Rent Cancellation: Social Protection in Uncertain Times

50167834446_19f4a27852_oKrystle Okafor–

With the onset of the coronavirus pandemic, interlocking structural inequities in health, employment, and racial justice have buffeted vulnerable populations. The looming “eviction apocalypse” sits at the nexus of these three ills. Black and Latinx people have the highest COVID infection, death, and unemployment rates nationwide. Mass evictions would only worsen this situation, preventing these households from sheltering in place and deepening the adversity they face.

As the latest federal stimulus package lingers in the Senate and the re-openings of states’ economies stall, activists have called for rent cancellation—the wholesale suspension of rent payments during the pandemic. It is neither a farfetched nor overblown proposition. Movements have made rent cancellation a central goal. Combined with precedential rent control cases, governments have the political and legal wherewithal to cancel rent. Further, social protection systems, institutional arrangements to insure against lifecycle and work-related contingencies, often evolve during times of crisis. If rent cancellation takes the form of a supply-side, landlord-facing debt relief program and is gusseted with tenants’ rights provisions, it could seize the moment, pass constitutional muster, and as I argue here, confer the necessary degree of social protection. Two arguments bear this out.

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The Hidden Shortages of the Market Economy

Ramsi A. Woodcock–

If you think shortages—in goods like toilet paper, meat, and masks—came in with the pandemic, think again.

Shortages are periods during which demand exceeds supply, and they’re an inescapable feature of all markets, all the time.

When an investor bids up the price of Apple stock because none is available at current prices, that’s a shortage. When a homeowner receives multiple bids for her home, that’s a shortage. When there are “only three left in stock” on Amazon and four users click “buy,” that, too, is a shortage.

We don’t notice these quotidian shortages because sellers usually respond to them by raising prices. The price of Apple stock jumps, the home sells for more than it listed, and Amazon’s dynamic pricing algorithms regret to inform you that “the prices of some items in your cart have changed.”

But price increases don’t make shortages go away. They just ration access to the shortage good to those who have the greatest willingness—which often means the greatest ability—to pay.

That’s a problem, because ration pricing concentrates wealth in the hands of sellers. We know that because the prices sellers charge before a shortage manifests itself must be calculated to cover costs, otherwise sellers wouldn’t quote those prices. When sellers go on to jack up prices in response to a shortage, they must therefore enjoy a windfall: profits in excess of what they need to be induced to bring their goods to market.

The pervasiveness of shortages, and the ration pricing that comes with them, makes markets fundamentally exploitative. But the only way to induce firms to engage in queue pricing may well be to embrace that ultimate progressive villain: God.

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Guiding Innovation’s Hand: Industrial Policy Against Inequality

This is the second post in our series discussing The Meritocracy Trap by Daniel Markovits. Click here to read all posts in the series. 

Jeff Gordon – 

Most of the critical attention directed at Daniel Markovits’s The Meritocracy Trap has focused on its claim that well-off parents launder inequality through schooling. While Markovits brings masterfully comprehensive reams of data to bear on the concept of the “meritocratic inheritance,” the most original and provocative part of the book comes later, when Markovits offers his explanation of why educational sorting has come to matter so much: elite schooling leads to top jobs, and “[t]he top jobs pay so well because a raft of new technologies has fundamentally transformed work to make exceptional skills enormously more productive than they were at mid-century and ordinary skills relatively less productive.” This is provocative because it contradicts the pervasive myth that technological change is natural, self-directing, or inevitable. Few reviewers have remarked on this part of the book or reflected on what it suggests: that industrial policy will be vital to building a more equal economy.

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In Defense of Rent Control and Rent Caps (Part II of II)

 

Via Boston Globe

Yesterday, we posted the beginning of Duncan Kennedy’s testimony before the Massachusetts State Legislature’s Joint Committee on Housing. Below is the second half of the testimony.

Duncan Kennedy –

Claim 3: State provision of more section 8 certificates and subsidized affordable projects can resolve the housing crisis.

