On Monday I was a guest of the Atlas Foundation at a lunch where the speaker was a guy named Temba Nolutshungu. Nolutshungu is from South Africa, and is the Director of a group in that country called the Free Market Foundation, an organization that works to promote free market principles. The particular subject of Nolutshungu's speech was a program of the FMF called Khaya Lam, or "my home."
It seems that South Africa, like most everyplace these days, is subject to trendy progressive groupthink on how to raise the poor up from poverty. So of course the South Africans have engaged in massive building of subsidized public housing for the poor. All over the country, the government has built vast tracts of tiny homes, row upon row of them, on small plots of land. In line with the typical socialist business model, the "beneficiaries" of the program cannot buy or own the homes, but rent them at subsidized rents from their government overlords. The projects look clean, if modest, upon completion. However, over time they gradually deteriorate, and certainly the residents never make any significant investments in improving them as long as they are in public ownership -- which until now has been, indefinitely. Here is an example of what these projects look like (this one in a township called Khyalitsha, on the outskirts of Cape Town):
Nolutshungu estimated that some 5 million or more South Africans, almost all black, live in housing of this type.
Nolutshungu then described the idea of the Khaya Lam program as "land titling," that is, providing "title" to the land and building to the people living in it. It was an interesting choice of words. I would have described the program as giving away the public housing to the residents. As Nolutshungu described it, when title to one of these homes is transferred to the residents, the government does not charge anything for the land or the building; however, there is a fee of the equivalent of about $150 for what he called "conveyancing."
And then Nolutshungu described what happens when the people get title to their homes. Suddenly, they start investing in them. They expand their size, put in plumbing, replace the roof, put up security gates and fences, put in better windows, and on and on. Plumbers, bricklayers, roofers, ironworkers, welders, glaziers and others are suddenly in demand. Economic activity greatly expands. Who would have thought such a thing might happen? I asked Nolutshungu to provide me with some "before" and "after" pictures, but I have not yet received them. They will likely be the subject of a future post.
Of course, trendy opinion and bureaucrats looking to protect their fiefs try to slow or halt this initiative at every turn. So far the Khaya Lam initiative is basically a pilot program in one town, called Ngwathe. The number of homes transferred to the residents, according to Nolutshungu, is approaching 1000 -- but that is out of around 20,000 in Ngwathe alone, and many millions in all of South Africa. Bureaucrats impose restrictions (like minimum residency time requirements and prohibition on renting out the home after title transfer) so that fewer people will qualify and those who do will not be able to maximize the value of their investments. Why am I not surprised?
If you would like to donate to this initiative, you can do so at this link. Believe it or not, it only takes about $150 per unit to transfer the unit to the residents.
Meanwhile, my proposal to do the same thing in Manhattan and transfer title of the public housing to the residents continues to go nowhere. Instead of taking tens of thousands of currently poor people and making them rich, we are building more "affordable housing" so we can keep more and more people in a life of permanent poverty. It's the Manhattan way!