Tagged: Economy

Your First Week of Econ 1 Won’t Solve the Housing Crisis

No-Monster_City-Hall-770x332

San Francisco has become a flashpoint in the national political battle over eye-popping rent increases in America’s cities.

San Francisco real estate developer Michael Cohen, who used to run the city’s economic development department, says “The single most important land use debate that goes on in San Francisco is whether you believe that the laws of supply and demand exist.”

This explanation hasn’t many satisfied longtime residents, whose swelling anger against gentrification and displacement has broken out into mass protests against new luxury developments in historically working-class neighborhoods and a ballot measure this fall to halt all new luxury development in the city’s Mission District.

Cohen, the growing SF Bay Area Renters Federation (SFBARF) and others, say more of these new developments are the only way to bring down rents citywide, because they will relieve the city’s chronic shortage of housing.  They say protests against new development are actually the reason for rising rents, as the city’s constrained housing supply is lagging far behind the demand of young professionals flocking to San Francisco and other urban centers to work in booming well-paid tech industries in recent years.  Others, largely led by community organizations like Causa Justa/Just Cause made up of longtime residents, predominantly working-class families and people of color, call this “trickle down housing” and say it doesn’t work.

So why are these Bay Area native folks so skeptical of basic economic theory?  Well maybe it’s because your basic economic theory is hella basic, bruh.  Economic models are about simplification of the real world—we need models to teach theories, but sometimes those simplifications become a problem when we apply them to real life.

The people who lived and worked and raised their families in low-income urban neighborhoods long before the hipsters thought it was cool, in the decades when the middle-class fled to white suburbia, have a lifetime of experience with the economic reality of urban housing markets, not the basic economic theory.

Here’s what they see:  The same neighborhoods that are seeing the biggest rent increases are those seeing the most new housing developments.  They see the East/West divide of the city of San Francisco: The densely populated eastern neighborhoods like the Mission and SoMa are booming with new development while facing eye-popping rent increases and overwhelming numbers of evictions.  Meanwhile, the western side of the city, with its many low-density middle-class enclaves that are hotbeds of NIMBYism, sees relatively little change.  They’ve seen a boom and bust cycle of interest in San Francisco by developers and yuppies:  the long flight of white middle-class families and employers from the city for decades, followed by a tech bubble in the 90’s that led to a development rush before popping spectacularly, and then a resurgence of the tech industry in the last few years leading to another cycle of development, gentrification and rising rents.  It’s hard to shake the gut feeling that development isn’t for them, that in fact it hurts their community.  They’ve been tossed around by this boom and bust cycle, families losing their homes, friends losing their stores, feeling like strangers in their own neighborhoods, in a story that just doesn’t align with that supply and demand graph.

Where new housing development is being built in SF

Median rents in SF

Housing cost increases in SF

Population density in SF

New housing developments being proposed in SF

For longtime residents, the basic supply and demand theory just doesn’t pass the bullshit smell test.  Maybe it’s not because they’re stupid and don’t understand economics.  Maybe it’s because thanks to their actual lived experience, they understand how urban housing markets work in practice better than the Patiently Explaining Gentrifiers understand them in theory.  So my dear Patiently Explaining Gentrifiers, the next time you roll your fixie past the black family in your apartment and they look at you sideways, please refer to this helpful guide to break down the economics that they understand and you don’t.

  1. Luxury housing doesn’t really substitute for low-income housing

Housing marketed at young urban professionals is not a perfect substitute for housing built for blue-collar families.  That means they have different markets setting their price, which are driven by different levels of supply and demand.  (Not to mention these two segments of the housing market diverge farther and farther apart the more economic inequality grows.)

Imagine a world where you could only buy two cars:  Cadillacs and Honda Civics.  Most people who own Cadillacs wouldn’t be caught dead driving a Honda Civic and most people who push a Civic can barely dream of owning a Cadillac.   So if GM decided to build a lot more Cadillacs next year, you’d expect to see the price of Cadillacs go down, but it probably wouldn’t have much effect on the price of Civics.

But that doesn’t mean the two prices are totally unrelated.  A bargain item can be a substitute for a luxury item, it’s just not a very good one.  Say for example, there’s a sudden rush of rich people wanting brand new Caddies.  They start buying up all the Cadillacs on the car lots, but the people who already own Cadillacs insist that to retain the “Cadillac brand” (and maybe improve the selling value of their car), GM must not produce more than a limited amount per year.  The resulting shortage sends Caddie prices sky high as the dealerships are swarmed with people trying to outbid each other.  But those who can’t get their hands on a Cadillac still need a car.  So the second-class yuppies (you know, the ones who work at Ask.com instead of Google) start buying Honda Civics and tricking them out, adding heated seats and TV screens.  Seeing Civics have gained a new customer base with more money to spend, the Honda dealerships start raising their prices too.

Replace cars with housing and dealerships with landlords, and this is part of what we’re seeing with the housing market in cities like San Francisco, and it’s the basic argument of the folks at SFBARF.

So the natural solution is of course to build more Cadillacs (aka high-end housing developments) to address this problem at its root?

Yes, that’s true to some extent.  Solving the housing crisis will require building more luxury housing somewhere.  But there’s more.

 

2. Neighborhood speculation raises land values

We can’t just replace cars with housing and dealerships with landlords in a simple model of the world.  Because cars aren’t like housing.  If you park your Caddie in the spot next to my Civic, it doesn’t cause my monthly car note to get more expensive.  But with housing, only part of what you’re paying for is the physical structure, most of what you’re paying for is the location, the land, the neighborhood.