More section 8s and more rent-restricted affordable subsidized units could in theory have a major impact on the housing crisis. But there is no conceivable way that can happen in practice. Growing income inequality means upper income demand for housing grows much more quickly than lower income. Upper income buyers bid up prices in order to expand their share of the available stock. Exclusionary zoning closes both upper income and affordable units out of the suburbs (in spite of our ineffectual inclusionary regime). At the same time, it shifts upper income demand back toward the older inner ring city neighborhoods.

The crisis generates displacement and shelter impoverishment (skyrocketing rent/income ratios) through a downward squeeze. The rich expand their neighborhoods to adjacent less wealthy areas pushing residents into the next area down the chain. Or they jump into well located lower income inner city areas forcing residents to crowd into adjacent low rent areas. The crisis now affects the whole lower half of the income distribution.

To reverse the crisis, even just to stabilize the current disastrous situation, would require subsidies, section 8s and affordable construction, to the tune of hundreds of millions or even billions of tax-payer dollars directed at the middle and no longer just the lower end of the chain. Rent control, either caps or a full regulatory program, allows localities to defend themselves against these market forces. They can tailor their response to their local market conditions and in many situations turn them to their advantage. No new taxes required. The innovative legislation being considered in Massachusetts permits them to increase the supply of affordable housing targeted to their local conditions without calling for massive new subsidies from the state.

Claim 4: Income eligibility tests for rent controlled and capped units are a good idea.

Requiring proof of low income status for eligibility to have rent capped would be counterproductive because it would cause landlord discrimination against the very people the bills area trying to help. It is already documented that a large percentage of section 8 certificate holders, and disproportionally African Americans, experience discrimination from landlords who don’t want to rent to them at uncapped fair market value rents. In the midst of a crisis of escalating rents, a tenant who qualifies for the cap is obviously not as good a bet for the landlord as a tenant who does not.

In building-based rent control, an income eligibility requirement would mean more units available for income qualified applicants but it would also risk stigmatizing residents and whole buildings. The better response of H3924 is to authorize anti-displacement zoning so that localities can exclude upper income neighborhoods. The remaining reduction in units going to low income tenants serves the by the now universally recognized policy goal of mixing income groups rather than concentrating poverty.

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In Defense of Rent Control and Rent Caps (Part I of II)

Duncan Kennedy –

Via Boston Globe

The Massachusetts State Legislature’s Joint Committee on Housing is currently considering two bills that would revive rent control in the state. The first bill caps rent increases for not-owner-occupied residential housing at the CPI not to exceed 5%, with an income eligibility proviso. The second much more ambitious bill authorizes localities to choose among a menu of options to create their own version of full rent control. The options included fixing rents subject to increases for capital improvements, controlling condo conversion, good faith eviction requirement and zoning to deal with market variation within the locality.

On January 14, 2020, I offered testimony in support of the bills. Rent control has already been revived in Oregon, California and New York and in Massachusetts it is the focus of intense grass roots neighborhood activism particularly among the low income East Asian and Latina/o communities. At the hearing, they showed up in mass and testified in moving detail to the devastating effects of the crisis on individuals and neighborhoods.

What was absent, and the gap I tried with a fellow academic to fill, was a head-on attack on the industry arguments against the bills. Their arguments are of course rationalizations of their economic interest. But they make serious claims about consequences for the public interest and for supposed beneficiaries as well. Elected legislators, alas, are responsive both to the massive money spent lobbying against rent control and to some extent in good faith to the industry arguments. My goal, as laid out in the edited testimony we’re publishing today and tomorrow was to supplement not to displace the narration of blatant injustice and the invocation of a human right to decent housing with arguments in the policy language of the policy makers.

I wanted to post my testimony here because I think of it as law and political economy, in the particular tradition I work in, which might be called post-Marxist critical legal studies. It starts with groups led by elites, with strategies based on shared material and ideological, or “ideal” interests. They co-operate in social production and reproduction and compete over the distribution of stakes that are both material and “ideal.” Relations of domination and subordination are pervasive. The stakes of the game include the rules of the game, including prominently law. In this tradition the goal is not just to grasp the way law functions in struggles but also to push (humbly, uncertainly) on the side of emancipation or liberation or social justice.

