Homelessness – A Matter Of Choice


If homelessness of an individual or family is a tragedy, homelessness of millions of people must multiply that tragedy millionfold, mustn’t it?

Here’s a recipe for disaster.  Take a city of eight million people, destroy forty per cent of its housing stock – nearly  one and a quarter million homes – in less than eighteen months and make more than forty percent of its population technically homeless. 

That, in World War II, was what happened to London, England just one of hundreds of cities around the world faced with similar calamities.  In London, it was largely the consequence of the Blitz, concerted German aerial bombing of Britain’s capital between 1939 and 1941.  In Dresden, Germany, the British wrought similar destruction.  Hiroshima and Nagasaki, Japan, were devastated by the USA exploding the world’s first nuclear weapons.  Yet within just a few years, in these and countless other shattered cities, destroyed infrastructure had been restored and homelessness was virtually unknown.. 

Worldwide in 1945, almost irrespective of political system, there was a high degree of social consensus.  Housing the homeless was seen as a community challenge, a responsibility taken up with alacrity.  Multiple approaches were applied.  Overcoming the personal and social tragedy of mass homelessness transformed cityscapes and social expectations.  One consequence of meeting that challenge successfully was the remarkable fact that by the early 1950s absolute homelessness, people living rough on London’s streets, was almost unknown. 

We know it could be done then.  So why not now?  Why does solving the problem of homelessness now feel like an unattainable dream?  Do the people who tell us to be ‘realistic’ know something we don’t?  Well, many lessons have been learned and, to mix metaphors, a lot of bucks have flowed under a lot of burning bridges and the bucks don’t stop flowing.

 To answer that ‘why’ question, jump forward fifty years to 1992.  Two stories in one issue of the Wall Street journal provided a fascinating snapshot of 90s “reality”.  One explained how India, a country with a population then approaching one billion, was denied a development loan of $200 million, less than twenty cents per head.  The banks, the newspaper explained, could not be sure India would repay that loan.  The other reported that, for reasons not unrelated to preventing the possible collapse of several major Canadian and US banks, three property-developer brothers from Toronto were about to be bailed out with a twenty-billion dollar rescue package, almost seven billion dollars per head.  Less than two years later the Reichman brothers’ construction company declared bankruptcy owing seventeen billion dollars.  Interestingly, they ended up neither homeless nor even penniless.

It was no news for that day’s Wall Street Journal that by 1992 for well over a decade, thousands of people had been living and some were dying on London’s streets, the very streets from which homelessness appeared to have been eradicated in the 1950s.

Logically, morally, housing must be a human right, mustn’t it?

Not without justification, Canada is proud of its Charter of Rights and Freedoms. Canadians who know are doubly proud because the Universal Declaration of Human Rights, the UN’s model which has been used so successfully to invoke human rights and inspire progressive legislation around the world since 1948, was drafted by Canadian, human rights lawyer John Peters Humphrey. 

Check out the Canadian Charter or the Universal Declaration online.  Do a word search.  The words ‘house’, ‘housing’ or ‘home’ appear nowhere. 

Yet a 1998 travelling exhibition to mark the Universal Declaration’s fiftieth anniversary showed that in his preparatory notes and first drafts, Humphrey had included the right to housing.  Eleanor Roosevelt  who championed the Declaration and chaired the UN committee which ultimately approved it was also sympathetic.  So how was that crucial right omitted?

Jump forward two years from the WSJ article to 1994, then a further fifteen years to 2009.  Look at what was and is happening in the United States.  Publicly reported hysteria reached levels associated with the McCarthy era and the height of the cold war.  The focus of the frenzy?  The idea that Americans might have a human right taken for granted in the majority of what are often labelled “advanced democracies”, the right to healthcare irrespective of their wealth or poverty.

In the late 1940s the witch-hunt target was different – housing then, healthcare now – but the motive was the same.  The Soviet Union, the embodiment for the USA of the evils of Communism, had a constitution guaranteeing its citizenry the right to a home.  How it was to be achieved or even what that guarantee meant were never spelled out.  But the knowledge that Communists assured that right was enough for its opponents to mount an attack on the very concept. 

As today’s rentayanks appear on television, run weblogs, write articles or take to the streets to vent rage at the imposition of “socialism” on their market-oriented lives, much work takes place behind the scenes to ensure that the usual beneficiaries, the corporations, will continue to benefit.

In the USA of the late 1940s housing was hardly a high profit investment.  From the 1915 recession, until shortly after Word War II, US house prices remained virtually unchanged.  Action was needed to turn housing into a sure fire winner.