When you build expensive new condos next to low-income apartments, it has an external effect:  it raises the value of all the land in the neighborhood surrounding it.  (The same way if you put a toxic waste dump in a neighborhood it lowers the surrounding land values.)  Land is a speculative asset: unlike the buildings on top of the land, you can’t build more of it.  There’s a limited supply and the best way to make money from it is to buy up as much as you can get your hands on now if you think the price is going to go up in the future.  Developers start rushing to get in first on this hot new neighborhood, bidding up land values (“Did you see the New York Times wrote an article about this totally up-and-coming neighborhood??”)

Once the new residents move in, they create demand for someone to open up an artisanal kale wrap deli and kombucha bar next door and a barbershop on the corner that will trim your fixed gear bicycle’s decorative moustache.  Those new amenities create even more demand from yuppies and hipsters to live in that neighborhood.  The cycle of rising land values continues to spiral out of control.

So what the hell happened?  Why isn’t increasing the housing supply bringing down rents?

 

  1. Rising land values reduce the supply of low-income housing

Now if I’m a landlord who currently owns a fairly cheap apartment building and rents primarily to working-class immigrant families, when neighborhood land values rise, suddenly I own an asset that I’m not using to its full potential.  I’m better off completely shifting my business model of what kind of housing I’m providing on the land.  I’m basically burning free money unless I either sell the land to a developer or fix the place up myself and charge higher rents to new customers willing and able to pay more.  This will likely involve evicting my low-income tenants from their homes.  If my city has strong renter protection and/or rent control laws, I’ll have to do whatever I can to harass my tenants, threaten to call the police or immigration on them, refuse to make repairs, or otherwise make their life a living hell until they move out.  I might even convert my rental apartments into condos for sale using what’s called an “Ellis Act eviction” to evade tenant protection laws.  I’m reducing the supply of low-rent housing by converting it to a different type of housing.

Here’s a similar example: Say I grow wheat in North Dakota.  If shale oil is discovered in my region and everyone around me is fracking for oil, I’m sure as hell not going to keep farming my land for wheat.  But if I take my land out of wheat production and sell it into oil production, guess what that does to the supply of wheat?

And if I’m a developer looking to build cheap, low-cost housing marketed at working-class families, I’m sure as hell not going to do it anymore now that the first step is buying some premium priced land, which now covers every single neighborhood in cities like SF and NY.  New development of housing for working-class families basically grinds to a halt, because it’s not profitable to buy expensive land and then rent it for cheap.  Supply of low-income rentals is strangled, despite the fact that the booming growth of tech is also creating tons of low-paid jobs for janitors, landscapers, cooks, childcare workers, and security guards who are fueling rising demand for this type of housing.

Say I want to open a cheap sandwich shop.  I’m trying to decide between selling Mexican tortas for $5 or Vietnamese banh mi for $4.  Suddenly the price of wheat spikes, and bread now costs $3 a loaf.  My old business ideas would no longer turn a profit once you factor in the other costs, so I either don’t open my shop or I change my business plan and open up an Artisan Torta/Banh-Mi Fusion Deli and charge $15 a sandwich.  The higher price of an input, wheat, has restricted the supply of cheap sandwiches, just as a higher price of land restricted the supply of low-income rental housing.

That’s why between 2007-2014, San Francisco built over twice the amount of high-income housing than it was projected to need by California’s housing department, but only built half of what it needed for low-income families and a third of what it needed for middle-income households.

So as speculation raises land values in a neighborhood, landlords shift their buildings away from the low-income market and orient towards the high-income housing market.  And developers are unable to build new housing affordable to low-income families because land values are so high.  Both trends result in a massive sucking away from the neighborhood’s housing supply for working-class families.

 

  1. Yuppies gobble up more housing space per person

But it gets worse. This assumes a 1:1 ratio of replacement as developers and landlords shift from supplying low-income housing to high-income housing.  But blue-collar households tend to have more people in the same space than white-collar households.  Apartments that once held a working-class immigrant family of five are now being converted to become home to a young tech worker, his bandana-wearing pug, and his girlfriend who stays over sometimes to watch Netflix and chill.  That means landlords and developers are responding to speculation by taking low-rent housing supply off the market even faster than they’re putting high-rent housing supply into the market.

Every new high-rent development in a low-income neighborhood contributes to the cycle of speculation raising land values around it, bringing new low rent-development to a halt and converting the existing nearby supply of low-rent housing at an alarming rate into high-rent housing for people who demand much more square footage per person.  Thus a development that helps relieve the shortage of high rent housing can actually create a much worse shortage of low-rent housing.

That’s why residents of rapidly gentrifying neighborhoods like San Francisco’s Mission District are protesting new luxury developments.  When you’ve lived through this kind of speculative development, you don’t need an economics degree to know the math.

 

But it doesn’t have to be a zero sum game.

We can increase the supply of expensive housing while also increasing the supply of affordable housing.  But we need to remove the factor of neighborhood speculation from the equation.

Before I go further, let me make abundantly clear that I agree that we absolutely need to build more housing suitable for young professionals in central cities.  In fact, we need a lot more of it.  Too often, social justice activists struggling every day to defend our communities’ right to live in their own homes forget that white flight to the suburbs in the late 20th century was one of the worst things that ever happened to low-income communities of color in the US.  It devastated funding for urban schools and social services as public resources were shifted out to suburban bedroom communities.  Rising economic and racial segregation widened income inequality, and reduced economic mobility, as the rich and poor lived in two separate worlds.  And the massive environmental toll of millions of commuters driving out to far-flung quiet neighborhoods every day manifested itself in the air pollution and climate change whose burden falls most heavily on low-income communities of color.  We need to ask ourselves:  What’s our endgame?  Maintaining the pre-boom segregated status quo?  Because that’s an awful future.

