Homelessness in the E.U.: Rectifying a Right

In late 2025, the E.U. Commission presented its first European Affordable Housing Plan. The E.U.’s involvement in “social housing,” which translates into federal funds being used to provide housing beyond homeless shelters for people who cannot afford to house themselves, implies that the programs of the states had been insufficient. The U.S. could take a lesson from the Commission’s plan, which is cleverly multi-pronged in tackling the societal problem. Both in the E.U. and U.S., both federal and state funds were needed even in 2025 when neither economy was in recession. It is better to increase the supply of affordable housing when times are good than when unemployment is soaring. This is an exception in the E.U. to the usual pattern wherein the E.U. increases its competencies, or enumerated powers, in periods of one crisis or another. Russia’s multi-year invasion of Ukraine, which borders the E.U., and the Union’s foreign and defense activity demonstrate how European integration has typically been enhanced by crisis rather than when times are good.

Homeless in both the E.U. and U.S. was a problem in 2024. In its “9^th Overview on Housing Exclusion” in 2024, Feantsa estimated a total of 1,287,000 people “rough sleeping, staying in night shelters, or temporary accommodation” in the European Union.[1] According to the U.S. Federal Reserve Bank, 771,400 people were homeless in January, 2024—an increase of 118,300 from 2023.[2] The total population of the E.U. at the end of 2024 was estimated at 450.4 million, and that of the U.S. was 341.8 million (whereas the respective states tended to cluster in the tens of millions). That works out to .0028% and .0023%, respectively. This may come as a surprise because in Europe, housing is more likely to be viewed as a right than in the United States.

Dan Jorgensen, the E.U. Commissioner for Energy and Housing (and the first such commissioner in E.U. history), said at the time of the Commission’s presentation of its proposal, “Housing is not just a commodity; it is a fundamental right. We must mobilise every euro and do everything in our power to make sure that in Europe everyone can afford a decent place to call home.”[3] In the U.S., the lax regulations on investor-speculators on houses, condos, and even apartment buildings evince a commodities-orientation to residential real-estate, whereas in the E.U. the homelessness problem may have more to do with insufficient supply rather than the salience of a political ideology favoring business or disfavoring the poor as deserving their plight.

I contend that permanent housing as a right is a better political ideology than is the business-commodity view of housing units both because being homeless takes such a terrible toll of the human psyche and because society should be obligated via the market or else the state to supply permanent housing because economic interdependence is endemic to a society as opposed to Hobbes’ state of nature, where life is short and brutish. Put another way, being in the state of nature in terms of housing while being in a society does not work because a society and a state of nature are mutually exclusive. 

It is inconsistent to insert, especially within city and even a town, even a slice of Hobbes' state of nature, whether in the form of sociopathic violent gangs for which law in south Chicago in Illinois is wholly disrespected, or homeless individuals in a town or city. Having the state of nature within a society is not like Yin being in Yang, and vice versa, in Chinese philosophy; rather, the state of nature inside a society contradicts the necessity that Kant argued is inherent to law, whether public or moral law. Furthermore, to tolerate homelessness within a society is like inserting a vice like vengeance into omnibenevolence—a point that Nietzsche makes in claiming that the Abrahamic deity is “dead” in the sense of having been discredited by being both vengeful and perfectly benevolent, which are incompatible with each other. Even though the effort to rid humans of vengeance is laudable, the cost in assigning the vice to God was surprisingly overlooked, and still is. Similarly, the utter incompatibility of homelessness and society is seldom recognized. 

By the end of 2025, it was well beyond time for the E.U.’s Commission to come up with a plan to rid the Union once and for all of the sordid plight of homelessness. Ridding Europeans of the constant, underlying existential angst that does not leave a mind that is subtly aware that homelessness could occur in the future can be expected to result in happier, more relaxed people and thus less interpersonal strife. It is indeed realistic that the E.U., together with the member-states, could together, as a shared competency, eliminate  the problem of homelessness in 2026 by relaxing state rules on whom can receive housing assistance (i.e., not just the very poor), using federal “European Social Housing” funds to get homeless people immediately into at least short-term housing (even hotels), and incentivizing the construction of more housing units to meet the demand, and even reducing housing prices and rents for everyone. The sordid commodity perspective in America would be exposed as severely flawed, as it reflects elected officials across that Union being in the campaign-financing pockets of private finance and business rather than looking out for, or protecting, all constituents from the horrible experience of being homeless. Just in virtue of being a human being—how we are hard-wired and how vulnerable the human brain or mind is to the incapacitating harm from severe, existential stress—something beyond short-term housing should be ensured unconditionally. How a human mind reacts to being homeless ought to justify the unconditional aspect, as those who do not work must wander around at all times and be subject to theft is a callous ideological belief.

