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Neighbourhood botch: the real-estate state and the empire of finance

Santarem brazil minha casa minha vida pulsar imagens alamy architectural review owen hatherley

Government policies have led to the egregious destruction of housing access for the poor, while lining the pockets of the elite

One of the most breached of rights declared by the UN at its inception is the right to be decently and securely housed, as Raquel Rolnik reminds the reader at the start of her book on the global housing crisis. Her panoramic, newly translated book from 2015, Urban Warfare, and Samuel Stein’s new short polemic, Capital City, both chart how housing ceased to mean a place in which to live as of right, and transformed instead into a financial instrument. Since the mid-1970s, successive governments across the world have helped along this transformation, regardless of the consequences for that original ‘right’. These changes have become the orthodoxy of the World Bank – it once lent 90 per cent of its housing budget to public housing schemes, but this has now shrunk to less than 10 per cent – and of that alleged champion of social democratic values, the European Union, which, in 2008, ruled that public housing could only be provided for those who couldn’t afford the market’s product. Offering decommodification to anyone who isn’t desperate is an impermissible interference with the free market.

‘It’s maddening to realise that we already know how to solve homelessness and housing poverty – but threw it away for the promise of a quick profit’

The two books are different in focus – Rolnik sweeps across five continents, while Stein zeroes in on New York City – but their analysis is very similar. Both are professionals in the housing sector, though of very different seniority. Stein is a qualified planner, whereas Rolnik, a Brazilian professor of urban planning, spent six years as the UNs’ special rapporteur on housing. In this capacity, she firmly criticised the housing policies of the UK’s Conservative-Liberal Democrat coalition, particularly its brutal, regressive ‘bedroom tax’, earning her brief Daily Mail notoriety. The titles of each book embody their object of criticism as a particular form of state – the ‘real-estate state’ for Stein, the ‘empire of finance’ for Rolnik. Accordingly, both are strongly corrective against any ‘cock-up theory’ of how we got to this point, insisting that the financial bubbles, the shortages of affordable housing and the empty luxury towers are all the results of deliberate decisions that have made a small number of people astonishingly rich.

Usefully, both spend a lot of time explaining how we really got here in the first place. Rolnik registers the importance first of the destruction of social housing across much of Europe and the dismantlement of less-radical forms of state assistance in the US or Greece. This act of destruction is followed by one of expansion, where finance moved into the places it hadn’t previously gone, linking apparently disparate phenomena like the sub-prime crisis in the US with the moves to offer micro-finance and formal title to slum dwellers in Latin America and the Indian subcontinent. Policies like these were ‘not the product of an unsuccessful attempt to amplify the private housing market to embrace the poorest’, but ‘resulted from a clear and aggressive policy of destruction of the existing alternatives of housing access for the poorest’. An early example of these, Rolnik finds, was the housing policy brought into Chile under Augusto Pinochet, through which substandard housing is offered at subsidised rates to the poor. Allegedly radical projects such as Alejandro Aravena’s ‘half-house’ housing schemes can be seen in this context, not as an alternative to the status quo, but as an incarnation of it, combining the provision of deliberately third-rate housing with the goal of making slum dwellers into asset owners.

Thomas heatherwick studios hudsons yard the vessel enrique shore alamy architectural review owen hatherley

Thomas heatherwick studios hudsons yard the vessel enrique shore alamy architectural review owen hatherley

Source: Enrique Shore / ALAMY

New skyscrapers loom over Thomas Heatherwick’s Vessel. Severely criticised in the press, Hudson Yards is the largest mixed-use private real estate venture in US history

There are frequent flashes in the book to accounts of inspiring tenant struggles from around the world, from anti-bedroom tax activists in Manchester to defenders of common land in the Maldives, but there is caution on recent governmental efforts to solve the problem. The major example is Brazil’s Minha Casa, Minha Vida (My House, My Life) programme, a pillar of the Workers’ Party governments of Lula da Silva and Dilma Rousseff. This might look, to the untrained eye, like a mass programme of social housing, but Rolnik finds there a previous government’s plan for the expansion of home ownership that the Workers’ Party – eager not to scare off capital – tried to push left by increasing supply, driving down prices and trying to encourage co-operative management of the new estates. But this new statesubsidised private housing was peripheral, financially complex and occasionally corrupt, serving to bring the leftist government into close alliance with the old vested interests. A smaller-scale example of the failure of reform comes in Capital City, through the New York mayoralty of Bill de Blasio, whose combination of radical rhetoric and fiscal conservatism has failed completely to solve that city’s affordability crisis.

