
Solve Homelessness: Cut Out The Middle Man - joelrunyon
http://www.economist.com/node/17420321?story_id=17420321&fsrc=scn/tw/te/rss/pe
======
shaddi
This pretty great, but it's also pretty anecdotal. How were these 13 chosen
(probably not randomly)? What is the outcome going to be in 6 months? A year?
Five years?

Based on the (admittedly not extensive) work I've done trying to help homeless
folks get back on their feet, a lot of people do just need some money to get
their life back in order. For instance, it's hard to apply for jobs when you
don't have an address or a phone number for people to call you back at. Giving
someone the ability to not have to worry about making their rent payment for a
couple months can be huge.

But a significant portion of the cases I've seen can't be solved this simply.
Despite what this article says substance abuse issues /are/ a big factor for a
lot of the homeless people I've worked with. Providing cash money can
alleviate some of their problems in the short term, but there are generally
more fundamental obstacles that are holding people back. If you don't address
these issues people can very easily fall back into the trap.

The best intervention I've ever seen for a homeless person is an employer who
is willing to give them a steady job and be understanding about the difficulty
of the situation they're going through. Anything that can get a homeless
person to this point should be encouraged. Sometimes that can mean covering
their expenses for a while to get back on their feet. But often it means
providing substance abuse support; often it means teaching job skills; often
it means connecting them with the right social service or civil society
groups.

~~~
nika
Or, for those who aren't quite ready to do a steady job, the legalization of
interent or part time jobs. Let them work when they are sober and not when
they are not.

Unfortunately the burden on businesses for "hiring someone" is so high due to
regulations that it only makes sense to make positions that are full time, or
part time with dedicated hours.

There are a lot of jobs that could exist where people worked some number of
hours when they wanted to work, but where if they didn't show up for several
weeks someone else could be doing it while they're gone.

Businesses would be willing to hire people on such terms (especially for some
jobs like construction, or cleaning, etc) but they have to create positions
that are focused on specific people due to the impact of regulations.

Hell, under Obamacare anyone who hires a kid to mow their lawn and pays them
$400 over the course of a year has to file a 1099 on them!

~~~
angus77
I've actually tried to convince a couple of employers in the past to give me
more flexible hours when it was obvious that the set hours were irrelevant
(e.g. I wasn't greeting guests or waiting for phonecalls or anything). They
were adamant that that is just not the way things are done.

Same thing as when you try to convince an employer to let you go home early
when you work a little harder and manage to get 8 hours of work done in 6
hours. That's just not the way things are done, so slow down already!

------
ajays
Unfortunately, the way the system is setup, things won't change anytime soon.
The reality is: often cities' homelessness departments are prime locations for
employing cronies and operatives.

For example: the City of San Francisco spends $70M per year (about $10K per
homeless person, given that the population of the homeless is just under 7K).
On top of that you have churches and other charities helping out. And yet I
see homeless people all around, sleeping in doorways, on sidewalks, etc. Heck,
in the shadow of City Hall you'll see dozens of homeless people.

But the department of homelessness (I don't recall the name of the department)
was filled with people from (ex-mayor) Gavin Newsom's campaign staff (from his
unsuccessful run for Governor). There is no accountability. There are no
metrics on how many homeless people are in the City. All we have is a massive
bureaucracy that is making a living off of claiming to help homeless people.

~~~
kevin_morrill
Where does the $70M figure come from? Not challenging you, just want to be
able to cite toe source myself. This is outrageous.

~~~
krschultz
Is it?

Thats $87 per citizen in SF.

That accounts for 0.39% of my taxes in a given year, and I don't even make
that much money because I just graduated college.

~~~
jonknee
You're paying $22k in city taxes a year and don't consider yourself making
much money?

~~~
krschultz
"My taxes" != city taxes, but you probably already knew that and are trying to
pivot the argument to be about me instead of about my point. That is usually a
sign you can't argue my point.

I'm saying, $87 a year out of my taxes is a tiny amount when you consider what
you pay for other things. How much do you spend a year on defense? Since the
effective tax rate is around 30% (roughly) and the defense budget is around
20% of the federal budget (roughly), I pay around 52x more for defense than
for helping homeless people in a given year. Is defense 52x more important
than social services? And I say this being a defense contractor who entire
livelyhood depends on taxes and the military industrial complex.

~~~
jonknee
Considering the discussion was about what SF pays, I think talking about what
you pay in SF taxes would make sense. But hey, that's just me.

