodson
Every study prepared and commission report issued on the decline of housing affordability identifies regulation (e.g., low density zoning) and other delays in obtaining development permits as primary culprits. What we see across the country is widespread concern, particularly in suburban and rural communities, over the potential problems of environmental degradation, worsened traffic conjestion, increased property taxes for schools and the cost of infrastructure expansion, and loss of open space. Responding to citizen concerns — and sometimes having development proposals rejected because of them – - does add to the cost of housing development. But, what must be understood is that even should such “anti-growth” resistance be substantially reduced, housing will not become more affordable without other very specific public policy changes. A brief examination of how communities develop reveals why even the potential for changes in regulation will exacerbate rather than help make housing more affordable.
The earliest suburban communities spread out from the rail lines linking those communities with the urban center. As public infrastructure was extended beyond the cities, farmland became increasingly more developable for residential, commercial or industrial use. Developers and land speculators bought out many farmers (who often took their profit in increased land values to purchase much larger farms in more distant locations). The developers obtained approval for large subdivisions of homes, and the speculators waited for the price of land to rise ever higher. Beginning in the 1950s, state and Federal subsidies for highway programs expanded accessibility into areas not served by “mass transit.” New communities sprang up seemingly overnight; and, because many speculators continued to hold their sites off the market, development was forced to more and more distant locations — absorbing farmland and open space.
During the 1950s and 1960s, the cost of suburban land for housing, although increasing, was still relatively inexpensive; and, people wanted space between themselves and their neighbors — a luxury few enjoyed as city dwellers. As a result, minimum acre or lot size zoning was adopted to protect the character of suburban communities. Ironically, a secondary reason for this type of zoning was to reduce the potential for overdevelopment. However, as vacant land disappeared (or was being held for speculation), the price of land was driven up considerably and developers were forced to ever more distant farming areas to find land on which they could build houses people could afford.
The tendency for land to increase in value does have limits. Widespread unemployment and recession cause land values to fall like a house of cards hit by a stiff wind. Even when economic conditions are favorable, land prices are subject to downward pressures that include the household income of potential homebuyers, the market rate of interest charged by lending institutions for mortgage loans, the costs associated with actual construction of housing units, and the impact of public policies such as zoning and taxation.
When a developer makes an offer to a farmer, speculator or other landowner for a site, zoning and other development costs are important components in determining the maximum price that can be paid while still looking forward to a reasonable profit. If land prices are rising and the present owner is under little financial pressure to sell, the developer may be forced to pay much more than the development plan can absorb. One way to change the financials is to apply for a zoning variance that would permit a more intensive use of the site (i.e., higher density or high-rise development). When such variances are approved, however, all other landowners will thereafter capitalize this potential for higher density development into their asking prices.
Another public policy with direct and normally negative impact on housing affordability is the property tax. Most communities do a very poor job of assessing undeveloped land to reflect increases in market value. Housing, on the other hand, is heavily taxed, taking homeownership out of the reach of many families who might afford a basic mortgage payment but cannot afford the extra $100-$300 a month in property taxes. If the annual cost to landowners of holding land equated to its annual increase in value, far less land would be held for speculation and the price of land would stabilize and gradually decline. With more landowners offering their land for development, the costs associated with site improvement (i.e., bringing in streets, utilities, sewer and water lines, etc.) would be absorbed by landowners in the form of lower prices. Herein lies the key to housing affordability.
Back to the Provocative Essays page
Back to the Center for Economic Justice main page
|January 9, 2007||Posted by Edward Dodson under Uncategorized|
Housing — Still a Huge Challenge for Humanity
What right to housing?
Although we oppose socialism, it’s healthy to be aware of information from a wide range of sources. Here we have a socialist guest writer analyzing why, in this modern age, a simple human need such as housing is still so darn difficult to meet.
See if you can find some areas where you agree or disagree with this perspective on housing. This article originally was posted at the Socialist Party of Great Britain web site and appears here with permission of the author.
by “Red Deathy”
Every week we are treated to the latest front-page-filling concern for the paid scribblers of the capitalist class. The current crisis is concern over the spiralling cost of housing. In recent weeks, we have had announcements by banks, such as the National Westminster, that they intend to withhold mortgages on houses in certain post-codes (mostly in London), for fear of a burst in the house-price bubble. Simultaneously, on 7 February, we were treated to a round of reports about the average house price exceeding £100,000 in Britain. At the root of all this is the continuing inability of the market system to provide for even this most basic need of a human being, a place to live.
