Climbing the Ladder
As a follow-up to our economic study and press conference on affordable homes in Pennsylvania, I was on the radio with Liz Hersh, Executive Director of the Housing Alliance of Pennsylvania. Since many of the callers wondered aloud why public dollars should be used to help pay for houses for private citizens, I offered analogy that I'd like to fill out a little more in this space.
Having worked for a small business accelerator for ten years, I understand that when it comes to the financing of private firms, there are some gaps that may justify public and non-profit participation to help fill. Entrepreneurs and investors are independent decision-makers that should be otherwise left alone to figure things out in ways that are mutually beneficial. But when it comes to access to capital for certain sizes and kinds of businesses, there are gaps that make it feel like the lowest rung on the ladder to success is twenty feet in the air.
If instead we can put in some lower rungs, we might be able to get some of these entrepreneurs to grow their businesses enough to eventually reach the lowest rungs. From there, it's on them to savvily secure funds, grow their businesses, and pay back debtors or investors and be in a better position to go even higher on the ladder.
Of course, this doesn't mean we willy-nilly extend credit or throw money to any old entrepreneur. They have to demonstrate something to make us feel comfortable providing them with the lift to get up on the ladder. But, absent intentional action by the public or non-profit sectors, they may be stuck below the lowest rung, unable to reach up and therefore unable to get themselves into a virtuous cycle of growth, job creation, and wealth generation.
The housing market is somewhat similar. Buyers and sellers are private actors that can figure out a price that works for both sides. But there are some gaps at the lowest end, which, if filled, can get people up to the lowest rung on the ladder, where they are no longer moving from house to house, uprooting from community to community, pulling their kids out of school and otherwise disrupting their ability to make progress.
Ironically, the two industries in the news over the past two years have been the housing and financial sectors. In both cases, we've seen that, however market-based they are, how they do has an immense spillover effect on the rest of the economy.
As a fiscal conservative, I resonate with callers' concerns about how taxpayer dollars should be spent. Legislators at every level of government have to make tough choices in these constrained times, and not all initiatives, however worthy, can be funded.
All I'm suggesting is that there are public ramifications and public roles when it comes to these industries, which are worthy of discourse and action and in some cases prioritization of financial and other resources. And if a little nudge can get people up a ladder that for them has an otherwise impossibly high first rung, one ought to take a good hard look at thinking about making those nudges possible.