EDITOR’S INTRODUCTION | Since publishing Part I of this three-part series, other publications have followed suit, with similar columns appearing in the Vancouver Sun and the Vancouver Courier. The articles signal a recognition that the phenomenon of affordability-scapegoating is losing credibility in Vancouver. At the same time, the articles fit into familiar gene of commentary in Vancouver: oblique, evasive, ready to ask questions rather than try to provide answers. Such writing cannot help but come up short of its target. Here in Part II, Crompton argues that while racialized scapegoating relies on unsubstantiated anecdotes, the economic facts clearly show that Asian buyers are not responsible for Vancouver’s housing crisis. Crompton argues that the responsibility lies squarely at the feet of Vancouver’s local ruling-class and its neoliberal policies. Part I is available here. Part III is available here.
Facts and Anecdotes
A recent BMO report blames Canada’s unsustainable household debt and world-record housing prices on an “enormous inflow of capital from non-resident Chinese nationals.” When a journalist wrote to the author of the report in search of a source for these enormous inflows, he received the following response: “It’s based on anecdotal reports; there are no reliable data on foreign-resident purchases…If you find a good source of data, please pass it on to us.”
Despite the entrenched belief that, since the 1980s, Chinese investors have succeeded in throwing off the equilibrium of the local housing market, the reality is that the vast majority of foreign residential real-estate in Vancouver is American-owned. According to 2010 property statistics collected by BC Assessment Authority (the provincial Crown corporation that assesses all properties in B.C. for tax purposes), about 58% of foreign-owned real-estate is American. Europe and the United States together account for 70% of all foreign-owned real-estate in the city, with the whole of Asia accounting for only 22%.
In response to these numbers, commentators who hope to peg the housing crisis on Asian capital maintain that while the volume of purchases from Asia is lower, it is the nature of those purchases that matters, since Asian buyers are bidding for luxury housing at the top and dragging the rest of the market upwards with them. Again, reality disrupts the myth. In 2010, the highest recorded purchases were from the United States ($7.17m) and Europe ($7.55m), while the highest Asian purchase was a Hong Kong owner, reaching $6.84m.
Despite the facts, numbers are often not enough to compete with anecdotes. Regardless of the data, the notion of Asian capital as a dominant category for understanding the housing crisis persists, with constant statements to the effect that “despite the lack of statistical proof,” “despite the dearth of empirical data,” “despite reports that point to the contrary,” the threat is nonetheless real. These types of analysis invoke a set of signifiers – “Asian,” “foreign,” “offshore” – that in reality serve as empty signifiers: they mean nothing but can absorb whatever prejudice is found lying around. The empty signifier is a floating entity meant to place (and displace) blame wherever necessary.
Local Conditions: The extraction of rent from living labour
Racism, as the ultimate “floating” signifier, has followed a complicated path in the history of Vancouver. From the beginning it has alternated between different forms of metaphor and imagery, always capitalizing on the uncertainty that follows in the wake of its maneuvers. It is this uncertainty that has for 150 years helped make Asians into such “indispensable enemies” of the West Coast. Vancouver historian Henry Yu has stressed the fact that, in the face of this uncertainty, the analysis of local conditions becomes all the more important: “There is contingency involved in anti-Asian politics – local conditions matter.”
For its part, the hallmark of anti-Asian politics is its ability to capitalize on conspiratorial uncertainty as a means to erase the analysis of local conditions. A marker of the success of scapegoating is precisely its ability to capitalize on its own ’emptiness’ by eliminating actual factors, local or otherwise, from the analysis of the situation. With reference to anti-Semitic scapegoating, Slavoj Zizek captures this phenomenon perfectly:
In anti-Semitism, all fears (of economic crisis, etc.) are exchanged for the fear of the Jew – je crains le Juif, cher citoyen, et je n’ai point d’autre crainte…(‘I fear the Jew, my friend, and have no other fears…’).