Over the last century, the structures of home ownership in Britain changed dramatically, from a situation where most people rented their home (with an average of 4 people per household), to a situation where the majority of homes are privately owned by their occupiers, with the famous 2.4 people per household. As the population of the UK grew by some 50 percent in that century the number of houses tripled. Since the 1970s the numbers in rented accommodation has steadily fallen, and now represent only 8 million out of 25 million households. Over that century, we saw numerous initiatives from rents controls, to council houses and housing associations to try and ensure proper provision of housing, none of which worked over the long run.
In the aftermath of the Thatcher regime, housing has been left almost exclusively to the open market, with councils at best being able to cut deals with developers to build social housing in exchange for planning permission on lucrative projects. Between 1988 and 1996 production of new houses fell yearly (especially compared with the simultaneous clearance of slum housing stock). In 1988 a net gain to the housing stock of 234,500 houses was made, compared to net gain of only 178,000 in 1996. This fall can be seen more clearly in the general reduction in output (in terms of raw materials for houses) of building products over the same period, with bricks being the best example, falling from 4,654,000 tonnes in 1989 to 2,939,000 tonnes in 1999.
Much of this malaise will be due to the falling investment by the state. In 1988 the state (central and local governments) spent a total of £5,273 million on housing expenditure, this plummeted to £2,825 million in 1999. Some of that fall was achieved by transferring housing stock from the public to the private sector in 1999. As has been noted in the columns of this journal before, the state is currently in the processes of divesting itself of as much capital as possible, hoping to transfer it into the private sector where it can be both valorised for profit, and used in a capitalistically more efficient manner. This has obviously, though, had some knock-on in terms of building of new houses.
This is particularly so with regards to being unable to manage the demand thrown up by the uneven nature of the market system. Given that workers must migrate to where they can find work, in some areas, such as London, the cost of houses is much higher than in areas of low employment, such as Hull. As the labour time that goes into their building and maintenance will be about the same, the difference is the price of the land on which they are built. What this illustrates is the difference between the cost of the house itself and the cost of the land it is on.
In an agricultural economy, the rental value of the land would be derived from the differences in the quality of the soil. That is, land which could produce more, say, grain per hectare per hour of labour would give up a higher rental value than the least productive land (that is, land which could be exploited only for the given rate of profit in the economy). This remains partially true of land for industrial use. In the big cities, such as London, however, there is not the remotest chance of returning the land to agricultural use, and so it becomes human geography that provides land an income, from firms wanting office space, or volumes of people (with particular disposable wealth to hand) wanting housing.
Rent is derived not from any inherent feature or use of the soil, but solely through the titular owners’ parasitic capacity to prevent capital from being invested in an area without them being given a share of the surplus value generated (usually any in excess of the average rate of profit prevalent in the economy). This capacity is derived solely through their possessing property rights legally enforced upon others. The price of land itself, not being a product of labour, is calculated by taking the income it can generate and projecting it as a rate of return on capital over a number of years (so land that, say, generates £1 million rent per annum at a rate of 10 percent would have a nominal value of £10 million).
This is, in part, recognised in the national accounts, in that the subsoil value of land is now listed alongside computer software patents and electromagnetic spectrum rights as non tangible fixed assets. It is not the quality of these things that creates their rental/asset value, but merely proprietorship over them.
Pressure on wages
In recent years as part of the property owning democracy gimmick government policies have tended to encourage workers to buy houses and use them as a form of savings and investment to try to climb the property ladder. This increases the number of housing transactions (as some people speculate), and also means that the government is locked into policies which must attempt to ensure the continuing appreciation of house prices (or which at least prevent negative equity).
According to the Office of National Statistics, in 1998 the average person was paying 17 percent of their gross income on housing costs. Obviously, that is a percentage of wildly differing incomes, so the top 10 percent of incomes would be paying £120.80 per week on housing, whilst the lowest would be paying £19.80. Even then these figures are somewhat deceptive, since many of the lower income households were only meeting their full housing cost of an average of £59.40 per week through housing benefit (which is tapered to achieve the 17 percent cost).
