The Paradox Of Income Inequality

The paradox of income inequality is that all the official progressive programs that supposedly will make it better actually make it worse.  And thus we have the ridiculous phenomenon that those places in the country that are the hottest hotbeds of progressivism, and that put in place the most expansive array of programs to "help" the poor and ameliorate income inequality, then end up with the very highest levels of income inequality as measured by the official government statistics.  As I have noted before, the Congressional District with the very highest "Gini Coefficient" (the sophisticated snob's official best measure of income inequality) is none other than my own district, New York 10, home of Greenwich Village, the Upper West Side, the New York Times, the most generous welfare and housing and Medicaid programs in the country, and of a stifling progressive orthodoxy that you can't cut through with a machete.  Might we be doing something wrong?

An article in yesterday's Financial Times, "The riddle of black America's rising woes under Obama," by Edward Luce, does a real service in highlighting some of the statistical data on income and wealth inequality, particularly as it relates to the disaster that Barack Obama and his policies have brought upon black America.  But Luce then proceeds to draw some seriously dumb conclusions.

First, the bad news.  Most of the time you have to do serious digging to find out how bad Obama has been for black Americans.  The mainstream media just won't report on this.  So, thank you Mr. Luce for pulling some of this together:

Since 2009, median non-white household income has dropped by almost a 10th to $33,000 a year, according to the US Federal Reserve’s survey of consumer finances. As a whole, median incomes fell by 5 per cent. But by the more telling measure of net wealth – assets minus liabilities – the numbers offer a more troubling story.

The median non-white family today has a net worth of just $18,100 – almost a fifth lower than it was when Mr Obama took office. White median wealth, on the other hand, has inched up by 1 per cent to $142,000. In 2009, white households were seven times richer than their black counterparts. That gap is now eightfold. Both in relative and absolute terms, blacks are doing worse under Mr Obama.

And then, without any intermediate steps, Mr. Luce jumps to the following conclusion:

Without Mr Obama’s efforts, African-American suffering would have been even greater. He has fought Congress to preserve food stamps and long-term unemployment insurance – both of which help blacks disproportionately.   The number of Americans without health insurance has fallen by 8m since the Affordable Care Act came into effect. . . .  By no honest reckoning can Mr Obama be blamed for the decline in black America’s fortunes.

Note first that Mr. Luce's switches back and forth between African-American "suffering" and African-American "fortunes" as measured by median income and median net worth, without alerting the reader that the two may not be the same thing.  If your chosen measures of black well-being are median income and median net worth, there can be no question but that the massive increases in food stamps and Medicaid have been the main causes of things getting worse.  Probably all or nearly all of the declines in black income and net worth can be directly attributed to the massive increases in food stamps and Medicaid under the Obama administration.

Why?  First, of course, because the provision of food stamp and Medicaid benefits is not counted in the government statistics on income and wealth.  So when the government hands out an additional $40 billion in annual food stamp spending, and an additional $50 billion of annual Medicaid spending, as it did between 2009 and 2013, that adds exactly a big goose egg to the measured incomes and net worths of the recipients.  Meanwhile, to get these handouts you must meet income and asset tests -- or, to put it another way, you must get your income and assets below certain thresholds.  Of course, the limits vary in an enormously complex patchwork among the states.  For example, here is information from the New America Foundation on asset limits relevant to food stamp eligibility.  With all kinds of loopholes and exceptions, it remains the case that in the large majority of states if you want food stamps you need to get your assets under $5000.

So can it possibly be any surprise that as food stamp recipients went from about 27 million to almost 50 million under Obama, lots of people with assets in the high four figures and low five figures were spending those assets down in order to qualify?  Let's see, I have saved $10,000 and I don't qualify for food stamps; but if I spend $5000 on a big TV, then I will qualify for an $8000 per year handout (which, however, will not count in my measured income or net worth).  And thus the food stamp explosion is a very effective way to drive the median net worth of African Americans toward zero.

 So, Mr. Luce, has African American "suffering" (your word) increased or decreased under Obama?  You say that "without Mr. Obama's efforts, African-American suffering would have been even greater."  But what has occurred is that African Americans have traded market income and net worth for increased government handouts and dependency.  Which is the path of more "suffering," and which of less?  I go with your initial take that black fortunes have "declined," even though the increase in handouts may well exceed the decrease in market incomes and net worth.  But that's because I think that being trapped in dependency on government handouts is a terrible thing for the recipients. 

