“Working-class millionaires”: the housing bubble, inequality, and NIMBYism

Image via Getty/Newshub

By DAPHNE LAWLESS

This article is for Fightback’s magazine issue on class. Subscribe to the magazine or e-publication here.

In my article on the Auckland local body elections in 2016, I paid special attention to (now former) Auckland Councillor Mike Lee – a long-standing Left-wing activist who had distinguished himself by opposing intensified housing in the central city/inner suburbs area which he represented.1 Although the debate has moved on in Auckland, it is currently raging in full force in Wellington. Some of the strongest voices against similar housing intensification in that city – whose rate of rent inflation now outpaces Auckland’s2 – are councillors elected from the Green Party.

“Now I don’t know why progressives like that have a mind block. I just don’t know,” commented urban geographer Ben Ross to the Newsroom website.3This article aims to provide an answer to Ben Ross’s question; one which uses the much-misunderstood idea of class – in the sense of the social analysis pioneered by Karl Marx – to suggest an explanation for “Not In My Back Yard” (NIMBY) attitudes among the self-described Left. On the way, I hope to show how a class analysis makes it easier to understand why the massive inflation in housing prices and rents has been allowed to happen in the first place.

Whatever happened to class?

It’s very difficult to talk about “class” sensibly, since the uses of the term which are current in popular culture and the mass media are very difficult from the sense in which Marx used it. The popular understanding of the media is that “working-class” is a cultural identity – or a “consumption” identity – meaning someone who consumes “ordinary”, mass-market things, rather than fancy “elite” things. In New Zealand terms, someone who drinks Lion Red beer and watches rugby, rather than drinks Cloudy Bay wine and goes to dance recitals, might be called “working class”.

This idea of class – based on what people consume – is very popular among Right-wing populists who want to build a mass movement against media and cultural “elites”, rather than the capitalist system and the billionaire class. The crowning stupidity of this approach came from the US presidential spokesperson who tried to argue that the “working class” identified with Donald Trump – at the time the most powerful head of state on the globe and infamous for flaunting his wealth – because he ate Big Macs.4

In contrast, when Karl Marx and Friedrich Engels discussed class, they specifically meant a social distinction based on ownership of the means of production, and on control over others’ labour power. Marx and Engels’ vision, as expressed in the Communist Manifesto, was of society increasingly divided between two major classes – owners of the means of production (capitalists) and those who needed to work to survive (proletarians).5

So why do Marx, Engels and socialists in their tradition worry so much about the idea of (socioeconomic) class? Because class is a kind of “dirty secret” of capitalism and liberal democracy. On paper, in a society such as Aotearoa or Australia, everyone is equal; we all have the vote and the same human rights. But in practice, the owners of property make sure – through their influence over the economy, over the lives of their employees and tenants, and with their ownership of mass media and dominance of educational institutions – that democracy can never develop to the point that it threatens their privileges. As French poet Anatole France put it: “The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.”

Class, then, is why democracy under capitalism never works “as advertised”. But class analysis is not a conspiracy theory. It is not as if all the members of property-owning classes consciously “rig” the system to benefit at everyone else’s expense. Marx argues that the ideas in people’s heads develop from the way in which they live their lives6:

The mode of production of material life determines the social, political and intellectual life process in general. It is not the consciousness of men that determines their being, but, on the contrary, their social being that determines their consciousness.

Privileged classes and groups are not (entirely) consciously and selfishly guarding their privileges; but it just seems like “common sense” that a way of organizing society which makes their lives comfortable and pleasant is the correct state of affairs. This is why “rational” arguments for social change, or appeals to people’s better nature, have limited impact on the privileged. But even worse, these ideas “trickle down” to dominate all social layers, even the most oppressed7:

The ideas of the ruling class are in every epoch the ruling ideas, i.e., the class which is the ruling material force of society, is at the same time its ruling intellectual force.

The common sense of gentrification millionaires

So how does all this help us understand the “progressive mind-block” where veteran socialists and Green Party activists end up opposing housing intensification? In my 2016 article I suggested some explanation of how Mike Lee, in particular, ended up in that position:

Mike Lee’s main achievements for the Left were as chair of the Auckland Regional Council, when he was elected by all the people of the old Auckland City, from Avondale to Remuera to Otahuhu. His anti-Unitary Plan stance, however, has been as the councillor for the Waitemata/Gulf ward – including the central city but dominated by the gentrified, super-wealthy suburbs of Ponsonby, Grey Lynn, Herne Bay et al… One does not need to be a Marxist to point out that a good elected politician promotes the interests of their constituents.

