We are experiencing the slow-motion takeover of the private housing sector by the government, and the pace is accelerating.
In all state takeovers of private companies, shortages develop and then worsen. It is a consequence of the replacement of financial rewards for production and creation by sanctions: mind-numbing regulations and confiscatory taxes. At the same time, cover artists promise free stuff to anyone who needs it.
The only way this can continue is if production is constrained by government force of one kind or another.
At the extreme limit of government force, people are imprisoned or executed for not working for the “common good”. At the less extreme end, people are prevented from earning a living or making a profit unless they “voluntarily” donate the fruits of their labors to be distributed by the government.
This is the philosophy of collectivism. It’s the idea that everything produced in a society somehow belongs to everyone, and it’s the government’s job to distribute it ‘fairly’.
This inevitably leads to shortages.
In a free country, it’s a multi-step process to get there. First, there is a need to convince the public that ordinary business should be banned for a larger reason. The fear of climate change serves this purpose well. Fear of COVID-19 transmission has also been effective. Suddenly a total ban on normal life seems justified, even essential. People are scared enough to accept the idea that they need government permission to do anything.
In the housing sector, fear of climate change has led California to effectively ban the construction of new single-family home communities. The suburbs that offer a lifestyle that many people consider desirable have been redefined as a destructive “sprawl” of the Earth. A new measure of “vehicle miles traveled” has been added to the law to prevent property developments that would generate commuting.
After more than a decade of this housing-discouraging government policy, California has incredibly high prices for existing single-family homes and a housing shortage. State push for urban density, including a law that abolishes single-family zoning across the state (Senate Bill 9), is meeting strong resistance from Californians who have purchased homes away from the urban density and fight to keep it that way.
A second front in the war against the private housing sector is the intentional destruction of family landlords. COVID-19 advanced this government goal, as landlords were forced to provide free housing to tenants who were unable or unwilling to pay the rent they owed, but who could not be evicted.
Rent control is another cause of the housing shortage. Many studies have documented that rent control gradually leads to fewer rental units because it makes existing investments in rental housing progressively less profitable until they are completely in the red each month, while discouraging new investments in new multi-family properties.
After trashing the private housing sector, government officials are happy to jump in front of the cameras and offer public housing.
It’s on your ballot in the city of Los Angeles. The LH proposal would authorize an additional 5,000 low-income public housing units, or its equivalent, in each of the 15 Los Angeles City Council districts.
Another effort to revive public housing has just been signed into law by Governor Gavin Newsom. Senate Bill 679 creates a new county-wide tax authority in Los Angeles, with an unelected board empowered to put tax increases on ballots and spend the money to build government controlled housing.
Instead of allowing the private housing industry to function, California state and local authorities strangle it and then jump on the corpse to declare the market a failure. The solution they propose is to disconnect the effort from the reward and replace it with a reward for connections.
Who will be lucky enough to have a cheap apartment in the most inaccessible areas of the city? To increase your chances of being chosen, don’t do or say anything that criticizes the government. You will still have the right to free speech, but no place to live.
The real solution to the housing shortage is less government, not more. Vote no on rent control, no on the LH proposal, no on anything that tries to tell you the government is going to solve the crisis it intentionally created.
Write to Susan@SusanShelley.com and follow her on Twitter @Susan_Shelley