The Political Economy of Homelessness

Photograph Source: Laurie Avocado – CC BY 2.0

In 2009, Hollywood tried to get us to care about the nearly 50,000 homeless people in Los Angeles by releasing a film titled “The Soloist”. It starred Jamie Foxx as the real-life, trained classical musician Nathaniel Ayers who ended up on the streets as a result of schizophrenia. This chronic illness makes such people especially vulnerable when tax-starved municipal governments can no longer fund support networks. It was up to LA Times reporter Steve Lopez to tell his story, after happening upon him on the streets playing a cello (in the film, it was a violin). Ayers barely got by from the small donations he received playing on the streets. It was left to Lopez to rescue him from the hell of LA’s streets. You can see Ayers playing the violin here:

This year there’s hope for the salvation of another lost soul from the mean streets of LA. Like Ayers, Emily Zamourka studied in a conservatory. When a homeless man stole the violin that provided a livelihood, the landlord evicted her. She ended up on the streets singing opera, another of her skills. When a cop made a video of her singing in the subway, it soon went viral and led to articles just like the one Lopez wrote for Ayers. As an indication that she might have psychological problems that helped to land her on the streets, she just lost the recording contract because of not showing up for paying gigs.

For most Los Angelenos, the homeless are hardly worth noticing, if not a total infringement on their quality of life. In an October 22nd NY Times article titled “Backlash Against the Homeless As a Crisis Builds in California”, you get the picture of what solid citizens have to put up with:

For many, that breaking point was the worsening squalor in the streets of cities like Los Angeles and San Francisco, where open-air drug dealing is rampant in some spots and where human feces and scattered needles and syringes have been found lying about. Those scenes have also proved a potent symbol for Republicans like President Trump to showcase what they call the failures of liberal urban enclaves.

This year an appeals court ruled that Boise, Idaho did not have the right to make sleeping in public illegal. Dave Bieter, Boise’s Mayor, has now taken the case to the Supreme Court, where the rightwing majority will likely side with him and Trump, even if Boise can hardly be described as a liberal enclave. Oh, did I mention that Bieter is a Democrat and an early supporter of Obama for President in 2008?

Notwithstanding a film like “The Soloist”, the real need is for a documentary that shows what the homeless condition is like in LA and how people of good will are acting on their behalf. That film has arrived. Distributed by Cinema Libre Studios, a long-standing source of socially aware films, “The Advocates” will be available as VOD and DVD on December 11th. (Check their website around that time.)

The documentary focuses on caregiving individuals and nonprofits that do not make playing the violin or singing Puccini a litmus test. Indeed, its strength is in showing the dedication of social workers and volunteers in attending to society’s outcasts. It demonstrates that even if terrible things are being done in Christianity’s name, especially by Trump’s bible-thumping supporters, these are still people who take the story of Jesus cleansing a leper to heart.

We meet Rudy Salinas of Housing Works, who has the patience of a saint. His job mostly consists of trying to find apartments for homeless people provided by Housing Works and making sure that they don’t fall through cracks in the system. (We also hear from the LA writer Steve Lopez of “The Soloist” fame.) Salinas picks them up and drives them to medical appointments or government agencies that provide the meager funds they need for clothing, food and medicine. Each of the homeless people we meet on his daily rounds suffer from alcoholism, mental illness, or the bad habits accumulated over decades of living on the streets. Keeping his spirits alive in the face of a nearly Sisyphean task is a testament to the persistence of human solidarity that is under siege from both the White House and its “adversaries” like Dave Bieter.

In the press notes director Rémi Kessler explains why he decided to make this film:

People often ask why I decided to make this film. It all started about three years ago when I was having a coffee with a friend in Silver Lake, Los Angeles. We were sitting at an outdoor restaurant and were approached by someone asking for money. I brushed him off, but my friend took out his wallet, peeled off a $1 bill from a stack of singles and handed it to the man, wishing him a good day. On each of the dollar bills, my friend had written, “Feed the homeless and love them.”

LA’s homeless and those of other major cities are ground zero of the nation’s housing crisis. If you want to understand why this is happening, it is best not to dwell on the psychological flaws that undermined its victims in a dog-eat-dog world. Instead, it makes much more sense to understand the economic and political factors that impact not only them but just about everybody else who is making less than a million dollars a year or so.

