Saturday, July 5, 2014
How Billionaires Can Save Themselves - and the Country - At The Same Time
Billionaire Tim Perkins: Instead of castigating the 99 percent he could subsidize low cost housing and make the world safer for him and his kind.
Billionaires are feeling a hunted lot, as well they should. History shows when one tiny fraction of a populace accumulates super-heated riches they risk bringing the pitchforks from the lesser folk, often leading to heads lopped off (as occurred in the French Revolution) or wealth seized by a fascist enclave (often voted in by the hoi polloi on the promise they will have greater security).
Globally, the billionaire (in unique wealth terms) is almost like a living Dodo when we learn that 85 of them control the same wealth as the rest of the planet (7.5 billion) put together. Knowing stats like that can put targets on their backs, especially if they're not charitable types. Then they can end up displaying the sort of paranoia Tim Perkins did some months back. Recall Perkins - a billionaire venture capitalist- pontificated in a letter to The Wall Street Journal in which he wrote of 'parallels' between the treatment of Jews in Nazi Germany and what he describes as the "progressive war on the American one percent". While the analogy of the richest in the world to Jews persecuted by Nazis borders on the ludicrous (as well as outrageous), e.g.
Perkins was close to one truth, also recently articulated by Seattle venture capitalist Nick Hanauer. In an essay published by Politico Magazine Hanauer warned that the widening income gap in the U.S. would eventually spark a violent revolution. (Sounding similar tones to David Cay Johnston, e.g.
Hanauer wrote in the piece, shared nearly 200,000 times on Facebook by Tuesday afternoon:
“No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out.”
So those like Perkins have good reason to be paranoid. Especially if they don't make contributions to the greater society. Hanauer, whose fortune ballooned thanks to an early investment in Amazon, first suggested raising the minimum wage to $15 last year in an op-ed published by Bloomberg View.
A February profile in the Seattle Times said he first became “obsessed” with the $15-an-hour figure in late 2012. Last month, with Hanauer’s blessing, Seattle’s city council unanimously passed an ordinance enshrining that wage -- the nation’s highest guaranteed minimum pay -- in law.
Hanauer definitely contributed to the betterment of a large swatch of citizens in Seattle - but let us note that he didn't pay any of that wage hike out of his own pocket. This introduces the question of whether he and other "zillionaires" (as he calls them) can do more.
I believe they can, and most notably in terms of housing - rental housing - which is growing too costly for many across the nation. The issue was brought to light in the current issue of the Colorado Springs Independent in an article 'The Rent's Too Damn High' (page 13). The article pointed to a needs assessment study done for El Paso County (which is the county for Colorado Springs) and found that "nearly half of El Paso County renters were spending 30 percent or more of their income on rent."
Of course, this is unsustainable, and often leaves too little income to pay for food, utilities, medical interventions or other emergencies. In other words, an "affordable rent" should be no more than 30 percent of income. If one's income is $28,000 a year - as is common for many of these renters- the rent ought to be no more than $8400 a year. That is, not exceed $700 a month. Yet the Apartment Association of Southern Colorado (AASC) found that the median rent in the city itself was $793.10 for the first quarter of this year.
We know the law of supply and demand also operates, so no surprise either that the same finding included a shortage of 12,666 rental units in the city, and 5,740 in the country. Further, there was only a 6.7 percent vacancy rate in the city. Nor is there much promise of hope on the horizon. Though the Pikes Peak Regional Building Department has issued 3,314 permits since 2004, few of them are for affordable units. (To substantiate this, the AASC found that the average rent for a Colorado Springs apartment built between 2005 and 2011 was $1,168.76, or way beyond the affordable boundary for most local renters.)
Why isn't supply keeping up with demand? According to Richard Sullivan, the former head of the Colorado Springs Housing Authority, quoted in the article:
"Housing is a capital intensive event and there's lack of capital for affordable housing."
But, of course, it is a bit more complex than that, including WHY capital isn't available. As Sullivan goes on to say (ibid.), in the past, for profit developers weren't expected to build cheap units. The government did that. But large scale public housing project stopped being funded in the 1990s. Since then, much of the existing housing has fallen into disrepair because no maintenance has been supplied.
Currently, there are a few federal housing programs left (as there are all over the nation) and these are mostly the "Section 8" programs - which subsidize rent at apartments for qualified people. The problem is that these programs have thousands of people on wait lists.
Here is where the billionaires can directly enter the picture and help out: They can provide subsidies for a private version of the federal Section 8 housing, which will expand the affordable rental units nationwide. For perhaps 25 municipalities, we are likely looking at subsidies totaling $1 trillion, maybe $1.5 trillion. But this will comprise a small chunk out of the total worth of those 85 billionaires who have as much as the rest of the planet put together.
This is a chance for the elite of the elite to step forward and really show their 'Mensch mettle', while also mightily contributing to the economy - because look, the money saved by a few million people on rent will allow them to spend more on other items to pump up the GDP.
They will feel good about themselves for making a direct contribution to society and help save themselves at the same time, bearing in mind JFK's famous words:
"If a free society cannot help the many who are poor, it cannot save the few who are rich."