Arnold Kling  

Low Collective Benefits

Boys, Girls, and Math... Freddie, Fannie, and the Fragi...

Sudhir Venkatesh writes

Introduced with much fanfare in 1993, HOPE helped municipal governments demolish dilapidated public housing projects and revitalize their inner cities. To receive program money, mayors agreed to move families from the projects to low-poverty neighborhoods and build mixed-income housing where the projects once stood...

In large cities like Atlanta, Baltimore and Chicago, the program reshuffled project residents to outlying neighborhoods and struggling inner-ring suburbs whose mayors lack the experience and resources to help the incoming poor and stem rising crime and gang activity. More than 80 percent of the families who left Chicago’s demolished projects moved into equally poor, racially segregated neighborhoods...

A 1998 report from the Government Accountability Office also concluded that HUD oversight was lacking, and HOPE VI was giving greater weight to the interests of real estate developers.

Venkatesh then proceeds, rather naively in my view, to call for replacing the Department of Housing and Urban Development with a better department. First of all, failure only leads to exit in markets, not in government. Second, who is to say that the next generation of programs will not also be captured by special interests?

In my simple diagram, housing programs are an example of the large population in the lower right quadrant--public funding with narrow private benefits.

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COMMENTS (3 to date)
KipEsquire writes:

How ironic that these public housing projects were themselves created by the same sort of program in the first place: the Federal Housing Act's Title I urban renewal program of the '50s and '60s...

Martin writes:

What Sudhir calls for is a common response. Let me re-phrase his recommendation:

Let's replace people everywhere by better people.

How could one not agree with such a change?

Vincent Clement writes:

Martin: Except you are unlikely to find 'better' people in government. Let me rephrase that. There are smart people in government.

Problem is that the politics and special interests override them. And I speak from experience, as I am a government employee.

The same thing that did HUD in, will do the new department in. In the beginning, the new department may achieve success and be a model. But in the long run, all government bureaucracies grow too large and become invaded by special interests.

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