We know that the reversal of last century’s white flight is a good thing.  But not if it simply leads to displacement of the urban working-class and communities of color.  When the last affordable neighborhood in San Francisco and New York disappears, and the displaced families of the working class are all forced to leave cities and grow a ring of high poverty suburbs, both the economic isolation and environmental devastation will remain the same as it was before.

 

We need shared cities free of land speculation.

We can do this by building high-end housing in urban neighborhoods that are already historically middle and upper class, where it won’t lead to speculation that a neighborhood is “up and coming”.  Every city has these neighborhoods.  They’re on the west sides of Los Angeles and San Francisco and the north side of Seattle (I’m a die hard West Coaster).  They’re the neighborhoods in your city with the oldest median age, the lowest population density, the highest home ownership rate, the whitest residents and the highest incomes.  They’re the places seeing virtually no new housing being built right now.  Often strict zoning codes limit new building in these neighborhoods to two stories or single family homes, and the residents are fiercely opposed to denser apartments near them, using their abundance of free time to rail against the parking problems, crime and noise they will bring (often code for younger, poorer, or browner people).  The residents of these neighborhoods tend to be more well-resourced, well-organized and well-connected than those in low-income neighborhoods, who often face language and educational barriers and are too busy working long hours for low wages to attend planning commission meetings.  Developers quake in fear of their wrath and major new housing projects are rarely proposed, let alone make it to the review phase to be fought over.  These are the real NIMBYhoods and they need to be upzoned.  Simply changing zoning codes in the lowest density parts of cities to allow taller, denser buildings could lead to a housing development surge without raising rents in low-income neighborhoods.

It won’t be easy.  The mayor of Seattle managed to negotiate out an agreement with business interests to pass the first $15 minimum wage in any major American city, but when he backed ending neighborhood bans on apartment buildings by eliminating single-family-only zoning citywide, he met staunch opposition and withdrew the proposal.

As well as political opposition, there’s also a logistical problem.  These neighborhoods tend to have limited public transit service, (part of their exclusion of young people, poor people, and people of color) which makes it hard to add more apartment-dwellers, especially those dependent on public transit.  We’ll need to build out more transit between the NIMBYhoods and downtown areas where young professionals work.

But building high-end housing in already high-end neighborhoods is the only way to increase supply without triggering the spiral of speculation that raises land values and pushes poor people out.

Meanwhile, we need to ensure we’re also increasing the supply of housing for the working-class, which is bound to erode away if yuppies keep coming faster than our cities can build housing for them.

Longstanding tools that cities use to nudge developers to pay for affordable housing, like inclusionary housing ordinances and density bonuses, definitely help, especially as private development booms.  But alone they’re not enough to maintain the balance of different types of housing needed in growing cities where both software programmers and their janitors need a place to live.  With the sharp decline in affordable housing funds from the state and federal governments, this will require new sources of revenue.

A land value tax could finance public transit expansions into high-end neighborhoods while also creating a new affordable housing fund.  This fund could buy empty plots of land or buildings that go up for sale in low-income neighborhoods and add them into a Community Land Trust—publicly-owned land made permanently affordable to low-income families, where the benefits of increases in land values are captured by the public instead of landlords.  This kind of tax would fall mainly on landlords who are riding the wave of speculation, sitting on their land and extracting bigger and bigger profits by charging higher and higher rents to tenants.  It wouldn’t tax building more housing on top of your land.  And it could protect a large chunk of urban neighborhoods from the wild swings of speculation—or at least make sure that longtime residents actually reap their share of the benefits.

I won’t pretend to know all the answers and I’m not an actual economist (to be fair, neither is Matt Yglesias, the intellectual father of the movement to increase housing supply, whose book The Rent is Too Damn High is the only e-book I’ve ever bought).  I’m a guy who lived in Oakland as a kid and knows my rent would be double what I’m paying right now if I moved back there.  And I’d hate to be one of the kids in Oakland right now looking around and thinking maybe my city doesn’t have a place for me anymore.

But it doesn’t have to be that way.

A shared city is possible.  A city where people from a diverse set of racial backgrounds and economic classes cross paths in public spaces, learn from each other, and create things together.  A city where we all contribute to and benefit from the same school districts, transportation networks, libraries, parks and city services.  A city that allows more people to live lifestyles that are walkable and transit accessible, energy and water efficient, allowing us to sustain our planet.  A city where children can grow up, become adults and get good jobs and support their own families, and one day retire in peace.  But unleashing the animal spirits of unchecked speculation, much like the gold rush that once built San Francisco upon the violent displacement of its native inhabitants, will carry us down a much different path.

 

Advertisements

How Anti-Feminism is Killing Men

If you haven’t heard of “Men’s Rights Activists”, they’re a disturbing bunch:  A loosely organized network of men primarily concerned with the injustices of being stuck in the “friend zone” and women accusing them of rape, whose activities of choice seem to be writing angry and threatening things about feminists in the dark corners of the internet.

But although the conversation has mostly been dominated by fundamentally bad people, there is an undeniable need for an open conversation between men about gender in our society.

