the holistic radical

August 14, 2007

Two trends capitalism refuses to admit are related

Filed under: Uncategorized — sesame seed @ 3:46 am

Yahoo news story on the 10 least affordable markets–not a single one is a shocker, the usual suspect cities;

but think outside the norm for a moment and juxtapose that with the article about US life expectancies dropping compared to 41 other countries.

Is there a connection between these two articles?
You bet your bottom dollar there is.
(And, alas, it is all about the bottom dollar–and whom the dollar puts on the bottom.)

Could it be that when housing is seen as an “investment,” rather than a human right, as it is seen at least somewhat in other countries, people suffer because 1. they can’t aford to move anywhere, 2. wind up living where they don’t want to live, and 3. suffer health effects psychologically and physiologically from not living where they want to live. It is long past time that we realize that living in shitty housing can effect mental and physical health–and it’s long past time that we stop realizing this in just the tut-tut, “isn’t that unfortunate” abstract, or the “we will need to run more studies” hypothetical, but the real “let’s make some policies to change this garbage behavior of ours already” kind of action.

Alas, too, other countries are very eager to follow American cutthroat capitalistic models, and as they do, we can expect that their life expectancies will also decline over the long term, just as ours are now. The fact of the matter is that the “free market” can not secure the welfare–or well-being, of all of its citizens. If anything, capitalism is designed to exploit the many in order to make a few rich. The rich few become rich arbitarily–by and large, it’s not because of their “hard work” or “special talent.” The ghettoes and paper rooms of shitty apartments like mine everywhere around the world are filled with people who aren’t lazy.

I love how the Yahoo/ article on the top 10 least affordable housing markets completely blames “regulatory restrictions” for making places more expensive. Yeah, who needs steel bars in their apartment buildings? And why pay construction workers a living wage? And why not use lead paint if we can get away with it? And why should buildings in hurricane areas be hurricane-proof, etc? Who needs these “Regulations”? They’re for schmucks, right? We’re trying to build here!

And if all new construction happens to be condos for people who happen to be in the middle class and up, and with good credit, and well-connected with references, and if this happens to reduce rental housing, and happens to make it harder for low-income people to find housing, who cares? What, you don’t want to wrangle up a huge down payment for a place to live and you don’t want to be tied down to one place for ten or twenty years or more? Well, you could always “flip” the property, right? Screw over your fellow man, everyone does it! And everyone gets a cut except the poor. We’re not being exclusionist. This is just “how the world works,” you know. You just have to get with the program. And, by the way, there’s nothing wrong with our attitude. If you can’t play ball, if you can’t conform to these terms, you’re the one who must be the criminal. After all, if you don’t want to pay half or more of your income on housing, and you don’t have steady employment, or if you don’t want to work 70 hours a week for a certain “standard of living,” well then, who the hell are you?

One step toward improving housing for all would be to prevent people from owning, say, more than 2 properties until homelessness were solved. (Yes–homelessness can be solved with enough political cojones, i.e., if there was enough public outcry about it instead of acting like homelessness is just another “unfortunate” fact of life and demonizing the people–the human beings–who are homeless. In fact, family homelessness is the fastest rising kind of incidence of homelessness there is currently.) Another would be to prevent people from “flipping” properties–e.g., speculation–perhaps through some partial residency requirements or from –“gasp!”–controlling the market. (See, for example, recent NY Times article about how people tend to get divorced once the value of their property increases their net worth, so they split up and then take the excess profits from the house’s sale and go their separate ways: “If they can afford to split the house, they can afford to split.”) I mean, we control interest rates, but we can’t accomplish rent control in most cities? Why’s that? I mean, I’m no “economist,” but you can tell I don’t like Milton Friedman.

(Naturally, both of these ideas would require state control/ intervention, and hence they probably won’t happen any time soon, as the state is so connected to corporate interests. The factors behind that longstanding phenomena would constitute a whole other entry onto itself.)

That’s inherent in capitalism’s design, folks. That means that there is no way capitalism can not screw people over. It’s not in capitalism’s interest to admit this, or admit that making housing a commodity and the subsequent shortening of life span that’s associated with it, is harmful to people on multiple levels. However, the sooner we realize this, the sooner we can see the interconnection of these forces, the sooner we can perhaps make government do what it was designed to do–to provide for the less fortunate and ensure that no one is deprived as a consequence, direct or indirect, of someone else’s excess.


nyt piece (i’d love not to have to reproduce it, but nytimes loves making its intellectual property inaccessible after a certain amount of time, unless you’re a business/academic user paying huge amounts to get this information):

