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CIAO DATE: 03/02
Critical Review
Winter–Spring 1998 (Vol.12 Nos.1–2)
Unforeseen Consequences and Pathological Self-Reinforcement: Why Cities Decline
By Anthony Woodlief *
Abstract
Peter Salins’s The Ecology of Housing Destruction and Salins’s co-authored work with Gerald Mildner, Scarcity by Design, provide fascinating evidence of the unintentionally harmful effects of urban policies, and their role as catalysts for further harmful policies designed to ameliorate previous harms. The result is a web of counterproductive regulations confronting bewildered policymakers and frustrated citizens. In his The Federal Government and Urban Housing, on the other hand, R. Allen Hays not only misses the existence of these complex policy dynamics, but fails to assess accurately the consequences of the housing policies he favors. His work does, however, offer useful insights into the nature of policy decisions.
While many urban theorists maintain a rather sanguine view of government housing policies, Peter Salins and Gerald Mildner argue, in Scarcity by Design (Cambridge, Mass.: Harvard University Press, 1992), that the impact of such policies has often been literally devastating. In an earlier work, Salins (1980) documented how a combination of rent regulations, stringent zoning codes, and short-sighted low-income housing policies have produced slow-spreading “zones of destruction,” littered with abandoned buildings, rubble, and hopeless, poverty-stricken adults and children. In their collaborative endeavor, Salins and Mildner bolster and update Salins’s earlier analysis. The work of these authors illustrates how policy makers often harm the people they intend to help. I will argue that this is not only a common outcome, but a result that is difficult to change even when the policy makers themselves recognize the harm caused by a policy after it is implemented. What is more, we have reason to expect such outcomes even if lawmakers are rational and altruistic.
Fighting Human Nature
Unlike many social scientists, Salins and Mildner are attentive to the effects of public policies on behavior. Consider rent control, a primary culprit in Salins and Mildner’s analysis. Though New York City has several layers of rent regulations that fall under the rubric of what outsiders call “rent control,” to some degree they all have the same effect: they keep the rents of regulated apartments below what a free market between tenants and landlords would produce. Like any other price control, rent regulation affects the decisions of individual buyers and sellers. Salins and Mildner provide data to show that such effects include a restricted supply of new housing, the decay of existing housing, an inefficient distribution of housing, an increase in property-tax delinquency and thus in building abandonment, and a decline in city property tax revenues.
While some of these effects are easily anticipated, others are less so; thus, it is worth briefly considering each. By imposing an artificially low price on housing, rent control reduces the revenue generated by rental properties, in many cases below their costs. Once their earnings dip below maintenance costs and taxes, owners have no incentive to make repairs or pay taxes, and every incentive to abandon their buildings. Rising rates of delinquency and abandonment translate into falling property-tax revenue. Meanwhile, the city housing supply contracts, as existing buildings deteriorate and developers concentrate their resources elsewhere, for fear that any new apartments they construct will be regulated like existing apartments. Finally, rent control produces housing inefficiencies by creating a strong incentive for people to remain in their regulated, low-rent apartments, even if their housing needs change—say, because their children move out. Thus we see young families with children crammed into small apartments, while across the street live elderly couples with three bedrooms.
Salins and Mildner show that the benefits of below-market rents appear to accrue primarily to upper- and middle-income families. While the rents of regulated apartments are on a par with those of unregulated apartments in most of New York City, a substantial gap exists between the two in Manhattan. Average incomes were 75 percent higher in this borough than the rest of the city in 1987. According to a New York City developer, “‘We’ve got plenty of low-income housing in New York. We’ve just got upper-income people living in it’” (13).
But rent control is not the only cause of New York’s zones of destruction. Salins had argued that another key event in New York City’s long march to its present sad state was the marriage of rent delinquency and tenant grievance proceedings under the auspices of the New York Housing Court in 1972. Because tenant complaints took precedence over rent delinquency complaints, rents became much more difficult to collect in poorer, crime-ridden buildings, where more maintenance is necessary and where tenants are more likely to break things in order to create a maintenance grievance with which they can avoid paying rent.
This situation was exacerbated by a New York City Department of Social Services (DSS) policy of providing its beneficiaries rent and moving allowances with few restrictions. Landlord–tenant adjudication procedures, which were slow and subject to abuse by unscrupulous tenants, allowed DSS subsidy recipients to withhold rent for several months, pocketing the DSS subsidy. When evicted, the tenants could relocate with the help of a DSS moving allowance. To convey the magnitude of the delinquency problem, Salins noted a late 1970s city estimate that rent delinquency among the welfare population was 36 percent (1980, 46). While this behavior led many landlords to refuse DSS recipients as tenants, Salins argued that profit-maximizing owners found that they could make short-run profits in spite of high delinquency rates by accepting DSS clients, doing little maintenance, and not paying property taxes. When delinquency, rent withholding due to poor maintenance, and waning tax grace periods made their buildings unprofitable, these owners simply abandoned them.