Is It Possible To Make Affordable Housing In Manhattan Seem Reasonable?

In my continuing coverage of the "worst possible public policy," namely so-called "affordable housing" in Manhattan, I wrote back in June about a new project nearing completion in Harlem known as Sugar Hill Development.  Now in the Arts section of yesterday's New York Times, we find an architecture review of the exact same project by the Times's architecture critic, Michael Kimmelman.  Shall we contrast my take and his?

Here is the picture of the project that I included in my June 12 article:

My take:

Could it be more hideous?  This makes the old time "projects" that New York is famous for look positively pleasant.  If you didn't know what it was, you would probably guess it's a prison.

The Times article occupies most of the first page of the Arts section, and continues onto most of the second page.  You can guess where it's going from the headline:  "Building Hope And Nurturing Into Housing."  Here is their picture:

Definitely the same building, although in their view from the downhill side the thing looks even more likely to tip over.  Nice gas station next door!  So, Kimmelman, what do you think?

[Sugar Hill] has been conceived to serve some of the very poorest New Yorkers, who will move into anything but a run-of-the-mill building. Designed by a marquee architect, with no concessions to timid taste, the project aspires to must-see status. . . .  [I]t posits a goal for what subsidized housing might look like, how it could lift a neighborhood and mold a generation. . . .   It’s clad in shadowy gray precast, thickly grooved concrete panels spectrally embossed with abstracted roses that refer to floral decorations on historic buildings in the neighborhood. . . .  I like the building’s exterior.

Well, my betting is that something this brutal will never "lift a neighborhood and mold a generation."  And how about the part that this building has been "conceived to serve some of the very poorest New Yorkers."  Kimmelman gives no details.  Is this true?  Actually, no.  The sponsor's website lists the income restrictions for the building:

124 apartments are planned with 70% of the units set-aside for households earning very low incomes defined by the City of New York as 50% of the Area Medium Income (AMI) or below, this is less than $38,400 for a family of four. 30% of all apartments will be dedicated to those at extremely low income levels of 30% of AMI ($23,050 for a family of four) or below. 10% of the apartments will be targeted at 50-60% AMI. Community residents with no lease, doubled or tripled-up in seriously substandard conditions in the community will be accommodated as will homeless households residing in the emergency shelter system. The remaining 20% of the apartments will be extended to low income working families at 80% AMI, or less than $61,450 for a family of four.

Translated into English, only 30% of the building is going to families at or near the so-called "poverty level," and the $61,450 limit for the top 20% is actually well above the median family income in the United States according to the most recent Census data.  Then Kimmelman hits us with this ridiculous piece of deceptive information:

Broadway Housing Communities estimates that each resident in a supportive housing development like Sugar Hill costs taxpayers $12,500 a year, on average.

Did you notice that he just switched from talking about "families" to talking about "residents"?  I guess that $12,500 per "resident" would be $50,000 for a family of four.  Can somebody please explain to me how it can possibly make sense to subsidize one family of four earning more than the national median income to the tune of $50,000 per year, every year, year after year for their whole lives?  That's a gift of present value of between $1 million and $1.5 million.  But even that is a huge underestimate, because it's just talking about the on-budget cash outlay, when the whole idea of these kinds of projects is to hide the costs where they can't and won't be measured.  To get to the real cost to the taxpayers, you have to add to the cash outlay an additional amount representing the opportunity cost of the rent you forewent by renting at below-market prices.  The market rental of these apartments will be in the range of $3000 to $4000 per month, and the lucky residents will be paying at best about half that.  So the real number, as I estimated in my previous article, is about a $2 million present-value gift per family, 70+ percent of which are not "poor" as we define that term in our official data.

Well, at least they'll be "nurtured," or something like that.  Actually, maybe not.  We haven't yet considered what's on the inside of this building.  Back to Kimmelman:

The apartments seem like an afterthought: awkward, with angled walls, quirky layouts that tenants may find hard to furnish, and deep-set, weirdly placed windows of various sizes.  Sugar Hill turns out to be like an A student who crams for the big test and then forgets to bring a pencil.

