Pluralistic: Everyday homeowners are human shields for Wall Street's Internet of Shit slumlords (01 Oct 2024)

Originally published at: Pluralistic: Everyday homeowners are human shields for Wall Street’s Internet of Shit slumlords (01 Oct 2024) – Pluralistic: Daily links from Cory Doctorow



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A rotting apartment living room; the Wall Street 'Charging Bull' statue is in one corner; from one of its horns dangles a sign reading 'FOR RENT WALL ST.' Through a crumbling doorway, we see an aristocrat laid out on a guillotine, about to be beheaded.

Everyday homeowners are human shields for Wall Street's Internet of Shit slumlords (permalink)

The American Dream, such as it is, used to be two dreams, one based on work and solidarity, the other on asset appreciation and disconnected individualism. We killed the first one.

As the New Deal gave way to the post-war social safety net, Americans discovered two paths to social mobility: they could join a union, and they could buy a home. Joining a union meant that your wages would rise with productivity, and that the democratic ideal that you were meant to approach once every two years at the ballot-box could follow you into the building you spent more waking hours in than any other: your jobsite.

Labor unions used their political power to win labor rights, so that even workers who weren't a union couldn't be arbitrarily fired, or maimed on the job with impunity, or harassed or abused. And while the labor movement was mired in the same racist legacy that every American institution brought forward out of genocide and slavery, where racialized people started unions of their own or demanded representation from the unions who nominally represented them, they thrived.

Then there were houses. On the one hand, owning your home insulated you from the petty tyranny of the landlord, the threat of eviction, rent hikes, indifferent or dangerous building maintenance, and all the other miseries that arise when you think of a building as your home and someone else thinks of it as an asset, and the board is tilted so that they win every argument.

But homeownership wasn't just sold as a way to get out from under scumbag landlords: it was primarily sold as a way to build intergenerational wealth. Your house wasn't just a place to live: it was an asset, and it appreciated.

And if the dividends of labor protection were unevenly distributed between white people and racial minorities, the dividends of home ownership were almost entirely hoarded by white families. Federal policies – redlining – combined with racist lending at the local level, meant that Black families and other racialized groups were stuck in tenancy, while white families build wealth thanks to federal subsidies:

https://web.archive.org/web/20170220005558/https://www.demos.org/sites/default/files/publications/Asset%20Value%20of%20Whiteness.pdf

Those were the two American dreams: a good job and your own home. We killed the first one, and the second one devoured us whole.

Without a strong labor movement, wages stagnated. Corporate power waxed, and with it, the power to pollute, to poison, to maim and to defraud. The labor movement wasn't strong enough to stop Reagan from killing free UC tuition when he was governor of California. It wasn't strong enough to hold back spiraling health care prices. It wasn't strong enough to block the business lobby from neutering antitrust and ushering in four decades of market concentration, market capture and corruption. Workers couldn't save their defined benefits pension and were railroaded into market-based 401(k)s, forcing them to play the stock casino against their bosses, ever the sucker at the poker table.

With stagnant wages and out of control medical, educational and end-of-life bills, homeownership – the thing you do as an individual, where your gain is someone else's loss – became the American secular religion. Your house wasn't just a place to sleep and keep your photo albums: if it appreciated enough, you might be able to liquidate it on your deathbed and pay off your eldercare, your healthcare, your kids' college debt, and leave enough left over for your kids' downpayments.

And so every American who had a home became the enemy of every American who didn't – including one another's children. Every home built threatened your own property values. The racist, batshit American school funding formula, which sees schools funded out of property taxes, meaning the richest kids get the best schools, turned out to be a great way to increase your property values.

Protections for tenants, meanwhile, threatened the entire American way of life – the American dream itself. Every protection a tenant got – protection from eviction or rent hikes, the legal right to a safe and well-maintained home – reduced the value of every home in town.

After all, the better a landlord has to treat their tenants, the less money a landlord can make from a rental property. The less money a landlord can make from a rental property, the less they'd bid on a house like yours if it went up for sale.

