I am 100% on board with treating housing as a human right, but this proposal misunderstands the point of interest rates.
Interest rates are a best guess by financial institutions about your likelihood to repay and their expectations for inflation over the course of the loan. Interests rates are higher for poorer people because the risk of them not paying it back is higher. Google the “sub prime lending crisis” which is exactly what crashed the global economy in 2009.
One other commenter notes that an alternative would be to build state owned housing and rent it at reasonable rates. Unless it’s mixed income housing, that model has failed everywhere it had been tried-- from Cabrini Green in Chicago to the commie blocks of eastern Europe. Why? because it creates specific areas in a city where a business is essentially guaranteed to have less revenue than anywhere else. This is why urban centers have food desserts and why people who live in the massive public housing blocks in Coney Island have to commute 90 minutes to Manhattan – why would you open your business in a poor neighborhood rather than the financial district?
Even with the mixed-income model popular across Scandinavia and the Netherlands, it’s not like they solved the housing crisis as this does nothing from stopping the investment properties and the airbnb-ifcation of city Centers.
Here’s a congressional report on how increases to student grants (Pell grants) are highly correlated with increases in tuition.
Again, I think everyone should be able to afford a home, but this policy is as ignorant of history as it is ineffective at addressing the root cause of the housing crisis.
I understand your point, however it’s flawed from the start in that government interest rates should not be used for a means of risk assessment, in my opinion. Your argument makes sense for private institutions. Bank loads should follow your logic. The government, however, should use interest rates to funnel new money where it’s needed most, and not towards private investors.
I agree with the platitude, but subsidizing interest isn’t giving money to poor people-- it’s cutting a check to a bank, using tax money that rich people avoid paying. If you want to increase the supply of cheap houses, you have to build cheap houses. If you want to lower the price of housing, artificially injecting a bunch of money into a market is going to raise demand and do nothing for the supply. Nevermind that in the US in particular, the problems exacerbated by a massive demographic shift towards dense urban centers that were not bombed out and rebuilt in the mid 20th century and therefore do not have housing stock appropriate for the lifestyles of today.
You also ignored the comment that subsidized interest is already an existing thing in the US and that the last time they tried giving houses to poor people that they could not afford to maintain, it crashed the global economy and was the single greatest wealth transfer towards hedge funds in history. NYC’s newest policy (after moving away from the structural failure of consolidated public housing) is that all new construction must have a certain number of low income, middle income, and high income units. That’s an actual supply side solution and the ratios and income thresholds are determined by the already existing demographics of the neighborhood as a way to fight both gentrification and white flight.
I’d be happy to have an actual policy discussion rooted in facts, but you can’t wave your hand over a stack of tax revenue and solve structural problems about housing stock, centuries of segregation, and the horrors of capitalism simply by wishing it away. There’s a lot of actual work to be done, and some of that might mean replacing historical housing districts with high density, mixed income developments. But that won’t ever happen, because the generations before us relied on home ownership as an investment vehicle for retirement and have spent decades campaigning against stuff like public transit, low income housing, and the existence of homeless people anywhere near them.
Feel free to diagree, but I’d rather give my money to a homeless person directly than subsidize the actuarial risk of a billion dollar investment bank via the coervice use of state violence if I decided not to pay my taxes.
Like, if you can’t come up with 3% of the value of a house (the down payment standard for subsidized homeowners in the US) how are you supposed to repair a roof or replace a major appliance? More government grants? From what revenue?
if the proposal is to disposses all the property owned by billionaires and use that to fund a reimagining of our cities such that they’re built for people and not cars, I’m game. If your idea is to raise taxes on working people to subsidize other working people while the banks, the construction firms, and every material vendor takes a profit, then fuck that.
Most of Sweden’s housing is owned by local governments (kommun in Swedish), but it’s also a 5 year wait list to get anything, impossible for immigrants/students to find anything because they don’t qualify for the queue immediately, and tied to a specific place. So, if you get a better job somewhere else, you’re still fucked because you would have needed to get on their queue 5 years ago or pay the inflated “market” rent because the supply of non-state-owned housing is so low. Denmark and the Netherlands have the same problem, but perhaps that’s more understandable considering their absolute size and population density.