It is no exaggeration to say that today, for a person who attempts to understand Vancouver’s housing crisis through the existing lens of excess foreign capital, local conditions become almost entirely irrelevant. As the housing crisis worsens in Vancouver, the oblivious slogan becomes: “I worry about the Asians, my friend, and have no other worries.” This persistent logic takes the form of anecdotes and empty signifiers: I know a woman who knows a guy who knows a real-estate agent who works with mostly foreign buyers. “All of his work is now with (international) buyers…very few spoke English, translators were used in virtually all the transactions,” as one anecdote reads in an article by city commentator Sandy Garossino.
In such narratives, the realities of the local situation literally drop from out the bottom, disappearing into the depths. The key to the empty signifier is that its lack of tangible proof makes the threat appear all the more dire. It plays the role of a hidden cause that can never be pointed to concretely, but whose evasiveness makes it hold all the more sway in the imagination of those who believe it. As with the anti-Semitic category of the Jewish banker, global capital takes on the role of a mystified power, like a puppet pulling the imaginary strings of the economy.
By pointing to nothing, anti-Semitism appears to be pointing at everything, providing an explanation for the whole order of the world. The empty signifier becomes the Master signifier. It is in this eclipse that local conditions disappear behind the moon of racism, overtaken by the empty (Master) signifier. Thus in Vancouver, the housing economy becomes viewed as something “completely independent of local economic conditions,” to quote Sandy Garossino. Finance, real-estate and the ongoing commodification of housing are re-framed as processes of pure circulation floating in a global “stratosphere,” rather than an actual process of rent accumulation and financial power.
In this image, Vancouver becomes an undivided victim of “excessive global capital speculation that is unrelated to the local economy” – to again quote Garossino – rather than a site of struggle between property elites and the dispossessed of the city. Instead of zeroing in on the quasi-feudal relationship between landlords and renters, against which Vancouver has a long tradition of popular struggle, Garossino retreats from history in order to lament the floating housing market, upheld by the paralleled loftiness of the empty signifier of race. Instead of attacking the reality in front of one’s face, we set out to attack the elusive abstractions that cannot be demonstrated. Why? To better secure the promise that nothing is allowed to happen that may change the actual situation.
Elephant in the Room: Monopoly Capital
A current version of the paradoxical attempt to address the crisis (in a way that is calculated to rule out the possibility of change) is the Mayor’s Affordability Task Force. The goal of the Task Force, as recently stated by the Mayor, is to lower the cost of housing without lowering overall property values. Given the impossible nature of this goal, the members of the task force accept that they will not be able to bring affordability to Vancouver. One businessman, Peter Simpson, ruled out affordability and mocked the very idea of another Task Force – before finding himself appointed to it.
Another member of the task force, developer Michael Geller, voices skepticism about what members of the development industry can contribute in their role as directors of the Task Force. In an affordability task force “progress report” posted at City Caucus, Geller states:
Two key questions that need to be addressed are whether reduced costs will necessarily translate into reduced prices; and whether it is indeed possible to build truly affordable housing given the other factors such as land costs and foreign investment.
Geller delivers two telltale signs of monopoly capitalism. First, the recognition that in markets dominated by monopoly capital, costs bear little relation to price. Geller soberly casts doubt on the assumption that reduced costs – including tax breaks and fee exemptions – will necessarily translate into reduced prices. Geller is familiar with the dynamics of an industry whose prices already dwarf costs and where 20% profit rates are assumed as given, underwritten by Vancouver’s oligopolistic political and market structures – a structure whose bottom line is to actively limit supply, especially affordable supply. The result, as has been written in a previous Mainlander essay, is that “market rents bear no reflection of the actual costs of tenancy but rather of the opportunity cost of capital.”
