The Failure of Affordable Housing Policy

(c) by Mark Dempsey

If you read most editorials decrying the shortage of affordable housing (here's one), you'll actually believe the USA doesn't have enough houses. That's why we have the largest homeless population since the great depression! If we could only build more homes, that would solve the problem! If only the government would get out of the way and deregulate this stuff, darn them!

Except the US has more vacant homes than homeless people, and in San Francisco, there are five times as many vacant homes as homeless. And yes, government policies like zoning and building codes restrict home building--and we should look into revising them--but the distribution of housing, not a shortage of deregulation, is the problem.

Following the New Deal, the federal government built affordable homes. Of course, they skimped on maintenance and generally sabotaged affordable housing that might be available even to poor people, but at least they built affordable housing in some manner. 

One notion behind the attack on the poor is that they deserve their poverty, and of course, rich people deserve their wealth. Note: A family member who was active in philanthropy met many wealthy individuals and was quick to point out that, while 90% of them were "born on third base," they all wanted to act like they had hit a triple. But hey, it's okay to punish the poor because they deserve it.

Richard Nixon halted federal efforts to build affordable housing in the 1970s. Meanwhile, as he cut taxes on the wealthy by roughly half, he and his successor increased payroll taxes eightfold. Consequently, Reagan reduced HUD's affordable housing budget by 75%. The attack on the poor is bipartisan, too. Bill Clinton signed legislation that included the Faircloth amendment limiting the federal government's ability to fund affordable housing. Meanwhile, the local charity serving the homeless started during the Reagan administration. 

Many people believe our homeless population is largely mentally ill and/or addicted in some way. Even though the majority of the unhoused are really just too poor to afford rent, mentally ill people are a larger portion of the unhoused than the general population. 

With this in mind, it's useful to remember that Reagan closed California's asylums when he was governor, and JFK wanted to close the big federal asylums and move the inmates to transitional housing more integrated into the community. Congress approved the federal asylum closures but failed to fund the transitional housing. Both of these government moves threw the mentally ill out on the street. Senator Daniel Patrick Moynihan described the omission of funding for transitional housing as the most shameful episode of his career in public service.

So rents rising faster than paychecks has been the story for the majority of those homeless or even those precariously clinging to their housing.  Surveys also confirm that mental health and addiction problems most often occur after people experience homelessness. Being unhoused can induce a form of PTSD, leading to self-medication. PTSD can also vanish once the unhoused get shelter. Some communities have even found it's cheaper to house people than to deal with the policing and health problems homelessness produces.

One lobby opposing affordable housing is banks. They love higher home prices--with bigger mortgages, they get bigger profits--so they lobby for restricting the supply and type of housing. If you want to see how banks control the housing market, try to get a loan for a boarding house. If FNMA ("Fannie Mae") introduced a special affordable housing mortgage, we would have much more affordable housing. 

"But where would we get the money to discount loan rates, etc?" Just a reminder: the feds make all the legal dollars. Here's something no one said, ever: "The Japanese just attacked Pearl Harbor, but we're a little low on cash, so I guess we won't respond." Pleading that the government (or public bank) that makes the money can't afford something is slightly ridiculous.  

Former congressional aide and author of Goliath: The 100-Year War Between Monopoly Power and Democracy, Matt Stoller writes that monopolists are driving up the price of land and materials, never mind the monopolists whose rental software algorithms raise rent. 

Contrary to the "deregulate everything" narrative of the Abundance-ists, these are evidence that the government movement toward deregulation is behind at least part of the rise in housing costs. 

Reality! What a concept! (A quick look at films: Rental Family and Good Fortune)

(c) by Mark Dempsey

Some of the best recent movies have Asian provenance. Asian writer and comedian Aziz Ansari's Good Fortune and Brendan Frasier's Japanese adventure (Rental Family) are both outstanding. Good Fortune skates perilously close to the Hollywood/Disneyfied fantasy line, and, ironically, Rental Family is more realistic, even though its a story about creating an illusion.

Jackie Chan's martial arts movies include reality in the final titles with the out takes, where Jackie Chan does not succeed doing the incredible stunts he does for the film. The final titles' failures are the reminder: what you just watched is an illusion  Don't be fooled! Good Fortune exposes some uncomfortable truths about poverty in the US, but Rental Family is my favorite because it reminds us of how convincing illusions can be.

