CommentsCORRUPTION WATCH-In by-gone eras, people would come from miles around to stand in the hot sun to listen to long political debates. The seven Lincoln-Douglas Debates of 1858 were held in each of Illinois’ Congressional districts. People came from hundreds of miles to listen to the two men set forth their political philosophies concerning the role of slavery and the nature of the federal union.
Today, we would get a tweet. “Crooked Lincoln has a family of mice living in his beard.”
It’s not that current day Americans in general and Angelenos in particular are dumb -- hmm, wait, a minute. That is the problem! The public is grossly ignorant of virtually everything. Let’s be real, it is much more fun to see what the Mad-Tweeter-in-Chief has tweeted about SNL than it is learn the principles of macro-economics.
The Government’s Responsibility for Macro-economics.
We know that Macro-Economics is the government’s duty because that is what Macro-Economics means -- the realm of economics where the government provides the sound parameters for the economy to function.
There are two basic areas where the government’s parameters are indispensable: (1) The Price System and (2) The Business Cycle. Macro-Economics actually dates back to 1776 when Adam Smith wrote Wealth of Nations, which ended the Mercantile Era of economics – a fact unknown to Donald Trump because he has not read it on Twitter.
Local Government’s Responsibility for The Price System.
All governments are responsible for the Price System because at all levels of the economy everyone needs accurate information. The purpose of Supply and Demand is to set the proper value of everything. Unless buyers and sellers have accurate information, there is no way to know how much to pay for anything. Since the American public is a grand consumer of Fake News, it loves fake news about prices.
LA City Attorney Mike Feuer Attempts to Save the Price System from the Xmas Grinch.
Los Angeles City Attorney Michael Feuer is the spoilsport of our mass obsession to have false information fed to us about everything all the time. The City Attorney has sued four national retail chains for lying to the public. The City Attorney exposed that a gaggle of Grinches in the form of JC Penney, Sears, Kohl’s and Macy’s have been shoveling false advertising down our throats.
Retailers have known for years that people love a bargain. Thus, it’s a proven sales strategy to tell the public that some necklace used to sell for an exorbitant price but now they can get a great bargain at 75% off. Since most people cannot tell fake news or fake advertisements from real ones, the deceit operates wonderfully.
The Macro-economic Role of the City Government.
City Attorney Feuer realizes that he has not only a political and legal duty but also a moral duty to use his office to protect the Price System. I guess the voters didn’t realize when they elected the former executive director of Bet Tzedek Legal Services to be the City Attorney that he would care about human beings and justice rather than the profits of billionaires.
As members of the public, however, we need to grasp the true significance of Michael Feuer’s lawsuit against deceptive advertising. Mike Feuer’s lawsuit goes to the essence of a government’s legitimacy to govern. In America, the power to govern derives from the consent of the governed. When an elite seizes control of the government and abuses that power to deceive and mislead everyone else, the government destroys its legitimacy. The government was formed to “promote the general Welfare, and secure the Blessings of Liberty to ourselves and Posterity.” [Preamble US Constitution]
The well-being of every Angeleno rests upon the soundness of the economy, and the economy’s health rests upon a Price System which accurately transmits to everyone all the time true and correct information. Mike Feuer’s lawsuit is not only to prevent a few people from being ripped off by over-paying for a washing machine or a diamond necklace. Competitors who did not lie lost customers, and the longer the government allows the crooks and thieves to make greater profits, the harder it is for the honest businessman to stay in business. After a while, the honest are driven out of business by the crooked so that no one knows how much of a product’s “value” is real or how much is based on a pack of lies. In a city, state or nation where Fake News and fraudulent advertising rule the roost, the decent person suffers.
That is why Attorney Mike Feuer was performing a Constitutional and moral duty when he stepped forward to bring honesty and justice to the Price System as the Xmas shopping season begins. Mike Feuer’s seasonal gift to us is not just a few honest prices, but it’s defending the integrity of the Price System itself.
LA City Attorney Feuer is the Exception.
City Attorney Michael Feuer is the exception for Los Angeles. The Price System for housing has been riddled with fraud, deception and manipulation for years with devastating impacts on the city. The bad news is that there is no prospect that the trend will be reversed. The good news is…well, there is no good news -- unless you’re a home builder in Texas or outside Nashville. Those are two of the places where new homes for Angeleno Millennials are being built. The destruction of the LA Price System for housing has driven employers away from Los Angeles. No one should be surprised that Family Millennials looking for decent jobs, a detached home which they can afford and quality education for the children are leaving LA.
