Politics & Policy

HUD’s Affirmatively Furthering Fair Housing Rule Won’t Alleviate Urban Poverty

If you had to name all the villains who have done harm to America’s great old cities, you might put the federal Department of Housing and Urban Development at the top of a long list.

And since many of those cities are disproportionately black and/or Hispanic, HUD’s record of disastrous policies has had a “disparate impact” on minorities. Taking the recent Supreme Court ruling in Texas Housing — which embraced a very broad definition of “discrimination” under the Fair Housing Act — to its logical conclusion, then, one might say HUD deserves to be prosecuted, if not shut down.

But let us not uncharitably ignore intent, as the Supremes did. The good people at HUD always meant well, always painted rosy pictures of their plans’ and programs’ likely effects. The real world just rarely cooperated.

Consider HUD’s shameful role, beginning in the New Deal era and expanding massively after WWII, in bribing cities to bulldoze “blighted” areas and move their residents to newly built government-owned and government-managed high-rises. The bureaucrats and planners promised — like Marxists fantasizing about the socialist New Man — that these edifices would not just renew their host cities but transform their occupants.

Of course, “the projects” were transformative — in the exact opposite of the way promised. Most soon became infamous as vertical slums, loci of concentrated poverty, crime, and dysfunction. In their day, “the projects” exacerbated every urban problem until, in a complete and tragic admission of programmatic failure, HUD demolished many of them.

Now comes HUD secretary Julian Castro, who recently unveiled his agency’s latest effort to transform: a new rule dubbed Affirmatively Furthering Fair Housing (AFFH).

AFFH is rooted not just in the usual liberal presumptions about the imperfection of markets and the infallibility of government, but in the idea that geography is destiny. HUD has noticed that there are certain neighborhoods where the races have not achieved their desired balance, and where poverty and its tragic by-products are terrible and persistent — never mind the agency’s historic contribution to said ’hoods.

Castro’s mantra is that “no child’s zip code should determine her opportunity to achieve.” AFFH will solve this by making HUD funding contingent on a recipient’s willingness to satisfy the bureaucracy’s fair-housing goals. That means spreading the recipients of HUD’s subsidies (disproportionately minorities) more “fairly” across the grid (into disproportionately non-minority zones) or getting cut off.

Yes, this is patronizing, but the idea that minorities depend on proximity to non-minorities for their well-being is so deeply rooted in progressive thought that it is unquestioned. More important, the focus on geography is seriously misguided, and the failure of HUD (and its grant-hungry enablers in academe) to identify the real root of the urban-poverty problem assures that minorities will continue to suffer needlessly from economic deprivation.

The fact that it’s easier to prosper in some cities and neighborhoods than others is obvious — but the reason is not, as the leftist narrative would have it, that evil whites have built barricades around designated areas, sorted residents by race, and systematically kept minorities in their place. The data on “black flight” from cities to suburbs (and, lately, from North to South) put the lie to that.

Rather, it’s the capital, stupid. Or, more precisely, it’s the lack of capital flowing to certain areas that breeds poverty, lack of opportunity, inequality, and all the sad consequences thereof.

The Left, or at least its most anti-capitalist cadres, have refused to notice or acknowledge the crucial and favorable effect of capital on the welfare of the poor. A few have pointed out that many urban neighborhoods are “food deserts” that lack grocery stores. Du-uh. But they are also factory deserts, office deserts — you name it.

All of these forms of physical capital are simply tools that raise the productivity, wages, and quality of life of those nearby. They are, in short, anti-poverty, pro-“pursuit of happiness” machines. And for decades many (though by no means all) urban policymakers have chased these engines of prosperity away with confiscatory taxes, stultifying regulations, wage controls, support for labor cartels, and myriad other policies hostile to investment. Always meaning well, of course.

The capital deserts thus created are, indeed, often poor and miserable places – though they often stand in contrast to oases of affluence nearby. My hometown of Baltimore illustrates why. In the 25 years from 1950 and 1975, 19 property-tax increases — calculated to rob the rich and buy the votes of the poor — chased tens of thousands of home- and business-owners to the suburbs. Even the most ardent redistributionist eventually saw a problem.

So Baltimore, like many other cities in decline, put its finger in the dike by handing out special tax breaks to rich, well-connected developers who had “paid to play.” This helped revive a neighborhood here and there — usually within sight of water — but did nothing to attract capital investment where it was most needed. The results reached a literal flash point this spring, with our nationally televised riots. In their aftermath, it was easy for the Left to rant about income inequality and racial injustice, contrasting the rioters’ dilapidated neighborhoods with the city’s new waterfront condos or rehabbed townhomes.

But that third-world-ish profile of few privileged rich and many deprived poor is a failure of government rather than markets. HUD and AFFH won’t do anything to cure this malady — or even alleviate its symptoms.

Surely, HUD’s enormous financial leverage and the tsunami of “disparate impact” litigation that AFFH will bring forth might lead some localities to step up their efforts to relocate HUD–subsidized tenants or build new projects (low-rise!) in better neighborhoods. But we’ve seen it all before. The first intra-urban diaspora HUD oversaw, which disproportionately targeted black neighborhoods, was dismissively referred to as “Negro removal”; version 2.0 of this program is unlikely to go any better.

Instead of playing zip-code games, HUD might use its budgetary muscle more constructively; it should close its checkbook unless cities reform their anti-capitalist policies. “No city’s tax, regulatory, or labor policy should limit a child’s opportunity to achieve,” Mr. Castro could say.

That would be not just a sound bite, but sound policy.

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