Of course there are other ways to remind the audience not to get caught up in the fiction. Shakespeare has a play within a play in Hamlet, for one example.

Rental Family, starring Brendan Frasier, contains many surprising reminders that the reality portrayed in the film is not always what it seems. Frasier plays a desperate-for-work bilingual (Japanese/English) actor hired to provide emotional support for Japanese clients. 

For the first scenes in his new acting gig, he pretends to marry a Japanese woman. The marriage is a ceremony to provide the woman's parents with satisfying memories before she moves to Canada with her new pseudo-husband. After the wedding, we discover she's lesbian, leaving her family to be with another woman. But the illusion is preserved in wedding photos; everyone gets to save face.

Another family hires Frasier to portray the father of a girl who has actually been raised by a single mother. He's a necessary accessory to the child's application for a good school. As one might expect, Frasier falls for the little girl, and becomes fatherly in ways that convince the little girl he really is her dad. She's later disillusioned when she sees him in a TV commercial.

But Frasier and the little girl reconcile after she's admitted to the school, even though she knows he's part of an elaborate illusion her mother arranged. Frasier tells her his character's real name, and they remain friendly. The illusion isn't necessary, but perhaps the letdown when it's revealed is.

Rental Family has many other twists and turns, but the reminder of the distinction between illusion and reality is central to its theme. 

Currently American culture is fraught with heavily marketed illusions. Hollywood tells us the detectives always catch the bad guy. In reality, police solve less than 15% of crimes. Nevertheless, alternative strategies to manage crime remain unexplored, and cutting police budgets remains taboo.

A movie is only a subtle reminder that there's an underlying pig beneath all that lipstick, but that may be all it takes. Meanwhile, asian-adjacent films like Jackie Chan's, Good Fortune and Rental Family say Asians are more interested in results than words. 

One Western pundit who married a Chinese woman, says that people in her culture are not so interested in declarations like "I love you" as they are in demonstrations of a loving relationship. Talk is cheap, but it's a currency Americans have accepted for some time now.

 

Real Economics

From Corbin Trent (here...well worth reading the whole thing):

In 1950, median INDIVIDUAL income was $1,971. A median home cost $7,354. The nation spent about $83 per person for healthcare. A four-year college degree cost $852.

Do the math. 3.73 years of work to buy a house. One week of work for healthcare. Less than two months for a college degree.

In 2023, median personal income was $42,220. A median home costs $429,000. Healthcare runs $14,570 per person per year. A four-year degree costs nearly $40,000.

10.16 years of work to buy a house. Twelve weeks of work for healthcare. More than six months for college.

So wages went up 21x since 1950. Sounds great, right? But the essnetials the core things we need to survive went up much much faster.

Housing went up 58x. Healthcare went up 175x. College went up 47x. But as I showed in “The Cover Up,” the official inflation numbers hide most of this through hedonic adjustments and statistical manipulation. The experts tell us the cost of life went up maybe 3-4x instead of 50-175x. Inflation is under control, economists and politicians tell us.

....

When my uncle graduated from high school, he took a job as a bag boy at the local A&P. Made enough for an apartment, food, going out, and a new Camaro. My aunt went to ETSU, worked part-time, and graduated debt-free while paying her own way.

....

The government claims real wages have increased 252% since 1950. My math says we’ve lost 61% of our purchasing power....





Either we’re losing buying power for the foundations of life or basic math is wrong. Many of our statistics have become completely detached from reality.

The Gap That Breeds Rage

This gap between what the statistics say and what we live breeds the rage you see in our politics.

....The chart below shows the official claims about what our annual income buys in Blue and what my math figures for renters and owners in orange and red.





....Wall Street replaced wages with debt. When we couldn’t afford college, the financial industry gave us loans from Sallie Mae that we can’t discharge in bankruptcy. Can’t afford a house? Sign 30 years away to Wells Fargo. Can’t afford a car? Here’s an 84-month loan. Seven years of payments for a depreciating asset.

In 1950, household debt was $47 billion. Today it exceeds $17.1 trillion. When measured in years of work at median wages, the debt burden has grown from eight weeks of work in 1950 to 63 weeks today. A 670% increase.




What once took one year of labor now demands over three. This isn’t prosperity.

The Distraction

Here’s the trick. Economists and politicians point to the cheap TV. The smartphone. The streaming services. Look how much better life is. You have technology your grandparents couldn’t dream of.

