Diary of a Walking Butterfly

The City of Detroit and the Agricultural Adjustment Act (a New Deal program that funded the demolition of farmers’ “excess” crops) are “two important precedents” that the federal government should keep in mind when considering “solutions” to the housing crisis, writes Noah Johnson of Merrill Lynch Wealth Management in Pasadena, California to the Financial Times this week (“Demolitions would boost US housing market”, Thursday, 27 October 2011). Lawrence Summers, director of the president’s National Economic Council and former Treasury Secretary under Clinton, “is correct… that the housing market is the single largest drag on the US economy”, says Johnson, “but his solution is too technocratic”. Rather Johnson thinks that “America’s housing situation needs a bold policy that is easy to understand” (emphasis added).

The U.S. should “buy these developments for 70 cents on the dollar” proposes Johnson, “then instead of renting them they could level them”. Such a program would be also highly labor intensive, Johnson claims, as it would require many construction workers. But Johnson fails to mention these would be extremely short-term jobs, likely without benefits. He also fails to point out the contradiction between advocating government intervention to rescue a capitalist market - in this case the housing market – through a “jobs program” and more logical answer of simply giving the “excess” supply to people who need it. Both would be forms of planned government intervention, but only one option – the profitable option! – is acceptable to the cannibals who run society.

For a “financial advisor” like Johnson, bulldozers are much easier to understand than any “technocratic” tinkering. The federal government should demolish empty homes and high rises to cut down on “excess supply”. “Excess supply”, of course, doesn’t mean that there are too many homes and apartments to fill – just like “excess supply” of farm crops during the Great Depression didn’t mean that bread lines were a thing of the past. Rather it means there are too many homes and apartments for housing prices to remain at rates acceptable to ruling class bankers and owners. The millions of people in this country – and around the world – who (try to) sleep every night without a roof over their heads or a warm bed to comfort them are irrelevant to the rulers of society, so long as those people don’t make enough money to afford to pay them a rent or a mortgage.

Such is the type of irrational system capitalism is. Even though there is enough food for everyone, people starve. Even when there are enough houses for people, there are still people who are homeless. Rather than put “excess” food in hungry people’s mouths and fill “excess” housing with people who need homes, it is far better, says a Merrill Lynch representative like Johnson, to destroy that “excess”. Better to drive up the prices to increase returns for the richest people in society, than to make sure everyone gets what they need. Ruling class profits taking precedent over human need is the central, constantly reoccurring theme of capitalist society.

“The last advantage is that with the visibility of this project”, Johnson claims, “comes the opportunity for great publicity. What better way to show bipartisanship than to have John Boehner and Barack Obama with sledgehammers taking the first swings at an empty tract home in Bakersfield?”

Does this not reveal the utter disconnect between those who control the wealth of society and those who make it? Kicking workers out of their homes is fine for Johnson, even joyful publicity, a change to drive up investor confidence and get rid of “excess” supply. Making sure people are clothed, and housed, and fed, on the other hand, is a nonstarter. This is the type of bipartisanship that the capitalist class loves: Democrats and Republicans working together to keep people homeless and hungry.

Further Reading:

“The Housing Question” by Friedrich Engels, 1872.