Public Problems, Your Story or Mine?

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An example of a public problem is the proliferation of crime in housing projects. It is almost impossible to describe the problem without referencing social constructs.

Social Constructs

According to the book, Theories of the Policy Process, social constructs are created by policy makers to cast beneficiaries or recipients in either a positive or negative light. In turn, the distribution of benefits or encumbrances reflects and further defines the perception of the target population. The book further delineates target groups into four classifications: advantaged, contenders, dependents, and deviants (Sabatier, Paul 2007, p 101-103).

In this view, people living in housing projects could easily vacillate between being defined as dependent (mothers, poor) or deviant (welfare mothers, criminals) depending on who is defining them. Unfortunately, the social construct surrounding housing projects is often the deviant construct.

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“White fragility”

No one wants to be called fragile. And if you’re white, what you feel reading the title of this article may be indicative of the term. “White fragility” refers to white people’s low emotional tolerance for discussing topics of race and racism. The term was coined by Dr. Robin DiAngelo in a 2011 article discussing…

via The scientific way to train white people to stop being racist — Quartz

Federal Housing Policy: There Goes the Neighborhood

Federal housing policies have existed since the 1930s. Citizen support for federal housing policies evoke a range of emotions from ambivalence to violent opposition. A recent decision by Housing and Urban Development (HUD), is no exception. The ruling, Affirmatively Furthering Fair Housing (AFFH), is designed to deconstruct current housing policy and re-assemble it in a fashion that prevents segregation, concentration of poverty and unequal access to community assets (U.S. Department of Housing and Urban Development 2015). The policy seeks to address historical patterns of inequality by changing planning at the local level and has garnered a slew of negative press. For example, The Hill published a 2014 piece entitled, “Obama Making Bid to Diversify Wealthy Neighborhoods”. In addition, the spectacularly slanted piece on breitbart.com decries, “War on Suburbs: Obama, Julian Castro Rev up Affirmative Action Housing”. What images do these headlines conjure? Perhaps attack on middle-class values? Fear? Loss of control? There are many unwritten words that the media outlets want the reader to fill in. It is a complex fabric of race, big government, and capitalism. The trite narratives in the media headlines are meant to induce drama and emotional reactions helping to sell more papers.

Like most redistributive policies, federal housing policy seeks to redistribute wealth in pursuit of the greater good. In this instance, by equalize living conditions for those who cannot afford adequate shelter. Lawrence L. Thompson (2006, 2) points to the inception of housing policy as its modest beginnings as a step to bolster the economy and put the dream of home ownership in the hands of many. From these humble beginnings, federal housing policy has morphed over the years to address issues surrounding low and moderate income families through mechanisms such as public housing, programs targeting urban decay, entitlements, and block grants. The controversy in housing policy does not lie so much with government provision of shelter, but with the definition of adequate shelter. According to Housing Quality Standards (U.S. Department of Housing and Urban Development), minimums for shelter include a secure structure, plumbing, electric, cooking source, and heat. To tax payers that could seem adequate. To those living in such housing, often described as “slums”, “hoods” or “projects”, that may seem far from adequate.

Does federal housing policy also have a duty for safety, and access to jobs, education and other community assets? In addition, to discuss housing without discussing race does a disservice to the underlying wicked problems presented in federal housing policy. The question becomes, how will this ruling be different from all those that have come before it? To answer that question means to delve into federal housing policy at the practitioner level by addressing the social constructs and narratives driving policy, historical housing policy, and the overarching goals of AFFH policy.

 

Policy Narratives & Social Constructs
Randy Clemons and Mark McBeth (2009) define public policy as the actions or decisions made by government. For example, the action or inaction of budget cuts is a public policy. The decisions guiding who gets what comes in the form of a struggle whereby political actors use (Clemons and McBeth 2009, 13) coercion, bargaining, compromise or rewards. The conversation surrounding these decisions and the tools selected to get the job done are cloaked in policy narratives. Policy narratives are stories. Just as stories have beginnings, conclusions, and a cast of characters including villains, heroes and victims, so to do policy narratives. What sets them apart from stories is how they are framed. Stories are meant to entertain and delight. Policy narratives are meant to advance ones ideology or to “win” over opposition. Political actors frame policy narratives often in ways that create emotional reactions, painting worst-case scenarios with sweeping brushes of loaded information. In other words, the narrative is not meant to illuminate, but to stabilize and underwrite a complex issue by providing slanted information. How a public problem is defined (Clemons & McBeth 2009) sets the tone for the rest of the policy cycle. The end result of the policy is largely determined by who has the stronger narrative and what they define as the particular social ill at hand.

Two components of a narrative that can affect the policy process are what Professor Deborah Stone refers to as the “strategically crafted argument” and social constructs (Smith 2009, 188). Social constructs can often feed a strategically crafted argument by highlighting certain information and leaving out details that could be damning to the argument. In this regard, policy makers can craft arguments to evoke mental images that make an idea attractive and the alternative gruesome, villainous, or wasteful. For example, narratives surrounding the poor often frame them as mentally ill, lazy, drug users who would rather take advantage of the system than work. Framing a concept in this light makes it almost impossible for the average person to back polices that divert tax money to supporting those that do not “deserve” help.

