Public Housing; P.L. Poirot

A Housing Shortage Although the foregoing campaign statement did not say so, many persons believe that a housing shortage exists in the United States at the present time. They say that there are not enough dwellings to satisfy the de mand.They say it isn't right that some American families should be deprived of better housing, especially when they appear willing to pay for it. They say that private builders aren't doing the job, that the competitive system isn't functioning properly. Many persons believe that the government ought to do something about such a sit uation. A seeming corrective for any shortage is to produce more of the things which are scarce-in this instance, produce more houses. And that's precisely what a great many citizens believe the government of the United States ought to do: carryon and enlarge its public hous ing program. Other persons will argue that the job should be done by the state governments. And still others believe that the cities and communities ought to do the job through their own local governments. If the hours of earnest and vigorous debate as to which of these branches of government ought to do the job had been spent in home construction, this housing shortage would [328 ] be much less acute than it is. And the sad part of all such debate is that it blinds the participants to the true nature of the problem.

The problem is that there are not enough dwellings to satisfy the demand at prevailing prices. And the fact is that someone has been interfering with prices-the means by which the market equates the demand for housing against the available supply of houses. Price Fixing Someone has been trying to set too low a price for housing, thus causing too much demand. Theoretically, such interference could originate with individual owners of houses, apartments, and other dwellings. Suppose an apartment house builder were to open a new project, for some reason offering all of his well-built and highly desirable apartments at a monthly rental of $10.00, in cluding utilities. In most communities such a ridicu lously low rental rate would bring forth far more applications from tenants than could be satisfied. The apartment house owner would have created a housing "shortage" simply by building housing and offering it for rental at less than the prevailing market price. Or suppose that some owner decides to sell his home for a figure well below what the prevailing market price might be. This, too, might lead to a so-called housing shortage, for there would be a tremendous demand for such a bargain.

Actually, these are pretty radical suppositions. Private [329 ] builders and home owners usually do not cut their own throats in any such fashion. The owner of a home or an apartment usually asks as much rent or as high a selling price as he believes the market might allow. However, as a producer of housing, he is competing with many other producers. The greater the supply· of houses relative to the demand for them, the keener is the com petition between producers. Such competition tends to lower the market level of rents and the market value of dwellings, which enables consumers to buy more and perhaps better housing for their money than before. Government Interference Sometimes the government-federal, state, or local interferes with the price signals in the housing market. Not the private builder, but the government, steps in and says that rents shall not exceed $10.00 a month, or what ever other figure they deem to be fair. The consequence of such indirect housing subsidy, of course, is that those tenants who are most fortunate will expand into living quarters more spacious than they would consider neces sary at the competitive market price. Most tenants who can find two rooms for the price of one will occupy the two rooms instead of one.

The tendency of rent control to aggravate the housing shortage seems to have been recognized even by the gov ernment. With one hand, the government holds the price of housing below its competitive level; with another hand, it forces the diversion of productive efforts from [ 330] other uses into home construction. For instance, the gov ernment oHers mortgage money at lower than the mar ket rate of interest, thus applying a little pressure on lenders to the advantage of borrowers. The government also offers mortgage insurance or guarantees the payment of mortgages which otherwise would be too shaky to seem attractive to private investors. As a :Hnal resort, the government may oHer the mortgage in the form of tax privileged or even tax-exempt government bonds to attract investors toward the "opportunity." So the gov ernment has various ways of applying its powers of taxation so as to interfere with the housing market. By emphasizing rent control, it is possible to create as seri ous a housing shortage as anyone could desire!

Of course, the government doesn't deliberately set out to create a housing shortage when it indulges in rent control and various easy home-purchase subsidies. The object is to help the needy, the returning veterans, the families of defense workers, the "underpaid public ser vants," all those who are thought to be worthy and deserving. And it is not a popular thing to question such humanitarian motives. However, it is necessary to raise some questions because the means employed are defeat ing the objective. The housing shortage persists because of what is being done by the government in its effort to correct it. And the victims who suffer most are the very ones who were supposed to be the beneficiaries of this intervention-the persons who were presumed to be unable to meet their own need for housing. Even an [331 ] artificially created shortage hits nrst and hardest against those least able to afford the scarce item.

The government is trying to prohibit competitive bar gaining as the determinant of the price for housing. In other words, the government has been trying to force people to do what they would not do voluntarily. In one sense, it may be said that the housing shortage is merely a measure of popular resistance to the idea of substitut ing the force of government for the voluntary market method of bringing supply and demand toward a bal ance. Shortages and surpluses do not develop or, at least, do not continue for long when prices are free to fluctuate according to the choices of buyers and sellers. Measuring the Shortage The current housing "shortage" is not a thing that can be measured merely by comparing the number of families or the number of people with the number of dwellings or the number of rooms. The 1950 census reports an average of 3.5 persons per occupied dwelling unit in the United States, compared with 3.7 persons at the end of World War II, 3.8 persons in 1940, and 4.8 persons in 1900. The total number of dwelling units in 1950 was 23 per cent greater than in 1940, whereas the same period saw a population increase of less than·15 per cent. These figures certainly indicate that most of the so-called hous ing shortage stems from disruption of the market mecha nism rather than from a decline in dwelling facilities.