Similarly, in Dileep Fonseka’s Newsroom article, he mentions how pro-intensification Wellington councillor Rebecca Matthews “inadvertently highlighted Green Party-aligned Deputy Mayor Sarah Free’s ownership of multiple properties when she captured a screenshot of declared property interests”.

“There is a generational thing here,” Matthews told Fonseka. “I’ve met maybe one person under 35 who is against this stuff….people have got in this position because they managed to buy these houses cheaply many, many years ago.” This is a point which I also raised in my 2016 article, when I pointed out that Mike Lee’s constituency

were beneficiaries of racially-biased gentrification. Grey Lynn and Ponsonby were heavily Polynesian working-class suburbs in the 1950s and 1960s. They were pushed out of the area in the 1980s… and young, “hipster”, Pākehā took advantage to buy up cheaper housing in what were then insalubrious but culturally rich suburbs. This generation subsequently benefitted from the massive neoliberal housing boom. They may have “done up” their Ponsonby villas, but no amount of “doing up” can justify a 2000% increase in capital value over 30 years.

It’s worth mentioning that there are far more extreme opponents of contemporary urbanism than Mike Lee or the Wellington Green Party. The most notorious are a small group in Auckland led by café owner Lisa Prager, who have gone beyond opposition to intensification to active sabotage against bike lanes and traffic-calming initiatives in the inner suburbs. Prager and her group, however, go well beyond the concerns about “heritage” and the greed of property developers raised by the councillors:

Prager believes transport and roading changes being made by AT are “designed to assist multinational corporations to transfer public money into private hands via confidential contracts”.

Alternative transport lobby groups like Bike Auckland and Generation Zero along with blogs like Greater Auckland were a part of a global conspiracy called Agenda 21, she said

For those who have followed Fightback’s analysis of the far right, this is the familiar form of conspiracy theories that we hear from far-Right groups opposing COVID health measures or multicultural society in general. It’s worth noting that even mainstream “NIMBY” discourse resorts to milder forms of ‘alternative facts’, such as accusing pro-intensification activists of being fronts for the Property Council (as Mike Lee does in his response in Fonseka’s article), or claiming that there are tens of thousands of “ghost homes” sitting vacant so there is no need for new housing.9

Prager’s group, although far more extreme than the NIMBY councillors, fit the same class profile we’ve been discussing: small property/business owners; Pākehā; of the generation which came of age before neoliberal reforms and the property bubble. In a 2019 article about anti-transgender/anti-sex work attitudes from some on the Left, I suggested that:

fascist politics everywhere can be characterised as a movement led by the insecure and frightened middle-class. People who may have worked hard to build a little privilege for themselves under capitalism become terrified that an ethnic or cultural Other (classically, “the Jews”) might take it away from them.10

NIMBYism – as a defence of a status quo which benefits a particular middle-class layer, couched in the language of social justice, and envisaging a conspiracy of big business and progressive activists against it – is a classic example of a Right-wing populist argument which disguises itself in Left-sounding language, effectively enough to confuse those who identify as “Left” but feel their privilege to be threatened by social trends. In other words, the kind of thing which Fightback has been warning against for many years.

The wealth effect builds a constituency

However, if the problem with house-price inflation and NIMBYism were due only to the economic self-interest – or “mind blocks” – of local body politicians and grumpy shopkeepers, it would be much easier to solve. The knottier problem is one at the level of the entire economy – and baked into the neoliberal economic model which has ruled the global economy for the last four decades.

A capitalist economy always runs a balancing act between keeping wages as low as possible, and therefore profits high; and the problem that profits can only be made if the goods and services produced can be sold. And if wages are too low, workers can’t afford to buy things.

One possible answer to this problem is expressed in the mantra of New Zealand’s neoliberal politicians in the 1990s of an “export-led recovery”. You can keep wages low in your own country if the goods and services are sold overseas – a model which has shown its most impressive success in China and other East Asian economies. But the benefits of this model decrease as more countries adopt it, in a kind of “race to the bottom”.

