On interest,credit and capital ∗

On interest, credit and capital Laurence Harris This article examines the category of interest payments within the problematic of historical materialism. It examines the interest payments which occur under the capitalist mode of production on the basis of credit from capitalists to capitalists, from capitalists to workers, and from workers to capitalists. On the subject of capitalist to capitalist interest payments, the article examines the views of Marx on interest-bearing capital and demonstrates that Marx did consider this interest rate to be subject to determinate and analysable laws. These interest payments are transfers of surplus value as such. On the subject of worker to capitalist interest payments it is demonstrated that these are payments out of wage revenue which are appropriated as profit on merchants' capital rather than as profit on interest-bearing capital. Finally, capitalist to worker interest payments are identical with payments of wage revenue and, therefore, are for capitalists equivalent to the advance of variable capital. These results are established on the basis of the law of value and after considering the concept of value of labour power. In conclusion, the construction of data employed in empirical work is criticised.     

The low‐income housing tax credit program goes mainstream and moves to the suburbs

Abstract

The Low‐Income Housing Tax Credit (LIHTC) program is now 20 years old. With the maturing of the program, the use of tax credits has become commonplace in the development of rental housing across the nation. This article examines how the program has changed both financially and spatially. Specifically, the article asks whether it provides a mechanism that can help deconcentrate impoverished renters by providing access to low‐poverty neighborhoods.

This research finds that as the price for tax credits rises, the program becomes increasingly popular with developers who are helping it make inroads in low‐poverty suburbs. By entering the suburbs, the LIHTC program is meeting and even exceeding the performance of the Housing Choice Voucher Program in terms of offering opportunities to live in low‐poverty settings.     

The low‐income housing tax credit as an aid to housing finance: How well has it worked?

Abstract

The Low‐Income Housing Tax Credit program has been operating for over 10 years and has helped finance thousands of developments with units set aside for low‐ or moderate‐income households. However, the program has been criticized for requiring additional layers of subsidy to leverage investment and for providing benefits to developers in excess of the amount necessary to induce them to invest.

An analysis of a sample of developments from Missouri finds that the tax credits are syndicated, with virtually all of the syndication proceeds (about 33 percent of the financing) used to pay for development costs. Conventional lending provides another 44 percent of the financing. Unfortunately, because these sources do not cover all of the costs, developers enter into a complex, costly process of layering additional subsidies, one on top of another, to fully finance the development.     

Comment on Kirk Mcclure's “The low‐income housing tax credit program goes mainstream and moves to the suburbs”

Abstract

As McClure's article notes, the Low‐Income Housing Tax Credit (LIHTC) program has indeed gone mainstream. Given the tarnished reputation of many other federal low‐income housing programs, this is good news. It is also surprising in some ways considering the many programmatic flaws inherent in the LIHTC program.

As a point of departure, I look at why McClure and others are able to describe the program in a positive light despite its many flaws. I attribute this to the unique political culture of the United States, for which the LIHTC program is well suited. In addition, it sidesteps one of the thorniest problems that have bedeviled low‐income housing programs—the spatial isolation of poor minorities. Until the LIHTC program explicitly addresses this issue, however, any praise must be tempered by a great deal of caution.     

The cost‐effectiveness of the low‐income housing tax credit relative to vouchers: Evidence from six metropolitan areas

Abstract

How expensive is the Low‐Income Housing Tax Credit (LIHTC) program relative to vouchers? Are there any market conditions under which the supply‐based LIHTC could be more cost‐effective than demand‐based vouchers? This article examines these questions in six metropolitan areas—Boston, New York, San Jose (CA), Atlanta, Cleveland, and Miami. Controlling for family income and unit size, I compare the development subsidies of new‐construction LIHTC projects with the alternative 20‐year voucher cost in each area.

In general, the LIHTC is found to be more expensive than vouchers. The premium, however, varies significantly by voucher payment standard and local housing market. Assuming a payment standard of 100 percent of fair market rent, the LIHTC is only 2 percent more expensive than vouchers in San Jose, but more than twice as expensive as vouchers in Atlanta. Many factors account for these regional variations. This study emphasizes two: local market conditions and program administration.     

Comment on Kirk McClure's “Are low-income housing tax credit developments locating where there is a shortage of affordable units?”

Kirk McClure's article makes important contributions to our understanding of the way in which state allocating agencies are using the Low-Income Housing Tax Credit (LIHTC). However, one of the premises of his analysis – that allocating agencies should encourage the location housing developments in census tracts with a “surplus” of low-income renters – is mistaken. Census tracts are too small to be considered closed-system housing markets. Additionally, the LIHTC program does not exist in isolation, but instead as part of a combined national rental housing policy that includes both supply-side programs (LIHTC) and demand-side programs (housing vouchers). A final flaw in the notion that LIHTC units should be built in census tracts with a surplus of renter households in the 30% to 60% of AMI range compared with the units affordable to them is that increasing the amount of affordable housing in those tracts could have the effect of further concentrating households by income and race.     

‘Yes,but all responsible Finns want to stop living on credit’: Feeling rules in the Finnish politics of austerity

In 2015, the newly elected government of Finland introduced austerity measures designed to improve the public economy, which had not recovered from the financial crisis of 2007–2008. The article examines how the government sought to secure acceptance for austerity by appealing to citizens’ emotions. We analyse how the measures were emotionally motivated and how, according to the parties in power, citizens should and should not have felt about them. The article shows how the politics of austerity produces various and contradictory feeling rules. These seek to temper citizens’ negative emotions towards austerity, such as dissatisfaction over unfair sharing of pain and distrust towards political authority. Interestingly, the rules evoke hope that a better future lies ahead if citizens follow the proposed measures, yet prompt fears of what will happen if they do not. The government also emphasised its transparency and honesty to prompt empathy and trust from the population.