I recently saw that San Francisco is considering fast-tracking residential development dedicated to teacher housing. There are quibbles between the moderate mayor and the progressives on city council (“Board of Supervisors”) over the exact structure of the housing subsidies, but both sides agree at least in theory that it should be easier to build housing for teachers; for more background, see article here and Twitter back-and-forth here. I bring this up because it’s an example of bad governance at the local level in the US, one that sends everyone the message, “you should get more clout to bribe politicians.”
The basic problem is that market-rate housing in San Francisco is extremely expensive; in the Mission, a two-bedroom apartment rents for about $5,000 or $5,500 a month. There’s rent control, but it requires one to have lived in the city for a very long time – friends who have lived in the city since the mid-2000s pay around $2,700, which is borderline on a teacher’s salary. Usually the city’s local notables don’t have to care about whether housing is affordable to people in intermediate professions, since our rent is their property values, but “teachers can’t afford housing here” could be a rallying cry for more housing. Thus, they feel like making an exception.
Making an exception is the hallmark of populist governance. In a system with not much rule of law and no trust that there will ever be rule of law, people don’t ask for better rules but to benefit from exceptions. That various exporters threatened to leave Britain over Brexit did not faze Theresa May – every time a company people didn’t hate made such a threat, she offered special subsidies to stay no matter what would happen with the trade agreement with the rump-EU.
The problem with populism is that it sends the message, invest in political marketing and not in productivity. A company that sees that San Francisco is subsidizing housing for teachers in preference to other workers with similar pay and skill level – clerical workers, social workers, lab techs – gets a clear incentive to give its workers more political prestige through political contributions, sponsorships of events the local politicians are interested in, etc. It faces less pressure to invest in its productivity and pay its workers better, since housing is not allocated by market pricing but by political whims.
Under liberal governance, if San Francisco wishes to give its teachers perks, it can pay them better. Programmers get paid $110,000 a year plus benefits (stock options, good health insurance, free food), and the city can if it wants raise taxes and pay teachers similarly; if it can commit to maintaining such high pay indefinitely it can ensure the profession will get more prestige and attract people who otherwise would be writing code for how to sell user data to advertisers slightly more efficiently.
However, a tax hike might fall on the local homeowners and on other rich people who have invested a lot of time and money in obtaining political influence. To avoid burdening the powerful, the city can’t do this – it has to come up with some one-off bespoke deal for teacher housing, rather than permitting more housing across the board and also raising salaries to be competitive with those of the private sector.
Improving the quality of governance requires making it harder for politicians to create such deals. The original YIMBY praxis of state preemption laws is one way to do this: it completely takes local notables out of the loop. While the YIMBY groups on the ground in California don’t go further with this, their favorite state politician, Scott Wiener, who represents San Francisco in the State Senate, is consciously trying to form an informal state party with some ideological coherence based on relevant state issues, led by the question of housing.
It may be prudent to refine this preemption doctrine by interfering with local rules that favor some groups over others in housing. Thus the state should pass a preemption law that forbids dedicated housing for teachers, cops, or other charismatic professions, and requires all housing to be allocated by market pricing, or, failing that, by a clear process of rent control, such as waitlists or income limits. Private actors may continue to buy and sell housing based on their wishes, subject to the usual anti-discrimination law, but municipalities may not use incentives such as subsidies, tax breaks, access to public land, or special fast-tracking of approvals. Such a law may well succeed in the state legislature – unlike the SB 50 process preempting zoning restrictions, this law would not be nakedly offensive to the privileged group of suburban homeowners who managed to scuttle SB 50.
It is not really possible to develop rule of law in an environment in which powerful people can easily circumvent the rules. A city that can offer a way out of an onerous permitting regime to people who make it attractive offers – that is, bribery – has no incentive to make the permitting regime easier, and a powerful incentive to keep it as it is. If building housing becomes easier, politicians lose the ability to extort community benefits by threatening to withhold permits. And if there is a way out for socioeconomic classes that demagogues can’t dismiss as gentrifiers, transients, and rootless cosmopolitans, then politicians gain the ability to threaten everyone else, while employers as well as nonprofits get a powerful message that they should pay more bribes. It’s a win-win for everyone except the hapless residents governed by such corruption.
The question is whether area YIMBYs are willing to leverage the one point of power they do have – namely, their connection to nationwide ideological networks that the local notables of these cities pay lip service to. Out of four New York Times op-ed writers who online liberals like, two (Paul Krugman, Jamelle Bouie) have openly called for more housing in cities, and two (Charles Blow, Michelle Goldberg) have never opined on this issue; NIMBYs have ample local power but little national clout. YIMBYs have this advantage and need to press it to completely sideline machine politics and personality politics – that is, to form a coherent, identifiable political party in California (or New York, or Massachusetts) contesting state and local elections, and if winning local elections without assimilating to the local rot is not possible then work to delegitimize government below the state level as irredeemably corrupt.