President’s Day: Trump No Reason for Local Leaders to Wage Class Warfare

Nullification

Here’s a recent Facebook post by Seattle City Councilmember Kshama Sawant:

It’s time for politicians to move beyond platitudes to action. If Seattle is a sanctuary city, elected officials need to take radical measures to fight Trump’s attacks. The Mayor should not deploy police against peaceful protesters, but instead use police to shield immigrants from ICE raids! Sanctuary also means affordability: Tax big developers and fight for rent control to make our city affordable for all!

Here’s what I wrote right after the election at Forbes:

Seattle has been the scene lately of loud and noisy protests against the coming Trump administration, and this opposition is in no small part because of President-Elect Trump’s views on immigration. He wants to deport people and wall new people out of our country. However, the very people in the streets of Seattle who oppose this policy, usually, when it comes to housing and growth policy here, are part of an all too familiar pattern of insular and ingrown almost xennophobic protectionism that seems to run counter with the self-proclaimed leftist hegemony in the city. It’s a pattern sure to raise a barrier for new people who want to live in the city, a barrier of high housing prices that might as well be a wall (check out Saturday Night Live’s take on this effect they call “The Bubble“).

My comments were later mimicked by Councilmember Rob Johnson when he compared angry neighborhood opposition to Trump’s wall building. I had to point out all over social media that I had said this first, not because of my ego, but because I want to remind people I know what I’m talking about. More importantly, what I say is often discredited automatically until someone else says it. But it doesn’t make it any less true. I’ve called it the Cassandra effect.

So these are the two ways in which the Trump thing is going to play out locally. On the one hand, the somewhat inchoate mob of socialists and angry and mostly white and entitled single-family homeowners will crowd around Sawant in the street in front of various public buildings and shake their fists, grit their teeth, and stomp their feet. Local politicians suffering from chronic Sally Field Syndrome will jump in front of parades, file appeals, make declarations, and threaten to disobey the Federal government all to the cheers of the bitter mob. While this is what Trump himself might call, “Sad!” in a Tweet, it’s more concerning that meets the eye.

Politicians can express in what they do both the highest aspirations that people have; their speeches and actions can inspire and when they have vision they can assuage anger, ameliorate anxiety, and show people that what their own fears and prejudices make impossible can be done if they’d let go of those walls around themselves. It is physically painful to watch Robert Kennedy’s speech at the time of the assassination of Martin Luther King Jr. Here’s a man who spoke from the heart to the heart, quoting Greek poetry, to a group of black people filled with legitimate rage and pain.

What we need in the United States is not division; what we need in the United States is not hatred; what we need in the United States is not violence and lawlessness, but is love, and wisdom, and compassion toward one another, and a feeling of justice toward those who still suffer within our country, whether they be white or whether they be black.

So I ask you tonight to return home, to say a prayer for the family of Martin Luther King — yeah, it’s true — but more importantly to say a prayer for our own country, which all of us love — a prayer for understanding and that compassion of which I spoke.

We can do well in this country. We will have difficult times. We’ve had difficult times in the past, but we — and we will have difficult times in the future. It is not the end of violence; it is not the end of lawlessness; and it’s not the end of disorder.

But the vast majority of white people and the vast majority of black people in this country want to live together, want to improve the quality of our life, and want justice for all human beings that abide in our land.

And let’s dedicate ourselves to what the Greeks wrote so many years ago: to tame the savageness of man and make gentle the life of this world. Let us dedicate ourselves to that, and say a prayer for our country and for our people.

It hurts because we are in one of “those difficult times,” and Kennedy himself was gunned down only months later. We never had a chance to see him as President. So today, instead of his steady but breaking voice, speaking from his own heartache and pain from the loss of his brother, to people that had lost their own leader, we have a smallness of mind and lack of vision from local leaders who are taking fear and anxiety and bending it to their own narrow and dangerous agenda.

All the marching and Trump obsession lately has me with the feeling of being trapped behind the lines. I see people casually talking about secession from the union and urging local law enforcement to get into altercations with federal law enforcement. It’s as if the people never learned about the Nullification Crisis or our Civil War in school. The bravado from local leaders, including even faith leaders, is truly disheartening.

I am an adherent to the sense of conservatism articulated by Edmund Burke by his actions in Parliament as well as his words, here from Reflections on the Revolution in France:

The constituent parts of a state are obliged to hold their public faith with each other and with all those who derive any serious interest under their engagements, as much as the whole state is bound to keep its faith with separate communities. Otherwise competence and power would soon be confounded and no law be left but the will of a prevailing force. On this principle the succession of the crown has always been what it now is, an hereditary succession by law; in the old line it was a succession by the common law; in the new, by the statute law operating on the principles of the common law, not changing the substance, but regulating the mode and describing the persons. Both these descriptions of law are of the same force and are derived from an equal authority emanating from the common agreement and original compact of the state, communi sponsione republican [(the assent of the commons)], and as such are equally binding on king and people, too, as long as the terms are observed and they continue the same body politic (page 18).

It is worth noting that Burke was a supporter of the American Revolution that uprising was a demand for what colonists felt they were due under the English Constitution and common law, not an abrogation of tradition and order for the sake of just making up something new. The French Revolution, on the other hand, of which Burke was critical, saw open class warfare and simply threw out everything out at once, leaving nothing standing. It’s tempting when one  is frustrated with a creaky old system of government to long for cutting down all the old rules. One of the best articulations of this are the words put into the mouth of Thomas More in the play A Man for All Seasons:

It can be a challenge to be calm during times of social disorder. It is easy to push back against a system producing results we don’t like. As a Hayekian, I feel the frustration with our fussy land use laws, an overgrown thicket of amendment by reference, confusing, contradictory, and harmful to the people of this city, laws without aspiration for what is good but only worried about stopping what might be bad. God, how I’d love to cut those down all those laws, every last one of them! With a chain saw. And the Council keeps adding more and more to the mess in the name of social justice and trying to help lower prices by adding costs, to increase access to affordable housing by imposing schemes that will make it less accessible. How sweet it would be to slice through all that to get to the “devil himself” hiding in the bushes of the code.

