You Can’t Ban Recessions Just As You Can’t Ban Homelessness

You can’t ban recessions just as you can’t ban homelessness. But you can make things worse and waste precious resources by trying to legislate them away. 

The Hungarian government’s latest war is on homeless people. Not homelessness as a phenomenon, but homeless people. The move is a textbook case of scapegoating/target building (by the state) and victim blaming (by the helpless, oppressed public). It is also a cautionary tale on how the economy cannot be legislated. Neither on macro, nor on a micro level.

It is perhaps obvious why the law doesn’t work to manipulate individual cases by sheer political will.

Maria is 62. She spent many years working in the US before returning to Hungary upon her mother’s death. It was a grave mistake. Her life never quite bounced back. She worked as a nurse and part-time cleaner to make some money, before losing both jobs. She became homeless five months ago when her partner died an she wasn’t allowed to stay in their apartment. She had worked odd jobs since, but not even a whole income is enough to pay rent. Clearly, all Maria needed was a law that makes rough sleeping illegal to fix her life.

But of course, helping her (or anyone) wasn’t the goal of this law. Making rough sleeping illegal is nonsense. The government might as well try to outlaw gravity to save airlines on their fuel costs. No one wants to stay homeless (and if someone would, who are we to forbid it?), while a ban presupposes intentionality.

Individual economic situations cannot be legislated more than the entire economy can. Forget those desirable outcomes you have in mind when dreaming about wouldn’t-it-be-nice legislative acts. The world doesn’t work that way – but you can lose your rights and get entangled in a jungle of laws in the process. Pay attention to the means instead of the desirable end. There is no end game in real life, anyway, but you want to avoid a jungle of nonsensical rules and bans building up in the wake of legislative efforts to ban mishaps. They don’t help but at least thwart recovery – just as homeless people are made even more miserable by this ban.

Despite people in the neighborhood turning up to testify and vouch for her, Maria was sent off with a warning. Her defenders were not allowed to testify. Her blanket and belongings were taken away and she was told that three such warnings and she will be in jail. Jail time and a criminal record are not helping her. Neither do they make her way out of homelessness any easier.

Many of these homeless people used to be under psychiatric treatment until this government shut down such institutions, in a vaguely scientologist move. In the meantime, the housing crisis is reaching fever pitch, and the government is trying to mask the symptoms. Introducing depressing loan-for-babies policies and sweeping the homeless off the streets are equally ineffective, and equally inhumane. They are also effective authoritarian power tools. They make the victims feel guilty and apologetic, while they make the non-victims gloating in righteous victim blaming. They make everyone discuss issues that don’t threaten the autocrat’s rule.

Many homeless people have committed mistakes, no doubt, and their safety nets weren’t strong enough to rebound. Some people are sheltered from the consequences of their poor choices – others have one strike before they are out. But it doesn’t matter whose fault it is when you want to design a solution. And most importantly, you can’t and shouldn’t design a one-size-fits-all solution. It is not your place to do so.

Individual mistakes can’t be outlawed either. But there is something useful the state could do: mitigate the Matthew effect (at least when it’s in a downward spiral), and re-link choices with consequences. But that’s of course, not on any politician’s mind. Both left and right wants to do away with the link between choice and responsibility: the right wants to kill life choices, the left wants to kill individual consequences.

Re-linking the tow means leaving people with free choices, but trying to make sure that consequences for those choices are not borne by outsiders. And then the state may keep the road clean for recovery. No help is needed, if obstacles, such as reckless occupational licensing, are out of the way.

It also applies to the broader economy. You can’t ban every possible type of reckless economic behavior in advance, but you can try to limit the negative externalities. Instead of bailing out banks, the state could try to make them shoulder all the responsibility – and let the economy stand up. It’s been ten years since banks runaway behavior proved to be a “systemic risk”. (And not just to the economy, but apparently to freedom, through the invisible transmission mechanism of authoritarian thinking.) Risk had been socialized and fudged for so long, banks got out of hand – and stayed that way. All behind the legal protections they were given by politicians with savior complex.

We would already have forgotten the whole crisis if the perpetrators weren’t bailed out and the pain prolonged – and the problem amplified by another decade of reckless spending. Socializing losses is not a long-term solution. It was unethical to begin with. And after the banks have collapsed and the dust has settled, the state can do one thing: keep the road clean for recovery. Allow new players springing on the ruins of dead banks. Just steer clear, remove privileges such as monopolies, licensing, trying to force the world to do the same things the same way. Saviors have always been part of the problem.

Under communism, there was a drive by the Party leadership to criminalize homelessness. They called it közveszélyes munkakerülő, which roughly translates to “public menace avoiding work” and they put it in your state-issued ID under your occupation, stigmatizing you for life. Because that makes you reconsider your poor choices.

It is very telling that for once, the self-professed “conservative” intellectuals of Hungary  are not bothered by the central planning aspects of the homeless-hunt, nor by the exorbitant waste of police and court resources on performing legal farces in each and every case of homelessness. It is not about ideology, nor help, nor rationality. It is a demonstration of power and ultimately a power tool. All attempts of legislating economic reality are power tools, or corruption opportunities. Stop celebrating them.

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