--- On Thu, 4/30/09, Doug Henwood <dhenwood at panix.com> wrote:
> Yeah, but social life often doesn't provide large n's. So
> you have to supplement it with theory. And theory tells me
> that states can accomplish things that small bands of
> individuals, especially those lacking a broader social
> vision, can't.
>
> I used to find the whole anarchist/autonomist thing very
> seductive. While I can still understand its emotional
> appeal, I'm convinced that adhering to it after the age of
> 30 is like skateboarding after the age of 30.
>
[WS:] While I agree with you on the issue of state vs. a small band of individuals, I do not think that state could provide a solution to housing. Nor, for that matter, can a small band of individuals aka housing coop.
The problem is that housing is a good whose liquidity is considerably greater than its fungibility. That is, you can sell ("liquidate") a a unit of housing much more easily than to substitute one unit of housing with another. It is so, because demand for housing is highly contingent on externalities (the neighborhood effect.) When you buy a house in, say, East Village, you are not only buying 900 square feet of brick, mortar, and wood, but you are also buying a particular piece of Big Apple with it. That is why it is rather difficult to substitute this unit of housing with another one located in, say, the Bronx, let alone New Jersey - but it is much easier to sell it for cash. This low fungibility / high liquidity of housing create artificial shortages that drive up the price and naturally invites speculation.
Furthermore, since there is a finite number of housing units one can build in any particular location - there is no easy solution to this problem, either by government or a small band of individuals. Government can impose price control (cf. rent control in NYC) but that will only lead to hoarding - people keeping "their" units even if they do not need them, which further exacerbates housing shortages and thus price.
The same situation existed in Eastern Europe with cooperative housing. Despite government subsidies for housing construction (coop owners were paying only a fraction of the actual construction costs) and strict rules governing re-sale of these units, there was severe housing shortage in major cities and people were able to charge exorbitant rent - while there was ample housing in smaller and distant localities. Employers in such localities often offered free housing to attract people to certain positions, and afaik there were not that many takers.
A co-p has basically the same array of tools at its disposal - legal caps on the price and subletting - as for example in my coop in Baltimore. The bylaws give the coop the right to first buy at a price determined by a formula rather than the market - which effectively prevents "flipping" i.e. speculation that drives up the price. There are also restrictions on subletting, but these are more difficult to enforce. Needless to say that none of these measures would be very effective if the market forces drove the price up in that area. That is, nothing would prevent me from charging a prospective buyer whatever the market can bear for letting him/her into my unit as a "relative" (distant cousin, paramour or whatever) and then agreeing to vacate the unit - whether the coop "buys" my formula determined equity in it or not, he/she cannot be evicted if he/she already lives there. Likewise, nothing prevents me from subletting my unit at market prices (I
know that many coop members do that.)
So the bottom line is that coop policies aiming to curb speculation and housing price increases are largely ineffective, if market forces drive that price up - which often the case due to low fungibility and high liquidity of housing units. The fact that this does not happen in my coop is caoused by low demand for this type of housing in this particular location (NYC would be much different!) than with the bylaws aiming to curb speculation.
Ditto for government intervention. There is a finite number of housing units the government can build in any specific location - and if a location is "desirable" or if there is artificial housing shortage due to either hoarding (side effect of rent/price control) or speculative manipulation.
There are, of course, more effective means of dealing with the problem, such as government assignment of housing (once practiced in Eastern Europe) - but these are not acceptable in a democratic society.
So the bottom line is that the housing market is really screwed and there is not much that can be done about it in a democratic society, either by government or by a band of individuals.
PS. Low fungibility of housing is one of the key reason why the housing building policies advocated by James Heartfiled on this forum are likely to be ineffective, not to mention environmentally disastrous.
Wojtek