But I'll still bet that nobody will ever move out.  Nobody moves out from the subsidized "affordable" housing in Manhattan.  Would you give back half of your $2 million gift before collecting it?  I wouldn't think so.

Some day, a long time from now, the residents of this building will get bought out and the place will be dynamited.  Probably, I'll be long dead.  But in the meantime can we at least stop building more of these things? 

Money And Politics, New York Edition

A big election is only a month away.  Here in New York, the Governor, Comptroller, Attorney General, and the entire state legislature are up for election.  Needless to say, nothing of what I consider important is getting any mention whatsoever.  

The big issues, without question (not in any particular order) are (1) way overspending on K-12 education, almost double the national average per pupil, for far worse results, (2) way overspending on Medicaid, again almost double the national average per beneficiary, with no measurable benefits in life expectancy or any other metric, (3) unsustainable pension promises, and (4) thoroughly incompetent housing meddling leading to artificial shortages and a huge population trapped in "poverty" despite living in housing that costs the taxpayers a multiple per year per beneficiary of what is said to be the poverty level.

We are the highest taxed jurisdiction in the country, and everybody seems to believe that it's because we provide lots of services that other places don't.  Actually not.  Instead, we spend far more money to provide the same services, but of worse quality.  You would think that that would be a gigantic issue in the upcoming election. 

I'm not meaning to be too critical of the Republican candidate for Governor, who is Rob Astorino.  He is a serious and hard-working guy, and doing his best in a tough situation.  But his message is getting completely drowned out in a campaign where the other side has an unbelievable money advantage, highly illustrative of the powers of incumbency in our state where an activist government meddles in everything.

The State Board of Elections publishes information on the fundraising and spending of the two campaigns.  The two reports for the Astorino campaign indicate that he has raised a total of under $5 million for the campaign -- and this is a rather large state.  Currently he has $1.2 million cash on hand going into the last month of the campaign.   Cuomo has raised at least $43.6 million.  Cuomo's list of major donors contains one after another of the large government employee unions and unions (like health care workers) whose jobs are government-funded:  Patrolmens Benevolent Association, Sergeants Benevolent Association, Emergency Medical Services Local 2507, Service Employees International Union, Uniformed Fire Fighters Association, Transit Workers Local 100, etc., etc., etc.  Funny, but I can't find a single union contribution (even private sector) to Astorino down to contributions of as little as $2000.

But that piece of the money advantage is only the beginning.  In a serious contrast from anything I recall from past elections, Cuomo has been completely shameless in spending vast sums of taxpayer money right in the middle of the election cycle to promote his signature programs, and thus to keep himself in the public eye.  According to Capital New York here New York State has spent no less than $161 million during Cuomo's term promoting "business and tourism," large amounts of that prominently featuring the Governor's signature programs with which he has gone to great lengths to be sure his name is associated.

Exhibit A of this vast taxpayer spending in support of Cuomo is something called Start UP NY.  The program is classic New York crony capitalism.  The idea is that if you move a business to New York you can get a ten year exemption from all state taxes.  This has been Cuomo's signature economic development initiative, and he has invested gobs of his time associating his name with it.  For example, here is a video of Cuomo speaking at Cornell University to kick off the Start UP NY initiative.  According to the Capital New York article, no less than $28 million of taxpayer money has been spent on the Start UP NY advertising campaign, recently averaging $5 million per month.  This represents almost as much as Cuomo has spent on his re-election campaign during this period, and a multiple of almost 6 times the total that Astorino has raised.  These taxpayer-funded ads flood the airways every evening, shamelessly promoting the Governor's signature project in the midst of the election contest.  So good luck with your $1.2 million, Rob.

To those who continue the campaign to "get money out of politics" (New York Times? Larry Lessig?  Harry Reid?) I ask, what is your plan to deal with the problem of incumbents causing the government to spend vast amounts of taxpayer money in support of the incumbents and of the ongoing growth of the government?  When you drive all other money out of politics, that will be all that is left, with nothing to counterbalance it.

