Buy Low, Rent High

 

“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.


The Condition of Laboring Man at Pullman 1894
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.

 

Home of the Brave

 

It’s not easy leaving one home for another one far off, as anyone who has ever done it can attest. If moving thousands of miles away from family and friends is difficult now, when electronic communication allows people to keep in touch, it was even more difficult in past centuries, when leaving behind familiars often meant permanent dislocation without any further contact. The emigrants, particularly if they were poor, had to be brave to make the momentous decision to leave, and then again to establish a new home.

 

Economics and politics are the biggest drivers of emigration, even for those leaving the United States. American government agencies don’t keep exact numbers on the amount of people leaving the country, but estimates over the past twenty years are that the number of Americans living abroad either on a temporary or permanent basis have more than doubled, from four million to nine million. People who live abroad temporarily, but longer term than tourists, are considered expatriates. The status of expatriates is usually fluid, with some eventually becoming citizens in their adopted country, and some returning to the United States.

Richard Redgrave - The Emigrants' Last Sight of Home
The Emigrants’ Last Sight of Home, an 1858 painting by Richard Redgrave (1804-1888).

As hard as it is to pin down statistics on American expatriates, it seems a reasonable inference from the increasing number of articles published online and elsewhere touting overseas retirement destinations that more Americans than ever are deciding to live abroad when they have a fixed, mostly predictable income. For some of these people, the political situation in the United States may play a role in their decision, as this country more and more resembles the banana republics derided in the past, with obscene income inequality, police state tactics employed by the governing class, and the mass of people working in a condition of debt peonage. Many of the countries listed as desirable retirement destinations are in Latin America, and the reasoning among retirees may be that since the United States has come to resemble those countries politically, at least the change for them won’t be that great on that account, and their money will go further.

It’s more complicated than that, of course, because for centuries the United States interfered in the politics and economics of Latin America, which it regarded patronizingly as its back yard. Latin American countries have lately been working to disengage themselves from the most sordid aspects of American interference, with the most extreme example being Venezuela. At any rate, Latin America is popular amongst expatriate American retirees looking to get the most out of their pension dollars. Europe is generally more expensive, with the more dysfunctional economies of southern Europe offering better deals. Southern Europe also offers warmer weather and high quality health care that is on a par with the rest of Europe. American retirees are more likely, therefore, to emigrate to the sunny beaches of Spain than the frigid fjords of Norway.

Director John Huston, an American expatriate for much of his life, in a cameo appearance early in his 1948 film The Treasure of the Sierra Madre, with Humphrey Bogart. The film was about a trio of down on their luck American expatriates in Mexico. Poverty is a miserable existence anywhere, but it causes even more anxiety among those who are adrift from the support of friends, family, and familiar surroundings.
The magazine articles for retirees typically mention a few destinations in southeast Asia, and hardly any spots in Africa or the rest of Asia. Presumably the heavy slant toward Latin America and Europe is because those places offer less of a culture shock to most Americans along with the aforementioned economic advantages and similar political climate. That slant also assumes the major part of the readers are of Caucasian European descent, which is not unreasonable considering American demographics, particularly of the middle class that can afford a comfortable retirement, or at least expects to do so if they can stretch their dollars overseas. Their numbers are increasing.

The propaganda in this country has long been that everyone in the world wanted to come here, and that we could pick and choose who got in. With some quibbles, that was mostly true for a long time. Now that may no longer be the case; now not as many people elsewhere may be attracted to these shores, while more people here may be looking elsewhere. For now, it is the people with dependable income, retirees among them, who are leaving. They are the brave ones, and as the political and economic situation in America swirls down a dark hole, and despite the ever more shrill propaganda about how everything is great, just great, more will surely follow to make their home elsewhere.
― Ed.