By olly @Adobe Stock
A Pervasive Culture of Corruption
At the Manhattan Contrarian, Francis Menton uses the New York City Housing Authority (NYCHA) as his example of an “utterly failed agency.” Mr. Menton thinks that the Authority is probably the best large-scale example of a pure socialist-model economic enterprise in the United States. You can read a few of Menton’s prior posts on NYCHA here, here and here.
How is it that in the 1940s and 1950s the NYCHA started out with such great optimism, yet by the 1980s and 1990s it had already begun to decline? Each year since then has gotten worse.
Mr. Menton helps unravel, is the mystery of why the Authority costs so much more to operate and maintain an apartment than it costs a private landlord.
After all, the biggest selling point of socialism (public ownership) has always been that it can save oodles of money for the taxpayers by eliminating the need for a margin of profit to go to a private owner. And yet, in a Report issued in May 2023, an independent oversight group called the Citizens Budget Commission published statistics indicating that as of 2022 NYCHA’s annual operation and maintenance costs per apartment exceeded those of private landlords by over 70%. Moreover, the cost gap for apartment O&M costs between private and NYCHA ownership had exploded during the prior seven years, rising from a 39% NYCHA premium in 2015 to a 71% premium in 2022.
On the Manhattan Contrarian’s website is the chart from the CBC Report, as reproduced in Menton’s 23 May 2023 post.
A second tangled mess is why the Authority units on average are in far worse condition than the privately-owned units.
Spend More to Provide Less
NYCHA is claiming a need for tens of billions of dollars of new taxpayer money to fund capital improvements needed to keep the buildings from crumbling. Naturally, NYCHA’s biggest supporter is none other than Senate Majority Leader Chuck Schumer, who regularly goes back to draw on the infinite pile of federal money for another and yet another bailout for NYCHA.
Here is a transcript of a press conference given by Schumer and then-Mayor Bill de Blasio back in 2015 announcing a special $3 billion handout from the feds to NYCHA; and here is an NBC News report on another Schumer press conference about another massive bailout for NYCHA, this one from 2021.
“It’s not really that big a mystery,” explains Menton:
After all, this is socialism. Socialism everywhere is afflicted by a lack of incentives to control costs, plus a pervasive culture of corruption. Where all the money comes from the huge central source of infinite funds, what’s to stop everyone involved from trying to get their hands on as much of the loot as possible?
… even though we had a good sense (of) what was going on from just applying our innate intelligence to the nature of socialism, it has been difficult to get any hard evidence of the pervasive corruption. That ended a few days ago (February 6) when the prosecutors from the Southern District of New York announced indictments and arrests of some 70 NYCHA employees for demanding and taking bribes to award repair contracts to various vendors.
The Manhattan Contrarian recognizes that the people now charged with accepting bribes probably don’t even perceive that they did anything wrong. Their whole lives have been organized around gaming to get as much for themselves as they can out of the money flowing from the government.
Are Any of These Different?
What’s really the difference between these three things:
- Getting an apartment where you only have to pay rent that covers about a third of the operating costs, and the government pays the rest (this is the fundamental model of public housing, and perfectly legitimate),
- Slowing or stopping the payment of rent, thus forcing the government to pay up to 100% of the operating costs (the majority of NYCHA tenants now doing this, without any penalty or sanction, civil or criminal)
- Skimming a 10% or 20% vig off some small painting or plumbing contracts? (A “vig,” short for vigorish, is a fee charged by a bookmaker.)
Unfortunately for America, the Manhattan Contrarian doesn’t expect the New York Housing Authority to exit from its death spiral anytime soon.
