As pols from Pittsburgh’s Grant Street, to Harrisburg’s North Third Street, to Washington’s Pennsylvania Avenue keep pledging direct and indirect public subsidies to convert failing office towers into residential accommodations, the evidence continues to mount what a dubious public policy it is.
As The Wall Street Journal reported on Wednesday:
“Cities hoping to convert emptying office buildings into apartments are running into financing issues, stagnating rental markets and other challenges that are bottling up their efforts.”
Among those other issues – a fundamental: In too many cases, it’s simply too expensive to pull off making the conversions cost-effective, (especially when “affordable housing” mandates are thrown in).
So, instead of listening to the marketplace, governments at the local, state and federal level are pledging public dollars to developers and would-be renters and/or buyers to “make it work.”
From The Journal’s Konrad Putzier and Will Parker:
“The White House said last month that it was updating guidance for existing grants and spending programs to make billions in federal dollars available for these projects. It also said it would seek the conversion of more government-owned properties into housing.
“Some cities, such as Washington, D.C., New York and San Francisco, are also taking steps to encourage more conversions. Tax incentives and faster approvals are ‘rocket fuel’ for these projects, said Sheila Botting, a principal at commercial property brokerage Avison Young.”
But here’s the more apt description: It’s like throwing more rocket fuel on an exploding missile that will lead to a long and predictable series of downwind marketplace implosions.
Evermore subsidies will be required to cover the failures created by each succeeding government intervention, proffered by hubristic pols who believe that signals of marketplace failures are their signal to turn taxpayers into venture capitalists.
Such “solutions” solve nothing. They only exacerbate the problems at hand. Constantly turning a deaf ear to the roar of the marketplace shouting “NO!” is public policy perdition incarnate.
Or as Jake Haulk, president-emeritus of the Allegheny Institute, put it:
“Some fools never learn. They just become beneficiaries of government money and waste taxpayer money.
“Governments are vast sinkholes of stupidity,” the Ph.D. economist reiterates.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