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1. “What is Homelessness,” Feantsa, Feantsa.org (accessed 16 December 2025).
2. Lisa McKay and Kenneth Cowles, “Who Is Homeless in the United States? A 2025 Update,” The Federal Reserve Bank of Minneapolis, March 14, 2025.
3. Vincenzo Genovese, “EU to Revise State Aid Rules to Address bloc-wide Housing Crisis,” Euronews.com, 16 December 2025.

On the Supply and Demand in Housing Markets: Rent Control in California

In February, 2019, Oregon’s legislature passed rent-control legislation limiting rent increases to 7% annually plus inflation. New York’s legislature strengthened the existing local rent-control regulations in New York City. Roughly six months later, California’s legislature passed rent-control legislation limiting annual rent increases to 5% after inflation and strengthening other tenant protections.[1] Not even the largest landlord group and the California Business Roundtable had opposed the legislation in spite of the fact that rent-control even as a concept flies in the face of the free-market ideology that has been so popular in America. Indeed, economists “from both the left and the right have a well-established aversion to rent control, arguing that such policies ignore the message of rising prices, which is to build more housing.”[2] Accordingly, only four of the American states (and Washington, D.C.) had some kind of local rent-control. So what accounts for the rent-control fever that had taken hold in 2019? I want to point to the immediate context then in California, and then to a more theoretical explanation that calls for distinguishing shelter from real-estate investing.

California’s poverty rate of 18.2% was at the time the highest in the United States. San Francisco’s homeless population had increased by 17% since 2017, while homelessness in Los Angeles had increased by 16% since 2018.[3] Homelessness had become a dominant issue politically. Voters had approved “several multibillion-dollar programs to build shelters and subsidized housing.”[4] Assemblyman David Chiu, author of the rent-control legislation, said of the homeless problem, “Protecting tenants is a critical and obvious component of any strategy to address this.”[5] Dampening the fear of displacement was part of this protection. With homelessness at epic proportions and housing markets continuing to rise in many urban areas, the fear could easily become unpalatable particularly for middle-class renters. In other words, a source of instability that renters can typically overlook had become so acute in California that reducing the fear was included in the rationale for the legislation.

More theoretically, the fear a person naturally has at some level of losing his or her shelter without being able to move to another is a byproduct of subjecting housing to an unobstructed market-mechanism. Where laissez-faire capitalism is especially revered, the fear is accepted as a fact of life even though it is not a fact of life in societies in which a safety-net includes housing. Moreover, there is no guarantee that an equilibrium in a given rental market is in line with every resident having shelter. In fact, as many of the California rental markets demonstrated especially in the years leading up to 2019, rising demand does not necessarily translate into enough of an increase in supply. The 7% plus inflation increase allowed in the rent-control legislation was in part intended to encourage more supply. Yet even so, the government had increased spending on subsidized housing. In short, a rising housing market acts on demand and supply in such a way that homelessness can increase; even efforts by government to add to supply (e.g. subsidized housing) may fall short.

Perhaps as in the case of health insurance wherein the U.S. Government used subsidies to see that the poor and middle class have had access to medical care while wealthier Americans could by premium health-insurance on the free market, the matter of shelter could be distinguished from that of real estate; the supply of basic shelter would not be “decided” by a market-mechanism, but by how many people (e.g., homeless) need shelter. Homeless men and woman whose health warrants supervision could be accommodated by group homes or assisted living apartment complexes. The wealthy could still play the housing market, treating houses as commodities. The distinction between shelter and a commodity makes it easier to understand why and how the fear of displacement can be so salient as in California in 2019. The market mechanism is incompatible with shelter viewed as a human right (therefore sans fear).

In summary, both the homeless crisis coming to a head in San Francisco and Los Angeles in 2019 and the incompatibility of shelter and the market mechanism can explain why California’s government took action on rent-control even though it would not solve the homeless problem. For that to occur, the government as well as non-profits and even businesses (e.g., CSR) would need to step in such that the supply would be sufficient to house the demand even apart from ability to pay full rent.  In other words, I submit that shelter in an interdependent society (rather than the state of nature) can be unconditional, in contradistinction to investment in real estate. The fear of displacement alone points to the incompatibility of shelter and conditionality (i.e., the market mechanism); so too did the extent of homelessness in California. Clearly, replying on a market-equilibrium, even if without realizing it, had given rise to severe distortions.

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[1] Conor Dougherty and Luis Ferré-Sadurni, “California Approves Statewide Rent Control to Ease Housing Crisis,” The New York Times, September 12, 2019.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Ibid.