“Zones of Destruction”
Owners might have been expected to prefer long-run earnings to the short-run strategy described by Salins. But remember that the tenant composition of each building affects the entire neighborhood, and hence the value of other buildings. Crime is highly positively correlated with factors, such as low income, that were themselves positively correlated with the likelihood of receiving a DSS housing subsidy. If other owners began to accept a significant number of DSS subsidy recipients as tenants, owners who did not do so would still have seen their incomes fall as middle-income tenants fled the neighborhood, a cost that would have risen as the fears of increased crime proved justified.
Similarly, rent control and other regulations, by reducing the profitability of building ownership, may create the conditions under which all owners have an incentive to let their buildings decay—even owners who are not directly affected by the regulations. Though Salins doesn’t say so, the building owners in a neighborhood face a multiple-person Prisoner’s Dilemma (Smith 1982; Axelrod 1984; Olson 1965). Each will be better off if all refrain from letting their buildings slip into disrepair or renting to unruly DSS tenants, but each will suffer if he refrains while others in the neighborhood defect and pursue the short-run strategy. An owner who decides to pursue the short-run, low-maintenance strategy increases the chances that the other owners in the area will likewise defect. Each must worry that enough defections by his fellow owners will create for him a real loss, as opposed to the loss comprised of the opportunity cost of pursuing the short-run rather than the long-run strategy.
The results of this environment are Salins’s “zones of destruction,” where the short-run strategy has resulted in large-scale abandonment. Housing on the edge of these zones, in turn, is “programmed for abandonment” as owners do the equivalent of selling in a declining market (Salins 1980, 93). This process allows the zones to spread slowly, leading economists to describe New York City rent control (to which Salins adds other policies) as slow-motion bombing. To substantiate his claims about building abandonment and spreading zones of destruction, Salins examined the acquisition costs, operating expenses, and rental income of several properties either adjacent to or far from zones of destruction. He found that even though rental income and operating expenses were roughly the same for all of the properties, the acquisition costs were much higher for the properties located far from zones of destruction than for properties adjacent to the zones, reflecting awareness that the properties near zones of destruction have much lower long-run income potential (1980, 98).
Though the adoption of a short-run strategy by some owners may well lead others to do the same, we might still ask what prompts the first defections in a neighborhood. Salins seems to attribute the owner’s choice of a short-run strategy solely to the decline in potential long-run income resulting from being close to a zone of destruction. This decline reduces the difference between long-run profits and short-run profits, making the former a less attractive alternative. But this explanation begs the question by assuming the pre-existence of the very decay Salins is trying to explain. Costly rent, zoning, and building codes may be decisive here, by reducing the long-run income to be expected from owning a building. Add to this the fact that an owner’s assessment of his potential long- and short-run income is a function, in part, of his expectations regarding the other owners’ actions, and we see how instability can develop in a neighborhood. If for any reason owners lose faith in the willingness of others to stand firm in the face of encroaching decay or declining earnings, the defections begin to accelerate, fueling a downward spiral.
Policy Self-Reinforcement and Autocatalysis
Salins’s work draws our attention to an important but overlooked component of public policies—their capacity to perpetuate themselves, reinforce one another, and serve as catalysts for chains of unforeseeable events that, once set in motion, cannot be undone by removing the policy that sparked them. Most scholars tend to assess the effects of public policies on income, housing, paperwork requirements, and the like. Others, including Salins and Mildner, focus on the behavioral effects of policies—how they modify and sometimes pervert human action. But too few thinkers explicitly consider the effects of policy on policy. As Aaron Wildavsky (1987, ch. 3) observed, policy very often becomes its own cause, as we endeavor to correct the unintended consequences of previous decisions.
Government programs often fail to resemble the rational, comprehensive planning that serves as a model for aspiring policy makers. Limited time, limited information, multiple lines of authority, and multiple issues competing for their attention leave officials ill prepared to craft well-considered legislation, let alone perform the monitoring necessary to ensure faithful implementation. Public officials have a basic inability to predict the multitudinous effects arising from the implementation and interaction of their policies.
An understanding of this phenomenon is essential because inevitably the attention of any student of politics and government (perhaps especially urban politics and government) turns to a deceptively simple question: “Why?” Why do cities erect cumbersome, unresponsive bureaucracies and tolerate their resulting malfeasance? Why is a policy subsystem like New York’s housing apparatus so difficult to change when most citizens are displeased with its performance? Why can’t public officials make better policies? These questions raise doubts about the efficacy—indeed, the very purpose—of government.