Sure. Electronics got cheaper. I can buy a 55” TV for $300. My grandpa’s 19” black-and-white cost $200 in 1950. That’s equivalent to $2,400 today.

But while the TV got cheaper, everything that actually matters got more expensive. Housing is up 7x since 1980. The official stats say 3.7x. Healthcare is up 13x. Official stats hide 9.3x of that. College is up 12x. Official stats hide 8.3x. Food is up 5.7x. Official stats hide 2x.

As I detailed in “The Cover Up,” roughly 50-60% of actual inflation gets hidden through hedonic adjustments, Owner’s Equivalent Rent, and basket re-weighting....

The Political Consequences

Trump didn’t cause this disaster. He exploited it. He saw the anger, the despair, the realization that the American Dream had become a scam. He told people their pain was real. The system was rigged. Their leaders had failed them. And unlike the economists and media pundits, he never told them to learn to code.

That’s why he won in 2016, and again in 2024.

But look what happened this month. Democrats swept Virginia, New Jersey, and NYC. Voters sided with Democrats on the economy despite Republican advantages on crime and immigration. Independents swung hard left. Trump’s approval on the economy has cratered.

We’re still broke. Now we’re blaming him for it.

But Democrats haven’t see the light yet either. Most of them don’t see the collapse because their numbers tell them everything’s fine. They’re incapable of fixing a crisis unless they can see it exists.

This is what happens when Reagan legalizes stock buybacks, when the Boskin Commission embeds statistical lies, when both parties tell people for forty years that they’re imagining their own decline. People stop trusting institutions. Not because we’re irrational. Because the institutions are lying.

What Any Real Solution Requires

Any politician promising affordability without a bold plan to shift power back to working people is full of shit.

Tweaking tax credits or adjusting interest rates ian’t going to restore affordability in any meaningful sense. We’re need to reverse a 50-year transfer of $79 trillion from the bottom 90% to the top 1%. We’re talking about breaking up monopolies and oligopolies that control our healthcare, our housing, our food. We’re talking about rebuilding unions strong enough to actually negotiate with capital. We’re talking about public ownership and public competition in captured markets.

That takes political power. Real political power. Not the kind you get from being polite or following Senate norms or designing another program with so many hoops nobody can use it. The kind you get from organizing millions of people who are tired of trading their lives for survival while Wall Street and the executives they enriched get richer.

We used to build things in this country. Real things that lifted everyone up. When we invested in ourselves, roads, dams, public universities, the research that created the internet, everybody got richer. Not just the people at the top.

We can do that again. But first we have to be honest about where we are.

These days GDP growth is disconnected from real tangible production. It is fueled by a parasitic elite take more from us. Stock markets soar while families drown in debt. Official real wages rise on paper while buying power crashes in real life. We work harder than our parents did and fall further behind. More and more of us have insurance and still go can’t afford to go to the doctor. We do everything right and still drown in debt.

The people who rigged this system are still telling us everything’s fine. The executives who legalized looting through stock buybacks. The economists who embedded the statistical lies. The politicians who protected the theft.

The Choice

We can keep measuring success by numbers designed to hide our decline. Or we can start building an economy that actually serves the people who make it work.

Right now we’re not just declining. We’re being stripped for parts. One week of our lives at a time. Ten years of labor for a house that used to take three. One decade of debt for an education that used to cost a part-time job.

The parasitic elite aren’t stealing our money. They’re stealing our time. Our lives. The years we’ll never get back.

No amount of statistical manipulation can hide that theft anymore. We see it now.

We need to start thinking about building what we need together, as a people. America is ready for systemic change. Hell, Trump has already done a lot of the destruction. The old order is weakened.

The question is are we ready to knock it over and build something beautiful in its place. Will “We The People” be at the table?

Corbin Trent

Liberal Elites Kicked the Door Wide Open for Trump’s Flagrant Corruption

From Tony Wikrent's Week in review:

Liberal Elites Kicked the Door Wide Open for Trump’s Flagrant Corruption

Dylan Gyauch-Lewis, November 9 2025 [The Intercept]


…While Trumpian corruption is striking in frequency, scale, and just how routine it is starting to feel, this administration was the logical endpoint of the long-standing tradition of elite impunity. The second Trump administration is a striking monument to governmental misconduct, but the ground was broken long ago, with both parties laying the foundation. For the past half century, corporate and white-collar crime have gone largely unenforced. This was the result of both a widespread shift in views of governance (à la the Reagan Revolution) and a coordinated plan orchestrated to enable private wealth to hijack our democracy, as David Sirota and Jared Jacang Maher documented in their new book “Master Plan,” building on a podcast of the same name.

