Public Comment

There are two crises facing the Bay Area. Supposedly. One is a crisis of homelessness, which is the economic production (through inflation and rent increases) of people who cannot afford housing, because they are priced out and are left to sleep on sidewalks and parks. The other is a crisis of affordable housing, which is politically produced by developers, landlords, and city governments that displace people from their homes in an economic environment in which they cannot find housing they can afford. They are either forced to move out of town, or become homeless, sleeping on the streets. It looks like one crisis to me. It is the failure of government to treat them as one that makes them two. 

When the number of homeless people in a city like Berkeley increases, the city has a choice. It can either work with the people, and try to get them past the dispossession and hard times they are experiencing (by finding partial-shelter, providing services, assisting in maintaining encampments, etc.). Or it can send the police. The Choice: democracy vs. despotism. 

Up to now, cities like Berkeley have chosen to just send the police. That is, they choose to help drive the bulldozer of victimization. The victims, the people thus assaulted, have little choice but to move to a different street. And get angry at the hypocrisy of a city that says it cares. Refusing to abandon their humanity, they eventually organize resistance. 

The authority for the police assaults is takes the form of local ordinances. But because these police actions almost always violate the US Constitution (Cf. “There is no law,” Berkeley Planet, July 6, 2019), the ordinances themselves exist as arbitrary, without legitimate foundation. What they also ignore is that the homeless, the victims of this suppression, are nevertheless residents of the city (just like those who are housed). As city policy, it is highly discriminatory toward the homeless. In effect, city policy implies that the homeless “have no rights that a property-oriented society is bound to respect” (to steal a line from the 1856 Dred Scott Decision). In other words, it’s a form of Jim Crow. 

Ironically, the fundamental assumption with respect to housing is not the ignoring of legitimacy but the very prohibition of law itself. The Constitution says, “no state shall [pass any] law impairing the obligation of contracts” (Article I, Section 10.1). Chief Justice Marshall, in 1810 (in Fletcher vs. Peck), interpreted that clause to mean that once purchase and sale were completed; no state government could set them asunder. In so doing, he elevated ownership to a sacrosanct property right. 

In California, that principle has taken the form of what is called the Costa-Hawkins Act. That act simply states that a property owner can set the rent for his property at anything he desires. In one sentence, it renders local regulation of rent levels illegal if without compensation. When Los Angeles passed an ordinance regulating rent levels, requiring “below market rate” units in developments for the benefit of low income families, landlords sued the city, demanding that the city compensate them for the difference between the rent they could collect under that law and what they would have collected if the unit rented at the market rate. The landlords won (it’s called the Palmer Decision of 2009). 

As a result, rent levels have risen enormously in the city of Berkeley (and throughout California). As developers showed they could make a killing by freely boosting rent levels, owners of private houses sought to keep pace with them, and displaced many tenants in order to raise the rent on their units, throwing people out of house and home. The going rate rose to around three thousand bucks a month for a one-bedroom apartment. One would have to earn over $120,000 a year to not be “rent-burdened” (a HUD term). 

The city fails because it cannot give equal protection to renters that it does to property owners. Under property rights, the 14^th Amendment becomes useless. Hence, there is a crisis. 

This crisis is caused by an absence of law, not an absence of housing. There are entire apartment buildings in Berkeley that are empty – closed to occupancy and unused for years. And the government cannot open them. In addition, there are now large, brand-new apartment buildings, built over the last few years, that are still not fully rented. They have “Now Leasing” and “For Rent” signs on them, which means there is a glut of market rate housing. But cities are barred from passing laws by which to give renters equal protection, or any protection at all against rent gouging. That prohibition from protecting tenants is the fundamental economic principle of housing. 

The Costa-Hawkins Act is a perfect example. Its passage meant it was legitimate for the state to pass a law that says that no law can be passed in the interest of non-property-owners (aka renters). That is a statement right out of “theater of the absurd.” 

A vast political crisis arises from the conjunction of that prohibition with the inability of increasing numbers of people to live in this economy. It is an unlivability imposed by property, market forces, and government failure. 

Let’s look a little more deeply into this. 

The majority of residents of a city like Berkeley are renters, as with most cities. The Costa-Hawkins Act prohibits a city from protecting the majority of its residents from being victimized by rent-gouging. That is, it prevents the city from democratically representing the interests of the majority of its residents. It can only act in the interest of a minority, that of property owners (and developers). That is, a law passed by a state assembly makes democracy at the local level impossible. And in doing so, it affirms the priority of property rights over human rights. The democratic principle of equal protection under the law has been rendered null and void. Those dogmatists who still chant “build build” are not only “out to lunch” but also anti-democratic in making common cause with the cause of the problem. The problem is that there is no democracy. In dealing with the homeless, the city is lawless, and in dealing with property owners, the city is divested of its representative properties. 

