The Oakland fire tragedy and the housing crisis in America


7 December 2016

The death toll from last Friday’s fire at a warehouse in Oakland, California stands at 36, with 85 percent of the burnt-out structure having been searched. Among the dead, some of whom have yet to be identified, are young people and artists who made their home in the 86-year-old sprawling two-story structure known as the Ghost Ship. The building was leased to an artists’ collective in the Fruitvale district of the city.

It was the deadliest building fire in the US since a Rhode Island nightclub fire in 2003, which claimed 100 lives. The tragedy has horrified the San Francisco Bay Area and the world, leaving many asking how such an event could take place in 21st century America.

It is unclear at this point whether criminal charges will be filed against the owner of the building, Chor Nar Siu Ng, who owns several other blighted properties in Oakland, or against Derick Ion Almena, who leased the property, lived there with his wife and three children, and ran the artists’ collective. Looking for an individual to blame, the media has launched a campaign against Almena in particular, who lost many people he knew in the blaze.

Authorities have pointed to electrical problems and the lack of basic fire safety provisions in the dilapidated structure. At the root of the tragedy, however, lies the dysfunctional character of American capitalism, including a housing crisis born of poverty, social inequality, and years of neglect by government authorities.

The Bay Area, long known as a haven for artists and students, is now largely unaffordable for workers and young people. Along with the tech boom of the last six years, housing prices have skyrocketed. Warehouses and lofts in San Francisco’s former industrial areas have given way to high-end condos and workspaces to house tech start-ups and their employees. More than 2,000 people are evicted annually in the city.

This has pushed artists and others struggling to find affordable housing to Oakland, across the San Francisco Bay, and beyond. Now these areas are also increasingly unaffordable, with the median cost of available rentals in Oakland standing at $3,000 a month, far beyond what is affordable for most Americans. People living in buildings such as the Ghost Ship are faced with the choice of living in substandard housing or being homeless.

Speaking to CBS, a city councilor from Fruitvale estimated that there are some 200 warehouses in Oakland “that have no papers, no permit, no fire code, nothing.” If occupied, these structures are disasters waiting to happen. And while building inspectors apparently ignore these deathtraps, no measures are taken to alleviate the growing crisis that leads to their use as housing.

The Bay Area’s economy has spawned a small army of billionaires, with 50 of them making it onto the Forbes 400 list of richest Americans in 2016. Oakland itself is increasingly socially polarized, home to the fifth largest cluster of “elite zip codes” in the US, ranked by a combination of high income and education level attained. At the same time, more than 800,000 people in the region live below the poverty line.

The housing crisis in the Bay Area mirrors that of metropolitan areas across the country. The Los Angeles Times reports that more than 20,000 rent-controlled apartments in LA have been taken off the market since 2011 to make way for pricey homes and condos for the wealthy, leading to hundreds of evictions this year.

Evictions are taking place not only in thriving real estate markets like San Francisco, New York and Los Angeles, but also in places like Milwaukee and St. Louis, where deindustrialization and unemployment, combined with wages that do not keep pace with the cost of living, are driving people out of their homes.

According to a report released last year by Harvard University titled “Projecting Trends in Severely Cost-Burdened Renters,” by 2025 nearly 15 million US households will devote more than half of their income to rent. Those unable to keep pace with their rent or mortgage payments will find themselves evicted and possibly homeless.

The federal government has long since abandoned any responsibility for the provision of decent housing, leading to disasters like that in Oakland last week. According to the US Fire Administration, an organization that tracks fire deaths based on media reports, there were 2,290 fire deaths in the US in 2015, many of them in mobile homes or other substandard housing.

The first US national housing legislation, passed in 1937, went beyond providing low-cost public housing and was aimed at improving the lagging economy by funding jobs to build affordable housing. Public housing today has largely ceased to exist, with units sold off to developers to turn a quick profit, and those in need of housing waiting years if not decades for openings to use their Section 8 housing vouchers.

The Obama administration, following the Bush and Clinton administrations before it, has made no pretense of establishing a public works program to address the woeful state of infrastructure in the US—whether in housing, roads, bridges, energy grids or in other vital areas.

President-elect Donald Trump has made clear his attitude toward the housing crisis with his nomination of Ben Carson to run the Department of Housing and Urban Development. Carson, a retired neurosurgeon with no professional housing policy experience, has declared his hostility to the entire concept of public housing and social provision in general, stating: “It really is not compassionate to pat people on the head and say, ‘There you poor little thing, I’m going to take care of all your needs, your health care, your food and your housing, don’t you worry about anything’” (Conservative Political Action Conference, February 26, 2015).

The Socialist Equality Party calls for an immediate halt to foreclosures and evictions and for the provision of billions of dollars to provide decent, low-cost housing to those in need. Housing is a social right that can be assured only by placing the home construction and financing industry under public ownership.

For tragedies like that in Oakland to be averted in the future, public funds must be poured into the construction of new homes for working families. Such a project can be undertaken only under a workers government based on a socialist program, which treats affordable housing as a basic human right, not a privilege reserved for the wealthy.

Kate Randall

I Came to San Francisco to Change My Life: I Found a Tribe of Depressed Workaholics Living on Top of One Another

Hacker House Blues: my life with 12 programmers, 2 rooms and one 21st-century dream.
By David Garczynski / Salon September 18, 2016

I might have been trespassing up there, but I would often go to the 19th-floor business lounge to work and study. Located on the top floor of the a luxury high-rise in the SOMA district of San Francisco, the lounge was only accessible to residents of the building. Yet for a while I found myself there almost every day.