Wall Street Snuffed Out President Clinton's Goal of Homeownership for the Poor

It is one thing for the head of a government (or a government’s executive arm) to set a praiseworthy goal that is in the public interest, and quite another thing to rely on the financial sector to implement it. Finance has its own means tied to its own goals, with plenty of greed in the mix. Governmental officials may tend to minimize the potential damage from ego-laden greed to the goals of public policy. Such policy ideally strives for the good of the whole, whereas the goals of a private sector of a part. This could account, at least in part, for the financial crisis of 2008 and the continuing bear market in housing in much of the U.S.

According to The Wall Street Journal, housing prices had fallen for 57 consecutive months by May 2011.[1] Even though the recession had officially ended in June 2009, the real estate market still had yet to hit bottom.[2] Since the housing peak in 2006, home values nationally were down 29.5 percent, according to Zillow.com. Compared to the same time in 2010, prices were down 8.2 percent in the U.S. markets. In that year, house price depreciation had slowed or stabilized because of tax credits of up to $8000 that expired during that summer. Accordingly, negative equity became even more prevalent in the first quarter of 2011, when 28.4 percent of all single-family homes with mortgages were "underwater."[3] Monthly declines for February and March were "really staggering," according to Stan Humphries, Zillow's chef economist. He claimed that the declines reflected "the true underlying demand," which was "being completely overwhelmed by supply."[4] Fannie and Freddie sold more than 94,000 foreclosed houses in the quarter; this represents 23% more than in the previous quarter.[5] The increase in supply from the foreclosures was at relatively low prices, hence the impact on the market was particularly depressing.

A declining housing price translates into lost wealth for the homeowner. When home values decline, the values of mortgages often do not go down as well. Homeowners lose some of their equity, or the stake they have in their home. When equity becomes negative—that is to say, when the value of a mortgage exceeds the value of the property—homeowners become especially vulnerable to default and foreclosure. “Falling home prices can create a vicious cycle. When a property falls into foreclosure, it tends to depress the values of properties around it, making those homes more likely to experience a similar fate. [In 2010], nearly 2.9 million homes received a foreclosure filing, and more than 2.8 million homes got one in 2009.” based on the data provider RealtyTrac.[6] More foreclosures further reduced the value of residential mortgage-based securities, which in turn reduced the asset-values and returns of companies and individuals investing in the CDOs (collateralized debt obligations) worldwide. This investment asset essentially has mortgage-borrowers pay the holders of the respective CDOs, whose value is thus based on the value of the underlying mortgages.

Problematically, the holders of the CDOs, not the originator of the mortgage, assumed the risk that the mortgage borrowers might stop their mortgage payments. The mortgage servicers had sold their mortgages to an investment bank such as Lehman Brothers, which in turn would pass the then-securitized mortgage-based bonds on to investors such as Deutsche Bank and the two major banks of Iceland. Neither companies such as New Century (or Countrywide) nor investment banks like Lehman would face any risk unless they happened to be holding a significant number of the risky mortgages (or real estate) when the merry-go-round finally stopped in 2008.

Countrywide was bought up by Bank of America (by Ken Lewis, CEO at the time) and Lehman Brothers went bankrupt. Both Lewis and Dick Fuld (of Lehman) could be said to be empire-builders—meaning expansion at virtually any expense and even as an end itself. Pure ego plus greed. New Century and Lehman both assumed that they would never get caught with their pants down holding toxic mortgages. They were both wrong—oh so wrong. To be so wrong and yet blame the consumers is, at the very least, bad form.

Unfortunately, the housing market was “plagued by scandal” in the first quarter of 2011.[7] Homeowners and investors filed “numerous lawsuits alleging that big banks misplaced or even faked crucial mortgage documents.” After it was “revealed that companies that processed foreclosures signed thousands of documents daily without even reading them, potentially violating the law, some of the biggest banks temporarily halted their foreclosure proceedings” in the fall of 2010.[8] I suspect, however, that the failure of the underwriters (and compliance folks) is a red herring; most of the sub-prime residential mortgages required no documents proving income or even a job, and many of those mortgage applications contained lies known or even encouraged by the brokers. Not unexpectedly, the brokers and borrowers have differed on whether the latter should be expected to have resisted the, “It’s ok, really. Trust me,” from the “professionals.” In any case, the (in many cases) first-time homeowners were used, and the greed of the mortgage producers was ultimately behind it.