 For nearly three decades post-war British governments of all colours competed to outplan and outbuild each other in housing provision.  Although publicly funded housing for the poor could be traced back a millennium, a local authority model that had emerged in the early 20th Century prevailed.  It came as no surprise to anybody that in a 1959 General Election campaign a British Conservative Prime Minister promised that his government would build three hundred thousand publicly subsidised new homes – social, , not private, market housing.  The 1945 Labour government had started a massive programme of house-building, developing on schemes underway since the 1930s.  Those were intended not just to rebuild the shattered housing stock of the World War I era and provide “homes fit for heroes”, they were a Keynesian strategy to kick-start the economy which had been left in shreds.  Much of the work was carried out by local council or government labour forces.  Many materials and components were produced in publicly funded and operated factories.  The schemes provided remarkably high quality housing at a cost with which the market could simply not compete and make profits.  Housing was treated not as a commodity but a basic right, even though no constitution guaranteed that right.  It created political consensus and social cohesion. 

Socially mixed housing estates, even entire towns were planned and built, providing not only houses but also social, educational, recreational, health, commercial and transport infrastructure. Minimum space and amenity standards were introduced.  Planning was the key.  The model was soon widely emulated around the world.

Globally over the next decades the expertise acquired in rebuilding after wars and natural disasters led to massive programmes of publicly planned and administered, semi-public, co-operative, community and voluntary-organisation-managed social housing schemes.  Hundreds of millions of people were housed, infrastructure provided.  It looked as though the scourge of homelessness could go the same way as smallpox.  House and community building boosted construction and other industry, created employment, improved social conditions.  With governments of all types supporting housebuilding, the United Nations promoting its construction and providing training, skills and experience, the World Bank providing support funding and the International Monetary Fund offering expertise, the future looked as if it could be rosy.  The UN declared 1986-7 International Year of Shelter for the Homeless and the UN Centre for Human Settlements encouraged governments to work towards a target of decent housing for all by the year 2000.  But by the time the International Year of Shelter for the Homeless arrived, there had been a sea change.

Where did it all go wrong?

Opposition to making housing a universal human right in 1948 was more, much more, than just an ideological stance.  It was part of a strategy to create scarcity, allow market prices to soar and make money for banks and corporations.  For a while it appeared to work.  The stated ideological underpinning was that old familiar song, only the market can provide housing in the most efficient way and social provision can never compete with the market.  In truth markets would only ever provide mass housing if there are guaranteed profits to be made.  To make their profits the opponents of social housing would do anything to manipulate the market.

In Britain the first changes arrived in 1951 with the first post-war Conservative government.  Instead of local authorities and government being allowed to fund housing and infrastructure construction directly from revenue and taxation, new laws forced them to borrow the money needed to build housing from specially constituted financial institutions and pay it back with interest over a number of years, twenty five or forty.  It would end up costing far more.  Now the banks were interested.  House and city building could mean big money for them.  Gradually commercial banks got their hands on the loans.  Initially low interest rates rose over time.  The new model was established. 

In the United States, promising mass social housing projects started to face opposition, singled out for concerted Republican attack.  As economies started to boom in the 1950s there was a lot of money to be made out of financing housing construction although regulations introduced to prevent a repeat of the 1929 crash limited potential profits for speculators.

It took the arrival of Margaret Thatcher in Britain and Ronald Reagan in the USA, both believers in the Chicago School of Economics, followers of the philosopher Friedrich Hayek and advocates of free enterprise to take the new model global.  Both expressed visceral hatred for the concept, even the word, “planning”, then carefully planned and orchestrated their actions.  Both professed unwavering belief in “free markets”, then worked ceaselessly to manipulate markets, ensuring they were anything but free.  The idea of housing being provided on the basis of need was replaced by the insistence that housing was to be available only to those who could afford it.  To support this changed concept, transformation of social attitudes to housing became essential.  Henceforth housing would be promoted as “an investment”.

Margaret Thatcher struck the first death blows for publicly owned and managed social housing in Britain, introducing the attractive sounding “right to buy” while acting to block public building of housing by withdrawing its funding.  She introduced a range of short-term alternative models, support to housing associations and co-operatives, gave them some of the money taken from the public sector, then over time, progressively withdrew that funding.  To accompany these changes, new tax provisions incentivised an entirely new market, to be known as “buy-to let”.  Individuals could make their fortunes there.  Neither Tony Blair nor Gordon Brown, believers in the magic of the market, would challenge the Thatcher model.  For good measure, arguing that a healthy private housing market would eliminate homelessness, Margaret Thatcher sold off most of Britain’s homeless shelters, solid older buildings in good locations, to developers to turn into luxury apartments or boutique hotels.  They were not replaced.

In the US Ronald Reagan appointed Vice-President George Bush as his czar for deregulation of the main housing finance sector, the Savings and Loans banks.  This led in 1988 to the then biggest financial sector failure since the 1929 crash and the Great Depression.  In 1989, then President George Bush was forced to rush through a 165-billion-dollar rescue package for the S&Ls.  In 1990 Stanford University estimated that the true cost to the American public over the life of that rescue scheme would reach 1.4 trillion dollars.