Seventeen floors below, I lived in an illegal Airbnb with 12 roommates split between two rooms. There were six people packed into my bedroom alone — seven, if you included the guy who lived in the closet. Three bunk beds adorned the walls, and I was fortunate enough to score a bottom bunk. Unfortunately, though, it was not the one by the window, which, with the exception of one dim lamp, was the only source of light in the room. Even at midday, the room never lit up much more than a shadowed cave. At most hours of the day, you could find someone sleeping in there. Getting in and out of bed was a precarious dance in the darkness to avoid stepping into the suitcases on the floor, out of which most of us lived.

In the shared kitchen, the sink more often than not held a giant pile of dishes, and the fridge, packed with everyone’s groceries and leftovers, emanated a slightly moldy aroma. Mixed in there were the half-eaten meals and unfinished condiment jars of tenants who had long since moved out — all left to rot, but often too far buried in the mass of food to be located.

Let’s just say the room was not as advertised.

The Airbnb posting did boast of access to a 24-hour gym, roof deck and bocce courts. The building has an indoor basketball court, an outdoor hot tub and even a rock climbing wall. The 19th-floor business lounge alone comes with a pool table, a porch, several flat-screen TVs and an enviable view of much of San Francisco. For $1,200 a month, it all seemed worth it. The post did say it was a four-person apartment, not 13, and included a picture of a sunny room with a pair of bunk beds, but I figured for a short sub-lease while I attended coding school, it wouldn’t be so bad. The reviews, after all, were pretty positive, too: mostly 5-stars. However, none of them mentioned the fact that I wouldn’t even be given a front door key.

I’d have to sneak into the building every night. The only way I entered the building was by waiting until someone exited or entered, and then I’d slip through the door before it closed. From there I’d walk straight past the front desk guard and head to the bank of elevators. Despite my nerves, that part was surprisingly easy. The building caters to the young tech elite, so a backwards hat and a collegiate T-shirt practically made me invisible. When I got to my floor, I’d make sure none of the neighbors were watching, and if no one was around, I’d stand on my tiptoes and grab the communal key hidden atop the exit sign. Once the door was unlocked, I’d return the key to its perch for the next tenant to use.

I had moved to San Francisco to break into the tech world after being accepted into one of those ubiquitous 12-week coding boot camps. I had dreams of becoming a programmer, hoping one day I could land a remote contracting gig — a job where I could work from wherever and make a good living. My life would be part ski bum and part professional.

In my mid-20s uncertainty, the coding route seemed to have the most promise — high paychecks in companies that prized work-life balance, or so it seemed from afar. I knew the road wouldn’t be easy, but any time I’d mention my ambitions to family and friends, they responded with resounding positivity, affirming my belief that it was a well-worn path to an obtainable goal.

All of the people in that Airbnb were programmers. Some were trying to break into the industry through boot camps, but most were already full-time professional coders. They headed out early in the morning to their jobs at start-ups in the neighborhood. A lot of them hailed from some of the top schools in the country: Stanford, MIT, Dartmouth. If I was going to get through my program, I needed to rely on them, academically and emotionally. Once the program started up, I would find myself coding 15 hours a day during the week, with that number mercifully dropping to 10-12 hours on the weekends. Late at night, when my stressed-out thoughts would form an ever-intensifying feedback loop of questioning despair — What am I doing? Is this really worth it? — I would need to be able to look to the people around me as living reminders of the possibility of my goals.

Every night, the people whose jobs I coveted would come home from 10- to 12-hour shifts in front of a computer and proceed to the couch, where they’d open up their laptops and spend the remaining hours of the night in silence, sifting through more and more lines of code. Beyond preternatural math abilities and a penchant for problem solving, it seemed most didn’t have much in the way of life skills. They weren’t who I thought they would be — a community of intelligent and inspiring men and women bouncing ideas back and forth. Rather they were boys and girls, coddled by day in the security of companies that fed them, entertained them and nursed them. At home, they could barely take care of themselves.

Take for example the programmer who lived in my closet: Every night he’d come home around 9 p.m. He’d sit on the couch, pour himself a bowl of cereal and eat in silence. Then he would grab his laptop and head directly into the closet — a so-called “private room” listed on Airbnb for $1,400 a month. It was the only time I’d ever see him. The only way I could tell he was home was by the glow of his laptop seeping out from under the closet door. Hours later, deep into the night, the light would go out, and I would know he had to gone to sleep. By the time I arrived, he had been living there for 16 months, in a windowless closet with a thin mattress placed right on the floor. During the day he codes for Pinterest. Yeah . . . that Pinterest.

Maybe there were people working in this city who were living out the tech dreams of everyone else, but I’ve realized the number of people who dream about it far outnumber of people who obtain it. Everyone I spoke to in this town seemed doe-eyed about the future, even while they were living in illegal Airbnbs and working at failing startups across the city.

The odds weren’t in my favor. Most likely I’d find myself in the 92 percent of start-ups that go under in three years, trapped like some of my friends — much smarter and better programmers than I’ll ever be — bouncing from failing company to failing company.
Or maybe not. Maybe I would make it, only to become like my friends who earn six-figure paychecks and still lament that they’ll never be able to buy a home here. What illusions could I continue to maintain then?

There was a good chance I’d find myself in a situation like another roommate’s. During salary negotiations for a job at a start-up, he was encouraged to accept the pay tier with a lower salary but higher equity stake. Now he works 12-hour days just to try to keep the company (and his potential payout) afloat on a paycheck not much higher than some entry-level, non-programming jobs.

