Slow-motion takeover of the private housing sector by the government

We are living through the slow-motion takeover of the private housing sector by the government, and the pace is picking up.

In all government takeovers of private enterprise, shortages develop and then worsen. It’s a consequence of replacing the financial rewards for production and creation with penalties: mind-numbing regulations and confiscatory taxes. At the same time, the takeover artists promise free stuff for everyone who needs it.

The only way this can continue is if production is compelled through government force of one kind or another.

At the extreme end of government force, people are imprisoned or executed for failing to work for the “common good.” At the less extreme end, people are prevented from earning a living or making a profit unless they “voluntarily” give away the fruits of their efforts to be distributed by the government.

This is the philosophy of collectivism. It’s the idea that everything produced in a society kind of belongs to everybody, and it’s the government’s job to distribute it “fairly.”

It leads inevitably to shortages.

In a free country, it’s a multi-step process to make this happen. First, it’s necessary to convince the public that ordinary business must be prohibited for some wider reason. The fear of climate change serves nicely for the purpose. The fear of COVID-19 transmission was also effective. Suddenly a total ban on normal life seems justified, even essential. People are sufficiently frightened to accept the idea that they must have the government’s permission to do anything.

In the housing sector, the fear of climate change has led California to effectively prohibit the construction of new communities of single-family homes. Suburbs that offer a lifestyle many people consider desirable have been redefined as Earth-destroying “sprawl.” A new metric of “vehicle miles traveled” was added to the law to prevent housing developments that would generate commutes to work.

After more than a decade of this housing-discouraging government policy, California has insanely high prices for existing single-family homes and a housing shortage. The state’s push for urban density, including a law that abolishes single-family zoning everywhere in the state (Senate Bill 9), is running into strong resistance from Californians who bought a home away from urban density and fight to keep it that way.

A second front in the war on the private housing sector is the intentional destruction of mom-and-pop landlords. COVID-19 advanced this government goal as landlords were forced to provide free housing to tenants who could not or would not pay the rent they owed, yet could not be evicted.

Rent control is another cause of the housing shortage. Many studies have documented that rent control gradually leads to fewer rental units as it makes existing investments in rental housing gradually less profitable until they’re fully in the red every month, while discouraging new investment in new multi-family properties.

Having wrecked the private housing sector, government officials are pleased to jump in front of cameras and propose public housing.

It’s on your ballot in the city of Los Angeles. Proposition LH would authorize an additional 5,000 units of low-income public housing, or its equivalent, in each of L.A.’s 15 city council districts.

Another effort to jump-start public housing was just signed into law by Gov. Gavin Newsom. Senate Bill 679 creates a new countywide taxing authority in L.A., with an unelected governing board empowered to put tax increases on the ballot and spend the money building government-controlled housing.

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Instead of allowing the private housing industry to function, state and local officials in California are strangling it and then hopping onto the corpse to declare that the market has failed. The solution they offer is to disconnect effort from reward and replace it with reward-for-connections.

Who’ll be lucky enough to get a low-cost apartment in the city’s most unaffordable neighborhoods? To improve your chances of being chosen, don’t do or say anything that’s critical of the government. You’ll still have the right to freedom of speech, just no place to live.

The real solution to the housing shortage is less government, not more. Vote no on rent control, no on Proposition LH, no on anything that tries to tell you the government is going to fix the crisis it intentionally created.

Write Susan@SusanShelley.com and follow her on Twitter @Susan_Shelley