Tuesday, November 18, 2014

The Problem of Homeless Kids

This morning NPR had a show about a spike in child homelessness. Of course our hearts go out to those affected. But two points.

First, the measurement problem is important. One reason for the surprising extent of the problem ("1 in 30 children in the United States is homeless") is that it measures any child who was in "less than adequate" housing over the past year. This includes kids who are "doubled up", staying in residential motels, couch-surfing, etc. Now I don't deny this is a problem, but it's not homelessness. I defy anyone who has had to sleep on the street for a month to seriously claim that having a roof over one's head, even an impermanent one, is a lot better than not. So we should be calling this an "inadequate housing problem", or something like that. Calling it homelessness is needlessly incendiary.

Second, and more importantly, NPR is shocked, shocked, to discover that California is third worst in the nation in this category. I am not. The reason for the extent of the problem here is high housing prices. The proposed solution... wait for it... is subsidized housing.

This won't work, though, at least not as one would hope. The problem is one of supply: it takes time to add housing. In California there is only so much of it, and as anyone who has looked for an apartment recently can attest, it's largely occupied. Subsidizing it just puts more dollars chasing the same number of units, with the result that the price per unit will go up. But this won't increase the number of units. If the housing market were entirely free, we would expect an increase in supply to come from the rise in prices, and after some lag to allow for building, the market would clear. But this is California: building requires zoning, and approvals, and inspections, and it isn't quick or easy and many cities don't really want it. So the most likely result of subsidies will just be to push prices up, especially on low-end apartments, which will of course hurt those occupying (or competing for) those same units who aren't getting the subsidy. Whether this will actually help anyone is an open question, but it's quite possible that it won't, net-net. We know for sure that any subsidy program will transfer X% of the taxpayer dollars used to landlords (who benefit from the higher rents). The only question is: what's X?

It's hard to ignore the fact that the problem, and the proposed solution, are very much like Obamacare. We have a limited supply of health care (represented by doctors, nurses, hospitals, etc.). Obamacare regulates prices (which certainly won't expand the supply) and subsidizes demand (which increases it), with the result that we'll have shortages. We're already seeing that. Will liberals ever learn a lesson here? In the eighty years since FDR, it's not clear that they have.

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