The claim, for example, made by some mortgage brokers and Wall Street securitization arrangers that the borrowers should have somehow known better than to sign low- or no-document subprime mortgages with steep ARM resets of up to double-digit interest rates is more than just disingenuous; the brokers had assured the potential homeowners that the inevitable increase in home equity appreciation from the rising housing market would give them the 20 percent equity stake that was necessary at the time to refinance into a fixed mortgages at a decent, constant interest rate. The brokers did not care whether the borrowers enabling the double commissions could make the higher ARM (adjustable rate mortgage) payments in case they might kick in. One might even say that the system was rigged by the mortgage-producing companies such as Countrywide at the expense of first-time mortgage-borrowers. Preying on the newbies, in other words, could characterize the system’s basis. Of course, such preying is unethical, for it puts others in harm’s way unless the prey should have known better, which I dispute. In short, it was not a fair fight when the harm came as even AAA-rated subprime (i.e., risky) mortgage-based CDOs ruptured in the financial crisis of 2008. 

In conclusion, although Clinton’s goal of putting poor people in their own homes had been laudable, constructing ARM mortgages with resets that low income people could not afford and relying on a rising market to obviate them was a recipe for years of a bear housing market. In other words, the system that the financial world established blocked Clinton’s goal from being sustainable, and thus achieved. Of course, Wall Street was not in the game to do Clinton’s bidding; finance had its own goals, which went on through two terms of George W. Bush in the White House. In retrospect, Clinton should have used government regulation to establish a viable system in sync with the goal rather than allow his henchmen—most notable Alan Greenspan at the Federal Reserve, Robert Rubin, Secretary of the Treasury, and Larry Summers also of the Treasury, to push Congress to keep the CDOs unregulated. In other words, Clinton, in trying to position himself in the political middle, followed Carter in adopting a deregulatory position even as it ultimately rendered his laudable goal unattainable and even reckless.

See Essays on the Financial Crisis and On the Arrogance of False Entitlement, both available at Amazon. 

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1. Nick Timiraaos and Dawn Wotapka, "Home Market Takes a Tumble," The Wall Street Journal, May 9, 2011, pp. A1-A2.

2. William Alden, “Home Prices Fall Again in Biggest Drop since 2008,” The Huffington Post, May 9, 2011.

3. Ibid.

4. Nick Timiraaos and Dawn Wotapka, "Home Market Takes a Tumble," The Wall Street Journal, May 9, 2011, pp. A1-A2.

5. Ibid.

6. William Alden, “Home Prices Fall Again in Biggest Drop since 2008,” The Huffington Post, May 9, 2011.

7. Ibid.

8.Ibid.

Sustenance: A Human Right in America?

In the fall of 2010, the following was said on Fox News: “The government should spend more on the war in Afghanistan in order to fight terrorism. The problem is that the government has gotten into entitlements.”  The latter presumably includes food stamps, public housing, Social Security, Medicare, and Medicaid.  To say that government ought to be engaged in defense and not in supplying needy citizens with food, shelter and health-care is distinct from saying that the federal government should concentrate on foreign policy and defense, while entitlements are formulated and funded by the state governments as their domestic programs. In other words, advocacy for a certain priority in government and for less government is distinct from advocacy for restoring balanced federalism.

Most Europeans in the E.U. undoubtedly view the redistributive right for sustenance resources as founded on human rights and thus as a legitimate part of government.  In contrast, Americans do not typically apply a human rights justification to entitlements for other Americans even as foreign aid may be justified in part on this basis.

For example, on June 3, 2011, Donald Trump told a forum in Washington, D.C.: "A certain Republican representative, two nights ago -– I watched on television -– Representative Cantor, who [sic] I like, said we don't want to give money to the tornado victims, . . . (a)nd yet, in Afghanistan we are spending ten billion dollars a month but we don't want to help the people that are devastated by tornadoes -- wiped out, killed, maimed, injured. We don't have money for them but we are spending ten billion dollars a month in Afghanistan. We are spending billions of dollars in Iraq where they have the second largest oil fields in the world … and we can't help people that got flooded in Mississippi that got hit horribly by tornadoes." The U.S. House Majority Leader was holding up funds for basic necessities at home as leverage in debt-ceiling negotiations with the Democrats, while allowing billions of dollars to continue to flow in foreign aid (and to the U.S. military in Iraq and Afghanistan).  Canter’s antipathy toward government aiding citizens who would otherwise be left to the state of nature represents a rather warped understanding of a social contract.

People such as Eric Canter believe that the market mechanism trumps any right to have one’s basic needs satisfied. Resources are viewed as commodities produced and distributed by private enterprise, even though the market does not guarantee that every citizen’s basic needs are met. Even so, it can be asked whether the right to survival (i.e., life) is part of the American social contract. If so, then relying on the market mechanism alone is not sufficient.

