Homelessness

It has long been my contention that homelessness is encouraged by programs to aid the homeless. It’s a fact of life: If you offer people a chance to get something for doing nothing, some of them will take your offer. (The subsidization of unemployment with welfare payments, food stamps, etc., is among the reasons that the real unemployment rate is markedly higher than the official rate.)

Recently, after I had mentioned my hypothesis to a correspondent, Francis Menton posted “The More Public Money Spent to Solve ‘Homelessness,’ the More Homelessness There Is“, at his blog, Manhattan Contrarian. Menton observes that the budget for homeless services in San Francisco

has gone from about $155 million annually in the 2011-12 fiscal year, to $271 million annually in San Francisco’s most recent 2018-19 spending plan.…

[T]he $271 million per year would place San Francisco right near the top of the heap in per capita spending by a municipality to solve the homelessness problem. With a population of about 900,000, $271 million would come to about $300 per capita per year. By comparison, champion spender New York City, with a population close to ten times that of San Francisco, is up to spending some $3.2 billion annually on the homeless, which would be about $375 per capita….

So surely, with all this spending, homelessness in San Francisco must have at least begun its inevitable rapid decline? No, I’m sorry. Once again, it is the opposite. According to a piece in the City Journal by Erica Sandberg on October 10, the official count of homeless in San Francisco is now 9,780. That represents an increase of at least 30% just since 2017.

There’s more. It comes from The Economist, a magazine that was founded in the era of classical liberalism but which has gone over to the dark side: modern “liberlism”. In case you don’t know the difference, see “Political Ideologies“.

In “Homelessness Is Declining in America” (available with a limited-use free subscription), the real story is buried. The fake story is the nationwide decline of homelessness since 2009, which is unsurprising given that 2009 marked the nadir of the Great Recession.

The real story is that despite the nationwide decline of homelessness, its incidence has risen in major cities, where reigning Democrats are bent on solving the problem by throwing money at it; thus this graph, which is well down the page:

Further, The Economist acknowledges the phenomenon discussed by Menton:

Despite significant public efforts—such as a surcharge on sales tax directed entirely towards homeless services and a $1.2bn bond issue to pay for affordable housing—the problem of homelessness is worsening in Los Angeles. It has emerged as the greatest liability for Eric Garcetti, the mayor, and may have hindered his ambitions to run for president. After spending hundreds of millions, the city was surprised to learn in July that the number of homeless people had increased by 12% from the previous year (city officials point out that this was less than in many other parts of California). Though it can be found everywhere, homelessness, unlike other social pathologies, is not a growing national problem. Rather it is an acute and worsening condition in America’s biggest, most successful cities.

Every year in January, America’s Department of Housing and Urban Development mobilises thousands of volunteers to walk the streets and count the unsheltered homeless. Along with data provided by homeless shelters, these create an annual census of types of homeless residents. Advocates think that the methodology produces a significant undercount, but they are the best statistics available (and much higher quality than those of other developed countries). Since 2009 they show a 12% decline nationally, but increases of 18% in San Francisco, 35% in Seattle, 50% in Los Angeles and 59% in New York. [These figures seem to be drawn from HUD reports that can be found here and here.]

The Economist tries to minimize the scope of the problem by addressing “myths”:

The first is that the typical homeless person has lived on the street for years, while dealing with addiction, mental illness, or both. In fact, only 35% of the homeless have no shelter, and only one-third of those are classified as chronically homeless. The overwhelming majority of America’s homeless are in some sort of temporary shelter paid for by charities or government. This skews public perceptions of the problem. Most imagine the epicentre of the American homeless epidemic to be San Francisco—where there are 6,900 homeless people, of whom 4,400 live outdoors—instead of New York, where there are 79,000 homeless, of whom just 3,700 are unsheltered.

The “mythical” perception about the “typical homeless person” is a straw man, which seems designed to distract attention from the fact that homelessness is on the rise in big cities. Further, there is the attempt to distinguish between sheltered and unsheltered homeless persons. But sheltering is part of the problem, in that the availability of shelters makes it easier to be homeless. (More about that, below.)

The second myth is that rising homelessness in cities is the result of migration, either in search of better weather or benefits. Homelessness is a home-grown problem. About 70% of the homeless in San Francisco previously lived in the city; 75% of those living on the streets of Los Angeles, in places like Skid Row, come from the surrounding area. Though comparable data do not exist for Hawaii—which has one of the highest homelessness rates in the country—a majority of the homeless are ethnic Hawaiians and Pacific Islanders, suggesting that the problem is largely local.

The fact that homelessness is mainly a home-grown problem is consistent with the hypothesis that spending by big-city governments helps to promote it. The Economist doesn’t try to rebut that idea, but mentions in a sneering way a report by the Council of Economic Advisers “suggesting that spending on shelters would incentivise homelessness.” Well, I found the report (“The State of Homelessness in America“), and it cites evidence from actual research (as opposed to The Economist‘s hand-waving) to support what should be obvious to anyone who thinks about it: Sheltering incentivizes homelessness.

The Economist isn’t through, however:

All this obscures the chief culprit, however, which is the cost of housing. Even among the poor—of which there are officially 38m in America—homelessness is relatively rare, affecting roughly one in 70 people. What pushes some poor people into homelessness, and not others, remains obscure. So too are the reasons for the sharp racial disparities in homelessness; roughly 40% of the homeless are black, compared with 13% of the population. But remarkably tight correlations exist with rent increases.

An analysis by Chris Glynn and Emily Fox, two statisticians, predicts that a 10% increase in rents in a high-cost city like New York would result in an 8% increase in the number of homeless residents. Wherever homelessness appears out of control in America—whether in Honolulu, Seattle or Washington, DC—high housing costs almost surely lurk. Fixing this means dealing with a lack of supply, created by over-burdensome zoning regulations and an unwillingness among Democratic leaders to overcome entrenched local interests.

Ah, yes, “affordable housing” is always the answer if you’re a leftist. But it isn’t. Housing costs are high and bound to get higher because population continues to grow and businesses continue to grow and hire. Most of the population and business growth occurs in big cities. And if not in city cores, then in the satellite cities and developed areas that revolve around the cores. What this means is that there is a limited amount of land on which housing, offices, and factories can be built, so that the value of the land rises as the demand for it rises. Even if the supply of construction materials and labor were to rise with demand, the price of housing would continue to rise.

The only real “solution” is for governments to dictate across-the-board restrictions on lot size, building-unit size, and the elaborateness of materials used. That isn’t an issue for “entrenched local interests”, it’s an issue for anyone who believes that government shouldn’t tell him that he must live in a middle-income home when he can afford (and enjoy) something more luxurious, or that he must squeeze his highly paid employees into barren lofts.

Thus “affordable housing” in practice means subsidization. If opposition to subsidization is an “entrenched local interest”, it’s of a piece with opposition to across-the-board restrictions. It requires people who earn money to give it to people who don’t earn money (or very much money), thus blunting everyone’s incentive to earn more. Nobody promised anybody a rose garden — at least not until the welfare state came along in the 1930s. And, despite that, my father and grandfathers held menial jobs during the Great Depression and paid for their own housing, such as it was. If people are different now, it’s because of the welfare state.

Finally, homelessness is also encouraged by “enlightened” policies that allow (or don’t discourage) loitering, camping, and panhandling. I happen to live in Austin, where the homeless have been encouraged to do all of those things, to the detriment of public health and safety. I hope that Governor Abbott follows through on his commitment to rid public spaces of homeless encampments.