While political scientists, historians, and economists offer several powerful models that might be used to answer these questions, they prove ultimately unsatisfactory. Pluralist theory, for example, suggests that governments make policy in response to interest-group pressures. Indeed, Salins and Mildner reveal how landlords’ associations, tenants’ rights groups, and developers have at times influenced the adoption or rejection of various policies in New York. But even in a strictly pluralist world, where the preferences of government officials have no effect, this model would be inadequate to explain New York’s housing mess. That is because it does not take into account ignorance—on the part of interest groups and public officials alike—regarding the present and future consequences of policies. If we realize the extent to which policy making involves reaction to these unintended consequences and acknowledge how quickly this can produce layers of conflicting law and bureaucracy, the notion that policy is strictly the result of interest-group demands loses its force. In addition, we know that many interest groups concerned with particular policies spring into existence only after the policy is enacted, which turns the pluralist argument on its head. Finally, a great deal of interest group pressure, while powerful, is blunt—it offers no guidance to policymakers, only a clear expression of dissatisfaction with the status quo.
A focus on policy makers, on the other hand, produces various forms of public choice theory (Croswell 1975; Niskanen 1971; Tullock 1965) and state theory (Krasner 1984), according to which government officials pursue either self-interest or their judgments of what is best for the public. Budget and regulatory growth can be explained quite nicely, it would seem, as functions of elite preferences. Political elites are themselves divided on policy issues, however, forcing them to seek compromises that satisfy neither ideological faction. These compromises, joined with the boundedly rational nature of decision making (Cyert and March 1963; Lindblom 1959; Simon 1957), help produce policies that generate unanticipated consequences. These unintended policy consequences quickly turn even the most rational, self-interested policy maker into a harried troubleshooter, not a foresighted planner.
Incrementalists (Braybrooke and Lindblom 1963; Lindblom 1959 and 1965; Wildavsky 1988, ch. 3) incorporate the problem-solving, crisis-motivated nature of policy making into their models to yield a fairly realistic picture of government bureaucracies. They argue that in the face of limited time and information, confronted with an environment of competing interest groups and ideological or self-interested bureaucrats, policy makers adopt a rational strategy of gradual change based on feedback from past changes. Such an approach enables policy makers to deal with the impossibility of measuring tradeoffs between, say, roads and hospitals by making small adjustments in the budgets for each and then assessing whether these adjustments produce desirable outcomes (Lindblom 1959). It also keeps them from making large mistakes: if last year’s actions weren’t a colossal failure, then actions slightly different from last year’s shouldn’t be disastrous either. The first rule in politics, then, is to avoid blunders for which one can be held publicly accountable. This, according to the incrementalists, explains why budgetary changes are usually small from year to year, and why public policy is so often characterized by an evolutionary process of changes in rules.
The beauty of the incrementalist model is that it seems not only to describe much public policy, but to imply the possibility of arriving at optimal policies in the long run. If policy makers are groping about in the dark as a result of limited information about the future consequences of their actions, then a process of gradual adjustment and feedback can produce the best policy. This attractive implication, however, belies the model’s ability to explain policy. While it is inarguable that policymakers often adopt an incrementalist approach for precisely the reasons suggested by these theorists (limited information, limited time, inability to compare apples and oranges, etc.), it is also quite clear that policy—in our case housing policy—very often is not optimal.
Furthermore, policy arenas are occasionally characterized by sharp changes that incrementalist theory neither predicts nor explains (Schulman 1975). Bryan D. Jones (1994) and Frank R. Baumgartner and Jones (1993) argue that the inherent inertia of policy-making organizations, combined with the limited attention range of voters, produces punctuated policy equilibria. While policy inertia and incrementalism are the norms, once some event (either internally generated or exogenous) refocuses public attention on a policy and its problems, the stage is set for drastic change as policy makers respond. The general tendency toward inertia and self-reinforcement then reasserts itself, as interest groups and elites coalesce around incremental modifications of the new policy.
Acknowledging the ability of policy to reinforce and perpetuate itself takes us a further step toward reconciling incrementalist theory (as well as the other aforementioned models) with observed reality. When we consider the additional constraints of limited information and time, shared authority over decisions, and competing private and bureaucratic interests, we can see how actual policy making begins to diverge from the predictions of pluralists, state theorists, public-choice theorists, and incrementalists.
