Above is a picture taken last year of a property in San Antonio called the Dashiell House. The house, which burned down in a fire earlier this year, had been abandoned for years and effectively condemned. Before the fire, any legitimate use would have required millions in repairs. As a result, the owners sought to tear down the structure and invest millions to build a 250-unit apartment complex.
Of course, it wasn’t that easy.
Local groups engaged the historic commission to slow down the process and have the building designated as a historical monument. Despite many modern additions, the shell was built in 1853 as a brothel and later occupied by the Catholic church for 100 years. The project ground to a halt.
So, why does this matter?
Well, the mayor and City Council of San Antonio have made affordable housing their number one priority — like many city leaders across the nation. How does stopping construction of 250 units near the city center help this cause? Well, of course, it doesn’t.
But this pattern plays out across the country every day. An array of hurdles exist that slow construction projects: historic reviews, community reviews, environmental reviews, zoning approvals, building restrictions and minimum requirements. The list goes on and on. Special interests, usually neighbors who do not want change in their backyard (“NIMBY!”), grab hold of these processes and slow or stop projects en masse. Even if they don’t prevail, the costs of completion go up. And then we are shocked we have an affordable housing problem.
So what do we do in response? Spend money to make it up. Low supply means high prices. High prices mean we must help people with affordability.
And on cue, San Antonio just passed a $150 million bond to tackle affordable housing. This pool comes on top of myriad programs to subsidize rent and housing access across the city.
You know what we could do instead? Make it easier to build, no public money required. More supply to meet the growing demand! The owners wanted to build 250 new housing units with their own money.
Is there a need for some friction in the process? Should we protect truly historic buildings? Do we need environmental controls? Of course. But, perspective has been lost and uncompromising activists have gained too much power to veto projects. The Dashiell House is no architectural treasure or historic icon.
Leaders see the protesting minority and can please them by shutting projects down. The broader costs are then spread to everyone via bigger programs to ease the pain. Politicians feel they face no trade-offs. Please the angry, pay for the collateral damage.
But, as I laid out before, the money will eventually run out.
Once you see this dynamic in action, you can’t unsee it. It is everywhere in our policy world today — and at the core of our growing cost of living issues.
More dollars for infrastructure, but it must be union-backed, domestically sourced and LEED certified.
More tax breaks and guaranteed loans for elite universities, but no expansion of enrollment.
More government-subsidized health care, but ever-tightening restrictions on medical licensing, remote care and scope of work for nurse practitioners.
More subsidies for solar, but impossible environmental standards limit any lithium mining needed to build panels (let’s just rely on China!).
I could go on and on.
Print money to help people buy things, but make supply of those things harder and harder. The playbook is expensive and ineffective — and hopefully in its endgame.
Inflation and our supply chain woes have opened people’s eyes to the need to build. We have to produce more and do it faster.
And the good news? People across the political spectrum are waking up to this reality.
Of course libertarians (especially the new breed of state capacity libertarians) are all over this problem even coining the term “progressive supply-side economics” in an attempt to gain bipartisan support. Economist Eli Dourado came up with the phrase and laid out the case simply:
“A new supply-side economics would recognize that productivity growth is the right target, but it would reject tax policy as the primary means of stimulating productivity. Instead, it would examine how everything government does — from permitting to procurement — could be improved to increase productivity.”
And there are growing signs that both sides see we can’t just spend our way out of our problems.
The progressive policy wonk Ezra Klein has written at length recently on the topic pointing out, “progressives are often uninterested in the creation of the goods and services they want everyone to have.” Even the regulation-loving Alexandria Ocasio-Cortez has recently deemed herself a YIMBY (Yes in My Backyard!) demanding looser zoning laws to allow more building. Gavin Newsom recently reversed his decision to close the Diablo Canyon plant, upsetting activists, but ensuring lower cost and carbon-free power for residents. As the cost of living rises, the ability to take these stands will grow.
The right is more naturally inclined to supply side concepts like deregulation, free markets and trade. “Drill baby drill” ring a bell? But, they also answer to special interests. Pro-business is often counter to free market ideas and the right often protects incumbent property and business owners over innovative newcomers. Corporate welfare and protectionism is every bit as big an issue to supply constraints as the growing handouts to individuals is to excess demand. More supply means more competition and the incumbents won’t like it. The right needs to find ways to drive private sector productivity and innovation, not just profits. It will take a lot more than tax cuts. Or just opposing handouts.
The leadership opportunity exists to build a coherent vision and broad coalition on these new supply-side concepts. Voters are going to demand a plan. Inflation is by far the number one issue on their mind. The good news is America’s greatest asset is a culture of innovation. Our open society embraces new ideas and change better than any in the world. We need leaders ready to harness that power again in ways for the greater good. Special interests will be uncompromising, but our leaders cannot be if we want to truly solve problems. Building more, faster, not simply spending more is the only way out. The time to rally America to the cause is now.
This commentary was originally published in Movements Start Small.