In Los Angeles, the homelessness crisis can be traced back to the Reagan presidency when 70,000 manufacturing jobs disappeared, only to be replaced by low-paying jobs in the services such as dishwashing, security guards, parking attendants, hamburger flippers and the like. NY went through the same sea change. From the 1950s to the 1990s, it lost 750,000 manufacturing jobs while its land value went from $20 billion to $400 billion. For those trying to keep afloat in the service industries, it is difficult enough to survive in any city. However, when the rents began to skyrocket during the long neoliberal turn backed by both capitalist parties, it was all the more easy to become homeless.

The film depicts people at the very bottom, but the changing face of real estate has taken a toll on everybody except the super-rich. Young people who have just graduated college are often forced to live with their parents since their degree will not cover the rent in a place like LA or NY. Those who have begun to earn a decent salary can often no longer raise a family within a reasonable distance from work. More than 150,000 people in LA County spend three hours traveling to-and-from work. To compound the problem, many of them in LA (or the Bay Area) end up buying houses close to the forest and threatened by the epidemic of wild fires.

For the past half-century, the urban-suburban divide has taken on a new configuration. Many middle-class professionals decide to implant themselves inside the city rather than the countryside. They are more intent on being able to go to museums or trendy restaurants than they are on joining a country club and playing tennis. With a limited amount of land on the market, real estate developers are always looking for places to gentrify, including the neighborhood where I live. It was once called Germantown, a reference to the blue-collar workers who lived in four and five-story tenements no different than those on the Lower East Side. The real estate developer who built my complex took advantage of a tax abatement program provided by the Mitchell-Lama bill. Its sponsors hoped to create middle-class housing in NY in the days before FIRE (finance, insurance and real estate) became king. Despite the original intent, the net result was to pave the way for luxury condominiums. That included my complex that exited the Mitchell-Lama program after it expired. My rent for a one-bedroom is $2,800 per month, a price out of reach for most young people entering the work-force.

For them, the answer is Williamsburg (or at least it was until it became gentrified) or other neighborhoods in the outer boroughs that our Sandinista Mayor Bill De Blasio has made available at bargain-basement prices to real estate barons. Under his rezoning bills, web developers will move in while elevator operators and hospital orderlies move out. As this pressure continues to exert itself, it will finally reach those who were in the most precarious conditions of all. Many working people are recreational drug users or alcoholics since this is what capitalist alienation breeds. Once they become unemployed, the next step is living on a relative’s sofa, in a car on the street, or on the street itself.

For a profoundly knowledgeable take on this process, I recommend Samuel Stein’s “Capital City: Gentrification and the Real Estate State.” It makes the case that when it comes to such matters, there’s not much difference between Trump and those who want to impeach him. For those who expect the housing crisis to be relieved under a Bernie Sanders presidency, keep in mind that his socialism is nothing more than a repeat of the New Deal, as he assured us himself. Stein reminds us that one of the New Deal’s landmark legislation set the pattern for the ills we face today:

Even before bulldozers cleared the way for cranes, bankers and planners had set out on a stealthier form of urban neighborhood clearance, which established the preconditions for gentrification. In 1934 New Deal legislation established the Federal Housing Administration (FHA) to standardize, regulate and insure home mortgages. Not everyone, however, could access these loans. Along with the FHA, the federal government empowered bankers and developers to lead the Home Owners’ Loan Corporation (HOLC). HOLC was tasked with quantifying the risk bankers would take in giving loans to particular people in particular places. This would allow the federal government and the banks to agree on rates for FHA loan insurance. To make these decisions, HOLC sent surveyors out to every residential block in just about every city in the country; those surveyors would look at a neighborhood and grade it on a scale from A (very safe) to D (very unsafe).

There were three main criteria HOLC used to determine risk: 1) the age of the building stock; 2) the density of housing; and, by far most determinately, 3) the racial composition of residents. Jews were considered communistic and likely to go on rent strike. Italians were characterized as dangerous gangsters. African Americans were written off entirely, and virtually any block with any Black people was given a low grade. Following real estate industry “best practices,” the FHA made segregation and suburbanization the United States’ de facto housing policy. Over time, as property owners in Black, immigrant and racially mixed neighborhoods were shut out of the finance system, many of their buildings declined, rents fell and some landlords resorted to abandonment.

