Download Homelessness

The Impact of Neoliberalism on Homelessness
Paul Emerson
RMIT University
Word Count: 2,554
Australia is experiencing a serious housing crisis characterised by a major
reduction in public housing availability, soaring private rental rates, an
acknowledged housing affordability crisis and no real reduction in the number of
homeless. On any given night of the week one in two hundred people are
homeless and approximately seven in ten people seeking emergency
accommodation are turned away due to an inadequate supply of crisis
accommodation (Lunn 2008). In past years, homelessness was generally
perceived to be a social issue synonymous with people who had an alcohol or
drug addiction and or were suffering from some form of mental illness. However,
the last six years have witnessed a thirty percent increase in the number of
families accessing services for the homeless (Lunn 2008). The growing
phenomenon of homelessness has been occurring during an extended period of
uninterrupted economic growth combined with a thirty year low in the official
unemployment rate (Farouque 2008; Ryan 2008).
Bacchi (cited in Driscoll 2009) eloquently described discourse as a
method of analysing public policy. Hence, in this paper I argue that neoliberalism
has proven to be an abject failure. Rather than indirectly benefiting the broader
community, the so-called trickle-down theory has merely served to create a
concentration of wealth in the hands of a few individuals in conjunction with
higher rates of homelessness among people at the opposing end of the socioeconomic spectrum, a phenomenon not seen in the developed world since 1928.
Finally, I will argue that the State, in conjunction with the private sector, has a
moral obligation to develop and adequately fund effective policies to ensure that
its vulnerable citizens are afforded basic human rights, including the right to
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adequate and affordable housing. As part of my argument I will advocate a thesis
whereby all levels of Government would be better served to adopt a social
market economic model in lieu of the now failed laissez-faire economic model in
order to create a far more egalitarian and cohesive society. I will firstly define the
nature of homelessness along with some of its causes and effects within the
context of a free-market economy.
There are three segments in the homelessness population on census
night. They are:
1. ‘Primary homelessness – people without conventional accommodation living
on the streets - in deserted buildings, railway carriages, under bridges, in parks
etc’ (Chamberlain, Johnson & Theobold 2007, pp. 13-14);
2. ‘Secondary homelessness – people moving between various forms of
temporary shelter including friends, emergency accommodation, refuges, hostels
and boarding houses’ (Chamberlain, Johnson & Theobold 2007, pp. 13-14);
3. ‘Tertiary homelessness – people living permanently in single rooms in private
boarding houses without their own bathroom or kitchen and without security of
tenure. They are homeless because their accommodation does not have the
characteristics identified in the minimum community standard’ (Chamberlain,
Johnson & Theobold 2007, pp. 13-14). However, homelessness is not just about a
lack of accessible and affordable housing, it also defines an inadequate
connectedness with family and or community (Lynch 2008).
Australia’s free-market economy has experienced unprecedented levels of
annual growth and prosperity in the last seventeen years or so and tied to this
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ethos of economic neoliberalism is the implicit assumption that if people do not
thrive in a free-market economy, there must be something inherently wrong
with them (Andrews & Flynn 2008; Middendorp 2008; Nader 2008). However,
the unfortunate reality facing many thousands of impoverished men, women and
children, is a postmodern era scarcely better than the pitiless misery and
deprivations of London so evocatively portrayed by Charles Dickens in Oliver
Twist one hundred and seventy-one years ago (Australian Broadcasting
Corporation (ABC) News 2008; Horin 2007a; Horin 2007b; Nader 2008).
Homelessness is an endemic social problem affecting one hundred and
five thousand Australians every night of the week of which sixteen thousand
experience absolute homelessness by having to sleep out in the elements (Lunn
2008). As many as eighty-four thousand homeless people are affected by some
form of mental illness and or cognitive impairment and more than half of these
have a co-existing addiction (Ellingsen 2004; Horin 2007e). Contrary to the
thesis synonymous with economic ideologues such as Milton Friedman and
Richard Posner, homelessness, unlike veganism, is not an alternative lifestyle
choice (Nader 2008). Overwhelmingly, homelessness is brought about by factors
that extend beyond the control of people and is an indication that our system of
free-market capitalism has failed the most vulnerable in society (Cooke 2008;
Khadem 2007; Turley 2008; Smith & Turley 2007). People become homeless for
a variety of reasons including deinstitutionalisation, mental illness, substance
abuse, domestic violence, financial problems, an increase in unreliable and
unaffordable private housing and a lack of appropriate and affordable public
housing (Horin 2007e; Thompson 2007). Hence, a job paying an adequate
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income is a necessary pre-requisite within the framework of a free-market
economy (Burrow 2006). Being devoid of adequate income profoundly impinges
upon a consumer’s sense of independence and choice and in extreme cases longterm homelessness becomes a real probability (Burrow 2006). This in turn can
lead to further complications such as physical illness (including dental), mental
illness, a deprivation of educational and employment resources, entrenched
poverty and last but not least, social isolation (Horin 2007a; Horin 2007e; Turley
2008). Economic rationalists have homogenized us into like-minded economic
creatures and by doing so they have disregarded the unique attributes that
account for our individuality as human-beings. Regardless of the ideology of
economic rationalists, mental illness in the form of schizophrenia, bipolar
disorder and depression is an episodic disease that can severely impinge upon
one’s job prospects, tenure and socio-economic status (Herman 2003; Horin
2007d). From a psychological perspective, an individual experiencing an episode
of manic depression hardly constitutes what an economic rationalist would view
as a rational economic man (REM) exercising freedom of choice, as extreme
manic episodes can sometimes lead to psychotic symptoms such as delusions
and hallucinations.