Social constructs (Paul Sabatier 2007), are created by policy makers to cast beneficiaries or recipients in either a positive or negative light. In turn, the distribution of benefits or encumbrances reflects and further defines the perception of the target population. Sabatier further delineates target groups into four classifications: advantaged, contenders, dependants, and deviants; each characterized by low or high power and a positive or negative perception (Sabatier 2007, 101). Advantaged groups enjoy high power and are seen in a positive light. They are small business owners and homeowners; the group that puts money into the economy. At the other spectrum of the high power scale are groups seen in a negative light. Although they contribute to the economy they are seen as a necessary evil such as big business and big oil; big box stores such as Wal-Mart often fall in this category. Shifting down the scale to no power and positive perception is the dependant group. Examples are students and children. These groups are seen as positive but have low power because although people deem it necessary to support them, they do not contribute to the economy and often do not voice their needs. Sabatier opines, support and resources are not extended to dependent groups until predicated as past the point of no return, or in a crisis situation. The last category is the deviant group which has no power and is perceived negatively. This group often houses criminals, and welfare recipients (Sabatier 2007).

What are the implications of social constructs in the policy arena? It can mean that the light and shadows cast by non-rational definitions surrounding money and power affect who gets what and how they get it. Target groups are influenced by the fluidity of social constructs and as such, move in and out of power status and perception based on public mood, trigger events (e.g. crises), and shifts in administration. In addition, it is important to consider what Emery Roe refers to as a metanarrative; a thing that is unsaid by the things that are said. In other words, Roe likens the metanarrative to the Gestalt psychology theory of “a thing defined by what it is not” (1994, 155). Regarding housing policy, what is largely unsaid is the failures of capitalism in the Great Depression are responsible for underwriting policy emphasizing help for the middle class. As such, the unspoken metanarratives of capitalism and racism have underwritten many of the failures in housing policy.

 

Historical Policy Context
Federal housing policy, like most redistributive polices, is characterized by waves of expansion and restraint attached to public mood, certain trigger events (such as the Civil Right Movement) and changes in presidential administration. According to R. Allen Hays (1995) there are four main issues that are central to housing policy. They are quantity, quality, cost and equity. Throughout the long and tenured 85 year history of housing policy no one issue has dominated landscape. Each administration has had its own slant on which area of emphasis should spin the next iteration of policy through the formation process.

Prior to the Great Depression, issues in housing were treated largely as a private matter. Changes in public mood in conjunction with ill-equipped local governments became the tipping point for government intervention in mitigating the effects of economic depression. Prior to 1934, housing programs addressed only short term emergency situations such as foreclosure (Hays, 1995). The Depression had devastating effects on families as foreclosures and evictions accelerated to rates not previously seen in any other time in history. The 1934 National Housing Act, penned under the umbrella of the New Deal (Thompson 2006, 2) was designed to encourage the accumulation of personal assets and stimulate the economy. The 1934 Act contained a federally insured home mortgage insurance program administered by the Federal Housing Administration (FHA). The program provided incentives to both investors and individuals seeking housing. Homeowners paid premiums to national accounts that covered defaulted mortgages. The program offered fixed long term payment schedules and low down payments (Thompson, 2006, 2).

The 1934 Act changed housing policy. For the first time, housing policy expands beyond emergency assistance and plays a federal regulatory role in banking and credit industries. According to Hays (1995, 85) the intended beneficiaries of FHA loan programs are the working class with steady income. After the Act’s adoption, more individuals can afford mortgage payments, thus putting the “American dream” of homeownership within reach of more families. Prior to the 1934 Act, there was no system in place to handle an influx of FHA applicants. As program demand increased, applications were controlled by private bankers. Because the program began long before the end of the “separate but equal” doctrine, it quickly became characterized by discriminatory practices. Scholars and practitioners (Hays, Heathcott, Kimble) cite the practices of private bankers refusing to write loans in central cities and point to the intersection of suburban “white flight” along with the construction of new highways, and the suburban relocation of central city jobs as dealing a crushing blow to urban areas. As jobs and white working class families withdrew, central cities were left with sprawling deficiencies and a minority class with decreasing access to jobs. Hays (1995, 86) shines light on the vicious cycle official and unofficial discrimination by the FHA which further contributed to private bankers forbearance on mortgages in central cities.

John Kimble (2007) delves into the deeper reasons for refusal to underwrite mortgages in central cities. Kimble’s work indicates issues beyond surface discrimination to deep seated segregation policies between the FHA and all parties involved in the mortgage process. Kimble contends the deeper forms of racism can be seen in historical scoring of neighborhoods based on percentages of minorities, and community assets. Passages from the 1930 and 1947 FHA Underwriting Manual indicate to agents that it is imperative that the social and racial classes stay separated to maintain property values. To further crystallize this process appraisers were directed to map the racial characteristics in each geographic area so that race and penetration of minority groups could be tracked (Kimble 2007, 405).

Racial and class tracking directives led directly to the first appearance of segregated planning processes and racially classified property deeds as standard practice. By the late 1930s the FHA was shaping policy around its favored beneficiaries, the white middle class as the socially constructed advantaged group. Hays (1995, 27) suggests minorities face discrimination in employment which leads to larger proportions of minorities in an impoverished state. The higher number of poor minority groups as opposed to poor whites links them directly to the negative images surrounding the poor. Thus in a twofold blockade, characterizing minorities as dependents or deviants prevents them from securing good jobs and penetrating the white suburbs.