Trump himself is a byproduct of the wealthy being empowered to violate the law. Seemingly his entire pre-government career was predicated on getting away with gaming bankruptcy law, committing widespread financial fraud, and racial discrimination. Now, in government, he is employing the “blitzscaling” model pioneered by firms like Uber to break the law faster than anyone can keep up with….

The Great Recession was a turning point; the extent of corporate lawbreaking in the financial sector was laid bare. And, famously, hardly anyone ever went to jail. Obama-era regulators, in many ways the acme of our last half-century of the hands-off approach to ruling-class misconduct, earned rebuke and scorn as “the chickenshit club,” afraid to square up against the powerful, if not overtly committed to serve elite interests. Since 2008, it has only become more apparent that the wealthy play by an entirely different set of rules.

Trump’s first election was, in part, built on the argument that he knew “how to play the game.” In this telling, his ability to break the rules was actually an asset because he would break them for you rather than just for the powerful. It was always a dubious pitch, but it’s understandable why — faced with the choice between someone trying to convince you the game that’s obviously been fixed is actually not rigged, and someone who tells you how they cheat and promise to help you get ahead a little bit — people would gravitate toward the latter. Part of the early MAGA mythos was built on resignation to the fact that our rule of law is fundamentally perverted to create two parallel tracks of justice: an unforgiving, punitive, carceral system for most people, and a cushy, consequence-free dinner party circuit for the ruling class.

Dethroning Trump will not be enough to restore real rule of law; the Biden administration is proof enough of that. Donald Trump was excised from the White House with historically bad public sentiment in the immediate aftermath of a failed coup. Under Biden, the Garland Justice Department tried to wind the clock back to 2016 and resume operating the way establishment politicians did in the 1990s and 2000s. It failed spectacularly, allowing bad actors like Elon Musk to grow ever more powerful while continuing to flout the law with impunity. The result was an embittered Trump who faced no real repercussions for his corruption — the worst-case scenario….

To dislodge the hold that corruption has on our government and restore the rule of law, Democrats will need to decide who they really are — and who they’ll fight for.

[TW: More accurately, Democrats will need to decide who they’ll fight against.]

The importance of (public) banking

 Public bank maven Ellen Brown has a new post describing how Zohran Mamdani is going to manage to get the money needed for his programs. Hint: It's a public bank. You might also refer to this previous post for context. It explains why this isn't optional, it's required.

Excerpt:

Banks, Not the Government, Create the Money Supply

How can a public bank lend billions more than the capital it actually has? The answer is in a little-known secret of banking: banks don’t lend existing money. They create it. When a bank issues a loan, it doesn’t hand out cash from a vault. It creates a deposit in the account of the borrower, backed by the borrower’s promise to repay the loan with interest; and these deposits are counted in the money supply. Roughly 95% of the U.S. money supply is created in this way — by private banks, for private profit.

A public bank does the same thing, but in the public interest. It monetizes future productivity — housing that will generate rent, roads and rail that will transport workers, solar panels that will lower energy costs. To “monetize” means to turn future productivity into something that can be spent now — e.g. spent on the labor and materials necessary to create the products that will repay the loan. The money is created into existence, circulates through the economy and is extinguished upon repayment.

Isn’t That the Sort of “Money Printing” That Drives Up Prices?

No. Price inflation is a function of supply and demand: prices go up when too much money is chasing too few goods. Injecting new money (demand) does not drive up prices as long as the money creates new supply to absorb it, keeping prices stable.

China’s development model illustrates this principle. Over the past 29 years, its money supply has increased by a whopping 5,500%. Yet price inflation has remained modest, because the increase in money was matched by an increase in goods and services. The China Development Bank — one of the largest banks in the world — along with other Chinese public banks fund infrastructure, housing and manufacturing, creating real assets that absorb the new currency in the marketplace. 

....