~~~
krschultz
Do you really think that the city budget is self-funded? I don't live in SF
but in NYC a huge portion of the budget comes from state and federal grants.
That is true even on the local town level. Almost all of the money sent to the
federal and state governments is handed back down the chain with strings and
stipulations attached.

Otherwise, what would the state be doing? If the state spends a bunch of money
on roads, it spends it on roads _in towns_. You might be driving down the
street in your town seeing construction, but that money came from state taxes
not town taxes.

The same goes for programs big and samll. Medicaid is money collected on the
federal level, but paid out on the state level.

------
karzeem
Milton Friedman's idea for alleviating poverty was a variation of this idea.
It's called the negative income tax and the basic idea is that people below a
certain threshold get cash from the government each year. The further below
the threshold you are, the more cash you get.

<http://en.wikipedia.org/wiki/Negative_income_tax>

~~~
cletus
This isn't actually too far from what we have now and is a _terrible idea_.

Below a certain income level in the Australia and parts of Europe (in all
probability) you not only pay no taxes but you get low income credits. This is
a negative income tax as you describe it.

The problem? Let me give you an example (and this is purely fictional):

Joe earns $5,000 a year in part-time work. He pays no tax. He gets $2,000 a
year in government assistance.

Marginal rate of tax: -40%. Net income: $7,000 Total tax rate: -40%

Joe finds a better paying job and now earns $15,000 a year. Now he's paying
$3,000 a year in tax and his low income tax credit is gone.

Marginal rate of tax: 30% Net income: $12,000 Total tax rate: 20%

Seems reasonable right? Now consider the difference:

Extra gross income: $10,000 Extra net income: $5,000 Marginal rate of tax: 50%

You see this with government benefits (that taper off and then cut out at
certain income levels). The marginal tax rate low income earners end up paying
can be well beyond 50%. Add in child support and this can go over 90%.

Call this a _disincentive to work_.

Let me give you a concrete example:

[http://www.centrelink.gov.au/internet/internet.nsf/payments/...](http://www.centrelink.gov.au/internet/internet.nsf/payments/chartc.htm)

> Income over these amounts reduces your rate of pension by 50 cents in the
> dollar (single), or 25 cents in the dollar each (for couples). For
> transitional or saved cases, income over these amounts reduces your rate of
> pension by 40 cents in the dollar (single), or 20 cents in the dollar each
> (for couples).

Bear in mind that you're losing 50 cents of tax free income for every $1 of
taxable income that you gain.

~~~
elwin
The disincentive is because the rates are badly chosen. If there was a wide
buffer with a marginal rate of 0, it would work better.

------
sethg
I have a theory that “welfare” and “charity” for the poor, at least as
practiced in the US, is frequently an exchange: impoverished people abase
themselves in front of a representative of the government or some charitable
organization, and they get benefits _in exchange for_ portraying themselves as
suitable members of The Deserving Poor. A program that merely gave money to
people who don’t have any money, even if it was more efficient (because of
lower overhead), would be politically unsustainable.

A local paper here just ran an article¹ about how a state rep was indignant
because, out of about $50 million the state gave out in welfare-benefit debit
cards last year, about $200,000 was spent on “non-essentials” (principally, at
liquor stores²). $827 at Victoria’s Secret outlets! $664 at pet supply stores!
For shame!

¹
[http://www.bostonherald.com/news/politics/view.bg?articleid=...](http://www.bostonherald.com/news/politics/view.bg?articleid=1316850)

² I don’t know if these guardians of the public purse confirmed that this
money was spent _on liquor_ and not on, say, chips and peanuts.

------
pmorici
How does, "a new pair of trainers and a television" help someone get off the
street? This article is sort of light on facts.

~~~
slavak
On that note, where does a "homeless" person even PUT a television?!

~~~
_mayo
Maybe it's motivation to get a place to put the television.

------
speckle
My unsupported speculation is that the public see the homeless as people that
tumbled downwards because of mental issues and addictions. What's not often
considered is the community that they live in - they still have social
interactions; they still feel pride and depression and snark and remorse.
Mommying them by giving them a bed and curfew isn't just demeaning to a
homeless man, it's demeaning to anyone. I'm not sure if this is the right
solution but I'm glad to see they're trying new things.

------
bugsy
I've worked with the homeless off and on over the years. Social workers are
nice people and well intentioned do-gooders, and they tend to want to
infantilize and control homeless people "for their own good". They develop a
symbiotic relationship with some hopeless cases.