So Geller’s diagnosis recognizes that lower costs do not produce lower prices. On the other side of the equation, however, Geller defensively insists that factors of supply are ultimately irrelevant because foreign demand is overwhelming the market anyways. A recent Business in Vancouver article effectively recapitulates these two sides of the coin:
[F]oreign investment has augmented sales in several Canadian markets, [but] its influence was significant only in Greater Vancouver…Limited inventory levels in [Vancouver] have slowed sales somewhat in 2011, given that demand exceeds available supply.
Here a free market journalist must be at pains to square the contradiction of how inventory could be limited in the context of red-hot demand. Despite vast tracts of empty land, skyrocketing prices, and growing post-Olympic demand, the supply of new condos indeed declined between 2010 and 2011, from 2,849 to 1,628!
It should be acknowledged that this decline is partly due to the fact that condo starts slowed significantly during the global market downturn of 2008, at the beginning of the three-year start-to-finish construction cycle of a building. What should also be noted, however, is that inventory will most certainly not over-correct or compensate for those months of lost construction, despite the fact that prices have risen to well above pre-2008 levels. It is under-supply that truly guarantees the record profits we are currently seeing in Vancouver’s condo development and marketing industry.
The BIV journalist quoted above is absolutely correct in her statement that limited inventory has caused reduced sales in 2011. The assertion of a second cause, however (in the form of “excessive demand”), is a simple reversal of cause and effect: sales have not slowed as a result of excessive demand. Under conditions of monopoly expansion, demand is made into the servant of profit, and not the other way around.
Year-over-year market data and migration statistics, readily available to industry planners and marketers, give nearly perfect information for use in calculating new supply. Far from being blindly driven by the forces of global demand, new supply adjusts itself to variations in global conditions. The development industry, with its razor-sharp grip on new supply, adds the precise amount of marginal housing each year to keep prices high and steadily rising.
Incidentally, Michael Geller speaks to the active role of urban elites in deflecting the social conflict produced by monopoly capital onto the level of foreign capital – in other words, from the level of supply to the question of demand. Like Garossino, Geller suggests that supply ultimately does not matter in a context of hot global demand, despite his half-hearted claims that the crisis can be solved by the creative use of new building types such as townhouses and laneway homes.
On her campaign trail for city council, Garossino insisted that the housing problem is so great that it cannot be cured through increased supply. This refusal to address issues of the supply of affordable housing – including an offhand dismissal of the urgent need for social housing, and a more sustained attack on the principle of density – hinges on a vague but staunchly defended notion of unlimited global demand:
Our housing prices are so extreme relative to everywhere else in Canada that we have to look at why is that happening, and the big thing that is really noticeable is that it does appear that we have a major influx of global capital.
In a populist context, the results of this line of argumentation are not hard to guess: with a few illustrations about the candidate’s “extensive knowledge of Asia” and concerns about empty condos “never to be occupied or even visited,” voters are smoothly guided towards the assumption that demand is bursting at the seams in the midst of a veritable Asian “invasion” of investment capital.
Vancouver’s residential real estate has become a speculative commodity for global investors living outside Canada…purchased wholly as investment instruments for speculators with no ties to Canada.
During the elections, Garossino’s call for a specific restrictions on foreign ownership was further bolstered by her assertion that, in any case, foreign investors have a special “tolerance for lower rate of return on income, lower return on investment, than the local developers.” Foreign investors can afford to be taxed extra, since “return on investment is not their primary objective.” This is also why they keep their condos empty, according to Garossino, despite proof to the contrary. In 2009, Andy Yan with BTAworks conducted a massive survey of 2,400 condos in Downtown Vancouver, finding that the majority of “empty” condos in Vancouver, defined as condos not occupied by their owner, are in fact occupied by renters.
It is clear that Garossino – and so many others – would rather talk about empty condos than the renters who live in them. And for those who can’t even afford to rent a condo, non-market housing is out of the question, since Vancouver is apparently without a “tax base,” although there are many Mining, Forestry, and IT headquarters in Vancouver. The staunch neoliberalism of our Mayor, who asserts that taxation is an outdated “old formula” for generating public funds for public projects, has spread to candidates who – in the absence of an independent COPE – were strangely positioned as the election’s official opposition.