The period of the 1930s also saw the introduction of low interest construction loans to supply affordable housing to the “submerged middle class” (Heathcott 2012, 362). Initial programs were too small in scope to make the rents truly affordable to the intended beneficiaries. Housing advocates ramped up their lobbying activities and were able to successfully secure a new bill in 1937 that would become the birth of public housing. The new legislation was designed to benefit low-income recipients and control was placed squarely in the hands of local governments. The devolution of power was tricky water to navigate because it required the creation of Public Housing Authorities (PHAs) and approval of legislation that would enable localities to move forward with public housing plans (Heathcott 2012, 363).

The 1940s were characterized by the boom in housing needs generated by new families and a buckled private housing market. Hays (1995, 91) contends that public housing was sharply curtailed by budget cuts and was barely off the ground when its stock was diverted to war needs and workers. In addition, as the program began to take shape in the late forties there was much debate over the beneficiaries of the program, the design and cost of the units, and where the units would be situated. The public housing program also marked the first real devolution of power to local government. As such, public housing fell into the hands of local political figures who were responsive to their constituencies, local political networks, and public mood.

Site selection became a big grievance in this area according to Hays (1995, 92) as local officials gave into immense political pressure to situate new projects amongst existing projects, images of slums and projects began to take shape. The social construction label of deviants surrounded the poor and attracted crime due to the large densities of disadvantaged, powerless people. This further re-enforced the perceptions of the projects and the people themselves. Concentrating many low income tenants in one area also feeds negative perceptions (Atkinson & Jacobs 2010, 160) and leads to an aversion the public feels towards public housing projects.

As federal housing programs continued into the 1950s they became characterized with competing goals. Heathcott (2012, 366) calls the goals a “recalibration” effort to provide adequate shelter and include: funding for urban development, increased funding for FHA programs and a commitment of new public housing units. One of the goals under the 1949 Housing Act, funding for urban development, morphed into the program that would later be the slum clearance mechanism under the title Urban Renewal. Urban renewal is one of the most dastardly programs on the books. It was designed to help clear blighted areas while creating new affordable housing stock. According to Marc Weiss (1985, 254) less than 3% of units demolished in urban renewal areas were rebuilt by the time the program was designated a failure in the late sixties. The legislative broom of urban renewal became so closely linked to displacement of minorities it had come to be referred to as “Negro removal” (Weiss 1985, 253).

The reality of Urban Renewal was business interests took precedent over housing for the poor as there was no mechanism in place to divert funding away from commercial interests and towards housing needs. Dilapidated housing and blighted areas were cleared but the real damage came in form of the breakdown of social capital. Susan Greenbaum (2008, 43) describes social capital as a shared bond amongst the neighborhood residents that can be called upon to bridge gaps in times of need. It could be argued that social capital is crucial for an impoverished area. Many times neighbors will pool resources than enable them to work and take care of their families. This could be the sharing of a car, or childcare that is otherwise unaffordable. As housing units were destroyed, residents were relocated in many different areas and waitlisted for housing stock that was not replenished at the same rate as those that were destroyed. Furthermore, the competing housing goals of the 1950s contributed to what Heathcott (2012, 366) describes as the triple threat to minorities. As they were displaced by Urban Renewal they were further locked out of available housing stock by discriminatory FHA policies and “gentleman’s agreements” between white real estate agents thus keeping minorities gridlocked in declining inner cities.

Stone (2012, 340) contends, “The system of rights depends crucially on citizen’s willingness to bring their grievances to government”. Perhaps this is why historical housing policy circumvents the responsibility to provide equal access. Individuals affected are not citizens that can easily attend city council meetings or mobilize contact of elected officials. This scenario describes housing policy until reforms made in the 1960 Civil Rights Movement. The culmination of Fair Housing Laws and cabinet-level designation of HUD were the first of many attempts to change the system. The Fair Housing Act of 1968 (U.S. Department of Housing and Urban Development) offers protection from discrimination in housing activities such as purchasing or renting. The original protected classes were race, color, national origin, and religion. Through subsequent amendments gender, disability, and familial status were later added to the protected categories. The Fair Housing Act was passed by Congress shortly after the assignation of Dr. Martin Luther King. It represented an expansion of federal authority over earlier acts limited to policies where federal spending was directed. Thus, HUD assumed a regulatory role in the entire housing market (Thompson 2006, 8).

The failures of the FHA underwriting practices and public housing have set in motion many different flavors of policy designed to correct discrimination, segregation and unequal access to community assets. The Fair Housing Act was the first major legislation to do that. Two pieces of legislation that appear to have the blueprints to the new Affirmatively Furthering Fair Housing (AFFH) ruling are the 1974 Community Development Act and the Cranston-Gonzales National Housing Act of 1990. The passage of the 1974 Community Development Act marks the first appearance of goals similar to AFFH monitoring requirements. Localities receiving Community Development Block Grants (CDBG) are subject to approval by HUD. The process is based on a newly required comprehensive planning document in the form of a Housing Assistance Plan (HAP). The HAP is designed to address the condition of housing stock, the needs of the community, and goals for provision of assistance (Hays 1995, 199). Blocks grants were initially popular with localities due to their quiet reliance on existing local political arrangements (Hayes 1995, 242) which also meant the grants were vulnerable to pull from other areas such as economic development and infrastructure.