If life is not part of the social contract, then the hungry and homeless, as well as the untreated sick, are (and can legitimately behave as if) in the state of nature. As much as some of the rich do not want to be taxed so the least fortunate can survive, the prospect of the latter behaving as if in the state of nature must surely be even less palatable.

James Madison writes in Federalist #51, “the weaker individual is not secured against the violence of the stronger” in the state of nature. Nor is the weaker secured against starvation and sickness.  Without the police to protect their property, are the rich sufficiently strong to ward off the hungry and homeless? Who is the strong and who is the weak in a dog-eat-dog contest between two human beings—one with a bank account and the other with a left hook? Life, Thomas Hobbes writes, is “solitary, poor, nasty, brutish and short” in the state of nature are all equal in the sense that any one of us can be killed in our sleep. Suddenly having some of one’s tax directed on a human-rights basis may not sound so bad.

What keeps those whose survival is so tenuous from simply taking from the rich is of course the funded social contract that protects property with police force even as there is no guarantee for survival. Such a warped social contract is an aberration in terms of social contract theory.

  The social contract undergirding a political society is meant to alleviate the fear of the want of necessities (and self-defense) while working for the happiness of the members.  In other words, there is a right to shelter, food and medical care. Otherwise, the society is only marginal or partial in obviating the insecurity that exists in the state of nature.

Therefore, to say that government should merely defend citizens from the insecurity of foreign invasion does not go far enough from the standpoint of why government is instituted as part of a social contract that takes people out of the state of nature. However, to say that an empire-level government ought to be charged with protection from foreign invasion, while the individual republics are tasked with ascertaining their citizens with protection from starvation, the elements, and sickness. Without anxiety, foreign or domestic, every citizen—rich or poor—would be freed up from a basic insecurity that without a viable social contract is simply part of life.

Sources:

The Federalist, ed. Jacob E. Cooke, Hanover, N.H.: Wesleyan Press, 1961.

Sam Stein, “Trump Takes Aim at Cantor, Krauthammer, U.S. Foreign Policy,” The Huffington Post, June 3, 2011.

Uncovering the Root of Poverty: An Addictive Habit

Addictive pain-killers killed 64,000 residents in the U.S. in 2016, in part because physicians tended to rely on patients’ self-determined ratings of pain on a scale of 1 to 10.[1] Such subjective ratings were of course vulnerable to self-seeking motives willfully negligent or even reckless in terms of health. A habit or marked tendency in favor of choices at the expense of a person’s own long-term well-being stems, I submit, from weak impulse-control. This, plus the related lack of consideration for other people, either causes or is associated generally with poor people at least in the United States.

Poverty, it has been said, is the cruelest form of war, for such war can go on and on and wreck subtle though tremendous damage on the afflicted. Yet the mentality that can get a person into such a war and associated bad choices can be easily overlooked by elites that deign to study the problem of poverty.

The full essay is at "An Addictive Habit."

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[1] Gregory Korte, “U.S. Waging Tech War against Opioid Epidemic,” USA Today, November 24-26, 2017.

TARP Paid Off: But What about the Foreclosures?

TARP, the "bailout" for banks rather than mortgage borrowers, was the first big issue facing the Obama administration before the roughly $800 billion stimulus plan and the health insurance overhaul that stoked the rise of the Tea Party movement. After supporting TARP, several Republicans lost in the elections of 2010 largely because of their votes. For many Americans, TARP is a symbol of big government at its worst, intervening in private markets with taxpayers’ billions to save Wall Street plutocrats while average Americans continued to struggle to make mortgage payments or lost their houses outright.  “This is the best federal program of any real size to be despised by the public like this,” said Douglas J. Elliott, a former investment banker now associated with the Brookings Institution. “It was probably the only effective method available to us to keep from having a financial meltdown much worse than we actually had. Had that happened, unemployment would be substantially higher than it is now, the deficit would have gone up even more than it has,” Mr. Elliott added. “But it really cuts against the grain for a public that is so angry at banks to think that something that so plainly helped the banks could also be good for the public.” TARP was good for the public not in that the funds enabled Wall Street bonuses; rather, the good was solely on the macro level, as the frozen credit markets eventually thawed such that the financial system meltdown was averted.  However, this does not mean that it was "the only effective method available."