Deeply ingrained gender roles and expectations touch every aspect of our families, our jobs, our health, in ways that are incredibly harmful not just to women, but also to men.  We grew up within the constraints of a warped vision of manhood, one that says masculinity is not just about strength, but about violent aggression, not just about protective care but about possession, not just about resilience, but about never being vulnerable.  This twisted caricature of manhood is reflected in the ways we treat each other every day, our laws and institutions, our economy and popular culture.  A real men’s rights activism would appreciate the good in masculinity while pushing back against the ways in which our society’s distorted understanding of manhood hurts us.

The problem starts with the idea that men are invincible.  That we are the ones born with the strength to fight wars and build economies.  But it ends with the idea that men are disposable.  That our bodies can be thrown down coal mines and into battlefields and prisons, often in the name of “protecting” women, who we view as too weak to work long or dangerous hours and endure such harsh violence and punishment.  A real men’s rights activism would stand up for the rights of workers, fight our relentlessly expanding prison system, and demand an end to war.

dangerous-jobs-ny-girderWomen continue to bear the brunt of poverty in America, with low-wage jobs justified by the assumption that women don’t need to be paid equally.  But gender is also used as a tool to exploit male workers through long hours and dangerous conditions.  The most under-regulated sectors of the economy, where worker injuries and deaths are commonplace, overwhelmingly employ men.  Attempts to improve worker safety standards in constructing buildings, extracting minerals, managing waste, and operating heavy machinery are crushed by deep-pocketed corporate lobbying that manipulates powerful social norms viewing men as indestructible work machines.  While other countries have shortened the work-week, mandated paid vacation time, supported earlier retirement, and even provided paternity leave for men to take care of newborn children, the American man is supposed to be tough and hard-working.  He is not supposed to mind late nights at the office away from his family or missing most of his child’s first months of life.  American males work more hours in their lifetimes than anyone else in the industrialized world.  As more and more women have entered the workplace in recent decades, men are not working less hours as some might have predicted, if anything they are working more, particularly white-collar college-educated men.  Where is the outrage from so-called “Men’s Rights Activists”?  Who stands up for men’s rights to be more than cogs in the machine of economic production, to be safe at work and spend time with their families?

The explosion of America’s prison population in recent decades overwhelmingly affects men.  The US holds more prisoners than any other nation in the world.  With 5% of the population, we have 25% of the world’s prisoners, due to harsh laws mandating unusually long prison sentences, heavy imprisonment of nonviolent drug users, low investment in prevention and rehabilitation, and a parole system that throws people back in prison as a response to minor violations like missing meetings.  While prison policy is often labeled a black or Latino issue, it would more accurately be described as a men’s issue, with men representing over nine in ten inmates.  Our ever-expanding prison industrial complex is made possible by our society’s perceptions of men—young men, low-income men, men of color—but ultimately men.  We stubbornly reject proven cost-efficient and effective reforms like preventing crime by investing in programs for at-risk boys or helping formerly incarcerated men adjust back into society with education and job opportunities.  Those are “hug-a-thug” women’s solutions.  Real men understand that other men are violent and irreversibly dangerous—they cannot be helped by compassion but instead must be separated for decades from their families and communities.  The show “Orange is the New Black” is largely successful because it depicts a women’s prison—we are capable of being horrified by the shocking conditions only once we can imagine women having to endure them.  But we will never reform our prison system until we can recognize the humanity of other men.

There is no greater testament to our society’s willingness to treat men as disposable than war.  Who fills the caskets that return home draped in flags?  Who are the faces of the homeless veterans who line freeway exits and downtown sidewalks?  Who are the survivors of war facing job discrimination and social isolation from disabilities and post-traumatic stress?  When women and children are victims of war we are disgusted, horrified, inconsolable, outraged—why can’t we muster the same compassion for fellow men?  We have swallowed the lie that we are so strong that our lives aren’t worth saving.  If “Men’s Rights Activists” truly cared about fundamentally improving the lives of men they would be marching in the streets for peace, not grumbling about feminists on Reddit.  It is not women who are sending us to die overseas, but powerful men who place such little value on the lives of other men.

These problems fall most heavily on working-class and poor men who fill our prisons, our most deadly jobs, and the ranks of our military.  This puts men under an unrelenting pressure to succeed in today’s brutally competitive economy to escape the fleeting life expectancy of low-income men in America.  It’s easy to think that only young men or only black men or only poor men end up behind bars or dying in Afghanistan or working in a steel mill, but middle-class college-educated men should remember that this system thrives on that mentality.  Men are constantly running an economic rat race because somewhere inside we recognize that we are only one slip away from the fate we condemn other men to because we think they should be tough enough to handle it.

If we want to make life better for men, we must stop blaming women.  We must remember that the gender roles that reduce women to silent property and sexual objects are the same that reduce men to emotionless machines made for fighting and hard labor.  Feminists are not enemies of men, but allies in a common struggle to reclaim our humanity.  When we refuse to believe women who survive rape and blame victims for “asking for it”, we feed a society that views us as uncontrollable sexual monsters who must not be provoked, that makes women afraid to see us on the street and parents afraid to trust us with their children.  When we try to justify the pay gap by saying men work harder or negotiate better or deserve to make more because we financially support women, we feed a society that judges men’s worth by our ability to make lots of money and be cutthroat competitors who live for work alone and never see our families.  When we defend the domination of all levels of government by “strong, tough” men and not “irrational, weak” women, we feed a society that continues to send millions of our fellow men to die in battle and rot in prison because that’s what strong, masculine leadership supposedly stands for.

