“Market” Isn't a Dirty Word, Nor is “Government” [UnintendedConsequences]

“Market” and “Government” aren’t bad words - you’re just using them wrong.

Anything sufficiently complicated eventually ends up getting its own vernacular. So it is with San Francisco housing policy. Words like “market-rate” and “affordable” gain meanings specific to this particular context. Meanwhile, words like “neoliberal” lose their meaning entirely.

Another axiom: People view any sufficiently complicated question through the lens of their favorite ideology and that lens distorts what words mean.

So it is with a question like “Should San Francisco address problems like gentrification, displacement, homelessness, lower rates of economic growth, and decreasing diversity by building more housing?”

People with an anti-market, pro-government ideological bent put the blame for these problems at the feet of market forces. “Too much Tech is killing San Francisco,” they’ll say in earnest.

People with a pro-market, anti-government ideological bent put the blame for these problems at the feet of government. “Build, baby, build!” is their solution to everything.

The irritating thing is that both factions are correct. Too much tech is killing San Francisco. Increasing demand without increasing supply always has the same effect: higher prices. Gentrification, displacement, homelessness, lower rates of economic growth, and decreasing diversity all result directly from the fact that 70% of San Francisco rents, and rents are subject to market forces. So when housing becomes scarce, people get priced out of their homes.

Too much tech might be killing SF, but we’re not going to build a wall. So we’re going to have to house these people. And there really is only one long-term solution to too little supply when you can’t cap demand: More supply.

Seen from this perspective the question stops being whether to build and starts being what to build. Again, people rely on their ideological shortcuts. Anti-market, pro-government people advocate for more “affordable” housing. Pro-market, anti-government people advocate for more “market-rate” housing.

The problem is that there is no such thing as market-rate housing in San Francisco. Maybe that’s a touch hyperbolic. I’ll say it this way. It’s impossible to know what housing in San Francisco would cost without the following:

Permits and permit fees
Environmental impact reports (EIRs)
Affordable housing mandates/inclusionary zoning ordinances
Local ballot measures
Parking requirements
Too many cities (collective action problem)

In San Francisco, what gets lost in the fierce debate between the market-rate and affordable housing factions is that, at least in the current regime, the two kinds of housing are more alike than not.

In both cases voters, not market forces, decide what gets built and where. And while the benefits of blocking new housing developments are concentrated, the cost of those choices is borne by everyone collectively.

If builders were allowed to build what people would buy where people would buy it, instead of what people will allow them to build where they’ll allow them to build it, there would be no fight between “market-rate” and “affordable” housing in San Francisco. Just like there’s no fight between market-rate and affordable housing in Houston, Texas. Techies are displacing San Franciscans because San Francisco is really good at blocking housing. And rich neighborhoods are better at it than poor ones.

We keep building high-rises an elite few can afford to live in instead of the homes San Franciscans want and need. Why? Because developers have to prioritize high-priced developments to recoup the losses from the multi-year, multi-lawyered fights to win the right to build in the first place. That’s not a market, that’s an oligopoly.

No one on either side of the ideological seems willing to ask why we’ve just accepted the premise that affordable housing requires subsidies. Or that “market-rate” means too expensive for native San Franciscans to afford. No one is willing to dream of how “affordable” we could make housing, even if it were all truly “market-rate.”

Cathy Reisenwitz writes about software for a living, sex on the side, and policy for fun. Her column “Unintended Consequences” appears regularly in the Bay City Beacon. She’s pro-sex, pro-feminism, and pro-market. Sign up for her newsletter and follow her on Twitter.

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Photograph by Michal Jarmoluk