The second piece of legislation that has similar goals to the AFFH is the Cranston-Gonzales National Housing Act of 1990. The act emphasizes stability through homeownership like its predecessors, and is entrenched in the ideology of federal devolution to localities that began to emerge in the late 1970s (Ziebarth & Meeks 1998). The 1990 act also introduced a revised planning process to replace the previous HAP agreements. According to Hays (1995, 260) the Comprehensive Housing Affordability Strategy (CHAS) was similar to the HAP agreements in that it required localities to review current housing stock, the current housing market, and available resources. What made CHAS planning different was the requirement of public-private task forces and the need for a five year plan to address areas of deficiency.

 

Affirmatively Further Fair Housing, AFFH
To understand AFFH it is important to view it through two lens: its inception, and how it will achieve the stated goals. Historically, housing policy has been plagued with vague and often conflicting design concerns. With no oversight and clever private stakeholders, the programs become a clearinghouse for individual profit, a facade for political humanitarianism, and thus reach their biggest failure point at the end user. The implications being that most of these programs had a great chance of harming the very population that they were supposed to benefit. With each program failure and each change in political conditions, federal housing policy re-entered the policy cycle.
In the traditional iteration of the policy model (Clemons & McBeth 2009), policies go through a cycle or loop as they make a natural progression from the problem definition through adoption on to implementation. The evaluation stage being where decisions are made about how to change or terminate the program. In reality, the policy process can take on variable directions and infinite loops that are based on public mood, shifts in administration and trigger events. The problem definition is the most difficult part of the process. It takes much cajoling and compromising to come up with a working definition of a problem that will be clear enough to make the government agenda. Often times trigger events or other propaganda laden items get pushed forth that are ambiguous and difficult to understand, while other problems are shaped by an uninformed public or an elected official who has a stake in the outcome (Clemons & McBeth 2009).

Taken through a view of nonrational processes, a more fitting rubric is offered by Professor John Kingdon’s model (Anderson, 2011). The model states that three separate streams (problems, proposals, politics) must converge in a window of opportunity to set an agenda and shape future policy development. In simple terms, the model indicates that agenda setting is a combination of the above mentioned forces in an opportunistic time frame that will secure a majority interest on an issue. Critics such as Michael Leahy (2015) contend that the AFFH ruling is a form of social engineering that was passed under the cover of an important Supreme Court decision regarding site selection of low-income housing units. The case, Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., (2015) is about disparate-impact and whether certain policies, such the concentration of low-income housing in inner city neighborhoods, creates disproportionate disadvantage to minorities groups. Disparate-impact at its core is about whether the effects of policy create adverse impact on protected classes, regardless of the intent of the policy. Perhaps given Kingdon’s model of the policy process, the current state of civil rights in conjunction with the Supreme Court case, were the openings of windows to advance the agenda of new housing policy.

To sidestep a discussion of the racially charged narratives, such as those in housing site selection, creates a missed opportunity to correct underlying metanarratives of racism and capitalism that damns minority groups to a rung of unequal access. Atkinson and Jacobs (2010, 160) highlight the complexity of the self fulfilling prophecy of social construct laden narratives by suggesting that the poor are “thrice damned” to particular neighborhoods because they bend to the bureaucrats requirements for their low income, take on the label that availability of inferior housing is resultant of their dysfunction, and as the final nail in the coffin, are subject to low political support because of the conditions (densely impoverished areas) created for them by the low political support.

AFFH is designed to change all that by enforcing equal access, which has been the documented goal of housing policy since the 1960s. It is a clarification to the Fair Housing Act of 1968. According to the Federal Register (U.S Department of Housing and Urban Development 2015), AFFH is designed to promulgate the Fair Housing Act of 1968, and to overcome historic patterns of segregation and unequal access. This will be achieved through several channels that start at the local planning level. Program participants receiving CDBG funding will be required to address legacy segregation patterns by taking steps to balance communities in a way that is free from segregation.

AFFH represents an attempt to correct the imbalances in communities dating back to the beginning of housing policy, such as those created by the FHA. In the Regulatory Analysis HUD states that although it is not possible to define “fairness and dignity” they are values at the heart of the AFFH rule; values, when addressed, propel communities out from under restricted zoning practices (U.S Department of Housing and Urban Development 2015, 2). However, instead of a blanket mandate HUD recognizes that all regions are different and allows for local decision making of planning policies under a general rubric. What is strikingly different about AFFH is that is does not require a specific action to be applied to all localities; it can be likened to a tool box. Each jurisdiction is able to use tools that apply to its specific circumstances. In addition, HUD encourages (U.S Department of Housing and Urban Development 2015), but does not require, program participants to work together in a horizontal collaboration to effectively pool resources.

According to the Federal Register (U.S Department of Housing and Urban Development 2015), the resources available to localities include: a standardized assessment tool, provision of big data, agency collaboration, and the facilitation of civic engagement. Under previous housing policy localities conducted an analysis of impediments (AI) that blocked protected classes from fair housing choices. However, prior to AFFH these plans were largely unmonitored (U.S Department of Housing and Urban Development 2015, 42272). Under the new process as documented by the Regulatory Impact Analysis (U.S Department of Housing and Urban Development 2015 ,1) Assessment of Fair Housing (AFH) combines standardized government data on issues such as patterns of segregation and impediments to community assets, with local strategic planning.