Runaway inflation in the property market of New Zealand, and other countries, suggests another way out from the contradiction between wages and consumption – what economists call the household wealth effect.11 Encouraged by near-zero interest rates, a continuous rise in the value of people’s homes means, bluntly, that people “feel richer”. Jacinda Ardern’s government has acknowledged that people “expect” there to be continuous rises in property values – an endorsement of a permanently inflating asset market which no Government would ever make for, say, the stock market.12

Given this implicit Government guarantee, there is no reason for people who own housing property not to run up ever increasing amounts of debt – “putting it on the mortgage”. But this maintains consumption levels, and thus keeps the economy ticking over, at the price of increasing social inequality. Those who have property get continuously richer – those who can’t get on the property ladder pay rent at an ever-increasing proportion of income. This is what they call a “K-shaped recovery” – recovery for property owners, stagnation or worse for the rest of us.13

Some Leftists object to housing property being used as the key to a class analysis. Someone’s personal house, they argue, is not a “means of production” in the same way that Marx meant it. But in the current financialized neoliberal economy, as we’ve seen, a house is not only a place to live but an investment asset, which not only inflates spending power above what wages and salaries could provide, but continually exacerbates the distinction between the “haves” and the “have-nots”.14 In Australia, income inequality between the highest and lowest deciles nearly doubled once housing costs are accounted for.15

Ben Ross’s perplexity at the “mind-block” of progressive NIMBYs is resolved when we recognize that such people are only “progressive” insofar as it doesn’t impact upon their own social status and comfort. An economy where house prices were stable, or fell, would be disastrous for the comfortably-off older Pākehā layers from which our local politicians are overwhelmingly drawn – no matter how they justify it (to themselves and others) with concerns about heritage or conspiracy theories. Worse still, it would no doubt lead to an economic crisis with a collapse in consumption – unless balanced by a large increase in wages and salaries, which is the last thing that big business wants.

The housing asset bubble will end – one way or another. Auckland’s formerly runaway rents have begun to “flatten off” with increased building since 2016, though property prices continue to inflate16. Either the era of near-zero interest rates will come to an end due to adverse economic developments elsewhere in the world; or the misery imposed by increasing rents for unhealthy and unsustainable housing will reach a tipping point where the self-interest of the NIMBY classes will be overruled. The question is how much pain working people have to suffer before that happens. The suggestion of former Green Party leader Metiria Turei in 2016 of crashing the housing market by 40% is an excellent one, that might be accomplished through massive intensification of sustainable housing, accompanied by a programme of rent control, coupled with a big increase in wages and salaries, and reforms of National Superannuation and KiwiSaver to offer alternative forms of economic security to property ownership. Only then might the stranglehold of the landlord class over politics in this country be loosened.

1 https://fightback.org.nz/2016/10/19/aucklands-no-choice-elections-blue-greens-and-conservative-leftists/

2 https://www.nzherald.co.nz/business/auckland-rents-up-nearly-3-per-cent-new-barfoot-thompson-data/

3 https://www.newsroom.co.nz/the-lefties-who-want-less-housing

4 https://thehill.com/blogs/blog-briefing-room/news/375422-gorka-americans-like-trump-because-he-eats-big-macs-on-air

5 See elsewhere in this issue for discussions of modern developments in class analysis which look in more detail at the various social groups which are “in-between” these two major layers.

6 Karl Marx, “Preface” in A Contribution to the Critique of Political Economy: https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/preface.htm

7 Karl Marx, “The Illusion of the Epoch” in The German Ideology: https://www.marxists.org/archive/marx/works/1845/german-ideology/ch01b.htm

8 https://www.stuff.co.nz/auckland/local-news/central-leader/102298217/anticycleway-protester-arrested-after-destroying-traffic-island-with-sledgehammer; see also this tweet from Auckland Councillor Pippa Coom https://mobile.twitter.com/pippacoom/status/1410540515653685249

9 https://www.stuff.co.nz/business/industries/125463204/ghost-houses-a-spectre-of-nzs-housing-crisis-or-just-a-bogeyman

10 https://fightback.org.nz/2019/08/26/swerf-and-terf-the-red-brown-alliance-in-policing-gender/

11 https://www.rbnz.govt.nz/research-and-publications/discussion-papers/2019/dp2019-01

12 https://www.interest.co.nz/property/108301/pm-jacinda-ardern-says-sustained-moderation-remains-governments-goal-when-it-comes

13 https://www.newshub.co.nz/home/money/2021/04/explosion-of-wealth-inequality-as-housing-boom-leaves-many-behind-economist.html

14https://voxeu.org/article/housing-and-wealth-inequality-story-policy-trade-offs

15https://theconversation.com/how-the-housing-boom-has-driven-rising-inequality-102581

16https://www.stuff.co.nz/business/125543691/rents-flatten-after-government-housing-changes-trade-me

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