Why Homelessness Won’t Be Solved by Itself

The San Francisco Chronicle ran an admirable series on homelessness—on the front page. Like everywhere else, the city has spent many millions to help solve the problem, and it has only gotten worse. That’s because homelessness is not a city problem. It’s not even a national problem. At base, it’s a global problem, closely related to the concentration of the nation’s and the world’s wealth in the hands of a few people who have absolutely no use for it.

Homelessness is not one single problem. Locally, the two most significant factors are unemployment and substance abuse. The former is no doubt the far bigger factor, in spite of what some people think. To those people, mostly white conservatives who believe because they were always able to find work, anyone unemployed is simply not trying hard enough. Oddly enough, the same people also believe that all homeless are addicts. In neither case do they think that economic conditions might have something to do with it.

Homelessness is not caused by the homeless. It is caused by the economy.

I will leave addiction for another time. The biggest element of homelessness is unemployment, and many of the personal tales are heartbreaking. Millions of people with decades of dependable skilled work were tossed aside when factories closed, their jobs shipped off to poor countries where the bosses pay a fraction of US wages, and workers are too desperate to demand more.

The newly jobless family is unable to find equivalent work, and falls behind on the mortgage and bills. Eventually they settle for beginning-level wages, which don’t pay the bills. They downsize, sometimes unable to sell their house in a down market, which is then seized by the bank. Sometimes they can’t find work because they are “too old”, which can be anything from 40 on up. Sometimes everything fails, and they have no choice but to live in their car, or a tent.

However, the loss of work because of modernization is a greater factor than outsourcing jobs to the Third World, although they are related. As I have said here and here, more and more of the work we depended on is being done by robots and computers. Some of this modernization calls for employees with new skills, but many more jobs simply vaporize, their workers pushed out to fend for themselves. Jobs in management aren’t shielded from this trend, either, if for no other reason than the analytical work by management, as well as software coding, can be done at 25% of the cost by workers in India and elsewhere.

Not all is lost, however. Effort in at least four areas can create higher levels of employment. These are: (1) a shorter work week; (2) better laws that provide universal citizen needs at greater efficiency; (3) laws that keep jobs and money in the country; (4) and changes that attenuate the greed of the very rich and the corporate bosses.

As I have said before, my half-humorous suggestion for determining the work week was to divide the grand total of hours of work available by the grand total number of workers. In principle it’s actually a good idea. It would give us a work week of 20 hours or so, which would give us some of the benefits that modernization should provide.

Getting to a 20-hour week is not simple, because workers can neither suddenly be paid half as much nor can they be paid the same for half the work. But we did it to arrive at the 40-hour week from 60 hours, so it is quite possible.

The federal government can do numerous things to make living under the new situation comfortable. Conservatives who believe that a sort of anarchy with few laws and minimal government is the best way are simply wrong. That would give us more crime and less efficiency.

We have laws because not everyone can be trusted to behave for the common benefit, obviously. Besides individual criminals, corporations and the very rich dependably behave in ways that reduce everyone else’s wealth and wellbeing while increasing their own. This has given us the current plutocracy, which, if we are to restore our democracy, must be overthrown one way or another. But that will not happen as long as the very rich and their congressional pets control the government. The once-reasonable Republican party has gone berserk, and is no help. It will take great Democratic strength to rescue the country from itself.

The laws that have taken away from the common good must simply be ended. If a practice cannot be shown to be socially worthwhile, it should be outlawed. It’s not hard to think of examples. Flash trading and hedge funds have no social utility at all; they do not benefit the country in any way. Giant banks must return to boring old banking, and shed their investment services. This is something the Great Depression taught us, but we forgot. Corporations must not be able to avoid their fair share of taxes by setting up a shell headquarters in some low-tax country. All the tax dodges set up by the very wealthy and their congressional pets must be ended. There is no reason the very rich should own such a huge part of the national wealth, because the only place it can come from is the rest of us.

Rather than clutching their pearls and watching corporate bosses rake in multi-millions for sending jobs to poor countries, Congress should enact any number of laws that discourage them from shipping jobs out and closing the mill. Simply requiring all foods to be pure and without known chemicals and impurities, and labeled GMO if they are, would not only improve the quality of our food, but would eliminate carelessly produced foods from overseas. Modernizing factories could be encouraged with financial incentives. Many small steps would improve the employment picture.

Corporations have taken to setting up an office in a low tax country and calling that the corporate headquarters to avoid paying taxes. There are many ways that could be curbed, including designating such companies foreign companies, subject to taxes and duties greater than those for domestic companies. The global economy is complex, but our laws should not allow the US to suffer for the benefit of corporate officers.

In all cases of universal citizen need, the federal government must manage that need, because profit-making interests will always cost significantly more. Every such step we take improves the wellbeing and wealth of the country. National health care is the most obvious instance. National health care insurance would provide the average equivalent of a seven percent raise. The simplest example of benefit here is the avoidance of unnecessary death from untreated disease. An adult who dies unnecessarily costs the country a lot, which falls on the deficit side of the national accounting. There are many other possibilities for national services besides health care that would improve the financial security of all citizens.

These things are so obviously beneficial for the country it is ridiculous to believe we’d be better off without them, as Republicans claim. The federal government is efficient, in spite of what Ronald Reagan claimed, and requires fewer people to do the same work, without the severely bloated wages of corporate bosses.

Right now the government seems to have no understanding of what causes homelessness, nor have more than a handful of people suggested what we can do about it. I believe that the ways I have suggested are well worth discussion and development. I believe they would cure or improve several serious problems. Unfortunately, one political party, the one that caused most of the problems in the first place, would rather defend the plutocracy.

