Eight (unlikely and unpopular) policy options for addressing housing issues

After a recent conversation with colleagues prompted by reading together the sociological work Evicted as well as my own thinking about residential segregation, I wanted to put together a blog post summarizing possible policy solutions to housing issues. I am not optimistic but here are the possible options I see at multiple levels:

  1. Provide incentives for developers and builders. This is a common strategy across different government levels: builders and developers are given access to choice properties or are able to build higher-end housing if they build cheaper housing or provide monies that could be used for cheaper housing. A number of major cities, including Chicago, have such incentives. However, it does not seem to have made a major dent in the amount of affordable housing that is needed. I have heard that argument that governments have simply not offered big enough incentives – there is a tipping point where this could really push builders and developers to construct cheaper housing. I don’t think I buy this argument. Even though there is clearly a market right now for cheaper housing, why would builders and developers not try to build the priciest stuff they can to bring in more profit?
  2. Other market-driven solutions beyond incentives. I’m on the record here as skeptical that free markets can address issues of residential segregation and housing. Vouchers have their supporters since they theoretically would allow poorer residents to access areas of the housing market they otherwise could not. At the same time, introducing vouchers leads to other issues such as inflated prices/rents and negative reactions to those with the vouchers.
  3. Local government action. Municipal officials have a good amount of control over what can be built within their boundaries. However, they are constrained by (1) local residents who want to protect their community (examples of NIMBY in action here and here) and (2) limited budgets and revenues so they are typically trying to maximize property and sales taxes while minimizing use of social services. The biggest tool municipalities have are local zoning guidelines that often constrict what can be built (see recent suburban non-housing examples here and here). One way that wealthier areas exclude those who are not so wealthy is to not allow multi-family housing or set guidelines requiring larger lot sizes.
  4. Metropolitan action. Housing is really an issue that spans municipalities as the majority of people live in one place and commute to another for work (plus drive elsewhere for other amenities). Yet, metropolitan governance does not exist on a large-scale in the United States. Outside of a few regions, this is not a viable option: people in different communities do not have ways to collaborate nor would they necessarily want to. This is particularly true of wealthier communities. Residents would argue that this is the purpose of local government: local residents should get to make decisions about their own communities rather than handing off money and/or control to an outside body that wishes to damage their quality of life. See examples of how this can play out regarding affordable housing in one region and another involving transportation across a whole region.
  5. State governments. States could decide to impose regulations and guidelines but then they would have to overrule municipalities. This is difficult. For example, Illinois in 2004 an affordable housing guideline where every community was supposed to have a certain percentage of their housing stock within affordable limits. The guidelines could have been useful but they had no teeth and what counted as affordable was loosely defined. As this 2015 Chicago Tribune article suggests, wealthier communities did not submit to the guidelines and “Lee acknowledged that the agency has no authority to enforce the mandate if municipalities do not submit affordable housing plans.” Nothing really changed – and I’m guessing this was intentional.
  6. Federal government. Even though the United States has public housing, it was difficult to get off the ground and is not viewed favorably by many. That whole single-family homes fights communism thing plus the American ideal is everyone owning a home. Even if public housing had some successes, on the whole federal efforts have promoted white suburbs mortgages for single-family homes are subsidized. Results for federal initiatives involving vouchers, such as Moving to Opportunity, are mixed as many of the residents end up in similar poor neighborhoods and it is not clear if certain long-term outcomes such as education and employment are positively affected. Federal efforts consistently draw negative responses from conservatives. Operators in the housing industry – the National Association of Home Builders, the National Association of Realtors, lenders, and others – mobilize to protect the mortgage interest deduction and single-family homes. American Apartheid suggested we lack the political will to enforce the 1968 Housing Act and thus we still have discrimination in housing (from mortgages to real estate agents to landlords and more).
  7. The court system. Given the relative lack of action by local and state officials, housing and zoning cases do occasionally make it to state and federal courts. I argued a few years back that I could envision the Supreme Court approving inclusionary zoning (I’m not sure I still think this given the current makeup of the court). They can indeed take action and compel other governmental bodies to address issues. Some famous cases include the Gatreaux case in Chicago where a court ordered scattered-site housing and the Mount Laurel cases in New Jersey combating exclusionary zoning. The problem with these is that they require taking legal action in the first place, they can take a long time to litigate, and while the results may be compelling, they are still often viewed unfavorably and putting the changes into action are not easy.
  8. Non-profits and religious groups. Either sets of groups have limited resources – housing is a very expensive proposition on a large scale – or are more interested in other concerns. Groups like Habitat for Humanity may do good things but they can only build so many houses and not all communities or neighborhoods are welcoming to their projects. Churches, particularly big ones, could access a good amount of resources but housing is more of a structural issue that many conservative Christians may not want to get into.

