Is Private Housing The Problem? (And Is Public Housing The Answer?)

everyone loves an old house Tara Gone With the Wind

A provocative piece by Jesse A. Myerson in The Nation argues that we’re way too attached to real estate, and that private property is destroying us. We shouldn’t merely complain about how the rent is too damn high or that we can’t afford to live within an hour of our workplaces. We should take action.

As he puts it, “Real estate as a store of private wealth is the rotten tree that sprouts these diseased branches, and the solution is to quit pruning twigs and chop the sucker down.”

I’m pretty attached to my own rotten tree, and lord knows I benefited from the one my parents invested in back in the day, but, well, let’s hear him out.

The entire apparatus by which housing is privately “owned” is created by the government’s decisions to subsidize or protect certain interests. … 

Ostensibly, the government pursues the public interest, but treating real estate as privately owned wealth, as a financial asset, has devastating public effects. On a grand scale, treating land as an asset allows speculators to create bubbles large enough to threaten global economic collapse. The housing bubble—really a land bubble—of the last decade bid the price of land up so high, concocting such dangerous “complex financial instruments” to turn out so many sub-prime mortgages, that the burst was enough to sink some of the world’s most profitable firms, plunge us into the Great Recession, extinguish the majority of all black wealth in the United States, bankrupt pension funds worldwide, and destroy the governments of Greece, Iceland, and other nations.

True, that last recession was a doozy. We should learn from it, he argues, instead of simply hoping the same cycle doesn’t repeat itself. We should treat land itself the same way we treat commodities like oil discovered inside land.

100 percent of the location price should be confiscated and invested in a sovereign wealth fund, the way Alaska’s oil royalties are. That fund could either pay out universal dividends, the way the Alaska Permanent Fund does, or provide the public with a huge pool of resources with which to invest in public institutions.

Buildings would, in that case, retain nominal “owners,” but those owners wouldn’t be able to make money off of other people.

It should be noted that this has been tried in various forms over the years. Myerson cites the optimistic example of Vienna:

the City of Vienna is the largest landowner in all of Austria. On its land, the city government provides comfortable housing (whose units might be high-end condos in the United States) not just to poor and working-class people but to virtually half the city. Public housing accounts for more than 13 times the housing overseen by the affordable-housing agency of Philadelphia, a city with a comparable population size. The public-housing system established Vienna’s first libraries, and many of its kindergartens, daycare centers, dental clinics, and parks. “These places are incredible,” architectural historian William Menking is quoted as saying. “There are swimming pools and saunas and bicycle parking.”

That sounds nice! And also super expensive. How could you scale that for a full city, let alone one of the world’s largest countries?

There are other examples, too. Going way back, the Hebrew Bible makes clear that God retains ownership over the holy land.

in Israel all property belonged to the Lord, as Leviticus 25:23 (NIV, 1984) made clear: “the land is mine and you are but aliens and my tenants.” Because Yahweh is the one and only Lord and ultimate king over Israel, he was also Lord of the soil and its products. Accordingly, the Holy Land was God’s domain (Josh. 22:19) and that land was the land of Yahweh (Hos. 9:3; Ps. 85:1 [2]; Jer. 16:18). …

One of the central affirmations of the faith of Israel was that the land they occupied belonged exclusively to the Lord; it did not belong to Israel even after they occupied it (Ex. 15:13, 17). Therefore, the land could not be sold permanently, for it belonged to the Lord, and the people of Israel were only residents or “guests” and “tenants” (Hebrew, gerim and toshabim) there (Lev. 25:23). The chief landlord was Yahweh.

Like the related innovation of the Jubilee Year (“This fiftieth year is sacred—it is a time of freedom and of celebration when everyone will receive back their original property”), it’s a nice thought. But it’s not a terribly functional system, and it’s unclear whether even the ancient Hebrews took it seriously. Needless to say, most of contemporary Israel treats these rules as more like guidelines, and quaint, archaic ones at that.

There’s also the example of Singapore, which has erected massive towers for its citizens to live in. As Shaila Dewan of the NYT recently reported, “more than 80 percent of the population lives in public housing designed with walkability, ethnic diversity and green space in mind.” Helps to have one-party, semi-authoritarian rule.

Workers there are still the unhappiest in Asia, though, so removing housing as a cause of stress doesn’t seem to be a panacea. (Most students and twenty-somethings live with their parents anyway.)

Who else has tried a version of this? Well, the USSR did:

In the Soviet Union, housing in cities belonged to the government. It was distributed by municipal authorities or by government departments based on an established number of square meters per person. As a rule, tenants had no choice in the housing they were offered. Rent and payment for communal services like water and electricity did not form a significant part of a family’s budget. They did not cover the real costs, and were subsidized by the government.

People’s access to housing was like their access to consumer goods in that it depended on their position in society and their place of work.

From everything I’ve heard, seenand read, it was a pretty grim situation. Not exactly a model to emulate.

Nor does it help that high-density Soviet and communist architecture is so, well, ugly.

Less than a year after Stalin’s death, in December 1954, Nikita Khrushchev set a campaign to promote the “industrialization of architecture”. He spoke highly of prefabricated buildings, reinforced concrete, and standardized apartments. He did not care for appearances, instead focusing on just building housing because that is what the people need. Prefab tower blocks, called Plattenbau in German and panelaky in Czech and Slovak, were constructed all over the Soviet Union and their satellite states. Originally, these apartments were to house families working for the state.

I’m afraid we care too much about individualism and self-expression to submit willingly to public housing, especially considering — Vienna aside — public housing’s abysmal track record both abroad and at home. Dewan’s NYT piece about Singapore comes to the same conclusion:

It’s not clear we have the fortitude to deal with these [housing] shortages head-on. …

there are economic forces at work that seem to move in only one direction: More people are moving to cities, and wealth is distributed more unequally. Apartments have become a global commodity, a safe investment for the well heeled, no matter where they actually live. Todd Sinai, a Wharton economist, says that just as cities have always had fashionable neighborhoods where only wealthy people can afford to live, now some “superstar cities” have become just like those places, the affluent districts of the globe.

Getting rid of private real estate ownership might be nice, in other words, especially if we could all get thoughtfully designed spaces that come complete with access to saunas and pools; but it would require nothing short of a zombie apocalypse.

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