The 21st Century Political Crash

The grand crash between liberalism and conservatism today is not about what it used to be, about balance, about avoiding extremes. Many of the Republican platform planks from fifty years ago would fit neatly in any Democratic platform today. Now it is entirely about who gets the money. For Republicans that means the rich. All others are judged lazy “takers”.

Conservative capitalists hold all the cards, having purchased the deck. Not only have the very rich taken virtually all of the financial profit of the past half century for themselves, they have literally purchased governmental favor by spending enormous sums on lobbying, buying pet legislators with re-election money, and cultivating political influence by various unsavory means such as the ALEC organization and various varieties of pay-for-access to legislators.

It’s all about who gets the money.
Do we have a democracy—
or a plutocracy?

There is nothing even remotely like this power in the liberal camp, particularly for the poor, who are largely voiceless and invisible in the halls of government.

Most of us non-rich aren’t even interested in hoarding wealth. We are interested in justice and equality. This puts us at a distinct disadvantage because wealth buys what it wants, which is not justice and equality. In fact, it precludes justice and equality. This gross imbalance has resulted in laws, regulations, and favors that fulfill the wish list of the very rich, guaranteeing them ever-increasing wealth, which is paid for by the rest of us.

The post-WWII decades seemed like the end of this imbalance. Instead, as we learned from Thomas Piketty, we have returned to an earlier norm of gross inequality and power to the very rich. Our inequality, as measured by the Gini Index, is sandwiched among Bulgaria, Uruguay, Philippines, and Cameroon, far away from where we should be, and is worsening all the time.

As shown by Piketty’s Capitalism In the Twenty-first Century, stacking the deck has created inequality as bad as the Gilded Age, when plutocrats gave extravagant parties of disgusting excess for hundreds, featuring such things as bars of gold or diamonds for party favors, while the poor literally didn’t have enough to eat. In the long run, it’s a problematic game for the rich to be playing, as Marie Antoinette might advise.

Stacking the deck
has created an inequality
worse than that
of the Gilded Age.

During the post-WWII years strong labor unions that had helped bring war victory were able to demand good wages. This resulted in wealthier buyers for American products, thus benefiting capitalists as well. The economy was the healthiest it’s ever been. Since the Reagan era, conservatives have demonized labor and low-income people, and through a long campaign have basically killed the “damned unions” they hated in spite of the soaring economy they brought.

At this point conservatives are just beginning to understand once again that their wish list destroys the buyer base under which capitalism thrives. The subjugation and lost power of labor and the resulting worsening income of nearly everyone have led to an unhealthy quasi-democracy where gross inequality constantly increases in parallel with the power and hoarded wealth of the very rich.

The wages of the lowest earners are scandalously skimpy, especially for the richest nation in history. Not only has the minimum wage been eroded to half by inflation, but it was never close to an adequate living wage to begin with. Yet millions do depend on their low-wage job for their entire family income, because they have no other choice. The resulting corrosive poverty is bad for us all, because it costs the rest of us for welfare support, worsens social ills such as poor health, erodes the value of education, and weakens the nation. Recent striving for a $15 minimum wage is an improvement, but isn’t close to the Living Wage enjoyed by so many other countries.

Better prevention of capitalist
wealth extraction is crucial,
or democracy is doomed.

The other part of the unsolved problem is how to balance healthy capitalist initiative that actually does accomplish some good against the limitless greed that accompanies capitalism and worsens everything. It’s not an easy problem. Clearly, as inequality continues its malevolent rise, better prevention of unearned capitalist wealth extraction and rent seeking is crucial if we are to retain our claim to being a democracy. Inequality does nothing good for the nation.

Piketty warned that there were no complete solutions. He suggested that a very modest annual wealth tax may be a partial answer.

In my opinion, removing the numerous artificial loopholes so that all income is taxed will surely help. The very wealthy get most of their income from capital gains, which is taxed at just over half of the rate for ordinary income, whereas most of us are taxed at a higher rate. Much wealth rests in unreported offshore accounts, and there are numerous obscure financial quirks arranged by the rich to funnel more money to themselves. Every little bit harms, after all. It’s worth repeating that all this wealth is useless to its owners, except as bragging rights. They cannot possibly spend it, and their investments don’t really benefit the country.

Most outrageously, some of the richest corporations pay no US tax at all, and most don’t pay anywhere near their share, which means the rest of us must pick up the slack. Many use various schemes to pretend they don’t owe any, such as moving their nominal headquarters to a low-tax country, or hiding their billions with fancy bookkeeping. They should pay a duty, or be taxed, to sell their goods in a “foreign” country.

Hedge funds, fast trading, and stock market derivatives, all of whose social utility is zero, ought to be simply outlawed. The fact that you can manipulate other people’s money doesn’t make it moral, let alone of any value to society. Investment in offshore banks that don’t report their holdings to the US government should be outlawed, period. Banks should be reorganized in order to separate banking from investment, with government bailout of investment banks specifically forbidden.

Rich capitalists will fight all of these tooth and nail, and they own Congress.

Further possibilities could include mechanisms that reward the wealthy for using their money in socially beneficial ways. Individuals might receive a special tax favor for non-controlling investments in benefit corporations, non-polluting renewable energy, education for the poor, or so-called social funds whose goals are to improve society. Or simply pay for needed national infrastructure upkeep, which at present is in an advanced state of decay from decades of deferred maintenance. Incentives might be devised for money that is withdrawn from certain foreign banks and returned to domestic banks.

Whatever comes of it, we need a rearrangement of priorities so that the poor are not trapped in eternal hopelessness while the super rich build their personal Versailles from which to look down on the rest of us as they destroy the Earth beneath their feet.