.Co-ops: Low rents, good services

We take it fur granted certain
services shoutld be provided us
at or below cost - not free of
charge, but without our having
to pay for someoe's personal
profit. Take the mailt service,
for example. Most of us in the
United States need and use the
mails, and we think it only
natural that we have a postal
service which does not turn a
profit.
Curiously, we take it for grant-
ed other services ought to come
our way on a profit-earning
basis.' Take housing, for exam-
ple. We tend to think it a mat-
ter of course that landlords
should have the right to earn
a profit by leasing out their
properties. And landlords earn
an amazing amtunlmt of profits.
Most landlords earn themselves
money monthly by collecting
more in rents than they pay
out in expenses. They increase
their profits by claiming their
property for income tax deduc-
tions. When they sell their build-

ings, they usually get much
more than they paid for them.
And all the time the landlord
is out there making money on
his itmvestment, his banker is
right there beside him, sharing
the profits by collecting huge
amounts of interest on mortgage
loans.
It seems that somewhere along
the line someone should have
asked the question: Is it proper
- for profit to lbe earned in lhous-
ing rentals? The answer to that-'
question is not necessarily yes.
MANY PEOPLE THINK that.
non-profit services, especially
those run by the government,
are handled by inefficient bu-
reaucracies which would best be
replaced by private business.
The postal service is a case in
point.
Many enemies of public "in-
terference" in business services
assert the postal system runs
in the redbecause the govern-
ment tends to bungle operations

F

The Michigan Daily
Edited and managed by Students at the
University of Michigan
Friday, August 5, 1977
News Phone: 764-0552
A ne no or lrcl
,s
" w
could ring owerto labor
AS OF AUGUST 11 University clericals will legally be
able to farm a new union - one year after mem-
bers of the former clerical union, UAW, Local 2,001,
voted to decertify.
Presently, the Organizing Committee for Clericals
(OCC) is the only campus clerical group taking steps
toward creating a new labor organization.
We urge campus clericals to contact 0CC officials
and get involved in the organizing drive.
University clericals clearly need a labor union to
protect their job interests. According to a recent OCC
survey of several area union-management wage agree-
ments, the maximum pay per week for university cleri-
cals is 20 per cent lower than even the lowest maximum
union-secured wages. In addition, the clericals present
non-union contract with the University does not include
a cost of living allowance.
NON-ECONOMIC ASPECTS pf the clerical's work would
also improve with a union contract. Issues such as
'speedup' could be settled faster, and fairly, with a
unioh-backed grievance procedure.
The OCC has established a set of completely demo-
cratic bylaws which will allow important certification
decisions such as possible affiliation with a larger in-
ternational onion, to be resolved democratically.
If the OCC is to succeed in attaining a new union,
Utiverity clericals must work together. Campus cleri-
cats tmust now put memories of last summer's divisive
decerti i cations fight behind them.
Contact your reps
Sen. Donald Riedle (Dem.), 1205 Dirksen Bldg., Washing-
ton, D.C. 20510
Sen. Robert Griffin (Rep.), 353 Russell Bldg., Capitol hilt,
Washington, D.C. 20515.
Rep. Carl Pursell (Rep.), 1709 Longworth House Office Bldg.,
Washington, D.C. 20515.
Sen. Gilbert Bursley (Rep.), Senate, State Capitol Bldg.,
Lansing, MI 48933.
Rep. Perry Bullard (Dem.), House of Representatives, State
Capitol Bldg., Lansing, MI 4933.