Admittedly, there is no great revelation in the claim that public officials enact policy without precise knowledge of how closely it mirrors the “ideal.” What the foregoing theories have failed to capture, however, is that as this gap between implemented policy and ideal policy becomes apparent, officials find themselves constrained from acting on this new knowledge. The policy they have created causes problems they did not foresee, which they may endeavor to repair with—of course—more policies (which carry their own unintended consequences). But the implemented policy finds proponents in both private and bureaucratic actors, who defend its perceived benefits for their interests and ideals. Those harmed by the policy, on the other hand, are often dispersed and unaware of the damage it causes. Soon, policy makers find themselves scrambling to patch up problems created by the actions of their predecessors, all the while attending to the varied demands of interests engendered and fueled by these earlier policies. Over time, they travel down a path that nobody intended or foresaw, yet which nobody seems capable of leaving. 1
The Tangled Web
Though this is not their primary intention, Salins and Mildner provide many examples of self-reinforcing, self-perpetuating policy streams that have produced an unintended maze of constraints on beneficial human action in New York City. For example, the city’s numerous extensions of rent control statutes, interspersed with promises to refrain from doing so again, served to create uncertainty among potential developers about the future regulatory treatment of any apartment buildings they might erect (59–68). This uncertainty hampered growth in the supply of housing, causing higher rents as supply lagged behind increases in demand. Rising rents elicited popular demands for the extension of rent control to currently uncontrolled housing. This only made developers even more wary of building apartments.
The most striking example of a regulation’s capacity to reinforce itself can be found in the method New York city and state officials periodically use to assess the necessity of continuing rent control. State law requires a vacancy survey every three years to verify the persistence of a housing emergency, defined as a vacancy rate under 5 percent (41). Insofar as rent controls create a housing shortage, this procedure virtually guarantees that they are self-perpetuating.
New York City’s housing policies have served not only to reinforce themselves; they have perpetuated a stream of additional policies that creates an even more complex regulatory labyrinth. For example, Salins and Mildner show that housing construction in the city increased in anticipation of stricter zoning implementation in 1961. Before this law, housing in New York could be built on land zoned for manufacturing or industry. The new law promised to reduce the supply of available sites significantly by requiring housing to be built only on lots zoned as residential. Naturally, builders raced to beat this new law, generating a housing boom that was followed by a drought after the new regulations took effect. The resulting near-cessation of construction caused a jump in the rents of unregulated apartments, producing new demands for an extension of rent control, which officials eventually granted.
As the city’s economic base shifted from manufacturing to service industries, the buildings associated with the former fell into disuse (72). New manufacturers opted for the suburbs, where there were lots that could accommodate long, low buildings. But the 1961 law prevented turning the abandoned manufacturing buildings into apartments, despite chronic housing shortages. Predictably, the owners of the abandoned buildings began illegally renting them to residential tenants. At this point the authors’ account takes a comic turn, as the city, which refused to legalize this practice entirely, created a Loft Board that decided that only “artists-in-residence” could live in these buildings. Applicants were required to submit samples of their work to the city’s Department of Cultural Affairs to obtain an artist’s permit, which they could then take to the Loft Board to obtain permission to live in a loft (73). Fifteen years after passing the zoning law, New York officials were still passing laws to cope with its unintended consequences, and today they are legislating remedies to the consequences of those laws.
In fact, New York has erected entire bureaucracies to deal with the consequences of its regulation. The remedy these agencies provide is more regulation. Salins and Mildner note that any reasonably large apartment-building proposal has to go through a variety of hearings where it can be blocked by a wide array of local interest groups. Meanwhile, the regulation-driven process of decay and abandonment Salins described has created what he and Mildner label “public housing by default” (92), as the city steps in with its own buildings to remedy the housing shortage its policies helped create.
As one begins to uncover the layers of policy governing housing in New York, a set of malign symbiotic relationships between regulations, agencies, landlords, and tenants becomes apparent. Regulations intended to make housing affordable create incentives that restrict the housing supply, which creates disputes among and between sellers and buyers. Tenants murder landlords. Landlords demand exorbitant “key money” from prospective renters. Squatters occupy abandoned buildings. Regulations and agencies created to handle these disputes (e.g., the New York City Housing Court) promulgate more rules and become ensnared in contentious relationships both with existing agencies and with citizens. Once set in place, this web thickens and evolves to the point that nobody can understand or predict its behavior, everybody is unhappy with it, yet no one seems capable of fixing it.
Stepping Back in Order to Move Forward
In addition to perpetuating themselves and catalyzing additional government action, policies may reach out to affect social norms. Norms are themselves examples of self-reinforcing systems. Insofar as public policies affect behavior, they may have the ability to alter norms in unintended ways, replacing norms beneficial to individuals and groups with harmful ones. The growth of urban pathologies such as crime, drug use, and illegitimacy may be explained in this way. To see how this is so, it is helpful to consider the work of someone who would disagree with such an analysis, and who seems unaware even of the policy tendencies described by Salins and Mildner, let alone the self-reinforcing nature of policy that I am suggesting.
