Government Intervention Analysis
Government assistance for families with low incomes is vital in addressing social and economic challenges those with low incomes face. While not all people can be of the same social and economic status in any society, government intervention programs provide a safety net to prevent them from falling into extreme poverty. One such intervention by the US government is the housing voucher program that addresses the housing affordability problem. Housing vouchers address homelessness, housing instability, overcrowded settlements, and other housing outcomes for low-income families.
Arguments for Government Intervention
One of the reasons why a government needs to intervene in the market as opposed to relying on market-based solutions is to correct market failures for long-term problems. Government intervention is required, especially when the deviations are significant and long-term (Belsky & Wachter, 2010). The housing problem in the US has been going on for a long time and affects many families. Cases of people working but sleeping in their cars because they cannot afford housing in the US are common. Therefore, government intervention is necessary to help people who cannot afford housing or be able to pay rent.
Also, government intervention is necessary to help promote equity. First, due to gentrification, some families end up in neighborhoods where they cannot afford housing, yet they could previously afford it. Instead of pushing them out of what used to be their homes, it is necessary to offer them vouchers so that they may continue living there (Belsky & Wachter, 2010). For instance, San Fransisco in California ranked first as the most gentrified area between 2013-2017, leading to a massive increase in housing rent. In such a case, there is a need for government intervention to ensure that low-income families are not pushed out. Also, high-interest mortgages prevent low-income families from owning homes, hence the need for government intervention to bolster equality.
Losers and Gainers in Government Housing Voucher Programs
According to Turner (2003), the biggest beneficiaries in housing voucher programs are the direct beneficiaries (consumers) and landlords of the selected housing units (property owners). People who would otherwise be homeless or live in poor housing conditions can afford decent housing using housing vouchers. Also, property owners of previously unoccupied housing units benefit from government interventions as their selected units get tenants (Turner, 2003). It is worth noting that the government targets specific housing units and cuts a deal with the owners for occupancy.
Conversely, the general public is the biggest loser of the housing intervention programs. After realizing that the government is about to make subsidy-like interventions, property owners may increase rent or housing prices (Turner, 2003). Eventually, this burdens the general public since they are the ones who pay taxes to finance the government’s subsidy intervention programs.
Externalities and Unintended Consequences of the Government’s Housing Voucher Program
The government’s voucher program may contribute to poverty concentration. When the government offers housing vouchers to struggling families, it effectively restricts them to specific geographical locations, meaning that the place will be inhabited by struggling families (Semuels, 2015). Besides, the government monitors the beneficiaries’ incomes, such that they lose their vouchers if their incomes exceed the ceiling. These factors encourage poverty concentration in specific suburbs selected by the government.
Another negative externality of the government’s housing voucher program is reduced employment rates and earnings. People who benefit from the housing voucher lose the motivation to seek employment, aware that the government will cover them (Semuels, 2015). Besides, others do not want to lose such vouchers and may avoid some opportunities to remain within the bracket that qualifies to receive the opportunities.
Cost of the Intervention as a Share of GDP
According to the Center on Budget and Policy Priorities (2022), about 10.2 million Americans in 5.2 million households have benefited from the housing voucher program since its inception in 2000. The program was launched in 2000 under section 8 of the US Housing Act, and it is intended to ensure decent housing for low-income families, struggling seniors, and children. Based on the cost trend of funding by the federal government, the number of beneficiaries of the housing voucher program is on an upward trajectory. For instance, before the pandemic in the 2019/2020 financial year, the government spent $48.5 billion (Center on Budget and Policy Priorities, 2022). However, the cost hit over $90 billion after the pandemic- an all-time high. The trend shows that the number of beneficiaries continues to rise.