One criticism of other post Civil Rights corrective housing policy such as HAP agreements (Hays 1995, 261) is the process became merely a numbers crunching exercise. AFH moves beyond this in the Regulatory Impact Analysis (U.S Department of Housing and Urban Development 2015 ,5) whereby it translates the goals of the rule from paper to implementation. Possible actions to overcome impediments to access include: modification of zoning and site selection, transportation systems linking housing to employment centers, revised lending practices, and access to information about rights and responsibilities. The particular mix of tools used will depend heavily on how proactive the locality was in previous planning practices and what resources in terms of time and money are available.

 

Conclusion
Federal housing policy emerged as an emergency bail out to homeowners. Its initial goals were to provide jobs and economic growth during the Great Depression. Later programs were designed to provide improved access to affordable and desirable housing. When viewed through a historical context, the link between housing policy and racism appears. Strategies to correct imbalances are often met with the predominate narrative of government social engineering to disrupt middle-class neighborhoods (Leahy 2015). However, the very beginning of housing policy such as, FHA underwriting practices, slum clearance, and restriction of low-income projects could be likened to a form of social engineering.

The housing conversation starts by acknowledging that policy began in a time when both the policy makers and the beneficiaries were white middle class families. Up until the Civil Rights movement the poorest of the poor and minorities had no voice. With no one to hear them they were shut out of the policy conversations that could improve their lives. Public policy is often a reactionary machine to public mood. The tension felt by what changes are desired in policy is the attempt to pull the pendulum into balance. The AFFH rule seeks to correct the imbalance created in earlier policy by elevating communities as a whole, not by displacing minorities or brute force integration of suburbs. AFFH certainly has the flavor of post Civil Rights era corrective policy that rely on data, planning and civic engagement. But is this policy doomed like all those before it? Only time, and the next iteration of the policy cycle will tell.

References
Anderson, James E. 2011. Public Policymaking. Seventh edition. Boston, MA: Wadsworth Cengage Learning.

Atkinson, R., Keith Jacobs. 2010. “Damned by Place, then by Politics: Spatial Disadvantage and the Housing Policy-research Interface”. International Journal of Housing Policy, 10, 2 (June): 155-171.

Clemons, Randy S. and McBeth, Mark K. 2009. Public Policy Praxis. Pearson Education, Inc.

Greenbaum, Susan. 2008. “Poverty and the Willful Destruction of Social Captial: Displacement and Dispossession in African American Communities”. Rethinking Marxism, 10, 1 (January): 42-54.

Hayes, R. Allen. 1995. The Federal Government and Urban Housing. Albany, New York: State University of New York Press.

Heathcott, Joseph. 2012. “The Strange Career of Public Housing: Policy, Planning and the American Metropolis in the Twentieth Century.” Journal of American Planning Association, 78, 4 (Autumn): 360-375.

Kimble, John. 2007. “Insuring Inequality: The Role of the Federal Housing Administration in the Urban Ghettoization of African Americans.” Law and Social Inquiry, 32, 2 (Spring): 399- 434.

Leahy, Michael. 2015. “War on Suburbs: Obama, Julian Castro Rev up Affirmative Action Housing”. http://www.breitbart.com/big-government/2015/07/29/castro-and-obama- unite-to-subjugate-americas-suburbs-with-unlawful-affirmatively-furthering-fair- housing-rule/ (July 29, 2015).

Sabatier, Paul. 2007. Theories of the Policy Process. Second Edition. Boulder, Colorado: Westview Press.

Smith, K. B. and Christopher W. Larimer. 2009. The Public Policy Theory Primer. Boulder, Colorado: Westview Press.

Stone, Deborah. 2012. Policy Paradox. The Art of Political Decision Making. Third Edition. New York, New York: W.W. Norton and Company, Inc.

Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. 2015. U.S. 13-1371.

Thompson, Lawrence L. 2006. A History of HUD. Washington D.C.

U.S Department of Housing and Urban Development. 2015. Federal Register. Affirmatively Furthering Fair Housing Rule: Regulatory Impact Analysis. Washington, D.C.: Department of Housing and Urban Development.

U.S. Department of Housing and Urban Development. Housing Choice Voucher Program Guidebook. Washington D.C.: Department of Housing and Urban Development.

U.S. Department of Housing and Urban Development. 2015.” HUD Rule on Affirmatively Furthering Fair Housing.” https://www.huduser.gov/portal/affht_pt.html#final-rule

U.S. Department of Housing and Urban Development. “Title VIII: Fair Housing And Equal Opportunity.” http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_ housing_equal_opp/progdesc/title8

Weiss, Marc. 1985. “The Origins and Legacy of Urban Renewal.” In Federal Housing Policy & Programs, ed, J. Paul

Mitchell. New Brunswick, NJ: Center For Urban Policy Research, 253-276.

Ziebarth, Ann C. & Carol B. Meeks. 1998. “Public Policy Issues and Financing for Rural Housing. Advancing the Consumer Interest. 10, 1 (Spring): 11, 9

The SBA: Big Brother or Nurturing Mother? A Tale of Two Policy Narratives

Like many policies, the Small Business Act of 1953 did not happen overnight. It is the product of many forces both external and internal to federal government. These forces come in the form of lobby groups, media, agendas of elected officials, changes in the philosophy of the Presidential Administration, budgets and trigger events to name a few. When thinking about the many factors surrounding policy formation, Professor John Kingdon’s policy model comes to mind. The model states that three separate streams (problems, proposals, politics) must converge in a window of opportunity to set an agenda and shape future policy development (Anderson, 2011). In simple terms the model indicates that agenda setting is a combination of the above mentioned forces in an opportunistic time frame that will secure a majority interest on an issue. This paper will focus on the ways in which the problem definition shapes the Small Business Administration, the policy window for the Small Business Act, and the prevailing policy narratives surrounding the agency.

