San Francisco: America's Largest Gated Community
By David Henderson
Reinham Salam has an excellent article on Slate. I don’t like the title, “Selfish, Selfish San Francisco.” No, it’s not the objection you might expect from an Ayn Rand admirer: my objection to Slate‘s use of the word “selfish.” My objection is that Slate attributes any virtue or vice to a whole city. Indeed, the content of the article is so good and so clear that it itself refutes the title.
Salam makes the case, which no economist I know of would disagree with, that stringent land-use land-use regulations in San Francisco have substantially limited the growth of the housing stock. It’s basic Econ 101 to get from a lower supply than otherwise to higher rents and housing prices than otherwise. Edward Glaeser of Harvard and Joseph Gyourko of Wharton wrote an excellent piece on this in Regulation, Fall 2002. It’s “Zoning’s Steep Price.”
A great paragraph that puts the numbers in perspective:
Or consider San Francisco, one of the least-affordable major cities in the United States. San Francisco’s population is about 825,000. If it had the same population density as my hometown, New York City, it would instead have a population of 1.2 million. Note that I’m referring to the population density of all five boroughs of New York City, including suburban Staten Island and the low-rise outer reaches of Brooklyn, Queens, and the Bronx. A San Francisco of 1.2 million would not be a Blade Runner-style dystopia in which mole people were forced to live cheek-by-jowl in blighted tenements. San Francisco at 1.2 million people would still be only half as dense as Paris, a city that is hardly a Dickensian nightmare.
The effect on lower and middle-income families:
In The Gated City, Ryan Avent observed that high housing costs in America’s most productive cities had forced large numbers of middle- and low-income households to either accept long, costly commutes, which eat into the ability of families to work and save, or to move to low-cost, low-productivity regions. Over time, this greatly impairs the ability of working- and middle-class Americans to climb the economic ladder. Moreover, when you move large numbers of people from high-productivity, high-wage regions to low-productivity, low-wage regions, you lower the productivity of the entire country. In other words, the rich homeowners who are fighting development in San Francisco and throughout coastal California are actually making America poorer.
This is the point co-blogger Bryan Caplan makes in another context: his discussion of restrictions on immigration. Those restrictions keep people in lower-productivity jobs than otherwise, making those people, and the people who would have gained from trading with them and hiring them, i.e., Americans, poorer.
Also, how allowing more building in San Francisco would cut electricity use:
One of the many benefits of allowing for more housing in a city like San Francisco is that it would likely lead to sharp reductions in carbon emissions. San Francisco is among the greenest cities in the United States, thanks largely to its superb climate. The same goes for San Diego, San Jose, and Los Angeles. The economists Edward Glaeser and Matthew Kahn have estimated that a San Francisco household spends one-fourth as much on electricity as a comparable household in Houston, as coastal Californians have far less need for air conditioning. To be sure, California does face serious environmental challenges. For example, that California’s water resources are stretched thin. But redirecting water resources from agricultural to residential uses would make an enormous difference, as would pricing water resources more intelligently. The environmental upside of supersizing San Francisco and other coastal California cities far outweighs the downside.
Now you might see why I don’t like the article’s title. San Francisco doesn’t have only property owners: it also has renters. My daughter is one of them. She and her roommates are hurting from the high rents they pay due to restrictions on building houses and apartments. She, and tens of thousands other renters, are San Franciscans too.