So-called “Men’s Rights Activists” have only succeeded in carving out a little online world that provides an outlet for validating a few men’s deep-seated bitterness towards some particular women in their personal lives.  But we deserve better than that.  We deserve a world that doesn’t treat men as disposable machines, one where we live longer, freer, happier lives.  We can’t get there by hating women.  We can only get there by loving ourselves.

How to Live in an Oligarchy

oligarchy-1

A flood of articles and blogs rocked the internet recently declaring the US is no longer a democracy, but an oligarchy whose politics are completely dominated by the economic elite.  They cite a groundbreaking new Princeton study that found that the political opinions of average non-wealthy US citizens have essentially zero statistically significant impact on policy.  Although this confirms what most people already knew about the growing influence of money in politics and economic inequality, the zero number is devastating.

I asked myself, is my life’s work organizing working-class people to build political power completely meaningless and futile?

But then I actually read the study itself, because I’m a nerd.  When I finished, I realized it confirmed exactly why I need to do this work.

The authors of the oligarchy study never actually say that average middle and working-class people don’t matter in US politics.  What they say is that unorganized average people don’t matter.  But organized people do.

In fact, they conclude that a mass-based membership organization that stands up for everyday people can be equally matched head-to-head with a corporate lobbying group.

Here’s what the study actually says.

Gilens and Page use statistical data to test four competing political science theories about US politics:

  1. “Majoritarian Electoral Democracy”:  The will of the majority of people is carried out by a functioning democracy with apple pie, bald eagles and shit.
  2. “Economic Elite Domination”:  Politicians don’t give a damn about the opinions of average people unless they happen to align with the interests of the wealthy few, whose opinions are all that really matters.
  3. “Majoritarian Pluralism”:  There is a chorus of voices of different organized interest groups that generally ends up representing what the people as a whole want
  4. “Biased Pluralism”:  There is a chorus of voices, but you can hear a loud and distinct upper-class accent.  Monocles and feather boas abound.  Economic elites have more interest groups representing them, so policymaking tends to favor the wealthy.

They describe our political system as both #2 and #4.   They measure this by comparing actual policy outcomes with the political preferences of middle-income citizens, the wealthiest 10% of citizens, interest groups representing businesses, and interest groups representing broad memberships of people.

The numbers don’t lie—the kind of democracy you learn about as a kid in school just doesn’t describe reality in the United States today.  The support of a majority of average voters doesn’t make a policy more likely to be passed at all, but the support of wealthy elites does.

But then this begs the question:  Why do food stamps, Social Security, Medicare, student aid, public housing, even public schools and libraries, still exist?  Surely not out of the goodness of the hearts of America’s all-powerful millionaire oligarchs?  Maybe these programs were created back when political power was distributed more evenly, when democracy still worked, and they remain only because economic elites have not yet been able to completely dismantle them.  But then how do you explain the recent expansion of healthcare to millions of uninsured paid for largely by raising taxes on the wealthiest 2%?

The answer is interest groups, who have a strong impact on policymaking.  According to the Gilens-Page study, literally the only way for working and middle-class people to influence American politics is by organizing ourselves into groups that can match the political clout of economic elites.

Groups of people without political power, from exploited immigrant farmworkers in California to disenfranchised black communities in the Jim Crow South, have long known that the only thing they could do to change the oppressive political and economic systems they lived in was to organize themselves.  In fact, the most celebrated leaders of America’s great social movements, from Cesar Chavez to Martin Luther King, have worked to bring together unorganized people who thought they were powerless to build strong organizations in which the powerless became the powerful.

As a whole, the study finds that the political preferences of interest groups don’t reflect overall public opinion.  In fact, their data shows that the most powerful lobbying groups representing industries and corporations negatively correlate with the average citizen’s wishes—they stand against the majority of people on most political issues.  But mass-based interest groups that represent millions of real people who make up their membership, such as labor unions or the American Association of Retired People (AARP), have a high correlation between what they push for on Capitol Hill and what average citizens want.

The problem is that among interest groups, the former is nearly twice as influential as the latter.  The study notes that “the composition of the U.S. interest group universe is heavily tilted toward corporations and business and professional associations.”  However, the authors stress that it is not because public interest organizations are inherently weaker than corporate lobbyists, but simply that they are outnumbered.  They calculate that “the average individual business group and the average mass-oriented group appears to be about equally influential”, but there are roughly twice as many powerful corporate interest groups as there are powerful public interest groups.

And unfortunately, as Gilens and Page point out, the mass-based public interest groups with major influence in Washington are mostly labor unions, whose memberships have been declining for decades.  With the shrinking of organized labor, fewer low and middle-income people are organized into political groups today than ever before.

Note that the very rich don’t need to organize.  The data shows their policy preferences, reducing regulations on businesses, taxes on high earners, and barriers to international trade, have a major impact on policymakers even before interest groups are taken into account.  Although the wealthy have less need to organize, they are in fact more organized, with many more lobbying groups representing their interests.

But the harsh reality is that in a political system like the one we live in, poor, working-class and middle-class people have no power without organizations.  None.  Period.

There is only one thing we can do to save ourselves from oligarchy.  Organize.  Organize like someone who’s realized that nobody in power gives a shit about what you think.  Organize like someone who’s realized that individualism only serves powerful individuals.  Rebuild the organizations we’ve lost, grow the organizations we have and start the organizations of our dreams.  Organize bigger, organize smarter, organize people who have never been organized before.  Organize the hell out of everything.  We can’t afford not to.  Because without organizing, there is literally no such thing as democracy.

