Privatizing The Profits, Socializing The Loses

There the "free" marketeers go again. Milwaukee real estate execs question Housing Authority's high-rise plan.

So, the City is booming. Development, jobs, tourism, new businesses...things are looking up.

As usual, when things start to gentrify, certain people are priced out of the market...yet those workers are still necessary for the booming economy to exist.

Enter affordable housing. Another policy answer to a society that doesn't pay a living-wage. If you're not going to pay a downtown-wage for a downtown-worker, public policy steps in to subsidize and correct the market.

It's as much a subsidy to the employer as it is to the worker. By subsidizing the housing of these workers, the government is allowing the employer to pay below-market wages.

Also, as usual, and wanting to have it both ways, local developers are complaining when the government steps in to correct the market. The Milwaukee Business Journal reported, "The Housing Authority in April introduced its plan, which calls for spending up to $150 million on a high-rise tower with 350 apartments, a mix of market-rate and affordable units."

Tim Gokhman, director of New Land Enterprises, told the Business Journal:

He said if the city has figured out how to generate a profit from a high-rise to subsidize affordable units, “teach the rest of the market how those profits can be attained.”

Because the profits aren't high enough for private developers, because the returns on investment aren't elevated enough, because the government won't just give them the money to do it, private developers are complaining when the government enters the market to provide needed housing for citizens. (Privateers complain when the government does any of the many things the magic "free" market won't do.)

Developers can't have it both ways. They can't claim they're the experts - the "free" market and the private actors have all the answers and will provide as long as the government stays out of the way. But then, in the very next breath, they come to the public for giveaways, tax breaks and other hand-outs they claim the need for their projects.

If the public has to give tax cuts, subsidies and incentives to private actors to get them to do something, why shouldn't the public entity just complete the project?

The private sector does some things well. But it's time we re-realize the same can be said for the public sector.