August 12, 2007
Buy Low, Divorce High
FOR years, Michele Kleier, a real estate broker on the Upper East Side, knew why one of her most persistent clients was calling even before picking up the phone.
The client, a former high-ranking fashion executive and perpetual volunteer at her children’s private schools, was checking the price she could get for her nine-room co-op in a prewar building. When the market reached a high, she told Ms. Kleier, she planned to divorce her husband, sell the apartment and live on her share of the profits.
Last year, Ms. Kleier delivered the long-awaited news: Manhattan luxury apartments were at a peak. The client went through with her plan. Now the woman calls from her new condo in California, raving about the weather and the distance from her ex-husband.
“She felt that she couldn’t walk out on him until she had the money to move away and buy something on her own,” Ms. Kleier said. “The real estate market allowed her to buy her freedom.”
A little-noted side effect of the property boom of the past decade has been the real-estate-enabled divorce. Home values might have slid in some markets, but in the New York City region, where prices remain high, divorce professionals like therapists and lawyers, along with real estate brokers, say unhappily married couples are cashing in appreciated homes to underwrite a split.
“The equity that there is in real estate is one of the impetuses why there are so many divorces,” said Nancy Chemtob, a Manhattan divorce lawyer, adding that the net worth of her clients has doubled in the past three years mainly thanks to real estate. The price of the average Manhattan apartment was $1.3 million as of June, up 7 percent from a year ago, according to the real estate brokers Brown Harris Stevens.
A spouse who has not worked, like Ms. Kleier’s client, might decide that with a divorce settlement enriched by real estate, it is possible to maintain a comfortable standard of living. Or a breadwinning spouse might recognize that even after dividing community property, it will be possible to live well as a single person.
“No matter what the net worth of the client,” Ms. Chemtob said, “the $3 million apartment is now the $7 million apartment, and the $7 million apartment is the $14 million apartment. Half of a lot is a lot.”
That is how Sharon Sheinker thinks about the real estate equity she and her ex-husband accumulated over a 16-year marriage, which she said made the decision to legally separate easier.
The former couple made enough on their first apartment in New Jersey, and then on a second home on Long Island, to build a five-bedroom house in a gated community in Dix Hills, on Long Island, four years ago, for $1.1 million.
They recently signed a contract to sell the house for $1.4 million, less than the asking price of $1.579 million. But Ms. Sheinker calculates a $60,000 profit each year over the past four years. She will use her share to buy a smaller house in Dix Hills and continue to run a charity, A Gift From Alexa, in honor of her 6-year-old daughter, who is autistic.
“Money is freedom,” Ms. Sheinker said. “I don’t need the mansion. We made enough money to be able to get divorced and support two households.”
Economists are familiar with this phenomenon. Even though divorce rates are declining over all, as far back as 1977 the economist Gary Becker showed that couples experiencing any unexpected, drastic rise in net worth are at risk of divorce. (The same holds true for a drastic decline in net worth.)
Extrapolating from survey data, Dr. Becker concluded in The Journal of Political Economy that “a greater deviation between actual and expected earnings increases the probability” of divorce.
Although couples who see their incomes rise steadily generally stay together, those who make more money than they ever expected are vulnerable to divorce. They realize that they are less financially dependent on each other and that they might have chosen different spouses if they had more choices at the time, said Dr. Becker, who teaches at the University of Chicago.
Dr. Becker, who won the Nobel Prize in 1992, also explored in his divorce study the economic argument for what many people today call trading up, or finding a trophy spouse.
Noting that 75 percent of men and more than 70 percent of women remarry within 15 years of a divorce, he found that divorced men with higher earnings have the greatest likelihood of remarrying. This implied, in his view, that men who have come into wealth have an incentive to divorce because they believe they could better their situation.
“They feel, given their status now, they can find other people of a type that appeals to them more than when they got married,” he said in a telephone interview.
Kenneth Mueller, an East Village psychotherapist, says he has about a half-dozen clients who are real estate executives. Some, he said, have used windfall wealth from property to strengthen their marriages — like paying for counseling or adopting children. But others are emboldened to divorce and remarry. He said some men conclude that they can find a new spouse because their first wives were “not what I really wanted.”
Of course, not all couples sitting on greatly appreciated homes are headed for divorce court. The likelihood of divorce depends on the strength of a marriage before the advent of unexpected wealth, according to Evelyn Lehrer, an economist who expanded on Dr. Becker’s findings in 2003.
In her study “The Economics of Divorce,” published in the book “Marriage and the Economy: Theory and Evidence From Industrialized Societies,” Professor Lehrer concluded that couples who are likely to divorce after an unexpected change in assets often had weaker marriages to begin with. It is not the new wealth that causes the divorce; the money is just the catalyst.
Stephanie Coontz, the author of “Marriage, a History: From Obedience to Intimacy, or How Love Conquered Marriage,” compared the current Gilded Age to an earlier one in the 1920s, when, she said, divorces spiked at a time of rapid wealth creation. In times when people accumulate wealth, she said, they often think they don’t have to abide by society’s conventional rules.
“When people get a lot of wealth in a hurry, it’s more easy to act upon their impulses,” she said. “You get used to sending back a steak because you don’t like it. You send back a wife.”
Real estate these days seems much on the minds of couples who are in counseling. Elyse Goldstein, an Upper East Side psychologist, said that half the couples she has seen in recent years have brought up real estate as a relationship issue, and 15 percent regarded it as a serious one.
“Real estate has become a language of emotional barter in terms of registering pains, hurts and resentments,” Dr. Goldstein said. “If they can’t have love, they can have real estate. There are a lot of fights about who is going to benefit from the windfall.”
SUSAN KATZ, a fashion industry sales executive, said that real estate battles with her ex-husband over their home in Roslyn Heights, on Long Island, have dragged out over three years, involving three lawyers and $350,000 in legal fees.
She said that real estate was not the original cause of the divorce. But it has become the central issue as she and her ex-husband fight over what the house is worth, and how much she must pay to buy it from him.
Ms. Katz finds that some women who are divorcing can’t cash in on the value of a home because they or their spouses borrowed against it. “Women think when they get divorced they can have half of the house,” she said. “Most women don’t realize how much this house is mortgaged.”
And then there are cases in which couples decide a divorce settlement would ultimately be too costly because of the on-paper appreciation of their property.
One New York real estate executive, who has separated from his wife and would not speak on the record because he is unsure if he will divorce, said most of his peers in the industry who are unhappily wed seem to be staying put. They don’t want to carve up the real estate portfolios they bought or built during the boom.
“I know plenty of people who are enormously wealthy and just don’t want to cut it up,” he said. “They find it hard to divide the real estate.”

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