The most likely scenario, however, was that I’d become like the mid-30s man who slept in the bunk above me. The reality of his situation slowly slipped him into a depressive state, until he was sleeping most hours of the day. The rest of his waking hours were spent walking around slumped and gloomy.

Programming for me was never supposed to be more than a means to an end, but that end started to feel farther and farther away. The longer I lived in that Airbnb, the longer I realized my dreams would never be met. In all likelihood I would be swept up in an economy here that traded on hopes and dreams of the people clamoring to break in. The illegal Airbnbs that dot the city can afford to charge their amounts because there is no shortage of people wanting to break in. There is another smart kid around the corner who believes that despite the working and living conditions this is just the first step to striking it big. Never tell them the odds.

I had hinged my happiness on an illusion and naively fought to get into a community that wouldn’t help me advance in the direction of my dreams. Maybe in the end I would get everything I needed or at least a nice paycheck, but I’d lose all of myself in the process. I’d be churned and beaten by the underbelly of the tech world here long before I could ever make it out.

If you are interested, it’s not that hard to sneak up to the 19th-floor lounge. I still do sometimes, despite having long since moved out and given up programming. From up there the view of San Francisco takes on the artificial quality of a miniature model. To the north, you’ll see a sea of tech start-ups, their signs and symbols a wild mash of colors. From this distance, it can all look so peaceful. Just know that somewhere in that view is another “hacker house” with bright kids living in almost migrant-worker conditions. Somewhere out there is a coding boot camp with slightly inflated numbers, selling a dream. Their fluorescent halls and cramped bedrooms are filled with the perennially hopeful looking to take the place of those who have already realized this dream isn’t all it’s cracked up to be.

It is a beautiful view, though. Just one I no longer want for myself.

David Garczynski has lived in the Bay Area for one year now. In that time, he’s lived in an illegal Airbnb, on his cousin’s couch, in two short-term subleases, and has been evicted once. He just signed an official (and legal) lease last week.

Sanders supporters discuss issues outside California rallies

By WSWS reporters
1 June 2016

In the two weeks leading up to the June 7 primary in California, Bernie Sanders has been holding rallies up and down the state. He frequently speaks in two or more cities each day, trying to gain an edge over frontrunner Hillary Clinton to better position himself for the Democratic National Convention in July. Despite trailing in pledged delegates, Sanders has vowed to campaign through the convention.

Sanders speaking in Oakland

Reporters from the World Socialist Web Site spoke to workers and youth attending rallies in Santa Barbara and Oakland. The people drawn to Sanders campaign had widely varying conceptions although all were looking for an alternative to the current political system. Most opposed war, despite Sanders’s support for Obama’s drone assassination and bombing campaigns. Many opposed Clinton specifically or the Democrats generally despite Sanders’s repeated statements in support of both. Almost all were drawn to Sanders’s claim to be a socialist.

Leading Democratic Party officials, afraid that Sanders cannot line his supporters up behind Clinton, have called on him to withdraw from the race to prevent a contentious convention.

In Oakland on May 30, about 60,000 people came to listen to Sanders speak in Frank Ogawa Plaza. WSWS reporters distributed copies of the election statement of Jerry White and Niles Niemuth for the Socialist Equality Party, and interviewed some of those waiting to get in.


Devin is a 38-year-old visual effects editor from Oakland. “The 2016 election is like a giant circus,” he said. “It doesn’t make any sense that it might come down to Hillary Clinton and Trump who nobody likes. We’ve been spoon-fed Hillary, and it makes me sad to see Bernie not be a shoo-in, because his policies represent the interests of so many people.

“I’m absolutely for society not being run by corporations, and I believe education and health care should be free. There needs to be a revolution in thought, not through violence. Bernie has proposed a set of ideas, and now we need to find people who support them and get them elected. I hope this doesn’t stop after the election.”


Javier, a 17-year-old student from San Francisco, described himself as a Marxist. “I think the election is leading to a political revolution because Sanders has shown us what’s wrong with the Democrats,” he began. “I feel like his policies on health care and education have a socialist character, but this is just the beginning. There’s a lot more that needs to be done after the election.”

On the issue of war, Javier was less certain: “I’m not as aware of his stances on foreign policy as I should be, but I know he didn’t support the war in Iraq, and if other politicians had listened to him in 2003 then maybe the US wouldn’t have entered that terrible war. He also hasn’t supported war against Iran, which is important. If the US worked to help other countries, the world would be a better place. But because of imperialism we’re not, we’re just screwing them over entirely.”


Mateen is a 29-year-old bar manager coming from Oakland who did not see Sanders’s policies as necessarily socialist. “They’re just common sense,” he said. “They can be equated with socialist ideals, but they’re practical solutions to real problems. Regarding the need for revolution—things need to be turned on their head. We have an auction, not a democracy. We need to raise taxes on the top 1 percent, and anyone making over $500,000 a year. They don’t need that much money.”

When asked whether how they would feel if Sanders formally endorses Clinton’s candidacy, the response was overwhelmingly negative. “I can’t support the lesser of two evils any more,” Mateen said. “I’ll make a stand by writing in Bernie.” Devin was opposed to an endorsement of Clinton, saying: “It would be a bitter pill to swallow. I couldn’t support her no matter what. There’s a lot of tough questions to consider though—what happens if Trump becomes president?” Javier was much more emphatic, “If Sanders did that, it would be an F-you to his supporters because he’s exposed her so much over the course of the primaries.”

