Deja Vu All Over Again

"Whereas the debate for the last few years has been about work programs, what we're seeing now is that work isn't enough to keep people out of the shelter system. The $5.15 per hour minimum wage is not enough to cover rents greater than $700 or $800 a month." That was the statement of Steven Banks, Counsel to the Homeless Rights Project of the Legal Aid Society, quoted in the New York Times on February 8th. The Times article chronicles the precipitous increase in the homeless-shelter population in New York -- reflecting a national trend -- and notes that the current increase is almost completely made up of women and children. The number of single males in shelters -- that population of skid-row derelicts that many people like to envision as "the homeless" -- has remained constant for a decade. (This has something to do with the fact that although some rudimentary social services are still in place to aid poor women and their families, single men on the street are almost completely ignored.)

This should not come as a surprise to anyone, although the Times article had little to say about what might have caused this problem. It did mention that the city's commissioner of homeless services, Martin Oesterrich, cited the following reasons: "sharply rising housing costs in an economic boom, a subway advertisement campaign that encourages victims of domestic violence to seek help, more court orders for eviction, and declines in subsidized housing." Bingo. We are also told that homelessness has reached levels that have not been seen since the late 1980s: the height, one may remember, of the last big real-estate bubble, right before the last recession.

There are those who deride us here at the HGI for teaching out of a textbook first published in 1879, declaring that nothing that old could ever be relevant to today's conditions. It is ironic that they criticize us for promulgating what they characterize as the same old tired theory, and yet turn around and report the same old tired news about poverty and the boom/bust cycle. From the standpoint of the basic principles of political economy (that's what we teach here!), there are no surprises in the economic news -- or in the "new economy". It seems odd, for example, that here our economy has been expanding for the last eight years; assets are up tremendously, unemployment is down, and yet here come the old demons of poverty and homelessness, just like the time before: it's an old story of Progress and Poverty.

We have been globalizing, of course, and President Clinton rode tall on the digital frontier, presiding over the longest peacetime economic expansion since the last time, but "globalization" is by no means new. The "free trade vs. protection" debate was a huge public issue in Henry George's day. Nowadays we call it WTO, NAFTA, or "the Battle in Seattle". And although the specifics get numbingly complex (the NAFTA "free trade" agreement was over 300 pages long), the overall question remains the same: who benefits from the tremendous gains made possible by international trade -- and who loses? The rising tide of globalization, we are told, will lift all our boats -- but Henry George had this to say in 1886:

It is useless to tell working-men that increase in the general wealth means improvement in their condition. They know by experience that this is not true. The working classes of the United States have seen the general wealth enormously increased, and they have also seen that, as wealth has increased, the fortunes if the rich have grown larger, without its becoming a whit easier to get a living by labor. (Protection or Free Trade)

There is much fretting about the persistence of the "urban underclass", that burgeoning group of embittered, unemployable people pent up in rotting, unmaintained, over-priced slums (or turning up to desperately compete for the few beds left in homeless shelters), but we were already fretting about them in 1879:

Whence shall come the new barbarians? Go through the squalid quarters of great cities, and you may see, even now, their gathering hordes! How shall learning perish? Men will cease to read, and books will kindle fires and be turned into cartridges! (Progress and Poverty)

But, of course, if George's only contribution were this sort of eloquent indignation, he would scarcely be worth our time today. We have indignation aplenty in our public dialogue today -- but precious little analysis of the fundamental causes of our seemingly intractable social problems. But that is what we need, and that is precisely what we have not gotten from our "leaders", whether political or academic. For evidence of the utter bankruptcy of economic policy in our time, we need look no further than the depressing familiarity of stories such as this one.

And what of economic analysis in our time? The academic writers who are published in today's economic journals, who provide the standard pool of talking heads for TV commentary, would have us believe that this is a matter of great and rarefied subtlety, an exploration of realms far beyond the ken of the average working stiff. Henry George said otherwise, in 1897:

If political economy be the science that can not safely be left to specialists, the one science of which it is needful of all to know something, it is also the science which the ordinary man may most easily study. It requires no tools, no apparatus, no special learning. The phenomena which it investigates need not be sought for in laboratories or libraries; they lie about us, and are constantly thrust upon us. The principles on which it builds are truths of which we all are conscious.. and on which in everyday matters we constantly base our reasoning and our actions. And its processes, which consist mainly in analysis, require only care in distinguishing what is essential from what is merely accidental. (The Science of Political Economy)

Kids in New York City have been missing school, the article went on to report, because they and their families, some 700 strong on recent nights, had spent the night in the hallway of the Bronx office responsible for the city-wide assignment of shelter beds to homeless families. Things like this are a tragedy in our "new economy" -- but they are not a mystery.

Lindy Davies -- February 11, 2001

What Folks Have Been Saying:

The only lesson that can be drawn from the concentration of wealth is that as individuals we must 1) Spend what little money we have wisely so as to give the corporations that are exploiting us as little profit as possible 2) in some capacity, go into business for ourselves. This might mean learning a skill that can help us and our familes and friends (such as plumbing or auto repair), or producing something for sale (cookies, paintings, music). You will never do something as well as when it is for yourself. When you are a wage slave, you are giving the business you work for tons of profits. Businesses will not hire you if they lose money on you. They only want to exploit you.
Sassafras <no>
USA - Monday, February 12, 2001 at 23:00:16 (EST)
That's telling them, Lindy. Sometimes I disagree with some of what you have to say, sometimes I'm not even sure what to make of it all, but this was a perfect bull's eye. Now if only we could get George Dubya to frequent this site.
Nicholas Rosen <>
Arlington, VA U.S.A. - Tuesday, February 13, 2001 at 22:36:48 (EST)
There are some interesting new "Non-zero Sum Game" theoretical books available that tie in, I think: Wealth, as a human product, like trade, is non-zero sum. Land, and bandwidth, etc., however, IS zero-sum: the more I have, the less for you.
Tom Grey <>
Bratislava, Slovakia - Tuesday, February 20, 2001 at 09:41:06 (EST)
I would like to take your courser.
Homer Wimberley <Homwim>
Clermont, Fl USA - Wednesday, February 21, 2001 at 09:39:17 (EST)
Magnificent! Don't cravenly defend against the opposition. Attack! We have weapons provided by George. Let's not keep them sheathed. Let's use them.
Harry Pollard <>
Tujunga, CA USA - Saturday, February 24, 2001 at 16:50:54 (EST)
Great article. It doesn't matter how high wages go if the rent of land can just rise up to capture it.
Adam Monroe <>
NY, NY USA - Wednesday, March 07, 2001 at 00:52:12 (EST)
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