Montreal, October 25, 2003  /  No 131  
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Harry Valentine is a free-marketeer living in Eastern Ontario. He can be reached at
by Harry Valentine
          Recent news stories have highlighted Vancouver's growing homelessness problem, by showing a community of some 1,000 unemployed homeless people living in tents due to the shortage of affordable, low-cost rental accommodation. British Columbia's premier has been quoted as stating that jobs are available in the province. The homeless people replied that they cannot get jobs because they don't have permanent addresses where potential employers could contact them. Vancouver's mayor declared that as welfare payments are reduced, the ranks of the city's unemployed homeless population could swell to over 6,000 people.
          The problem of homelessness and the shortage of affordable, low-cost rental accommodation has a cause. Almost consistently, that cause can be found in an originally well intentioned government policy that failed in the long term. Generous social assistance and welfare payments of an earlier era helped sustain higher than normal market prices for economy rental accommodation. While neither the government of British Columbia nor the city of Vancouver enforce rent controls, other regulations are enforced in the realm of tenant/landlord relations. Landlords need to present documented evidence of tenant misbehaviour before obtaining permission from a tribunal, prior to evicting a problem tenant. This time and revenue consuming process can discourage many property owners from offering low-cost rental accommodation. 
          Property owners who have empty basements, renovated garages or spare rooms in their homes, can nicely avoid any run-ins with city hall by using the space for purposes other than rental accommodation. One time Ontario premier Bob Rae threatened to get tough with landlords by compelling them by force of law to meet certain rental property standards set by the provincial government. Combined with Ontario's rent control laws, government regulation reduced both the availability and construction of low-cost rental accommodation in Ontario. In several major Ontario centres, people classified as the working poor have had to sleep over at shelters for the homeless.  
          Preliminary research into cities where homelessness existed has revealed that vacant and disused industrial buildings and warehouses also existed. Some homeless people have actually slept over in such buildings, without the property owners' knowledge, let alone their permission. In several large municipalities, vacant and abandoned "smokestack" era industrial buildings have remained standing for many years. Municipal zoning bylaws prevent such buildings from being used for any other than industrial use. Many types of vacant industrial buildings could be renovated for short-term, low-cost rental accommodations. However, most municipalities persist in violating private property rights by enforcing politically expedient zoning bylaws that dictate what use a building may be put to. As long as municipalities are unwilling to yield on their zoning bylaws and uphold private property rights, homelessness will likely persist for decades to come.  
Self-help won't do for the bureaucrats 
          Some Vancouver homeless people have been reported as earning some money on the streets, by cleaning car windshields with squeegees. In a previous article entitled THE STATE AND THE UNDERGROUND ECONOMY, (see le QL, no 100), I made the point that people who have fallen on hard times can often take responsibility for themselves if they can earn money by offering services in the underground economy. If more opportunities became available to them whereby they could exchange services for cash, many of them would eventually be able to re-enter the world of full-time, long-term employment. While state officials may scream that they're trying to discourage vice, their policy actions also curtail hundreds of other non-vice employment opportunities. The charge of soliciting could be extended to include people who offer to shovel snow from driveways, cut lawns, weed gardens, wash cars, rake leaves, sweep floors and hundreds of other similar productive activities. By enacting laws that restrict such trading of services on a cash-only basis, the state ultimately harms disadvantaged citizens.  
     « State officials want to enforce minimum wage laws, workplace standards (when raking leaves on somebody's lawn), market regulation, taxation laws and a long list of red tape that distorts the economy and denies opportunity to the people who need it most. »
          Private home owners, property owners, and small business owners could probably come up with a wide variety of constructive and productive short-term, cash-only employment opportunities for unemployed homeless people. Volunteer community action groups could probably organise programs whereby people seeking such employment opportunities could connect with people offering such opportunities. Except state officials emphatically won't allow for it. Overzealous and overeager bureaucrats dying for an opportunity to achieve some recognition and status before their peers and superiors, stand ready to pounce on any property owner or business owner who dares offer any kind of worthwhile short-term employment opportunity to any needy person, on a cash-only basis. State officials want to enforce minimum wage laws, workplace standards (when raking leaves on somebody's lawn), market regulation, taxation laws and a long list of red tape that distorts the economy and denies opportunity to the people who need it most.  
          Officials will likely complain that allowing homeless people to work on a cash-only basis in an informal economy would merely feed into the drug problem. The drug problem is a direct result of high drug prices and increased drug potency, both the result of state drug laws. Drug laws don't reduce a drug problem, they intensify the problem by raising drug prices, in turn attracting a violent element into the drug trade. People who have been driven to despair or who regard their lives as having little or no meaning, are the most likely users of "illicit" drugs. State behaviour has already been shown to be a significant factor in driving people to despair. This was evident in the alcoholism epidemic that plagued the repressive former Soviet Union. In an attempt to reduce the risk of drug use (or abuse) by unemployed homeless people, state officials seek to deny them opportunities to earn money on a cash-only basis in an informal economy. Except such a policy would only drive them to even greater despair, increasing their need for drugs. 
          While Vancouver's mayor and BC's premier may hope that Vancouver's homelessness problem will quietly go away, by next summer there may be 6,000 to 10,000 homeless and unemployed people living in the Vancouver area. In major Canadian cities, soup kitchens are now serving meals to record numbers of needy people. Across the country, food banks are being stretched to their limits supplementing unemployed and working poor people with donated food. Prices of certain high-protein foods are high, due to state market regulation that curtails competition and aims to maintain high market prices on a variety of foods. Over a decade ago in British Columbia, independent dairy farms that operated outside the regulatory regime were shut down by force of law. In previous articles, I presented the case that market tribunals consistently contravene Canada's Constitution when they restrict competition. It is the poor, the working poor, the unemployed and the homeless who are most hurt by state regulation on food prices.  
A prelude to a worse situation 
          The recent spectacle of homeless people living in tents in Vancouver may be a prelude as to what we can expect in the future. Despite the appearance of economic growth in Canada, most Canadian exports are going into the USA, something reflected in the GDP figures. However, due to record low interest rates combined with record high levels of government spending, there is high propensity for malinvestment in the American economy. At present, there is no econometric method that can accurately estimate just how much of Canada's GDP is the result of malinvestment or of government spending. This information may only become available after the economy is eventually given the chance to correct itself. This may cause an economic slowdown, precipitating mass layoffs in Canada and swell the ranks of the unemployed homeless. 
          Political interference in the economy emanating out of the USA, along with problems caused by an "overheated" economy in China, would seriously undermine the viability of Canada's welfare state. A post-welfare era could emerge. During such a forthcoming era, assistance to the working poor (many of whom are homeless) and to the unemployed homeless could be severely restricted as a very direct result of government regulation (zoning bylaws, tax laws, regulations on food production, minimum wage laws, workplace regulations). If such regulation did not exist, owners of vacant commercial buildings such as empty warehouses and disused factories could renovate them into low-cost rental accommodations; private charities could run shelters in a few such buildings, while other charities and self-help groups could help unemployed homeless people either rebuild their lives or get a new start on life. 
          In an environment that is free from government regulatory control, private initiative could help masses of unemployed homeless people. In such an environment, more food at lower costs could be produced. Unfortunately,  no government seems prepared to cede any regulatory control in any area of the economy, even when faced with masses of unemployed, homeless and hungry people. 
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