Specifically, the TARP funds could have been used to subsidize mortgage borrowers demonstrating difficulty in making the payments. On a CBS news show May 15, 2011, Speaker Boehner was asked about the four foreclosure programs of the U.S. Government. "They have all failed," he told the journalist. However, the Speaker then refused to have the government get involved; the best we can do is wait for the market to solve the problem as more buyers enter. However, that would only spur foreclosures, as more buyers would make it easier for banks to sell their foreclosed houses. It is interesting that hundreds of billions of taxpayer dollars could go the big banks, enabling record executive bonuses, whereas all we can do is rely on the market to mitigate the foreclosures. This squalid double-standard can be explained by simply looking at the bankers' interest, which is at odds with that of the mortgage borrowers. Considering the problematic way in which the sub-prime mortgages had been produced (e.g., liars' loans and no-document mortgages), I contend that the interests of the banks' customers ought to be given primacy here. The problem is that the borrowers are dispersed, whereas the bankers have concentrated leverage via their capital and lobby over government officials who would like to be re-elected. In a republic, the leverage ought to go in the opposite direction: elected representatives coming down on the bankers for their shaddy lending and related double commissions at the expense of the borrowers.

Laying the power reality aside, an alternative to TARP can be envisioned. This exercise, although inexorably futile, can tell us something about the opportunity costs involved in enabling the powers that be rather than holding them accountable. Along with a federal law limited the rate resets on the ARM sub-prime mortgages (resisting the pressure of the banking industry that recklessly had originated or bought the mortgages), subsidies could not only have removed a major toxic element from banks' balance sheets and thus opened up lending, but also perhaps fortified the housing markets in the U.S. such that homeowners duped into houses over their heads could have had some time to sell and find more suitable housing. In other words, the "two birds with one stone" could have applied, instead of the top-directed infusion. TARP did not come with requirements that lending reach a minimum level so even though the banks did not fail, it took even the TARP banks a long time to raise lending again; the return to lending should have been immediate.

It could be argued that the TARP funds put into banks gave the U.S. Government the corresponding benefit of bank stock. To be sure, selling the stock has made up a large part of the TARP funds already by 2011, but it was at that time uncertain whether the government would make a profit. In the fourth quarter of 2010, the U.S. Treasury projected that taxpayers wouuld lose less than $50 billion at worst, but at best could break even or even make money. Its best-case assumptions, however, assume that A.I.G., which had received $182 billion in TARP funds, and the auto companies would remain profitable and that Treasury would get a good price as it sells its corporate shares in coming years.

In May 2011, AIG and the Treasury Department announced that they would sell $9 billion in stock altogether, but for less than half of the expected price. As of May 10th, the AIG stock pre-market price was thirty cents off from the government's breakeven point. AIG stock had slid from the mid 40s to the mid 20s. I submit that these considerations of U.S. profit-taking, although appealing from a capitalist standpoint, misses the bigger picture in terms of a government's mission. I contend that governments do not exist to make profits. Furthermore, a government's primary charge is to protect citizens, whether from foe or famine. Failing to mitigate or obviate foreclosures even as banks got funds to keep them afloat is thus a blight on the U.S. Government. To be sure, maintaining the viability of the financial system is legitimately part of the government's job, that function could have been accomplished by protecting citizens who otherwise lost their homes. This is not to say that the homeowners deserved to stay indefinitely in houses too big for them; rather, it is to say that homeowners could have been kept from being tossed onto the street. The U.S. Government could have helped two birds with one bag of birdfeed while meeting its own obligations as a government.

Sources:

Jackie Calmes, “TARP Bailout to Cost Less Than Once Anticipated,” The New York Times, September 30, 2010.

The Huffington Post, "AIG, U.S. Will Sell $9B in Stock -- But for Less than Half of Expected Price," May 11, 2011.

Wealth and Happiness American-Style

The Organization for Economic Cooperation and Development released an up-dated version of its Better Life Index in May 2012. The U.S. ranked first in income, with average household wealth at $102,000, as well as in housing (Americans spending about 20% of their disposable income on it—the OECD average being 22%).[1] These figures for the U.S. could have been pushed upward by the fact that at the time, the very rich were richer than their counterparts in other countries, for the gap between rich and poor was relatively high in the U.S. For example, 30 million Americans were without health insurance and a record number of Americans were receiving a governmental subsidy for food. Rather than assume that the middle and lower economic segments in the U.S. were better off than their counterparts in other regions of the world, I suspect that the statistics reflect the higher relative pay of American executives and professionals (lawyers, physicians and CPAs). The typical CEO in the E.U., for example, made less than his or her counterpart in the U.S.  This caused trouble in the Chrysler-Daimler merger because the Chrysler executives enjoyed higher compensation even though Daimler was in charge.

