Basic Economics of solving homeless crisis

Vincent J. Curtis

3 Dec 20

RE: The First Unitarian Church of Hamilton sent a letter to the editor demanding government spend money and provide give-aways to solve the homelessness problem in Hamilton.  I'm not sure if this should be put down to soft-headed liberalism or progressivism. 

The First Unitarian Church is to be commended for its work with the homeless, but it has taught the elders nothing about economics.

Housing crises are always and everywhere caused by government policy, and demanding more government action to fix homelessness is like taking the ‘hair of the dog’ in hopes of curing a hangover. 

Let’s start with something really basic.  Government doesn’t build new housing, private contractors do.  There is no “speeding production” of housing.  You just don’t call new construction capacity into existence at the snap of the fingers.  You have to grow the pool of skilled labour, and that skilled labour has to see a prospect of a career in the business or else that worker will choose another career path.

There is another problem with attempting to force down housing prices through a massive building program, and that is the effect on mortgagees who bought their houses when prices were high.  A worker who bought a home for $400,000 doesn’t want to see its value cut to $250,000, particularly not on account of his government - supported by his property taxes - taking pity on people who are homeless because they don’t work.

Solving a housing crisis isn’t as simple as throwing other people’s money at it and government giving things away.

Socialism – what a tangled web it weaves!

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