All of these options are difficult to implement. On the whole, many wealthier suburbanites and urban residents do not want any kind of cheaper or subsidized housing in their neighborhoods or community.

If I had to pick two levels that provide the best opportunities, I might go with local government and the courts. Zoning guidelines are often developed by average citizens sitting on local committees. Get named to such committees and you can influence this process. The courts are a way to get around the unpopularity of introducing cheaper housing as such measure are unlikely to find broad support. At the same time, as noted above, the court route has its own challenges.

Perhaps the most daunting option in my mind is trying to influence the federal level. Does any political party talk seriously about housing? After all, one journalist captured this quote:

The former governor of the Bank of England, Mervyn King, told me this: “Most countries have socialized health care and a free market for mortgages. You in the United States do exactly the opposite.”

It will be hard to alter an entire system based on providing socialized mortgages for the middle-class and above.

Sociologists provide limited hope for reversing inequality

Several sociologists, among other experts, provides reasons for hope and despair regarding the shift where “inequality in America has been on the rise. The result is an alarming concentration of wealth among the country’s very well-off.” As they discuss reasons for hope, I was struck that the policy prescriptions provided by these experts tended to be limited: generally smaller programs (like Moving To Opportunity) or local efforts. This could be the result of several factors: maybe an online article this isn’t the sort of venue to get into large-scale policy discussions; perhaps academics aren’t great at operating in the world of policy as opposed to diagnosing problems; or the scope of study among these academics has tended toward smaller-scale studies. An area where some experts did see hope was in the social movement activity of recent years which has pushed some of these issues into the larger public conversation.

It would be fascinating to ask a broader range of sociologists this question and to get specifics from them on what gives them despair or hope. It can be relatively easy to point out large trends – such as concentrated wealth – but it is more difficult to discuss and push for feasible change. I’m also reminded that the period of less concentrated wealth that people often look to as a shining example – the post World War II era – was the result of particular large events that were difficult to foresee (a worldwide depression, the biggest war the world has ever seen) and responses to these changes.

Hard to counter China’s aging, even with change in one-child policy

The change in China’s one-child policy may not have much effect on its demographics:

“The population in China is going to continue to age,” said Kristin Bietsch, a research associate at the Population Reference Bureau in Washington, D.C. “Even though they’re hoping to increase their fertility, they’re still going to have a substantial population aging — and this is going to happen even with the increase in fertility.”…Adrian Raftery, a professor of statistics and sociology at the University of Washington in Seattle, agreed: “The (United Nations) has already been projecting a small and slow increase in China’s fertility rates over the coming decades, and this news makes this even more likely to happen,” he said. “The increase is not likely to be large, though.”…

Like much of Europe, China’s population is aging rapidly — India’s population, now at 1.3 billion, is expected to surpass China’s within seven years, according to the United Nations…

But many demographers argue the birthrate would have fallen anyway as China’s economy developed and education levels rose. They foresee a looming crisis because the policy reduced the young labor pool that must support the large baby boom generation as it retires.

Three quick thoughts:

  1. See more about demographic transition here: as countries develop and have more wealth, residents have fewer children. Even as the one-child policy disappears, there may not be a rush to have two children.
  2. Governments have the ability to set policies such as these but one problem with influential policies is that they also need good timing. If the goal was to reduce the proportion of older residents, this change came late and it will now take more time to counteract the unintended consequences of the initial policy.
  3. I haven’t seen much about the real reasons China reversed this policy. Presumably, it has to do with aging – a modern society needs a broad base of young workers both for economic growth as well as to pay into the system to take care of older residents. Yet, this article brings up the population of India – might the shift also have to do with the population growth of India? Are there other reasons as well?

Why do more liberal cities have more expensive housing?

After providing evidence that more liberal American cities have higher-priced housing, several explanations are offered for the phenomenon:

Kolko’s theory isn’t an outlier. There is a deep literature tying liberal residents to illiberal housing policies that create affordability crunches for the middle class. In 2010, UCLA economist Matthew Kahn published a study of California cities, which found that liberal metros issued fewer new housing permits. The correlation held over time: As California cities became more liberal, he said, they built fewer homes….

