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Opinion: It’s Time for U.S. to Boost Supply of Affordable Rental Units

By Michela Zonta

InsideSources.com

The rental affordability crisis has been drawing increasing attention from the media, government entities and advocacy groups in recent months. As rental markets across the nation grow increasingly tighter, and as rents continue to outpace stagnant incomes, a growing number of renter households across the income spectrum is finding it increasingly difficult to afford their homes and meet the expenses for other basic living necessities. Census data indicate that 46 percent of nearly 44 million renters in the United States spend more than 30 percent of their income on rent and utilities.

Without a doubt, the post-Great Recession drop in homeownership and the increase in rental demand — partly driven by demographic shifts — play an important role in the current shortage of available and affordable rental units, especially in hot markets like San Francisco, Los Angeles and New York. But the surge in demand cannot be deemed as the sole explanation for the rental affordability crisis that the nation is experiencing. And, as such, we cannot expect demand-based policies to be sufficient to solve the problem, especially at a time when federal assistance programs continue to fall short of meeting the increasing need for affordable housing among low-income households.

When it comes to the housing market, instead, we have to consider the supply problem. Significant gaps in the supply of rental units that are affordable for households in different income brackets are largely due to the inadequate production of homes, particularly in the lower-income spectrum of the housing market.

As the supply of low-rent units has decreased, private market additions to the rental housing stock have shifted to the high end — and more specifically, to the very high end. The latter do not encourage enough supply to ensure that affordable housing trickles down to low- and moderate-income renters. At the same time, despite the continuing effort of programs such as the Low-Income Housing Tax Credit (LIHTC), federal housing and tax policies do not adequately address the increasing gaps in affordable rental housing.

We need a more aggressive intervention by the federal government in boosting the overall supply of rental housing. To do so, the federal government needs to directly go back to the construction business at a large scale, as it did in the past, while avoiding some of the mistakes that have often constrained the public housing program’s implementation and quality over time.

A newly introduced Homes for All program, in which the federal government will engage in the large-scale construction of affordable and good-quality homes, could address just that. The proposed program, which is intended to complement both existing rental assistance programs and the preservation of existing affordable housing stock, calls for an active role in the production of affordable units for renters who are in need of affordable housing through direct grants to localities.

Supporting this type of housing has the potential of meeting three goals: challenging private-market development practices that greatly influence home prices by prioritizing luxury apartment construction; encouraging long-term affordability; and promoting a process by which housing costs will better match household incomes, especially in proximity to employment centers and areas experiencing rapid job growth.

Homes for All recommends making homes available to a mix of incomes, while preserving the ability to target assistance to those with the greatest need. Through design, the socioeconomic status of residents will be impossible to distinguish from the exterior appearance of buildings. At the same time, to avoid segregative patterns, the program promotes a scattered distribution of units and a flexible supply of units to accommodate several different types of households.

The program also encourages mixed-use developments, especially in proximity to public transit; the adoption of universal design principles; energy efficiency; access to broadband; and novel building techniques such as modular construction.

But perhaps the most important element of the program concerns where housing will be built and how it will be managed. Homes for All recommends that homes are built on publicly owned land, to contain construction costs. There are a variety of ways to develop housing on public land. For example, different types of sites — such as vacant, publicly-held land, and underutilized sites such as parking lots and lots where existing public facilities are no longer needed — represent opportunities for the construction of affordable housing. Once the units are completed, they should be permanently held in some form of social ownership, such as community land trusts, which can ensure long-term affordability. These, along with local nonprofit, mission-driven organizations will be in charge of managing and operating the new housing stock.

The private housing market and the government’s decades-long experiment with a laissez-faire approach to supply have not worked well to fill the affordable housing gap. The adoption of a program such as Homes for All has the potential to reinvigorate the government’s role in directly — and equitably — addressing the supply of affordable housing across the nation.

ABOUT THE WRITER

Michela Zonta is a senior policy analyst at the Center for American Progress and the author of CAP’s Homes for All proposal. She wrote this for InsideSources.com.

Opinion: Italy’s Debt Is Worse Than You Think

By Desmond Lachman

InsideSources.com

Since June when the new Italian government took office, the market has begun to focus again on that country’s shaky public debt fundamentals. The market would seem to be more than justified in doing so. Not only have Italy’s economic growth prospects been diminished by the coming into office of a populist government sorely lacking in commitment to either budget discipline or economic reform. Rather it is also that the country’s present public debt level has not looked more troubling than it has over the past 100 years.