 

Why is a Kid in Seattle 4 Times as Likely to Escape Poverty as a Kid in Memphis?

mobilitymap

On Monday the NY Times covered a fascinating new study on social mobility.  As you can see from the map above, there’s huge variation in the likelihood a kid from a low-income family will end up making it out of poverty depending on where they live.

Despite popular misconceptions about the “American Dream”, kids who grow up poor in the US are less likely to climb into the middle and upper classes than their counterparts in Western Europe, Canada, etc.  This is a phenomenon dubbed “The Great Gatsby Curve”— countries with high levels of inequality also have low levels of mobility– i.e. if the rungs on the ladder are farther apart, it’s harder to climb the ladder.   Poor kids in the US suffer from a weaker social safety net, worse health care and nutrition, more unstable housing, limited access to childcare, preschool, and college, and have to compete with rich kids who are even richer than kids in other countries (and have the resulting advantages in life).

Now let’s assume the American Dream  is not just some bullshit platitude and we really do care about opportunity for all, regardless of the circumstances of one’s birth.

We might be feeling pretty hopeless right now.  Fixing America’s crisis of inequality sounds overwhelming, and this useless Congress has a snowball’s chance in hell of creating any costly new social programs like universal preschool.

But what this study says to me is that it’s possible to make a significant difference at the local level.  The trap of intergenerational poverty in places like Atlanta, Memphis, and Charlotte might be worse than any country in the industrialized world.  But places like Salt Lake City, the San Francisco Bay Area, and Seattle have social mobility comparable to places like Norway and Denmark.

What explains the differences?  Why are rags-to-riches stories in Chicago much less common than its rival metropolises of NY and LA?  Why is a poor kid in San Francisco twice as likely to become successful as a poor kid in St. Louis?  Can growing up poor in Seattle really give you four times better of a chance in life than in Memphis?

When you look at the map, the worst regions are clearly the Deep South and the urban industrial core of the Midwest.  I associate these areas with entrenched black-white patterns of inequality and segregation.  But the article notes that in cities like Atlanta, while opportunities to rise in society are scarce for poor blacks, they are just as scarce for poor whites.  Maybe communities like Atlanta are more likely to see poverty in racialized terms (“Those people are not like me”), weakening their support of attempts to advance opportunities for poor folks of all races.

But let’s get into the nitty-gritty.

correlationswithmobility

Simplified list of factors correlated with social mobility in the study

The authors were looking for proof that tax credits aimed at reducing child poverty like the EITC lead to better social mobility.  But unfortunately they found that local tax policies had only a small correlation with class mobility.

So what can we do to at the local level to increase opportunity?  Which of these factors is most easily and clearly impacted by public policy?

It’s interesting to note that the factors that most strongly correlate with lack of opportunity are things you might associate with a social conservative policy agenda:  promoting traditional family structures, community ties, and religious participation.  So why then is the South, the heartland of social conservatism, the huge red swath on the map with the least opportunity?  I’d argue this is because social conservative policies are extremely ineffective at actually accomplishing things like reducing teen birthrates, and often counterproductive (see: birth control, sex ed).

I don’t think anywhere in America we’ve actually developed effective policies to make people have stronger family ties or be more active in their communities.  (I do think we could mitigate some of the negative effects of widespread single motherhood with things like universal preschool and paid maternal leave though.)

Unfortunately the factors most directly tied to government policy (college tuition, local public spending, etc.) are at the bottom of the list.  Seems like if state/local governments want to raise social mobility the best thing they can do is increase per-pupil school funding, but even that has a pretty weak correlation.  Clearly the focus should be on reducing high school dropouts, but how exactly policymakers should do that is the tougher question.

I think the most interesting part of this study is the link it establishes between social mobility and segregation along racial and economic class lines.  In a sprawled out, highly segregated city like Atlanta, people in poor black neighborhoods are much more isolated from decent job opportunities, good schools, social networks and other resources.

File:Atlanta cityscape 032008.jpg

Cities and counties should be paying close attention to this.  Plan dense, walkable, mixed-income neighborhoods.  Provide quality public transit connecting low-income communities to job and educational opportunities.  Focus economic development and infrastructure spending on the urban center, not just on the suburban outskirts.  Don’t allow wealthy NIMBYs to block affordable housing in the suburbs and don’t allow developers to gentrify poor people out of revitalizing urban neighborhoods.  Smart growth is not just about sustainability and hippy shit.  It’s about the goddamn American Dream.  It’s about everyone having a fair chance to make it.  Bald eagles and apple pie and all that.

Last but not least, for the community organizers out there:  Notice that “Social Capital Index” there at the top?  That measures people’s civic engagement and level of involvement in community groups.   Whether you’re organizing community activists to increase school funding, provide subsidized childcare or better public transit, the act of organizing people itself enhances economic opportunity as much as any policy change.  Helping strengthen people’s ties to each other and to their community is one of the key foundations of social mobility.  The best thing we can do is organize from the grassroots to make this American Dream a reality.

Was the Fiscal Cliff Deal, Weirdly Enough, Occupy’s First National Victory?

 

My reaction to the final fiscal cliff compromise was something along the lines of an exhausted sigh and shrug. Seems fine I guess. The whole manufactured crisis thing is hard to get worked up about after a while.

But I began to think… maybe there’s something being overlooked here: In an odd way, this could be seen as the first national policy victory of the Occupy Movement.

Like the fiscal deal or not, in 2013, the 1 Percent will pay the highest tax rate they’ve paid since 1979.