Introduction and History

Although things have changed in technology, business, and the policy arena, the Small Business Act is still going strong over 60 years after its inception. The Small Business Administration dots the landscape of cities and towns across the nation. It reaches the population via a network of affiliates including Small Business and Technology Development Centers (SBTDC), Small Business Development Centers (SBDC), SCORE volunteers, SBA district offices, Export Centers, Women’s and Veteran’s Centers and Technical Assistance Centers to name a few. This network of thousands of offices and employees can trace its roots to the Small Business Act. This “Small” Act sprang forth in the tumultuous time of war. It struggled, flopped, and floundered its way through the policy cycle to emerge as the Small Business Act of 1953.

Some argue that small business as a public policy interest began back in the times of the Sherman Antitrust and Clayton legislation in the early 1900’s. However, it appears that small business as a vital element to economic development is strongly correlated with the period that began in 1929 with the Reconstruction Finance Corporation. The RFC, which was created by President Herbert Hoover, was designed to help businesses obtain loan money to work on federal contracts (Bail, 2009). In addition to the RFC, several other pieces of legislation were introduced prior to Small Business Act of 1953. For instance, in 1942 Congress created the Smaller War Plants Corporation, SWPC, in response to small business owners complaints that they were unable to compete with large business in defense production contracting. After the Second World War the SWPC was disbanded and the lending and contract powers were transferred to the RFC (Bail, 2009). In 1944 President Roosevelt issued an “Economic Bill of Rights” that was designed to bolster economic development through the “right” of every individual to a paying job in a secure economy. This Act however, had no provision for small business and has been criticized as largely symbolic in nature (Clark and Saade, 2010).

Around the time of the Korean War another agency similar to SWPC was created to certify small businesses when they met eligibility requirements for government contracts. In addition, the Department of Commerce’s Office of Small Business began taking over education responsibilities in the form of management counseling. This was due to the belief that small business failure was largely a result of lack of expertise and information. By 1952, the RFC which had taken over the SWPC, was abolished. In sensing the importance of the agency work aimed at small business, President Dwight D. Eisenhower helped to create Small Business Administration with the signing of the 1953 Small Business Act (Bail, 2009).

Problem Definition

Problem definition is one of the most important and most difficult processes in the policy cycle. This is because problem definition can vary widely from one individual to the next and social problems are not necessarily tangible. Typically social problems are socially constructed and based on less than rational views. This is no different for the Small Business Act. The 1953 legislation was born during a twenty year period of war time turbulence. This period marks a time when the country was experiencing growing pains in the form of changing attitudes and changing work environments.

On the economic side of things there was a drastic decline in the traditionally active sector of farming, especially in the south. This was due not only to wartime loss of life for soldiers, but many that returned home did not want to return to a life of farming (Clark and Saade, 2010). At the same time, complaints of small business disadvantage in the government defense production marketplace were pouring into Congress. That pressure gave rise to fears on a possible weakening of homeland defense and the slogan “If America will save the small businessmen, then small businessmen will save America” (Clark and Saade, 2010, p.4).

In addition, chain stores were springing up rapidly, which whipped small business advocates and independent merchants into a frenzy to pass tax legislation (Bean, 1995). And finally, in the article Beyond the Broker State: A History of the Federal Government’s Policies Toward Small Business, 1936-1961, an argument is presented that global politics contributed to American fears. The author points out that many Americans felt that rise of fascism in Europe was partially due to the decline of small business. This created the fear in some that the government would have to expand its regulatory powers if big business controlled the economy. People saw this as a possible threat to democracy that could be mitigated only through the protection of small business. (Bean, 1995)

Through this backwards view of the policy cycle the problem definition (that led to agenda setting for the 1953 Act) appears to be fear. There was fear that returning soldiers could not find work, and fear that the economy could not recover if there were still depressed sectors in the nation. There was fear that without the support of the small businessmen in defense production there would be a weakening in the homeland security position. Fear was defined in terms of a threat to “the little guy” as chain stores sprang up. This fear was compounded by what some felt was the contribution of big business to fascism and totalitarianism in Europe.

A problem definition that is easy to define even in the face of many contributing sources can catch on like wildfire. In this instance fear, surrounded by times of Depression and war, ignited a blaze of unity for small business advocacy under the guise of the underdog mascot. When defining policy problems in terms of fear, especially during a trigger period of war there is heavy reliance on myths and symbols. This can take the form of the “little guy”, “us versus them” and the all too popular story of the underdog. Most Americans love the story of the underdog. Many can conjure up stories of heroes and legends they know; and many feel that our country was built in the likeness of the underdog. Fear coupled with the symbol of the “little guy” is a clear, concise and unifying force that can give way to agenda setting for small business policy. It is clear that problem definition is not necessarily based on facts. Politicians can use facts to craft arguments to sway citizens in emotionally charged perspectives of problems . These themes will be discussed further in the policy narrative section.