However, neoliberalism has not been the sole factor behind an
exponential increase in the rate of homelessness in recent years. It is the case
that some Government initiatives, in the form of middle-class welfare, have also
contributed to the inglorious levels of homelessness which Australia is currently
witnessing. The policy initiatives, to which I refer, include negative gearing and
the first home buyer’s grant (Schneiders 2007; The Canberra Times 2008). On
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both counts, the intervention by Government has exponentially increased
consumer demand in the private housing sector with demand outstripping
supply (The Allen Consulting Group 2004). This has had a two-fold effect of
artificially inflating the price of real estate in the private housing sector, while
simultaneously reducing the availability of public housing (The Allen Consulting
Group 2004; The Canberra Times 2008). This ill-conceived piece of public policy
has culminated in displacing many low-income earners from the private housing
sector, thus placing unrealistic pressures on an ever shrinking public housing
sector relative to population growth (Schneiders 2007; The Allen Consulting
Group 2004). In addition, Pisarski (cited in Irvine 2008) states that during the
twelve-year reign of the Howard Government, funding for public housing was
dramatically reduced by approximately three and a half billion dollars. By
contrast, the Howard Government during its final twelve months in office
provided two billion dollars subsidising the private rental market (Perusco
2008). Private rent assistance is bad public policy as it is an expensive, inefficient
and ineffective program and it does not target the needs of the most vulnerable
and disenfranchised members of our society. Instead, private rent assistance
merely serves to benefit landlords in the long run.
During the nineteen eighties, the Reagan administration in its zealous
quest to embrace laissez-faire economics substantially reduced the level of
investment in public housing and this was a major factor in creating a homeless
epidemic that is still growing today, thereby exposing a false sense of
consciousness in relation to the trickle-down theory, an issue that Karl Marx
poignantly warned against (Farouque 2008; Horin 2008; Perusco 2008). But
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alas, American policymakers are now arguing that it makes better economic
sense to prevent homelessness because the cost of managing the social problem
is prohibitive (Perusco 2008). As a consequence, there are now more than four
hundred plans to end homelessness and, yes, public housing is a key part of these
plans (Perusco 2008). Australia has the opportunity to learn from America's
mistake by switching the thrust of government policy from demand-side
solutions like rent subsidies to supply-side measures in order to increase the
supply of adequate and affordable public housing for low-income families
(Perusco 2008).
Ironically, the implosion of the United States economy underpins the
thesis advocated by Keynesian economists that the economy needs the State to
clean up the mess caused by the excesses of free-market capitalism. The market
has yet again proven to be imperfect in being driven by insane levels of selfregulation, self-interested greedy capitalists and excessive consumption, thus
leaving many people in a state of despair and without a home (Ham 2004; Munro
2008). The signs are ominous, as the current level of wealth concentration is
comparable to that of nineteen twenty-eight (Horin 2007c; Huang & Stone 2008,
para. 4). Self-regulation as a way of solving all problems is finished.
Neoliberalism is finished. The all-powerful market that always knows best is
finished.
Since the advent of capitalism some four hundred years ago, marketbased economies have to varying degrees relied on the State to provide mass
public infrastructure and maintain law and order, hence posing the proposition
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that market-based economies would not have emerged had it not been for the
underlying support provided by the State. Within the framework of marketbased economies, the State has played a protectionist role by intervening at
times when capitalism has malfunctioned, as was the case during the Great
Depression and more recently during the global economic meltdown, primarily
fuelled by the sub-prime crisis in the United States. The State also plays a
significant role in collecting taxes and providing various kinds of welfare support
to society’s needy, the provision of goods and services and regulating against the
excesses of capitalism motivated by self-interest and greed. By regulating the
market, the State offers protection to both consumers and the environment.
