A coupla weeks ago, the Department of Housing and Urban Development (HUD) released a proposal to ban smoking in all public housing. It would reportedly affect about a million households.
I've got a new column up at The Daily Beast arguing that the idea showcases government paternalism at its most naked. There's a strong case to be made that the federal government should not be involved in providing housing (including subsidies to housing in the form of the mortgage-interest deduction). But if it is, it would be far better to provide recipients not with Section 8 vouchers or payments but unrestricted cash. Indeed, that would be far better for any and all transfers to all recipients. As the Heritage Foundation has pointed out, about 20 percent of all government services and benefits got to the top income quintile. The more transparent such transfers become, the more we can actually debate and discuss their breadth and depth.
Rather than being adopted, the proposal should spur a larger conversation about how best to adminster other sorts of programs—from food stamps to the mortgage-interest deduction—that try to engineer our behavior to suit the whims of our leaders….
When it comes to food stamps (technically known as SNAP these days), the government refuses to pay for all sorts of products, to steer recipients to ostensibly healthier choices. The net result of giving people electronic benefit (EBT) cards that can only be used to purchase particular foods is a thriving abritrage market in the benefits. According to a 2014 federal study (PDF), for instance, SNAP recipients who want cash routinely use social media sites to sell the cards at a fraction of their face value. In San Antonio, $400 in SNAP money was offered for $240 in cash; in New Jersey, a $200 EBT card was advertised for $100 in cash.
Rather than trying to push the neediest Americans into particular behaviors—buy a house! have a kid! eat more kale! don't smoke!—it would be far more elegant and efficient to simply give them unrestricted cash payments, whether for food or housing. That would eliminate all secondary markets in benefits and minimize the market distortions that inevitably occur in heavily subsidized markets (the favorable treatment of home ownership was one of the factors in the housing bubble). It might even allow us to start having conversations about simultaneously reducing the size of the welfare state while increasing its effectiveness.