THE DEBATE about how best to increase the supply of low-cost housing has centered, even during the Reagan and post-Reagan eras, on the most effective means of state intervention: whether government should provide housing directly (through subsidized construction) or indirectly (through housing vouchers). Both courses reflect doubts about the quality of the low- to moderate-income housing that the market will provide.  Policymakers have assumed that such housing will be so manifestly inferior that the state must provide either substitute housing or funds.