Tag Archives: renting

The Good and Bad of Declining Home Ownership

New Orleans       Home ownership rates are declining globally for the first time in one-hundred years, while tenancy is rising.  I have mixed feelings about these trends.

On the one hand, I hope that greater numbers of tenants equals more power in the bargains with landlords, and look to Germany and the rent freezes in Berlin with particular interest.  The optimist says that more tenants means that there will be accelerated construction of decent and affordable units providing better units.  Sadly, I see no sign of that in either Canada, the United States, Ireland, or the United Kingdom.  Construction seems geared to higher income tenancy and condominium purchases, not something that benefits low-and-moderate income tenants and their families caught in the cost squeeze of higher rents.  The Economist touted co-living spaces as an alternative for such families, even as they celebrate the decline in homeownership, but too much of co-living sounds like the familiar marketing strategy for singles-only apartment complexes, except that co-living lacks the swimming pool and your own kitchen.  The price might be right, but I’m not feeling the love.  In the small sample of our 30s-aged organizing staff in England, two have moved to buy a home when they thought they had the chance, and their relationships were stable.

On the other hand, as I worry about the decades long emphasis that ACORN made for families to achieve ownership and the rightness of our emphasis from cooperative spaces in New York City to single-family homes in Phoenix and Houston, I worry that I don’t see any other asset class that allows long-term, multi-generational security and citizen wealth that could serve as a replacement for ownership strategies.  Rent-controlled apartments in New York City offer some of that, but that’s the exception not the rule.  I joked last year with a talented former organizer who bolted our staff in Philadelphia decades earlier when a rent-controlled unit came available in the building where he was raised in NYC, but I understood fully.

Depressingly, I recently finished reading Saving America’s Cities, the story of urban renewal chief Ed Logue in New Haven, Boston, and the Bronx in the heyday of government and foundation financing for housing and development projects for low-and-moderate income communities.  In that brief window of the 60s and 70s before Republican block grants and CDBG funds, housing was built, but at a price.  The author Lisbeth Cohen notes that HUD insisted that buildings be segregated by income.  Logue and his team, despite their personal progressivism, populated their projects at 70% white to 30% minority, worshiping on the alter of stability for these rental developments.  Redlining was curtailed in homebuying but slips into publicly supported housing developments.

You have to have a horse to beat a horse, and as much as we push and demand for more and better rental units, we have to have something that provides potential security for families to compete against the goal, and increasingly the dream, of home ownership.  As the news again heralds more Trump efforts to reduce what’s left of the safety-net, it seems we are forcing people to believe in a broken-down nag, when we need a thoroughbred to win the race.


Marketing and Artificial Profits are Huge Factor in US Inequality

New Orleans       When I first read an email about Washington University’s law Professor Gerrit De Geest’s book, Rents: How Marketing Causes Inequality, I thought, right on!  Soaring rents for tenants are absolutely driving inequality in city after city.  Actually, looking at the book was different, but perhaps more important.  When De Geest is talking about “rents,” he’s referring to the artificial profits that would not exist in a free, competitive market.  The term “rents” original did refer to tenants of course but as the term has aged from economist David Ricardo’s initial argument rents are now a major economic distortion.

Professor De Geest and I talked at length about his argument on Wade’s World recently. These rents or artificial profits in his calculations have grow from 20% of the US economy in 1970 to more than one-third of the economy now.  Most of those artificial profits have been collected by corporations and the rich, and they have put the mechanism to drive these fake profits in overdrive making the economy a rigged game to put it kindly.

De Geest points the finger at seo blog of business schools and the dominance of their constant refrain about marketing.  It would not be too far to state that past simple communication about the existence of a certain product, everything else is designed to created artificial profits for products that are virtually the same.  Certainly, this is the heart of branding, as you can
view here, as a process of convincing consumers that identical soaps, detergents, cars and so forth worth more or less depending on the marketing.   We shared examples from both of our brief experiences working in grocery stores and food supply businesses in our youth.  Working at Luzianne Coffee Company in New Orleans in their warehouse and shipping dock, it was easy to see the exactly same blend of coffee being relabeled for the local market and plain labeled for shipment on a contract to provide coffee to our soldiers in Vietnam.  De Geest talked about a weekly “bonus special” at the store where he was a clerk.  There were no price reductions.  They just moved the items from one part of the store to another.  These are rents or artificial profits, and once you start looking through De Geest’s lens, they are obviously everywhere.

Part of De Geest’s case is that business schools promoting marketing have overwhelmed law schools undergirding regulation and economic fair play.  In leveling the playing field, he is not a fan of taxes, unions, or other potential economic actors because he believes in conditions for an ideal free market, so he’s jaundiced on rebalancing what he sees as one problem for another.  He advocates expanding the country’s anti-trust laws to put some sharper teeth in curtailing some of this, and generally stepping up the role of law and regulation in the economy.  Good luck with that with Congress and the President where they are today.

Regardless, De Geest’s arguments deserve a hearing, and, importantly, they give some names and faces to why inequality is continually expanding and making a myth of any arguments about so-called “free enterprise” being fair.