 

Average_Federal_Tax_Rates_Top_1_Percent.PNG

 

At the movement’s peak, although I was excited about its potential, I was kind of a pessimist about Occupy. I wrote then that without institutionalizing itself, it would dissolve before achieving the kind of national policy victories that the Tea Party had won.

But there is something to be said for the more intangible impact of social movements. They shape the thinking of everyone from your everyday dude on the street to professors, journalists, leaders of organizations and even presidents.

During Occupy Wall Street’s initial explosion onto the scene in 2011, I was in DC interning for the White House Council of Economic Advisers. It was fascinating to see how think tanks, economists, columnists, even the great global institutions of capitalism like the OECD and the IMF all felt it necessary to respond to Occupy and start talking about income inequality and how to address it.

Then one day the chief economist at the CEA brought all of us into her office to watch on TV as the president gave a speech in Osawatomie, Kansas. It didn’t create much media buzz, but she insisted this was an extremely important speech. And it was. It was the moment where Barack Obama publicly shifted to the strategy and message that won him re-election a year later.

Since the Tea Party’s rise and the miserable beatdown congressional Democrats had taken in 2010, the president had spent the past year moving his rhetoric to the center and trying to appease the right wing. Although in 2008 he originally campaigned on letting the Bush Tax Cuts expire for those making over $250k a year, he had outraged progressives like me in 2010 when he compromised with House Republicans to fully extend them for two more years (which would eventually lead to the fiscal cliff).

But as we saw in his shift on gay marriage, presidents, like any human being, change their minds sometimes. I believe it’s safe to say Occupy changed Obama. After that speech in Osawatomie, when for the first time he talked about the 99% and the 1%, he took a combative approach, with a clear emphasis on one issue: economic fairness. That was the message he used to successfully define the choice between him and Mitt Romney, and what ultimately won him the election a year later.

And in the first major political battle after the election, negotiating with congressional Republicans, he drew a line in the sand back to his original campaign promise that the Bush Tax Cuts must expire on incomes over $250k. Of course, being Barack Obama, he then crossed his line in the sand and offered a new threshold of $450k. But this one he held firm to. And interestingly enough, this is roughly the income level that puts you in the richest 1% of Americans.

 

So the One Percenters will pay the lion’s share of the tax increases in the fiscal deal. Meanwhile, thanks to the almost-impressive vicious stubbornness of the GOP, the incredibly-rich-but-not-quite-obscenely-rich Two Percenters (roughly incomes between $250k-450k) got the best deal. In fact, the downright impoverished will see a larger tax hike than they will next year. But at least in the Occupy frame of the world, the Two Percenters are still part of the 99%.

If anything this deal shows the sticking power of Occupy’s successful framing of our political economy as a conflict between the 99% and the 1%. This frame has, maybe for the first time, made its way into something written into law.

I’m sure if you asked most of the folks who participated in General Assemblies at the height of the Occupy Movement they would not be jumping with joy about this slight increase in the top marginal tax rate. But even if it wasn’t exactly their dream, in a way this is their victory.

The Fiscal Cliff: Why American Politics is Completely, Tragically, Indefensibly Fucking Crazy

319674_397456310331383_459589497_n

There is no better story to explain the true insanity of American politics than the fiscal cliff.

The Media is Ignorant and it’s Making Everyone Else Ignorant Too

An explanation of the strangeness of this whole debate has to start with pointing out that the name itself is wrong.  It’s the product of the 24 hour news cycle which has produced a shockingly ignorant TV press corps that cannot possibly go several months without running around screaming about the latest invented apocalyptic crisis.  There is no “cliff” of economic doom we’re about to plunge over on January 1st like Wiley Coyote.  It’s really a gradual slope.

But slowly going down that slope would still be bad.  Why?  Basic economics says governments are supposed to run deficits during economic downturns.  They borrow rather than raising taxes to spend money on things like bridges, schools, the military, creating jobs for construction workers, teachers, and death-machine manufacturers.  The “fiscal cliff” is the large increase in taxes and cuts in spending scheduled to happen in 2013, which could put us back into recession.

File:Deficit or Surplus with Alternative Fiscal Scenario.png

Yet the media has created the perception among people that this is some kind of “debt crisis”, and we therefore need take this moment to deal with our national debt.  In fact, it’s the opposite.  Going over the fiscal cliff will almost completely eliminate the deficit (graph on right).  Yes, that’s right.  We could literally lock Congress in a big cage for the next year and the deficit would pretty much go away.  But that’s a bad thing, because it would tank the economy.

The Tea Party is Seriously Insane

So why aren’t the Tea Party crazies who are so obsessed with reducing the deficit cheering about the fiscal cliff?

If, as they’ve bizarrely insisted, the deficit under Obama is what’s been holding back job growth, shouldn’t the fiscal cliff be the Biggest Stimulus Ever?

In fact, a large part of the fiscal cliff is because of the automatic trigger budget cuts that they demanded when they held the debt ceiling hostage and almost caused the US to default.

So did they stop believing in austerity and suddenly become true believers in Keynesian economics?  No, apparently they don’t really believe anything and are just fucking crazy and angry about anything Obama does.

Congress Either Doesn’t Know or Doesn’t Care What Regular People Want

The truth is, right or left, no one wants to go over the cliff.  In fact, normal people (read: not members of Congress) are mostly in agreement.  A wide majority supports allowing the Bush tax cuts for the rich to expire on schedule.  And although Republicans like spending cuts in theory, when you ask them about the specific cuts their congressional representatives are talking about, they no longer support them.

