On Public Housing, Food, and Why We Need a Housing Market

I got this question recently in an e-mail: I was wondering what your opinion on public housing is, and if you’ve written a piece on it. I think your insight is very good to have, and I appreciate knowing what you think on the issues. Here’s my answer. 

Here’s a link to one post that might help: https://www.forbes.com/sites/rogervaldez/2017/03/06/in-defense-of-more-housing/
My view is that whatever approach we take to housing, we need more supply when demand goes up. In the big picture, it matters less who or what produces that housing than it gets made and delivered to those who need it.
The problem with non-market approaches is that they inevitably lead to rationing and the decisions about who gets the housing end up falling into the hands and minds of bureaucrats making decisions. The market, through prices, rations housing as well, but does so in a blind way, that is nobody can get ahead in line because of politics etc.
But in both approaches, if housing supply meets demand, the problems of rationing and escalating prices matter less and less. Unfortunately, public officials and bureaucrats complicate the production of housing, both public and private, with way too many rules and regulations. We don’t treat other necessities, say food for example, in the same way. We do regulate food safety, but because the federal government has prioritized affordability, farmers and producers actually get benefits, subsidies, and regulatory relief to make food cheaper. When was the last time you heard that “food prices are skyrocketing!”
Yes, there are a myriad of issues with the way we manage the food market, but high prices are not one of them. Imagine if we payed private developers to produce more housing, subsidized their purchases of land, allowed them to pay less for labor, and even passed legislation protecting the industry from libel and defamation. Again, there are issues with all of these (see the settlement of the ‘pink slime’ lawsuit or the many issues associated with farm labor).
Still, the point is that our priorities around food favor its affordable production. Farmers are generally sympathetic figures, and though there are many social justice, legal, and other issues associated with food production, the system has delivered affordability. In contrast, housing production and operation is seen as a scourge and a profiteering racket. Housing, however, is like any other business and housing producers are human beings like any other set of human beings working in an industry. As I always say, greed is a character trait, not a business model.
Finally, I think we need smart subsidies. Although to make the lager point about supply I sometimes concede that it is a “right” or that the government could produce it and manage it, I think that is a terrible idea. Government is best when it is a referee in the market, not a participant. Government should write the rule book, revise it, and set priorities based on good science and data. But because housing is perhaps the biggest single monthly expense for a household, paid out all at once, it can make people very angry when that expense increases. And at times of population growth, increases in prices are coupled with other issues, problems, and discomfort that are all attributed, often, to the production of housing rather than it’s scarcity. The rule book then just gets longer and longer.
This is a long answer to a simple question, but I think it’s always worth reflecting on why the market should be allowed to produce as much housing as it possibly can. When and where it fails, mostly for people who have less money and a myriad of other challenges, housing should be subsidized, even produced and managed by government. But even for people struggling to get out of poverty, we ought to be considering guaranteed income and vouchers when we can rather than turning over their housing to a system we wouldn’t trust ourselves.
Thanks for the question.
Roger–

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