From all sides, the 2011 municipal elections in Vancouver gave voice to a homeowner’s desire that things stay just as they are. Despite her bold assertion that “tinkering won’t solve this,” Sandy Garossino was clear that her team did not want to see a radical drop in prices, arguing instead for “more surgical responses.” The difference between tinkering and precision surgery was never made clear, except to say that surgery will be carried out as a means to prevent the market from undergoing a correction, which would be disastrous for Vancouver’s property elite.
Obviously we don’t want to shock the market, because that would take a bad situation and make it infinitely worse. So my approach is to ask what are the surgical tools you could start to use.
In other words, Garossino does not want to address the many factors of the housing bubble, because such a multi-pronged approach might cause the bubble to deflate too quickly. And so we are restricted to selecting only one factor. This single factor – the offshore buyers – must be dealt with by using “surgical tools.” If the overarching question for politicians who wants to address affordability is, ‘how to bring down housing prices without bringing down housing prices,’ Garossino reveals that the resolution to such an intractable contradiction can only be found in empty signifiers.
Nothing Foreign about Global Capital
To begin, there is no question about the fact that today China is a source of massive surpluses distributed throughout the globe, including Vancouver. “China’s economy has been,” as the Asian Pacific Post writes, “minting millionaires”. The Post does not, however, report on the Anglo-investors among these millionaires who work from Canada and who always have worked from here. Picking up where the Post leaves off, a Vancouver Sun editorial, written from the perspective of Vancouver’s business elite, remarks that while Vancouverites were once racist towards the arrival of new Asians in the 1980s and 90s, they have now realized that the Pacific Rim connection is not only a source of investment into Vancouver, but a new line of entry for Canadians into the Chinese economy.
It used to be that the so-called “astronauts” – the Hong Kong breadwinners who spent much of their time aloft commuting back and forth between Vancouver and Hong Kong – were seen as oddities. Today its seen as a way of life for any Canadian who wants to tap into Asia’s boom.
In short, it is impossible to overlook that China’s new wealth emerges within a complex network of the Canada-China nexus, always blurring the lines of what is considered “global” and “local.”
These connections mean that, quoting Tristan Markle, “surplus capital extracted from China is made possible by the conditions of oppressed labour sustained by Canadian-based capital networks.” This exploitation cannot be downplayed. The transformations of the Chinese economy are today on a scale that has to be reconciled with one-sided depictions of an economy that mints millionaires.
As Perry Anderson writes, “never have peasants, the backbone of the revolution, been robbed in such numbers of land and livelihood by developers and officials.” This process of dispossession accelerates even while the commodification of land fails to move as fast as other sectors of the Chinese economy. Indeed it is for the latter reason that the domestic land market is becoming over-saturated by capital, so that China’s “soaring domestic housing market has sent rich mainland investors flooding overseas to get more for their money.” Sitting among such “rich mainland investors” are Anglo-Canadians who must of course bring surplus capital back into Vancouver from Chinese labour networks (perhaps it is the case that they have left China for more long-term reasons, such as too many strikes and uprisings in their mainland factories).
On the other side of the coin, the North American economy itself has been freeing up enormous amount of unregulated, surplus capital extracted from global and local labourers and renters. As the Occupy movement has foregrounded, if there is any economy that has been minting millionaires in the period since the 1980s it is the North American economy. The ratio of the average American workers’ income to that of their CEOs changed from 30 to 1 in 1970 to 500 to 1 by 2000, helping the top 0.1 percent of the population to triple its share of the national wealth. During that same period, individuals’ real wages in America and elsewhere stagnated or even declined. Real wages were frozen while the top layers of society dramatically increased their share of the economy. David Harvey, Duménil & Lévy, and others are precise in identifying neoliberalism as a “project for the restoration of ruling class power.”