Distortion and Manipulation in the Value of LA Housing.
The manipulation of the housing market in Los Angeles over the last 15 years has created a crisis. The two most visible features are homelessness and terrible traffic. Both are a reflection of the housing patterns which have been imposed on Angelenos through years of lies and misinformation.
Because the housing market has many segments, discussion of housing prices is complex. For example, Garcetti’s policy to eradicate rent-controlled housing results in higher rents. With over 22,000 rent controlled houses destroyed, the lowest end of the housing market, except for card board boxes next to the freeways, is significantly reduced. Whenever the lowest prices are removed, the average price increases. This should be obvious to a 3rd grader. The average of 5, 6, 7, 8, 9 (avg. 7) will be lower than the average of 6,7,8,9 (avg. 7.5). Thus, the mere destruction of rent-controlled houses raises the mathematical average.
Since all the evicted people do not end up on the street, those who do search for housing tend to increase the cost of housing just above the rent control level so that data becomes 7,7,8,9 (avg. 7.75).
Then if we construct 150% more high-end apartments than we need, those putative rents are added to the averages so that the average rental increases. 7,7,8,9,9 (avg 8). However, with a 12% vacancy rate for the higher end apartments, we know that inflated rental prices are being added to the statistics. [source: HCIDLA 11-17-2015 report]
These simple calculations show how just the destruction of rent controlled apartments and the construction of a glut of higher end apartments can result in a mathematical 15% increase in housing costs. The problem is that people pay what they believe is the correct price. That’s why it has been vital for years for the City to have been publishing accurate data about housing. Instead, the public has been receiving a constant stream of false information.
Other polices have been pushing residential houses prices upwards based on speculation and not based on the value of a home for “living space.” The Spot Zoning, which a developer can purchase from his councilmember, means that residential properties are worth far more to a developer than to someone who wants to start a family. Likewise, Granny Flats increase the commercial value of an R-1 home, thereby escalating the prices of detached homes beyond their value as living space for a family. If the City had never allowed Spot Zoning, TODs, InFill projects, or encouraged Granny Flats, LA residential properties would be significantly lower, but Garcetti’s developer buddies would be less wealthy.
The illicit distortion of housing values in Los Angeles has been both more complicated and more drastic than can be explained in a CityWatch article, but the underlying problem has been the manipulation of housing prices and a serious mis-allocation of housing resources to the extent that Los Angeles has made itself one of the least attractive urban areas in the entire nation for the emerging middle class. The professional and business service sector of the middle class rank Los Angeles as #60 on their list of desirable places to live.
Due to the sustained attack on the detached single family home and the squandering of literally billions of construction dollars on Transit Oriented Districts (TODs like Bunker Hill and Century City) along with mixed-use projects, Los Angeles has foolishly made itself extraordinarily undesirable for the new middle class. The City has a net exodus of people over those who come here. Yet, LA continues to manufacture the myth that Los Angeles is still a Destination City. While Hollywood will lure thousands of youngsters to the Walk of Fame, the middle class is being driven out.
Perhaps the most egregious attack on the Price System for housing came from Eric Garcetti when he ran for LA mayor by falsely claiming that he had “revitalized Hollywood.” As readers of CityWatch should already know, in January 2014, Judge Alan Goodman found that Garcetti’s claims for Hollywood were based on Lies and Myths, i.e., “fatally flawed data” and “wishful thinking.”
If Los Angeles had a daily newspaper devoted to journalism, Los Angeles never would have deteriorated to this condition where it ranks at the top of the lists of bad urban areas and at the bottom of the lists of good urban areas. Instead, the LA Times’s objectives have been the promotion and protection of the elite, and everyone else be damned. In that environment, it has been relatively easy to destroy the Price System for LA housing.
(Richard Lee Abrams is a Los Angeles attorney. He can be reached at: [email protected]. Abrams views are his own and do not necessarily reflect the views of CityWatch.) Edited for CityWatch by Linda Abrams.
The Grinch that Stole Affordable Housing in LA
