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Tear Down the Ghetto: The Price is Wrong
By Glen Ford
The final crisis of capitalism is no
longer looming: it has arrived with all the mad presence
of a six-foot-seven transvestite at the head of the
parade at the stroke of midnight in Greenwich Village on
Halloween.
Here's the latest criminal enterprise
hatched by the ruling sectors of U.S. society: tear down
all that overpriced housing, the stuff that was only
recently built but can no longer be financed for sale.
No, don't convert it to useful purposes as rental units
or reasonably-priced family homes to satisfy the
desperate needs of millions of families—and of people
who wish they could successfully constitute themselves
as households in this jungle-like environment. Just make
it all go away, with the federal government paying the
bill for the massive destruction.
It is now proposed that the "excess"
housing stock of the United States be knocked down,
bulldozed until a renewed shortage of shelter will
render the housing that survives worth something close
to the prices advertised before the bubble burst.
It has come to this: The U.S. economy
can only heal itself by destroying those few products it
can still manage to create. This is what happens when
pure capitalists rule society, the people with no
connection to actual production of goods and services,
but only to the uses of money, or the recently coined
phrase "moneyness"—stuff that can be made to act for a
while as if it were money. Like the $516 trillion in
"derivatives" that big banks have to hold on to because
nobody knows what's in these strange "instruments"—which
were just as good as money as long as financial
institutions pretended they really were money-like.
At some point, the derivatives will
have to be disposed of, but there's a problem. The
yearly gross product of the United States is only about
$17 trillion, and the entire planet only produces about
$50 trillion in goods and services a year. Therefore,
nobody can possibly bail out ten times the Earth's worth
in derivatives.
But the capitalist fools can
start tearing down some houses.
The Wall Street Journal's
Holman W. Jenkins, Jr., in the April 2 issue, suggests
"using tax dollars to buy and demolish foreclosed,
unoccupied or half-built houses in selected markets,"
thereby driving up prices by lowering
availability. Jenkins points to ghettonomics—government
at its most destructive and least responsive to the
citizenry—as the emerging business model. "In highly
depressed housing markets," Jenkins quotes Federal
Reserve Chief Ben Bernanke, "the worst-quality units are
often demolished to mitigate safety hazards and reduce
supply."
But Jenkins' is not concerned about
safety, only with keeping supply down and price up. For
example:
"Baltimore has been praised for
efforts to keep borrowers in their homes, but little
mentioned is a program of demolition of foreclosed
homes. Cleveland spends $6 million a year to demolish
buildings. Dayton plans to demolish 550 this year. Only
a small mental adjustment is required to begin aiming
these bulldozers at ‘new' homes too. Get over it."
What the misanthropic Jenkins calls a
"small mental adjustment" is actually a
government-subsidized economy of destruction—rather than
production—divorced totally from human needs but instead
dictated by the demands of those who deal in
"moneyness."
"Knocking down surplus homes would be
the most efficient and equitable way to spend taxpayer
dollars. It can proceed experimentally. It can be turned
off quickly when the need evaporates. It would not be a
lesson to Americans that housing debt is not real debt
and need not be repaid. It wouldn't benefit the most
irresponsible lenders and borrowers at the expense of
responsible ones. The housing market would still have to
hit bottom, but the bottom would be higher (and
sooner)," said Jenkins.
"Surplus homes" in a country in which
affordable housing is disappearing. In this same sense,
the problem with New Orleans was "surplus people,"
who have now been scattered and exiled through
a joint public-private-meteorological venture that goes
under the general heading of Katrina. That which cannot
be exploited by the Big Capitalists is, by definition,
surplus.
There can be no doubt of the insanity
of late stage capitalism, its absolute disconnect from
every notion of supply and demand drummed into the heads
of innocent school children during crude early
Miseducation. Wall Street and its servants in government
purposely created a monstrous bubble of grossly
overpriced housing in order to build up debt that would
make it appear that a non-producing society is really
doing things that are healthy and worthwhile. There was
never the slightest chance that the scheme, which
violated every lesson of recent and ancient history,
could avoid absolute disaster. Suddenly, that which was
crazily overpriced one minute was transformed into a
near-worthless redundancy, the next.
