The Cost of Housing
Any assessment of the housing crisis, both in Ireland and across the world, should start with two simple observations.
The first is that the majority cost of housing is in the inflation of land prices. In Ireland it accounts for the majority of the costs of new housing. The second observation is that land, by itself, has no value. As with air and water, it is a natural resource. Landlordism is not capitalism. At some stage force has been used to seize and enclose land and force is an ongoing factor in holding the land and expelling unwanted tenants. One of the major factors in the original conquest of Ireland and in many other colonies was the inability of the native population to deal with the concept of land as personal property.
In the era of capitalism land and the property on it act as a store of "fictional capital" that can no longer be invested productively. Nowhere does the old anarchist adage "property is theft" carry more weight.
Many will shrug their shoulders at this as an historical footnote from the writings of James Connolly, yet today apartments are being built in the major cities of the world, not for habitation, but as stores of wealth for the 1%. Working class districts are seeing mass eviction of residents in a process of gentrification. In Ireland an historical experiment is taking place. Massive property portfolios, bankrolled by the workers and held in the state NAMA fund are, as part of a firesale, transferred to "Vulture Capital'' funds based in New York. This transfer is government policy, surrounded by corruption and payoffs to officials and politicians. The scheme was designed to speed up payments to the European Central Bank. The Vulture funds are not required to pay tax and the only discussion hangs around whether or not they should be bound by what little housing and rental regulation there is - but only if it does not interfere with a guaranteed return on their capital.
Nothing illustrates more clearly the collaboration between native capitalist politicians, bankers and property speculators and global capital than this current firesale of mortgages at knock-down prices. The politicians get foreign currency to pay off more sovereign debt, European Central Bank rules about the level of internal debt are met, the banks get to balance their books and the vultures the chance to make a killing following mass evictions.
Many of the victims object that the process is illogical. They would be able to pay their mortgages if offered the same cut-price deal.
But that is not the logic of capitalism. A deal with tenants would not hold out endless opportunities for profit. Above all it would breach the first rule of the bank bailout - that there can be no forgiveness. Any weakening at any stage by the ECB would have allowed the victims to question the legitimacy of a debt that was not theirs. This was the battle fought across Europe that forced through the era of austerity and saved the banks. The leader of Permanent TSB spelt out this reality. Despite public ownership of the banks and widespread protest the bank had to sell off “distressed” mortgages, most of which were the subject of regular payment by tenants. ECB rules meant that the proportion of these mortgages on the books had to fall sharply so that the bank could meet stress tests of profitability. He expresses sympathy for families put at risk, but does not mention that it was the working class that rescued his institution or that this new transfer of wealth to the vulture capitalists will benefit Irish capital by increasing the value of their own holdings. The question of opposing the ECB simply doesn’t arise.
Housing as a commodity
So much for fictional capital and for rackrenting in the service of debt relief. However the most visible aspect of the housing issue is the house itself. This, as the product of labour, does contain value. It contains use value - everyone needs somewhere to live - and it contains value as a commodity that can be sold on the market. According to capitalists there is no contradiction between use value and exchange value. In fact one of the most extreme proponents of this view is chair of the government's
The Chair, Conor Skehan, says that Ireland doesn't have a major housing issue. The level of homelessness is completely normal and in line with other European countries (themselves experiencing a decade of austerity). The market will respond to demand, more houses will be built and all will be well.
Yet the steps that the government has taken following this ideology simply make things worse. Subsidies to buyers simply speed up housing inflation. Relaxing planning laws means more congestion. Cutting regulation and reducing the space required for homes means paying through the nose for instant slums.
This is Famine thinking. During the famine food was exported from Ireland. Landlords could not picture a world where their rights did not take precedence. Today our property is handed to the vultures while we suffer.
Conor Skehan is right to say that the housing market will regulate itself. What he neglects to mention is that it will regulate itself to maximize profit. It will do nothing for those homeless and those evicted and expelled.
One of the main jobs of the capitalist state is to mitigate the effects of the market and head off the revolts that it would provoke, but above all the state defends the bankers, the landlords and the vulture capitalists. In Ireland we have the additional problem that the government, despite its claims, acts under the direction of the Troika. That means that their main concern will be to throw dust in our faces and convince us they are taking action while doing little.
The Irish Congress of Trade Unions, alongside SIPTU and the National Homelessness and Housing Coalition, propose a housing emergency - a call on the government for a mixture of social and private housing.
There are some problems with
their approach. We should not subsidise further private housing when part
of the problem of homelessness is due to an out of control housing market.
The suggestion is that the cost of the new houses comes from government
borrowing. ICTU have made the proposal of extra borrowing through-out a
decade of austerity with no effect. It makes even less sense now when a
major element of the crisis is the relentless sell off of NAMA properties
in order to pay down the debt. It is, as with all their campaigns, an attempt
to lobby the government. As with all the other trade union campaigns the
result will be half a loaf, or given the low energy of this campaign, a
few slices of bread.
A much more credible campaign, the Campaign for Public Housing, has different methods and different objectives. Its focus is on direct action, street demonstrations, community organisation, and a national network of activists. Its political demand is a mass programme of social housing to meet the needs of working people.
Socialist Democracy fully support these demands, however we believe some further steps are need to achieve our objectives.
The first is unity. We should not complacently accept two housing campaigns marching in different directions. Instead we should constantly argue for a single united campaign. However unity by itself means little if it is not based on an active campaigning movement in the model of the National Housing Coalition and that is what we should win supporters of the SIPTU group to.
We also need a democratic national movement. We should sign up every housing action group, every community group, every trade union branch and political parties who support the campaign. All should meet in convention, elect a representative leadership and be ready to open new discussions - for example how to deal with a wave of evictions and the increased threats of force.
The demand for mass social housing with low rents stands on its own. We do not, like ICTU, have to do sums to work out what the government can afford. We should however be aware that no Irish government can meet our demands without breaking the fiscal space - the loose change left by the Troika - or while paying off the massive banking debt that still hangs over the country. In reality the mortgage sales and foreclosures are simply the latest bill from the bankers, who still have their hands around our throat even as the government claims recovery.
At it heart the eye-watering charges for rents and mortgages, the savage punishment of those in arrears, are mechanisms that operate as a sort of negative wage, taking a greater and greater proportion of earnings that go, along with so much else, in a continuing and unending payment to the banks. Yet the government and ICTU have negotiated a new Lansdowne Road agreement that keeps austerity in place but releases just enough public sector pay to head off explosion. The upward march of housing costs threatens to undo the social peace and turn a humanitarian crisis into a full-blown political crisis where workers reject the meagre slice of the pie allocated to them.
So a housing campaign should be firmly anti-imperialist, recognising that we are in a fight to the death with the government, the vulture funds and the Troika. In these circumstances the only possible strategy is an Apollo house strategy. We work from above and below demanding action from the government while at the same time being willing to take control of our own property and use it for our own needs.
Begging imperialism to show mercy is no alternative to a real fight.