Interestingly, the rank of the U.S. in life satisfaction was above average, with 76 percent of people reporting having more positive than negative experiences in an average day (the average in the OECD index being 72%). In other words, the gap between the rich and poor does not appear to have gotten in the way of life-satisfaction. Although economic reductionism is particularly salient in the U.S., such satisfaction does not reduce to dollars and cents. Even in economic terms, the large gap between the rich and poor includes geographic distance. For example, court-orders have had to be used to force some cities and towns to allow subsidized (low-income) housing. Meanwhile, it is not uncommon, particularly in Florida, for people with money to live in gated communities. With the rich out of sight, the poor are less likely to be aware of the economic inequality, which could otherwise put a damper on their life-satisfaction.

As a final observation, my reference to Florida suggests that the OECD should not generalize all of the American states into one figure. For example, life-satisfaction is likely to be higher in Hawaii than in Alabama or Michigan for climatic or economic reasons (or in North Dakota during the winter even considering the economic boom). Housing in New Hampshire is, in general, better than in Mississippi. Income in Connecticut is higher on average than in Arkansas. For states, whether in the U.S. or E.U., to be in a union is not to say that they are identical and thus readily grouped together. In other words, a general statistic in housing or income has less real meaning when applied over such a large area. It is like saying that the average temperature in the U.S. in 2011 was 56 degrees (I don’t know the real figure). It is unlikely that figure applies in any state—certainly not in Florida, Hawaii, Alaska, or Maine. The figure has no real meaning, other than relative to other such figures over time (e.g., to assess global warming). For the OECD to compare the U.S. as a whole to E.U. states such as Denmark, Belgium and Spain suggests that the organization is content to engage in category mistakes. If the figures are relevant on the state level, the OECD should be consistent rather than selectively over-generalize.

1. “OECD LaunchesUpdated Version of Your Better Life Index,” OECD. 

See also MSNBC, “US Ranks No. 1 in Wealth, Not in Happiness.” 

Subsidiarity: Federalism Over Catholic Social Ethics?

In the E.U., the principle of subsidiarity functions in theory like the Tenth Amendment does in the U.S.—again in theory. In both cases, public authority on a given domain or policy-area is preferentially to be exercised at the state rather than federal level. The principle, while not federalism per se, can be an element of it. Taking subsidiarity to be “really federalism” turns the latter into an alliance—giving the states potentially so much power that the government of the federation or union itself cannot act as a check on the state governments.

The complete essay is at Essays on Two Federal Empires.

Moral Hazard in Mortgages

“The cherished American ideal of self-reliance has a flip side”[1]  Before getting to the implications, or flip side, I want to fill out what informs this ideal. One could add to it the ideological stance that came into its own in 1980 with the election of Ronald Reagan, who declared that government is the problem. This implies that government should be minimized, and otherwise corrected as much as possible. Government is hardly to be viewed as the solution. This is the legacy of the Kennedy assassinations of the 1960s, the Vietnam War, and Watergate as well as Ford’s pathetic “WIN” buttons and Carter’s micromanagement and failure in regard to the hostages in Iran. I was not old enough for the Kennedys’ truncated optimism (and that of Martin Luther King) to resonate; I knew the political (and economic) pessimism of the 1970s and the energizing “fix it” mentality of the early 1980s. Of course, Reagan’s “new federalism” failed, as did his aim to balance the federal budget, and the jury is still out on whether “peace through strength” pushed the USSR off the cliff.

The full essay is at "Moral Hazard in Mortgages."

1. Shaila Dewan, “Moral Hazard: A Tempest-Tossed Idea,” The New York Times, February 26, 2012. 

Distinguishing Entitlements from the Safety Net

In 2012, Congress lost sight of the fundamental purpose of a safety net, extending it beyond the difference between life and death. By zeroing in on the purpose of a safety net, Congress can both save money and better provide for the survival of those who are not providing it for themselves. Of such people, where survival itself is at stake, questions of being deserving pale in comparison to society’s obligation to fend off starvation, sickness and homelessness. Ironically, by extending the safety net beyond survival, Congress has undercut its role in providing for its citizens’ survival.

The “government safety net was created to keep Americans from abject poverty, but the poorest households no longer receive a majority of government benefits. A secondary mission has gradually become primary: maintaining the middle class from childhood through retirement. The share of benefits flowing to the least affluent households, the bottom fifth, . . . declined from 54 percent in 1979 to 36 percent in 2007,” according to a Congressional Budget Office analysis published in 2011.[1] Making the secondary mission primary undercuts the primary mission by putting it at risk.