“Local high net worth individuals”
“Downtown,” writes Bob Rennie, “is being driven by local high net worth individuals and children spending their parent’s money.” These local high-net worth individuals are well positioned within international networks of labour and capital and are no less global than anyone else trading in the property market. Global in this sense does not mean “over there,” somewhere else in the world. On the contrary it means here, in front of us, and as Zizek has said presciently, the global rich and global poor often live directly above and below one another, stacked in the highrises of our modern cities. “A new global class is emerging” composed of “ultrahigh-net-worth individuals.”
These global citizens [are] the true counter-pole to those living in slums…They are, indeed, two sides of the same coin, the two extremes of the class division…with ordinary people swarming through the dangerous streets down below, whilst the rich float around on a higher level, up in the air.
Any effort to analyze housing costs in Vancouver should begin with the conspicuous role of ‘local high net worth individuals.’ These investors are today more important than ever for the reason that there are far more of them than ten years ago, while each one holds dramatically more money than ten years ago. The last ten years have seen an exhaustive restoration of ruling class power in Britsh Columbia, and it serves to review the empirical data to understand the roots of the surplus capital now being re-absorbed into Vancouver’s booming real-estate market.
After ten years of neoliberal reforms, an unprecedented amount of wealth has been freed into circulation, transferred to the rich from working-class people of the province of British Columbia. Since the election of the BC Liberal government in 2001, profit rates have soared while the corporate income tax rate descended from 16.5 percent to 10 percent. Today the upper 20% of BC pay a lower total provincial tax rate than the remaining 80%, and the provincial government now collects more revenues from sales taxes than from income tax. Already by 2010 the people of BC were paying more in medical premiums than businesses paid in corporate income taxes, and the trends are only worsening. All of these changes, which only scratch the surface of a massive roll-out of neoliberal restructuring and privatization of the British Columbia economy in the past decade, represent a massive handout to the rich, amounting to billions of transferred dollars between 2000 and 2010. In each of the next four years, corporate profits are projected to continue climbing and reach $31.3 billion in the year 2015 alone. Profits have soared, but instead of being re-invested in labour, wages have stagnated and declined.
All of these numbers matter for housing in at least two major respects. Firstly, the neoliberal theft of working class wages means that we have less available to spend on housing. Stagnant and declining wages are being gouged with higher rents and mortgages. Secondly, these new rounds of finance are freed up for injection into the further-inflated housing market. There is a “spatial fix” taking place in which over-accumulated capital “switches”, to use David Harvey’s terms, into fixed capital investments — an absorption process in which surplus capital is placed in non-productive sectors. This non-productive sector is, above all, real-estate, articulated by Bob Rennie when referring to real-estate investment in Vancouver as question of “parking money.” Simply, surplus profits leave the global industrial cycle when financial investment in housing permits a “smooth switch of over-accumulated circulating capital into fixed capital formation.” In other words, the neoliberal restructuring of the economy frees up an increasing mass of finance to be injected into housing.
To match the floating capital freed up by federal and provincial tax cuts, the City of Vancouver now has the lowest corporate taxes in the world. A report published by the global financial auditor KPMG places Vancouver first out a list of 41 global cities. The main finding of the report is that Vancouver has a tax system more favorable to corporations and the wealthy than anywhere else in the world. In addition to a low overall rate for wealthy corporations, the municipal government has implemented a policy of property tax breaks and exemptions for real-estate developers and billionaires, adding up to tens of millions of dollars. Not long ago the two wealthiest billionaires in British Columbia – Brandt Louie and Jim Pattison (London Drugs and Nesters) – received ten-year tax exemptions for their corporations’ participation in the new Woodward’s development.
