Tent city 311.
(photo credit: Ben Hartman)
Having grown up in the US during the Vietnam war, I’m quite familiar with
protesting the government. And we all know how that ended. America
lost. But during that time, I also learned some marxist code words that sound
nice for the media, but have much darker undertones. Now, in Israel there are
protests against cottage cheese and housing prices. Sometimes it’s a good idea
to learn from history so as not to repeat the same mistakes.
justice” is one such term. It is just a blatant call for communism. Nothing
social about it. Nothing ‘about justice’ either. It’s only a call to appropriate
private property and wealth redistribution in line with the marxist manifesto of
soap opera philosophy and propaganda.
“Affordable housing” is another
nice-sounding marxist term. It has nothing to do with “affordable” or “housing,”
and doesn’t even pretend to. It is liberal progressive (socialist/marxist)
extremist speak for the appropriation of private property through legislation,
to make stealing legal. It also covers private property owners subsidizing the
renters. It’s just an element of the communist-marxist ideology being put into
practice. There is nothing capitalist about it. Rent control in the US is an
abject failure, to put it politely. A property owner who makes his or her
apartment available for rent should be viewed as a provider of housing, not
someone whose assets are to be appropriated by the socialist regime running the
place. Rent control and its variants only serves the political class, and always
has. In reality, the system was never designed to provide housing for the people
who really need it. It was never designed to create additional housing units. It
suppresses the creation of new housing units, discouraging repairs and
maintenance of existing units, destroying neighborhoods and even cities. It only
exists to provide subsidized housing for the voting base, political cronies and
hacks. So why do politicians do it? The answer is in political arithmetic. If
politicians screw a property owner, they know they will lose one vote, but gain
100 or more from the tenants. The soapopera philosophy of the liberal extremists
and socialists who endeavor to provide rent subsidies to people who really need
them only backfired. The wrong people, sometimes wealthy people, are frequently
found living in these apartments. Removing them is political suicide, so that
won’t happen. Furthermore, it does nothing to address the underlying problem,
which is a shortage of housing units.
BEFORE APPLYING a solution, a
problem has to be properly identified. The symptom here is high housing
costs.The underlying problem is a shortage of housing units. If you don’t solve
the underlying problem, the symptom can never disappear. The source of the
problem is government bureaucracy and corruption. Housing starts in Israel are
down due to convoluted land laws, bureaucratic nonsense, bureaucratic bickering,
corruption and political correctness. Add to that the bureaucratic
obstacles, unions, all the fees and permits – legal and otherwise – that a
builder needs to pay and building becomes much more expensive than it needs to
be. Getting rid of these unnecessary expenditures will make housing more
affordable. I know the liberal progressive (socialists) will scream fits, but
98% of it is hogwash. And frequently most of the kvetchers are those who benefit
from the bureaucratic nonsense and corruption.
Politicians are only
interested in being portrayed positively by the liberal media and getting
re-elected. But eliminating these extra costs probably won’t do anything
to get them re-elected. Note that allowing housing to be built for the citizens
they purport to represent has no place on this agenda. The current
housing protests are only begging for a solution to the symptom, which is high
rental and property prices. They’re not really demanding that the underlying
problem be resolved. And they are demanding the solution from the problem’s
creators. Why they do that I cannot comprehend.
How can one expect
the creator of the problem to fix it, especially when they’ll never even admit
that they created the problem in the first place?
Rearranging the existing
housing unit inventory doesn’t create any new housing to solve the
problem. Rearranging tax schemes doesn’t create any new housing either.
That only rewards the politically connected for exhibiting the appropriate
socialist behavior, or penalizes those who don’t. Believing that
politicians can snap their fingers and solve a problem they created in the first
place is a socialist fantasy.
Property owners don’t set rental or sale
prices. The marketplace does that. For example, if there are 20,000 units
available and 10,000 people seeking them, they will be priced at one level.
Alternatively, if there are 20,000 people seeking 10,000 units, the price will
be significantly higher. A property owner can only ask the market price,
whatever that may be. The economic term for this is “supply and demand.” If you
ever sat or slept through an economics class, you’ve likely heard this
THE CURRENT situation is that demand exceeds supply. One
doesn’t really need a bloated government ministry to figure that out.
government simply can’t legislate supply and demand, although no doubt they’ve
it has tried. It just doesn’t work. Ask the soviets what happened to the USSR
after many years of planned economies. The system can only
In the longer run, without government interference, the
marketplace will build enough housing to satisfy demand. In the short run, there
can (and likely will) be periods of shortages and excess. But the marketplace
is self correcting. Governmental meddling usually makes the problem worse, not
better. History has taught us that. Legislators worldwide are perpetually
obsessed with cooking up schemes to repeal the economic cycles. No government or
regulatory bureaucracy has ever been able to do that. Yet we seem destined to
repeat the same stupidity.
The only solution is to build more housing.
The best, quickest and most efficient way for that to happen is for the
government to just get the hell out of the way.
The writer is a recent
immigrant from New Jersey living in Karmiel. He has been practicing accounting
for over 30 years and has dealt extensively in the real-estate sector.