This is an astounding situation. It makes representation a joke. Both councilmembers and the Mayor are elected by making promises to people in order to get their votes. But once elected, not only can they not fulfill their promises to the majority of the voters, but they cannot even ensure that those to whom they made those promises will not have been displaced and disappeared. The electoral process itself becomes absurd. 

A Resolution? Dream On  

There is a resolution for the affordable housing crisis. It is to building affordable housing. Affordable rent is defined by HUD as no more than 30% of a tenant’s income. The concept of affordability thus implies a breach in economic principle, an enormous paradigm shift. To make rent affordable means to relate rent to the tenant’s ability to pay, and not to some impersonal market. One could no longer say that “the market” determines all. Worse; it would be to recognize that the "market" is capable of killing people (starving them out), and thus must be superseded by regulation. Setting rents in relation to tenants’ income would also resolve the homeless crisis by providing housing that the homeless could afford. 

Unfortunately, this is not possible in a property-oriented society, in which the priority of property rights cancels democracy and its guarantee of equal protection. This fact was the core of the Palmer decision. Government must make up the difference between affordability (30% of a tenant’s income) and what the landlord would get at market rate. That is, providing housing for low income people can only be accomplished through government subsidies. The inability of government to give equal protection to renters makes affordable housing unaffordable to city governments. 

Ultimately, there is no resolution to the affordable housing crisis except an alternate economy. Rent levels can be controlled and related to the income of the tenants only through government-owned housing, or cooperative owned housing. And those structures would work as an alternate form of housing economics only if there was also a form of democratic control – a form of governance that would democratically represent the interests of the tenants. 

The future as imaginary  

Democratic control of housing, as the prerequisite for affordable housing to be real, is a dream in a society in which sanctity of property cancels democracy. Yet property exercises its hegemony and control in reference to a dream-world as well. 

In the Palmer decision, landlords argued (in Civil Court) that “this is what I could be getting out of that apartment if the city hadn’t required me to rent it for less, so the city has harmed me to the that extent, and I want recompense.” For landlords to argue against a city that they would have received specific earnings from renting at market rate, they must imagine the future of their enterprise, and then state it as established fact. They calculate about an imagined future and present it as real. 

This paradigm of raising imagination to the level of materiality is not just a quirk of housing economics. It is now an established international paradigm. With the founding of the World Trade Organization (WTO), and the signing of a number of treaties like NAFTA under its umbrella, the principle of transforming the imaginary into the real was given international legitimacy. If a multinational corporation invests in a WTO signatory nation that has labor legislation setting high minimum wages and/or environmental legislation that required foreign investors to reduce all pollution and despoliation of the land, and those legal requirements reduce that corporation’s projected (imagined) earnings and profitability, then that corporation can hold the host country’s government liable or responsible for its loss of profits. And the WTO set up a special court in which suits of that nature could be filed by corporations against governments (the Investor-State Dispute Settlement court system (ISDS)). In other words, a corporation investing in another country is thus given the right to imagine in advance what its earnings and profit picture will be, and can then hold that host country responsible for its inability to attain that goal. While the proposal to make this paradigm official in the WTO was defeated in Seattle in 1999, it has been included in specific treaties like NAFTA (and was proposed for the Trans-Pacific Partnership). 

Treaties like that make democracy unfeasible for a country hosting corporate investment. Their labor and environmental laws can be rendered overly expensive, to the point of forcing their repeal. Even the US has been sued by Canadian corporations for just such a loss in profits. TransCanada sued over the Keystone Pipeline in 2016, and Methanex sued US when California banned the use of methanol in gasoline. In the case of underdeveloped countries that had little bargaining power against corporate suits, they have had to repeal labor and environmental legislation in advance in order to seek corporate investment. It also means that pollution by corporations (for instance, the release of greenhouse gases) could not be regulated. 

Every corporation has the official ability to transform imagined future earnings into real capital before the fact. 

It is against that kind of pro-corporate international treaty power that major international conferences have been organized, like the Paris Conference on global warming and climate change. Nations (if they were signatory to the WTO, etc.) no longer had the ability to act for the preservation of the planet on their own. They could only do so by changing some of the international rules established by the WTO. 

There is no democracy in a society that sets property rights first. There is no equal protection of people under the law if there is no democracy. There is no ability to supersede an investing corporation’s imagination if there is no equal protection of people under the law. 

By permitting development without giving equal weight and power to the residents of the community to determine the nature of that development, the city allows development to be imposed without recourse. Thus, it discriminates against its own residents. At the same time, it scares the so-called “middle class.” Their only protection against the oppression of corporate capital is to own a house. Otherwise, they find themselves unprotected on an impoverishing rental treadmill. But if they try to enjoy the fact that their property values go up, they also realize that sale of the house to gain control of that value will only make it evaporate. 

Some realize that they should make common cause with the homeless and renters to change the zoning laws to be more protective. Others are simply content to blame the victims. But something more fundamental has to change.