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The Second Wave of Algorithmic Accountability

Frank Pasquale –

Over the past decade, algorithmic accountability has become an important concern for social scientists, computer scientists, journalists, and lawyers. Exposés have sparked vibrant debates about algorithmic sentencing. Researchers have exposed tech giants showing women ads for lower-paying jobs, discriminating against the aged, deploying deceptive dark patterns to trick consumers into buying things, and manipulating users toward rabbit holes of extremist content. Public-spirited regulators have begun to address algorithmic transparency and online fairness, building on the work of legal scholars who have called for technological due process, platform neutrality, and nondiscrimination principles.

This policy work is just beginning, as experts translate academic research and activist demands into statutes and regulations. Lawmakers are proposing bills requiring basic standards of algorithmic transparency and auditing. We are starting down on a long road toward ensuring that AI-based hiring practices and financial underwriting are not used if they have a disparate impact on historically marginalized communities. And just as this “first wave” of algorithmic accountability research and activism has targeted existing systems, an emerging “second wave” of algorithmic accountability has begun to address more structural concerns. Both waves will be essential to ensure a fairer, and more genuinely emancipatory, political economy of technology.

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A Single Federal Usury Cap is Too Blunt an Instrument

NB: This post is part of a debate on the Loan Shark Prevention Act, a bill that would introduce a federal usury cap. Emma Caterine’s response is here.

Anne Fleming–

In May 2019, Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez unveiled the Loan Shark Prevention Act, a bill that would cap the cost of consumer credit nationwide. Under the bill, the total cost of a loan, calculated as an annualized percentage rate (APR), could not exceed 15%.

Although high credit card charges are the bill’s main target, payday loans rank among the most expensive forms of consumer credit in the United States. A typical payday loan from a storefront lender costs $15 per $100 borrowed. For a $350 loan that must be repaid in one lump sum in two weeks, the borrower would pay $52.50 in fees. This equates to a 391% APR.

Payday lenders argue that it is misleading to calculate the cost of their products in terms of an APR because payday loans are not marketed for long-term use. But most borrowers cannot repay their loans in full in two weeks. Instead, they pay only the fee and rollover the balance into a new two-week loan. In this way, consumers can end up in a months-long cycle of borrowing, paying hundreds of dollars in fees. This vicious cycle is especially concerning because most borrowers are low-income, just making ends meet. Furthermore, Hispanic and African-American households account for a disproportionate share of payday loan users.

In other words, high-cost credit is a real concern that policymakers must address. But a one-size-fits-all 15% APR cap is a blunt instrument for tackling this problem.

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The Law and Political Economy of Sex Work: Symposium

The Law and Political Economy of Sex Work: Symposium

This post is part of our symposium on the political economy of sex work. Read the rest of the symposium here.

Lorelei Lee –

I am approaching my 20th year of living in the world as a sex worker. This year, presidential candidates are being asked whether they believe sex work should be decriminalized. Decrim NY and the Sex Worker Advocates Coalition have introduced decriminalization bills in New York State and Washington, D.C. California passed SB 233, joining a handful of other states in prohibiting the use of condoms as evidence in prostitution arrests, and expanding a San Francisco policy that prevents police from arresting sex workers who choose to report client violence. The public conversation is shifting. That shift is the result of hundreds of years of resistance and movement building by people who trade and have traded sex. As Juno Mac and Molly Smith explain in their new book, Revolting Prostitutes, “sex workers have shaped and contributed to social movements across the world.” Despite state, local, and new federal laws promoting profiling, surveillance, and exclusion of people in the sex trades from fundraising and communication platforms and from otherwise-public spaces, sex workers have continued to speak, to build coalitions, to insist on being heard.

