Ep37 -- The Messenger Is the Message

 In the 1970s and 80s, first as a British conservative party leader. And then as prime minister.  Margaret Thatcher promoted the idea of a "property owning democracy."  She didn't coin that term, but she made it very much a reality by passing a right-to-buy law that allowed people who lived in public housing to buy their homes at below-market rates.  It's important to remember as The Guardian put it in 2015,  "thatcherism in some ways was a highly skillful exercise in famed egalitarianism, as indeed is capitalism itself."  So Thatcher and her conservative allies were not implementing this program to help raise all boats, as it were. And all boats definitely did not rise. The Guardian again:  "Right to buy for all its appealingly inclusive rhetoric was not a right available to all. Those who could not afford to exercise it tended to be lone parents, younger tenants, people living on their own, or Thatcherism's economic losers: the unemployed or low-skilled."  

So clearly the goal of Thatcher's right to buy was not any kind of broadly egalitarian society.  In fact it was the exact opposite. What Thatcher really wanted was a nation of debtors,  because it's much easier to control debtors and to convince them that their interests align with those at the very top of the economic food chain.  When you think about it, thatcher wasn't hiding her true goal when she sought a property owning democracy.  Her ideal could be considered a democracy of sorts, but it's one where your representation is proportionate to the amount of property you own.  And that's very much what has emerged in Britain since the 1980s. And in America as well.  I guess it's much easier to see in retrospect, but obviously, Thatcher was proudly proclaiming who she was and as Maya Angelou so eloquently warned us, "When someone shows you who they are, believe them."  So this week, as we find ourselves deep in the murky depths of another election season, I want to talk a little bit about ways to see through the political rhetoric and get a clear view on what politicians and political operatives actually mean, by looking at who they clearly are.  

Stay tuned.  

I'm Craig Boreth, and this is The Great Ungaslighting, a podcast about how we all get conned into accepting a man-made culture that's out of sync with our human nature, and how we can fight back and put the kind back into humankind.  

But first a word about a sponsor.  

This week's episode of The Great Ungaslighting is not brought to you by Invitation Homes, the largest owner of single-family rentals in America. They own and rent out almost 85,000 homes. And, surprise, with that much market power, they have engaged in some eye-poppingly sleazy behavior for which they're currently being investigated by, of course, the FTC.  For example, Invitation will list a house for rent at a certain price. Then collect a non-refundable application fee from prospective tenants. Then they'll tell those applicants that the rent is actually higher than originally listed. And if you want to back out, guess what, Invitation we'll keep your application fee.  Since 2019, they fraudulently collected $18 million worth of application fees this way.  And speaking of fees, Invitation has raised junk fees to an art form, including such gems as utility management fees, lease easy bundle fees, air filter delivery fees, and smart home technology fees.  This last junk fee is a particular note, since in 2019 the CEO of Invitation urged the executive in charge of junk fees to quote "juice this hog," and make smart home technology fees mandatory.  

See, here's the thing. We have a massive housing crisis in this country. Lots of people can barely afford their rent, let alone afford to actually buy a home.  And yet since 2019 at a time when there had been very little growth in home construction, there are 12 new billionaire individuals or families from within the home building industry alone.  So why is that? Well, it's because the housing system ain't broke. It's fixed.  Wall Street has descended like locusts on the housing industry since the 2008 financial crisis, buying up homes and turning them into rentals and building new homes for the sole purpose of renting them out. 

This does two things. 

One, it keeps housing prices high because there are very few new homes for sale. And second, with the price fixing that's going on among the rental cartels, rents have continued to rise even with this added inventory.  In fact, the Bureau of Labor Statistics released a report a couple of weeks ago, finding that 70% of all inflation over the past 12 months was due to increases in housing costs. And according to an analysis by Matt Stoller at the American Economic Liberties Project, over the past four years up to a quarter, and quite possibly even more, of rental inflation is due to price fixing among landlords.  

So what's the solution?  Well, among other things, we need to break up the big real estate cartels that are trying to monopolize the housing market so they can charge whatever they want. And we'll need to bring rents and housing prices down.  But as I referred to in the Margaret Thatcher story, It's hard to do that when a lot of non-super-rich folks have basically all of their wealth tied up in their homes. And that's exactly what Thatcher and every other big-money advocate is counting on.  As Cory Doctorow rather bluntly put it:  "Middle-class homeowners are the useful idiots and human shields of the billionaires who are determined to force every American under 40 to raise their kids in a rented slum full of spiders, rat shit and black mold, which will still cost 60% of their take-home salary."  And as we'll see in the next segment, when it comes to the current elections, those billionaires are happy to continue the illusion of egalitarianism and property owner democracy,  the best kind of democracy, their money can buy.  

And we're back.  

Once again, just in case anyone hasn't noticed, it's election season.  I think I was probably tipped off by the 1800 fundraising texts and emails I get every day. Although to be fair, it's always campaign season, isn't it? And it's really just a question of how all-consuming it happens to be.  Well, with just over a month left to go until election day, it don't get much more all-consuming than this.  It's really more of an election affliction than an election season. And during this year's interminable election affliction, I guess that there has been more gaslighting than in any other election year in history. And that's really saying something.  So for a particular example of gaslighting and to stand out, it would have to be really egregious. 

Well, few humans have raised egregiousness to a personal brand more so than one Donald J. Trump.  At a rally last week, as people were leaving, he told the audience in the arena that those people you see leaving, they're not really leaving.  They're actually going to wait backstage to take photos with him. You see, they wanted to take photos before the speech, but he was late and there was a little hurricane in Florida and nobody ever leaves his rallies.  Man for someone who lies as much as Trump does, he's actually not very good at it.  

