The way "private" enterprise works in our era of the neo-fascist corporate state is well shown in an article in the Wall St. Journal (Feb. 5) on the National Corporation for Housing Partnerships. The NCHP, created by President Johnson, but supposedly run along the Nixonian lines of rewing up the "engine of private enterprise", wants to raise $50 million from private industry to invest in lowrent housing projects which would eventually mount up to $2 billion of capital.
Praiseworthy? But wait. In order for the corporation to get started, there must be a substantial flow of Federal funds to subsidize rentals in the new projects. The NCHP wants $150 million from the Federal government for this year and next before it sets up business as a corporation. With this huge subsidy, "private enterprise" in the form of the NCHP would be willing to build 10,000 low-rent units in the first year, and hopefully move up to 60,000 units annually.
A particularly desired form of federal subsidy would be to pay a subsidy that would keep mortgage interest costs down to a near-zero sum of 1% per year. With this kind of subsidy, a whole roster of the nation's largest corporations stand eager to do their great humanitarian work. This includes Kaiser Industries Corp, whose head, Edgar Kaiser, is the president of the NCHP, Westinghouse, Metropolitan Life, Deere and Co., and Ling-Temco-Vought. Many of the biggest banks, such as Chase Manhattan, First National City, Bank of America, Mellon National, would be willing to lend the corporation money to launch its operations. Also, not surprisingly, a host of local realty firms would be happy to join in the bonanza.
The big attraction, apart from humanitarianism, is a huge, guaranteed profit, or, as the Journal puts it, "a guaranteed, Government-supported market to attract profit-motivated private industry and investors." The estimated annual rate of profit for these investors would begin at over 24% and end at 17%. Pretty good returns for "helping the poor"!
----------------------------------------
This article has been reprinted with the kind permission of Mises.org.