But there are a lot of homeless that find participation in a system that is
designed to control them demeaning and won't participate. Among these are many
skilled people who became homeless during a rough patch and simply can't get
back into society because they have no place to take a shower with their own
phone and a bed where they can get rest and then go on a job interview or go
out and round up clients for work even. Being in the shelter system often
means you have to get in line hours in advance for a spot, and have to follow
various rules that prevent you from having time to get a job.

Some friends and I had created a small unlicensed shelter one year for
homeless people that didn't want to participate in the normal system. We had a
bouncer who screened for drugs and other than that there were no requirements.
Homeless people responded well to this and began policing themselves and
reporting on troublemakers (sneaking in drugs.) We did have people come in to
volunteer. Talking afresh to the guests, people found out their history and
skills and a network of impromptu referrals was set up which managed to get
the 50% of them that wanted a new start into jobs and houses. There were no
relapses or problems with these as they were men who had fallen on hard times
but who were clean and wanting to work and had skills. Simply finding them a
stable place enabled them to fix their own lives without guidance or control
from others, neither of which they wanted. That left another 50% that was
truly transient or didn't want to work.

Once you institutionalize the system it becomes a method of controlling
people. A lot of people don't want to be controlled.

Now that's my experience. In cities, there's a problem with the long term
chronically homeless. People who never made it back and who have given up. The
issue with this minority of homeless is that they cost a fortune in medical,
police and other services each year. For example, if it gets very cold and you
can't find a bed then you commit some petty crime to get arrested. Or they
might injure themselves when desperate just to get a place to stay at the
hospital. Or maybe they are just very ill. There are some homeless people in
cold cities who have medical problems who are costing more than $1 million a
year in public services.

There's a homeless advocate Philip F. Mangano who was "homeless czar" under
Bush who has promoted the idea of finding no-questions-asked housing for the
chronically homeless. This is not the people who can find a job with a stable
place who just need first month's rent and a deposit, but people who are not
going to be able to work long term and who are costing a fortune. Placing them
in public studio apartment housing at a cost of perhaps $8,000 a year in rent
saves money over all. One key is no restrictions. They can bring in alcohol
and drink in their room. They can come and go at all hours. It is their own
apartment. When presented like this, they are more likely to take the deal and
get off the street.

Does it cost money to do this? Yes. But the idea is that it costs less than
providing ad hoc services. Having a stable place makes them more likely to
make doctor's appointments. No longer are they coming to the hospital with
costly to treat hypothermia or frostbite.

Here's a couple articles about Mangano's work:
[http://articles.sfgate.com/2004-01-14/news/17408204_1_mangan...](http://articles.sfgate.com/2004-01-14/news/17408204_1_mangano-
executive-director-philip-mangano-total-homeless-population)
[http://www.washingtonpost.com/wp-
dyn/content/article/2008/12...](http://www.washingtonpost.com/wp-
dyn/content/article/2008/12/29/AR2008122902505.html)

~~~
ultrasaurus
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.

~~~
clistctrl
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.

~~~
JoeAltmaier
But people game the system. Govts that subsidize startups don't get much
success - its too easy to slack.

------
TGJ
So does giving the homeless small amounts of money perpetuate the problem
since they don't save it? Would larger amounts be able to help them achieve
some sort of first step? Like enough money to rent a apartment for 3 months
which gives them a chance to get a job vs. enough money to just buy a meal?

------
noelchurchill
11 of the 13 got off the street, but how did they do it? Maybe a new TV was
the motivation but did they get a job, their own home, and are they self
sustaining? Or did they just move off the street into welfare housing, living
off the state, which offsets the costs savings the article mentions...

~~~
eru
Actually, living in welfare housing may be cheaper for the state than living
on the street. Welfare housing costs a few hundred Pound a month. The
healthier living conditions, and thus reduced costs to the NHS, alone may be
worth it.

(And in the USA that would be even more pronounced, because people without
medical coverage often wait until their conditions become an emergency.)

There was an article a few years ago about some homeless people in L.A. or so
cost the state so much, that just paying for their housing is cheaper.

------
jwinter
The Housing First initiative in the US has seen some success:
<http://en.wikipedia.org/wiki/Housing_First>

------
zach
San Francisco used to spend generously on direct payments to homeless
individuals, until Proposition N was passed in 2002, redirecting the money to
services for the homeless. This measure was championed by Supervisor Gavin
Newsom who, as we know, was elected as Mayor the next year.

