Louis Proyect: The Unrepentant Marxist

August 24, 2010

The Housing Question

Filed under: financial crisis,housing — louisproyect @ 3:45 pm

Thousands of people hoping to get federal housing assistance fill the Tri-Cities Plaza in East Point, Ga., on Wednesday. Sixty were taken to hospitals as a result of scuffles and sweltering heat at the shopping center

Among the “entitlements” targeted by the ruling class today is home ownership, something that had been elevated to the same plane as motherhood, the American flag and apple pie in the 1950s. But lately the same kind of “concern” over social security going broke has been mounting for this quintessential symbol of the “American system”.

Robert J. Samuelson wrote about How a homeownership fetish hurt the American dream in the August 23rd Washington Post. Odd to see such a cherished goal likened to leather, bikini underwear and stiletto heels. He states:

In an ideal world, we would discard failed policies. We would trim or end the mortgage-interest tax deduction. We would curtail the GSEs’ loans and guarantees (the promise to repay mortgages that default). The consequences need not be dire. The homeownership rate, already down to 67 percent from its 2004-06 peak of 69 percent, would probably stabilize in the mid-60s. People would save more for down payments. Mortgage rates might rise a bit.

The GSE’s are Government Sponsored Enterprises, namely Fannie Mae and Freddie Mac, that have made cheap credit available, while the mortgage interest tax deduction is one of the primary incentives for buying rather than renting a home. From what I have heard over the years, including from the late Peter Camejo who was my informal financial adviser for a time in the early 80s, this mortgage deduction amounts to found money. At the time I was living in Mitchell-Lama subsidized housing so it didn’t matter that much to me. Now that the subsidy has ended and I am paying $2450 per month, I am more inclined to think about buying something—just when that found money might disappear. Aw, shucks.

The Wall Street Journal reported more or less the same thing on the 20th:

A consensus seems to be forming among policy makers on Capitol Hill: Housing subsidies need to be reduced over the next handful of years.

However, some legislative observers are worried about what that will mean for affordable rental homes.

“I think we’ve not paid close enough attention to rental housing and the advantages of that,” said Mark Zandi, chief economist at Moody’s Analytics.

“Not everyone can or should have a single-family home, and I think government should think more clearly about how it can help with respect to rental housing,” he said.

The matter of rental units came up during a forum on housing finance and the role of government on Tuesday.

Reading such articles summons up the image of a time machine. The pages of a calendar peel off as we head back to the 1930s and earlier, long before New Deal programs convinced working people that American society was the best thing that ever happened to them.

The goal of the ruling class appears to turn the clock back to the pre-WWI period when housing was intended primarily for the well-heeled. In Rosalyn Baxandall and Elizabeth Ewen’s invaluable “Picture Windows: How the Suburbs Happened”, the story of the transformation of home ownership is laid out in popularly written but Marxist terms. (Some of the book can be read on Google.)

Unlike programs such as social security or Medicare, affordable housing would benefit both bosses and workers. That at least was the argument of enlightened segments of the bourgeoisie, including Edward Filene, the founder of the famous Boston department store where I worked briefly in 1973.

In 1925 Filene wrote a book titled “The Way Out” that proposed solutions to what he considered a wasteful class struggle, including a Fordist approach to housing. He urged that houses become as cheap as the Model A, using the technology of the factory floor (Filene believed in Frederick Taylor’s principles) applied to home building. His belief in mass-produced goods and consumption is just the sort of thing that Gramsci analyzed in his prison writings.

Despite fitful attempts to fulfill Filene’s vision, home ownership in the 1920s remained an elite privilege. It was only in the 1930s that the government got involved in making this a reality for the masses. As was the case across the board, the New Deal approach to housing was Keynesian rather than socialist. Construction was seen as a way to stimulate the economy. The Federal Housing Administration (FHA) founded in 1934 was the primary tool to grease the wheels of a stalled economy. The FHA promoted home ownership through low-interest, 30 year mortgages now deemed counter-productive by pundits in the bourgeois press.

Alongside the FHA, the New Deal also established public housing projects of the sort that were more familiar in the European social democracy through the Public Works Administration (PWA). These projects were often co-sponsored by trade unions, such as the Carl Mackley development in Philadelphia that was supervised by Catherine Bauer, the executive director of the AFL. It had swimming pools, tennis courts and a library.

As might be expected, the Republican Party was hostile to such initiatives. After WWII, the USA was at a crossroads. There was a huge housing shortage, affecting many of the soldiers who had risked their lives in Europe and the Pacific. Something had to be done but there were ideological differences about how to do it.

These differences came to a head in Senate hearings on the housing shortage run by the infamous red-baiter Joe McCarthy in 1947 and 1948. Best known for his fascist-like attack on the CPUSA, McCarthy was also determined to block any government program that smacked of “socialism”, including housing like the Carl Mackley project.

Early in the hearings he toured the Rego Park Veterans Housing Project in Queens, NY which he described as “a deliberately created slum area, at federal expense…a breeding ground for communists.” Despite his ultraright politics, McCarthy opted for a solution not that much different from that embodied in Edward Filene’s book and in the FHA, namely a partnership between government and private industry that would kill two birds with one stone: satisfy the yearnings for home ownership by the workers and corporate profits.

McCarthy intimidated witnesses favoring public housing in the hearings just as he would bully Communists in a couple of years. But Anne Alpern, solicitor general for the city of Pittsburgh, used her ten minutes to defend a perspective that is under siege once again today:

I think of Washington not as some foreign power, but as a part of our democracy; and by working together we can establish a better government… We require central planning and that’s what we have in Washington… I believe in a democracy. People are entitled to the right to live and in that is the right to live decently.

