The cover photo on today’s New York Times was a tent city. It accompanied a story on the new Hoovervilles. When you look at the photo, and other photos that can be seen on the web site, you might imagine that you’re looking at the people who arrived early for a big music festival. The story is not as happy when you learn that the tents are occupied by people who have no other homes, many of them recently evicted from their houses. They have nowhere better to go. There is little good one can say about the situation beyond, “Well, at least they have high-quality tents.”
Camping out is better than trying to make a home out of a crate, a scene seen too often in 1930 and 1931 — but not much better. It is hard to avoid the term “Hooverville” from that era. The tent cities of this spring might be more colorful and modern-looking, but the essential problem is the same: people living the best they can when, for economic reasons, they don’t have access to a building.
There is something about this situation that doesn’t quite make sense, though. The United States is experiencing record rates of foreclosures and evictions at the same time that there is a record amount of vacant housing. According to one estimate, U.S. suburbs have so many extra houses that they cannot be filled for at least 12 years. Meanwhile, builders keep building more, albeit at a slower pace. Some urban centers also have high levels of vacant housing, but others are getting squeezed as more workers, weary of the cost of commuting, move from the suburbs into the city.
With so many vacant houses, and so many people without housing, you would think there would be a way to put the two together. That won’t happen quickly, though, and that failing is an excellent example of the kind of economic dysfunction that causes depressions. Depressions occur when people’s experience leads them in the wrong direction, so that their actions no longer connect to any economic benefit.
A TV pundit this month described foreclosure as a beneficial process in which you get the people who cannot afford a house out so that other people who can afford the house can move in. But that’s a description based on an experience from three or more years ago; it does not fit what is going on now. When people are evicted from their houses this month, in many cases, it will be so that the houses can sit vacant for five years or longer until a buyer, or at least a tenant, can be found.
Foreclosure may be mostly paperwork, but it is still hard work, and when businesses go through that kind of work and don’t get the financial benefit they were hoping for, it is hard to keep the economy rolling. It’s like having a cell phone conversation and hearing only every third word — it’s a lot harder to keep the conversation going when things aren’t connecting.
So what needs to be connected for the economy to work? It starts with people expressing themselves. That’s the starting point for the economy because it’s something people do no matter what is going on. When people have a way to express themselves that involves action, and that action creates a social benefit and a financial reward, that’s a cycle that can’t be stopped. The economy depends on the connections between expression, action, benefit, and reward. To build a better economy, we need to make more of those connections.