This means that any increase in demand for housing due to labour migration, or other events outside a general rise in wages, will increase the share of wages needing to go into housing, and thus create upwards wage pressure. An example of this is the current plan to raise the London weighting on salaries from £2500 to over £4000. This effectively means a potential transfer of wealth from productive capitalists to landholding ones (as well as some of the financial intermediaries involved). Given that the workers could press for higher wages (thus cutting profit rates), to off-set these rises in housing costs, unlike employers landowners have no direct interest in holding such costs down. Since the employers need their workers and during periods of growth, more and more workers – they have to surrender this indirect tribute to the landowners.
This is why capital was once willing to accept rent and housing market controls to prevent the landowners taking its profit. Hence why, now, the state pays a portion of rent to smooth out the proportion of wages spent on housing. Given, though, the size of the housing benefit budget, and the notorious capacity of landlords and tenants to make fraudulent claims, the state is under pressure to curb even that mechanism for taming housing costs.
What all this means is that the anarchy of capitalist production with its self-seeking economic agents, periods of boom and slump, its uneven migratory population pressures creates a clear contradiction between profit seeking and providing for human needs. In a world in which everyone could be easily housed, even in a country like Britain we find millions leaving in what even the government classifies as housing unfit for human habitation and actual homelessness on the streets, while nearly everyone has financial worries over satisfying this basic human need.
What’s your opinion? Should governments do something, or stay out of the way? How can we reach a society where housing is easy for all to obtain? Tell your views to The Progress Report!
|January 7, 2005||Posted by Edward Dodson under Uncategorized|
Housing High, Wages Low
Report Finds Gap Between Wages, Rent
by Jennifer Loven of the Associated Press
The average U.S. worker must earn at least $13.87 an hour, nearly three times the federal minimum wage, to pay the rent on even a modest two-bedroom apartment, according to a private study released Tuesday.
As in the past, the annual “Out of Reach” report by the National Low Income Housing Coalition found there is no jurisdiction in the country where someone working full time at the $5.15-an-hour federal minimum wage can afford an apartment. This year, the analysis concluded the gap between a minimum-wage salary and the cost of housing grew faster than before and widened virtually everywhere.
The Washington-based advocacy group favors increased federal spending on affordable housing and raising the minimum wage. [Others, including the Progress Report, favor removing unjust distortions of the economy that make housing artificially scarce and wages artificially low. We need justice and a level playing field, not government handouts.]
“Housing is the beginning, the foundation, the stability that people must have to go to work each day, send their children to school, arrange transportation and child care, and generally succeed in life,” the report said.
Sen. Jack Reed, D-R.I., chairman of the Senate housing subcommittee, said the report shows the shortcomings of federal policy including years of declining federal funding for affordable housing.
“It would seem self-evident that if one goes to work every day and collects a regular paycheck, that should be enough to secure a reasonable place to live and take care of one’s family,” Reed said.
The study is based on the Department of Housing and Urban Development’s determinations of fair market rent” in 3,779 states, counties and metropolitan areas. Each jurisdiction’s “housing wage” was then established by calculating how much a person would need to earn per hour to pay no more than 30 percent of income for those rents.
HUD considers housing affordable when it costs 30 percent or less of gross income.
The national housing wage of $13.87 is less than the $16.97 an hour the average fulltime U.S. worker earned in 2000, according to a Bureau of Labor Statistics report covering nearly all American employees or about 125 million workers.
But it is far more than the federal minimum wage of $5.15 an hour, earned by 2.7 million people in 2000.
Workers in California and the mid-Atlantic region of the East Coast needed the most income to afford a modest two-bedroom apartment, while those in Puerto Rico and much of the Deep South needed the least, the report showed.
In one third of all jurisdictions, the housing wage is more than twice the area’s minimum wage meaning a family needs at least two full-time minimum wage earners to afford even the most modest rental housing. Ten states and District of Columbia have set minimum wages above the federal figure.
And while most minimum-wage standards did not rise, the housing wage increased everywhere but Madison County, Missouri, the report found.
The study examined data from all 50 states, the District of Columbia and Puerto Rico, as well as from all metropolitan areas and counties or, in New England, towns.
On the Net: The report can be found at http://www.nlihc.org/oor2001/
What’s your opinion on the costs of housing and what should the USA do? Tell your views to The Progress Report!