The arguments summarized here on Wikipedia are a good introduction to some of
the issues in play here.

<http://en.wikipedia.org/wiki/Care_Not_Cash>

------
hardik
Interesting, just yesterday I read this critique of patronizing behaviour of
the elite towards those whom they do charity for
<http://retributions.nationalinterest.in/trust-the-poor/> (In context to some
welfare schemes in the Indian state of Bihar)

------
zackblum
"Some estimates suggest the state spends £26,000 annually on each homeless
person in health, police and prison bills."

So £26,000 vs. £794. I'd like to see this replicated.

~~~
nika
That's about $1,300. Or about $7.50 an hour for one month. This is about
minimum wage. If they could get minimum wage jobs, they would, and they'd
quickly not be homeless.

But they can't because students and recent graduates and stay at home moms,
etc, get the minimum wage jobs.

If we eliminated the minimum wage, then all the jobs that need doing, but
whose economic value is $2.75 an hour would come into being. This means that
the homeless person would be able to earn that $1,300 in two months. If low
cost housing were legalized, they'd be able to live cheaply while getting on
their feet and saving for getting a better job.

Minimum wage is the idea that we'd rather have someone homeless and not
working at $0 an hour than have them have a home and be digging themselves out
working for $2.50 an hour.

~~~
angus77
And if we removed all the oppressive health and safety rules from the heads of
the poor landlords, we'd have apartments that someone could afford to live in
when they make $1300 a month!

------
prawn
Check out this (relevant) site I found this morning - a quick browser 'game'
revealing some of the choices that inevitably keep many poor people poor:

<http://playspent.org/>

You start with $1000 and need to survive the month while trying to get a job,
live, eat, etc. A few frustrating choices along the way that might not seem
realistic, but may prove insightful for some.

~~~
thwarted
This would be more a more convincing exercise if it didn't force me to make a
choice between paying either the gas or electric bill when I could afford to
pay both (and then forcing me to incur an even larger fee to get it turned
back on), and made me pay to fix the leak in my rental apartment's sink. It
would also have been nice to know that I've got a sick mom, a kid, and a pet
at the beginning of the month, rather than springing them on me at seemingly
random points. I found out on day 17 that I had a dog -- that's one hungry
dog. I also held a yardsale with the explicit purpose of getting rid of stuff
since I didn't have enough room for it all in my rental, and rather than feel
good about that, it made me feel bad for only making $150 from the yard sale.

I mean, it was rough, and I had to tell my kid no a bunch of times and we
aren't eating all that great (and I had to avoid playing the lottery and miss
a friend's wedding). It was interesting, and reminded me of Morgan Spurlock's
"30 Days" show.

~~~
prawn
I hear you. I feel like they could've avoided some of those situations and
still conveyed the situations poorer people might find themselves in
regardless of which choices they made in life.

------
known
I think 1st world should ideally,

    
    
        1. Minimize income tax.
        2. Maximize wealth tax.
        3. Impose tax on idle cash.

~~~
danenania
How about:

1\. Provide only essential government services

2\. Enforce the law for everyone--no limited liability, no secret police, no
pollution quotas, no wars of aggression

3\. If they aren't hurting anyone or the environment, leave productive people
and their wealth alone

~~~
swift
A nice idea, but in the end I suspect the tricky part is the definition of
"essential government services" and the criteria for determining whether a
person or corporation is "hurting anyone or the environment".

~~~
danenania
Sure, but at least there would be something to try for.

~~~
krschultz
But what are you trying for? The definition of the statement in your mind is
clear but it doesn't mean a damn thing.

I think we should aim for the government only providing essential services.
But one of those services is making sure everyone has healthcare insurance
available to them at a rate that they can afford.

You and I know probably agree on very little about the size of the government,
even though we both agree that the government should aim to provide only the
minimum essential services.

~~~
danenania
I know, I'm just saying it would be a whole lot better to have this debate and
take whatever comes out of it than the current situation, which is mostly
cynical and corrupt sociopaths on both sides who aren't in any way interested
in bettering the country.

In other words, I'm just as happy to see someone like Dennis Kucinich do well
as I am Ron Paul, even though ideologically I agree more with Paul. I think we
should be more concerned with replacing evil people with good people than the
particulars of one platform or another. The common grounds (stop the wars,
stop corporate welfare) are vastly more important than the differences like
health care or welfare for people who actually need help.

------
rubashov
There are homeless because the flop houses and super cheap apartments (think
ten to a bathroom) have been killed off by permitting and zoning laws. To
solve homelessness you just need to make it legal to open up a for profit ten
dollar a night mens dorm _somewhere_ in a city. Hitler lived in one for a
couple years.

As it is the shelters are all government run and sane homeless people avoid
them because of rampant drugs and sexual abuse.

