2008 Financial Crisis

"Only one in four households that is income-eligible for federal housing assistance receives any. The annual cost to taxpayers of the federal income tax deductions for home mortgage interest and property taxes, which mainly benefit relatively affluent households, is double what the government spends on all lower-income housing programs combined." — Stockton Williams, executive director of the Terwilliger Center for Housing at the Urban Land Institute. On February 28, Oregon Governor Kate Brown signed into law a statewide rent control bill, the first of its kind in the nation. The provisions of the bill put a cap on yearly rent price increases at a percentage above inflation, and do not apply to all rental units. Tenants' rights groups believe the bill is better than nothing and puts an end to price gouging in a tight housing market, and they will continue to push for a more comprehensive bill in the future. Political cartoon from the Chicago Labor newspaper from July 7, 1894, showing the condition of the laboring man at the Pullman Company. The 1894 Pullman Strike was a pivotal event in redressing the imbalance between labor and capital during the first Gilded Age. In the current second Gilded Age, weakened labor unions have had difficulty increasing wages for members, and the ad hoc affiliation Fight for $15 has achieved piecemeal success. Arguments over whether rent control laws really work in favor of tenants go back and forth between the usual advocates for the free market on one side and advocates for at least limited government intervention on the other. "Supply and demand" is the linchpin for argument. Points less noted are low wages and income inequality, as in too many people have too little money while the rich continue accumulating more for themselves. And with more money comes more power in equal measure. Free market arguments ignore how over time the rich, with help from their friends in government, put their thumbs on the scales of capitalism, creating an ever more favorable environment for themselves. To conceal from the lower classes how they are being preyed upon, the rich and their enablers in academia and government concoct formulas such as "a rising tide lifts all boats", and "trickle down economics". The Earth is not an infinite place with infinite resources, however, and even if it were, the rich in their greed would still grab for themselves with one hand while swatting the lower orders with the other hand. In their pathology, it's just as important that others haven't enough as it is that they have too much. The same Wall Street financiers and speculators who created the housing bubble and consequent financial crisis in 2008 are responsible for skyrocketing rental prices around the country. None of them went to jail or were even indicted and prosecuted, and they were free to take advantage of the mess they had created by using their wealth to buy up property at rock bottom prices, helping themselves to favorable government regulations they themselves had largely written. That is more than just putting a thumb on the scale, it is sitting on it like a fat cat. It's not unusual for the rich to profit off an economic downturn because they have the money to buy when everyone else needs to sell to have any money at all. This latest example of the rich getting richer has simply been more blatant and egregious than in previous financial crises. A World War II era sign declaring rent control rules in some localities, a program administered nationwide by the Office for Emergency Management during the war and for several years afterward to prevent price gouging. Conservative pundits are likely to denigrate rent control laws as socialism, while praising the free market ideal of supply and demand in the housing market for setting rental prices. The problem they choose to ignore, or are possibly even ignorant of, is that the free market ideal has been a dead letter for a long time in America, if it ever actually existed outside of economics text books in the first place. What we have now is a crony capitalist system run by corporate and financial oligarchs who bend government regulations in their favor. They write the rules to benefit themselves. They ran the housing market into the ground, and then scooped up everything at bargain prices and started charging sky high rents. If renters balked at the high prices, it didn't matter, because they had no other options. Meanwhile, the building industry limped along, maintaining the housing shortage that keeps rents high. Supply and demand economics of, by, and for the fat cats. — Ed.

2008 Financial Crisis

Buy Low, Rent High