The New Deal FHA became the chief instrument through which low-cost housing became available to the working class, but without any commitment to the underlying egalitarian values that some new dealers espoused. This was an FHA that was much closer to the sensibilities of Harry Truman, a red-baiter himself who was after all the sponsor of the first Cold War anti-Communist legislation that Joe McCarthy would use as a basis for further purges.

According to Baxandall and Ewen, this was a FHA that tolerated shoddy housing consisting of “small rooms, crackpot prefab schemes, and shacks resembling emergency war housing.” The home builders associations sided with the FHA and against the public, including the Lustrom Corporation, builders of factory-produced houses made of metal (!) that were lauded in company literature written by Joe McCarthy himself.

With the expansion of the American economy and a steady increase in wages, workers were able to buy bigger and better homes through the use of 30 year, low interest mortgages and a tax break on interest payments. The purchase of houses fueled the economy and everything went swimmingly well until 2008 when the economy ran into a brick wall. Instead of figuring out a way to maintain the standard of living of the American working class, the people who run society are figuring out ways to support the extravagant life style of the people on top—to hell with the people on the bottom as these two items would demonstrate:

EAST POINT, Ga.—The weak economy has expanded the ranks of people chasing the limited number of federal housing vouchers, leading to a surge in applications nationwide and chaotic scenes here this week.

Sixty people were taken to hospitals Wednesday in this Atlanta suburb after a lengthy wait and an angry mob scene in a sweltering shopping-center parking lot. Those treated for heat exposure and injuries from scuffles were among 30,000 people who had lined up for a waiting list for just 455 vouchers to cover part of their rent.

Some camped out for nearly three days in temperatures that neared 100 degrees, including pregnant women, elderly in wheelchairs and people who drove down from New York City and Philadelphia, hoping to get on the waiting list in East Point for Housing Choice, or Section 8, vouchers.

The number of public housing units and vouchers has fallen in the past decade, as public housing blocks have been torn down, costs have risen and federal budgets have stayed flat. Waiting lists for vouchers in most major U.S. cities have been closed in recent years.

Those who make it onto the lists often have to wait for eight to 10 years to receive a voucher, which is a guarantee that a local housing authority will pay a portion of the tenant’s rent directly to the landlord. High unemployment and rising rents have made these vouchers even more of a precious commodity.

Read full: http://online.wsj.com/article/SB10001424052748703321004575427712156175190.html

NY Times July 28, 2010
Conan O’Brien Sells Duplex for $25 Million
By ELIZABETH A. HARRIS

CONAN O’BRIEN has more than 1.24 million followers on Twitter. (As a frame of reference, the speaker of the House, Nancy Pelosi, has about 6,900.) His Twitter bio reads, “I had a show. Then I had a different show. Now I have a Twitter account.”

Mr. O’Brien also had a sprawling duplex in the Majestic, the Art Deco co-op building at 115 Central Park West — but not anymore.

That apartment was just sold to David M. Zaslav, the chief executive of Discovery Communications, for $25 million, one of the highest prices paid for a Manhattan apartment this year.

Onward and upward, Coco!

The apartment was listed with John Burger, a managing director of Brown Harris Stevens, for $29.5 million. Chris Poore, a senior vice president of the Corcoran Group, represented the buyer.

Mr. Burger said he was not authorized to discuss the transaction, and Mr. Poore could not comment either. But according to people with knowledge of the deal, Mr. Zaslav is getting a fully furnished apartment with seven bedrooms, eight-and-a-half bathrooms and three terraces.

Mr. O’Brien was the host of “Late Night with Conan O’Brien” for 16 years before moving to Los Angeles for a brief but dramatic stint as the host of “The Tonight Show.” That arrangement dissolved early this year, and Mr. O’Brien walked away with a $45 million settlement, some $33 million for himself and the rest for his staff.

Later this year, he’ll start a new show on TBS.

Further reading: https://louisproyect.wordpress.com/2007/07/27/the-housing-question/

5 Comments »

  1. Contrast the “entitlement” talk of today with the “ownership society” spiel of the Bush years. No hobgoblins on the right.

    In the early 20th century, weren’t many on the left opposed to mortgages?

    Comment by rojo — August 24, 2010 @ 9:05 pm

  2. Hello,

    Hope you are well.

    Correct me if I am wrong as I am still learning.
    But would not Lenin oppose affordable housing as it would delay the revolution and the total transformation of the state?

    Thanks for the answer to come.

    Love,

    John Kaniecki

    Comment by john kaniecki — August 25, 2010 @ 3:38 pm

  3. John, Lenin supported any and all improvements in the conditions of the working class. I think you need to read Lenin, especially “What is to be Done” to get a better understanding of his approach.

    Comment by louisproyect — August 25, 2010 @ 3:41 pm

  4. Louis,

    Hi hope you are well.

    I am just acquainted with Marxism, Lenism, etc.

    Could you explain the differences. I understand about ‘pure’ Leninists not liking Trotskyites or Stalinists.

    But didn’t Lenin deviate from Marx and Engels?

    My problem is why the Marxists all can’t unify. Surely the fundamental dream of a workers’ paradise is the same.

    Love,

    John Kaniecki

    Comment by John Kaniecki — August 28, 2010 @ 1:12 pm

  5. John,

    The perennial debate between trotskyites and leninism has to do with Leninists’ preference for a statist transition to socialism with the trotskyite belief in raw people power. The trotskyites most always give enlightened criticisms of problematic structures on the left and on the right but there is little in the way of practicality or pragmatism that one can glean from it.

    Comment by jack humphrey — March 29, 2011 @ 7:41 pm


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