The Housing Crisis Is a National Problem
Inequality + the application of "supply and demand" to real estate = disaster
In a depressing and poorly framed column, liberal Seattle Times columnist Danny Westneat argues that solving the housing crisis might be impossible. “The well-intended liberal dream of housing for all,” he writes, “Is maybe just that – a dream.” Westneat points to an identically depressing and poorly framed New York Times story about liberal West Coast cities appealing to federal courts to allow them to sweep encampments of unhoused people, even if there is not enough shelter for them.
Make no mistake, I agree: the encampments embody a disaster.
Westneat and Shawn Hubler, the New York Times reporter, frame the problem poorly by considering it as an urban problem – exactly as the Republican politicians, who have worked hard to put in policies that create, promote, and exacerbate the problem, would wish.
It’s not an urban problem. It’s not even a county or regional problem. Even though the wealthy suburbs are happy to let the more liberal central cities pay the large bulk of the bill, it’s not a city problem. It’s a national problem.
Public Housing took off in the United States during the Great Depression of the 1930s, under Franklin Roosevelt’s administration. Harry Truman expanded it, and Lyndon Johnson expanded it again. Nixon halted the building of public housing in 1974. Reagan raised the rent on public housing from 25% of income to 30% of income – in part to hand out tax cuts to the wealthy. Since the Reagan tax cuts, the explosion of homelessness has only been matched by the explosion of billionaires. Now Fox News and Republicans blame the liberal cities for the effects of these policies.
But it’s unfair of me to blame Danny Westneat for the poor framing of the problem. Seattle’s leadership never should have attempted to “end homelessness” in isolation from a nonexistent national effort to solve a national problem.
We haven’t solved homelessness because we haven’t tried to as a nation. Saying it’s impossible to solve is to surrender to the dystopian Republican vision of more for the haves and nothing for the have-nots.
Inequality is built into our system, and the capitalist “law” of supply and demand has had disastrous results when it’s been applied to real estate. When populations grow, and the supply of land does not, the price will go up, to nobody’s benefit but the land owners’. It’s a huge problem – and one that will be challenging to solve.
To close, here’s one of the founding, and still the most famous, theorists of capitalism, Adam Smith:
“Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor.” – Adam Smith, The Wealth of Nations, 1776
The theoretical insight about the imbalance of supply, demand, and real estate is more than 140 years old. The American economist Henry George noted it in 1879.
Take now . . . some hard-headed business man, who has no theories, but knows how to make money. Say to him: “Here is a little village; in ten years it will be a great city—in ten years the railroad will have taken the place of the stage coach, the electric light of the candle; it will abound with all the machinery and improvements that so enormously multiply the effective power of labor. Will in ten years, interest be any higher?”
He will tell you, “No!”
"Will the wages of the common labor be any higher. . . ?”
He will tell you, “No the wages of common labor will not be any higher. . . .”
“What, then, will be higher?”
“Rent, the value of land. Go, get yourself a piece of ground, and hold possession.”
And if, under such circumstances, you take his advice, you need do nothing more. You may sit down and smoke your pipe; you may lie around like the lazzaroni of Naples or the leperos of Mexico; you may go up in a balloon or down a hole in the ground; and without doing one stroke of work, without adding one iota of wealth to the community, in ten years you will be rich! In the new city you may have a luxurious mansion, but among its public buildings will be an almshouse. – Henry George, Progress and Poverty, 1879
Resigning oneself to a bad outcome is a self-fulfilling doom. We can do better, and someday, we will.
NOTES:
Adam Smith quoted in Teachings from the Worldly Philosophers, Robert Heilbroner, 1996, p. 190
Henry George quoted in The Worldly Philosophers, Robert Heilbroner, 1992 (originally published in 1953), p. 187 – 188
Here's Danny Westneat's Seattle Times column, "West Coast cities start to confront the limits of the liberal dream"
Here’s Shawn Hubler’s New York Times article, “California Democrats Want Courts to Let Cities Clear Homeless Camps"
Photo at the top is of Henry George.