In Venezuela They've Been Reading Manhattan Contrarian!

I have repeatedly declared subsidized public housing to be the "worst possible public policy."  (Well, actually it's subsidized public housing in Manhattan that is the worst possible public policy; elsewhere subsidized public housing is just almost as bad as the worst possible public policy.)  But the things that make subsidized public housing so terrible as public policy are the very things that make it so attractive to cynical left-wing politicians.  Subsidized public housing creates a permanent and immobile dependent class trapped in poverty that perceives itself as owing its somewhat desirable homes to the incumbent politicians, and therefore can be counted on as a secure bloc of bought votes.  For the cynical politician, what's not to like?

Down in Venezuela, Hugo Chavez was everybody's favorite caricature of the socialism-inspired evil dictator for a fourteen-year reign spanning from 1999-2013.  In that period he did everything he could to drive his country into the ground -- all in the name of socialism and justice, of course. And naturally, blow-out construction of subsidized public housing was at the top of Chavez's political program.  After nibbling at the subject in the early years of his tenure, in 2010 he embarked on what he called his "great housing mission," setting out to build some 350,000 units of public housing in 2011 and 2012, and then 300,000 per year thereafter.  An article here in Britain's left-wing Guardian from 2013 of course gives a favorable review to Chavez's efforts and recommends the same for Britain.  To give an idea of the massiveness of Chavez's public housing efforts, the Guardian reported that construction went from 5% to 16.8% of the national economy in this period. 

And boy did it all seem to be going great -- at least if you believed the totally phony numbers for the economy put out by Venezuela at the time.  Historical economic data compiled by Focus Economics here shows that Venezuela reported economic growth of almost 25% in 2011 over 2010, and another 20% in 2012 over 2011.  Of course, in reality the economy was undoubtedly shrinking and the numbers were completely cooked.  How much of the supposed "growth" came from putting a totally fake value on the currency, and how much came from counting blowout wasteful government spending at 100 cents on the dollar in GDP, and how much came from the luck of temporarily high oil prices, and how much came from other phony manipulations, is anybody's guess.  Anyway, in 2013 Venezuela reported that growth had leveled off to about zero, and then in 2014 and 2015 they just stopped reporting economic statistics altogether.  By that time, from things like multi-hundred-percent inflation and completely empty store shelves, not to mention the collapse of oil prices in late 2015, the economic disaster was becoming too obvious to continue to put out the phony statistics with anything close to a straight face.

Those who follow world events will know that last month the opposition in Venezuela finally scored massive victories in legislative elections, and took control of both houses of the National Assembly.  They have stated an explicit agenda of undoing much or all of the massive state expansion under Chavez and his successor Maduro.  But the public housing blowout is something that is particularly tricky to undo.  After all, the whole idea here was to create a massive bloc of permanently bought votes that could always be counted on to support the leaders and political party that provided the largesse.  Telesur here puts the number of public housing units built in Venezuela in just 2011 to 2014 at 642,000.  Taking all public housing residents, we're talking about a voting bloc of probably a couple of million in a population of around 30 million.  Propose to take those units away from their occupants, and no politician could survive.

And that's where the Manhattan Contrarian proposal comes into play.  Back in November 2014 I laid out how a new crowd of elected leaders could get out from under the disaster of public housing without forfeiting all political viability.  The simple answer is -- give away the public housing to the residents!  No charge.

Now, I am not saying by any means that this policy is perfect.  It definitely gives an undeserved windfall to those who happened to win the lotteries to get into the public housing.  It treats the taxpayers of the country shamefully.  But the perfect can often be the enemy of the good.  Exiting from the burden of public housing will provide tremendous benefits both to the country as a whole and also to the residents.  To be perfectly cynical, a way needs to be found to make a topping bid for the residents' support, without which any exit strategy will be politically blocked.  Giving the housing to the residents provides that missing piece.  And, at no additional cost to the taxpayers, for whom the public housing is just an ongoing burden so long as it is in public ownership or control.

And thus we come to the report in yesterday's New York Times of the latest proposal from the new leaders of Venezuela's National Assembly.  The headline is, "Old Adversaries of Chavez Take a Page From His Playbook."    Yes, they are proposing to give away the housing to the occupants:

Twenty thousand people live in this concrete bastion built by President Hugo Chávez. He gave them the keys, and they gave him their votes.  There was one thing Mr. Chávez promised but never handed over en masse, though: the property titles that would allow his supporters to sell their homes and cash out.  But now that Mr. Chávez’s old adversaries have taken over Venezuela’s Parliament, they are adopting the tactic and doing it one better. They want to give away the deeds to hundreds of thousands of homes that Mr. Chávez and his movement built — and win the loyalties of the nation’s poor for years to come.

They must have been reading Manhattan Contrarian!  The genius of the proposal is that it has Maduro and his supporters completely flummoxed.  If it's a good idea for the government to give to some people a lifetime right to occupy a unit of public housing, why isn't it an even better idea to give them a deed so they can sell the unit, or mortgage it, or rent it, or otherwise turn it into cash income?  The true-blue socialist approach of no real ownership is revealed as just a device to keep the poor poor and dependent.  Here is how Maduro has responded, according to the Times:

In a fiery State of the Union address before legislators this month, Mr. Maduro vowed to do what he could to block his opponents’ work.  “You will have to topple me first to approve a privatization law,” he said to the applause of leftists.

The Times even includes quotes from some people who were awarded the public housing units only to then realize that the socialist dream isn't what it's cracked up to be.  For example:

Coromoto Carmona, 40 and unemployed, looked out a window that was laden with bars. She told the story of how she got her home here and how it has become a place where she feels trapped. . . .  In 2004, she received a thrilling call from the government: She would attend a meeting at Mr. Chávez’s presidential mansion, La Casona, where he would personally award her a new home.  She moved into her two-bedroom home with nine members of her family. But problems soon emerged. . . .  Mr. Chávez’s government had promised her and others the titles to their homes. But Ms. Carmona received only a laminated piece of paper saying she was allowed to live there. If she leaves, it is unclear if she will be able to find anywhere else to live.  “It’s like jail here,” she said.

Ah, the joys of socialism.  This will be playing out for a while.  But meanwhile, Maduro and his henchmen have no real answer to the proposal.  The likelihood is that the longer the discussion goes on, the more support they will lose from what had been a group of core supporters.

Now, meanwhile, back here in Manhattan, isn't there any way we can get this proposal onto the table?