In March, I promised to share with you tendencies in society today that remind us that a radically different way to organize society and the economy is possible – that a world without poverty and misery is not a utopia. In that and a subsequent post, I discussed how aspects of Venezuela under President Hugo Chavez, from community councils to sweeping anti-poverty programs to support of worker co-ops, have improved the ordinary lives of millions. Venezuela’s reforms, by making addressing the needs of the poor not seem totally contrary to the interests of capitalists, point in the direction of a more just economic system.
Closer to home, at least 10 million Americans have lost their houses since 2007 because they were foreclosed upon by the banks. Today, I’d like to bring to your attention what Gayle McLaughlin, Mayor of the predominantly working-class town of Richmond, California, is doing to beat back capital’s assault on poor and working people there.
As in other towns across the country, homeowners who took out mortgages during the housing boom have seen the values of their homes plummet in the wake of the economic crisis. More than half of the mortgages in Richmond are “underwater”, which means that their value exceeds what the property itself is worth, leading the banks to foreclose on homeowners. Poor communities of color were deliberately targeted for the most predatory loans – and in many cases, the banks committed outright fraud in peddling these “subprime” loans, sometimes foreclosing even on homeowners who had not missed any payments. Private equity firms like the Blackstone Group then buy up the foreclosed houses in order to rent them to the very people who, having lost their homes, are now in need of a place to live.
In 2010, President Obama’s Senior Adviser David Axelrod dismissed the possibility that the administration would call for a national moratorium on foreclosures, “because there are in fact valid foreclosures that probably should go forward.” And despite the overwhelming evidence of criminality, not a single senior executive from any of the Wall Street firms has been prosecuted by the Obama Justice Department for the crimes committed under their watch and with their blessing.
Enter Mayor McLaughlin, who as a Green Party candidate refused to take any corporate campaign contributions. In defiance of the donors who had heavily backed her Democratic rival, McLaughlin proposes to buy the underwater mortgages at the property’s current market value. The city of Richmond would then modify and reissue those discounted loans, with the intent of lifting some of the debt burden homeowners face and – most importantly – allowing them and their families to stay in their homes.
If the lender refuses to sell, the city of Richmond is threatening to use the power of eminent domain to seize the property, compensating the lender to the tune of that property’s market value. Eminent domain essentially allows the government to force private property owners to sell that property so it can be put to public use. Predictably, banks and investors, including Wells Fargo and Deutsche Bank, have filed suit, claiming the use of eminent domain here is unconstitutional. Meanwhile, the business press has been decrying government “run amok”. But as Bloomberg reports, there’s a long history of federal judicial precedent for the constitutionality of eminent domain in seizing a wide range of assets, including mortgages.
The financial sector may well find a way to undermine McLaughlin’s plan. But it may not. And if it doesn’t, it will be another testament to the potential of state power to work for ordinary people at the expense of capital – even now, in an era of austerity and privatization, in the belly of the beast. If Richmond becomes the model for cities across the US, it won’t mean that the need for revolution is any less urgent. On the contrary, the history of progressive reform in the US shows it’s only when we organize and push for revolution that measures like this one will start to be seen as an acceptable compromise by the capitalist class.
It’s not a matter of trusting that the state will mitigate the onslaught of global capitalism and the growing neo-fascist reaction to it. We have to fight for every bit of liberty and justice, to exercise a new kind of violence towards the state, to organize, theorize, strategize – and make it so.