People interested in law and political economy have a particular reason to listen to people in the sex trades. The conversations that sex workers are having are about markets, work, and coercion under neoliberalism. They are critiques of a legal system that implements policing to keep the “sacred” out of markets while enabling corporations to profit on the caging of human beings. In this symposium, Gilda Merlot will explain how the U.S. failure to “end demand” for migrant labor through the Immigration Reform and Control Act illuminates the unlikelihood of “ending demand” for sexual labor through criminalization. Aziza Ahmed and Jason Jackson will bring a political economy lens to sex work, critiquing the moral claims that justify criminalization. Finally, suprihmbé will unpack the false binary between the “agency/empowerment” of sex work and the “oppression/coercion” of trafficking.

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Killing Antitrust Softly (Through Procedure)

Sandeep Vaheesan – 

The Supreme Court has waged a multi-decade war on private rights of action. It has subverted the rights of consumers, workers, small businesses, and others to hold corporations accountable for wrongdoing through lawsuits. The Federal Arbitration Act (FAA) has been a preferred tool of the Court. Since the 1980s, it has reinvented this modest statute, converting the FAA into a quasi-constitutional sledgehammer for corporations to wield against private lawsuits, especially class actions. And the evisceration of private enforcement of law goes beyond arbitration. The Court has rewritten class certification, pleading, and summary judgment standards to help businesses ward off private lawsuits and accountability.

On top of these general procedural hurdles, the Supreme Court has imposed special burdens on parties seeking to vindicate their rights under the federal antitrust laws. Congress enacted an expansive private remedy originally in the Sherman Act and subsequently in the Clayton Act. Section 4 of the Clayton Act grants “any person” injured by an antitrust violation the right to recover treble damages and legal fees from the violator. Since the 1970s, however, the Supreme Court has effectively rewritten this text. While once recognizing that Section 4 “is comprehensive in its terms and coverage, protecting all who are made victims of the forbidden practices by whomever they may be perpetrated[,]” the Court has severely restricted who can enforce the antitrust laws. Two doctrines deserve special consideration. First, the Court held that, in general, only parties who purchased a good or service directly from the antitrust violator can obtain damages for overcharges. Second, it created the amorphous “antitrust injury” doctrine and granted the lower courts the power to dismiss disfavored substantive claims on supposedly procedural bases.

These procedural changes raise the age-old question: what good is substantive law if it cannot be enforced? The described procedural changes have not affected the substantive law (though the courts have done that too in certain areas) but it has prevented some of the most motivated parties from enforcing the law. Consumers and businesses injured by antitrust violations have long been the lead enforcers of the antitrust laws. Their role is only accentuated by the Department of Justice and Federal Trade Commission’s unwillingness to enforce multiple areas of antitrust law. This combination of judicial hostility to private cases and bureaucratic lethargy has turned much of the substantive law into a dead letter.

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Restorative Justice and Moral Neoliberalism

Amy J. Cohen – 

Today, groups of left organizers who wish to abolish the current penal system are practicing community mediation. They facilitate dialogic processes where people who have caused harm engage in active listening, relationship-building, and intensive forms of emotional, spiritual, and material reparations. These processes, variously called restorative justice or more often transformative justice and community-based accountability, are both practical and radical. Practical because while organizers wage political battles against the penal state for racial and economic justice, they simultaneously create spaces for people to opt out—to manage conflict and violence by cultivating love and forgiveness as well as armistice, separation, and safety through relationships and forms of reparations meaningful to them. Radical because these mediations prefigure an alternative just society, one in which individual and systemic change are co-constitutive processes.

As I outline in a forthcoming article, these organizers recall a small group of community mediation advocates in the 1970s and 1980s who linked delegalization and decentralization to left visionary politics. As I also outline, however, informal, anti-authoritarian practices of dispute resolution have often attracted bedfellows across a political spectrum. Likewise today, restorative justice enjoys growing support among Republican policymakers, evangelical conservative Christians, and libertarian thinktanks and organizations. Restorative justice is thus intriguing not only for how left organizers use it to advance prison abolition but also for how libertarian and conservative reformers have fashioned it into a tool of American neoliberalism.  Continue reading