When I was young, I lived in a State house. This is a house that was built 50 years earlier by the NZ government for the purpose of satisfying the need for low-income housing. The houses are solid, if unremarkable, and spread all over the country.
In the 1980’s, the Government offered a bunch of these houses for sale, with first right of refusal going to the occupants. Many people took them up on it, and bought into the housing market for a low cost. Effectively, the Government subsidized the purchase of peoples’ first house. Many of those people are now in the fortunate position of owning a house in one of the most unaffordable markets on the planet.
In the US, there’s an agency constituted to help rental tenants own their first house, too, that was set up under the New Deal, Fanny Mae (FNMA). Their charter was to make available and administer the newly-invented 30-year mortgage, a tool that was created at the time specifically to allow people to buy their first home. Some time later, a sister organization, Freddy Mac (FRMC) was set up by Congress for similar reasons, as a way to support buying a house for regular people.
After the bailout of the finance sector that happened after 2008, Wall Street used a chunk of the money given them by the taxpayer to buy up newly-available houses from people who suddenly couldn’t afford their mortgages. They are running them into the ground for a quick profit.
Today, many of these purchases by Wall Street are financed by Freddy Mac at a below-market rate. So the US government, unlike the NZ government, has chosen to use low-cost loans to subsidize the purchase of homes not by the tenants who need the break, but by finance whose incentive is to badly manage the asset for an immediate profit (hiking fees, rental rates and skimping on maintenance) and flip it on.
Pluralistic article “Wall Street’s landlord business is turning every rental into a slum”
This follows a standard playbook for the US government. A problem for some segment of the population is identified, and legislation passed to fund a solution. Rather than simply distributing those funds to the population, however, a private partnership is entered into whereby companies are asked to do the work, and the funding given to them. Oddly enough, this generally leads to corruption, mismanagement, an enrichment of a few smart enough to get on board, and a failure to fix the problem.
The money distributed for relief of suffering during the pandemic is a good example of both approaches. One program, paying families for the cost of child care while schools were not safe to open, was administered as a direct payment to recipients’ bank accounts, and has been reckoned to be the single factor most responsible for pulling 40% of children across the poverty line. Another program, the PPP “loan” for small business (a grant, if used for its intended purpose of furloughing workers) was administered by the banking system in conjunction with the federal government; at least one bank is now being sued for demanding repayment of loans in violation of the conditions of the program.
The US government has a problem with simply giving money back to people. This is an ideological approach to government support of the population for whose benefit the government exists, based on the idea that people who need help don’t deserve it. In contrast, giving money to business is viewed as legitimate. This is a quite different outlook on the function of government to that of the New Zealand I grew up with.