What's the chance that Cuomo's Start UP NY initiative will have any measurable positive impact on the distressed economy of upstate New York?  I would say about zero.  The various sorts of crony-capitalist initiatives that governments have made to bring business to distressed areas have a history of total and abject failure.  Here is a roundup on the subject by Steve Malanga in the City Journal back in 2005.  From urban renewal to urban development action grants to urban development corporations and in every major city across the country, government initiatives to promote business have uniformly made the situation worse.  By contrast, when New York City's government started focusing on controlling crime and (somewhat) controlling spending and taxes, we suddenly got a massive economic revival in the formerly depressed parts of Brooklyn and Queens, Harlem and the Bronx, almost entirely with private capital.

But Start UP NY is not really about economic revival.  It's about getting lots of taxpayer-funded support for Cuomo's re-election.  Oh, and to the extent that any companies actually move into these tax-free zones, they will be totally dependent on the government program to continue their existence when their tax exemption runs out.  That will be a great source of political contributions!

The best news I can find on the money-in-politics front in New York is that at least one group of players has figured out the game.  According to an article in Chalk Beat back in January, supporters of charter schools had contributed at least $800,000 to the Cuomo re-election even by that date, far outstripping his contributions from the teachers unions.  Actually guys, that was rather strategic! 

Obamacare Review

Time to check in again on Obamacare.  We all know that this grand piece of social engineering is supposedly the cure for the "crisis of the uninsured."  The provisions have mostly fully taken effect as of the beginning of this year, most particularly the so-called "individual mandate."  That'll teach those recalcitrants who won't buy what the government wants them to buy!    So I guess pretty much everyone now is insured, right?  Well, let's see if we can find the answer to that question.

There turn out to be multiple sources giving not-completely-consistent information.  For background, according to figures from the Census Bureau here,  in 2000 at the end of the Clinton administration the rate of uninsured in the United States was 13.7% and the number of uninsured was 38.4 million; and at the end of the Bush administration in 2008 the rate of uninsured was 15.4% and the number of uninsured was 46.3 million.  The latest information from multiple sources is as follows:

• The Census Bureau has just issued a report this month (September) titled "Health Insurance Coverage in the United States: 2013."  That's right, it only goes up to the end of last year.   According to a "Highlights" section on page 2, the rate of uninsured in 2013 was 13.4% and the number of uninsured was 42.0 million.  Does that represent some progress that can be attributed to Obamacare?  Oh wait, they changed their methodology from previous surveys, and now the question asks only whether you lacked health insurance for the entire year, as opposed to the old methodology, where the question was whether you lacked health insurance for any part of the year.  Why do I have the strong sense that that change is an intentional scam to drive down the number in the "uninsured" category to make Obamacare look good?  And yet that number has still only gone down marginally, at least by the end of 2013.   And how much of the change would have happened anyway in a (slowly) improving economy?
• Gallup has been doing surveys on a quarterly basis.  As I noted in a previous post, because the Census data is so untimely and of inconsistent methodology, HHS itself has been relying on numbers from Gallup.  In July Gallup released the results of a poll covering 2Q 2014, and reported that the rate of uninsured was 13.4%, constituting just over 42 million people, representing a decline from a 17.1% rate at the end of 2013.
• Transamerica Center for Health Studies has come out in September with a report titled "One Year In: Americans Respond to the Affordable Care Act."   This report gives the percent uninsured as of July 2014 as 15%, which would be about 47.2 million people.  To be fair, their methodology showed the percent uninsured at the end of 2013 as 22%, while Gallup had 17.1% and Census had only 13.4%.  But they don't tell you enough about the methodology to reconcile the discrepancies.  They do attribute almost all of the decline in uninsured to a rise of five percentage points in "public insured," i.e. Medicaid.

Forgive me, but I am completely underwhelmed by these numbers.  Back in the Bush administration, I listened to a constant drumbeat of activists asserting that the numbers of uninsured in the United States represented a desperate crisis.  Among hundreds of examples, who can forget the Institute of Medicine report from 2009, in the run-up to the passage of Obamacare, titled "America's Uninsured Crisis: Consequences for Health and Health Care"?  That report from the supposedly neutral IOM contained the following over-the-top rhetoric:

The growing number of uninsured Americans--totaling 45.7 million as of 2007--is taking a toll on the nation's health. One in five adults under age 65 and nearly one in ten children are uninsured. Uninsured individuals experience much more risk to their health than insured individuals. In its 2009 report America's Uninsured Crisis: Consequences for Health and Health Care, the Institute of Medicine points to a chasm between the health care needs of people without health insurance and access to effective health care services. This gap results in needless illness, suffering, and even death.