When the rally began, Sanders was introduced by actor Danny Glover and economist Robert Reich. The crowd booed Reich when Glover introduced him as former secretary of labor under Bill Clinton. Sanders began his speech by praising Reich, who participated in an administration that began gutting social services through welfare “reform.”

“He was one of the greatest secretaries of labor that this country has ever had,” Sanders said. “He made clear which side he was on, and that was the side of working people.”

At Santa Barbara City College, roughly 6,000 people came to hear Sanders speak on Saturday, May 28.

Echo Zen

Echo Zen teaches health education at California State University Channel Islands. “Youth are essential to the future of democracy in the United States,” she said. “We’re finally seeing a candidate who is able to activate a traditionally uninvolved demographic, the young people. That’s why I’m here. I see how youth are responding, and it’s very heartening.

“One can certainly argue that his ideas don’t go far enough. But let’s not forget that maybe 10 or 20 years ago, to be considered a socialist was a political death sentence. Now we find a substantial chunk of the population considering themselves socialist. It’s an earthquake in politics.”

Matthew (left) and Rosie (right)

Rosie Fatta, a University of California Santa Barbara student majoring in environmental studies, said, “Big business interests are definitely affecting our country. Actually, climate justice is what I’m interested in. I believe the fact that he’s even talking about that is important because some people are denying that there is global warming. And Bernie is addressing the root causes of it. Capitalism is the root cause of it.”

Her brother Matthew Fatta recently graduated from University of New Mexico in business. “There’s deep funding by big oil companies,” he said. “There should be more money provided for alternatives to fossil fuels. And we need to stop the corrupt relations between the fossil fuel industry and government.”

When a WSWS reporter raised the danger of war that none of the politicians is discussing, he said, “I don’t agree with war. The politicians are all saying that the enemy is China, but they’re still human beings like us.”

Raymok Ketema

Raymok Ketema from University of California Santa Barbara rejected the efforts to line minorities up behind Clinton, “I support Bernie Sanders because he has spoken out against the classism of this system,” he said. “Some people criticize him, saying he doesn’t address the racism in this country. But classism is racism.”

A retiree from the Navy said, “What’s wrong with socialism? It’s a necessity. There are over 300 million people in this country, and capitalism doesn’t work for us.” He said he had served overseas in the South China Sea and the Philippines during the Second World War. He discussed with the WSWS that those same areas are today flashpoints in Obama’s provocations against China.

On the war danger, he said, “This is the only country that has ever dropped atomic bombs. Not even the Soviet Union had one then. Is that something to boast about? I think the biggest problem for the working class is ignorance. It makes them malleable.”

Financial parasitism and the global housing crisis


By Gabriel Black
31 May 2016

Rent and housing costs in most major cities have skyrocketed since the financial crisis, cutting deeply into workers’ standard of living and prompting concerns about a new global housing bubble. Driving the soaring cost of rent is a global financial system that is being pumped full of cheap credit by all the major central governments at the expense of workers around the world.

Prices in some areas boggle the mind. San Francisco’s average asking price for a one-bedroom apartment went from $1,258 per month in January 2010 to $4,126 in February 2016. In London, the average home price has doubled since 2009, from about £300,000 ($437,600 USD) to £600,000 ($875,100).

Hong Kong’s housing market, which largely avoided the US real estate crash, more than tripled in its average sale between 2004 and today. The city is now considered the least affordable place in the world, with the median Hong Kong home price worth 19 times the city’s average skilled white-collar worker’s annual salary.

Housing and rental markets are so high that the Swiss bank UBS estimates that the majority of the world’s urban real estate markets are now “significantly overvalued.”

What is most striking about the colossal increase in prices, however, is how divorced it is from the incomes of the vast majority of the global population, which are moving in the opposite direction.

Historically, rent prices have tended to move with income and inflation. For example, in the United States the median home price adjusted for inflation remained largely flat between 1970 and 1998, fluctuating slightly above and below $160,000. This was a period in which workers’ incomes were also flat. After 1998, however, the housing market skyrocketed, with the median home price rising from about $160,000 in 1998 to $275,000 in 2006, the peak of the finance-driven boom. This jump was driven by all manner of financial speculation, including rampant criminal behavior, which had been let loose by the lowering of interest rates by the US Federal Reserve.

The housing market today is going through a new version of the 2006 housing crisis. However, unlike 2006, this process is global. Nearly every major capitalist government in the world is pursuing a policy of near-zero interest rates, encouraging rampant speculation in both the stock market and the real estate market.

This trend can be seen clearly in the United States. Between 2001 and 2014, the average real rental price rose 7 percent nationwide according to Harvard University’s Joint Center for Housing Studies. During that same period, median household income dropped by 9 percent.

In Los Angeles, the second largest city in the US, 40 percent of families either make poverty wages or are unemployed. As families and individuals increasingly struggle to make ends meet, rent has increased sharply in LA. In January 2010, an average one bedroom apartment went for $1,224 a month. Six years later, the cost was $1,935. And the worst is not over. A 2016 forecast by USC Casden Multifamily predicts that in the next few years rent will “soar.” It is no wonder that homeless in the city grew by 16 percent in just two years between 2013 and 2015.

Another way of capturing the growing divide between wages and rent for hundreds of millions of workers around the world is the Median Multiple, the ratio between median household income and average home price. According to the Demographia International Housing Affordability 2016 Survey, a Median Multiple of three and under is considered affordable (e.g., a family making $50,000 a year buying a house at $150,000 or less). A multiple exceeding five is considered “severely unaffordable.”