When a local neoliberal bourgeoisie has taken outright control of city council, we should ask: Is it “foreigners” who have chosen to sell off Vancouver’s social housing as market condos? Is it “foreigners” who have set the lowest corporate tax rates in world? Is it “foreigners” who have chosen to destroy social housing at Heather Place, Little Mountain and the Olympic Village? Is it “foreigners” who have exempted developers from inclusionary zoning in the Oppenheimer district? Is it “foreigners” who have written up long policies to “revitalize” areas containing our city’s largest concentration of affordable housing?
The answer to each is an obvious no. We can therefore begin to see how the Mayor and Vision benefit from the same old anti-Asian tropes that have plagued Vancouver for a century. Policies of tax cuts for the one percent, the sell-off of social housing, incentives and fee exemptions for billionaire developers, and the ongoing de-regulation of the housing market have come in tandem with the Mayor’s racist scapegoating of “wealthy immigrants,” supposedly responsible for Vancouver’s housing crisis. The sooner the better for calling out this ruling class double standard.
 Alexander Saxton, The Indispensable Enemy: Labor and the Anti-Chinese Movement in California, (University of California Press, 1975)
 Henry Yu, “Is Vancouver the Future or the Past? Asian Migrants and White Supremacy,” Pacific Historical Review, Vol. 75, No. 2 (2006), p. 311 (emphasis added)
 Slavoj Zizek, The Parallax View (Cambridge: MIT Press, 2006) p. 37
 “It is the intervention of the pure empty signifier which engenders the mysterious X, the je ne sais quoi which makes Jews into Jews for a true anti-Semite.” Zizek, In Defense of Lost Causes, (New York/London: Verso, 2008) p. 318
 CMHC data provided on request
 “Chinese flush with cash eye Canada,” The Asian Pacific Post, April 22 – 28, 2010
 Perry Anderson, “Two Revolutions,” New Left Review 61, Jan/Feb 2010, p. 95-96
 Lance Carter, “A Chinese Alternative? Interpreting the Chinese New Left Politically,” Insurgent Notes: Journal of Communist Theory and Practice, June 2010. “The Chinese Communist Party uses the powers of the state (both local and central) to keep wages low, working conditions horrendous, and squash dissent. Yet at the same time it is the state that has thus far prevented the complete privatization of the economy (perhaps most importantly the privatization of land).”
 Bruce McCoubrey, “Bob Rennie Selling the Olympic Village in China,” Vancouver Real Estate Market Insight, January 18, 2010. “Mr. Rennie probably knows that domestic demand for the [Olympic Village] units is almost done and the pressure is on find to find an external supply to absorb the remaining units. China is the best bet. The Chinese Government is now fighting a homegrown asset bubble and is planning restrictions on speculative real estate investing at home. Chinese investors will be looking to invest elsewhere.”
 “Chinese flush with cash eye Canada,” The Asian Pacific Post, April 22 – 28, 2010
 David Harvey, A Brief History of Neoliberalism (Oxford University Press, 2005) pp.16-17
 Nicholas Crafts, “Profits of Doom?” New Left Review 54, Nov/Dec 2008, p.54
 Bob Rennie, Keynote to the Urban Development Institute (2008), p. 16
 Slavoj Zizek, First as Tragedy, Then as Farce (London/New York: Verso, 2009) pp. 4 – 5
 Marc Lee, Iglika Ivanova, and Seth Klein, “BC’s Regressive Tax Shift A Decade of Diminishing Tax Fairness, 2000 to 2010,” Canadian Centre for Policy Alternatives, June 2011
 Ibid. p. 2
 Ibid. p. 9
 Iglika Ivanova, “BC’s Growing Gap: Family Income Inequality 1976 – 2006,” Canadian Centre for Policy Alternatives, March 2009
 David Harvey, The Limits to Capital (4th edition) (London/New York: Verso, 2006), p. 227-8
 Barbara Gunn, “Let the property games begin, Bob Rennie encourages brokers” Vancouver Sun, March 27, 2010
 Harvey, Limits to Capital, p. 266
 “Competitive Alternatives 2010 Special Report: Focus on Tax,” KPMG, May 2010