So far, most ‘solutions’ to a problem created by finance have been financial – the UK’s Help to Buy scheme is briefly noted by Rolnik as a particularly moronic example. The notion that it can all be sorted out by more ‘investment’ is mocked – one section of Urban Warfare simply lists the mass demolitions and clearances of public housing from cities that have hosted the Olympics. Both authors agree on the total inadequacy of slogans like ‘build more bloody houses’; as Rolnik points out, ‘in reality, highly priced homes abound’, while Stein notes that, ‘simply adding housing supply does not necessarily drive down overall prices’. This is because ‘real estate functions as plural – rather than singular – markets, meaning that increasing supply at the top of the market does nothing to reduce demand at the bottom’. Londoners who can walk from the tangle of new towers in an area like Nine Elms to the subdivided houses and privately let ex-council flats around can see this very clearly. Meanwhile, those who’ve praised Karakusevic Carson’s Colville Estate in Hackney – where new council housing is paid for by two new private David Chipperfield high-rises – should read thoroughly the sections of Capital City on what new shiny towers do to the (private) rents next door.

All this could make these books hard reading for architects and planners. Much of Stein’s book focuses on the paradox of residents actually opposing new investment; a new metro line or tram, a new park, art gallery or sports centre always has the concomitant of rising real-estate values – in many cases, that’s precisely what they’re for. Stein has a starker analysis of ‘gentrification’ than most: he has little to say about interesting or embarrassing subcultures, much more on how much local government in the 1970s and 1980s welcomed the movement of young middle-class people into inner cities – their contributions much more well received than hearing yet more complaints from New Yorkers about infestations and rent control. This shift was, ‘a boon to politicians who were both hamstrung by shrinking municipal budgets and unwilling to take on serious problems of entrenched poverty and structural racism. To their relief, the face of early gentrification was a group of middle-class, mostly white liberals looking to add value to the city’s building stock’. So it has remained, through many changes in fashion.

‘Offering decommodification to anyone who isn’t desperate is an impermissible interference with the free market’

Both of these books reflect an increasingly widespread awareness of the crisis, and an acceptance, ranging from politicians from Bernie Sanders to Ada Colau to John McDonnell, that it can’t go on any longer. But as to what happens next, Capital City has the more-concrete suggestions. Change can come from planning, but not from the current planning system, in which professionals are, ‘being asked to intervene in only one way: to do everything in their power to make land more expensive’. Stein argues for using existing preservation laws to retain the public and co-operative housing estates that exist, to preserve both ‘the class character’ of this housing and their coherent public spaces (only one of the city’s estates, Harlem River Houses, is currently listed). He ends with the five-point programme of the New York City Not 4 Sale movement: ending homelessness through a moratorium on evictions and the seizure of vacant properties; universal, cross-city rent control; community ownership of ‘distressed buildings’; the repair and expansion of public housing; and direct election of community planning boards with the power of veto. As Stein points out, these, ‘take what we have now … and turn them into something bolder, more democratic and less profitoriented’. A start, not an end.

The clarity and vehemence of these books is a tonic for anyone used to the combination of boosterism and sentimentality that marks so much urbanist writing. But the sheer scale of the problem is chilling. It’s also maddening to realise that we already know how to solve homelessness and housing poverty – as Rolnik notes, Britain, Scandinavia and Eastern Europe actually did so between the ’40s and the ’80s – but threw that away for the promise of a quick profit. In his introduction to Urban Warfare, David Harvey cites a 1978 New York municipal publication Housing in the Public Domain – The Only Solution, published just before the politics and economics of housing moved radically in the other direction. He roots the crisis in ‘forty years of demonising that solution’. This demonisation has failed to convince many of the young in the 2010s, who have only known a private system that is dysfunctional at best and disastrous at worst – try telling a 25 year old sleeping on a sofa that council housing is dystopian. The next step will be to build actual new public housing, without strings attached. We’ve only got 40 years of neglect to catch up on.

Urban Warfare Raquel Rolnik, Verso, 2019

Capital City Samuel Stein, Verso, 2019

Lead image: This estate in the suburbs of Santarém, Brazil, was part of the government’s much-vaunted Minha Casa Minha Vida. The programme had lofty aims but was doomed to fail. Source: Pulsar Imagens / ALAMY

This piece is featured in the AR September issue on money – click here to purchase your copy today