Thomas Sowell

There was a painful irony in an upbeat newspaper story about a man of modest income who was able to continue living in San Mateo County, California, only because he could rent a government-subsidized apartment for $850 a month. Without the subsidy, the rent would probably have been at least twice as high.

On the other hand, in Modesto, California, he could rent an apartment in a gated community for less than $850 a month -- and without government subsidies. Modesto is in a much more conservative part of California, where environmental extremists do not have the political clout to ban the building of housing over vast areas under "open space" laws. The artificial scarcity of buildable land under such laws drives up land prices and thus drives up housing prices.

As housing prices skyrocket after open space laws are passed, token amounts of "affordable housing" are then provided through government subsidies. In other words, having made housing unaffordable for many people, government now provides a relative handful of people with housing that is almost as affordable as it would be if the government had left things alone.

It is a classic example of what Adam Smith called a "most unnecessary attention" by politicians to things that would be better off without their interference. It has been nearly half a century since Martin Anderson's classic study "The Federal Bulldozer" revealed that the federal government had destroyed more housing through Urban Renewal than it ever built. Now state and local governments are banning housing under open space laws.

Meanwhile, politicians, editorial writers, and others who wring their hands over a lack of "affordable housing" turn to government as the only solution to a problem which government itself has created!

Politicians are seldom willing to solve any problem by simply stopping what they have been doing to create the problem. Instead, they come up with new programs that ignore the real cause.

Let's go back to that fortunate gentleman who is able to live in San Mateo County with government subsidies. Why couldn't he afford to live there without those subsidies?

A major reason is that the building of housing is banned on more than half the land in San Mateo County. Moreover, the county is now seeking to acquire an additional 220 square miles of land for "open space." That is more than four times the area of San Francisco. You cannot take vast amounts of land off the market without driving up the price of the land that is still on the market. That's Economics One.


Thomas Sowell

Thomas Sowell is a senior fellow at the Hoover Institute and author of The Housing Boom and Bust.

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