Policy Window

Critics argue that efforts around small business agencies during the period leading up to the 1953 legislation were largely designed in helping with national defense. During times of peace, the agencies appear to be little more than figureheads. The agencies were fraught with change as they were often disbanded and reformulated to meet the needs or whims of the changing Administration. In addition, it was a period of worldwide economic depression when the New Deal and Fair Deal programs were attempting to breathe life into the comatose economy. It is important to note the underpinnings of the Eisenhower administration as one of heavy interest in “technical assistance and loans to depressed areas” (Clark and Saade, 2010, p. 5). This was the perfect backdrop to incubate The Small Business Act of 1953 which in turn led Congress to create the Small Business Administration.

To refer back to the Kingdon model, the policy window was open and the three streams of problems, proposals and politics converged at the right time in the Eisenhower administration. The problems were based on Depression, unemployment and need for defense contracting. The proposals took various shapes as agencies designed to help small business gain federal contracts. Proposals also took the form of New Deal and Fair Deal programming designed to bolster depressed sectors of the economy. The politics swelled in various forms around securing “the little guy” for defense production so that he would help protect the homeland during times of war. The politics of fear were also used to cement bonds through narratives that pushed legislation to cure the “evils” of big business.

Policy Narratives

The final section of this paper will cover the two competing policy narratives surrounding the SBA. The first of these narrative is the SBA as the nurturing mother. In this policy narrative, supporters of small business contend that without government intervention small business would be snuffed out by big business. In essence, SBA policy was designed to help disadvantaged business compete in the free market.

According to the 1953 Act Section 2. (a) from the SBA website (sba.gov)
The essence of the American economic system of private enterprise is free competition. Only through full and free competition can free markets, free entry into business, and opportunities for the expression and growth of personal initiative and individual judgment be assured. The preservation and expansion of such competition is basic not only to the economic well-being but to the security of this Nation. Such security and well-being cannot be realized unless the actual and potential capacity of small business is encouraged and developed. It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation.

This passage from the Act is littered with what Deborah Stone refers to as the “strategically crafted argument” (Clemons & McBeth, 2009 p. 79). Words such as “security”, “encouraged”, “protect” and the phrasing of the policy is crafted in a way that portrays small business as the nations savior.

According to many supporters the only way to promote small business development is through set asides and special loans. In the article, Should the Small Business Administration Be Abolished?, a debate rages on both sides of the issue. Supporters of the SBA contend that billions of dollars go towards business counselors, information, and loans that are crucial to those who have been “failed by conventional lenders” (deRugy, 2012). Supporters also lay claim to small business as the major creator of jobs for women, veterans, minorities, and the country as a whole. In the aforementioned article, SBA proponent Barbara Kasoff, explains that the SBA is not singularly based on the loans it grants to disadvantaged business. The work of the SBA reaches through the network of affiliates that deliver one-on-one training and counseling sessions (deRugy, 2012). The affiliate centers are designed to be a hub of knowledge and expertise that is available mostly free of charge to small business owners.

Through the affiliate network, the SBA is still keeping up with the long tradition of technical assistance as espoused through the Eisenhower Administration. For instance, the Small Business and Technology Development Centers are an SBA affiliate with 900 centers nationwide. Many of these types of SBA affiliates are located in and around college campuses. According to Richard Proffer, a Business Development Specialist in Cape Girardeau County, the money for the SBTDCs’ comes though a contract with Missouri University in Columbia. The University provides SBA initiatives through SBTDCs’ state wide, via funds from the SBA. The network of Missouri SBTDCs’ claim to be meeting their economic development goals. According to their website they “exceeded annual capital infusion by 150%, pumping more than $670 million into Missouri’s economy over fiscal years 2010-2013” (missouribusiness.net).

A myriad of stories can be found about small business owners receiving help in technical assistance and loans through the SBA affiliates. The volume of stories found on the SBA district websites and the SBTDC website is too large to cover in this paper. Many of the stories discuss common themes such as how the business owner could not have secured funding without the help of the SBA, or how SBA classes helped business owners become more knowledgeable. One such example is in the article, Does the SBA Still Matter. The article discusses the role of SBDC small business counselors in helping small business owners develop business plans and other technical knowhow that will get them before bankers. The small business owners featured in the article discuss how before the help of the small business counselor they felt like they were “18 again and trying to borrow money for a car” (Mandelbaum, 2007, p. 101). The business owners, like many in the SBA success stories, attribute their success in the marketplace directly to their work with the SBA affiliate. The mantra of small business as the backbone of the economy is continuously supported and reinforced through these types of narratives.

As previously mentioned, the SBA policy narrative as one of a nurturing institution is repeated over and over again through small business owner success stories. These narratives speak directly to the original mission of the Small Business Act of 1953, as it was designed to help the “little guy” compete with big business in the free marketplace. Phillip Bail points to a quote on the SBA website that says, “small firms produce the items that line the shelves of America’s museums, shops and homes. They keep intact the heritage of ingenuity and enterprise and they help keep the American Dream within the reach of millions of Americans”. He goes on to say that attacking those words is akin to attacking the American Dream (Bail, 2009 p. 28).

