Ask A Red V: The Five-Year Plan

[Borachio]

We recruited a Marxist philosophy Prof, the son of a Marxist economics prof and are set to recruit a Marxist econ prof by New Years'. They are all over...

Very marginal. Academic Marxism is mostly a phenomenon of the 1960s through '70s, and while you'll still get a not inconsiderable number of academics in certain fields who identify as in some sense theoretically Marxian, they've almost all of them jettisoned the political baggage.

Well, someone must be more or less right. I think you've got the field covered, between the two of you.

 

[AvalancheMaster]

Quite a specific question: what is your opinion on public housing high-rises like Red Roads, Gallowsgate and the Barracks? Do you approve or disapprove them from a socialist viewpoint (providing housing for the left / actually being a playground for architects that disregard their main purpose)?

 

[Cheezy the Wiz]

My understanding is that Red Roads was council housing, which is the UK's version of what in the US we would call "the projects," i.e. cheaply-constructed, government-owned, designated low-income mass housing. I'm not aware of a significant ideological position you can ascribe to it. The similar mass housing projects in the Eastern Bloc in the post-war era were thrown together to solve a housing crisis which had been in full swing since the Socialist Offensive in the 1930s. Some weren't so bad (I stayed in a Khrushchev era hotel in Moscow a few years ago, which resembled the Khruschyovkas surrounding it in every way except the word "гостиница" across the top), but as with anything the reputation of something precedes it. And to be honest many of them were quite badly made.

Personally I don't think we face the crises they did. Not in any way, shape, or form. Except for the whole capitalism thing, of course. In the US, for example, there are more unoccupied houses than there are homeless people. That's an easily-enough solved problem right there. I imagine that's true in most places. I saw this graffiti in Dublin, for example:

Spoiler :

 

[AvalancheMaster]

Cheezy, assuming that you were at the public mourning on Nelson Mandela Place in Glasgow this Friday, what is your opinion, as a person on the left, of all the political talk and the fact that there was a scene?

 

[Gary Childress]

Interesting on the "more houses than homeless people" thing. Over-speculation really ran up the number of homes out there and hence drove down their value.

I've often wondered if there wasn't a very simple solution to our economic ills, though it would probably cause a conniption fit with many: tear down some of the substandard housing out there and move the former residents into some of the newer homes which are unoccupied. Wouldn't that essentially re-awaken a demand for housing and hence put an end to many of our current economic woes? Banks are losing money on their repossessions anyway. Why not just give them to people on the low end, tear down the bad houses and then people will start competing for living space again. No?

EDIT: I'm sort of reminded of how FDR had farmers plowing under their crops during the Great Depression in an effort to lower supply and raise prices. Not sure if that worked so well but it seems to me that a sure way to raise prices is to raise demand. That might most easily be accomplished by distributing houses equally and then letting the natural population growth rate run prices up from there. Just need to stop over-speculation from occurring again. Casino economics just doesn't work, I don't think.

 

[ReindeerThistle]

Interesting on the "more houses than homeless people" thing. Over-speculation really ran up the number of homes out there and hence drove down their value.

I've often wondered if there wasn't a very simple solution to our economic ills, though it would probably cause a conniption fit with many: tear down some of the substandard housing out there and move the former residents into some of the newer homes which are unoccupied. Wouldn't that essentially re-awaken a demand for housing and hence put an end to many of our current economic woes? Banks are losing money on their repossessions anyway. Why not just give them to people on the low end, tear down the bad houses and then people will start competing for living space again. No?

EDIT: I'm sort of reminded of how FDR had farmers plowing under their crops during the Great Depression in an effort to lower supply and raise prices. Not sure if that worked so well but it seems to me that a sure way to raise prices is to raise demand. That might most easily be accomplished by distributing houses equally and then letting the natural population growth rate run prices up from there. Just need to stop over-speculation from occurring again. Casino economics just doesn't work, I don't think.

As this is the Ask a Red Thread, I'll just come right out and say it: all material problems have material solutions. The reason there is a "housing shortage" is that wages are low, and people are not renting or buying, spending or saving. Wages are low because labour laws are totally geared toward the employers -- and I mean the .01% employers. Even anti-trust laws have been used as often against labour mare than they are against trusts. Utility companies raise their rates in spite of the lowering cost to provide utilities and the government agencies formed to protect consumers from the "potential abuse of monopoly power" (exact quote from the mission statement of the NY State Public Service Commission) rubber stamp rate increases while low-income families literally choose between paying for food and paying for heat.

The problem is state and local governments are over a barrel to raise revenue and keep jobs so they do what 30 years ago would be unthinkable -- give huge corporation tax breaks which in some cases is billions of dollars a year. Our feds gave $700 billion to the banks at the drop of a hat while American Vets can often wait 9 months or more for even a review of their disability claims.

These are problems that money can solve -- only someone who stands to lose much will tell you otherwise -- and spend billions to convince the public of this fact.

Starting thoughts...

