The Public-Private Welfare Trap and the Under-Provision of Affordable Housing

• In Event: Affordable Housing, Development, and Inclusion in Cities

Abstract

Why has the US not built more affordable housing, despite an ongoing shortage? Scholars have fruitfully investigated explanations of America's lack of affordable housing by exploring dynamics at the local level such as NIMBYism, neighborhood defending, and other behavioral and attitudinal factors. We complement this work with a multi-method American political economy approach, focusing on the coalitional politics of affordable housing that have produced an emphasis on tax-subsidized public-private partnerships over the construction of public housing as the primary solution to America's affordable housing shortage.

Applying institutional understandings of business power and policy feedback theory, we explain how this coalition has supported a highly profitable private sector while under-providing the affordable housing it intended to create. We term this pattern, which also occurs in other areas of America's often-submerged welfare state such as healthcare and education, the "public-private welfare trap."

We argue that the public-private welfare trap is supported by market logics---collective presentations of cause and effect economic relationships that affect both political elites and the mass public. Under Jim Crow, the market logic that segregation preserved house values influenced the structure of the politics of affordable housing; today, we draw attention to the market logic that public-private provision generates personal responsibility. Among political elites, this market logic went hand in hand with the neoliberal turn towards financialization and justified the rise to prominence of the public-private housing coalition, leading to the eventual accumulation of institutional business power. Amongst the mass public, this market logic contributes to an "electoral blind spot" in which voters cannot reliably ascertain policy positions or evaluate policy performance, further reducing the potential for policy feedback.

We provide several pieces of evidence for our argument. We document the marked increase in tax-subsidized public-private partnerships through the Low-income Housing Tax Credit (LIHTC), America's largest affordable housing production program which, since 1987, has helped produce 2.6 million units of low-income rental housing. 2.4 million of which are still in service. We then trace the political development of a bipartisan public-private housing coalition in the United States with political speech and campaign contribution data. Drawing on an original dataset of HUD press releases, Congressional committee meeting minutes, and housing finance agency publications, we document the development of pro-market personal responsibility rhetoric that emphasized public-private housing solutions over time. At the same time, political campaign contributions from the finance, insurance, and real estate (FIRE) sector to members of Congress are positively associated with the use of LIHTC funds to build privately-owned housing in their district. Finally, we use an original vote-choice experiment on a representative sample of the American public to show that market logic rhetoric is effective at generating support for public-private over public solutions to America's affordable housing crisis, with male respondents and those with strong "just world beliefs" most likely to be swayed by this rhetoric.

Our findings have implications for the future of the politics of affordable housing. These coalitional dynamics can undermine endeavors to build more public housing because public-private partnerships tend to increase power imbalances between grassroots public actors and private business power, amplifying existing and creating new inequalities.

Authors

• Tess Elizabeth Wise, Wake Forest University

• Andreas Wiedemann, Princeton University