Credible Economists’ Opinion on the Housing Voucher Intervention
Most economists agree that the housing voucher program has largely been successful. One of the successes is poverty alleviation and the creation of new opportunities for low-income earners. Harvard economists such as Raj Chetty, Nathaniel Hendren, and Lawrence Katz aver that once beneficiaries move from low-income areas to decent suburbs, they access better schools and employment opportunities in different economic sectors (Sard & Rice, 2016). Another success is associated with the alleviation of social ills. For instance, girls who move to decent neighborhoods are less likely to engage in social ills such as binge drinking and commercial sex since they access dignified jobs (Sard & Rice, 2016). Based on such factors, it is safe to conclude that the program has been successful.
Recommendations
The housing voucher program has largely been successful and should be continued. However, there is a need to make some changes to improve the program. First, the government should collaborate with property owners to ensure the units are renovated. Some property owners avoid renovation costs for Section 8 units since they are assured of income from the government whether to renovate them or not. Besides, federal and state governments should mandate agencies to convert public housing units into section 8 units (Graves, 2015). The move will go a long way toward reducing rent costs for the most vulnerable.
Conclusion
In summary, government interventions are sometimes required over market-based solutions. Circumstances that call for government intervention include when deviations are significant and long-term. Also, the government needs to intervene to promote equity. The US housing voucher program is one such intervention that has promoted equity. The program has helped keep many low-income earners out of poverty and afforded them decent housing.
References
Belsky, E. S., & Wachter, S. (2010, February). The need for government intervention to protect and advance the public interest in consumer and mortgage credit markets. In a National Symposium (Vol. 18, pp. 2010-19).
Center on Budget and Policy Priorities. (2022, January 19). Federal Rental Assistance Fact Sheets. Center on Budget and Policy Priorities. https://www.cbpp.org/research/housing/federal-rental-assistance-fact-sheets#US
Graves, E. (2015). Rooms for Improvement: A Qualitative Metasynthesis of the Housing Choice Voucher Program. Housing Policy Debate, 26(2), 346–361. https://doi.org/10.1080/10511482.2015.1072573
Sard, B., & Rice, D. (2016, January 12). Realizing the Housing Voucher Program’s Potential to Enable Families to Move to Better Neighborhoods. Center on Budget and Policy Priorities. https://www.cbpp.org/research/housing/realizing-the-housing-voucher-programs-potential-to-enable-families-to-move-to#:~:text=A%20recent%20groundbreaking%20study%20by,remained%20in%20extremely%20poor%20neighborhoods.
Semuels, A. (2015, June 24). Section 8 Is Failing Poor Americans. The Atlantic; The Atlantic. https://www.theatlantic.com/business/archive/2015/06/section-8-is-failing/396650/
Turner, M. A. (2003). Strengths and weaknesses of the Housing Voucher Program – Urban Institute. https://www.urban.org/sites/default/files/publication/64536/900635-Strengths-and-Weaknesses-of-the-Housing-Voucher-Program.pdf
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Question 
Government Intervention Analysis
Write a 700- to 1,050-word summary of your analysis. Identify the intervention (housing vouchers) and the market failure leading up to the intervention. Complete the following in your paper:
Analyze the arguments for government intervention as opposed to arguments for market-based solutions. Hint: See the information about market failures.
Examine who has been helped and who has been hurt by the selected government intervention.
Examine externalities and unintended consequences of such intervention. For example, consider whether the SNAP program and health coverage for families with lower incomes result in higher future tax revenues because children from families with lower incomes grow up healthier and produce higher incomes over their lifetimes.
Analyze whether the cost of the intervention you selected as a share of GDP or the number of participants is increasing, decreasing, or varies with the state of the economy based on the cost trend(or number of participants) since its inception or since 2000.
Analyze credible economists’ opinions on the success or failure of the intervention that you chose in achieving its objectives.
Recommend whether the program should be continued as is, discontinued, or modified based on your conclusions. Defend your recommendation.
Note: Use of charts and graphs is encouraged with appropriate citations. Any charts or graphs retrieved from the Federal Reserve Bank of St. Louis FRED website may only be included when the data sources used by FRED are US government sources such as the Bureau of Economic Analysis or the Bureau of Labor Statistics.
Cite at least 2 academically credible sources.