I just took my daily 1-hour swim, so to pump oxygen-carrying blood around my body, particularly thru the carotid arteries to my brain. I’m convinced this is one factor in preventing Alzheimer’s disease. So far all’s well; the little gray cells are still working.

Straight Talk from Al Jacobs

RESOLVING THE HOMELESS PROBLEM

According to a recent report, the prestigious beach city of Malibu, northwest of Los Angeles, faces a crisis. For nearly two decades the Malibu United Methodist Church and allied volunteer groups provided food, shelter and other services to the area’s homeless. It appears things are now out of control as these acts of generosity proved to be an attractive draw for displaced persons from more distant locations. And as they increased in number, their conflict with the residents of the community intensified, with a surge in homeless nuisance calls and increasing reports of scattered crimes by transients. City officials are now uncertain what to do as they grapple with the problem.

Perhaps Malibu might profit from an identical situation which faced the Orange County community of Laguna Beach several decades ago. The inducement for an invasion of drifters was the Episcopal Church’s provision of sleeping quarters on their grounds together with the operation of a soup kitchen. It wasn’t long before the city found itself overrun with derelicts. I specifically recall having to step over three idlers as I tried to enter the front door of an art gallery on the Pacific Coast Highway.

As in Malibu, city authorities somewhat tolerated the situation for awhile. What triggered a change was the planting of an explosive device outside the wall of the police chief’s office. Fortunately he wasn’t there when it blew the wall in, but it galvanized the sentiment required to resolve the problem. Within 48 hours the church terminated all eating and sleeping arrangements. In addition, I’m told the police became far less friendly to interlopers. I recall, within a week, a comment attributed to a city councilman, to the effect “… we wish to encourage them to seek more suitable shelter elsewhere.” It was clear the euphemism could be translated to “… we intend to run them out of town.” Apparently the city leaders accomplished what they intended, for within a month there were few, if any, homeless to be seen anywhere.

A final thought: Malibu is free to resolve its problem as it wishes. However, if it chooses to emulate the method used by Laguna Beach, it will most likely succeed. Whether or not this can be said to constitute enlightened public service is irrelevant; it will most likely rid the city of the homeless and satisfy the local residents. Not only are there far worse ways for a municipality to exert its authority, but there’s certainly something to be said in favor of pragmatism.

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Al Jacobs, a professional investor for nearly a half-

century, issues a monthly newsletter in which he

shares his financial knowledge and experience.

You may view it on http://www.roadwaytoprosperity.com

AFFORDABLE HOUSING VERSUS TAX REFORM

The most recent criticism of the ongoing tax reform plan comes from Ray Pearl, Executive Director of the California Housing Consortium, an advocacy group for the creation of affordable housing for low- and moderate-income residents. He maintains the federal GOP tax plan “would take a wrecking ball to the new foundation California has put in place.”

The new foundation he refers to are the State measures enacted over the past several months addressing homelessness. These include Senator Toni Atkins’ SB 2 adding a $75 fee on real estate transactions to raise $250 million to finance low-income housing, Assemblyman Richard Bloom’s AB 1505 allowing cities to force developers to set aside a number of homes in their projects for subsidized residents, together with a $4-billion bond measure to finance affordable housing developments. All were enthusiastically lauded by Governor Brown at the signing ceremony.

In case you wonder how well affordable housing money is spent, Mr. Pearl describes exactly how, as he reports: “In 2016 alone, California created more than 20,600 affordable homes thanks to $2.2 billion worth of federal housing credits and more than $6 billion of private bonds.” His numbers are fascinating; if you divide $8.2 billion by 20,600, you’ll find each affordable unit cost approximately $400,000. If this constitutes “affordable,” I must wonder on which planet Mr. Pearl resides.

Let me inform you of a truly excellent affordable housing plan operating in this country. It’s the Section 8 Housing program in which qualified low-income families occupy commercial rental housing at fair market prices, for which they pay no more than 25 percent of their income, with the government picking up the balance. Instituted in 1965 during the Lyndon Johnson administration, it’s federally funded and locally administered. It works superbly; this is where all low-income housing funds should go.

A final word: The bureaucracy works in strange and mysterious ways, its wonders to perform. Although it continues to throw huge sums of money at every facet of the homeless problem, affordable housing is rarely the result.