And since anyone planning to buy your house to live in it has to outbid a landlord who might want to rent it out, giving tenants any protection threatened everything – the one asset you owned, which was your plan a, b and c for paying off all that health, education, and assisted living debt:

https://pluralistic.net/2021/06/06/the-rents-too-damned-high/

Today, the house-as-asset scam is breathing its last. There are millions more people who need homes than there are homes available. Sure, homelessness is a fantastically complex problem, but you could address every aspect of it – addiction, mental illness, joblessness – and millions of people would still be homeless, because there aren't enough homes for them to live in:

https://headgum.com/factually-with-adam-conover/myths-about-homeless-people-with-dr-margot-kushel

70% of all inflation in 2024 came from the cost of housing; a quarter of that came from illegal collusive behavior by landlords to hike rents:

https://www.thebignewsletter.com/p/up-to-a-quarter-of-rental-inflation

Wall Street landlords have raised gigantic war-chests and are buying up homes at a rate never before seen, converting every available single-family home in many cities from an owner-occupied home to a rental. Private equity and hedge fund landlords have elevated charging junk fees to an absurdist theater project: you pay a "convenience" charge for paying your rent in cash. But also for paying your rent by direct transfer. Oh, and also for paying in cash. When Wall Street is your landlord, your home is a slum, dangerously undermaintained, sometimes lethally so:

https://pluralistic.net/2022/02/08/wall-street-landlords/#the-new-slumlords

Capitalists hate capitalism. The best thing to sell is something your customer can't live without, and that no one else has for sale. That's why "the market" loves private prisons so much:

https://pluralistic.net/2024/04/02/captive-customers/#guillotine-watch

The vast sums Wall Street is putting into buying up all of America's available housing stock is a bet that they can establish regional monopolies over having a home, and charge all the market can bear.

That's the plan at Invitation Homes, a company that was just targeted by the @FTC for a slate of eye-watering crimes against the tenants in the 80,000 single-family homes they've acquired:

https://www.ftc.gov/news-events/news/press-releases/2024/09/ftc-takes-action-against-invitation-homes-deceiving-renters-charging-junk-fees-withholding-security

Invitation Homes purchases homes as they come on the market, and they're also a leading customer of the "build-to-rent" housing industry, a fast-growing segment of new housing starts.

Writing about the FTC's enforcement action against Invitation Homes, Matt Soller brings in Starwood Capital Group, who manage Invitation Homes properties, and own 14,000 more homes in the sunbelt. Invitation and Starwood hate the anti-monopoly movement, and Barry Sternlicht, Starwood's billionaire CEO, really hates FTC Chair Lina Khan:

https://www.thebignewsletter.com/p/monopoly-round-up-corporate-slumlords

The FTC complaint lays out a suite of just comically sleazy things ways that Invitation abuses its tenants, starting with false advertising. The company lists its houses at relatively low rents, then charges a large fee to apply to live there. When you pass the application process, you're told the rent is actually much higher, and if you walk away from the deal, you forfeit your application fee. That scam's netted Invitation $18m since 2019.

Stoller really hates junk fees, calling them "convenience fees without any convenience, service charges without any service performed." He lays out Invitation's long list of junk fees, which honestly sound like a list that Chatgpt would spit out if you prompted it for fifty junk fees that wouldn't pass the giggle-test: "utility management fees" "Lease Easy bundle fees," "air filter delivery fee," "smart home technology fees," etc etc.

"Smart home technology fee?" Yeah, Invitation's gone in hard for Internet of Shit smart home tech. The SVP who oversees Invitation's smart home fee program was ordered to "juice this hog" (you guys, juice doesn't come from hogs).

After decades of recruiting everyday American homeowners to demand anti-tenant policies that benefit giant corporations, American tenants have few rights on paper and even fewer in practice. That's left the door wide open for Invitation to abuse their tenants in a myriad of dismal and unimaginative ways: stealing their deposits, trashing their credit reports to retaliate against complaints, illegal evictions, busted appliances, mold, vermin, insects – the whole slumlord playbook.

As Stoller writes, there's a twist: "this landlord isn’t just a random slumlord, it’s one of the biggest Wall Street players in housing."

There are vast fortunes to be made in converting the human right to housing into an asset class, but those fortunes end up in the hands of a very small number of billionaires. On their own, they wouldn't have the political power to dismantle protections for tenants.

Realistically speaking, most kids who grew up in their parents' owner-occupied homes are going to end up tenants, thanks to undersupply and housing inflation. But those kids' parents have spent decades demanding policies to make their homes as valuable as possible – including mortgage tax breaks (but not rent tax breaks!), looser eviction laws, and less enforcement of what few protections tenants have.

Middle class homeowners are the useful idiots and human shields of the billionaires who are determined to force every American under 40 raise their kids in a rented slum full of spiders, ratshit and black mold, which will still cost 60% of their take-home salary.