R. Allen Hays’s The Federal Government and Urban Housing (Albany: State University of New York Press, 1995), though at times myopic, is by far one of the better treatments of federal housing policy. Hays applies a model of elite dissensus (of which, more later) to explain the shortcomings of such federal policies as public housing, low-income housing subsidies, rent vouchers, housing rehabilitation, and community development. In Hays’s view, these programs suffered from compromises between liberal and conservative elites that left them underfunded, poorly targeted, and too short-lived or underanalyzed for us to appreciate their effectiveness. Hays also marshals demographic and economic data to argue for a renewed federal commitment to housing programs, in the face of what he believes to be the growing gap between those who can and cannot afford decent homes. Unfortunately, much of his data is misinterpreted or incorrect, while his conclusions require a suspension of interest in fundamental questions concerning poverty. Speaking more generally, the relative merits of this book say more about the doldrums of contemporary urban studies than the success of Hays’s approach. Despite these shortcomings, Hays offers ample evidence with which to support and extend the hypothesis I have constructed so far—that the policy realm yields unintended effects that are self-perpetuating and autocatalytic.
For some time, poverty researchers have been split between those who believe that external forces create poverty, and those who fault the pathological behaviors of the poor for their condition. Though it is central to any analysis of the successes and failures of housing policy, Hays appears unconcerned with this debate. Thus, he is able both to claim that public housing projects failed because they accepted too many of the very poor (who, Hays doesn’t say, tore the places apart), and to advocate the construction of more such monstrosities for the very same poor. The same goes for low-income housing subsidies, where the admission of very poor people raised the default rates. A recurring element in Hays’s critique of major federal housing programs is that their availability to the poorest of the poor gave them a scent of failure that tainted their many successes in giving people better housing than they might otherwise have obtained.
For example, Hays believes that negative public impressions of housing projects were fueled in part by the gradual admission of AFDC recipients (Aid to Families with Dependent Children, given largely to jobless single mothers). According to Hays, “This helped reinforce public perceptions of the program as one more ‘dole’ to those already receiving aid” (95). Renting to this very poor group, in other words, made public housing look bad, which affected its ability to secure future funding from public opinion-conscious politicians. The truth, of course, is that it was one more dole to those already receiving aid. Furthermore, since most Americans don’t peruse the tenant rolls of housing projects, or know anyone who lives in them, the negative impressions Hays mentions are likely to have stemmed not from public misperceptions of the moral worth of their residents, but from seeing what these projects looked like and hearing daily news accounts of very real and often brutal crimes done by and to their residents.
Like most academics, Hays seems to accept the thesis inspired by Richard Cloward and L. E. Ohlin (1960) and Frances Fox Piven and Cloward (1971) that poverty causes crime (and, by extension, drug use, suicide, divorce, illegitimacy, and pockets of ethnic and racial hatred). Some academics, however, and anybody who has ever lived among the poor (what policy changes might a greater overlap of these two classes produce?), recognize that the dominant causal arrow in this relationship runs the other way. I certainly do not mean that all poor people are so because they (or their parents) are lazy, criminal, drug-addicted, etc. It takes only a few well-armed thugs, drug dealers, and street bums to turn a prosperous community into a wasteland of barred windows and empty streets, where bathtubs are valued as much for their ability to slow a bullet as bathe a child. The resulting environment recycles itself, as children become socialized into a life where jobs are scarce and violence is commonplace. Just as we saw above that policies can be self-reinforcing, so can destructive community norms—at least until the community self-destructs faster than it replenishes itself.
Hays seems to recognize as much when he criticizes policy makers for placing housing projects in slums, where they became loci of crime and social decay. The problem, of course, is that the poor have to live somewhere. As Hays recognizes elsewhere in his book, you can’t make Americans concerned with their safety and property live close to housing projects if they don’t want to. And nobody wants to—especially poor homeowners, who comprise some of the most vocal opponents of low-income housing. Thus, wherever you put the project becomes, in time, a new slum. That policy makers were in some cases foresighted enough to skip the middle step by placing projects in existing slums earns them little credit with Hays. His unwillingness to question the roots of neighborhood decay leaves him free to sidestep the possibility that placing free and subsidized housing in decent neighborhoods tips them into a downward spiral of abandonment and poverty (Schelling 1971; see also Granovetter 1978).
Paved with Good Intentions
If poverty flows from the unchecked pathological behaviors of some community members, then it is logical to ask about the origins and sustenance of these behaviors. Though there may be some truth to the theory that they stem from poverty (leaving aside the lack of empirical corroboration, poor theoretical construction, and piercing refutations that confront this hypothesis), 2 it is worth asking whether the type of interventions advocated by Hays and others might themselves have contributed to this social decay. 3 Salins and Mildner, as we have seen, provide convincing evidence that this is the case.
Hays does not consider this possibility. He reports, for example, that public housing programs penalized the upwardly mobile among their beneficiaries. He spends not one sentence, however, considering the ramifications of this incentive structure for long-term behavior. During the 1940s and 1950s, public housing residents whose incomes rose above a maximum were evicted so that only the truly poor would benefit from government housing. Similar disincentives existed in other welfare programs. For example, single mothers were eligible for AFDC, while married parents largely were not. Even though such restrictions have since been gradually relaxed, one unavoidable restriction on eligibility remains: you can’t get welfare if you produce too much for society.
