Best Housing Hope; B. Siegan

as a.matter of right. They con tend that if the private sector cannot provide such housing, then it. is the obligation of.government to do so. This was an underlying prem ise ot the 1968 national housing act which called for the construc tion or rehabilitation ,of six mil lion .housing units, for low and moderate income families over the succeeding decade ..and established subsidy programs to accomplish that aim. Another basis for that legislation was the conviction that goyernment could effectively and efficiently subsidize the con~truc tion of. housing for the less fortu nate in our society. Time has shown' ~hat Congress in. p,a~sing this legislation, did not understand the operation of its own government. Admittedly, it was a mistake easily made, for the task .appeared ..relatively simple. Establish subsidy programs, pro221 222 THE FREEMAN April vide them with billions of dollars, and it would be only a question of time before those billions would create new and better housing for the country's less fortunate citi zens, at a reasonable per unit cost.

Nothing could have been further from the truth. Much housing was constructed under the program; in fact about 20 to 25 per cent of residential housing starts for 1970 and 1971 were for subsidized and public housing. Unfortunately, most of the beneficiaries probably were not poor people. By the time the product reached its intended re cipients, a great many had profited along the way, including many who cheated and gave and accept ed bribes. There were many scan dals in the progra.m, but even these might have been explained away. had the program largely ac complished its purposes. The results however, were high ly unsatisfactory. Much of the con struction was by the government's own evaluation defective and of poor quality. Perhaps the program created as many tax shelters for the rich as housing shelters for the very poor. A significant num ber of projects failed financially, and possibly worst of all, some of the developments intended to elim inate the slums themselves turned into almost instant slums.

With scandals and costs mounting and res ults remaining unsa tis factory, the Nixon administration in 1972 began to contract the sub sidy programs and subsequently froze funds appropriated for them. "We can no longer afford $100 billion mistakes," said George Romney, who assumed office as Secretary of the Department of Housing and Urban Development a strong proponent of subsidized housing and left office an equally ardent opponent. Government-Built Housing Is Costly and Wasteful If the total cost of the subsidy programs were averaged over the successful units - which, of course, were far fewer than those built the cost of each unit might be quite similar to the cost of hous ing in Beverly Hills (with hardly the same resale value). Even gov ernments can go broke on this basis, and taxpayers can and should .become very angry. But the cry goes out: "How else can··we provide for the hous ing needs of the less fortunate in society?" The operation of the real estate market provides the an swer: enable or allow builders to produce more private housing, and the less affluent will benefit as much as the more affluent. Due to the operation of the filtering process, construction of housing for the well-to-do will equally benefit those 1974 BEST HOUSING HOPE 223 of average, moderate and low in comes.

What is the filtering process? Filtering in housing occurs when new homes and apartments are constructed and families move in to them, vacating their former residences for occupancy by oth ers. The others, in turn, may va cate still other units and the proc ess continues through many se quences. A study of filtering in seven teen metropolitan areas of the country, made by the Survey Re search Center at the University of Michigan, has shown that on the average the construction of one new unit makes it possible for a succession of 3!j2 moves to occur to different and more likely better housing accommodations. New construction thus helps more peo ple indirectly than it does directly; 2lh moves occur to existing hous ing and only 1 move to new hous ing. The study shows that more than one-third of all those who move are likely to be in the lower and Mass Production moderate income categories, the targets of the subsidy programs.

It also reveals that while most new construction occurs in the outer portions of the metropolitan area, these moves extend to older areas near the center of the city, where the poorer portions of the population tend to live. The experience of the subsidy programs has demonstrated that new housing has not always meant decent housing; and it is decent housing, whether new or old, that should be the nation's objective. More private construction will ac complish that goal for more people without the huge waste of re sources that seems inevitably to accompany government's efforts. Accordingly, governments can ,best serve housing needs by elim inating laws and regulations such as zoning which impede develop ment of the land. An unrestricted private market still remains the most efficient and effective means yet devised to provide better hous ing for the less affluent. ~ IDEAS ON LIBERTY THE very principle· of capitalist entrepreneurship is to p1'ovide for the common man. In his capacity as consumer the common man is the sovereign whose buying' 01' abstention from buying de cides the fate of entrepNmeurial activities. There is. in the mar ket economy no other means of acqu,iring and preserving wealth than by supplying the masses in the best and cheapest way with aU the goods they ask for.

LUDWIG VON MlSES. Human Action LEONARD E. READ The law ... has converted plunder into a right, in order to protect plunder. -Bastiat THE COMMANDMENT, "Thou shalt not steal," would be far better kept today had not theft assumed vari ous disguises under which its prac tice .has been .. generally sanctified. The gilding of an evil gives it a virtuous face --;' a Mr. Hyde's ugli ness covered by a comely Dr. Jekyll mask. Why such subterfuge? To be thought of as a thief by others or to so regard oneself .. is utterly re volting to all but stunted mental ities; so, we try to sanctify our plunder! The sanctification of plunder is as old as the history of .ffian. If thievery was .indeed the first la bor-saving device, it was developed out of sheer ignorance. Survival is a laudable objective; therefore, if thievery is thought to be the only means to that good end, it must per force be good. Thus is plunder sanctified by those who know no better.