“All homeowners have an incentive to stop new housing,” Kahn told me, “because if developers build too many homes, prices fall, and housing is many families’ main asset. But in cities with many Democrats and Green Party members, environmental concerns might also be a factor. The movement might be too eager to preserve the past.”

The deeper you look, the more complex the relationship between blue cities and unaffordable housing becomes. In 2008, economist Albert Saiz used satellite-generated maps to show that the most regulated housing markets tend to have geographical constraints—that is, they are built along sloping mountains, in narrow peninsulas, and against nature’s least developable real estate: the ocean. (By comparison, many conservative cities, particularly in Texas, are surrounded by flatter land.) “Democratic, high-tax metropolitan areas… tend to constrain new development more,” Saiz concluded, and “historic areas seem to be more regulated.” He also found that cities with high home values tend to have more restrictive development policies…

“Developers pursue their own self-interest,” Kahn said. “If a developer has an acre, and he thinks it should be a shopping mall, he won’t think about neighborhood charm, or historic continuity. Liberals might say that the developer acting in his own self-interest ignores certain externalities, and they’ll apply restrictions. But these restrictions [e.g. historic preservation, environmental preservation, and height ceilings] add up, across a city, even if they’re well-intentioned. The affordability issue will rear its head.”

The options presented above include: (1) fewer housing permits; (2) environmental concerns; certain geographies that limit space, particularly along coastlines; (4) high taxes and high home values and (5) generally having more restrictions. Even though these factors are likely intertwined, it seems like it would be possible to look at the individual effects even when controlling for the other factors. One issue may be the relatively small sample size as such analyses are often limited to the 100 largest metropolitan areas. Even within the 100 biggest cities, there could be very different processes at work as Boise, Richmond, and San Bernadino are #98-100.

One common theme of these findings – outside of the geography argument – involves regulation and restrictions. Regulation doesn’t necessarily have to lead to less affordable housing. Regulations could also be used to push developers to include some units of affordable housing. Yet, it is hard for communities to turn down the big real estate money that can flow in; just see the recent happenings in New York City where high-priced units are still being built at a furious pace.

How boundary work helps explains false equivalence in the media

Read here for an explanation of how the sociological concept of boundary work is applied to the issue of false equivalence in media coverage:

Boundary work is a kind of rhetorical work that is performed in public argument: something is asserted to be science by stressing what it is not (pseudo-science, or faith, or religion, or what have you). Even Tim Geithner did it in his exit interview when he painted his own work as just a kind of technocratic problem-solving rather than politics, see this analysis.

It seems to me that our political discourse also contains a similar kind of boundary work — between “politics” and “policy.” Our politicians will always say: what I’m doing is just plain old common sense or the right thing or just good policy, or just the solution to a problem; whereas what my opponent is doing is playing politics. And if one sees politics as actually a way of managing relations between conflicting groups of people, one can see why they do that.

For instance, reforming the American health care system is almost certainly a matter of redistribution: taking money from older people and giving it to others (the uninsured, younger people, etc.). But one can’t say that if one is a politician, and so there is a delicate balancing act: one’s own work is constructed as problem-solving and policy-making, the opponent is portrayed as playing politics (where politics is understood to be trading off between different social groups).

I think this kind of boundary work exists in journalism too (and more on why it exists later); it’s what you call false equivalence (and Yglesias calls bipartisan think). Here the newspaper is seen as above politics, which is what grubby politicians do. And therefore the contrast between the policy that the newspaper is advocating (which is not politics but merely good moral sensible stuff), and that what the politicians are doing. It is imperative, I think, in this model that both parties be painted in the same brush. Because if you don’t, then you agree with one of the parties, which therefore makes you political.

Why should the newspapers practice this kind of boundary work? My sense (which comes straight from Paul Starr’s history of the media) is that it’s a holdover from the times when the newspaper industry changed. As we all know now (from arguing about partisanship), newspapers in the 19th century were unabashedly partisan. They also catered to niches, and made money from subscriptions. And that changed sometime in the 20th century when newspapers started to make money from advertisements — and therefore they had to be less partisan and attract more people. Hence the objective tone of the reported stories (he says, she says) — and also I think the false equivalence of the editorials.