By
which wosld be carried ottt ef-
ficiently by groups which are
motivated by profit. The truth
" is, however, the low cost of
mailing a letter in the U.S. is
the reason our postal system
loses money.
While it costs 13 cents to buy
a first class postage stamp in
America, as of January, 1976
the price of first class postage
in Britain, West Germany, The
Netherlands and Sweden ranged
from 19 to 23 cents. If the U.S.
postal service had hiked the
price of first class postage to
19 cents in 1976, it would have
turned a profit in that year. But
U.S. postal prices stay low be-
cause the focus of the mails
system is to provide service.
Just as it's feasible to. pro-
vide postal service, it's feasible
fore people to get housed with-
out having to pay for anyone's
profit. The University's ICC co-
op system is proof of that. The
campus co-ops form a network
of 22 buildings, each one hous-
ing anywhere from 13 to 58 peo-
ple. The network of buildings is
owned cooperatively by the co-
op residents.
THE COST OF LIVING in the
co-ops is low: $140 a month for
roam and board. The reason the
cost is relatively low is the co-
op houses don't serve to fatten
a landlord's bank account. There
is no one to earn monthly profit
on rents or lump-sum profits
from the sale of ICC buildings.
ICC consists purely and simply
of people cooperating to fill their
housing needs together at mini-
mal cost.
Cooperative housing constitutes
only a tiny fraction of Ann Ar- -
bor's housing market. But there
is no real limit to how large
the cooperative community


STEPHEN HERSH _---_
cold become here as people
in the city become more in-
terested in avoiding high-cost
rentals which mean high profits
to landlords. There is room for
the ICC to expand.
More individual houses in the
city could be bought and man-
aged cooperatively by forilher
tenants; there are houses for
sale in Ann Arbor, and it's sur-
prising how easily a handful of
people pooling modest financial
resources can work up enough
cash to make the down pay-
ment on a small building.
Cooperative housing keeps
rents down in three major ways.
First, it eliminates the month-
ly profit which the landlord
would earn if the property were
privately owned.
COOPERATIVE OWNER-
SHIP can also put a lid on rents
if the property is maintained
cooperatively for a number of
years. If the property is not
sold for a number of years, this
eliminates the rent hikes that
usually result from buildings be-
ing bought and sold. The sale
of property encourages rent
hikes because when an owner
sells a building, he usually can
get a higher price that he paid
for it. This means the new land-
lord will have to pay higher
monthly mortgage payments
than the old landlord had paid
- and the cost of this mort-
gage hike is generally passed_
on to the tenants.
And cooperative ownership
over a very long perod - say,
a number of decades - can cut
costs radically, because after
the mortgage is paid off com-
pletely, the cooperators will be
able to pay rent which does not
include mortgage costs. Rents
which don't cover mortgage pay-

ments can be extremely low.
Having the government own
and rent out more housing would
be one way to keep the cost of
huing cheap for more people.
At present, public housing in the
U.S. is geared-toward provid-
ing dwellings for people who
can't afford to rent in the pri-
vate market. lut the scope of
public housing could be broad-
ened. There is no reason why
government housing has to serve
only those who qualify for it un-
der poverty guidelines; the gov-
ernment could feasibly enter
other parts of the housing mar-
ket and provide the benefits of
non-profit housing to more ten-
ants.
if we view housing as a basic
right, the logic of this approach
becomes clear: tenants should
not be at the mercy of land-
lords who are free to charge
as high rents, as they can get
anyone to pay. Decent housing
does not have to come at the
cost of high private profit. The
very poor need protection from
high rents more than other peo-
ple - but they are not the only
ones who need this protection.
Government ownership, like
cooperative ownership, can
bring the cost-saving benefits
of long-term possession of prop-
erty by a single group. Mort-
gage inflation is one of the main
factors in rent inflation, and
with the government holding on
to buildings for decades, rents
for public housing can be kept
extremely low without heavy
subsidies. If the government had
purchased large'chunks of prop=
erty in Ann Arbor in 1957, twen-
ty years later tenants could still
be paying rents based. on 1957
mortgage prices. -
If housing can be provided an
a non-profit basis, should we
continue to allow profit-based
private housing leasing to con-
tinue? Businesspersons and con-
sumers alike agree it is neces-
sary to draw the line somewhere
in defining certain business
practices as legitimate and oth-
ers as not permissible. Have we
drawn the lines at the right
place in the area of housing?


4 7;'r1 THE MWVAUKEIE JOURNAL
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