As a side point, are you aware that the government has relied on deficit spending for more than a decade and that every new dollar spent is a dollar + interest that must be paid back to an investment fund?
For example, every time you ride the subway in NYC, you’re paying something like $.30 to Chase bank to service debt the MTA used to renovate the system in the 70s.
We tried that too. That was the USSR. It famously didn’t work out so well either, despite the superior working hours, vacation time, and education level when compared to the west. Even with well intentioned people acting on the best of intentions, there tends to be unpredictable side effects.
How Amsterdam accidentally created a violence and crime ridden ghetto by building consolidated public housing:
Granted, that’s not always the case. The “Kruschevkas” (commie blocks) from the middle period of the USSR are still in use across the former USSR and seem to be working well enough, especially since they were intended to be demolished in the 80s. But there wasn’t really income disparity like we see the west, so it’s hard to compare directly. We do know that over the long term, people got demotivated by shortages of luxury goods, tvs, chocolate, etc and this lead to a vicious cycle of shortages, being corrupt to circumvent the shortages, and demotivation because even if you worked really hard and saved your money, there wasn’t really anything to buy.
By the time they opened the borders, it was already doomed because, unfortunately, the average society citizen liked chocolate more than they liked the ideal of not relying on slavery and child labor to make exotic candy.
Agreed, instead of paying for some of it, enforce a strict 3% interest rate (with the remaining amount being paid for by the gov), this prevents the base cost of the home being raised by the amount of the subsidy
can you explain how that last point follows from the others? First time home buyers with 3% available for a down payment already get subsidized loans from Fannie Mae, which are then packaged into investment products and sold on the open market. When this went bad in 2009, it crashed the global economy. Are you suggesting that we do more risk reduction for multi billion dollar banks? Why not just cap interest at some fixed % above inflation like civilized countries do instead subsidizing predatory lending practices and guaranteeing said loans with tax money mostly raised from working people?
They should give lower interest rates to those with less means instead of the other way around.
Let me preface this with:
I am 100% on board with treating housing as a human right, but this proposal misunderstands the point of interest rates.
Interest rates are a best guess by financial institutions about your likelihood to repay and their expectations for inflation over the course of the loan. Interests rates are higher for poorer people because the risk of them not paying it back is higher. Google the “sub prime lending crisis” which is exactly what crashed the global economy in 2009.
One other commenter notes that an alternative would be to build state owned housing and rent it at reasonable rates. Unless it’s mixed income housing, that model has failed everywhere it had been tried-- from Cabrini Green in Chicago to the commie blocks of eastern Europe. Why? because it creates specific areas in a city where a business is essentially guaranteed to have less revenue than anywhere else. This is why urban centers have food desserts and why people who live in the massive public housing blocks in Coney Island have to commute 90 minutes to Manhattan – why would you open your business in a poor neighborhood rather than the financial district?
Even with the mixed-income model popular across Scandinavia and the Netherlands, it’s not like they solved the housing crisis as this does nothing from stopping the investment properties and the airbnb-ifcation of city Centers.
Here’s a congressional report on how increases to student grants (Pell grants) are highly correlated with increases in tuition.
https://crsreports.congress.gov/product/pdf/R/R43692/4
Again, I think everyone should be able to afford a home, but this policy is as ignorant of history as it is ineffective at addressing the root cause of the housing crisis.
I understand your point, however it’s flawed from the start in that government interest rates should not be used for a means of risk assessment, in my opinion. Your argument makes sense for private institutions. Bank loads should follow your logic. The government, however, should use interest rates to funnel new money where it’s needed most, and not towards private investors.
I agree with the platitude, but subsidizing interest isn’t giving money to poor people-- it’s cutting a check to a bank, using tax money that rich people avoid paying. If you want to increase the supply of cheap houses, you have to build cheap houses. If you want to lower the price of housing, artificially injecting a bunch of money into a market is going to raise demand and do nothing for the supply. Nevermind that in the US in particular, the problems exacerbated by a massive demographic shift towards dense urban centers that were not bombed out and rebuilt in the mid 20th century and therefore do not have housing stock appropriate for the lifestyles of today.
