The fraying of the socio‐economic fabric of Hong Kong

Abstract

Since the 1980s, Hong Kong has undergone momentous socio‐economic changes, which in turn have greatly affected public attitudes toward society and the economy. Interpersonal trust and the sense of community have weakened. Hong Kong as a society is increasingly seen as unfair in the sense that it is not perceived as a land of opportunities for the hardworking. The capitalist rules of the game are increasingly considered by the people to be unacceptable. Public demands for more governmental intervention in the economy, particularly in the area of income redistribution, are increasingly raised. Nascent feelings of class antagonism are palpable as economic inequalities are getting worse. As social conflicts of various kinds proliferate, public anxieties about Hong Kong's fraying socio‐economic fabric have come to the fore. People expect the government and the legal institutions to strengthen social order. At the same time, however, public trust of all social, economic and social authorities is declining. Accordingly, as social discontent and anxieties accumulate, the socio‐economic system of Hong Kong will face serious challenge in the years ahead.     

Comment on Dennis P. Culhane et al.’s “public shelter admission rates in Philadelphia and New York City: The implications of turnover for sheltered population counts”

The article here extended reflects on the excessively narrow debate over the government-sponsored enterprises (GSEs)' cost-benefit transfer balance which had been raging for a quarter-century before the 2007–2009 financial crisis. That crisis has cast a new light on the actual costs of GSE operations and exposed the unsustainability of some of their benefits for homeownership. After injecting afew new findings into the traditional debate, this comment adds some of what has transpired in recent years and what may be inferred from it so far. Doing so brings additional analysis to bear on the article's conclusion that “the GSEs might not be justified” and “Maybe it is time for them to exit” although most politicians in the past have been disinclined to show them the door.     

Comment on Andrew S. Carron and R. Dan Brumbaugh,Jr.’s “The viability of the thrift industry”

Abstract

Krueckeberg summarizes Hernando de Soto's premise on property rights and offers a critical interpretation of de Soto's work, arguing that it emphasizes efficiency over equity and, ultimately, that enhanced property rights alone are unlikely to significantly improve housing stability or access to capital for households living in informal arrangements. I clarify several of Krueckeberg's discussions of de Soto's ideas from the perspective of the Institute for Liberty and Democracy (ILD).

The ILD perspective, informed by de Soto's writings, contrasts with Krueckeberg's in the following five areas: access to utilities and services in squatter settlements, the criminal nature of these communities, the ability of the poor to fulfill the responsibilities of formal ownership, their ability to borrow against formally owned property, and the impact of formalizing property on rental housing. I close by considering how the ILD perspective on formalization might be brought to bear in the United States.     

Introduction to session 2: Magnitude of the crisis: The fiscal and human costs

Abstract

Many are looking to California and its state housing law for advice on how to deal with the affordability challenges affecting many metropolitan areas throughout the nation. It is thus critically important to go beyond the laws themselves and examine how state and municipal governance structure affects affordability, supply, and production. Some states give broad freedom to localities to develop policies that can potentially meet a range of goals and objectives. Others directly undermine those efforts by limiting local ability to pursue policy reforms while simultaneously failing to engage on the state level.

The redefinition of federalism on the national level, coupled with continued resistance to growth from some localities, establishes the state as at least an equal partner in dealing with housing supply and affordability issues. Understanding these distinctions is important, and the housing community needs to take them into account as it moves on the state front.     

The Low‐Income Housing Tax Credit An Analysis of the First Ten Years

Abstract

The Low‐Income Housing Tax Credit (LIHTC) has been the de facto federal rental housing production program since its creation in the Tax Reform Act of 1986. In this article, using a detailed database on 2,554 LIHTC projects, we analyze the costs of building these projects, where they are built, their financial viability, whom they serve, who finances them, and the size of the subsidies provided to them.

The LIHTC is a flexible program that has built different types of housing in various markets. While LIHTC projects serve low‐ and moderate‐income households, their rents are beyond the reach of many poor households without additional subsidy. Revenues just cover costs for many LIHTC projects. Over time, considerably more of each tax‐credit dollar has ended up in the projects, and returns to equity investors have dropped significantly, perhaps reflecting an increased understanding of project risks. We estimate that LIHTC projects developed by nonprofits are 20.3 percent more expensive than those developed by for‐profits.     

