What if everyone has it wrong, and “fighting homelessness” is actually funding homelessness? Doesn’t this theory better explain the observations?

In finance we have a simple and effective practice of following the money—increasing amounts of cash are collected from the people (taxes and donations) in order to “eliminate homelessness,” cash which is then used to fund homelessness, which of course grows homelessness, while also decreasing the wealth of the non-homeless.

This is an inescapable socioeconomic relationship because of opportunity cost (“the loss of potential gain from other alternatives when one alternative is chosen,” Oxford American Dictionary)—market participants reassess the changing game, and those at the margin switch to homelessness if it becomes a preferable option. Otherwise there is a lost opportunity; they incur a “cost” of not enjoying the benefits associated with the newly available choice.

Example: let’s say taxes are raised such that each homeless person receives $20K/yr (above the poverty line). In response, some people at the margin will opt to become “homeless;” they will trade what they consider a less desirable lifestyle (slaving away for low income) for what they consider a more desirable lifestyle (not slaving away for low income). And so the “demand for homelessness” actually increases due to the existence of this program, and taxes must further increase to fight the ever increasing homelessness. A positive feedback loop is born—the government and its employees grow, the number on welfare grow, the wealth and disposable income of the general public shrinks, and the productivity of the society shrinks.

The reason people are hungry

is that those above levy so many taxes

—Tao Te Ching ch.75

This is why homelessness can never be eliminated by action, but only minimized thru non-action—by not providing positive incentives for homelessness, and just letting the natural negative incentives do their thing, homelessness can remain at some “natural level” which has always existed. By the way, this is also why I question the claim that UBI will eliminate homelessness.

The fact is, across time and geography, there has never existed a utopian society with no homelessness/poverty, and thus there is no basis for believing such a future state can exist. In practice, so called “caring” has accomplished nothing at best, or even worse has increased suffering.


Let’s illustrate this with a high level review of two extremes: US-Seattle (high welfare spending), and KR-Seoul (low welfare spending)…


In Seattle—growing “caring,” i.e. high social spending, grew homelessness. City of Seattle spending “increased by 60% from $39 million to more than $63 million over the last four years, an average of $6 million per year” (City of Seattle Budget 2018). Yet the result: homelessness increased 102% for the same period (annual One Night Count). And that’s just the beginning, the wider Puget Sound area (nine counties) spends an incredible $1 billion per year addressing the homeless crisis!

Meanwhile across the sea in “uncaring” South Korea—social spending is the second lowest of the 34 OECD countries, and there is almost no homelessness. South Korea has a homeless rate of 0.022% vs the United States 0.170%, which is 8x lower homelessness. And this isn’t just statistics (I’ve spent a decade each leaving in these cities), you can walk around Seattle at night and see homeless everywhere, but you walk around Seoul and see none.

And yet, here is the popular “logic” in Seattle…

"The trends show that combined efforts of Puget Sound, including the Seattle/King County Coalition on Homelessness, to provide shelter, healthcare and other help for the homeless are having a positive impact, but that the numbers experiencing homelessness in the region are continuing to climb and, that the response is not adequate."—Wikipedia summary

This is nonsense, and almost certainly false. Real analysts study outcomes, we don’t engage in this practice of clinging to how things “should” work, and doubling down on failed theories. There is no basis for the belief that homelessness in Seattle increased because the funding was “not adequate,” and no reason to believe that more funding will produce a different outcome.

Note we can also look at US/SK data on poverty, and see that massive US spending has not resulted in lower poverty either.


This is just one example of seemingly endless incompetent socioeconomic analyses happening in America. Surely there is enough evidence here to question their model? And yet applying reason to this topic would likely decrease government jobs/spending and taxes, and so the bureaucrats will continue to fight reason tooth and nail.