The New York Public Banking Act (S1754/A3352), which Mamdani co-sponsored in the NY Assembly in 2023, would allow cities in the state to obtain charters for their own public banks. Modeled on California’s AB857, it has broad legislative support. However, it remains stalled in the legislature — likely due to pressure from entrenched financial interests. New York State is home to some of the largest and most powerful banks in the world, and they are in the heart of New York City.

New York City is also the home of the most powerful branch of the Federal Reserve, the New York Fed, and like all Fed branches, it is 100% owned by the banks in its district. Because of its proximity to Wall Street and its operational responsibilities, the New York Fed is often considered the heart of the Federal Reserve System. Its Wall Street owners are not likely to relinquish control of that megacity’s finances without a fight.

 

 

 

Ever wonder about the quality of economic advice our leaders receive?

 

Saikat Chakrabarti Runs for Pelosi's Congressional Seat + Thomas Ferguson evaluates Democratic failure

You'll read all about conventional Democrat Weiner running for Pelosi's congressional seat in the "lame-stream" news, but the absolute minimum about the progressive challenger, Saikat Chakrabarti. He's come from AOC's staff, and is very clear about the progressive goals he embraces. For the full story, read or listen to his interview with The Intercept.

One excerpt:"So the thing I’ve been working on at my think tank New Consensus, we’re calling it the “Mission for America.” And it really harkens back to basically what FDR did during the New Deal, but also during the mobilization for World War II to build a whole new economy because I think that’s ultimately the way we defeat authoritarianism. Because back in the 1930s, we had a really powerful, far right in this country. We were actually seeing Nazi rallies in Madison Square Garden, it was filling the stadium.

"And the way we defeated that was FDR came in with the New Deal movement. He built this whole new economy and a whole new society that improved people’s lives so dramatically, it just killed this idea that you need an authoritarian to do it for you.

"He proved democracy can work. And he did that through the social safety net. But he also did that by building an industrial base that created the modern-day middle class. So that’s really what the “Mission for America” is. It’s basically taking a lot of the institutions and the lessons from that era and saying, how do we do that today? Because I argue that it’s not just about some policies; it’s actually this whole other kind of governing that we had back then." 

Meanwhile, Thomas Ferguson evaluates Democratic chances here Hint: follow the money.  

Excerpt:

"The old line continues in a new way as people try to understand the Trump economy. Paul Krugman and many others continue to maintain that Biden left a good economy that Trump is ruining. The very last months of Biden’s term were somewhat better, but the dominant tendency is a deepening of the dual economy Storm and I spotlighted with the continuing stock market boom. The Federal Reserve Bank of Boston just put out a study of wealth, income, and consumption spending. It concludes that it’s the rich who are benefiting hugely in both wage growth and spending, not the lower-income groups. Other studies confirm this. 

"Indeed, segments of the business press now routinely refer to the “K-shaped economy,” alluding to the divergence between top and bottom in income and wealth. Most stories manage not to mention quantitative easing and the Fed’s role, but they document very clearly the way retail sales and other spending divide in our dual economy. That tendency became stronger during Biden’s term, especially once the relief programs were withdrawn and access to health insurance fell. Even the Wall Street Journal has come around on this point.

"The process has been going on for quite a long time, yet Democratic Party elites mostly felt comfortable discussing it in terms of second-order effects suffused in references to racism and gender. You could see that very clearly in 2016, where virtually everybody’s election analysis focused on race and gender. By contrast, in the analysis that Ben Page and my colleagues and I did, we were very clear that Trump’s ascent was first of all an economic story. You only had to listen to him talk to realize that race and gender were also playing big roles in his electoral appeals. But the importance of the economic squeeze on many Americans was clear from day one, as was the disenchantment of many Democratic voters with the party.

"It’s not getting better. Little in the “abundance agenda” now touted by many Democrats addresses the real problems. The recent paper from economists at the San Francisco Fed showing that supply constraints don’t explain housing construction and prices in US cities is devastating, for example. So is the evidence Storm and I presented about electricity rates; you don’t explain those by NIMBYism. Electricity prices are classic cases of money in politics distorting regulation."

Nick French

"To summarize where that leaves the Democrats right now: They still push this narrative that Biden had a great economy, that he delivered for workers. He only lost because the workers are confused by social media or because they don’t care about economic issues…

Thomas Ferguson

"Or the party has somehow not found a message. That’s another nonsense bromide. The Democrats failed to deliver for most Americans who were not rich, full stop."