The weight of real estate in the capitalist system staggers the imagination. Global real estate is now worth $217 trillion, thirty-six times the value of all the gold ever mined. It makes up sixty percent of the world’s assets. Within those assets, about 75 percent is in housing.

With so much wealth sloshing around, it should not come as a surprise that Blackstone is the largest landlord in the world. Run by Stephen Schwarzman, who spent close to $20 million on his 70th birthday party and is a good pal of fellow real estate magnate Donald Trump, it is the driving force behind gentrification everywhere. There is a dotted line between Schwarzman and the poorest sectors of the working class, some of whom eventually land on the street. To keep track of Schwarzman’s vulturistic practices, I recommend the Greedy Stephen Schwarzman website that mentions his role in prolonging California’s housing crisis:

Faced with worsening housing affordability and homeless crises, Californians sought to repeal statewide rent control restrictions in 2018. Schwarzman wouldn’t have it.

Blackstone and its subsidiary, Invitation Homes, shelled out $7.4 million to trick and confuse voters, stopping a grassroots effort that included labor unions, social justice groups, and tenants rights organizations.

Although behind a paywall in the 2020 Socialist Register, Karl Beitel’s “The Affordable Housing Crisis: Its Capitalist Roots and the Socialist Alternative” is about the best attempt I’ve seen to ground the housing crisis in Marxist theory. My advice is to find a friend (ahem) with a university account if you want a copy.

Reitel dismisses the neoliberal arguments why rents are “so damned high”. Markets will not bring them down, nor will ending regulations that keep a ceiling on them. What drives inflationary rents and mortgages is the particular role played by the real estate industry within the sphere of capitalist production overall. I cannot begin to recapitulate Beitel’s analysis, but it revolves around the question of land prices that are not subject to increased supply (especially on an island like Manhattan) or cheapening of per unit production costs. Another thing to keep in mind is the big difference between building high-rises and cars. GM can always move a factory to Mexico that not only replaces workers with robotics but pays them much less than if they were in Michigan or Ohio.

However, to put up a high-rise in LA or NY requires skilled labor that cannot be replaced by machines. Perhaps Donald Trump dreams of having a robot walking across a girder to tighten some bolts, but in real life that will never happen. When the trade union movement was much stronger in the USA, the construction workers commanded top wages because they enjoyed a closed shop benefiting white ethnics who maintained a job trust. Now the building trades are weaker and unable to prevent many buildings from operating as open shops. Yet the wages are still higher than average for those who have only a high school degree in many cases. The bottom line is that rents and mortgages in the most desirable neighborhoods will continue to go up short of a revolution.

These problems have been with the working class for well over a century. In 1872, Frederick Engels began publishing a series of articles collected in an edition titled “The Housing Question”. While much of it is polemics against Proudhon, an anarchist whose ideas had a very brief shelf-life, the most important observation made by Engels is an expansion on one of the demands raised in the Communist Manifesto:

On its own admission, therefore, the bourgeois solution of the housing question has come to grief—it has come to grief owing to the antithesis of town and country. And with this we have arrived at the kernel of the problem. The housing question can only be solved when society has been sufficiently transformed for a start to be made towards abolishing the antithesis between town and country, which has been brought to an extreme point by present-day capitalist society. Far from being able to abolish this antithesis, capitalist society on the contrary is compelled to intensify it day by day.

Cities such as New York, London and Paris arose during the industrial revolution. Newer metropolises such as Beijing, Jakarta, Istanbul and Mexico City replicate their features but under circumstances far more inimical to their well-being than when Engels wrote his articles. There are assaults on the environment that are the outcome of farms being distant from the mouths they are intended to feed and only possible through industrial farming. There is also downward pressure on wages that make housing increasingly impossible to afford. That is the outcome of the need for profits at the heart of capitalist production. All these problems have always existed but from now until the end of the twenty-first century they will reach a critical mass. At that point, workers will wake up from their slumber and act to abolish the class system in its totality, including the precariousness that makes every wage earner a candidate for homelessness given an economic system that has long outlived its usefulness. That system, rather than those it victimizes, should be without a home.

Louis Proyect blogged at and was the moderator of the Marxism mailing list. In his spare time, he reviewed films for CounterPunch.