You also ignored the comment that subsidized interest is already an existing thing in the US and that the last time they tried giving houses to poor people that they could not afford to maintain, it crashed the global economy and was the single greatest wealth transfer towards hedge funds in history. NYC’s newest policy (after moving away from the structural failure of consolidated public housing) is that all new construction must have a certain number of low income, middle income, and high income units. That’s an actual supply side solution and the ratios and income thresholds are determined by the already existing demographics of the neighborhood as a way to fight both gentrification and white flight.
I’d be happy to have an actual policy discussion rooted in facts, but you can’t wave your hand over a stack of tax revenue and solve structural problems about housing stock, centuries of segregation, and the horrors of capitalism simply by wishing it away. There’s a lot of actual work to be done, and some of that might mean replacing historical housing districts with high density, mixed income developments. But that won’t ever happen, because the generations before us relied on home ownership as an investment vehicle for retirement and have spent decades campaigning against stuff like public transit, low income housing, and the existence of homeless people anywhere near them.
Feel free to diagree, but I’d rather give my money to a homeless person directly than subsidize the actuarial risk of a billion dollar investment bank via the coervice use of state violence if I decided not to pay my taxes.
Like, if you can’t come up with 3% of the value of a house (the down payment standard for subsidized homeowners in the US) how are you supposed to repair a roof or replace a major appliance? More government grants? From what revenue?
if the proposal is to disposses all the property owned by billionaires and use that to fund a reimagining of our cities such that they’re built for people and not cars, I’m game. If your idea is to raise taxes on working people to subsidize other working people while the banks, the construction firms, and every material vendor takes a profit, then fuck that.
Most of Sweden’s housing is owned by local governments (kommun in Swedish), but it’s also a 5 year wait list to get anything, impossible for immigrants/students to find anything because they don’t qualify for the queue immediately, and tied to a specific place. So, if you get a better job somewhere else, you’re still fucked because you would have needed to get on their queue 5 years ago or pay the inflated “market” rent because the supply of non-state-owned housing is so low. Denmark and the Netherlands have the same problem, but perhaps that’s more understandable considering their absolute size and population density.
As a side point, are you aware that the government has relied on deficit spending for more than a decade and that every new dollar spent is a dollar + interest that must be paid back to an investment fund?
For example, every time you ride the subway in NYC, you’re paying something like $.30 to Chase bank to service debt the MTA used to renovate the system in the 70s.
I guess my issue is imagining private banks being bypassed, but it seems you’re saying that isn’t a thing in the real world.
We tried that too. That was the USSR. It famously didn’t work out so well either, despite the superior working hours, vacation time, and education level when compared to the west. Even with well intentioned people acting on the best of intentions, there tends to be unpredictable side effects.
How Amsterdam accidentally created a violence and crime ridden ghetto by building consolidated public housing:
https://youtu.be/sJsu7Tv-fRY?si=1xAsX2Ipvu6L6ybN
Same idea, but Chicago:
https://youtu.be/_CogQmmBL9k?si=pSuz9dvf6G4vC8Qk
Yugoslavia:
https://en.m.wikipedia.org/wiki/Western_City_Gate
Granted, that’s not always the case. The “Kruschevkas” (commie blocks) from the middle period of the USSR are still in use across the former USSR and seem to be working well enough, especially since they were intended to be demolished in the 80s. But there wasn’t really income disparity like we see the west, so it’s hard to compare directly. We do know that over the long term, people got demotivated by shortages of luxury goods, tvs, chocolate, etc and this lead to a vicious cycle of shortages, being corrupt to circumvent the shortages, and demotivation because even if you worked really hard and saved your money, there wasn’t really anything to buy.
By the time they opened the borders, it was already doomed because, unfortunately, the average society citizen liked chocolate more than they liked the ideal of not relying on slavery and child labor to make exotic candy.
Agreed, instead of paying for some of it, enforce a strict 3% interest rate (with the remaining amount being paid for by the gov), this prevents the base cost of the home being raised by the amount of the subsidy
can you explain how that last point follows from the others? First time home buyers with 3% available for a down payment already get subsidized loans from Fannie Mae, which are then packaged into investment products and sold on the open market. When this went bad in 2009, it crashed the global economy. Are you suggesting that we do more risk reduction for multi billion dollar banks? Why not just cap interest at some fixed % above inflation like civilized countries do instead subsidizing predatory lending practices and guaranteeing said loans with tax money mostly raised from working people?