Hays fails to address the obvious consequences of such a system. He observes that the evictions for rising incomes were harmful because they put people on the streets, but doesn’t seem to understand that such an incentive (and others like it) will affect behavior. An earned dollar loses its value when the combination of taxes and lost benefits results in a tax rate of 100 percent, or higher. Marriage is less attractive when benefits flow more freely to single mothers. Furthermore, monetary incentives for illegitimacy may serve to elicit behavior that erodes the moral disincentives for illegitimacy, leaving in place a perpetual cycle of poverty and illegitimacy in many neighborhoods even after changes in welfare policies remove the monetary incentives (Murray 1993; Nechyba 1996). The history of the Great Society is thus a sad tale of dependency, fostered by well-meaning social workers and academics and their often cynical political allies. Removing these policies holds no promise of reversing their damage, however, because the social pathologies they have spawned are now self-perpetuating.
Urban renewal has a similarly sordid history of destroying neighborhoods and evicting the poor (Anderson 1964) that is largely ignored by Hays. Although he discusses the difficulties confronting refugees of urban renewal in their search for other housing, he neglects the far more serious long-term effects of urban renewal on small businesses and communities, and on minority communities in particular. A closer look at the uprooting of vibrant black neighborhoods to make way for luxury hotels, civic centers, and highways reveals that, in many cases, the term “relocation” should be replaced with “dissolution” because the communities never grew back. What to wealthy white liberals appeared to be second-rate diners, shoe repair stores, and vegetable stands begging for demolition were, in fact, the building blocks for increasing job skills and prosperity among people labeled poor. 4 But bureaucrats and social workers, who mistook a dynamic system of social mobility for a static state of poverty, concluded that the only way to develop such neighborhoods is to raze them to the ground and build on the rubble, dispersing their unsavory residents in the process.
The Rest of the Story
The most disappointing aspect of The Federal Government and Urban Housing is Hays’s poor data analysis. What is supposed to give force to his account is the fact that housing prices are going up while homeownership rates are declining, suggesting a growing gap between the housing haves and have-nots. The problem with assuming that rising housing prices result in fewer homeowners is that this doesn’t hold quality constant. In other words, home prices might well be rising because buyers with more disposable income, facing lower interest rates compared to the 1970s, are choosing to finance larger homes with more amenities. In fact, controlling for quality reveals housing price increases to be barely ahead of—and sometimes behind—general inflation since 1969 (Abraham 1990). As for the decline in homeownership, it amounts to a drop during the 1980s of 1.7 percentage points, to 63.9 percent of all households. Hays picks a peak year for homeownership, 1981, as the starting point for his series, and stops at 1989. The homeownership rate in the year his book was published, however, was 65.1 percent in the final quarter. At the end of the third quarter of 1997 it stood at 66 percent—a record high. So much for declining homeownership.
To bolster his argument that Americans are finding it increasingly difficult to afford homes, Hays points to stagnant or declining incomes during the 1980s. But when properly measured (i.e., by individual income to adjust for changing family size, and including benefits, which have comprised an increasing portion of compensation), the average earnings of every income quintile increased during the 1980s, with the lowest growth quintile posting a 10.1 percent increase (McKenzie 1992). This fact suggests that rising home prices are due to the fact that buyers have more disposable income.
In order to make the point that black and female household heads are especially hard hit by a declining federal commitment to housing, Hays points to the large household income gaps between men and women and blacks and whites. But there has, in fact, been no decline in federal housing programs. Hays is misled in this regard by his reliance on the proportion of federal spending going to housing and development subsidies. Faster growth in other programs thus makes it appear that housing spending has declined, even though it has increased at an annual rate of 9 percent since 1980. As for the income comparisons, the large gap in black/white household incomes is driven substantially by the ominous chasm between the two in out-of-wedlock birthrates. While roughly 23 percent of white children are born out of wedlock, 68 percent of black children are, with the figure well over 80 percent in large cities. Thus, when Hays compares household incomes, he is often comparing the incomes of two working white parents to that of a single black parent. To make matters worse, since young women have the most out-of-wedlock births, Hays is comparing statistics for educated white parents to those for single black mothers with little chance of furthering their education. The education and job experience disadvantages suffered by single mothers also drive the gap in household incomes between male and female heads of household. Indeed, once we begin to control for things like single parenthood, average age, continuity in the workforce, region, and education, 5 these income gaps close almost completely.
Hays’s analysis of homelessness is also incomplete. He wants to lay as much blame as possible on inadequate federal housing initiatives. This leads him to neglect ample empirical evidence that a majority of the homeless suffer from alcoholism, drug addiction, mental illness, or some combination of these (Jencks 1994). Many of these people will be no more helped by additional public housing than drunken drivers will be helped by new roads. Rather, many of the homeless are trapped in self-reinforcing systems of pathological norms and harmful policies.