"Needless illness, suffering, and even death."  We must pass a law mandating that everyone is required to buy health insurance!!!  Well, we passed the law, and if you believe the Transamerica numbers, the number without health insurance today is about 47.2 million, which is up from the 45.7 million cited in the IOM study for 2007.   For this the government took over one-sixth of the economy?  For this we concede to the government the right to tell us what treatments we can and can't have?  For this we accept new layers of complexity in our taxes.  For this, we give the government access to all of our health records?

Oh, and then there's the cost.   For that we turn to Lahnee Chen of Bloomberg News on September 26, summarizing a report from Bloomberg Government on September 24.

The study found that federal spending on Obamacare and related legislation has far exceeded anyone’s estimates (or imaginations). To date, the report concludes that the health-care law has cost taxpayers $73 billion. And that number doesn’t include projected spending on the law’s Medicaid expansion, which if included would bring costs to more than $90 billion. The study’s estimate is even higher than the Congressional Budget Office’s “high” cost projection for the law -- $71.2 billion by the end of 2014.

But wait, that's only spending to date.  How does it look going forward?

This is only the tip of the iceberg when it comes to spending on the coverage provisions of the Affordable Care Act. The Bloomberg study reveals that only about 20 percent of the $73.5 billion that has been spent on the health-care law thus far can be attributed to the law’s premium subsidies. CBO has estimated that the subsidies are expected to cost more than $650 billion through 2019, with the Medicaid expansion accounting for a minimum of $350 billion in additional spending.

In other words, over $100 billion per year in additional spending, and all to achieve maybe a handful of percentage points of reduction in the rate of uninsured.  That would be about $10,000 per year per person newly insured, or $40,000 for each family of four newly insured.  Nobody has a Cadillac health plan that expensive.  And mind you, it's not that these people weren't previously getting treated when they got sick.

Well, Obamacare has achieved one thing.  And that is that somehow the "crisis of the uninsured" seems to have gone away.  In 2009 45.7 million uninsured was somehow a desperate crisis, but in 2014 47.2 million uninsured somehow is no longer a crisis at all.  At least I can't find anyone saying it is.  Certainly not IOM.  The only difference I can see is that meanwhile the bureaucracy got an extra hundred billion or so of annual taxpayer money to play with.

Poverty: It's Worse Than You Think

No, I'm not talking about actual poverty in that title.  I'm talking about the poverty scam, by which the government creates fake numbers to deceive the public into believing that a large percentage of the population lives in a state of physical suffering and deprivation despite a trillion dollars a year of government anti-poverty spending.

Last week, along with my excellent summer research assistant, I interviewed a Census Bureau official to get some more detail on the methodology by which the government's "poverty" numbers are compiled.  The official who agreed to be interviewed was the Chief of the Poverty Statistics Branch.    This is the person in charge of preparing the "poverty" portion of the government's reports on income and poverty, for example this one covering 2013.  I won't name names here, but the name can be found easily with a little Googling.

Throughout the government reports -- that 2013 report linked above being a good example -- they refer to the thing they are measuring as "economic well-being."  But the more you learn about what they do, the more you realize that, at least in the bottom rungs, these reports have little or nothing to do with economic well-being.  They have only to do with one concept, "cash income," a completely artificial construct of their creation that has been designed so that government spending can never cause the poverty rate to go down.  The whole game is systematically to exclude so many things that the poverty rate will remain high no matter what resources the people may have available to support themselves.

Thus, we verified that in calculating "poverty," they systematically exclude all government in-kind benefits, from housing to food stamps to Medicaid to energy assistance.  And they systematically exclude negative tax payments, like the EITC.  And they systematically exclude capital gains.  And they systematically exclude scholarships.  And loan proceeds.  And support from family members.  But those things were already obvious.  Not so obvious were these things:

• They have no idea whether they are capturing much or any of the vast amounts of off-the-books and illegal income in this country.  They take whatever answer a person gives as to his or her household income, without any sort of follow up or double check.  Various estimates put the size of the U.S. underground economy in the range of $2 trillion,  or about 12% of the economy.   Here is such an estimate from a University of Wisconsin study in 2011.  If even a small fraction of that amount goes to the population reporting itself "in poverty," it would hugely swing the numbers.  I can't imagine that any but a very small fraction of the underground economy is counted by the Census in its measure of "poverty."
• They make no effort of any kind to take existing assets into account.  In the surveys that determine "poverty" status, they don't even so much as ask about savings or home equity or business ownership.