~~~
khafra
I've stayed in $30/night hostels in New York City. I don't see many places
they could've cut costs and still provided a safe, sanitary place to sleep,
and there are still homeless people in New York City.

~~~
Qz
$30/night is roughly $11000 a year, which is almost 3 times more than I pay in
Pittsburgh for my share of a nice house. If there really is no way to cut
those costs in NYC, the answer is to get out of NYC.

~~~
khafra
Just as Silicon Valley can be a good idea for a lean startup, Manhattan can be
a good idea for the top tier of homeless person: The creativity, variety, and
drive of the panhandling there is many levels above what you'll see elsewhere.

...I'm not sure where I was going with that, but even at $10/night that's the
same you're paying in Pittsburgh.

------
nika
Sigh. This reminds me of the story about the poor guy in San Francisco who
developed a small business (selling flowers? shining shoes? can't remember)
but was caught and fined and made homeless (he'd just put down a deposit on an
apartment) by the city because he didn't have a business permit.

~~~
ajays
Good memory!

You're thinking of Larry, the shoe-shine guy:
[http://articles.sfgate.com/2009-06-04/news/17208451_1_larry-...](http://articles.sfgate.com/2009-06-04/news/17208451_1_larry-
moore-shoeshine-man-city-housing)

The local media indeed jumped on it, and raised a stink.

~~~
nika
Thanks for digging up that link. Larry got taken care of because of the stink,
but here are thousands of other stories of a similar nature, up and down the
spectrum. Many small businesses started by "amateurs" run afoul of
regulations, or simply discover that the tax burden is too much in the early
days. Once when I started a small business it turned out I'd located my office
in a special tax zone that wanted %3 of all _revenue_ earned by the business.

I have a friend who spent 4 days in jail because he was caught near a bar
without a drivers license. He didn't have ID, couldn't prove who he was and
got locked up. They didn't let him make a phone call, and he stayed there
until they decided he'd "learned his lesson". This one was sometimes homeless,
but not a drunk or drug user. Just lost his ID.

~~~
shrikant
_I have a friend who spent 4 days in jail because he was caught near a bar
without a drivers license. He didn't have ID, couldn't prove who he was and
got locked up. They didn't let him make a phone call, and he stayed there
until they decided he'd "learned his lesson". This one was sometimes homeless,
but not a drunk or drug user. Just lost his ID._

Wait... what? To me, that just sounds evil. Why shouldn't I be able to walk
around without any form of identification?

I genuinely want to know - is it really mandatory to have some form of
identification on you at all times? Sometimes I just don't - should I worry?

~~~
bugsy
No one is required to have ID in the US. In general, we have considered
"papers please" to be a form of fascism.

However, that does not mean the police won't put you in jail for not having
ID, though they have to let you out eventually. This has happened to me.

At this point in the discussion someone cites the Hiibel decision:
[http://en.wikipedia.org/wiki/Hiibel_v._Sixth_Judicial_Distri...](http://en.wikipedia.org/wiki/Hiibel_v._Sixth_Judicial_District_Court_of_Nevada)

That decision is that states with stop and identify laws, can require someone
to identify themself when there is "reasonable suspicion" a crime has occured,
which is also knowns as a Terry stop. The decision does not say you have to
have government ID in those states. It says you have to identify yourself. It
is sufficient to state your name and birth date for these purposes.

Again, that doesn't mean police will follow the law. Most of them don't.

------
nika
Also the motivations of the state are based on the motivations of any
government. Buracracy is unavoidable.

If you're going to be handing out money, it would be better to give it to
genuine charities that have an interest in helping the homeless. They
generally will be better (imperfect of course, but better) at spending the
money to help the most people.

The homeless oriented charities I'm aware of do amazing things with small
amounts of resources, and they have to scrape by.

A real shame when we're blowing a $3.7 trillion dollar budget every year.

~~~
pyre
Well, those charities are able to scrape by due to necessity (if they had more
resources the likelihood of some percentage of those resources being wasted
increases as their resources do) and because the people are generally more
committed. Government bureaucrats generally aren't that motivated to cut
corners, nor do they care for much beyond getting their paycheck (and maybe
moving up the ladder).