Such a comparison of persons per dwelling, of course, [332 ] tells nothing specific about the condition of the dwellings or the happiness or health of the residents. It has been charged that some Americans are now forced to live in slums and substandard dwellings. And it undoubtedly is true that some Americans are living in homes which other Americans would classify as uninhabitable. But it is equally true that some Americans eat and drink food and beverages which other Americans con sider unfit for human consumption. Some farm operators till soil so unproductive that other farm operators would classify it as unfit for farming. Some persons dress in a manner seen by others to be inadequate or positively indecent. Even the manner in which some Americans worship God is frowned upon by others. Who is to deter mine which ones of us are living in substandard fashion? And then what? Forced To Be Independent Aside from the occupants of prisons and other places of detention, how many American citizens actually are being forced to live in any particular place? Just what is the nature of this so-called force over those who dwell in the cCslums"?Am I being forced to live in my own modest home just because there are others living not too far away in homes which are castles by comparison? Is it force which limits any man's possession to that which he can produce or obtain in exchange for his own efforts and property? Is it force which constrains nearly every human being to somewhat less than full satisfaction of [333 ] every conceivable desire? Actually, these are the re straints of self-control exercised voluntarily by individ uals who respect the rights of one another to private ownership and control of property.

Among individuals who respect the right of every person to the product of his own efforts, it is expected that some persons may accumulate more property than others, not through resort to force, but simply as the result of superior productivity and personal thrift, both being a part of one:>s capacity to serve others. In a com petitive society, property accrues naturally to those best able to use it in service to others. If men are to be allowed to live according to the fruits of their individual efforts, it follows that they must be allowed to live ac cording to their different scales of values-not forced to work and act and live alike. A Strange Definition There may be those who will say that any person who eats an apple is forcing all other persons to do without that apple. And perhaps there are some who then go on to conclude that the eating of a single apple forces all others to do without apples. At least this seems to be the logic of persons who say that people are being forced to occupy slums .and substandard dwellings. They imply that such force is exercised by those who occupy more stately mansions. Their idea seems to be that force occurs or has been exercised whenever there develops the least deviation from a condition of absolute equality of mate[334 ] rial possessions. By such lflfreasoning,"they conclude that it is a proper function of government to provide a stand ardized dwelling unit for every citizen. Any individual who might attempt to disturb this dream of social equal ity by improving his own unit would have to be taxed back into line!

Partially Equal The foregoing illustration will be challenged by the majority of social levelers as going beyond their objec tives. They will say that their goal is not absolute equal ity-that only the lower 5 per cent or 10 per cent or one-third of the population really deserves to be equal ized upward. A favorite stunt of politicians who want to be known as defenders of private enterprise is to argue that, of course, we don't need 100,000 units of public housing a year-we only need 80,000 units! But this kind of a breaking point leaves no stopping place in principle. If all the people are to be taxed to build the new homes which some of the people cannot afford, this very tax will drive others down into the eligible lflfsubstandard class." There will always be a lowest 5 per cent, until absolute equality is reached. And the disrupted market place will not be allowed to indicate by way of price changes just who wants what.

If 5 per cent of the productive efforts of individuals are diverted, through the taxing powers of government, to the building of housing which a free market would not justify, then it must follow that something other than [335 ] housing will not be made available for consumption. The subsidized housing may be provided by curbing the out put of fine cars and television sets and fur coats. Or, the housing may come at the expense of workshoes, clothes, food,medical care, and other nonluxury items. This much is certain: Whatever other values may be claimed for it, it is not logical to claim that taxation is a device for improving or even sustaining the productive activities of individuals. The taxpayer, the recipient of the subsidy, and the supervising middleman are all invited by· the compulsory leveling process to be less productive than they could be. This curtails the total supply of things which can be consumed. Such compulsory exchange for the purpose of equalizing-unlike the market process of voluntary exchange for mutual gain-inevitably drives the over-all level of living below that of which free men are capable.

TheUMeenlndimaua~ There is indeed a sharp contrast between the poor housing conditions of the "slums" and the more exclusive homes of the "heights." And, not infrequently, it is out of the picture windows of the more fashionable homes that the "slums" are seen to be "community eyesores, blotches upon the character of American humanity, dens of iniquity, breeders of ignorance, disease and poverty" areas justifying public intervention and clearance. Seldom seen from the picture windows on the "heights" are the details of humanity in the so-called blighted [336 ] areas. Unseen is the fact that in these "slum areas" are individuals who are living as they feel they can afford to live. Perhaps their homes are substandard by the measurements of outsiders. Yet there is much to indicate that· some persons live in the "slums" by choice rather than necessity. It is conceivable that these occupants consider other things more important than improved housing, so far as their own spending is concerned.

Streets filled with parked automobiles and roof-tops jammed with television aerials suggest that possibility. And if a man wants to spread his earnings by a formula somewhat different from the average for the community, is that necessarily wrong? If the majority, by way of gov ernment, is to prescribe the kind of a house in which a poor man is to live, then to the same degree will the majority prescribe how the wealthy and even the citizens of ordinary means are to live. If it· is a new house for each family today, will it not be an adequate diet on every table, or a new car in every garage, tomorrow? And, of course, all of these things would be quite won derful, except for the fact that the government cannot thus provide one single item of goods or services to these persons except by taking it away from someone else who has worked to produce it. Unforeseen Consequences There is no denying that an architect's drawing of the bright and cheerful new homes of a proposed housing project is more beautiful than a photograph of the [337 ] "slums." "And it won't cost the community a cent," they usually say. Such clever devices influence opinion in favor of the project, for these are the things which can be seen.