We were referred to a recent report, issued January 2014, titled "Dynamics of Economic Well-Being:  Poverty, 2009-2011."  This report contains some information that emphasizes once again that the thing they are calling "poverty" has little or nothing to do with your conception of "poverty."

The "Dynamics" report comes out of a survey called the Survey of Income and Program Participation, which is a different survey from the American Community Survey and Current Population Survey that are the usual basis for the government claims as to "poverty."  Unlike the ACS and CPS that just take people's answers to questions on a one-time basis, the SIPP seeks to track a sample of some 25,000 people over a multi-year period.  Here are their first two "highlight" conclusions:

• Over the 36-month period from January 2009 to December 2011, 31.6 percent of the U.S. population was in poverty for at least 2 months, an increase from 27.1 percent over the period of 2005 to 2007.
• The percentage of people in poverty all 36 months from 2009 to 2011 was 3.5 percent, an increase from 3.0 percent over the period of 2005 to 2007.

Read that and you realize that what they're talking about has to be something completely different from what you think about as poverty.  Sure some people live paycheck to paycheck and get laid off from their job and are in a real spot.  But the large majority with brief periods of no paycheck have resources to fall back on, in many cases substantial resources.  31.6% of the population is a huge number that can't possibly have any real relationship to actual hardship.  Are they really counting actors between movies as "in poverty" for two months?  College kids with non-paying summer jobs?  Does the interval between your last paycheck from work and your first social security check count as "poverty" even if you have a million dollars in the bank?  These numbers cannot make sense unless the answers to those questions, and a lot more similar ones, are yes.

And along the same lines, please check out William Benson Huber's op-ed in today's New York Post, finally casting some light on the food insecurity scam.   Huber points to the endless "public service" ads by an organization called Feeding America claiming that one in five American children don't have enough to eat.  As previously pointed out many times on this blog (for example, here), such numbers come from the thoroughly fraudulent Department of Agriculture "food insecurity" surveys, that have nothing to do with hunger or even food deprivation.  As Huber points out, the actual number of American families that have any member miss even one meal during a year is only one out of one thousand.  So what is Feeding America up to with its endless ads?

Well, the motive here isn’t remotely altruistic. Forbes magazine lists Feeding America as the fourth-largest nonprofit in America.  And, as Paul Roderick Gregory notes in a Forbes column, the group’s “CEO earns over a half million dollars.  Its corporate sponsors represent America’s largest agribusiness companies, food processors and retailers (Conagra, Food Lion, General Mills, Kelloggs, Kroger, Pepsico and Walmart).”  If you make or sell food, you want to inculcate brand loyalty at the youngest age possible. And to get the public thinking we’re still not spending enough on food — never mind that 35 percent of poor kids are obese.

Yes, it's far, far worse than you think.

New York, The Home Of Crazy Housing Policy

In the private sector, when you fail you go out of business; but in the public sector failure is the springboard to argue that the taxpayers aren't giving you enough money and to try to get more.  New York housing policy provides some extreme examples of this phenomenon.  We're now about four generations into trying to cure a housing "crisis" through government actions that include rent regulations, extensive public housing, subsidies through a dizzying variety of different programs, onerous housing codes and inspection systems, and on and on.  And somehow the remaining "market" housing turns out to be the most expensive in the country.  Nobody seems able to look outward at places like Houston or Phoenix or Las Vegas with little to none of such programs, lots of construction, and much lower free market prices, as well as far better housing options for the low-income population.