That's why the FTC's action against Invitation Homes is such a big deal. And as Stoller points out, Chair Khan is really just implementing Kamala Harris's campaign promise to get Wall Street out of the landlord business.

Wall Street's raid on your bedroom and kitchen has inspired a generation of "finfluencer" copycats who buy and flip apartment buildings, sucking ever-larger amounts of cash out of them until they're unfit for human habitation, with mountains of rat-infested garbage ringing their crumbling walls:

https://pluralistic.net/2024/05/22/koteswar-jay-gajavelli/#if-you-ever-go-to-houston

Any future worth living in is going to get housing right. We need to stop thinking of housing as an asset and realize that it is, first and foremost, a human right. That's the premise of my 2023 solarpunk novel The Lost Cause, which just came out in paperback:

https://us.macmillan.com/books/9781250865946/thelostcause

You can't protect yourself from rising seas or rising healthcare bills through individual home-ownership. Solidarity – the kind of solidarity that once powered the union movement, and that is powering it again – is the only way to defeat the housing profiteers. The New Deal wasn't perfect, which is why whatever we do next has to be bigger, further reaching, and more inclusive than what FDR did almost a century ago.

The only minority that should be excluded from the next New Deal is billionaires.

(Image: Sam Valadi, Carlos Delgado, CC BY 2.0, modified)


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"When life gives you SARS, you make sarsaparilla" -Joey "Accordion Guy" DeVilla

Hi Cory, was just first exposed to your work from your great defcon 2024 speech on disenshitification, and was hoping to find that you also wrote on housing and land use, and it just so happens you put this article out the day I was looking for it! Very much enjoyed it, but am wondering if you have read any books by Henry George, or dove deeply into Georgism, which is having a bit of a renaissance. In another interview of yours on a left leaning show about inflation, I noticed that you strattled the line between socialism and capitalism, which is something Georgists are very much used to. I strongly feel that this once massively popular, late (~1870-1900) classical liberal perspective, which has been largely driven out of the education curriculum, could very much hone your aim on not just what are the root bugs of our socioeconomic dysfunction, especially when it comes to land and housing, but also provide a solid remedial framework.

I’ve hesitated to send you this as it feels like peddling, and that there is a fair chance you are very well know the concepts, but if not, I think it would be a new but familiar companion to your worldview, and for the benefit of others give ever more piercing ideas to your strong voice. Here is one common intro article regarding his foundational book: Book Review: Progress & Poverty | Game of Rent , though a read of the actual text provides a much deeper enlightening.

Thanks for your time and all that you do.

Joining a union meant that your wages would rise with productivity

No. This myth is insane. Please stop believing it, and pretty please stop repeating it. Joining a union means your wages rise because you have more bargaining power to influence the price of your wages collectively than individually. At no point ever does wage equal productivity. In no way does the idea even make sense.

Wages, like all market prices, are simply the result of supply and demand. Unions are organizations that monopsonize the supply of (usually skilled) labor to some degree.

Productivity is measured in units of $/time value created. Wages are also measured in $/time, but are a function of supply and demand, not value. Nothing is priced based on value. Everything is priced based on supply and demand (and regulations, but one could say that regulations act through supply and demand).

Imagine a really simple economy. There’s only one firm, and it produces widgets. Widgets remain stable, always worth $1/widget. The firm produces them from nothing ($0 of value) to $1 for the sake of simplicity. The wages earned have to be <$1/widget, because the firm exists and if it paid >$1/widget, it wouldn’t/couldn’t. Let’s say that each worker produces 100 widgets / day.

Now, imagine productivity increases. The usual way for this to happen is that we improve a process, automate something. Productivity becomes 200 widgets / day. Assuming that demand for widgets doesn’t change, the same number of widgets will be produced. But half as many workers will be required. So, either half the workforce is laid off, or every worker works half as many hours. In no case would anyone be raising the wages of the workers because productivity increased!

In the real world, there are dynamics, like demand for widgets is typically not fixed, as widgets become cheaper to make they draw demand away from more expensive substitutes to widgets, etc. If productivity increases because skilled labor is really good at making widgets, then maybe you get an outcome where the skilled labor gets paid more, per worker, but far fewer workers are employed in widget-making, so the average wage for making widgets goes up, but the average wage for people goes down, because, net, a bigger ratio of people were fired from widget-making than the ratio of higher pay to the scant few remaining widget-makers.

