Friday, March 4, 2011

Public Housing & The Toronto Star: More Poverty, No Solutions

Recently the “right-wing” Toronto mayor Rob Ford got an audit out of the Toronto Community Housing Corp that proved the organization was just another large bureaucracy. The TCHC is one of the oldest and largest public housing projects in Canada. People who live in the old decrepit buildings are the poorest in Toronto, forgotten by a society that's allowed a violent criminal organization to practice wealth redistribution. Mayor Ford has been acting to replace the TCHC board members despite the refusal of the CEO to leave her position.

Ford's also been muttering something about privatization. This got the Toronto Star all scared and thus we are presented with this editorial. “Fresh ideas on public housing” are just the same old arguments debunked by Walter Block in this lecture.

Here's my take on the issue,

The Toronto Star has four possible solutions for public housing. Before I go into that, let me clear up a couple paragraphs in the editorial:

Ford’s views on the future of social housing have been disappointing. He’s on record as vaguely favouring privatization and paying a monthly housing benefit so that people can rent rooms in privately owned buildings instead of relying on public housing.

I don't agree with that approach either, seeing that it still leaves the door open for mandatory taxation. Therefore, Ford's view is not a well-thought-out conclusion on how not to waste taxpayer's money.

There are big problems with taking that approach on a broad scale. First, the private rental sector simply is not large enough to absorb a tide of people from social housing, especially since the Toronto area has lost 17,300 rental units over the past decade.

Let's examine what the Toronto Star just said here. They claimed that the rental sector was not large enough to accommodate all the people from social housing, yet this same industry has lost 17,300 units over the past ten years.

Without even knowing the number of people dependent on social housing, here's how the market would accommodate these newcomers: some families would live together. It's not ideal, but it's better than a slum and it gives an incentive for the families to save for a place of their own. Somewhere in the editorial the Star correctly points to the high costs of rent, but again this is offset by more people living in one space. This less-than-pleasant condition hints to landlords that the market may be able to accommodate more apartments/housing.

Of course, the government has intervened with rent controls and various landlord Acts and amendments that have destroyed profit incentives.

In addition, the Toronto rental market has probably lost over 17,000 units in the past decade because in the past decade it's been much easier to buy a condo.

The Toronto Star has got four “fresh ideas” for public housing. Here they are:

A renewed and expanded provincial commitment to helping people move out of social housing by buying homes. Providing government money to make such a leap could be less expensive than an ongoing rent supplement. It would give people ownership of an asset, and free up public housing space.

And the CMHC is there to help! As well as lucrative mortgage deals from banks and easy access into your home's equity! That'll be what brings people out of poverty – housing bubbles!

There are better ways to go about this, as I'll get to below.

Splitting the massive Toronto Community Housing Corp. into smaller, more responsive agencies. TCHC is the second biggest provider of public housing in North America. Bigger isn’t always better, and some knowledgeable experts believe the mega-corporation may have grown too big for any board or executive to run properly. It could be divided along geographic lines or according to the various services it now delivers.

I like the beginnings of this idea, Toronto Star, but you didn't take your conclusions far enough. Whether the corporation is large or divided into small services won't matter if there is no profit-and-loss economic calculation. Without it, the decisions of the bureaucracy rely on rules and regulations set out by higher authority.

Think Catch-22.

A better solution would be to sell shares of the corporation to the general public and allow the TCHC to operate as a business. Instead of the board members being city bureaucrats, they would adhere to demands of shareholders. Profit-motive allocates resources to the most productive uses and voluntary payment (whether through donors or pay-as-you recipients) greatly enhances services. If the corporation decides it's too big and expensive to run properly, the business will divide itself up into smaller productive pieces, possibly competing with each other.

The relinquishing of the government monopoly also makes it easier for others to get into the business of providing charity houses. Competition will lower price and increase service. The charity houses that aren't very nice to live in and fail at lifting their customers out of poverty won't rake in a lot of donations and face bankruptcy. The charity houses that are successful in reducing poverty will be rewarded. If success is rewarded by more donations, then the charity house succeeds at offering expanded resources to a smaller number of people trying to escape poverty.

As logic and reason have fixed the problem in two points or less, I see little reason for continuing. But for the fun of it, I'll keep going and try to remain brief.

Special federal and provincial support for fixing Ontario’s oldest public housing units.

When money is given away like this, it only creates more of what is being subsidized.

A more aggressive push to integrate different social classes in what is now mainly housing for the poorest of the poor.

I don't understand what the Star is proposing here. Are they advocating more people be eligible for public housing? The program is for the poorest of the poor because this program creates that social class. Easing the entry so higher income earners can take part in this scam will only exacerbate the problem.

In the end there are only two social classes: taxpayers and tax consumers.

The best solution is to get every tax consumer as a tax producer so we won't need any tax payers.

1 comment:

  1. Great article Caleb! The Star is our version of the Pravda