Public Housing: Subsidies or Vouchers?

The moral, economic, and constitutional case for the federal government's involvement in housing is a dubious one at best, but this much ought to be beyond dispute: the way it conducts its housing business now is a disgrace.

Earlier this summer, Congressman Nick Smith of Michigan's 7th District offered an amendment to eliminate funding for construction of public housing and replace it with housing vouchers. A subsequent ideological debate pitted those who believe in the efficacy of markets, individual responsibility, and freedom of choice against those who believe that government must produce vital goods and services and decide basic matters for its citizens.

Under the present system, major developers are subsidized to produce housing units on a large scale for poor people. The government then provides an operating subsidy to those who run each project, usually a government public housing authority (PHA) that federal law says must supply "safe, decent, and sanitary housing" for qualified recipients. In actuality, many of the nation's 3,400 PHAs are havens of abuse, ineptitude, and corruption. While PHAs have devoured billions in subsidies, housing units are routinely "mismanaged into squalor, trapping entire communities in an atmosphere of hopelessness, despair, and danger," according to the National Center for Neighborhood Enterprise.

The Detroit Public Housing Authority is a case in point.

Listed on the federal government's "Troubled PHA List" for most of the past 15 years, it has been plagued with high vacancy rates, millions of dollars in uncollected rents, sloppy and unmonitored service contracts, careless record-keeping, bureaucratic overstaffing, poorly-maintained buildings, and a general pattern of management behavior that no private provider of rental housing could ever get away with. A 1992 paper on Detroit public housing from the Mackinac Center for Public Policy termed the situation "a scandal of the first order, and one that cries out for drastic reform."

A voucher program for public housing would provide far more freedom of choice for recipients than does the present system. Instead of tax dollars going to developers and operators for housing structures that effectively segregate the low income population from the rest of society, vouchers would allow recipients to shop in the open housing market for the site of their choice. They could supplement the voucher, if they choose, with whatever personal resources they have. If a landlord does not maintain the dwelling or provide adequate services, the tenant is not trapped; he or she can take the voucher to another building.

Vouchers would allow local contractors to rehabilitate small rental units and make them available to low income tenants. Small "rehab" companies in the private marketplace have fixed up the South Shore Bank area of Chicago, once considered an urban wasteland, in what could be a model for such entrepreneurial activity everywhere if public housing vouchers were to become federal policy. Michigan cities like Detroit could use a burst of local enterprising spirit that a scrapping of the current housing mess and its replacement with vouchers would generate.

We need not act as if only government can produce housing any more than we should believe that only government can produce food. As defective as the federal food stamp program is, its problems pale in comparison to the scandals we'd have if the government owned and operated farms from which it raised food to parcel out to poor people in government stores.

By going to a voucher system, we would take the location decisions out of the hands of bureaucrats and put them in the hands of the tenants-eliminating the inevitable delays, endless paperwork, and needless expense that encumber the current system. We could even abolish Public Housing Authorities and not miss them for a minute.

Public housing in Michigan cities desperately needs change. If government is going to be in this business, it at least ought to use good sense. Vouchers offer us such an opportunity.