Getting Back To The Basics Of Housing Policy And Economics

Last summer in a post here, I compared the Princeton Eviction Lab to the deception of Sinon outside the walls of Troy in Virgil’s Aeneid. Nothing has changed since then but my skepticism, which has deepened. We’re not any closer to changing the narrative that we’re in a housing “crisis” caused by a mix of avarice on the part of people in the business of housing and not enough money to subsidize housing for those who work and can’t pay for it. From Presidential decrees to investigate “predatory practices” to swarms of state level initiatives that accomplish little, nothing has slowed the progress toward more and more government control over rental housing, which won’t end housing scarcity that means higher prices for poor people and rationing of subsidized housing. It is still worth a series pointing out the way we should address housing. Here it is, one more time. Let’s start with whether housing is a right, or a commodity.

Housing is not a right, it is a commodity

The Eviction Lab stands out for having woven a story of pathos and urgency that has goaded many politicians across the country into headlong dives into punitive legislation intended to both punish people who rent their private property to people who need housing and at the same time redress some perceived injustice. At the heart of the sense that housing is a justice issue, that housing, however it is defined is a “right.” So, when a person fails to pay rent, for whatever, reason, they have a “right” to stay in that housing. In this view, housing is an entitlement, in the American vernacular, something we’re born with.

It is important to play this idea out. If we could overcome all the epistemological and ontological challenges with “rights,” and we knew that indeed, each and every person had a right to housing, we’d have to figure out how to measure that quantitatively. What kind of housing? How much housing? Where?

Let’s just say that everyone arrives at a consensus that each and every person has a right to 500 square feet of housing. Well, now we have to build all that housing. The question of where that housing would go and who would build it all is a challenge. Today, a market does the vast majority of housing production with private investors, developers, builders, and housing providers trying to meet the need of people who have money to spend on housing. In case you missed it, there are many people who face challenges paying for housing, which is why we’re having this conversation in the first place.

Even if the government, whatever agency it was, issued a fiat that every available resource would be marshaled to get land, hire workers, and build enough square footage to meet the basic need, the most obvious questions would remain: “Who will pay for all of it, and where will it go?” This is no different than the question we face today in a world where housing is a commodity. Policy makers have limited land and limited resources to pay for it, and if they do, the rules regulations act as a further limitation on siting. And politics don’t disappear either when housing is a right; groups who don’t want new housing built near them will still exercise influence.

The net result of trying to provide a minimum level of square footage to every human being in the country would be scarcity. Even with a massive investment and mobilization, housing is challenging to build and pay for. When I’ve argued with and against socialists about housing being a right, I’ve granted them the point that housing is a right but emphasized that even if it is a right, and we acknowledge that and make policy as if it were true, all the factors present in the current market would still constrain supply. Instead of a price system that rations housing impersonally, we’d get a system of rationing based on politics and privilege.

The answer isn’t about finding or deciding housing is a right but acknowledging all those factors that confound and inhibit the fast and efficient production of housing; bureaucracy, pointless rules, zoning, and parochial opposition. Fixing the housing economy by eliminating those would mean a functioning price system would mean most working people could afford housing the same way they can afford a cell phone and a car even when they experience economic challenges. When people do experience challenges, subsidies should be in cash. We’ll cover that next.