Leave it to the Russians to offer a great example of big government run amok. Bloomberg Business Week details the government?s efforts to force people into homeownership:
Russian President Dmitry Medvedev, in a speech two years ago, bemoaned the fact that 77 percent of the country’s 142 million citizens live “cooped up” in apartment blocks. Now his government has a plan to liberate them, amassing almost 2.5 million acres to seed the land with single-family homes. “Call it the Russian dream,” says Alexander A. Braverman, who runs the Federal Fund for the Promotion of Housing Construction Development, which Medvedev created. “I think we can make this dream come true.”
As the U.S. struggles to recover from the housing bust, some economists are reconsidering the soundness of policies that promote homeownership. Russia’s leaders aren’t worried. After visiting a newly completed development of prefabricated houses on the outskirts of St. Petersburg in November, Prime Minister Vladimir Putin said he hoped homeownership will inspire Russians “to have more babies.”
Developers, including Mospromstroy and National Housing, are lining up to profit from the coming boom in housing construction. At least 14 million square meters of housing are expected be under construction by next year on land owned by the federal fund. That will rise to 20 million square meters in 2012, or about 30 percent of all residential construction in Russia. “We think that people who have their own homes, driveways, and careers are fundamentally different than those who don’t have these things,” says Braverman. “The person who has something to defend is a different kind of person.”
To convert Russians to the joys of property ownership, the fund plans a marketing blitz, including billboards and TV and print advertising. “In the U.S. in the 1960s, the demand for homes came first and the government provided the rest,” says Nadezhda Kosareva, president of the Institute of Urban Economics, a research group in Moscow. “In Russia the government is trying to push the idea from above.”
Because central planning from Moscow has worked so well in the past.
