Categorized | Health, Politics, World

Slumlord Capitalism v. Global Pandemic

by JOHN WHITLOW

Photograph Source: Will Buckner – CC BY 2.0

The poet Langston Hughes once wrote, “I wish the rent was heaven sent.” With 10 million Americans filing for unemployment benefits in the midst of the coronavirus pandemic, Hughes’ words resonate now more than ever. As we hurtle toward a public health and economic catastrophe, we must reckon with the sobering fact that our federal government is helmed by landlords, real estate developers, and financiers whose fortunes have been made – and whose worldview has been shaped – by years of predatory and extractive business practices. These practices prefigured the federal response to the pandemic and overdetermine the nature of the state-led economic rescue that is already underway.

Jared Kushner is widely regarded as the Trump administration’s behind-the-scenes point person on the coronavirus. Kushner, like Trump, inherited his family’s real estate holdings, updating the business model and expanding its geographical footprint. A New York Times expose from 2017 sheds light on the day-to-day workings of Kushner’s properties in the Baltimore area, where tenants live amidst chronically poor conditions and are subjected to a relentless pattern of petty and meritless litigation. In New York City, Kushner’s residential real estate portfolio has benefited from generous tax incentives and exploited loopholes in the state’s rent laws to remove units from regulation, in the process converting affordable apartments to luxury goods.

The extraction of value that is at the core of Kushner’s business model is based on the multiplication of rents-debts and the intensification of inequalities.

The business practices of Kushner – like those of the real estate industry more broadly – are emblematic of the shifting relationship between the state and the market economy over the past four decades. Beginning in the 1970s, after years of intellectual mobilization by right-leaning economists, neoliberal policies began to take hold in the US and Western Europe. The redistributive functions of the state, established during the New Deal and expanded during the Great Society, were whittled down to a nub, resulting in a tattered safety net and exploding inequalities. At roughly the same time, capital began to move more freely across borders, and once-vibrant economic centers saw massive losses of stable, relatively high paying industrial jobs.

During this period, the power of finance capital grew and real estate became a motor of economic growth. In fact, global real estate now comprises the majority of the world’s assets. The economic centrality of real estate is inextricably linked with financialization, which refers to the expansion of financial services and technologies, and denotes the process through which financial markets have been unleashed, empowering creditors and expanding private debt. Across the country, private equity landlords have bought up swaths of residential properties, preying on tenants of meager means, in the name of short-term value maximization. Though the spread of financialized real estate seems bland and technocratic on the surface, its effects – rent hikes, harassment, evictions – are dislocating and violent. In the words of economic geographer Desiree Fields, the end result is the plundering of “the spaces of existence of the working poor.”

For decades, the bipartisan commonsense has been that government should be run according to market principles. The current administration takes this logic a step further, governing the country like the financialized landlord of a recently purchased ‘distressed asset’: seeking immediate, short-term gain wherever possible – via massive tax cuts and the gutting of already-depleted social programs; nickel and diming workers and poor people; exploiting racist and xenophobic tropes to erode solidarities; seizing on – and expanding – regulatory loopholes; allowing vital public infrastructure to decay, particularly in poor and Black and Brown communities; and casting itself as the insurgent populist that is cutting through entrenched and inefficient bureaucracy.

As it turns out, this mode of governance is particularly ill-suited to deal with the type of crisis we currently face. Despite having a clear window into the near-term trajectory of the coronavirus (see Italy) and a blueprint for how to contain it with relative success (see South Korea), the Trump administration – reportedly under the guidance of Kushner – initially viewed it as a hoax. Then, like a slumlord confronted with well-founded complaints about serious structural conditions, the administration failed to take action. Little to no testing was done initially, leaving the scientific and medical communities at an information deficit regarding the pace and scale of the virus’ advance. This problem was exacerbated by the interplay between our profit-driven healthcare system and our under-resourced medical and public health infrastructure.

In late February, the precipitous decline of the stock market and the inevitability of the virus’ spread left the administration with no choice but to act. The federal response – uneven and incoherent as it has been – can be viewed as a reflection of the worldview of financialized real estate. President Trump’s first instinct, apart from repeatedly referring to the coronavirus as “the Chinese virus,” was to slash the federal payroll tax – this would have given workers in much of the formal economy a small infusion of cash; it also would have starved social security of funding. The $2 trillion bailout passed by Congress and signed into law by Trump is a boon to large corporations and Wall Street. The idea – held by some progressives – that Trump would outflank the Democrats from the left was belied by the paltry benefits offered to workers: a modest one-time check for $1200, extended unemployment benefits, and no relief for renters.

During a stay in New York City in the midst of the Great Depression, the Spanish poet Federico Garcia Lorca, shaken by the inequality and alienation of his host society, wrote, “[t]he terrible, cold, cruel part … is Wall Street. Rivers of gold flow there from all over the earth, and death comes with it.” In recent years, these rivers have coursed with lucre from the real estate industry, whose representatives wield state power in much the same way that they made their fortunes – through predation, extraction, grift, racism. As a global pandemic bears down on us all, disproportionately impacting the most vulnerable, the bankruptcy of that project is on full display. And death comes with it.

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