Until the rise of economic rationalism and public choice theory nearly
three decades ago, Governments of developed nations adopted a Keynesian
approach to economic policy whereby the state and the market were
distinguishable identities. The former was driven by an ethos of helping people,
not least those in most need and the latter was driven by the pursuit of profit at
all costs. Over the course of the last three decades many OECD countries,
including Australia, have embraced and championed economic rationalism and
public choice theory, culminating in an ever-increasing number of Government
assets and services either being privatised or contracted out to the private
sector. The notion driving this brand of economic ideology was the fact that the
private sector could deliver services to the community on a more cost-effective
basis, while simultaneously halting the excessive fiscal waste allegedly
synonymous with Government expenditure. Hence, the role of the State in recent
decades has become more facilitative and less directly interventionist (Saunders
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& Eardley 2008). The diversion in Government economic policy from one of
Keynesian to laissez-faire has apart from other things resulted in the
deinstitutionalisation of the care of the mentally ill, confining many to an
extended life of homelessness, helplessness and impoverishment (Thompson
2007).
In light of recent events in the United States and the profound impact that
the economic meltdown is having on global markets the time has arrived for
world leaders to collectively reflect on the abject failure of the trickle-down
theory. Markets left to their own devices cannot be trusted, often requiring
Government intervention by way of imposing tighter regulations on their
operation, hence making the market work more effectively for both consumers
and the environment. Whilst not advocating the total abolishment of capitalism,
the implementation of an economic model (social market economy) synonymous
with Scandinavian countries would unequivocally provide more equitable
outcomes for society as a whole. As a point of comparison, Sweden has a social
rented sector comprising 15-18% and a homeless rate of 0.2%, whereas
Australia has a social rented sector comprising 5-6% and a homeless rate of
0.5% (Communities and Local Government 2007; Socialstyrelsen 2005).
In an effort to provide more affordable public housing, the State would
better serve its needy citizens by engaging the private sector and providing
incentives for investment and adopting one of the following three models, or a
combination of all three, namely bonds, partnerships and or tax credits (The
Allen Consulting Group 2004). The failure by Government to address the rental
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housing crisis will undermine other Government initiatives designed to assist
disadvantaged people into work and it will subsequently fail in its endeavour to
alleviate poverty and misery. Wealth still represents a source of happiness,
choice and opportunity in relation to what many economists label as REM
(Murphy et al 2007). Ironically, since the global economic crisis impacted upon
Australian shores, the Rudd Government has adopted a Keynesian approach to
policy formulation, a discourse synonymous with economic policy development
throughout the developed world for approximately four and a half decades from
the mid-nineteen thirties to the late nineteen seventies.
The Rudd Government recently implemented a second stimulus package
totally forty-two billion dollars of which seventy percent will be devoted to
desperately needed infrastructure. The modus operandi underpinning the
introduction of the package is to stimulate the national economy by injecting
public money. According to Keynesian economic theory, this piece of legislation
initiated and introduced by the Rudd Government will increase spending and
thus production, which in turn will support jobs during a period of profound and
extended contraction within the private sector. Six billion dollars has been
allocated to public, community and defence housing with an additional four
hundred million dollars to be allocated for repairs and maintenance to existing
public housing dwellings (Australian Labor Party 2009, para. 1). This is an
ambitious but necessary project alleged to assist twenty thousand low-income
households over the next two years by providing access to secure and affordable
public or community housing (Australian Labor Party 2009, para. 2). In addition,
this package will stimulate the building and construction sector by supporting
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fifteen thousand jobs over the next two years (Australian Labor Party 2009, para.
3). Finally, the implementations of the above-mentioned stimulus packages will
half homelessness by 2020 (Australian Labor Party 2009, para. 4).
If the Rudd-led Federal Government is serious about achieving greater
social inclusion by reducing homelessness and equipping our most marginalised
citizens with the necessary life skills to compete in the global economy, then a
massive injection of Government funding is urgently required to address the
abject state of public housing and mental health services. The extent of a nation's
poverty tells us a good deal about the nation and the conditions that it is
prepared to tolerate. A society's integrity is not judged by its economic success
but by how it treats and supports its most vulnerable. Housing is unequivocally a
human right.
In conclusion, this paper has argued that neoliberalism has been an abject
failure in addressing homelessness. It has also discussed the urgent need for the
State to embrace supply-side measures by allocating increased funding for public
housing projects in order to effectively address the issue of homelessness and
hence, society’s collective well-being.
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