Comment on Steven C. Bourassa and William G. Grigsby's “income tax concessions for owner‐occupied housing”

Abstract

Federal income tax deductions for mortgage interest and property taxes are defensible on grounds of both economic efficiency and the social benefits of homeownership. Homeowners should be treated as landlords renting to themselves; as such, they benefit because they do not pay a tax on the imputed rental income they receive, while rental property owners do. Both receive deductions for mortgage interest and property taxes, and both should.

The mortgage interest deduction generates symmetry between debt and equity financing of a home; if interest were not deductible, those whose income derives largely from property would have an advantage over those whose income comes from labor. Because workers would be disadvantaged, repeal is unlikely to generate the revenues Bourassa and Grigsby expect or modify the distribution of the tax burden in the way they favor. Finally, the deductions promote homeownership, which is socially desirable.     

Where will I sleep tomorrow? Housing,homelessness, and the returning prisoner

Abstract

This year, over 630,000 prisoners will be released from state and federal prisons across the country—more than four times as many as were released in 1980. In this article, we examine the scope of the prisoner reentry issue—what is known about the intersection of housing, homelessness, and reentry and about the barriers returning prisoners face in securing safe and affordable housing.

Although the housing challenges are formidable, progress is being made on numerous fronts. We seek to frame the dynamics of the reentry housing discussion by highlighting the promising strategies that are emerging. These strategies, taken to scale, could help create a very different national policy on prisoner reentry. Ultimately, effective reentry strategies have the potential not only to reduce re‐arrest and increase public safety, but also to reduce homelessness.     

Common‐interest housing in the communities of tomorrow

Abstract

This article offers a broad conceptual framework for understanding the rise of common‐interest housing developments (CIDs), including gated communities, townhouse and condominium projects, and other planned communities. The article begins by describing the CID as an institution and the essential characteristics and varieties of CIDs. Second, the rapid spread of CIDs is attributed to the incentives currently operating on real estate developers, municipal governments, and consumers. Third, this institution is placed in the context of definitions of public and private, and the categories of state, market, and civil society.

The article then presents the eight different “big‐picture” interpretations of this overall phenomenon that could inform the public policy framework within which CIDs are situated. They can be seen as an imperfectly realized version of the “rational choice” or “public choice” model, and reform efforts should be aimed at making choice mechanisms more effective.     

“Ragged urchins play on marquetry floors”: The discourse of filtering is reconstructed, 1920s–1950s

The idea of filtering has played a key role in our understanding of housing markets and in framing federal policy. The origins of the idea, however, and of the term itself, are poorly understood. Drawing loosely on the approach of discourse analysis, this article clarifies both issues, arguing that language shapes how we think about housing policy, and indeed policy itself. The concept of filtering emerged in Great Britain in the late nineteenth century where, by 1900, it informed arguments in favor of municipal (public) housing. It became influential in the United States in the 1920s but in 1938 was still referred to in different ways, notably as “hand-me-down housing.” Here, it was understood more narrowly, as an alternative to public housing. After 1939, the Federal Housing Administration, though not its leading consultant Homer Hoyt, popularized the term “filtering.” The neutral connotations of this metaphorical term suited the agency's goal of developing an apparently objective discourse of housing markets and market analysis. The term was normalized by the early 1960s.     

Comment on James H. Carr and Michelle Mulcahy's “Twenty years of housing policy: what's new,what's changed,what's ahead?”

Housing policy in the post Great Recession (GR) era faces tremendous uncertainties, but clearly there will be more sensitivity around risk, quality, and transparency in capital markets. The post-GR domestic policy environment and economy are likely to impose several overarching constraints, including less access to world capital markets for financing housing, more restrictive assessments of risk, and increasing restraints on federal domestic spending particularly for non-entitlement programs. Carr and Mulcahy provide a substantial agenda of liberal-progressive policies that focus on the predatory and risky practices of loan originators and promote expansion of home ownership for low-income households. If we are indeed on the brink of an era of austerity, the housing policy debate will need to focus on priorities for contraction rather than expansion in housing programs, and on tenure-neutral policies rather than promoting home ownership.