Guest Post: Housing Subsidies - Capitalism’s Smoke And Mirrors

Tyler Durden's picture

Submitted by Ben Tanosborn

Housing Subsidies - Capitalism’s Smoke and Mirrors

I have always looked at government subsidies with suspicion… trying to identify whether they are designed to assist (those in need) or to render support (for a cause). And looking at housing subsidies has been no different.

Housing subsidies to provide assistance with shelter have existed for centuries now, and continue to exist, particularly in developing nations with a high level of poverty, a low level of sophistication in the mortgage and banking systems, and an inefficient or poor land titling system.

There has been economic justification for providing such subsidies based on both the public health argument: due to problems caused by the concentration of population in major urban areas; and the sociopolitical argument: redistribution of wealth to those considered economically disadvantaged to make up for imperfections in the market, and, oftentimes, as a preventive measure of social unrest.

Many, if not most, people would agree with the general use of subsidies in a vertical equity fashion, or the efficient redistribution of wealth for a common social purpose: social justice to provide shelter for those who need it. It is subsidies in housing designed to support a political and not a socioeconomic purpose that bother me. Subsidies as they continue to exist in the US in housing follow in this category – much in exclusivity these days to the subsidies in other developed nations the world over, at least in quantifiable terms.

There is well over two-thirds of a trillion dollars yearly in interest and property taxes claimed as deductions in the federal income tax, or allowed as a component of the standard deduction for those who do not itemize. As a result, there could be as much as $170 billion ($130 b. in interest and $40 b. in property taxes) in subsidies in 2012 by the federal government; and possibly another $30 b. in the other tiers of government, mostly from the states.

That elicits the question… could those resources, $200 billion annually, be reallocated in the economy in a more efficient way? I believe most economists would argue, without needing to resort to Debreu’s CRU (Coefficient of Resources Utilization) that the macroeconomic stability of the US would be better served by using those resources in other areas; some providing a larger multiplier effect for the economy, while others might be used to fund much needed infrastructural changes for the long term economic viability of future generations. So, if this distortionary tax/subsidy is a sad anomaly in a mature economy such as the United States, why do we have it and proudly tout it? And even more importantly, why are all of us, citizens/taxpayers, unaware… no, truly ignorant… of the true cost of this tax subsidy and its positive alternative uses? As most of us would suspect, the reason is political… with a touch of greed and self-serving by politicians.

America’s economy, our capitalistic magical perpetual-motion machine has been forever lubricated by that friction-reducer in Washington known as lobbying… the “illuminated” teaching that takes place on the politicians we elect to serve us in Congress. A division of lobbyists, between 20 and 24 for every representative and senator in the Capitol, tutor these elected officials on what’s good for the country, what might be called the gospel of free enterprise according to the special interests they represent.

One might expect some direct proportionality in the money spent by these lobbyists and the economic impact on the industries/causes they represent. And, if housing and healthcare come close in their share of the gross domestic product, shouldn’t both lobbying groups spend similar amounts? Interestingly enough, according to figures from the Center for Responsive Politics, the “healthcare giants” (American Medical Assn., American Hospital Assn., Blue Cross/Blue Shield and different groups of “Big Pharma”) spent $870 million in the last 14 years to indoctrinate (and help reelect) our politicians. Yet, the National Association of Realtors (NAR) spent only $178 million during the same period to spread their industry gospel and keep those government subsidies in place.

It should come as no surprise to find the NAR spending only one-fifth as much as the healthcare mafia. Home ownership has been made part of the American psyche, and the capitalist system, for generations… as were the other myths of exceptionalism or the American dream. Yet, after decades of blotted subsidies, the US fares no better than most industrialized nations in either the ratio of owner-occupied units to total residential units (about 68 percent) or in actual ownership (equity after mortgages are deducted)… a figure which has been decimated after the recent housing bubble.

The bottom line to housing subsidies in America – that is, allowing deductions for interest and property taxes in owner-occupied residences when computing the federal and state income tax – is one of total absurdity, more so than ever now that we have come to accept a global economy which is shifting middle-class wealth from the haves to the have-not nations… and the prospect of increased mobility due to a chronic state of high unemployment in the form of underemployment.

Housing subsidies have been not only economically inefficient, but deceivingly used by a political system using smoke and mirrors to convince us that we are all “capitalists”, instead of pawns in a capitalist system.

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Alcoholic Native American's picture

Long live private property rights! 

Joe The Plumber's picture

I would expect advocating the raising of taxes to come from a daily koss poster. After all we all know the government can allocate capital more efficiently than the individual. Sarc


Alcoholic Native American's picture

Raising taxes is an absurd idea.  In the Age or quantative easing, tax revenues, like deficits are quaint relics.  The democratic strategy of "taxing the rich" draws liberal dimwits like flies to shit though and this is probably why they are persuing it.

Democrats reelection strategy seems to be tax the rich and let the gays marry.  Lord help us. 

LetThemEatRand's picture

No doubt the Lord shares your hatred of taxing the Rich, and your hatred of the Gays.   Amen.