The market’s unease about Italy’s public debt level has been reflected both in a sharp rise in Italian bond yields and a loss in foreign appetite for the country’s public debt. Since the start of the year, Italian 10-year bond yields have approximately doubled to their present level of 3.15 percent, which is the highest level recorded since mid-2014. Over the last two months foreigners have been reducing their Italian government bond holding at a monthly rate of around 40 billion euros.

Sadly, markets would seem to have every reason to be concerned about Italy’s public debt mountain. This is particularly the case at a time that the Federal Reserve has begun to raise interest rates and the European Central Bank has indicated that it intends to end its bond buying program by the end of 2018. According to official data, since the depth of the Eurozone debt crisis in 2012 Italy’s public-debt-to-GDP ratio has continued to rise to its present level of 132 percent of GDP. This makes the country the Eurozone’s second most indebted country after Greece.

Troubling as a 130 percent public-debt-to-GDP ratio might be, there are two reasons to think that the official debt figures understate the seriousness of Italy’s public debt problem. The first is that Italy’s official debt statistics exclude the Bank of Italy’s approximately 400 billion euros debtor position in the European Central Bank’s Target 2 clearance mechanism. Including the Bank of Italy’s Target 2 liabilities would take the country’s public-debt-to-GDP ratio to around 160 percent, or to the highest in the last 100 years.

A second reason for thinking that Italy’s official public-debt figures might be understated is that it is all too likely that Italy’s troubled banking system will at some stage need a government bailout. Not only does the Italian banking system have more than 10 percent of its loan portfolio in non-performing loans. It also holds more than 400 billion euros in Italian government bonds, which constitutes a dangerous doom-loop between the banks and the government.

To be sure, a country can always bring down its public debt to a more manageable level by a combination of increased budget discipline and economic reforms to put the country on a higher economic growth path. However, the new Five Star Movement-Italian League coalition government would appear to be moving in exactly the opposite direction to that which is required to achieve such a reduction in the public-debt ratio.

For a start, the new government would seem to be flouting the Eurozone’s rules for disciplined budget policies. It is doing so by insisting both on increasing public spending to finance a minimum income support program and on reducing tax revenues by the introduction of a flat income tax.

At the same time, far from introducing market friendly economic reforms, the new government seems to be intent on rolling back the labor market and pension reforms of its predecessor. This has to raise a basic question. If the Italian economy could not grow rapidly in a favorable global liquidity environment with a reform-minded government, why would one expect it to grow rapidly in a more difficult global liquidity environment with a government in the process of rolling back economic reforms?

All of this has to raise the possibility that Italy is headed for another sovereign debt crisis. This would certainly not be good for the global economy since Italy’s economy is around 10 times the size of that of Greece and after the United States and Japan it is the world’s third-largest sovereign debt market. For which reason, one has to hope that the new Italian government heeds the warnings that it is already getting from the markets and moves rapidly in the direction of budget discipline and economic reform.

ABOUT THE WRITER

Desmond Lachman is a resident fellow at the American Enterprise Institute. He was formerly a deputy director in the International Monetary Fund’s Policy Development and Review Department and the chief emerging market economic strategist at Salomon Smith Barney. He wrote this for InsideSources.com.

The Conversation

Teaching the public more science likely won’t boost support for funding, but sparking their curiosity might

August 29, 2018

Author

Matthew Motta

Postdoctoral Fellow in the Science of Science Communication, University of Pennsylvania

Disclosure statement

Matthew Motta does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

After 19 months without a director, the Trump administration recently tapped meteorologist Kelvin Droegemeier to lead the the White House’s Office of Science and Technology Policy. Perhaps surprisingly, given the administration’s previous efforts to slash funding for government-backed research, Droegemeier is a strong supporter of increased federal science funding.

Most Americans agree with him. About eight in 10 Americans say that the government ought to provide some amount of financial support for scientific research done in federal labs and at universities. The amount of support the government ought to provide, however, is a more contentious question. Few Americans think that the government should cut science funding, but less than half see a need to increase it.