Our new City Comptroller Scott Stringer looks to be trying to make a name for himself in this double-down-on-failure game.  Back in April he came out with a big report titled The Growing Gap: New York City's Housing Affordability Challenge.  It seems that that one didn't get the play he was hoping for, so he has just come out with another one, largely rehashing the first, titled  How New York Lives: An Analysis Of The City's Housing Maintenance Conditions.   Cutting to the heart of these reports, the big news is that the public and rent-regulated housing in New York City are in far worse condition than the free-market rentals and the owner-occupied housing.  Now there's a shocker!  And not only that, it's getting worse.  Consider these finding as to the low income public housing units under the jurisdiction of the New York City Housing Authority (home to about 500,000 people, or about one-seventeenth of the population):

• In 2002, 60 percent of public housing apartments had at least one deficiency.  By 2011, 79
percent of public housing apartments had at least one deficiency.

• Water leaks, a key element of a recent tenant-filed federal lawsuit, also rose substantially.  In 2002, water leaks were observed in approximately one-fifth of NYCHA apartments. By 2011 that percentage was nearly one-third.

• The number of units with broken or missing windows increased 945 percent from 2005 to 2011.

• From 2005 to 2011, rodent observations increased 12 percentage points, with over 36 percent of NYCHA apartments experiencing this condition in 2011.

• From 2008 to 2011, heating equipment breakdowns increased by 72.8 percent and units with broken plaster and peeling paint increased by 111 percent.

Well, there's nothing like socialized housing to improve the lives of the people!  The September report lacks an explicit plea for the big bucks, but consider this from the April report:

In recent City Council testimony delivered by Chairwoman Shola Olatoye it was noted that
NYCHA needs approximately $18 billion dollars to bring all of their developments to a state of good repair.

Eighteen billion?  No problem, we can get that by, say, shutting down the school system for an entire year.  Since I don't foresee that happening, what I do foresee is continued decline for the properties of the NYCHA.  The chance that government functionaries will ever adequately maintain the properties is about zero, and it really doesn't matter how much money they have to do the job.  If you can do the job adequately on your current budget, what's the argument for getting a bigger budget?  And without a bigger budget, how are you going to be able to hire yourself five assistants and a chauffeur?  The whole idea is to fail, and without a doubt they will fail and continue to fail.

Of course there is a way to get the current public housing stock maintained at no cost to the taxpayers.  That is to give  the projects to the current residents.  As owners, I predict that the residents will magically maintain their properties without cost to the taxpayers, just like the other housing owners do, in order to enhance their property values and make money on sale.  Oh, and by the way, we will have created several hundred billion dollars of housing value out of thin air -- value that today is suppressed by the lack of private ownership of the properties.  And we will also have removed hundreds of thousands of people from poverty.  More on that in future posts.

But anyway, in the category of housing policy craziness, we have an even crazier one out this week.   Something called the Fiscal Policy Institute has proposed a new property tax to apply only to residential properties of market value higher than $5 million and only when the property is not the "primary residence" of the owner.  FPI estimates that there are 1556 such units in the City.  Its proposed tax would be on a sliding scale, where property value between $5 and 6 million would get 0.5% of full fair market value per year additional tax, up to 4% additional tax on value above $25 million for the unit.  FPI, which assumes that all of these people are too dumb to take evasive action, calculates that the tax will raise $665 million per year, of which 83%, or $551 million will be paid by just 445 people at the rate of $1.2 million average per year each.

This idea arises out of the noticeable building boom going on in Manhattan of super high end condos, many selling for $5 million and up, of which, according to FPI, approximately half are purchased by non-City residents as part-time pieds-a-terre.   OK, but do we really believe that this handful of people is going to fork over an average of $1 million or so each per year for the privilege of owning this part-time pad?  The reason that New York has been attracting this market in the first place is precisely that its property taxes are moderate compared to the international competition.  At this level of gouging, why won't those Russian oligarchs go to Rio or Hong Kong?  And nobody seems to counting for anything the salaries of the construction workers and salespeople and the like that will go away when the building boom gets killed off.  It's not clear to me at all that this tax will even be a net positive in revenue when all is taken into account.

But needless to say, the City Council and State Legislature are panting with excitement with this opportunity to "get" these non-voting rich people.  Already, a resolution has been presented in the City Council, and a bill in the Legislature.  And who, you may ask, are the legislators presenting these items?  Why, none other than my own representatives, City Councilman Corey Johnson and State Senator Brad Hoylman.   Of course, these are the guys from the wealthiest districts in town, Greenwich Village and Chelsea.  Proving once again my proposition that the people who are most consumed with jealousy for the top one percent are in fact percents 97 and 98.