Monday, October 7, 2013

Allocation of Housing

Many people today see an unfair distribution of wealth and income more easily than ever before. According to most statistics, wealth has not been this polarized in the U.S. since 1929.

I don't know if the average American can suggest a reasonable remedy, though. Simple confiscation of wealth from the top 1% of income earners and redistributing it to the rest of us is just not going to be practical. Even if we taxed the highest incomes at 90%, the revenue from those increased tax receipts would not be divided equitably, we can assume.

I'm afraid that although people have a legitimate gripe in the disparities in wealth, we all have bought into this system of distribution at least in part. For example, almost none of us believe that there should be an absolute cap on income. That is, a law saying that all income above $XXX,000 will be confiscated by the government will not be popular when personal liberty is concerned.

One piece of evidence to support this buy-in to the current system of wealth distribution is housing. The U.S. (and any metropolitan area) has a large stock of housing--some of it desirable and some not very desirable. In the Washington, D.C. metro area, for example, there are beautiful homes along the Potomac river in Great Falls, Virginia, Georgetown in Washington or in the neighborhood called Potomac in Montgomery County, Maryland. These homes often cost upwards of several million dollars.

By contrast there are homes in poorer sections of the metro area which sell for less than $100,000. Some might be in a neighborhood with a lot of foreclosures or boarded up properties, or an area with poor schools, crime and litter.

In any case, almost all of us realize that the good, the average and the poor quality housing stock is distributed among the population according to certain circumstances--namely income. If you can afford it, you can buy a house in Georgetown. If not, you have to look elsewhere. Few of us dispute that--if we want to live in a million dollar home, we need to have a lot of money.

Utopians (and perhaps Communist hangers-on) might argue that this limited commodity (housing) should be shared equally among us and that perhaps residences should rotate among people, giving all of us a chance to live in Potomac or Great Falls while others are sent to public housing or blighted neighborhoods.

But even the poorest among us believes that the only reasonable way to move to Potomac is if you are rich. It is foolish to expect anyone to voluntarily give up that home (as none of us would do if we were the occupants) in the interest of sharing with our community.

So in that narrow sense, despite rising anger at disparity in wealth these days, few of us dispute that the most desirable homes should be distributed (or re-distributed) by anything but the ability to pay.

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