In 2015 Demographia surveyed 367 cities inside the UK, US, Canada, Australia, New Zealand, Ireland and Japan. According to the group, the 10 most unaffordable cities were: Hong Kong with a Median Multiple of 19.0; Sydney (12.2); Vancouver (10.8); Melbourne, (9.7); Auckland (9.7); San Jose (9.7); San Francisco (9.4); London (8.5); Los Angeles (8.1) and San Diego (8.1). All of these cities have experienced a doubling or even tripling of their Median Multiple since 1998.

The surge in prices and collapse in income has led to more renters on the renting market, since buying has become out of reach. In the United States, between 2005 and 2015, there were 9 million new renting households. This is the largest gain on record for a 10-year period according to Harvard University’s Joint Center for Housing Studies. In 2015, 37 percent of all US households rented, the highest level since the mid-1960s, and up from 31 percent in 2005.

Workers are now becoming trapped in this situation, as they spend more of their income paying for rent and are less and less likely to be able to buy a house. In 2001 in the US, 41 percent of renters spent 30 percent of their income or more on rent. This rose to 49 percent in 2014. In the same year, 26 percent of the renting population spent more than half of their income on rent. In the UK, a fifth of all young adults now stay in their parents’ home until they are at least 26. In 2015, 31.5 percent of US young people aged 18 to 34 lived at home, up from 27 percent in 2005.

While workers suffer under crushing rent burdens, landlords and investors are raking in millions if not billions. This year, a total of 184 billionaires made their wealth through real estate. This was up by 22 individuals from the year before, even as the overall number of billionaires went down from 1,826 to 1,810 individuals.

Those who make money off of rents do not add anything to the productive system. While a certain amount of money can go to maintenance and upkeep, vast and increasing sums of money made by real estate are from the pure monopoly status of owning land.

The wealth of these billionaires principally comes from the unsavory fact that in order to keep the global economy afloat, the central banks around the world have pumped the major banks full with cheap credit.

As UBS Global notes in its 2015 Global Real Estate Bubble Index, “Loose monetary policy has prevented a normalization of housing markets and encouraged local bubble risks to grow.” They write that much of the “overvaluation” in the global housing stock comes from a “dependence on low interest rates.”

“Price-to-rent (PR) multiples are greatest in Zurich, Vancouver, Hong Kong, Geneva and Singapore. The extremely high PR multiplies indicate an undue dependence of housing prices on low interest rates. Paris, London and Sydney follow suit and form a trio of cities with PR multiples around 30. House prices in these cities are vulnerable to a sharp correction should interest rates rise.”

In other words, the deluge of cheap credit provided by the world’s central governments to their major banks has unleashed an orgy of speculation. The world’s richest are getting even richer by doing nothing as their real estate investments shoot through the roof. Meanwhile the vast majority of the world’s population must pay increasingly obscene amounts just to have a place to live.

As Lenin noted in his work Imperialism, in capitalism’s state of decay there is an “extraordinary growth of a class, or rather, of a stratum of rentiers, i.e., people who live by ‘clipping coupons’, who take no part in any enterprise whatever, whose profession is idleness.”

This describes exactly the parasitic layer of real estate moguls, whose money comes not from producing anything of value to the world economy, but by sucking away money from the system in the form of rent. There is no one who benefits from high rents except the small layer of people who control the vast majority of the world’s property.



The Gig Economy Is Ripping Out Floor Below Middle Class

Gig economy profits are mostly going to wealthy executives.

Photo Credit: Image by Shutterstock, Copyright (c) tostphotos

The latest tech-driven gyrations upending traditional employment and increasing the divide between the haves and the have-nots are as profound as they are poorly understood by the public and federal lawmakers.

In what’s called the gig economy, companies like Uber hire people to use their own cars as taxis; property owners use firms like AirBnB to rent homes and rooms; and the well-off use firms like Instacart for on-demand shopping. While this may seem to offer more freedom of choice to all, some say the gig economy not only erodes wage-based work and benefits, it poses systemic risks to the economy as income becomes more erratic.

That was the takeaway from a talk by David Cay Johnston, the renowned investigative business reporter, at San Francisco Public Press, an independent non-profit outlet. Yet according to just-released findings by Pew Research Center in the first national survey about this corner of the “new digital economy,” most Americans have little idea of the changes underway.

“Imagine that you are a mortgage lender. Are you going to lend people money for 30 years if they don’t have the security of employment?” Johnston said, offering an example of how the successful push by the technology sector to undermine and overturn the labor laws created during the New Deal are tilting too far toward piecemeal purveyors and will create new instability.

“People are working without salary, benefits and the stability to buy a house and raise a family,” he said, saying that the blame can be placed at the foot of high-tech lobbyists who have donated to congressional campaigns and federal officeholders who subsequently loosened federal laws to their benefit.

Meanwhile, according to Pew’s New Digital Economy report, 61 percent of Americans have never heard of “crowdfunding,” 73 percent are not familiar with the “sharing economy,” and 89 percent have never heard of the “gig economy.”

Johnston is a registered Republican but schooled in the belief that business prospers when wages and benefits are reliable and income is spent locally. He described how the fundamentals of middle-class stability are being further eroded by a new technology-based oligarchy. Despite all the hip apps and marketing, gig economy profits are only going to executives while the jobs offered are intrinsically unstable, fiscally unpredictable and most of the risk and expense are placed on contract workers.