Buckaroo Banzai's picture

The Lord loves the gays. He just hates what they do to each other.

LetThemEatRand's picture

Almost as much as disobedient children.  Exodus 21:17 - "And he that curseth his father, or his mother, shall surely be put to death."

LetThemEatRand's picture

He really hates fatherless children, too.  Deuteronomy 23:2 - "A bastard shall not enter into the congregation of the Lord; even to his tenth generation shall he not enter into the congregation of the Lord."

LetThemEatRand's picture

An unwed mothers?  Get out of here.  Genesis 38:24 - "And it came to pass about three months later, that it was told Judah, saying, Tamar thy daughter-in-law hath played the harlot; and also, she is with child by whoredom. And Judah said, Bring her forth, and let her be burnt."

Buckaroo Banzai's picture

Luckily for us, Jesus Christ sacrificed himself on the cross to pay for all our sins. You may wish to refer to the New Testament, not the Old.

LetThemEatRand's picture

I know I'll have as much luck convincing you about gays as convincing my dog not to lick himself, but how about we move on to simpler things.  Where in the New Testament is the part about God and/or Jesus (or the Holy Ghost for that matter) hating anyone who taxes rich people again?

Oh regional Indian's picture

Everything is a meta-phor. If anyone here believes in fractals (as most should, or there are no quants on this board)...then, if one thing is a metaphor, it's all metaphor.

Like owner-ship. A meta-phor for a flag-carrying land-ship, by the kind dispensation of his majesty, via the treaty of 1783, as long as he get's his due in revenue, from you. AND , as long as all british subjects and american citizens have free passage up and down the coasts on the Great Missisippi River system.

The degree to which the question of owner-ship, in this Lex Romana we all currently inhabit, is a farce, is a deeply nested fractal metaphor in itself.

Plus, Moses was Akhnaten. It's all about eeeeeegypt.



TheGardener's picture

Lost you on the fractals and moses mate, still agree on you.

Ownership being put in perspective long on your small minded long indian long time ZH resident.

LetThemEatRand's picture

"have no idea what you're talking about, but agree with you!"

Reach around time.

A Nanny Moose's picture

Do you require Gumbint approval in all of your relationships?

Chris88's picture

"Where in the New Testament is the part about God and/or Jesus (or the Holy Ghost for that matter) hating anyone who taxes rich people again?"

Oh gee, maybe "Thou shalt not steal"  Which is all the government does.

Rubbish's picture

If you understand the New Testament, we are to give all our worldly possessions to the poor and carry up a cross for Christ. In as much I doubt you would pass judgment on thieves or find any problem paying Ceasar what is Ceasars.


The gates aren't narrow because this shit is easy.

FeralSerf's picture

If that is so "lucky", think how lucky it would be if you submitted to lethal injection in place of some convicted murderer.  How can people be so fucking stupid to believe this shit?  Even sheep aren't that stupid.

Red Heeler's picture

Fear and Loathing in the New Testament:

If any man come to me, and hate not his father, and mother, and wife, and children, and brethren, and sisters, yea, and his own life also, he cannot be my disciple. - Luke 14:26

TheGardener's picture

Nietzsche and Robin were right, don`t hate your next akin...
cause they are never coming back...

Rubbish's picture

This passage is simply showing that nothing should come before Jesus. You cannot exalt these humans above God.

Umh's picture

Sounds like cult admission requirements.

TheGardener's picture

So with all those harlots voting who is for childrens rights ? The fatherless should get two votes instead of a father.

The none-male , none-propertied should get two for their
unearned disadvantages and whites, lest there be any left, could still be eligible to vote if having a proven record of
having cut their self-esteem being cut by at least one and a half and passed PC exams and thus be counted one to a dozen.

Amish Hacker's picture

OK, Mr. Devil-Quoting-Scripture (LetThemEatRand), where in the Bible is baseball first mentioned?

In the big inning.

LetThemEatRand's picture

I don't recall invoking the Bible in support of baseball, so what is your point?  The clowns above invoked the Lord in their bashing of gays and taxes.  

Acorn10012's picture

LTER - a swing and a miss.

Amish - too funny!!!

Rubbish's picture

I'm thinking you missed the whole part about Jesus. He loves a lost sheep who returns just as much as one who never strayed. In fact when he/she returns, it's party time.


He also told us not to lay up riches of this gold and silver (that should go over real good here).  The day you meet the Spirit you won't sweat the small shit.

FeralSerf's picture

The Lord is allegedly omnipotent.  If S/He/It hated what gays do to each other, S/He/It could have them do something else to each other or disable their gay enabling code.  Are you denying that The Lord has freewill?

Your post, assuming it's not in jest, has to be one of the most idiotic  fucking statements ever.

Buckaroo Banzai's picture

You have an infant's understanding of God, unfortunately. God gave us the gift of free will, and the downside of that gift was the free will to turn away from Him.

God didn't abandon you-- you abandoned Him.