The concept of symbolic boundaries is an important one in the sociology of culture. Groups or organizations engage in drawing boundaries between what they are (by their own definition) and what they say others are. Policing these boundaries is a consistent and tricky task; the changes the other groups make might force a group to redraw its own boundaries. Or, outside social forces and circumstances might push all groups to redraw or double down on their boundaries. A good application of this concept to defining social class in the United States and France is Michele Lamont’s book Money, Morals, and Manners.

Digging into the moral reasons the American middle-class doesn’t like paying taxes

A new sociology study looks at the moral opposition middle-class Americans have to taxes. Here are some of the main findings:

“In this study, we demonstrate how people associate the income tax with a violation of the moral principle that hard work should be rewarded,” he added. “Our research has implications for how policymakers should frame fiscal issues. Because people intertwine fiscal issues with morality, approaches to tax policy that only emphasize economic benefits for the working and middle classes do not resonate with everyday understandings about what taxes mean to people.”…

Interview respondents saw themselves as morally deserving and hard-working people, whereas they perceived a tax structure that benefits the idle poor and the idle rich…

Respondents frequently associated their earliest memories of taxation with their first jobs, or wage labor, which in turn was associated with the absence of personal autonomy and dignity, or the ability to control one’s own time and work…

Hard work was viewed as a virtue, and respondents didn’t like idea of being taxed while they work, instead speaking in favor of a flat tax on consumption. “Tax whatever,” one respondent told the researchers. “Don’t take my paycheck.”

A note: the study is limited to a particular sector of the American public. Here is the study group: “24 semi-structured, open-ended interviews with white Southerners who owned or managed small businesses—a demographic group that is typically anti-taxation.” This study has a small N and a targeted group so this limits its generalizability but its value seems to be in hearing how people talk about and understand taxes.

This is another reminder that money is not typically exchanged in solely neutral economic transactions: there is a lot of social and moral weight in economic transactions. Thus, when talking about taxes, policy makers and citizens are making moral arguments in addition to straight-up financial arguments. This applies to some of the current budget debates in the United States: the two sides may be talking some about fiscal issues but there are also underlying moral issues about how money should be used, how it should be acquired, and more broadly, how social life should work.

 

A call for better macroeconomic statistics

As the economic crisis continues, one blogger suggests American macroeconomic statistics are “pretty weak” today:

In particular, the data coming out of the Bureau of Economic Analysis at the beginning of 2009 was way off. Here’s Cardiff Garcia, introducing an interview with Fed economist Jeremy Nalewaik:

The initial GDP estimate for the fourth quarter of 2008 showed that the economy contracted by 3.8 per cent. It was released on January 30, 2009 — about three weeks before Obama’s first stimulus bill passed. That number was continually adjust down in later revisions, and in July of this year the BEA revised it all the way down to a contraction of 8.9 per cent.

The BEA is happy to try to explain what happened here — but whatever the explanation, the original 3.8% figure was a massive and extremely expensive fail. It was bad enough to be able to get a $700 billion stimulus plan through Congress, but if Congress and the Obama Administration had known the gruesome truth — that the economy was contracting at a rate of well over $1 trillion per year — then more could and would have been done, both at the time and over subsequent months and years. Larry Summers warned at the time that the risks of doing too little were much greater than the risks of doing too much; only now do we know just how right he was on that front. (And even he didn’t push for a stimulus of more than $700 billion.)…

When I told Cardiff that the status of macroeconomic data-gathering has been declining for decades, I was making two separate statements — first that the quality of statistics has been declining, and secondly that the status of economists collating such statistics has been declining as well. Once upon a time, extremely well-regarded statisticians put lots of effort into building a system which could measure the economy in real time. Today, I can tell you exactly how many hot young economists dream of working for the BEA on tweaks to the GDP-measurement apparatus: zero.

Sounds like there is work to do. This commentator seems to suggest the government needs to offer the kind of money that would attract economists to this task. Are there economists out there right now who could handle this job and all it takes it some more money?

If we were looking at the causes of economic crises or perhaps what sustains them, could statistics really play a large role? Even with the best statistics, policymakers can still make bad decisions. But I suppose if the foundation of policy, the statistics that we trust to tell us what is really going on or what might, is faulty, then perhaps there is really little hope.

At the same time, I would suggest this isn’t only a macroeconomic problem: the world is complex, we want to tackle difficult problems, we are very reliant on statistical models, and there is more and more data to work with and collect. We need a lot of good people to tackle all of this.