During Johnston’s presentation, he said the protests against companies like Uber are not going to be enough to address the underlying disparities became they are based on federal law—or an absence of regulation—to create a healthier balance for employers, workers and the economy. Johnston believes these underlying issues and resulting shifts in the economy are neither recognized nor understood by 2016’s presidential candidates.

I spoke with him after his talk to further elaborate these points.

Steven Rosenfeld: What’s really going on with the gig economy?

David Cay Johnston: The gig economy is really about pushing down the costs of labor. And it’s government rules that help corporations pay less for labor and therefore make more profits, unless they push so far that they don’t effectively run the business. And they’re going to push them down and down because government policy lets them do it. When you pay people as employees, they get a regular paycheck. That means the employer takes more of the risk and the worker gets reliability. And that’s a much better system, because most people can’t live in a world of unreliability. How are you going to finance a mortgage if you don’t have a reliable income?

SR: You said these protests on the street against Uber aren’t really going anywhere, and neither is a litigation strategy because the federal courts are stacked with judges who are anti-labor, so where’s the pressure point?

DCJ: Demonstrations like shutting things down can be very beneficial, but they are a tactic, not a strategy. The strategy is we have to break the campaign finance system. We have to vote out of office those politicians in both parties who are rigging the game in favor of the oligarchs, who are feeding them and against everybody else. And how do you do that? Well, a lot of people were elected to Congress because they went door to door in their district and knocked on every door for a year—things like that. Or they got other people to do it with them. And they repeatedly went to people with a message and they got it across.

SR: The thing that I see as a reporter is that what unites the Bernie people and what unites the Trump people is they feel vulnerable. They feel unprotected against big systems—some big systems are government. Most big systems are corporate and private. And the gig economy is part of that, because people are not empowered and have fewer choices. So what do people do? 

DCJ: The underlying problem here is in the law. We’re getting the law wrong and we’re getting the principles wrong. People don’t understand that at all. First, of all, you can’t be too abstract. I am in this bizarre position in the people I champion in my books are the people going with Bernie or Donald. And I’ve written the toughest pieces about both of them that have been in this campaign—to the point where Donald called and threatened to sue me. And yet neither of these people is capable of doing anything.

Bernie Sanders is not capable of making any change. He doesn’t know how to run anything. And Donald, if he gets elected, he doesn’t care about any of this. He’s a narcissist.

So fundamentally we’ve got to find ways to build organizations that aren’t necessarily the organizations that are for people at their work. We’ve got to create social movements and find people who are leaders—this is not me. This is not my area—who will get across messages that will unite people and get them to say, Yeah, we’ve had enough of this and we are not taking it anymore, and elect different people to office.

SR: Everyone agrees with that. But we have a political culture whose language, whose rhetoric, whose understanding seems so dumbed down.

DCJ: My simple answer to that is I am in the diagnosis business. I am not in the solution business. I wish I was. But I have spent my whole life exposing problems and I have offered here and there solutions, but the fundamental solutions of how do you organize this society and a culture to change—I don’t know how to do that; it’s not what I do.

SR: But I’ll tell you what you do do—you analyze the money. Where it goes. You analyze how it’s structured. You analyze whether there is enough to be shifted from a column here as a tax break and giveaway, to a column here as a public benefit that could be a safety net. And as you said earlier tonight, there is enough money there to really have people lead more assured, confident and economically secure lives.

DCJ: So one of the ways to do that is nobody needs or can spend enormous huge incomes. My thought is a couple of reforms that we need is that even high income should be taxed at a much higher rate to discourage those high incomes. Secondly, if it’s wealth—you’re not spending the money, you’re building wealth—you should be able to build all the wealth you want, but when you die we should heavily tax it to take it away. And you shouldn’t be able to borrow against that wealth to live on—that’s how super-rich people live tax-free. If you had $1 billion and are spending only $10 million a year, you can borrow and get richer and richer without paying taxes. We need to stop that. We need to recognize that there is no utility to this.

You know, if you invent something and it makes you $10 billion, god bless you. You keep the $10 billion until you die. And then we should heavily tax that. We have gotten the idea that somehow this is wrong. The only reason you made the $10 billion is because you live in the United States of America. We have the market and the technology that taxpayers have invested to make it possible, and now we’re going to go harvest it. And if we don’t do that, here’s what we’re saying. We’re going to let that rich person who benefited from all that public investment and spending keep the money, and you’re going to be taxed so they can pay less. That’s crazy.

SR: Do you think there is an opening now because millions of Americans are looking to Bernie and looking to Trump to address deep anxieties?

DCJ: No, I think this is evidence of people’s panic. People know that the promise of the Reagan revolution, that it would make them rich, hasn’t worked out. They don’t know why. They don’t know what to do about it. So they have gone to two false prophets. And the difference between them is people who are motivated by racial animus or other bigotry are going to one, and people who have a better—in my view—or more reasonable understanding of society are going to the other. But they are false prophets. They can’t fix anything. They don’t know how to fix anything. And they don’t really care.

Leading members of Congress will tell you that Bernie has never accomplished anything and doesn’t know how to, and he’s a miserable human being if you ever meet him. I know that about him. But he has never accomplished anything. He’s a rabblerouser. We need rabblerousers. But he shouldn’t be president.

Steven Rosenfeld covers national political issues for AlterNet, including America’s retirement crisis, democracy and voting rights, and campaigns and elections. He is the author of “Count My Vote: A Citizen’s Guide to Voting” (AlterNet Books, 2008).

