Galveston Economic Report
David Stanowski Publisher
Galveston Vows to Continue Failed Policy; Lack of Success no Reason to Change!
by David Stanowski
30 March 2009
The Galveston Housing Authority was formed on 08 April 1940, in the heady days of the New Deal. The idea was simple; it was better for low-income people to live in properties owned, controlled, and subsidized by the government than to live in privately owned properties that they paid for themselves. This new formula would give them a hand up and out of poverty.
“In this conception—articulated by Catherine Bauer in her influential 1936 "Modern Housing" and embraced by President Franklin D. Roosevelt in the National Housing Act of 1937—public housing authorities were to run apartment buildings as permanent public utilities, with publicly financed construction keeping rents low.
It's hard to exaggerate how mistaken this idea was, even when Bauer and other advocates first formulated it. From the end of the Civil War up until 1937, private builders had erected a dizzying variety of housing for the striving poor as they improved their condition over time.”
How Charlotte is Revolutionizing Public Housing
This philosophy was reinvigorated and reinforced by the Great Society in 1964.
Next week will be the 69th anniversary of the GHA, so it may be time to actually ask the question; how well has it worked? Have many of the previous residents of GHA housing projects used their stay there as a stepping stone to successfully become self-sufficient in the private sector, or have many families remained in the projects for generation after generation?
Here’s what Star Parker has to say about public housing:
"A benevolent Uncle Sam welcomed mostly poor black Americans onto the government plantation. Those who accepted the invitation switched mindsets from "How do I take care of myself?" to "What do I have to do to stay on the plantation?"
Instead of solving economic problems, government welfare socialism created monstrous moral and spiritual problems -- the kind of problems that are inevitable when individuals turn responsibility for their lives over to others.
The legacy of American socialism is our blighted inner cities, dysfunctional inner city schools, and broken black families.
I thought we were on the road to moving socialism out of our poor black communities and replacing it with wealth-producing American capitalism. But, incredibly, we are going in the opposite direction.
Trillions of dollars later, black poverty is the same. But black families are not, with triple the incidence of single-parent homes and out-of-wedlock births."
Back on Uncle Sam's Plantation
One of my "mentors", Dr. Thomas Sowell, has done some of the best work on the legacy of public housing projects:
"Once, after giving a talk, I was confronted by a lady in the audience who asked what some people regard as the ultimate question:
"What is YOUR solution?"
"There are no solutions," I said. "There are only trade-offs."
"The people DEMAND solutions!" she shot back angrily.
The people can demand square circles if they want. But that doesn't mean that they will get them. What they are more likely to get is the illusion of a solution by someone seeking their vote.
Nowhere have illusions been more abundant than in discussions of housing -- especially that ever-elusive "affordable housing" that so many people wring their hands over -- often while passing laws that make it virtually impossible to achieve.
It has become axiomatic in some quarters that only the government can provide affordable housing to low-income people. Often the people who talk this way do not let economics cramp their style or history distract their attention.
Within living memory, there was a time when there were no government housing programs. The federal government first got into providing public housing with the National Housing Act of 1937. (It is amazing how many bad ideas began in either the 1930s or the 1960s.)
Today, we have gotten used to the idea that the government will take care of the poor by putting them in housing projects. We have also gotten used to seeing videotape of public housing projects being demolished. What has not been demolished, however, are the unsubstantiated assumptions behind these disastrous social experiments."
Housing Hurdles: the Solution?
"Among the most unconscionable attempts to unsort people who have sorted themselves out by behavior are government programs to relocate people into neighborhoods where they could not afford to live without subsidies. Often the people in those neighborhoods have sacrificed for years in order to be able to live where they could raise their children in decent surroundings and not have to live in fear of hoodlums -- only to have the government import the bad neighbors and hoodlums they have tried so hard to escape.
Both kinds of people may be of the same race but that does not make the consequences any less painful or the resentments any less bitter. Blacks as well as whites have objected to having problem people thrust into their midst through housing subsidies or government housing projects being built in their neighborhoods.
Almost never do the social experimenters relocate dysfunctional and dangerous people into their own elite neighborhoods. They unsort other people's neighborhoods and embitter other people's lives."
The New White Flight
Howard Husock is the Vice President, Policy Research and the Director of the Manhattan Institutes' Social Entrepreneurship Initiative. He was formerly the director of case studies in public policy and management at Harvard University's Kennedy School of Government. Husock is a prolific writer on housing and urban policy issues.
