As Ithaca cancels rent, we are seeing the economic system break down in unprecedented ways: economist

As Ithaca cancels rent, we are seeing the economic system break down in unprecedented ways: economist
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The Greek island of Ithaca is best known as the home of Odysseus, the protagonist of the ancient Greek epic poem "The Odyssey."


Nearly 3,000 years after "The Odyssey" was written, the city of Ithaca — a small community of roughly 30,000 in upstate New York — has passed a resolution which, in its own way, could foreshadow a different kind of odyssey. Yet rather than a literal journey through the ancient Mediterranean world, this odyssey is starting the city on a path to a post-capitalist world.

The catalyst? A resolution passed by the Ithaca common council on Wednesday that asks the New York State Department of Health to authorize their mayor to forgive rent debt from the last three months for tenants and small businesses alike. The common council also asks for the mayor to have the authority "to obligate landlords to offer renters who have been affected by COVID-19 lease extensions at the current rate of rent during the duration of the declaration of emergency."

This makes Ithaca the first American city to cancel rent during the pandemic, a particularly timely move given that nearly three-quarters of Ithaca residents are renters, many are out of work due to the coronavirus pandemic and New York's first eviction ban is scheduled to expire on June 20. Although Gov. Andrew Cuomo extended the ban, it still allows landlords to try to evict tenants, and merely empowers their victims to go to housing court (all the while still needing to cover their rent).

This may not seem like a big deal if you don't live in Ithaca, but the long-term ramifications could be huge.

"The key word there would be 'forgive,'" Dr. Richard D. Wolff, professor emeritus of economics at the University of Massachusetts Amherst, told Salon after this reporter read the relevant portions of the resolution to him. After reviewing how landlords are already starting to file lawsuits throughout the country — particularly those with commercial tenants who have been unable to pay their rents due to the economic shutdown — Wolff told Salon that "you are seeing a system break down. That's what this is."

He continued: "It isn't a detail. It isn't a particular problem. Even if you write it that way or see it that way, I can assure you, this is a system falling apart."

As Wolff explained to Salon, the dynamic in Ithaca has major implications: It entails the most fundamental rules of property law being suspended because of extraordinary circumstances. While government officials can certainly find legal precedents to justify taking extreme measures such as this — Wolff pointed out that this happens in eminent domain cases, when the state seizes private property by claiming to do so for the greater good — it is still noteworthy that these exceptions are being sought in the first place. That fact exposes, Wolff argues, the underlying structural problems of capitalism itself.

He also predicts landlords in Ithaca are going to fight this... fiercely.

'They are now going to fight it out because the normal rules of signing a lease and paying your monthly payment and all of that — that's what it means when a system breaks down, the normal rules no longer apply," Wolff explained. "And you're going to see vast filings of lawsuits left and right, because that's one arena — by the way, not the only one and not even the most important one — but it is an arena where you can literally see how the system is falling apart, because what's going to finally happen."

Wolff speculated that renters will mobilize to assert their human rights, citing as a hypothetical example Ithaca restaurant owners appealing to a mayor to argue in court that their businesses will have to close without rent forgiveness, making this a literal life or death situation for them and their employees.

Although Ithaca's move is a victory for everyday people over the ruling class, Wolff isn't optimistic just yet.

"There is no escape from the following conclusion, unless you are nuts or you have another agenda: The people who are the biggest, the richest, who can afford the most expensive law firm with the best political connections is going to win, and the medium and the small are going to lose," Wolff told Salon. "The details will be fought out, but I can assure you that the irony that we will all look back on is that the very inequalities that helped to produce this latest crash of capitalism are actually being made worse by how it's being managed. And what that means is exactly what it meant in 2008 and 2009, when the same thing happened: the inequalities only got worse, and here we are barely a decade after the end of the last one. And we're in an even worse one, rivaling, the great depression."

Capitalism itself is a fatally unstable system, Wolff pointed out. The very dynamics of capitalism inevitably lead to boom and bust cycles — including three in the last 20 years (the dotcom bust of 2000, the financial crisis in 2008 and the coronavirus crash in 2020). Even in supposedly prosperous periods, capitalism creates human suffering through severe income inequality, Wolff noted. Any long-term solution has to challenge the premises of capitalism itself; the alternatives simply involve biding our time until the next major crisis occurs.

"That's the way capitalism works," Wolff explained. "It's like asking me, if we were talking about slavery and I described to you how awful the master treats the slave, and after I did it for a few minutes you said to me, 'Well, I mean, is there no way to get out of this?' And the answer is not as long as you have this system, because this is the way this system works. If some people are the property of other people, you're going to get this kind of behavior — a little more or a little less here or there, but that's what it will do."

He added, "You're going to get capitalism. You're going to get an economic debt. That's why we have all these words for it. 'Crisis, crash depression, recession, boom, bust.'" And while Americans will occasionally focus on addressing inequality, "and then we have anti-poverty programs up the wazoo," soon "we go back and we live with it. And then it explodes — [as with] George Floyd or in some other form. And everybody goes, 'Oh my God, we have racism. We have poverty.' Yeah, we sure do. And we don't have a system that allows us to get out of it."

My personal thoughts: If there is any silver lining to the most recent economic setback, it is that the huge rise in unemployment could push Americans to the left. President Donald Trump is currently at a major disadvantage — both in terms of historical precedent and his current polling numbers — against the presumptive Democratic nominee, former Vice President Joe Biden. Although Biden ran as a centrist, he has recently moved to the left in his policy proposals, pushing for stimulus legislation "a hell of a lot bigger" than the $2 trillion already passed by Congress as well as creating a Pandemic Testing Board on the scale of President Franklin Roosevelt's famous War Production Board, investing in green businesses, forgiving federal student-loan debt at a minimum of $10,000 per person, establishing a 100,000-plus worker Public Health Jobs Corps, guaranteeing paid emergency sick leave, increasing the relief checks sent to families and adding $200 a month to Social Security checks.

These are hardly radical reforms, and they won't come anywhere close to moving us out of a capitalist system, but the fact that a stalwart establishmentarian like Biden has been pushed to the left by the exigencies of our current situation is telling. We may be facing a groundswell in public opinion that our leaders — at least those with a modicum of empathy for the disadvantaged — won't be able to ignore.

Or perhaps, as Wolff says, the powerful will once again be able to crush the disadvantaged and convince the hoi polloi that capitalism is good and those who oppose it are dangerous. Only time will tell.

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