Worthless? Well, it's not worthless
to you or me or a host of people we know well, who are
desperate for a dignified place to stay at a price that
can reasonably fit the budget of the median household in
the United States: $35,000 a year for a Black family vs.
about $60,000 for whites. The houses exist, of course,
and many, many more could be built—big ones, small ones,
urban ones, rural ones—but the conspirators that run the
U.S. and much of the world economy solely for their own
benefit can only satisfy their demands for ever-higher
rates of return on investment by two methods: blowing
bubbles until they inevitably burst, and international
theft through direct actions of war or warlike coercion.
By the Wall Street Journal's
Holman W. Jenkins' reckoning, the wrecking balls and
bulldozers need to get to work immediately in much of
Black America, where the subprime lending crisis hit
hardest. If these ghetto houses cannot be financed at
the bubble prices demanded, then they must be torn down,
thus making housing in general more scarce. Soon, with
scarcity, prices will stabilize.
All three major presidential
candidates are on great terms with the madmen of Wall
Street who have brought western "civilization"—which
includes Cleveland and Baltimore—past the edge of the
abyss. We are in freefall, contemplating tearing down
perfectly good houses, as crazed capitalists pile up
human and material debris at the bottom of the hole,
hoping for an acceptably soft landing. But there can be
no mutually acceptable outcome to the current crisis,
because human beings and Wall Streeters have
diametrically opposed goals in life. Humans want some
degree of stability in life, a reasonable chance that
their children will experience a materially, morally and
intellectually better world, and a degree of social
justice that allows people to look one another in the
eye. They require a roof over their heads, under fair
terms.
Wall Streeters want advantage, the
opposite of justice and fairness. We will soon be forced
to go to war with these people. Their notion of surplus
is deadly.
BAR executive Glen Ford can be
contacted at
Glen.Ford@BlackAgendaReport.com
Source:
Black Agenda Report
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Response
The Radical Solution—Knocking
down surplus homes would be the most efficient and
equitable way to spend taxpayer dollars. It can proceed
experimentally. It can be turned off quickly when the
need evaporates. It would not be a lesson to Americans
that housing debt is not real debt and need not be
repaid. It wouldn't benefit the most irresponsible
lenders and borrowers at the expense of responsible
ones. The housing market would still have to hit bottom,
but the bottom would be higher (and sooner).—Wall
Street Journal
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This would be more
of a way to equilibrate prices after all the dust
finally settles rather than a way to fix the current
problem. Driving up prices inorganically would probably
just fuel more speculating.
You know less
than 1/3 of the people who qualify for subsidized
housing are actually in the system because of
bureaucracy, waiting lists and lack of funding etc. If
the money being used to bail out lenders were used to
subsidize renters then there would be exponentially more
occupancy, rents being paid, less homelessness and
myriad other positive effects. Those who paid subsidized
rents would have more money to spend on other things
also. Much of this crisis is because of past bad
economic policies that benefited the wealthy at the
expense of pulling people into the middle class. Wealthy
landlords were created artificially instead of creating
homeownership organically.
As Mr. Ford alluded
to though, these "bubbles" bursting seem to be the only
thing that get the attention of the powers that be to
understand this economy has fundamental problems. All
these artificial value creation mechanisms that led to
the stock debacle of the 90s and this current real
estate crisis are just symptoms of an economy that no
longer creates value and relies on inflationary money
policies and corporate subsidies instead of export
demand growth and domestic job creation to expand the
economy.—Vince
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So it's clear that
the manifest and overwhelming negative of this
plan—there will be fewer houses for everyone to live
in— is less important to Mr. Jenkins than some
prospective gain. I would guess that Mr. Jenkins owns a
home whose value he does not want to see reduced, and
possibly has some personal stake in the stability of the
leveraged financial system around him. This at least
would give a patina of comprehensible avarice to what is
otherwise stark lunacy. This plan is as "efficient" and
"equitable" as my beating up a homeless guy to steal his
quarters.—stonecity
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Those who are homeowners or who are
interested in selling their houses or borrowing money on
their houses, as well as financiers and investment
houses, would seem to profit by creating a housing
shortage, however superficial the process is. So I
expect to hear silence on the matter, if irresponsible
Congress persons bring it to the floor, silence except
from maybe renters, who will find the whole matter
outlandish.—Rudy
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posted 9 April 2008 |
