The Pen and the Calculator

The Excluded Americans: Homelessness and Housing Policies, by William Tucker, Washington, D.C.: Regnery Gateway, 382 pages, $24.95

The Excluded Americans presents William Tucker in two different guises: Tucker the journalist and Tucker the housing theoretician. The book reports on the strange and awful things that occur when local governments decide to manage the market. As the subtitle indicates, the book also attempts to prove that these policies, most notably rent control, have been the culprit in the rise of homelessness.

Tucker takes the reader on a tour of the American urban countryside—its buildings and structures. He takes his reader from the housing pit of the homeless beyond the gates of Grand Central Station to the paper walls of exclusion in America's suburbs. He also reports from the war zones of Santa Monica, Berkeley, and New York City—where the paper-working class and the paper-pushing bureaucrats are winning the battle and burying landlords in the rubble of their buildings.

The villains in his story are the "excluders" who use the tools of zoning, rent control, and regulation to restrict the housing market and keep affordable housing out of the hands of the poor. Tucker despises the suburban mentality exemplified by zoning. The paper barriers of zoning ordinances that limit development to single-family, half-acre sites have kept the suburbs "uncluttered" by the urban poor. The attractiveness of the device and the feeble efforts of the courts to prevent its use bother the free-marketeer in Tucker: "A town could zone out whatever it didn't want without having to pay a price. Indeed, it [is] rewarded…by raising property values and avoiding social spending."

If zoning is bad, "no-growth" ordinances are even worse. At least zoning tries to keep out only the "undesirables"; no-growth tries to keep out everyone. "The last guy to move into town wants to be just that," says Tucker, "the last guy."

If Tucker is bothered and annoyed by present-day land-use practices, he is outraged by rent control. In cities such as New York, Berkeley, and Santa Monica, a paper-working class has created rules that are so restrictive that they go beyond the mere freezing of rents to punitive actions against landlords. The administrators of rent control, Tucker finds, are openly contemptuous of the "carpenters and immigrants" who cannot find their way through the regulatory maze.

The result of the rent control, Tucker reports, is that small landlords have often lost their financial, physical, and emotional well-being. Even large institutions, such as the YMCA, have been brought to their fiscal knees by rent control. But all the news is not bad. One aging hippie informed the readers of the Wall Street Journal that "Berkeley's rent control has provided some unanticipated benefits for the city's retail and restaurant trade." Apparently, there is such a thing as a free lunch, but only if your landlord picks up the tab.

Tucker turns his journalistic talents to New York City and finds a city in which lower-middle-class minority and immigrant landlords (who usually have not graduated from high school) are held hostage by their upper-middle-class tenants. Unable to raise rents enough to even cover their costs, many of these small landlords have finally abandoned their buildings rather than continue to lose money on them. The municipal government owns more than 100,000 vacant and boarded-up apartments that have been abandoned by financially strapped landlords.

There is a rich vein of irony in the attempts of tenant activists to bring these units back to "market" with massive subsidies. There is, for example, the woman whose successful fight to retain her $80 apartment resulted in the closing of Columbia University's School of Pharmacology. Having achieved the status of folk heroine, she went on to participate in 50 rent strikes. Her reward, and comeuppance, was to be appointed head of the "Harlem Restoration Project," which owns and manages two buildings under one of the city's alphabet soup of programs. When interviewed by Tucker she showed him her books, which indicated that in the larger of the two buildings 14 tenants were in arrears for a total of $15,000. When Tucker asked about evicting these people, she responded, "It is absurd how much trouble we have to go through with the courts and everyone else to evict these people.…I think it is ridiculous that you can't do anything about people who just won't pay rent."

Faced with the paradox of the homeless roaming the streets of the world's wealthiest country, and the absurdity of rent control, Tucker tries to make a connection. Using a 1984 Department of Housing and Urban Development survey on the homeless in 60 metropolitan areas, Tucker determines the homelessness rate for the study's 40 largest cities. In addition, he modifies HUD's random sample by eliminating six places where he had difficulty determining the vacancy rate, and added Lincoln, Nebraska (one of the smaller cities in HUD's survey), and 15 other cities that were not in the HUD study. He then selects a number of factors, including rent control, that might explain the variation in the homelessness rates in the different cities. With the help of a statistician, Tucker finds that cities with rent control have higher rates of homelessness and that the single factor of rent control explains 27 percent of the variation. From this, Tucker concludes that rent control is responsible for half the homelessness in America.

But as Tucker himself acknowledges, a correlation does not prove causation. His thesis is undermined by the fact that three of the four cities with the highest rates of homelessness—Miami, St. Louis, and Worcester—do not have rent control.

But the problems with Tucker's thesis don't stop there. To paraphrase the late Yiddish comedian Menashe Skulnik, "There is rent control and there is rent control." The moderate, leniently administered rent control in Los Angeles and New Jersey is a completely different beast from the strict rent control of Santa Monica and New York City. But Tucker doesn't distinguish between the different types of rent control.

And the fact that his method of analysis drives him to set the number of homeless at 1.2 million (taking the hardcore homeless and adding the homeless caused by regulation) should have given him at least a moment's pause. Even accounting for the time lag, it is twice as high as estimates by HUD (from whom he got his basic data) and by such respected institutions as the Urban Institute.

The whole question of the data used by Tucker is troublesome. The HUD numbers are acknowledged as best guesses. What is the basis for Tucker's selection of cities, and is it likely that his guesses are even as good as HUD's? Why did Tucker choose to separate out Santa Monica, Newark, and Yonkers from their larger markets of Los Angeles and New York City? Did Tucker ever meet a homeless person in Santa Monica whose last abode was in that city? The great number of homeless in Santa Monica may be due to the beach and food kitchen located there, not the rent control policies of a well-to-do yuppie community.

There also seem to be serious problems with the methodology. More sophisticated analyses of Tucker's data have found that in the 41 HUD cities in the original sample there was no statistically significant relationship between rent control and homelessness. Only in the 15 cities that were added by Tucker is such a relationship found.

Despite his failure to prove that the homeless on America's streets are there because of rent control, Tucker has written a fine book on overregulation of the housing market. He documents many reasons to abolish rent control—the bureaucracy it creates and its pernicious effects on landlords—but homelessness is not one of them. His pen, fortunately, is mightier than his calculator.

Irving Welfeld is a senior analyst at the Department of Housing and Urban Development. The views expressed are his own and not necessarily those of his employer.