But you know, who is really good at lying? The folks involved in statewide propositions or initiatives. If you live in California or one of the other 25 or so states that have these ballot initiatives, you have the added pleasure of being lied to not just by candidates for state and local office, but by special interest groups and their marketing divisions, who completely understand that there's no way even the most civically conscious citizen can possibly understand the complexities and ramifications of these policy proposals.  It's because of ballot propositions that California has one of the longest constitutions on earth. Each proposition, if passed, becomes a new constitutional amendment. If California were an independent country-- hey, we can dream right-- it would have the second longest constitution on earth, just behind India.  So this time around, we have one ballot proposition that has been particularly rife with gaslighting. Proposition  33 states quite simply:  "The state may not limit the right of any city, county or city and county to maintain, enact or expand residential rent control."  Prop 33 would repeal a 1995 state law that limited what kinds of rent controls cities and counties could implement in California.  

That's it it's pretty simple. Will local governments get to decide what kind of rent control they want in their area? 

So one side wants more flexibility on rent control. The other side doesn't.  

Now full disclosure. I am a landlord. And I have no problem with rent control.  Landlords have a great thing going. The benefits in the tax code are ridiculous. Plus you've got someone else paying for your appreciating asset. If you can't make the numbers work with some form of rent control in place, then get out of the business. But quit whining about it like it's some kind of epic injustice against your God-given right to make as much money as you can lay your hands on.  It's like people complaining about the progressive nature of the income tax. It's basically the only progressive tax we have left. And it's not even that progressive anymore. So just quit bitching about how tough absurdly wealthy people have it these days.  But alas, that sentiment is not widely shared among my fellow landlords, and thus the massively misleading nature of the No on 33 campaign.  If you drive around California these days, you'll definitely see No on 33 yard signs. After all the No on 33 campaign has two and a half times as much money as the Yes on 33 campaign.  And on those signs, you'll see the slogan "save affordable housing. No, on 33." Now that right there should tell you these people are not to be trusted. Exactly what affordable housing is there to save? Apparently we're living in some sort of housing Nirvana that we'd be throwing away on election day. 

Now granted there is some affordable housing, but not much, and not nearly enough as we need. So this idea that somehow rejecting rent control is going to save affordable housing it's just bullshit.  But in a perverse way, the slogan is honest. You see one provision of the current California law is that there was a cap on how much you can raise rents in the state.  And there are some parts of the state, more conservative areas that really hate rent control and who oppose prop 13, but nevertheless, look forward to the repeal of this current statewide limit so they can raise prices however much they want.  And I know it's kind of hard to understand, but essentially what they're saying is.  Keep the state's minimal limit on rent control because without it, you will be at the mercy of predatory landlords like us.  But what they truly believe is that however much, they may be able to Jack up rents in cities that forego rent control altogether if Prop 33 passes, they stand to lose a lot more in the vast majority of California cities that will enact much stricter rent control limits then those currently set by the state.  

Another easy way to determine what No on 33 really means, is to look at who is funding this opposition campaign. Remember when people show you who they are, believe them.  And guess who one of the biggest contributors to the No on 33 campaign is. That's right, Invitation Homes, who contributed $500,000 to kill Prop 33.  You'll also see No on 33 supporters saying that expanding rent control will hurt school budgets because they're based on property tax revenue and rent control could lower housing prices.  But again, we have a crisis of overpriced housing. If you want to do what's necessary to alleviate that problem, prices will go down. And while that's not good for everyone, it's good for a lot of people. And it will mean less property tax revenue and less money for schools. So that means we need to do the hard work of figuring out a better, fairer way to fund schools. It does not mean that we should do nothing and just pretend we can't possibly alleviate our drastic housing crisis.  

Some more interesting stuff about the No on 33 campaign: 

One of the most prominent spokespeople for No on 33 is Berkeley economist Ken Rosen.  What you don't see in any of his claims against Prop 33, is that his think tank, 

the UC Berkeley Fisher Center for Real Estate and Urban Economics, is funded almost exclusively by corporate landlords and developers.  

And finally, I did a little stroll through the list of No on 33 endorsements on their website. Along with the various chambers of commerce, builders and bankers associations, there's a group called the California Council for Affordable Housing.  Well, I guess if they're against 33, then maybe there's something to it. After all, they're the Council for Affordable Housing.  Well, not exactly.  They claim that their mission is facilitating the development and expansion of affordable housing in the state of California. But when you look further down to figure out who their members are, you get this rather nebulous word salad.  Our membership is broad based consisting of for-profit and non-profit organizations, builders, developers, lenders, syndicators, management companies, consultants, and public and private agencies.  So basically, except for those organizations and agencies, whatever they are, the only specific groups they've mentioned have business models that are diametrically opposed to affordable housing.  

Look. I get it. Being part of a real estate cartel is a good gig, and it's scary to face the possibility of your golden goose getting a bit of a haircut. But we just can't continue to live in a society where this kind of self-serving misleading bullshit determines the public policy on an issue as important as housing.  

I guess the big takeaway this week is to remember that, as the very serious adult in the room economists like to remind us all the time, incentives matter. Yeah, they do. 

So when a professional organization whose members make their money by keeping rents high, and keeping junk fees high, and screwing over powerless tenants to please Wall Street,  they are showing you who they are. So believe them. And vote accordingly.  

Well, that's it for this week. If you liked this episode, please share it with two or three friends who might also find it interesting. And until next time, be kind to yourself, cut each other some slack, and use your damn turn signal.