Ideology, Elite Dissensus, and Compromise
The most interesting part of Hays’s work is his attempt to frame his historical survey with a political model that incorporates elements of elite theory. He uses a model of subgovernments (Freeman 1965; Lowi 1969), wherein policy areas are dominated by sets of interested political and private elites. At the federal policy level, these elites include key members of relevant Congressional committees, federal agencies, and corporations and individuals with substantial interests in policy outcomes. This model diverges from the concept of an iron triangle of interest groups, Congressional committees, and administrative agencies by incorporating the refinements of Hugh Heclo’s (1977, 1978) notion of “issue networks.” This allows Hays to notice that among the interested elites are not only those who benefit from a program, but also academics, journalists, and others who have expertise in it. These subgovernments produce policy equilibria that are hard to unbalance, as existing groups work to exclude new groups with differing policy preferences.
These differences in policy preferences are driven by ideology, which Hays defines as a set of interrelated beliefs that guide action. Hays notes that interrelated beliefs need not be consistent with one another. For example, ask the average American whether the government should intervene heavily in the economy, and he will almost certainly say “no.” Follow up by asking if the government should guarantee a job to every American willing to work, and odds are he will say “yes.” Of course, the two answers are inconsistent, but that is the nature of public opinion, and this insight holds important implications for ideology, electoral behavior, and, ultimately, public policy.
Hays makes interesting use of belief inconsistency by applying it first to political elites. He argues that although American elites share a respect for the ideas of capitalism and democracy, they have developed differing “interpretive frameworks” for these ideas. In turn, they have gathered into two broad factions that Hays labels “liberal” and “conservative.” Hays defines liberals as those who favor government amelioration of undesirable market outcomes (presumably poverty, unemployment, discrimination, etc.). Conservatives are those who favor only augmentation of market outcomes (tax breaks and subsidies for businesses). Both, says Hays, are “firmly rooted in a common capitalist world view” (8).
As for the masses, Hays writes, they harbor “a collection of interrelated images and facts” that they “associate with particular persons or events,” but they have no clear interpretive frameworks, as elites do (7). In short, their views on politics, when existent, are jumbled and uninformed. This, Hays notes, leaves them “vulnerable to symbol manipulation by elites wishing to justify their policies.” These masses of voters are the audience that liberals and conservatives must please as they battle to implement their visions of how government should operate.
For Hays, this ideological battle between factions, waged with rhetoric and symbolism before an ignorant public, is the cause of U.S. housing policy failures. It has produced compromise policies that are at once suboptimal and, because they are rooted in majority votes, difficult to change. Furthermore, the solidified ideological factions of elites serve to filter policy initiatives and participants, excluding those outside established policy paradigms. Ideology thus serves as both an internal and an external constraint. Mainstream elites are internally constrained by their own philosophical affinity for capitalism and democracy, and externally constrained by public respect for the symbols and vague ideas associated with these systems. Elites outside this mainstream, moreover, are externally constrained both by the lack of mass support and by the ability of centrist elites to freeze them out of the subgovernments making policy.
Some of this analysis rings true. Much of what passes for political debate among elites is simply posturing and rhetoric designed to produce favorable public opinion. It is also true that handfuls of interested actors hold sway in most policy areas, so long as they do not create waves of public discontent (and semi-awareness) high enough to swamp the boat. Hays is clearly on to something when he decries policy compromises that cripple a program’s potential effectiveness while at the same time perpetuating its tenure. In fact, when one combines inconsistent voters with compromises among policy makers, one finds a partial explanation for why the inherently self-reinforcing nature of public policy is so threatening to civil society. Not only do policies perpetuate themselves; they often start from a suboptimal or irrational point. Rather than work themselves out of these beginning “ruts” via some incrementalist process of long-run optimization, these policies merely contribute to the creation of entire subsystems of policies aimed at remedying their own ills. These subsequent policies, as the work of Salins and Mildner illustrates, often carry with them further harmful and unanticipated consequences.
Yet Hays reveals only a portion of the trends that lead to irrational, self-reinforcing policies. As a result, he misjudges the extent to which policies represent centrist compromises. In addition to his observation that legislative compromise is a product of political factions, Hays would benefit from attention to the gaps that often grow between legislation and implementation. Consider the 1990 Americans with Disabilities Act. Driven by the symbolic value of assisting the disabled, yet mired in profound disagreement over the meaning of “disability” and over what constitutes a “reasonable” burden of accommodating the disabled, the measure’s key advocates in Congress adopted ambiguous language in order to secure passage of the bill. Because the Supreme Court empowers federal agencies to interpret unclear legislation, the Equal Employment Opportunity Commission (EEOC) now has wide latitude to determine the distribution of the costs and benefits created by this law. The agency has proven more than willing to pursue expansive definitions of disability, while seeking exorbitant remedies from the institutions it regulates. Compromise, in this case, leads not to centrist, majority-preferred policy, but to radical policy—a clear departure from Hays’s thesis.
