Costly low-rent housing breeds dependency
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Purchasing commercial housing is an investment, no matter whether the house is used to live in or be rented out. If the ratio of housing price and renting price is 20:1, you should recover your investment in 20 years. Otherwise, it is better to save your money in the bank, instead of buying the house.
Renting a house is a kind of consumption that would be counted in the consumer price index. If the housing price does not fall, rental prices will rise.
In this situation, the government must make a tough choice over the housing it controls; should it raise rents, or provide more funds? The large-scale construction of low-renting housing puts burdens on government finances.
It is important to control the construction costs for low-rent housing. One way is to strengthen management and crack down on kickbacks, and another way is to lower design standards.
Low-rent housing cannot be built to excessive living standards, since these houses are subsidized by the state. Otherwise, low-rent housing will become a big burden on local finance which is not fair to the middle class who earn money to buy their own houses.
In order to improve income distribution, we cannot only concentrate our effort on the distribution level. Allowances to the poor cannot only depend on government finance, or it becomes a black hole.
We should learn lessons from the Western welfare states after the World War II, the traditional socialist equalitarianism and also some left-wing policies in the socialist construction of China. Redistribution of income feeds the idle, and at the same time puts pressure on government finances.
The government should create employment opportunities for the poor, instead of relying on welfare.
China has not got a strong enough economy to give too much welfare to the poor. Even developed countries cannot deal with the endowment insurance well. Social security has become a big problem, given the aging of the population.
How can China give excessive welfare to the poor, given its low per-capita GDP? We should see that the construction of low-rent housing could end up just being a waste of funds, going to the wrong people and not helping even when it's given to the truly poor.
Only by stressing practical results and improving efficiency can maintain long-term sustainable development.