Tech billionaires got rich off us. Now they want to feed us the crumbs

In a future where robots take our jobs, the tech elite see universal basic income as a fair exchange. But don’t forget – their wealth came from what we provided

An attendee participates in the TechCrunch Disrupt hackathon. Many in Silicon Valley are fighting for universal basic income, or UBI.
An attendee participates in a TechCrunch hackathon. Many in Silicon Valley are fighting for universal basic income, or UBI. Photograph: Bloomberg/Bloomberg via Getty Images

That’s the premise behind universal basic income (UBI), an idea with a long and surprisingly mainstream history. Its popularity last peaked in the 1970s and now, after a relatively dormant few decades, it’s making a comeback. Pilot projects have been announced in Finland, the Netherlands, and Canada. This summer, Swiss voters will vote in a referendum that could give every adult about $2,500 a month.

These proposals aren’t much different from those floated 40 years ago. What’s new is the reasoning behind them. Basic income’s current revival is driven by fear of technology – specifically, the fear that robots and software will take our jobs, creating a massive social crisis that only UBI can solve. And nobody makes this argument more influentially than the tech industry elites who have become UBI’s most prominent and most powerful supporters.

“Silicon Valley’s basic income bromance,” the writer Lauren Smiley calls it: a group of venture capitalists, entrepreneurs, engineers, and futurists who together form an informal and extremely well-financed advocacy network for UBI. Most famous are Sam Altman, president of Y Combinator, a startup incubator that recently announced it would undertake a major study on basic income; Albert Wenger, a venture capitalist who writes a widely read blog; and Peter Diamandis, bestselling author of books about the future and cofounder of Singularity University.

UBI tech elites don’t agree on exactly how to implement a basic income. What they do agree on, emphatically, is why we need a basic income in the first place. In the very near future, they believe, breakthroughs in robotics and artificial intelligence will automate many professions out of existence. The gap between rich and poor will grow sharply, as millions of people won’t be able to find work. A universal basic income will offer those people a way to meet their basic needs in an economy that has rendered them permanently redundant.

This vision of the future makes a few assumptions. One is that unemployment, and economic misery, are technological phenomena. Tech’s UBI advocates often make this point explicitly, pointing to the past three decades of stagnating median wages and a widening wealth gap as proof that technology creates inequality – and that accelerating technology is likely to create even more. It’s an interpretation with broad credibility, often repeated in the pages of The Economist and in the conference halls of Davos.

Yet it’s also entirely wrong. Central to the story of technological inequality is the idea of skills-biased technical change (SBTC): the theory that technology, by automating middle-income jobs, splits the workforce into high-skilled, high-wage workers and low-skilled, low-wage workers. This polarization fuels inequality, since elite workers reap an ever-growing share of the rewards.

But economic data suggests there’s no evidence that this is actually taking place. If it were true, you’d expect to see well-educated workers using their skills advantage to bid up wages. Instead, wage growth has stagnated since the 1990s for workers of all education levels. Workers in IT, generally considered the quintessential high-skilled field, earn about as much today in inflation-adjusted dollars as they did in the late 1990s.

So if technology isn’t to blame for inequality, then what is?

Elite-led globalization, the transformation of the tax code, the growth of the financial sector, and, above all, the collapse of working-class power since the 1970s. Inequality isn’t the inevitable byproduct of technological change. If it were, other industrialized countries should show levels of inequality comparable to the United States’ – and they don’t. The US has far higher levels of income and wealth inequality than Sweden, and nobody would call Sweden a technologically undeveloped country.

What Sweden does have, however, is stronger unions and a stronger welfare state. This means that when technological change does happen, raising labor productivity, at least some of the gains of that greater productivity are passed on to workers instead of going to the owners of capital in the form of profits. This isn’t the case in the US, where productivity has grown over the past several decades but wages have flatlined. From 1973 to 2014, net productivity grew 72.2%. Over the same period, the hourly wage of the median worker rose a meager 8.7%. Meanwhile, corporate profits soared.

Technology transforms production, but power and politics determine how the dividends are distributed. For that reason, weak working-class organization tracks inequality far more reliably than technological innovation. As the historian Colin Gordon has observed, labor’s share of income “has fallen most rapidly in those sectors where union presence withered, not where computers displaced labor”.

The theory of technological inequality may fail, but it does serve a function: it absolves the elite of responsibility for the growing gap between rich and poor. It also makes capitalism look meritocratic: technology, by automating routine tasks, has enriched those exceptional few who are smart enough to perform tasks that are too complex or creative to automate, while impoverishing the rest.

The question not asked enough is: is the utopia of the imagined future a place we would actually want to live?

For most of us, I suspect, the answer is no. Even if every kind of work is abolished by automation, with robots raising our children, growing our crops, and cleaning our teeth, there will be political decisions to be made about what kind of society we want. In the world imagined by the UBI tech elite, those decisions would inevitably be made by the people who own the robots – in other words, them. At best, this might resemble a benevolent dictatorship, where a small class of “wealth creators” manufactures and maintains the machines that make it possible for everybody else to lead workless lives. They’d give us an allowance to live on, and keep the rest for themselves.

If you believe that wealth is essentially a private product, produced by individuals, then such an arrangement might seem fair. But in a modern economy, wealth is produced by society as a whole – and nowhere is this fact more apparent than in the case of the tech industry. Ever since the US military funded Silicon Valley into existence after the second world war, the tech industry has fed on a steady stream of public goods. Those goods might be government research, mined for profitable inventions, or the contents of your Gmail inbox and Facebook feed, mined for advertising revenue. What matters is they’re free, and they’re free because we give them away. If the robots ever arrive, their arrival will be bankrolled by our taxes, our attention, our data.