 

[Cheezy the Wiz]

Cheezy, assuming that you were at the public mourning on Nelson Mandela Place in Glasgow this Friday, what is your opinion, as a person on the left, of all the political talk and the fact that there was a scene?

I know literally nothing about this event. Sorry!

 

[Agent327]

The reason there is a "housing shortage" is that wages are low

Just wages of those engaged in construction or wages in general? You do realize that wages are a not insignificant part of housing prices?

 

[ReindeerThistle]

In US, Low wages = can't afford rent = large homeless population.

Even Adam Smith said workers should be able to afford to LIVE.

 

[Agent327]

So the large homeless population of the US is also due to low wages? And not to other causes, like, say, mental problems, loss of jobs? You do realize that raising wages in general will also raise prices?

 

[ReindeerThistle]

I know and help homeless families with full-time workers as "head of household."

Not JUST homelessness... but the number of families in the US living with relatives, et al, in crowded conditions (or in their cars) is not a condition of mental illness -- save on the part of US legislators, perhaps.

Loss of jobs has a lot to do with low wages. And, no, higher prices are NOT caused by higher wages.

 

[Cheezy the Wiz]

So the large homeless population of the US is also due to low wages? And not to other causes, like, say, mental problems, loss of jobs? You do realize that raising wages in general will also raise prices?

If you lose your job, that's a pretty big reduction in income.

And no, it's not because they're crazy.

Also, wage rises do not translate into price rises; that only happens if the boss decides to make it happen.

EDIT: Relevant article:

http://thinkprogress.org/economy/2013/12/09/3037221/record-affordable-rent/

Paying more than 30 percent of your income on rent is what experts call unaffordable. Yet the number of people who fall into that group has reached record numbers, according to a new report from the Joint Center for Housing Studies of Harvard University.

The share of renters who pay more than 30 percent of what they make on housing, or what the study labels “cost-burdened,” rose 12 percentage points last decade, reaching 50 percent in 2010. That includes 27 percent who face a “severe burden,” or in other words, pay more than half of their income on rent, a figure that rose 8 percentage points. Initial estimates show that there were a record 21.1 million renters who were cost-burdened in 2012.

The most recent data is for 2011, however, when 20.6 million people were cost-burdened and 11.3 million paid more than half what they made for housing. This problem falls heavily on low-income renters. More than 80 percent of those who made less than $15,000 in 2011 paid 30 percent of their income or more on housing, with 71 percent paying at least half. Given their tight budgets, these renters spend about $130 less on food, “a reduction of nearly 40 percent relative to those without [housing] burdens,” the authors write. “Housing affordability is thus clearly linked to the problem of hunger in America.” They also spend significantly less on health care and retirement savings.

It’s not too hard to figure out why so many struggle to afford rent. There is very little affordable housing available. These low-income renters who make $15,000 or less would have to find housing that costs less than $375 a month, yet the median monthly cost for housing that was built in the last four years is more than $1,000. Less than a third of those units rents for under $800, and a mere 5 percent go for less than $400. There were just 6.9 million housing units that these renters could afford in 2011, but there are 11.8 of these renters, and to top it off, 2.6 million of the affordable units are occupied by higher-income people. The availability of low-cost housing has been declining for decades — in 1970, there was an actual surplus of 300,000 low-cost rental units, but by 2011, there was a shortfall of 5.3 million units.

Unemployment also exacerbated the situation, although the report notes that “high unemployment rates are not the main culprit because the spread of burdens has been even greater among households with full-time workers.” Three-quarters of renters whose household heads couldn’t find a job in the previous year had a housing cost burden. But the share of those who were burdened while also working throughout the year before rose nearly 10 percentage points from 2001 to 2011, reaching more than 2.5 million people.

Meanwhile, federal subsidies to help low-income people afford housing have been hammered by budget cuts and are far from reaching everyone who needs help. One quarter of the households who are eligible for rental assistance actually gets it given the high demand that puts many on lengthy waiting lists. That problem got even worse this year thanks to sequestration, as some people who had finally moved off the waiting lists got their vouchers snatched back because of the automatic budget cuts. Between 40,000 and 65,000 fewer people will have gotten assistance this year compared to last, and if the cuts remain in place next year somewhere between 125,000 and 185,000 additional people will lose the support. Yet housing subsidies kept 2.8 million people out of poverty last year.

The inability of so many to afford rent has pushed many into homelessness. Almost half of the country’s homeless population works but doesn’t make enough to pay for housing. While there has been a decline in the numbers nationally, on any given night there are more than 600,000 homeless people, according to government data, and some of the most populous states actually saw big increases. The number of homeless students reached a record last year at 1.1 million.

Yet sequestration is also hurting the services that help the homeless. The Department of Housing and Urban Development estimated that more than 100,000 homeless and formerly homeless people would be removed from programs thanks to the cuts. Instead of pulling back on all of this investment, a way to fight homelessness would be for Congress to support the creation of more affordable housing by providing financing through the Federal Housing Administration, Fannie Mae, and Freddie Mac.

