How does a system that hands out free apartments deal with moral hazard? I'd also like a no-questions-asked $700/month apartment for free to work on my startup, and I can imagine many other people would as well.
The idea with these programs is that it's for the chronic long term homeless. So to qualify for a free apartment to work on your startup, you'd need to first spend 10 years on the streets, get diabetes or aids, and have a foot amputated. This is a big hurdle for most people looking for a free apartment.
There's many different categories of homeless. One of the most difficult to resolve is the long term chronic ones. Pretty much nothing tried has worked. However, pilot programs offering apartments have worked, at least it has reduced the cost of handling them and increased their quality of life. We are talking a small number of people, perhaps a few dozen in a big city like Chicago or New York or London. These are the guys that the police and social workers and hospitals all know by name because they are dealing with them every year for more than 10 years.
Given these constraints, do you agree that there is not a risk with moral hazard as implemented?
Of course there is the risk that such a program would be expanded to the point where it would become either a moral hazard, or become a substitute for welfare programs that deal with long term structural issues of unemployment caused by globalization and other factors. As a theoretical outcome in the future that would require many hypotheticals to happen first. It would be something of a slippery slope to consider it as a criticism of a program that seems to work to help long term chronic homeless get off the street while costing society less.
Its been a problem. I seem to recall some people in NYC actually moving into homeless shelter to get on waiting lists for free housing.
I think helping homeless people by giving them housing is a good idea, but it should be very limited housing with a lot of incentive to want to get your own place. It should not be a three bedroom apartment, especially when other people have to wait.
Many people I know, including myself, have suffered through a cramped studio or similar situation in order to save money and I see no reason why others cannot. Its a billion times better than living on the street.
For those engaging in charitable efforts, such a gift can be given to 5 times as many people as a more comfortable, "I'll just stay here forever" situation.
What if the "apartment" was in a Japanese-style capsule hotel? You might prefer to upgrade to your own apartment soon. OTOH, maybe providing no-questions-asked housing would help promote entrepeneurism?
personally i'd have no problems with you getting $700/month for an apartment to work on a startup. That might encourage more long term "job creation" then many other policy that is being set in place.