Even legislation that is not vague, such as the 1964 Civil Rights Act’s prohibition of employer discrimination, can be bent to satisfy ideologically extreme members of the implementing agency. Despite very clear language prohibiting discrimination on the basis of race, the EEOC has crafted rules over a span of 30 years that require racial discrimination on the part of governments and publicly funded universities. The tendency of bureaucracies and courts to distort centrist legislation in the service of extreme ends has drawn growing attention (Bork 1996).
The foregoing observation raises questions about Hays’s characterization of elites as supporters of capitalism and democracy. At what point does it become meaningless to say that his liberal and conservative factions (themselves questionable conceptualizations) are “firmly rooted in a common capitalist world view”? Once we acknowledge that the only true indicators of elite valuations of capitalism and democracy are their expressed policy preferences, Hays’s claim appears to be in danger. How are support for racial preferences, restrictive trade barriers, government control of the health-care system, or micromanagement of agriculture rooted in a capitalist world view? How do we reconcile widespread elite support for court decisions that invalidate popular referenda on term limits, welfare, and affirmative action with Hays’s belief that these same elites cherish democracy?
Hays is clearly correct that political elites frame their policy preferences using symbols supported by the masses. But this does not mean that they are internally constrained by a common American ethos. It is closer to the truth to say that political elites feel externally constrained by the opinions of the public, and by little else. Witness their escalating expenditures on polls and focus groups, all to tell them what Americans think. The goal is surely not to better serve the voters’ expressed interests. President Clinton’s polling team (among others) actually gives focus groups machines with dials attached while they watch clips of him speaking. Viewers are instructed to turn the dial one way when they hear something they like, and another way upon hearing something they dislike. The end product is a sort of speech EKG, which the opinion technicians use to isolate phrases and words that resonate with the audience. These words are then inserted into descriptions of proposed policies, regardless of their accuracy. Not even Orwell predicted as much.
Hays is, of course, aware of this, but his standard for classifying a policy preference as capitalist or democratic seems infinitely elastic, so that elites’ use of capitalist and democratic symbols to describe their policies are merely advertising, not fraud. As proof, consider his claim that “the actions advocated by liberals, from the New Deal onward, have been minor modifications of market outcomes” (22). In a world in which every policy is centrist, it becomes easy to blame policy failures on compromise, suggesting that more forceful manifestations of the same programs would have succeeded.
It is tempting to think of policy failures—the broken promises, unintended harm, wasted resources—as the result of deficiencies on the part of policy makers. That view is often accurate, in fact. Salins and Mildner make a convincing case for poor economic reasoning as a cause of many of New York’s preposterous regulations. Hays argues persuasively that policy makers value compromise and appearance over principle. Unfortunately, the belief that bad policy makers are the cause of bad policy effects can lead to two mistaken assumptions. The first is that employing more competent and well-meaning bureaucrats will produce better policy outcomes. The second is that eliminating the offending policy will undo its effects. Once we begin to view the web of policies and their effects as a self-sustaining system, however, the error in such thinking becomes clear. Will eliminating rent control, for example, stop the spreading zones of destruction in New York City? Will ending the subsidization of poverty eliminate its baneful effects on inner-city culture?
While we can lay blame at the feet of those who created these and other harmful programs, this takes us no closer to a solution. The dilemma that confronts those who agree more with Salins and Mildner than with Hays is this: At the end of the day we are no closer to solving the problems whose origins we believe we have correctly uncovered. That is the most damning indictment of government activism—the fact that no solution emerges from a proper diagnosis of the problem. Many conservatives and libertarians seem to believe that their mission is to educate, as if the harmful programs they decry will dissipate with the ignorance of their opponents. The harm, unfortunately, remains. And in many places, it spreads like a cancer.
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Endotes
*: Anthony Woodlief, e-mail woodliet@kochind.com, is completing a doctorate in political science at the University of Michigan. Back.
Note 1: For a more formal discussion of the consequences of limited information and self-reinforcing policy for analysis of urban politics and history, see Woodlief 1998. Back.
Note 2: See, in particular, Nettler 1974. Back.
Note 3: See, for example, Banfield and Wilson 1963 and Anderson 1964. Back.
Note 4: For evidence that many communities demolished by urban renewal were in good shape, see Husock 1991. Back.
Note 5: As Thomas Sowell (1995) illustrates, even controlling for education can be misleading if done improperly, because of vast differences in the kinds of college degrees earned by blacks versus whites, and men versus women. Back.