“Most policy experts agree these days that big public housing projects are noxious environments for their tenants. What’s less well understood is how noxious such projects are for the cities that surround them. Housing projects radiate dysfunction and social problems outward, damaging local businesses and neighborhood property values.
Public housing spawns neighborhood social problems because it concentrates together welfare-dependent, single-parent families, whose fatherless children disproportionately turn out to be school dropouts, drug users, non-workers, and criminals.
Some might dismiss Petrone’s grumbling as the intolerance of a white ethnic for minority newcomers in his once overwhelmingly Italian-American neighborhood. They’d be dead wrong. You’ll hear exactly the same complaints from hardworking minority residents of project-dominated neighborhoods, too.
Working with the Chicago Housing Authority, he proceeded to mix new, owner-occupied homes with buildings featuring new public housing units.
Gates’s gambit kept out interloping whites, all right; but it also enraged law-abiding minority homeowners, who didn’t much care for their new publicly housed neighbors, some of whom had turned their subsidized residences into crack dens.
Lambert, a Democrat, argued that Watuppa Heights was a magnet, drawing households with social problems to his city from Boston and other cities with large numbers of residents eligible for subsidized housing. His office discovered that, out of 1,700 households waiting to receive public housing placement in Fall River, only 200 actually lived in the city (and most of those had passed up available units in Watuppa Heights while waiting for apartments in newer, more desirable public housing). A Boston Globe article, reporting that Boston social workers were encouraging low-income households to move to the old mill town, where there was greater vacancy in the public housing system, provided further evidence that Watuppa was filling up with out-of-towners.
Perhaps surprisingly in a state where “affordable housing” is a mantra, the Massachusetts State Legislature recently gave Lambert the green light to demolish the project. The vote represented a big win for the mayor and for Fall River’s state legislators—and a major turning point for a city fighting hard to improve its schools and its economy.
The belief that “public housing ye shall always have with you” is sacrosanct among housing advocates and officials. Like public housing’s originators more than a half-century ago, they are convinced that the private housing market will always exclude the poor, making public housing permanently essential.
It is this assumption that drives the Department of Housing and Urban Development’s ongoing multi-billion-dollar Hope VI reform initiative—the latest in an endless series of HUD efforts to remedy the endless failures of its earlier housing programs. Hope VI has demolished 70,000 aging public housing units nationwide (including Chicago’s notorious Robert Taylor Homes), only to replace many of them with new units of a different design, in the belief that this time HUD will get the formula right.
Real-estate official Joe Petrone, part of a citizens’ group seeking to block construction of the new units, says, “We live in fear right now of them duplicating what we had for 40 years. They’re just putting a tuxedo on a pig. It’s still a pig.”
But by mandating that 79 of North Town Village’s 261 apartments rent to Housing Authority tenants, and that another 39 rent for below-market rates, the city has greatly diminished the prices of other units in the buildings and the property tax that the buildings generate. “We could be selling condos here for $800,000; instead we’re selling them for $425,000.”
In Fall River, for example, a legal services advocacy group, the Massachusetts Law Reform Institute, has pledged that it will try to block the demolition of Watuppa Heights “every step of the way,” as the Boston Globe puts it. In Chicago, the local housing authority faces constant pressure from tenant organizers such as the Community Renewal Society, a “social justice” organization that has pushed for one-to-one replacement of any public housing unit that the city happens to tear down and a lifetime “right of return” for any tenant displaced by project demolitions.
Housing officials and angry activists notwithstanding, however, the truth is that any two-income working family can afford private housing in the U.S. For example, the average rent for an apartment in New York City, excluding pricey Manhattan, is just $604.
It would be a boon to cities if they could get rid of such misbegotten places. By incubating social pathology, and by keeping so much property permanently off the property-tax rolls, public housing has sapped urban vitality. Though affordable housing activists deny it with their last breath, the gentrification that public housing inhibits is a good thing for cities, the urban poor included. It provides the housing that growing, high-paying businesses need if they are to attract the highly skilled workers who are their lifeblood—and whose high wages provide economic opportunity for so many other workers at all income levels. It is this economic dynamism that creates the opportunity city, in which there is a job for everyone, and no one has to depend on government for his income or his housing.”