Objections to the secondary mission as unnecessary can spill over as criticism of the primary mission as if it too were not necessary. “Many people say they are angry because the government is wasting money and giving money to people who do not deserve it. But more than that, they say they want to reduce the role of government in their own lives. They are frustrated that they need help, feel guilty for taking it and resent the government for providing it.”[2] A wealthy retired person drawing social security insurance ought to feel guilty; the insurance program is not a savings account. Criticism of this category mistake can impact politically the funding of social security for those who need it. For example, even as wealthy retirees draw on social security, the social security disability program is work-based, meaning that a minimum number of quarters of work are necessary even for one to apply for benefits. Making a safety net dependent on a work history cuts off the long-term ill from the safety net. Moreover, the requirement implies that a person who has a disability does not deserve to survive independently of work. For a safety-net program to be dependent on anything means that the program is not part of the safety net, as safety nets are by definition not conditional. Yet where a society so values work as a source of a person’s value (e.g., “I am a plummer”), a program can easily be assumed to be part of the safety net without actually being part of it.

Related to the political cost of criticism of superfluous programs (i.e., beyond survival) is the refusal to fund true safety-net programs sufficiently. Congress has “expanded the safety net without a commensurate increase in revenues, a primary reason for the government’s annual deficits and mushrooming debt. In 2000, federal and state governments spent about 37 cents on the safety net from every dollar they collected in revenue, according to a New York Times analysis. A decade later, after one Medicare expansion, two recessions and three rounds of tax cuts, spending on the safety net consumed nearly 66 cents of every dollar of revenue.” One “benefit” of tax cuts is that they “starve” entitlements, which are all grouped together and presumed to be unnecessary rather than serving a true safety-net function.

The result of the prejudice and related starvation is that over the next 25 years from 2012, “as the population ages and medical costs climb, the budget office projects that benefits programs will grow faster than any other part of government, driving the federal debt to dangerous heights.”[3] In other words, safety-net programs are fair game on the chopping block without respect to whether people die without them or are merely inconvenienced. The failure to distinguish between these two is dangerous to the abject poor. Were the distinction made, corporate welfare and even middle-class welfare could be cut by more, I submit, than the additional funds needed to provide the least well-off with sustenance. In other words, we as a society can have a solid survival-oriented (and limited) safety net that is not conditional while actually saving money as benefits are narrowed to people who really need them.

The key is focus in place of upward drift. As just one example, money saved from a means test for social security retirement insurance could be spent in expanding social security disability such that its benefits are not conditional on the long-term ill somehow having worked thirty or forty quarters in the last ten years. How exactly is a retarded adult supposed to find and hold a job for that many quarters?  Making the benefits unconditional with respect to work history is crucial, as the social security supplemental income program is insufficient to meet sustenance needs. It is unconscionable to expect the long-term disabled to have worked in order to receive enough to live on while the middle class receives entitlements classified as “safety net.” The key to making survival a human right is recognizing the need both to expand programs at that level and severely restrict programs aimed at higher levels. Whereas middle- and high-income beneficiaries of government largess can justifiably be blamed, it is sheer cruelty to blame those who are not able to meet even their own basic needs from work for receiving subsidies.

In my rather ignorant, presumptous hometown, an unemployment rate of around 20% went with the recession of 1980 as the machine tool industry went to Europe. The city had the highest unemployment rate in the state in the post-September 2008 recession, and yet the first vote the re-elected U.S. House representative made in 2010 was to cut off unemployment compensation. His claim was that people should get off the dole and work for a living. It was apparently beside the point that there were no jobs; the unemployed were supposed to have them anyway. This is like telling people that the empty space on a table is to be imagined as spaghetti and then getting mad at them for not eating it—as if they should be expected to eat air. Such warped, illogical thinking as the Congressman evinced in 2010 in the rustbelt of America can be linked to reducing a true safety net to a society of entitlements. To hold the poorest of the poor to such warped thinking is utterly cruel as well as ignorant. I hope American society has not come to such a selfish and short-sighted end. The society is only as good as we treat the least among us, for such treatment reveals our true colors.

1. Binyamin Appelbaum and Robert Gebeloff, “Even Critics of Safety Net Increasingly Depend on It,” The New York Times, February 12, 2012. 
2. Ibid.
3. Ibid.

Employing Smokers: Economic, Political and Social Aspects

Hospitals in Florida, Georgia, Massachusetts, Missouri, Ohio, Pennsylvania, Tennessee and Texas (among others), stopped hiring smokers in 2010 and more countries were openly considering doing so. Paul Terpeluk, a director at the Cleveland Clinic in Ohio, said, “The trend line is getting pretty steep, and I’d guess that in the next few years you’d see a lot of major hospitals go this way.”[1] Indeed, this could come to be the case around the world. Various factors impact any comprehensive evaluation of a hospitals' policy against hiring smokers. The matter is therefore more complex than one might assume at first glance.
 

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.

1. A. G. Sulzberger, “Hospitals Shift Smoking Bans to Smoker Ban,” The New York Times, February 10, 2011.