Under these circumstances, a basic income would be the crumbs left by the bully who steals your sandwich. Better to keep the sandwich for ourselves. Better to own the robots collectively, and allocate the surplus democratically, than leave society’s wealth in the hands of its luckiest members.

The San Andreas Fault Could Crack Soon—Here’s What Will Happen When It Does

966 roads, 90 fiber optic cables, 39 gas pipes and 141 power lines could be impacted.

Photo Credit: IrinaK/Shutterstock

The director of the Southern California Earthquake Center, Thomas Jordan, made an announcement recently that would have sent a chill down the spine of every Californian: that the San Andreas fault appears to be in a critical state and as such, could generate a large earthquake imminently. Of course, the reiteration of the seismic hazard to Californians will be nothing surprising, but what is new is the warning that the southern portion of the fault “looks like it’s locked, loaded and ready to go.”

Why is this eminent seismologist making these alarming statements? Well, the fact is that there has not been a major release of stresses in the southern portion of the San Andreas fault system since 1857. In simple terms, the San Andreas is one of many fault systems roughly marking the border between the Pacific and North American tectonic plates. Both plates are moving in an approximately northerly direction but the Pacific plate is moving faster than its North American counterpart, meaning that stresses between the plates are constantly building up.

In 1906, some of these stresses were catastrophically released in the San Francisco Bay area in a 7.8 magnitude event and again, in northern California, during the 6.9 magnitude 1989 Loma Prieta earthquake. Events of these magnitudes, however, have not occurred along the San Andreas fault in the south of the state—the 1994 Northridge event was associated with a nearby, but separate, fault system—leading to the suggestion that one is imminent and, given the amount of stress that might actually have accumulated, when it arrives it will be the “Big One.”

How Big Is “Big”?

So just how big could this potential earthquake be and is it possible that the destruction demonstrated in the film San Andreas could actually come to fruition?

In short, Californians will be (reasonably) pleased with the answers to these questions. In the film, the San Andreas fault produces an earthquake with a magnitude of 9.0. While not unheard of globally, earthquakes of this size are generally confined to regions of the earth where subduction—where one tectonic plate is being forced below another—is happening, for example in Chile and Japan. The tectonic situation in California is different. Here, two plates are sliding past each other.

As such, recent predictions limit the possible maximum earthquake magnitude along the San Andreas fault system to 8.0, although with a 7 percent probability estimate that such an event could occur in Southern California in the next 30 years; over the same period, there is a 75 percent chance of a magnitude 7.0 event. While magnitudes of 7.0, 8.0 and 9.0 might sound negligibly different, the energy that such events would unleash varies significantly, with a magnitude 9.0 event releasing 32 times more energy than a magnitude 8.0 and 1,000 times more energy than a magnitude 7.0.

Obviously, however, be it a 7.0 or an 8.0, damage is inevitable, but the whole sequence of events, as depicted in the film, is unlikely. For example, the San Andreas fault is not beneath the ocean and as such, any slippage along it could not displace water to the extent that a tsunami would be generated. The opening up of a massive chasm is also from the land of fantasy, as the plates are sliding relative to each other, not away from each other.

What is realistic, however, is that a great amount of destruction is likely. While the building codes in California are stringent, recommending retrofitting of seismic protection measures to older buildings and preventing the construction of new buildings near to known fault lines, there is no way to make a building 100 percent safe.

Predicting Devastation

In an attempt to understand the effects of a large, southern San Andreas earthquake, the U.S. Geological Survey modelled a 7.8 magnitude event, with slippage of 2-7 metres, to represent the stresses that have built up in the area since the last large event.

From this model, it was found that damage would be most severe to constructions straddling the fault. Fortunately, constructions of this sort are few and far between following the 1972 Alquist-Priolo Earthquake Fault Zoning Act. What would be affected by this slippage, however, are the 966 roads, 90 fiber optic cables, 39 gas pipes and 141 power lines that cross the fault zone.

The total cost of damage to buildings was estimated at $33 billion, with modern buildings faring well but older buildings being particularly susceptible. Fires would rage—as they did following the Northridge earthquake—as gas mains, and mains water pipes, become severed; in fact, the damage from resulting fires is estimated as more costly than that resulting from the initial shaking.

The overall death toll is estimated at 1,800. And just when things don’t look like they can get any worse, the main event will have destabilised the tectonics of the region to such an extent that a series of potentially powerful aftershocks will begin. For example, in 2011, Christchurch, New Zealand was struck by a 6.2 magnitude event and since then the city and surrounding region have experienced more than 10,000 aftershocks.

Fortunately, the film San Andreas is pure fiction, featuring the levels of exaggeration we are all used to from film makers who are, ironically, also based in southern California.

Even so, in all probability, the San Andreas is likely to generate a significant earthquake in the not too distant future. When it arrives, the damage will be significant and southern California will be massively affected. But Californians are no strangers to these events and the infrastructure of the state, in recent times, has been designed with earthquake protection in mind.

Forget tsunamis and deep chasms opening up, but do expect violent shaking, building damage, fires and widespread economic impacts as the region is out of action for potentially a long period of time.

Matthew Blackett is a Senior Lecturer in Physical Geography and Natural Hazards at Coventry University.