Should We Reject Low Income Housing?
February 15, 2013 in Daily Bulletin
Robert Lerman believes that low income housing should be abolished. His arguments are not as heartless as they may seem:
- Government sponsored low income housing restricts the areas that those with lower incomes can live in.
- Instead the government should boost the purchasing power of those with low incomes so that they can live where they want.
- This could be done by giving low income individuals ‘rent vouchers’. Not only would this empower them to choose where they live, studies suggest it would also be cheaper for the government than building low income housing.
Read more over here about how bad terminology can create bad policy, and other advantages of the voucher idea.
Source: The Atlantic Cities
This sounds like a simplified program that would leave more to markets, which is the sort of thing I like. But on closer inspection I don’t think it lives up to its promise. Subsidizing rents smells like an economically-neutral transfer operation. Rents go up, and so do taxes on landlords. It’s not the same as subsidizing production directly, from a supply-side point of view.
Of course the problems of geographically concentrating/isolating low-income people are huge. Markets do this anyway (housing is a positional good… which is why the vouchers are especially likely just to raise rents) and hardly need encouragement from the government.
What the government should do is subsidize the construction of mixed housing. If you’re a developer and you can prove that your building or development is home to people with a certain distribution of incomes, you get a subsidy.
Many municipalities use zoning approvals to force mixed-income development. That’s effectively a subsidy, but one mediated through an uncertain bureaucratic process.
http://www.theonion.com/articles/city-councilman-unearths-magical-zoning-amulet,1782/
Replacing it with a straightforward cash subsidy would probably be an improvement.
I don’t think any of this really solves the problem. If they can’t afford something as basic as a roof over their heads then they probably also can’t afford other necessities such as basic food. You can go item by item all you want and offer subsidies in specific areas. But to truly solve the problem and to empower people to not have to rely on the government you need deep institutional reform such as increasing minimum wage or retraining individuals who can’t find jobs. Being on government support is in nobody’s interest – least of all those who are forced to be on it.