Despite this minor setback, the US continued to push internationally for a series of co-ordinated actions in just one direction.  One major step in globalising the strategy of a shift from public to private provision was something apparently unconnected.  The United States started to withhold its contribution to various parts of the UN system and demand internal reforms.  These were followed by demands for changes in the policies the UN could promote.  Programmes were cut, staff sacked, future projects shelved.  For the UN Centre for Human Settlements, co-ordinating International Year of Shelter for the Homeless, projects based on  self-help, community initiative or public provision were out.  When, a few months later, the World Bank rode to the rescue with new funding, it imposed on the UN agency policy changes already familiar to many poor countries, recipients of World Bank loans.  Publicly owned housing – alongside other public assets – was to be sold off “to reduce the public debt” and “realise public asset values”.  Across Africa, model housing estates based on British council housing were put onto the market.  Most had been housing not for the population at large but for civil servants.  Suddenly they could no longer survive on their already low and frequently unpaid salaries.  They were forced to look for second or third jobs just to meet housing costs.  Opportunities for corruption increased exponentially.

The UN no longer supported public provision, self-build, community or co-operative housing,.  Governments were to switch from provision programmes to “enabling strategies”.  “Enabling” meant advising individuals and governments at all levels on how to contract loans, read ‘get into debt’. 

To be fair, the World Bank recognised its ‘enabling’ policies were not within everybody’s reach.  It had the decency to acknowledge that one of its buzzwords of the 1980s and 1990s, “affordability”, did not apply to the lowest-earning tenth population percentile, that part of the population on ten percent or less of average national income.  It played down the fact that in many countries, massive inequality meant that the lowest tenth percentile could constitute as much as ninety per cent of the population.  For them, the World Bank and the UN offered – nothing!  Homelessness rose exponentially.

UK homelessness may not have figured prominently in  the Wall Street Journal but over the years The Economist published a series of graphs showing that from 1979, as construction of publicly funded housing in Britain fell, official homelessness rose at almost exactly the same rate. 

Meanwhile one further element of the co-ordinated plan was working its way through the system.  Manipulation of housing shortages, management of an international media message that housing was not just a place to live but a long-term, iron-clad investment that for many people could become their retirement pension.

People who looked beyond what became known as the Anglo-Saxon model of economics grasped that these policies had led to a frenzied bidding upwards of house prices.  By the 1980s, in the world’s second largest economy, a country which ought to have been able to provide adequate housing for all, it was only affordable on five-generation, 125-year mortgages.  In the late 1980s Japan’s housing market collapsed taking down major banks in the process and leaving the country in a crisis from which it has yet to emerge nearly twenty years later.  Homelessness there hit new peaks.  Even now, people are living in tent cities in places like Tokyo.  Will Japan’s new government dare consider real change?

Manipulation of the “free market” depended on generating a climate of fear.  If people didn’t get onto the “housing ladder” they risked becoming homeless.  Rediscovered Victorian values divided the poor into “deserving” and “undeserving’.  The homeless, irrespective of how they had become so, were treated as feckless.  In Margaret Thatcher’s Britain people who had not earned their first million pounds by the age of thirty were viewed as failures.  It took time but over the next decade and a half the Anglo-Saxon model engineered housing price rises of several hundred percent.

In the USA extensive understanding of the dangers of overheated housing markets, based on the 1980s experience of the Savings and Loans collapse was not just ignored, it was systematically suppressed.  People who knew and wanted to regulate finance to prevent a repeat of the US and Japanese disasters  were fired and made unemployable.  Regulators were swept aside.  What were known as Recognised Accounting Practices or RAP were replace by something that favoured the fantasy that “no regulation is good regulation”. In came Creative Recognised Accounting Practices or CRAP.  The CRAP regime ushered in the era of the sub-prime loan. 

To compete and stay in business in a globalised world, banks and financial institutions were forced to participate in the CRAP race to the bottom.  Easy access to credit and the promise that rising prices ‘ensured’ that however high interest rates rose, the rising value of property would make “investing” in property worthwhile.  When that myth crumbled last year, not just banks but entire countries became technically bankrupt.

Have the collapse of housing financing institutions around the world over the past two years and the massive increase in homelessness sounded a warning to the world at large?  Far from it!  As major banks start laying claim to massive profits again, it looks as if they will be returning to “business as usual” meaning more homelessness.  British and US media are heralding new increases in housing prices as being a good thing. 

The next collapse will come much sooner and have an even more devastating effect on housing and homelessness than the last. 

Individuals faced with homelessness rarely have the resources to provide decent housing.  Local communities can pool and co-ordinate their limited assets but post-war experience showed only governments can mobilise all the resources needed to build their way out of mass homelessness. 

By promoting monetarism through the World Bank, IMF and UN, the US government forced one choice on all governments, mortgage and debt-based private housing, often benefiting US financiers.  That created homelessness and failed the poor.  Governments recently co-ordinated and marshalled far more than the cost of housing everyone in the world to protect failed bankers’ bonuses.  Without another world war, will we ever see them mobilise as effectively to house the needy and homeless?

The Victorian pauper, with tuppence in his pocket, might gloat: “You pays your money and takes your choice”.  Today’s homeless can only bemoan, “We pays our money, they takes our choices.”

Trained in architecture and planning and involved in housing issues since 1970, Bernard Miller has worked for UN agencies such as Habitat and written extensively about housing, debt and fraud.