This simply makes no sense. Why on Earth would wages go up with productivity? Neither causes the other. That they sometimes correlate is happenstance. In most realistic cases, increasing productivity means some mixture of either fewer producers are needed, fewer producer-hours are needed, and/or less skilled producers are needed to produce the same amount to satisfy market demand.

If someone did invent a competent AI for producing writing, don’t you think total wages paid to writers would go down? A competent AI writer would be ridiculously more productive than current human AI writers, by definition. Productivity up, wages down.

Yes, there are tons of counterexamples, especially when you look at wage rates or number of workers earning wages, but when you look at wages themselves, they tend to go down with rises in productivity.

The whole “goal” of capitalism, if you can call it that, is to produce everything that is wanted, for $0, in 0 seconds, employing 0 people. Advances in productivity take us closer to that “goal”, not further from it.

Georgism is too narrow. The problems with our system are that it’s not capitalistic enough. George recognized that land is not made by humans / not made valuable by the humans that own it, so shouldn’t be owned the way we let it be owned. George was a bit dense in saying that land is the only thing like this. George was also off the mark in saying that property taxes make sense as the best way to claw back this rent.

Go beyond the narrowness, and accept that humans don’t create space nor energy, and humans don’t make space nor energy valuable (earn it), so what should be done? Everyone gets the same amount of all that is unearned. Who gets to own (exclude others from) stuff that was unearned? Whoever pays the most for it. Who do they owe that payment to? Everyone, in perfectly equal shares, because it’s unearned wealth.

So, what this means, practically, is that all land, and all other combinations of energy and space that humans value but don’t create, must be bid upon, in an ongoing auction, all the time, where the proceeds are always going to everyone in equal shares.

Not a property tax, that a county, state, or country government can appropriate to anything it wants, but a property rent auction, whose proceeds the government must immediately redistribute, in equal shares, to all the people.

Obviously, people can and should (still) keep all the value they created until they die.

Equally obviously, stuff dead people made (like buildings, books, movies, songs) and stuff not-people made (like land) belong (morally) to everyone in equal shares. Because none of us deserve it, but it’s valuable.

«Middle class homeowners are the useful idiots and human shields of the billionaires»

I am very disappointed with this because it portrays rapacious “F*ck you! I got mine” middle class property speculator as the (sarcasm alert) “naive victims” of billionaires.

Also because middle class people have been voting for Reagan, Clinton, and their neoliberal successors for decades to pump up share and property prices but private equity speculators have only been really interested in residential property for the last few years.

«recruiting everyday American homeowners to demand anti-tenant policies that benefit giant corporations»

Many if not most of those “naive victims” have been voting for screwing tenants for their own benefit, and they have succeed so much that eventually even giant corporations have got interested in competing with often vicious middle class landlords.

«a good job and your own home. We killed the first one, and the second one devoured us whole.»

Most middle class people still have good jobs and their own homes, otherwise they would not be middle class, and have used both to devour the lower classes.

The political problem is not how to fight the “billionaires” and the “giant corporations” it is rather to persuade the many greedy and mean middle class voters that there are better alternatives for their financial security than to vote themselves large amounts of redistribution from the lower classes.

«unevenly distributed between white people and racial minorities»

Actually race does not matter much as to that: there have been and there still are many areas of the USA with negligible numbers of racial minorities, and still there are high rents and slums full of poor whites, and the same in other countries that have been dominated by middle class voters.

«the dividends of home ownership were almost entirely hoarded by white families»

There were and there are >99% still white areas in the USA (and in other countries not as obsessed with skin color), and in those areas the poor whites live in slums and suffer high housing costs regardless of their skin color.

The people who benefit from property speculation are the middle and upper class people in general, and that in the USA the ruling class have contrived to make it harder for poor racial minorities to join the middle and upper classes is a different topic even if it obfuscates who really benefits from housing speculation.

«the human right to housing»

If housing is a human right that right does not stop at the USA borders and USA taxpayers should pay 90% rates of tax to fund “the human right to housing” of desperately poor people in Nigeria or Colombia or Bangladesh (etc.) too, because they are humans and have the same human rights as the people of the USA. Then there are these choices:

  • Housing is a human right for every human, and rich country voters must vote to pay 90% taxes on their incomes to pay for housing worldwide until everybody in the world has that right satisfied, and that is politically absurd.

  • Housing is not a human right, but a reciprocal arrangement of mutual benefit among the residents of a political entity.

  • Housing is a human right but only inside the USA, because the rest of the world, 85% people of color, is not entitled to the same human rights as the USA, 85% white, and that smells really bad.