During the debate over the Affordable Care Act, progressives made a fair amount of justified hay over the political obsession with Rube Goldberg schemes to provide people with health insurance through eleventy-million kinds of tax credits and regulations instead of a program where people pay taxes and in exchange the government gives them health insurance. I think passing the Affordable Care Act was a tremendous achievement, but I also think that critique has a lot of merit. But what I find interesting is that I bet relatively single payer-loving critics of ACA will agree with me about the subject of affordable housing.
Yet here I am reading Cheryl Cort extolling the virtues of Washington DC’s inclusionary zoning rule and wondering if this level of complication is really necessary:
DC’s IZ program, like many land-based subsidies such as bonus density or land trusts, requires the owner to sell at an affordable price, yet allows the price to rise as overall incomes in the region rise. This rise in price is then shared with the owner. Keeping the unit affordable but sharing appreciation with the homeowner based on rising area incomes is a national best practice. According to the Center for Housing Policy, this is an effective approach that balances individual wealth-building with community goals of ensuring long-term affordability. [...]
In the case of for-sale units, IZ offers opportunities for lower income families to build wealth while realizing the other important benefits of homeownership. DC’s IZ program uses the change in the HUD Area Median Income (AMI) to calculate a maximum resale price an owner may receive for his or her unit. It uses the annual rate of change over the previous ten years to smooth out fluctuations in the AMI. For example, an IZ owner who bought her unit in 2006 for $200,000 and sold it in 2008 could potentially sell it for approximately $211,800 (plus any capital improvements made).
What if instead of doing all this, we let developers charge whatever they want for the apartments they build, thus increasing the quantity of property taxes paid by rich people living in fancy condos? Then we could take that revenue, and either write checks to poor people or else reduce the regressive sales tax rate. You can make housing more “affordable” through regulatory mandates that it be sold cheaply, or else you can increase income (check writing) or increase the affordability of other items (sales tax cut). But my option would seem likely to do more to increase the overall supply of housing in the metro area (making it more affordable for everyone) and also perhaps spur business expansion and job growth.
I’m not going to go all the way to the extreme and suggest that all in-kind provision of services should be replaced with cash grants. I can see why you might want to give families free preschool rather than money—you’re acting paternalistically, which is appropriate when there are kids involved. Social insurance programs involve a kind of risk-aggregation. But I think the general question “what if we just gave people more money instead?” is one that’s not asked often enough in either domestic or international poverty-fighting context.