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Journalism of Courage
If anyone wants a perfect demonstration of public policy that leads to private enrichment in the name of public good, distorting markets in the bargain, they should look at politicians dealing in land and living space. City politicians in India8217;s capital last week rejected the Centre8217;s decision to auction apartments built by the Delhi Development Authority. Local netas have voted to go back to the lottery system. Lotteries are supposed to be wealth-neutral, giving middle class and lower middle class citizens as much a chance as the rich to buy apartments. In practice, thanks to the low reserve price set by municipal authorities and the very high demand for living space in urban India, these sarkari apartments command huge premiums over sarkari rates. Since lottery winners can sell their apartments 8212; to disallow them from doing so would be violating their private property rights 8212; many government-built housing units are promptly sold. Lotteries like those run by DDA have become investment opportunities for the market-savvy, not a fair system of allocation for citizens of modest means.
The Centre had suggested auctions so that the Delhi local body could get more revenue 8212; surely a most sensible policy and one that politicians should have welcomed. Plus, once an auction aligned apartment rates to market prices, any egalitarian impulses could have been satisfied by targeted government help. That way far less public resources are forgone/spent.