As a scholar of the science of science communication, I’m interested in what factors lead people to support – or not support – federal funding for science. Do people with a stronger understanding of scientific basics feel better about seeing their tax dollars headed to the lab? Could a strong interest in science lead to more support for science funding – potentially even in the absence of basic science knowledge?

These questions have important implications for public policy. Many scientists worry that status quo levels of funding are insufficient. Fewer dollars to go around could potentially hinder their ability to research complex problems and offer evidence-based policy recommendations – like how to curtail the spread of disease or mitigate the effects of a changing climate.

Who supports science funding?

Why do some Americans oppose increasing funding for scientific research? Many in the scientific community tend to focus on the public’s lack of knowledge about science as a reason. Sometimes called the “knowledge deficit model,” this view suggests that people who better understand scientific basics should be more likely to appreciate science’s policy relevance and thus support increased funding.

But recent studies provide only mixed support for this idea. Although knowledge is correlated with increased support for federal science funding, the effect tends to be small. People who know more about science may also be more likely to reject certain research findings, especially when scientific consensus conflicts with their ideological, religious and cultural worldviews. For example, highly knowledgeable conservatives are more likely to reject scientific consensus on climate change than conservatives who are less up to speed on science.

An alternative to the knowledge deficit model is what I call the motivational deficit model. According to this theory, people who are more interested in science – but not necessarily more knowledgeable – should be more likely to appreciate the importance of scientific research and therefore support increased efforts to fund it. When I use the term “science interest,” I’m specifically talking about the kinds of people who enjoy following scientific discoveries in the news, even if they don’t know the difference between a proton and a neutron.

Studies suggest that being interested in science does encourage people to think more positively about scientists and scientific consensus. And other studies have found that Americans who are more ideologically conservative, less trusting of the federal government and more likely to interpret the Bible literally rather than figuratively are all less likely to support government funding. But less work has been done to study the effects of science knowledge and interest on science funding attitudes in the U.S.

Don’t know or don’t care?

Does a lack of knowledge or a lack of interest, or some combination of the two, best explain why some Americans oppose federal science funding? To investigate this question, I made use of two nationally representative surveys of U.S. adults from the General Social Survey. This survey interviewed two groups of people multiple times – one group between 2008 and 2012 and another group between 2010 and 2014. Surveys that interview the same people multiple times are often known as “panel studies.”

I wanted to see whether people who grew more interested in or more knowledgeable about science over time also became more likely to support science funding.

I measured science knowledge using respondents’ answers to a short quiz about scientific basics: things like knowing that antibiotics do not eliminate viral infections. I used respondents’ own self-reported interest in science related issues – like medical discoveries and space exploration – as a measure of their science interest.

To measure respondents’ attitudes toward science funding, I used a question that asks whether they think the federal government is spending “too much,” “too little,” or “about the right amount” on funding scientific research.

What I found provided strong support for the motivational deficit model. People who became more interested in science over time were much more likely to support increasing federal funding for scientific research. On average, I found that a 10 percent increase in science interest over time was associated with between a 7 to 8 percent increase in support for more science funding.

Interestingly, and in contrast to conventional wisdom in the scientific community, people who became more knowledgeable over time did not become any more likely to support federal science funding. Both sets of findings held even when considering the effects of people becoming more ideologically conservative, religious or distrusting of the scientific community over time.

Time to change communication priorities?

Informing the public about the basics of science is, no doubt, important. However, my research underscores the potential usefulness of boosting public interest in science. Someone doesn’t necessarily need to know the difference between a quasar and a pulsar to be fascinated by NASA’s recent discovery of subglacial water on Mars. Prioritizing efforts to get people interested and excited – instead of attempting to fill them up with facts – contrasts with conventional practice in the scientific community.

Interviews with scientists suggest that, for many, their primary communication goal is increasing public knowledge. Most see boosting public curiosity about science as secondary – something better left up to “science popularizers” like Bill Nye or Neil Degrasse Tyson. My research underscores the potential benefits of rethinking these priorities.

Comment: Despite my background in science and technology, I question if we’ve gone too far into such left-brained pursuits (especially when driven by ego indulgence, arrogance, self-righteousness and greed)… while discounting right-brained and whole-being pursuits (including intuitive, mystical, soul-centered and evolutionary).

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