The fiscal debate has featured all kinds of ridiculous antics from Congress.  We may have officially entered the Twilight Zone, when Senate Minority Leader McConnell (who has led more filibusters than anyone in history) I shit you not, filibustered his own  bill.

But at a deeper level, this shows who Congress is really accountable to.  Even though Congress agrees on tax rates for 98% of Americans, the debate is stuck because House Republicans are holding the whole thing hostage over tax cuts for the richest 2%.  And although the fiscal cliff cuts to the military are much more widely supported than cuts to Medicare, Congress is stumbling over themselves to protect the defense budget and fairly willing to throw grandma under the bus.  Why?  Because death-machine manufacturers have really good lobbyists and old poor people don’t.

Not Just the Tea Party, but the Republican Party in General is Seriously Insane

Clearly a significant portion of our country has become utterly unhinged from reality.  Not only were they convinced there was no way Obama could win, they still have trouble believing it even after the election is over.  

You don’t get to lose elections and then make demands.  Especially because Obama can get what he wants by doing nothing, letting all the tax cuts expire on January 1st, then asking Congress to vote for a tax cut just for the lower 98%, which they’ll all vote for.

Truth is, people are tired of the GOP’s shit.  That’s why Obama won.  That’s why in polls Americans overwhelmingly say they will blame Republicans in Congress if the fiscal cliff happens.

But here’s the best part.  If they don’t get their way, Republicans are threatening to start a whole new hostage situation over the debt ceiling.  The only thing that could make this more crazy is if as a compromise for raising the debt ceiling, Republicans demand another Supercommittee, which fails again, leading to automatic budget cuts that become another fiscal cliff that needs to be averted.

Maybe we’ll just be trapped in an infinite loop until we die.

Beyond Binders Full of Women: What Will Really Erase Gender Wage Inequality?

Mitt Romney’s awkwardly-phrased “binders full of women” statement unfortunately captured more attention than his non-answer to the question about the wage gap between men and women.  (Also the story is a lie– Romney didn’t ask the women’s organizations for the binders, the organizations presented them to both Romney and his opponent during the campaign as a challenge)

But I think the real story here is that progressives don’t really have a unified agenda for how to address wage inequality either.  

The Lily Ledbetter Fair Pay Act signed into law by Obama is a good policy, but just nibbles at the issue.  So what now?

Solutions are tricky because the problem is tricky.

Although women make 77 cents for every dollar that men make, economists chalk up about 9 cents of that gap to unexplained factors such as pure discrimination of the “I don’t think you’re smart/strong/skilled enough because you have a vagina” variety.  The other 14 cents are due to things like women having less work-experience or education or being in lower paid industries.  

Some people think it’s only the 9 cent “unexplained factors” that we need to go after.  I think that’s stupid.  The true burden of gender inequality isn’t from a few mean boss men being meanies to women workers.  It results from a compounding of one layer of deeply entrenched inequality on top of another on top of another.

It’s the cleaning lady who makes less money than her construction worker husband, who loses seniority by leaving the workforce for a few years to take care of the kids, which is influenced by the fact that society pays construction workers more than cleaning ladies (due to historical expectations of “women’s work” not needing as much pay), which is also influenced by the husband never being taught how to cook and clean and take care of other people when he was a boy, and is also influenced by her parents who didn’t encourage their daughter to become a construction worker instead, and it’s all influenced by our whole damn society’s obsession with macho cutthroat competition.

For example, it’s not like the lack of women engineers just fell from the sky from the fucking Math Gods.  It’s in large part due to documented discrimination within the sciences in academia.  So when policy wonks say “Well, if you read the STUDIES, the REAL wage gap is only 91/100,” I say they just don’t get how inequality really works.

But what they’re really saying is that there are some parts of the gender wage gap due to sexism, and some parts due to choice.  (Choice of lower-paying careers or college majors, choice of being a stay-at-home-mom for a few years, etc.)  However, if most of the wage gap is due to choice, that gap should theoretically be eliminated and even reversed within a generation.

That’s because today, American women under the age of 35 are now actually much more likely than men to say being successful in a high-paying career is very important in their lives.

On the other hand, I’m not sure it’s a good thing that women increasingly value making money over other priorities like their families.  It’s not that men care less about money than they did a generation ago, but only that women care more.  I think Americans of all genders could use a little more focus on their families over their careers.  But I digress.

The point is despite that women of my generation are apparently more career/money driven than men, I doubt my generation will see the wage gap magically vanish.

Why?

I don’t think changes in personal preferences will erase the wage gap because I don’t think personal preferences are the reason the wage gap exists now.   Personal choices don’t exist in a vacuum– they’re affected by laws, institutions, culture, resource constraints and power dynamics.  More women choose to be teachers.  But women don’t get to choose the fact that teachers make less money than other jobs with similar education levels.  If you happen to like teaching, you just gotta suck it up.

Some solutions I can think of:

  • Mandating companies give paid maternity leave (we’re one of the only countries without it)
  • Unions focusing on women-dominated industries like domestic work, food service, garment work, childcare
  • Raising the minimum wage (minimum wage-earners are mostly women)
  • A cultural shift towards greater acceptance of men also taking off work to raise children (paid paternity leave might help)
  • A turn away from the budget cuts that have disproportionately hurt women working in public-service jobs like teaching and social work

But the larger issue here is that I’m just throwing out random thoughts.  We’re not on the same page with a real agenda for how to address the gender wage gap.  And I’m not holding my breath that the gap will be closed unless we come together with something real and move it forward.