Houses for the People, Power for the Gangs: Criminal Governance and Social Housing

Extant literature posits a negative correlation between state capacity and criminality: criminal organizations thrive where the state is absent or weak. Conversely, increasing state presence in the form of local public or club goods, services, and social policies may reduce opportunities for criminal actors and individual incentives for citizens to engage in criminal activity. In this article, we argue that state presence does not necessarily lead to less crime and that under certain conditions it can backfire and produce more crime. We focus on the rollout of a large-scale social housing project in Brazil to examine how organized criminal groups exploit state initiatives to embed within communities, establishing persistent criminal activities ranging from the direct appropriation of housing units to the long-term exploitation of beneficiaries. We use a mixed-methods approach that integrates regression discontinuity designs, difference-in-differences models, and qualitative interviews with policymakers and stakeholders. We find that social housing has a causal effect on violence, as criminal organizations actively and aggressively seek to acquire and maintain control of housing developments and of the populations these projects were meant to serve. This paper contributes to the literature on criminal governance, social policy, and state capacity by demonstrating that well-intentioned state interventions can unintentionally enable criminal actors and entrench parallel forms of governance.