If it moves, tax it; if it keeps moving, regulate it; if it dies…

I apologize for the lack of posts for the last few days – I just moved to DC (a few blocks north of H Street, right by Gallaudet, if anyone’s curious), and I have yet to begin another rewarding relationship with Comcast. But, I’m here at work (I started interning at Reason magazine today), and I’ve got some free time, so I wanted to post this excerpt from Fogelson’s Downtown (I’m almost done!) that illustrates perfectly the shift from the second to last phase of Reagan’s joke about government, as applied to housing policy:

If neither public authority nor private enterprise could overcome the obstacles to urban redevelopment on its own, perhaps they could overcome them by working together. Or so the downtown business interests and their allies hoped. The trouble was that public authority and private enterprise were not used to working together. Through the mid nineteenth century public authority had routinely joined forces with private enterprise to stimulate economic development. But later this practice gave way to what might be called, for lack of a better term, an adversarial arrangement. Under this arrangement, public authorities granted private companies a franchise to build and operate the street railways, gas systems, and other public utilities other than the waterworks. They also regulated these companies. Under the watchful eyes of the courts and state legislatures, public authorities regulated the building industry as well. They established fire zones, drafted building codes, imposed height limits, and formulated zoning regulations. They also granted building permits – and, at least in theory, inspected everything from elevators to fire escapes.

This adversarial arrangement was the subject of a nationwide debate in the early twentieth century. Some Americans attacked it as one of the principal sources of corruption in cities. Others defended it as the most efficient way to promote private initiative and still protect the public interest. On one point, however, both sides agreed – this arrangement was only workable if private enterprise was eager to take on the project. But after World War I private enterprise had virtually no interest in building low-income housing, at least not under the existing building codes and other regulations that, in the eyes of the builders, made it all but impossible to earn even a modest return on capital. And by the late 1930s private enterprise had little or no interest in building anything, not even high- and middle-income housing, in blighted areas. What discouraged buildings, Alfred Bettman told a Senate committee, was blight, a disease that is “something less visible, more subtle, deeper, than the mere age or structural obsolescence of the existing buildings,” a disease so insidious that it does not respond to conventional remedies, a disease that is rapidly spreading all over the country.

Given these circumstances, advocates of urban redevelopment concluded that the adversarial arrangement would have to be abandoned. What sense did it make to follow a regulatory approach if there was nothing to regulate? Instead of imposing regulations, local officials should offer inducements. One was to give urban redevelopment projects a long-term partial exemption from property taxes. Another was to use eminent domain to make it easier and less expensive to assemble large parcels of real estate. Both inducements were discussed in many cities; and in some they were made available. But with a few exceptions – the most conspicuous of which was Stuyvesant Town, a middle-income housing project built by the Metropolitan Life Insurance Company on eighteen square blocks of lower Manhattan – they did little to encourage private enterprise to rebuild the slums and blighted areas.