Relying solely on the theory of trickle-down economics and hoping that building luxury apartments will at some point in the future lead to affordability is wishful think at best, and deceitful at its worst.
San Francisco supervisor David Campos’ response to the housing crisis, like his proposed housing moratorium, tends to miss the forest for the trees.
Contrary to Campos’ dismissal above, it’s a predominant view of expert governmental and academic analyses that overall supply constraint is the primary driver of unaffordability. For example:
California’s Legislative Analysts Office housing affordability study.
Glaeser & Gyourko [2013]. “The Impact of Building Restrictions on Housing Affordability.”
Hsieh & Moretti [2015] . “ Why Do Cities Matter? Local Growth and Aggregate Growth.” summarized by CityLab.
recent study by SF’s chief economist Ted Egan, thoroughly refuting Campos’s arguments for a building moratorium.
recent speech by Jason Furman, chair of Obama administration’s Council of Economic Advisors: “Barriers to Shared Growth: The Case of Land Use Regulation and Economic Rents.”
Matthew Rognlie [2014]. “A note on Piketty and diminishing returns to capital.” modestly titled but bombshell & debate-setting-paper, presenting case that supranormal housing-value gains are the biggest factor explainingrecent decades’ rise in inequality. Ferenstein Wire discusses.
As previous commenter suggested, calling supply-constraint arguments “trickle-down economics” is a clear misrepresentation, it having no logical connection to the Reagan-era macroeconomic growth policies so described. As with describing all market-rate housing as “luxury,” this appears to be just a way to perjoratively frame the reference, rather than make an argument.
The type of extreme political control over and limiting of housing production which Campos calls for is being increasingly recognized by policymakers and citizens today as a central factor in driving inequality, lowered social mobility, national productivity loss, and impoverishment of lower-income households. Housing costs are the key reason for California’s poverty rate having climbed in recent years to over 12%, among the nation’s highest.
Campos may be well intentioned and sincere, but refusing to support anywhere near sufficient overall housing supply demonstrably works against values and communities he pledges to represent. Policies have to be judged by outcomes, and the outcome of San Francisco’s 40-year experiment in supply control is the unaffordability and displacement crisis we’re in today. Progressive deeds, not words, shall move us.
