Bellevue, WA doing what it takes to keep housing affordable. Photo from the City of Bellevue.
In a stunningly awful Atlantic Cities article published this morning, history student James Zarsadiaz* blames neo-liberalism for literally everything:
In the economic context of cities, neo-liberal ideology encourages free enterprise, open competition, deregulation, and the dismantling of public goods. It relies on the private market for quotidian matters such as education, health care, housing, transportation, and even amusement. Instead of being seen as rights or services, these become commodities for purchase.
Putting aside the question of whether amusement is a right, a service, or a commodity, and why that even matters, let's first look at the worldview of neo-liberalism generally.
The neo-liberal perspective is one I'd describe as a logically pragmatic and policy-driven concern for social welfare. It's technocratic but not inhuman. It recognizes that government intervention serves a purpose (in contrast to conservatism) without leaping to the conclusion that if government intervention is useful in one place it must be useful elsewhere, or everywhere (as is sometimes the case in more progressive circles). Like all forms of liberalism, it's deeply concerned with equity and social welfare.
These aren't perfectly fair descriptions of ideologies on either the right or the left, but they illustrate the extremes between which neo-liberalism lives. It can't be defined much more specifically because neo-liberalism relies on context, logic, and pragmatism in guiding policy, rather than maxims or formulas. I suspect many who describe themselves as neo-liberals are strong proponents of a single-payer health care system, like Medicare for all (a powerful government intervention) while advocating forcefully for far less stringent regulations on urban development, especially dense mixed-use and residential construction. There is no contradiction here because neo-liberals recognize that the market for health care and the market for housing are not the same, and different markets require different interventions to keep them running smoothly. Some require a strong hand, others only a light touch.
Mr. Zarsadiaz's article is focused on housing, and although he doesn't actually propose, well, anything at all really, what he seems to be saying is that we need more government intervention in the housing market. Gentrification is pushing people out of their homes, so we need more affordable housing policies: rent control, inclusionary zoning fees, etc.
The neo-liberal response to this is four-fold:
- First, it acknowledges that there is a place for government to assist the needy in securing housing at reasonable personal cost. Some, myself included, will even argue that we should actually spend more on affordable housing and rent subsidies than we do now.
- Second, it notes that policies that limit the height and density of new development drive up prices by making it nearly (or completely) impossible for the supply of housing to meet the demand for it. This drives up market-rate rents by ensuring low vacancy rates.
- Third, it notes that inclusionary zoning policies and rent control further limit the supply of new homes by taking wide swathes of land off the market for redevelopment, which compounds the problem of rents for the remaining land. Inclusionary zoning fees are often set aside for building new affordable housing developments, but they paradoxically increase land costs and make the construction of affordable housing more expensive.
- Fourth, and last, these points are tied together. On the one hand we limit development at individual parcels via floor-area-ratio limits and height restrictions, driving up costs. Then we limit what development there is to only certain parts of the city, redlining any existing rent-controlled units (or the vast amount of land dedicated to single-family housing), further driving up costs. Then we try to build affordable housing on land that is vastly overpriced (as a result of our own policies), and the amount we provide falls pathetically short of the need, often by an order of magnitude or more.
There is nothing sensible about this in a world where public dollars are limited. This is a path that has never worked -- has never even come close to working, no matter how its been applied. And yet many would propose that we don't go far enough, that we require more restrictions, less development and more rent control. Unless these advocates can find a way to raise billions more dollars via zoning fees without shutting down development entirely, this is never going to be a solution.
The neo-liberal answer is to accept the utter failure of the current regime and to pursue a policy framework that is both logically coherent and internally consistent. It would mean more competition among developers, and perhaps even more total profit, but far less profit per project. With an adequate supply of housing, developers would be required to rent and sell their units at much closer to the actual cost of planning and construction, rather than at the inflated costs driven by an arbitrary scarcity. We'd have more housing (and therefore more residents, and more revenue), and instead of funding affordable housing on the backs of only new developments we could share that burden more equitably, and the lower cost of construction would translate directly into not only more spending on affordable housing, but more efficient spending—more units, and fewer dollars per unit.
This isn't about a commitment to the laissez-faire, a belief that markets are the answer for everything. It's a belief in the relevance of context and empiricism. And in the context of housing, freer markets—those that have done the most to match supply with demand—have been far more successful at staving off gentrification.
*I refuse to write all four of his names, and am loathe to acknowledge his status as a PhD candidate