Neither of those cases would be especially well addressed by your proposal. Really, wouldn't option #1 help the normal, hard-luck people quite a bit? It would

Neither of those cases would be especially well addressed by your proposal. Really, wouldn't option #1 help the normal, hard-luck people quite a bit? It would give you a permanent bed, and address to get mail, etc. while you applied for jobs and got back on your feet? It seems like an immensely superior option to the status quo. As for the crazy people, I agree, which is why I edited my answer to make it clear that there should be government provided permanent living arrangements that are supportive for the types of problems people have. The normal hard luck people should not have to live in dorms with crazy people and drug addicts.