We need to move away from public housing

OttawaSun – news/Canada
First Posted: Saturday, September 24, 2011.   By John Robson, Parliamentary Bureau

What is the government doing giving people houses? Even if we accept that charity is properly the business of the state, which I don’t, it still makes sense to ask: If food, clothing and shelter are the most basic necessities but no one thinks the welfare state should be knitting the poor sweaters or baking them buns, why are we so quick to ask it to build them houses?

There is a lively theoretical debate over giving the poor money they might spend foolishly versus giving them stuff (“aid-in-kind”) that doesn’t help teach them to make responsible choices. But what governments do in practice depends largely on which necessity is involved. Imperial Rome infamously gave bread to the urban poor. But not togas. And the United States offers “food stamps” but not shoe stamps (though some state welfare programs include clothing allowances). Meanwhile, Canadian governments generally avoid both.

Housing is different, mostly because it is so expensive.

Even those willing to trust the poor with a welfare cheque for other basics do not think it wise to hand them the down payment on a house, or even the monthly rent on a decent apartment. Hence the impulse to furnish housing more directly.

Canada’s tradition of public housing goes back to the Great Depression. And advocates clamour for more. Unfortunately even they know that, across continents and centuries, public housing tends to be dirty and dangerous.

The main problem is the so-called “tragedy of the commons” that everybody’s business is nobody’s business. If you own your own home you are making a major investment in your life and if you look after it well you live better and get richer.

But if someone else owns your home you gain little from looking after it. Trash it and the state will find you another one; take care of it and you gain nothing. Even renting an apartment is an exercise in responsibility. Living on the public dime teaches only helplessness, resentment and anger.

Because of the slum factor of public housing, and because housing is so darn expensive, governments often try to give the poor decent accommodation by imposing rent controls on private apartments instead.

This policy is unfair, shifting the whole cost of what is meant to be public charity onto that small group that has committed time and money to create rental housing. Also, it doesn’t work.

Landlords, denied a reasonable return on their investment, cannot maintain existing apartments and have little cause to build new ones (especially as they feel victimized by a sneaky act of expropriation.) Instead, they convert apartments to condominiums or some other use. If the law does not allow for that, they simply walk away from buildings that drain their wallets and emotions. And what does not exist cannot be rented at any price.

All is not lost. There is another method. Give the poor housing vouchers to cover a share of the market rent, which landlords can redeem in cash.

Like rent control, vouchers let the poor afford better apartments. But they increase the rewards to landlords who provide rental housing. They also tend to empower recipients of assistance instead of reducing them to surly dependency, and avoid segregating them in public housing.

Vouchers are still a second-best solution. It’s not just that they push up the price of rental housing. It’s that such redistributive policy reduces long-run growth, the best anti-poverty tool the world has ever seen.

But if the government must provide housing, vouchers achieve most of its short-run goals for as little long-term harm as possible.

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