The first step toward an abundance agenda for housing is realizing we don’t need more money, we need … More
Yesterday, I posted about Ezra Klein’s abundance agenda. I agree with where Klein is going, and I’m sure his book, written with Derek Thompson, Abundance, goes into the kind of depth an opinion piece in the New York Times cannot. I haven’t read the book yet, but I’m going to take the idea of a “liberalism that builds” and apply it to housing policy and practice. Klein is trying to rescue progressives from their instinct to embrace government as the solution and open a path toward disaggregating the progress from regulation. There are some specific steps I would suggest to do this when it comes to housing.
Three years ago, I wrote a similar post about how to create a conservative housing policy in a post titled, Toward a Conservative Housing Policy. I won’t recapitulate that whole argument here, but a key element of that post was to tie back to Milton Friedman’s idea of a negative income tax, and idea that could be called a guaranteed basic income. The idea is to end run the bureaucracy for subsidies for housing and just give people direct, fast cash for covering rent. This would accomplish the goals of reducing government and be a compassionate move to help poor people with what they need most, money. I’ll start with that same recommendation, and more in no special order.
Cash for rent – Conservatives generally speaking hate the idea of profligate spending on social benefits, seeing them as entitlements that create indolence and a constituency for bureaucracy. Weirdly, many on the left are suspicious or oppositional about cash for rent, worrying that in some way it is propping up land lords. But the left if coming around on cash. Cash is key for an abundance strategy, eliminating barriers and more efficiently getting needed help to households without buying land, building, and operating housing.
Homelessness is NOT just a housing problem – Nor is it just a law-and-order problem as some conservatives would argue. It is a deep and complicated problem that includes mental health, addiction, and economic issues. As I’ve argued before last year, we can’t litigate our way out of homelessness as many on the left tried to do (Courts Can’t Solve Homelessness; Only We Can Do That) nor can we arrest our way out of it (Criminalizing Homelessness Won’t Work; Collaboration Will). What we can do, is work to eliminate red tape and barriers so that jurisdictions can build on the capacity demonstrated when people living on the street organize themselves into encampments (A Tale Of Two Villages: Solving Homelessness Requires New Building Codes).
Listen to developers, builders, and housing providers – Too often, the left vilifies people in the business of housing. They are not bad people, and as I often say, sure, there are greedy landlords, but there are greedy teachers, doctors, bus drivers, and shoe salesman. Greed is a personality trait not a business model (really, it isn’t). Housing is, at least for now, a commodity and we can learn a great deal about housing markets by the decisions made by developers. When money starts to flow in one direction or another, it usually can tell us where scarcity is and where barriers are. I posted about how investors can teach us how supply and demand is working in a market so that local governments can effectively intervene to prevent price shocks.
Get better and more useful data – Economic data from investors is important, but we also need better permitting data. Developers always complain that building new housing “takes too long” and opponents of housing say “it’s too easy.” The truth is that across the country, for the most part, we just don’t have an answer about which is more accurate. I wrote a few years back about the fact that most jurisdictions simply don’t track permit data in a useful way. For example, most cities can’t accurately or reliably tell us how long it takes to get from permit application to issuance of certificate of occupancy, the point where an apartment or house can actually be lived in. All sides of the housing discussion need to demand that we get this kind of data so we can understand the interaction between permitting, price for housing, and other factors like population.
Understand and embrace risk – The left often wants to program things for a specific outcome not opportunity. There needs to be a balance. All capital construction, especially building and operating housing, is risky. Adding more rules and regulation increases risk and the only way to offset that risk is to increase price. When state and local governments make it harder to assess risk by limiting use of credit scores, for example. And cash subsidies involve risk of fraud. We need to find ways to offset risk for people who build and operate housing and take risk on households by investing cash subsidies that make it easier for them to survive but to also take their own risks, starting businesses or pursuing educational opportunity for example.
Understand taxes – What are taxes for? Taxes raise revenue for things the market otherwise can’t support (a big park in the middle of a city), incentivize or disincentivize behavior (mortgage home deduction or cigarette taxes), and redistribute wealth (capital gains taxes). There’s something to love and hate in these for everyone. But housing regulation acts as an opportunity tax and so do requirements that impose price or rent controls. Progressives need to understand that trying to impose prices end up causing inflation; see supply and demand.
Abolish zoning – Zoning is a 20th century solution to a 19th century problem; zoning –separating uses of land – is an answer to problems we don’t have, and a solution that makes problems like sprawl worse. Zoning also reenforces incumbent homeowner’s equity by limiting housing production, locking in acres of land for few people. This fuels inflation which disproportionately impacts people with less money who rent.
These are all ideas I’ve been advocating for years as good policy and they would lead to abundance. But they aren’t easy ideas, but generally, when it comes to housing, what we’re doing isn’t working.