There are prevailing questions as to whether the SBA has stepped away from its primary goals. Amid much value conflict, the SBA still operates and pushes initiates and money towards developing new and existing business. Many entities disagree with government involvement in private industry; while others contend that small business is vital to the economy and therefore it is our duty to support it. According to some of the themes in the literature, the agency goals have morphed from help in set asides for defense production contracting to aiding all types of endeavors for all types of “disadvantaged” businesses . The question becomes whether the policy has changed during evaluation cycle or is there competing interpretations on the implementation side? Some critics of the agency cite inconsistency in program administration while others cite changing times. These questions lead us to the next policy narrative of the SBA as Big Brother.

It is interesting to note the opposing policy narrative surrounding Eisenhower’s decision to sign the 1953 legislation. According to the article, Terminating the Small Business Administration, the other spin on why the act was penned was purely political in nature. The author contends that the RFC was abolished because of illegal influence peddling. The article goes on to explain that although Eisenhower was against the Small Business Act he signed the legislation to disarm critics that claimed that Republicans were “beholden to big business” (deRugy & DeHaven, 2011). In addition, the authors point out that this action was directly against the wishes of interest groups. Groups such as bankers and the Chamber of Commerce did not feel that government should be involved in lending. These groups along with the National Association of Manufactures would benefit from such legislation but instead wanted no part of “big brother” interference. The authors state that the creation of the SBA legislation, “was confined primarily to politicians of both parties who saw an opportunity to seduce the unorganized small business community into active political support” (deRugy & DeHaven, 2011). This again, speaks directly to the stories of heroes and legends and how easily people can be swayed by a clearly defined narrative. Especially one as seductive as the underdog. It is clear that politicians used this strong symbol to garner support. In addition, any political figure that chose not to act appeared t be in favor of big business, which was clearly cast as the villainous un-American character in this narrative.

Currently, there is some debate about whether the SBA is truly supporting its own mission. In the article, Does the SBA Still Matter?, critics cite turmoil in the agency due to inaccurate funding of projects. An examination of several large contracts that showed that more than half of the high dollar contracts in fact went to large business. The author claims that Washington appears to have a fluid definition of the Small Business Act when it comes to promoting the goals of small business. Behind closed doors there is a constant stream of efforts to change the definition of small business to include more constituents and allow larger business to take advantage of 7(a) SBA backed loans (Mandelbaum, 2007 p.107). The 7(a) loan was designed to extend credit to those small business owners who otherwise might be ineligible. This speaks directly to the portion of legislation that was created to help fund loans to enable disadvantaged businesses to compete in the free market. By this definition disadvantaged means small. In another loan program, the 8(a), disadvantage means minority. Critics of the 8(a) program cite an unsuccessful, underfunded attempt at easing impoverished areas in response to the race riots of 1967 (Mandelbaum, 2007). The 8(a) is a program that allows firms to get federal contracts free from bidding. If a company grows larger than the program allowance, it can split off and form a new one. This again points to the wink-wink behind closed doors in terms of allowing larger firms to get SBA backed initiatives.

A waste of tax dollars, money lent to businesses who have been rejected for not meeting benchmarks for success, high risk borrows who as determined by the market are not needed… these are a few of the policy narratives surrounding Veronique deRugy’s view of the SBA as “Big Brother”. In the article, Should the Small Business Administration Be Abolished, deRugy claims that SBA loans are harmful to the economy, to tax payers, and to the free market. She also claims that government should not be involved in the other technical assistance products that the SBA offers. She says these are unnecessary and can be handled by private firms (deRugy, 2012).


Conclusion

Policy formation raises many questions about who the interest groups are, who the stakeholders are and who is creating the problem definition . In weeding out this list it is important to note that individuals in groups are not mutually exclusive. It is also interesting to note that the problem definition, policy window and policy narratives are deeply intertwined in a cacophony of white noise from myths, legends and symbols. Whatever an individual’s particular sway towards the SBA, it is clear that it has a strong foothold in American government. In the words of critic Veronique deRugy, “The SBA…a program to help small business – a widely held belief that’s almost as sacrosanct as baseball, motherhood and apple pie. In reality, the SBA is a form of corporate welfare…” (deRugy, 2012). A perfect point to illustrate an imperfect system. A system that relies on the rallying troops through battle cries in the form of policy narratives.

References

Anderson, James E. 2011. Public Policymaking. 7th ed. Boston, MA: Wadsworth Cengage Learning.

Bail, Philip G. (2009). Federal Small Business Programs and the Small Business Act of 1953. Contract Management, 24-40.

Bean, Jonathan J. (1995). Beyond the Broker State: A History of the Federal Government’s Policies Toward Small Business, 1936-1961. Business and Economic History, 24 (1), 9-12.

Clark, Major. L and Radwan N. Saade. SBA.gov website. The Role of Small Business in Economic Development of the United States: From the End of the Korean War (1953) to the Present. 2010

Clemons, Randy S. and McBeth, Mark K. 2009. Public Policy Praxis. Pearson Education, Inc.

deRugy, Veronique. Wall Street Journal Online http://www.onlinewsj.com. Should the Small Business Administration Be Abolished? 2012

deRuby, Veronique and Tad DeHaven. Downsizinggovernment.org/sba. Terminating the Small Business Administration. 2011

Mandelbaum, Robb. 2007. Does the SBA Still Matter. New York, NY: Mansueto Ventures, LLC.

Missouribusiness.net. MO SBTDC infused $670 million into Missouri’s economy over 4 years. 2014.

Proffer, Richard. Personal interview. 20 Nov. 2014.

SBA.gov website. Small Business Act 1953. n.d.