LetThemEatRand's picture

Can you explain the Spanish Inquisition again?  Thank you.

Sophist Economicus's picture

I can. A bunch of moralizing assholes that destroyed the lives of many under the pretenses of doing good. No God was involved. Just defective moralizing, dimwits like yourself.

BTW, read any Rand yet?

LetThemEatRand's picture

And this is different than the current gay bashing war mongering self-righteous religious right how?  No doubt the defective moralizing dimwits who tortured and terrorized in the name of Jesus Christ thought and certainly proclaimed they were doing God's work then, no?  Did you finish building your Rand shrine yet asshole cultist?

Sophist Economicus's picture

The 'religious right' is a fabricated term - an intuition pump, if you will, to get the masses to turn from any kind of religion and to convince them to genuflect to the 'elite' instead of their God.  I imagine tha religious people have all sorts of diverse perspectives on gays or anything else.   I think the world and its people are more complex than the stupid characteritions that you are know for on these pages.     But of course, those that protest bigotry the most, are usually the most biggoted.

No one does God's work, BTW, but God (if He exists).   I know you're too stupid to know otherwise.


Rentier's picture

Dang bro you just owned Rand...

Also, Rand I can assure you those that do the actual gay bashing are not church going peeps.  They are males that find gays an afront and abomination to true male masculinity, one reason why they take it as a personal insult if hit on by a gay which results in them bashing their head in...not because they such holy rollers.

LetThemEatRand's picture

"Rand I can assure you those that do the actual gay bashing are not church going peeps."

Now that's just funny.  You do realize, don't you, that some of the most prominent "gay bashing" types are gay church leaders and their "flocks."  Haggard comes to mind.  And many Catholic priests among others.  Let me guess -- better to change the facts than debate the ones you can't defend?

LetThemEatRand's picture

Of course, there's no such thing as a rabid group of anti-gay, war mongering religious zealots who consistently vote Republican and who openly hate "liberals" and "Dems."  Mostly Southern.  Mostly white.  Identify themselves as Christians.  Think Obama is a Muslim.  Just a figment of our collective imagination.  If you can't defend it, deny it exists?

StychoKiller's picture

Feel free to ask Larry Craig what his "stance" is on this. :>D

Rubbish's picture

Everyone, everything does Gods work. Evil is part of Gods plan too, it has to be. If you think the fallen angels weren't written into the baseball game schedule, then you wouldn't believe God is infinite and the creator of everything.

jwoop66's picture

Combination of kicking out the muslim invaders and the Church/Govt(very closely related at the time) having too much power.   Whats your point, rand?   If taxes were higher and there were more govt subsidies things would have been better?

Did as many people suffer in the Spanish Inquisition as they did in Stalin/Mao/Hitlers statist utopian endeavors?

Cathartes Aura's picture

whereas you are here as a representative of God, doing God's work?

I'll try to remember that when reading your more, shall we say, colourful posts. . .

FeralSerf's picture

You didn't answer the question:  "Does God have freewill?"

An infant has a "greater understanding of God" than you do.  God did not and cannot "give us the gift of freewill" if we live in the same universe God lives in.  Spinoza proved that beyond a reasonable doubt about 400 years ago.   To deny this is to deny cause and effect.  Einstein, Leibniz and many others with much greater minds than yours agree with that.

God cannot abandon me and I cannot abandon it.   Your statement is illogical.

FeralSerf's picture

Read any Spinoza yet?  Or is Spinoza's "Ethics" a bit over your head?  (I think you're already, in effect, answered that, BTW.)

Sophist Economicus's picture

Why, quite frankly I did, in college where I was a Philosophy major.

The problem might be in some of these questions about God might be constrained by our use of logic in our constrained perception of the universe.    It's not a shot across the bow on Spinoza (but I never met a philosophical argument that was ever completed as long as both sides were rational -- just endless chess moves)

The concept of God is a little to big for us mere humans right now.    We really cannot explain the origin of the universe, what is the root cause of magnetism, why there is gravity, etc.    So, when it come to tautologies or silly questions like:

Is God all powerful?   Well, can he create a rock he cannot lift?  I get bored.


FeralSerf's picture

If the concept of God is too big for us, why are there so many people spending so many resources on the God industry?  Spinoza certainly didn't consider the concept too big.  I question whether you really did read and understand Spinoza with a comment like that.

Who said God is all powerful?  My suggestion of an omnipotent god was sarcasm -- meant to show how illogical the concept was.  Apparently this went over your head as well.  You have plenty of company if it makes you happier.

LetThemEatRand's picture

Philosophy major, heh?  So do you publicly and loudly denounce all of those who challenge the liberal arts education as a waste of time and nothing but an indoctrination into dreaded and evil liberalism?  And do you agree that education including an education in the arts is critical to being able to analyze the world around us?   Have you ever attended public school my hypocrite friend?

StychoKiller's picture

Philosophy == Liberalism?  Does NOT compute.

LetThemEatRand's picture

So you agree that a Liberal Arts education is a great thing, yes?  Or do you not know what it means?