How Public Housing Harms Cities
How public housing is bankrupting America -- while harming the people it was designed to help:
"For more than six decades, the United States has built public housing projects and otherwise subsidized housing for the poor. Everyone knows how quickly these housing projects, particularly in big cities, turn into dangerous, demoralized slums. But the problems with our low-income housing policy go much deeper than the unwholesome living conditions they provide.
In America's Trillion Dollar Housing Mistake: The Failure of American Housing Policy, Howard Husock argues that our low-income housing policy -- like so many other misguided anti-poverty programs -- has harmed those it set out to help and has caused serious, and continuing, collateral damage in our cities.
But public housing projects, Mr. Husock explains, are only the best-known housing policy mistakes. He reveals how a long list of lesser-known efforts -- including housing vouchers, community development corporations, the low-income housing tax credit, and the Community Reinvestment Act -- are just as pernicious, working in concert to undermine sound neighborhoods and perpetuate a dependent underclass.
He exposes the false premises underlying publicly subsidized housing, above all the belief that the private housing market inevitably fails the poor. Exploring the link between private housing markets and individual self-improvement, he also shows how new and expensive public efforts are merely old wine in new bottles. Instead he argues for the deep but unappreciated importance to America society of economically diverse urban neighborhoods -- and he demonstrates the historic and continuing importance of privately built "affordable" housing, from the brownstones of Brooklyn to the bungalows of Oakland."
Before Hurricane Ike, the Galveston Housing Authority owned and managed 958 public housing units:
Gulf Breeze: 199 elderly units
Holland House: 157 elderly units
The Oaks: 20 elderly units
Total: 376 elderly units
Cedar Terrace: 139 standard units
Magnolia Homes: 133 standard units
Oleander Homes: 206 standard units
Palm Terrace: 104 standard units
Total: 582 standard units
Cities all around the country are desperate for the opportunity to demolish their housing projects, and end the blight of public housing for the reasons outlined above. Here in Galveston, the GHA is being forced to demolish their four standard housing projects due to the damage from Hurricane Ike, but rather than use this as an opportunity to do away with these failed experiments in social engineering, they are pushing ahead to replace the 582 lost units, AND add another 1,500 units after that!
With all of the evidence that public housing projects do not make a positive impact on their residents, or the neighborhoods adjoining them, the GHA is seeking to nearly quadruple the number of standard public housing units in this city!! Advocates of rebuilding, and further expansion, argue that they hope to build back the population of the City by adding to the number of people dependent on public housing! If they get their way, this will have a disastrous effect on our recovery effort!
It is difficult to tell who is in favor of replacing these units, and adding still more, outside of the GHA, and Councilman Tarris Woods. Certainly these people think that they are doing the Lord’s work, but they are simply ignoring the negative impact of public housing on the people who live there and the City as a whole.
Can this be stopped?
The Galveston City Council can certainly vote not to allocate the funds to rebuild any public housing units, if at least four Members have the courage to do so, but should we expect them to take all the heat from the people, and organizations that will seek to demonize them, if they do? Wouldn’t it be preferable for Council to put the matter to a public vote? Since the residents of this city insisted that they must be allowed to be the ones to determine the fate of paid parking on the Seawall; why shouldn’t they be the ones to vote on something this crucial to the City's future?
Unfortunately, a negative vote by Council, or by the City at large, will probably be met by a lawsuit by some group like Lone Star Legal Aid that could easily overturn the will of the people.
The better strategy might be to begin by using the same legal system that is so often used by the advocates of New Deal solutions to every problem. The City could bring a lawsuit against the GHA challenging the whole premise of the public housing model using the vast amount of evidence to prove it is a failed experiment.
However, since the City is unlikely to take the lead on this, a citizens group could fund such a lawsuit, in a last ditch effort to save their city. It is also possible that a conservative or libertarian legal foundation would be willing to take the case, without charge, in order to try to set a precedent against public housing.
The upside of using a lawsuit is that even if the citizens of Galveston did not prevail; if it delayed matters long enough, that might be sufficient to stop new construction from taking place. The CDBG funds currently in play must be spent within two years or they will be lost. Not a long time in the world of civil litigation.
The GHA may argue that new units will make all the difference in the world, and past results will not be repeated. That has been the song and dance about public housing all around the country for many years. It wasn’t the buildings that caused the experiment to fail, it was the belief that the government could take over the responsibility for people’s lives, and then expect that those lives would not take a tragic turn. The GHA could build public housing bungalows on the front row at Pointe West and the results would be the same!
Do the people who actually pay for this nonsense get any say in this matter at all?
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