 

[Agent327]

Also, wage rises do not translate into price rises

In general, consistently rising wages will result in price inflation. (A single opinion article won't change that economic reality.) Obviously there are other factors as well. For instance, a total lack of confidence in a country's currency or economy may result in rampant price inflation (as in Venezuela).

But I understand from both of your replies that the US is rapidly devolving into a backward country. How sad.

By the way, I was not intending to mock the homeless - nor the causes of becoming homeless.

 

[Cheezy the Wiz]

In general, consistently rising wages will result in price inflation. (A single opinion article won't change that economic reality.) Obviously there are other factors as well. For instance, a total lack of confidence in a country's currency or economy may result in rampant price inflation (as in Venezuela).

My point was actually that there's only a correlation between price increases and wage increases because the boss, aka, the person who sets both price and wage, as well as profit, decides to move those two instead of the third. Now yes, part of value does derive from labor, in general it's most of the cost of production, actually. But what we are talking about here is distribution of the surplus value, aka, the extra "value" created through both market speculation as well as deprivation of worker wages. When workers demand higher wages, what they are asking for is a larger slice of the surplus value. If prices are to remain stable, then that necessarily means that higher wages in the company; the boss' and upper management's, must come down. A boss who defends his personal profit by increasing consumer prices is performing one of the most destructive crimes a person can commit: punishing the public for the benefit of the individual.

Never forget that, when you hear that lie that higher wages mean higher prices. This is the fault of selfish bosses, not workers fighting for the wealth they helped create.

 

[Agent327]

'Bosses', as you call them don't have 'personal profit' (and if they do it's economically speaking irrelevant): profit is where investment comes from. Reducing profit quite literally means investment reduction (again, there may be other causes for this) - unless increased costs are calculated in the price. Obviously, this isn't always possible, since not all products have an elastic demand. (As for labour costs being the main factor in production costs: this applies to developed countries, i.e. countries where wages tend to be relatively high.)

 

[ReindeerThistle]

The US is not "rapidly devolving" -- what is happening is endemic to.Capitalism: to increase their advantage, companies reduce variable costs as much as they can... and labour is easy to slash. The cuts at the largest corporations have effects all the way down. That means restaurants, hair salons, corner stores have less customer base and they cut wages.

"Profit," is just unpaid labour. Even Smith and Ricardo knew that.

 

[Cheezy the Wiz]

'Bosses', as you call them don't have 'personal profit' (and if they do it's economically speaking irrelevant)

Oh? And what do you call that fat amount of money he calls his share of the budget?

: profit is where investment comes from.

While this statement by itself is factually correct, since the primary purpose of profit is to reproduce capital, it has nothing to do with the rest of the sentence that preceded it.

Reducing profit quite literally means investment reduction (again, there may be other causes for this) - unless increased costs are calculated in the price. Obviously, this isn't always possible, since not all products have an elastic demand. (As for labour costs being the main factor in production costs: this applies to developed countries, i.e. countries where wages tend to be relatively high.)

This doesn't address my point at all.

 

[Agent327]

Oh? And what do you call that fat amount of money he calls his share of the budget?

While this statement by itself is factually correct, since the primary purpose of profit is to reproduce capital, it has nothing to do with the rest of the sentence that preceded it.

I suggest you reread both your above statements and check for the logical fallacy.

This doesn't address my point at all.

Actually it does; it's fundamental economics.

 

[Agent327]

The US is not "rapidly devolving" -- what is happening is endemic to.Capitalism: to increase their advantage, companies reduce variable costs as much as they can... and labour is easy to slash. The cuts at the largest corporations have effects all the way down. That means restaurants, hair salons, corner stores have less customer base and they cut wages.

"Profit," is just unpaid labour. Even Smith and Ricardo knew that.

I'd like to your Smith and Ricardo quotes to support that. (I'm not sure why you are referring to outdated economists by the way.)

No, seriously: profit is unpaid labour? Where do you get such ideas? Labour is a factor of production. If there is no profit a company has nothing to invest in its future; consequently it will fail - irrespective of wages being high or low.

Oh? And what do you call that fat amount of money he calls his share of the budget?

While this statement by itself is factually correct, since the primary purpose of profit is to reproduce capital, it has nothing to do with the rest of the sentence that preceded it.

I suggest you reread both your above statements and check for the logical fallacy.

This doesn't address my point at all.

Actually it does; it's fundamental economics.

 

[Cheezy the Wiz]

No, seriously: profit is unpaid labour? Where do you get such ideas? Labour is a factor of production. If there is no profit a company has nothing to invest in its future; consequently it will fail - irrespective of wages being high or low.

Do you not understand how you just repeated my previous post?

Actually it does; it's fundamental economics.

You made a factually correct statement, that rising wages can influence inflation. But it has nothing to do with my post at all.



Neither here nor there. This is a question and answer thread, and we will return to that format at this time.