Monday, January 18, 2016

How liberalism helps the one percenters

Most people think that government programs help the poor when, in fact, they don't do anything but line the pockets of the rich.

Let's use the Section 8 housing program as an example.

If you are ware of the program, then you know that the federal government pays a portion of the rent of a family based on their income.

Now on it's face you would probably ask how does this program line the pockets of the rich?

Here's how.

I have a client who buys foreclosed and depressed residential rental properties for the purpose of renting them to Section 8 renters.

Typically, he'll buy a house for about $20,000 and put about $20,000 of improvements into the property to make it Section 8 eligible. (By the way, he makes these very nice properties for what's being rented in the area)

In the old days, the value of a residential property used to be around 100 times the monthly rent it could gather on the open market. The converse is also true; the monthy rent should be approximately the value of the property divided by 100.

So if you take a $20,000 property make $20,000 in improvements, in a free and open market it would generate about $400 a month in rents.

Not if you run it through the Section 8 program. Instead of renting his properties for $400 a month, he's renting them anywhere from $800 to $1200 a month.

Now ask yourself the question, is the poor family better off?

The answer is probably not. If the market rents were allowed to exist in these poor areas, the family would be paying a lower rent overall. But because the government is involved, the increased rents goes into the hands of who?

It's not the poor family, It's the landlord.

The same holds true of the food stamp program. Who do you think are the largest lobbyist of that program?

It's a not a national poor person union, it's Archer Daniels Midland, Krogers, Kraft. All the rich people selling their crap to poor people.

Think about it?