However, that would make me no better than Sawant, Trump, or the angry mob whether they are urging nullification or fighting microhousing or Detached Accessory Dwelling Units, or pushing for the sweeping away homeless people in their tents or their cars. Mobs like that always appeal to “the will of a prevailing force.”

It may take awhile, but those of us who are working for a better world can’t rely on revolution or abrogation of a system of laws that produce outcomes we may not like. And one election or candidate won’t undo the damage. But we have to play the long game, patiently and with intention. So I turn once again to the land from whence all blessings flow, England, and my fellow Burkian John Lennon. I have to believe it’s going to be all right. It will be.

The featured image is called, “Nullification crisis: John C. Calhoun reaching for Despotism,” and is a lithograph from Endicott and Sweet, lithographers in New York City, produced in about 1833. 

Will City Pay Attention to Data on Homeless Resources or Just Keep Sweeping?

Real Change Petition Image

Someone sent me a report about homelessness by consultant group Focus Strategies. I agree with the substance and approach.

The report called, Seattle/King County: Homeless System Performance Assessment and Recommendations with Particular Emphasis on Single Adults was commissioned by United Way of King County, the City of Seattle, and King County.

The most compelling part of the report says that solving the homeless problem is largely doable with bold action and organizing existing resources better.

Seattle/King County has sufficient emergency shelter capacity to shelter all unsheltered single adult and family households by the end of 2017 by combining three initiatives: (1) eliminating low and moderately performing transitional housing (TH) projects; (2) reaching recommended system and program performance targets; and (3) implementing a well-functioning coordinated entry and diversion system (page 42).

It’s a smart and well done report and here are my thoughts.

I’ve visited with and written about the people working on these issues in Utah and Massachusetts (see Utah’s Strides On Chronic Homelessness Rely On Better … – Forbes and  Massachusetts Tries A New Solution For Chronic … – Forbes). In both states, the first step was to define the highest cost and most chronic part of the problem. The report does that by focusing on about 5,000 households. And I appreciate the effort to prioritize current programs and funding to case manage and work these more challenging situations into more permanent and stable solutions.

The hard part is trying to get the Seattle City Council to, “Act with Urgency and Boldness” which the report has as one of its first recommendations. The City Council doesn’t know how to be bold unless faced with an angry mob with a clear and publicly unpopular antagonist like developers or landlords. Without an enemy to flay and a mob to cheer, they simply are incapable of making decisions that solve real problems.

Having said that, and in response to the report, I would enthusiastically support,

  • The City needs to stop sweeps of homeless camps immediately — it makes no sense to destabilize households that have at least put together some kind of housing solution in the right of way. The City needs to work with these people to identify their issues and move them along a continuum of services. Many of these households are likely to be among the 5000 in the UW report; (see City Of Seattle Should Cooperate With Residents Of The Jungle – Forbes)
  • The City must enhance its approach to people who are living in vehicles, share data with social workers and service providers working with those households, and create a better and more transparent protocol and modest funding stream for solving these shorter term problems. Too often these households lose their homes when they get towed away for lack of payment of tickets or for other parking infractions. Again, many of these households may be among the 5,000 in the UW report.  (see: Home Is Where My Car Is: Murray’s Sledgehammer Approach … – Forbes)
  • I agree with the much smarter and experienced people on what they are suggesting as the starting point (D.2.d, page 42 and following) for using resources.
  • Recognize that the solution for these families is not going to be the construction of free standing units of housing;
  • Levy dollars and other public resources should be directed to vouchers and cash payments as much as possible rather than adding these households to waiting lists for subsidized housing
  • Prevention is important, and the Council needs to stop doing herm to the Multifamily Tax Exemption (MFTE) program by increasing inclusion rates and lowering Area Median Income (AMI) requirements. This doesn’t create more housing for poorer households, but fewer homes at 60 percent of AMI. If the Council wants to expand the reach of that program into lower levels of income it should expand the tax exemption and make it easier to use. This would prevent many households from having housing problems turn into housing crisis
  • Explore the use of social investment capital by creating a better assessment of the costs of the 5000 households to taxpayers and then bond against the future reductions of those costs. In other words, raise private capital to address the problems now, then pay back the investors using the realized savings as the problem is solved. This is a HALA recommendation. see Tracking HALA: Ending Homelessness with Social Impact Bonds …

As I said, anyone using data and common sense is going to come to the conclusion that we can solve much of the homeless issue but it will take 90 percent of those resources to solve the last 10 percent. Any case manager or social worker will say that to the Mayor if he was willing to listen. Utah has had a lot of success with this approach of putting lots of effort into the people that are known to the system and taking time to move them along the continuum. Throwing away their tents and towing away their cars doesn’t do that, in fact it does the exact opposite perpetuating the problem. 

This city seems obsessed with hating Trump while trying to wish and sweep away homelessness and lower prices by adding regulation and costs and taxes and fees to market rate housing and taking the money generated from taxes and giving it to non-profit developers who build $500,000 units that take 4 or 5 years to build. That doesn’t make any sense. What does make sense is taking this report seriously and doing something to implement the solutions it offers.

This Week in Olympia: Another Cash Grab by Non-Profit Housers

Shake Down

Late last week I spotted a post on Facebook that I really couldn’t believe. The non-profit housing group the Housing Development Consortium (HDC) and Futurewise are pushing to use funds generated from the Real Estate Excise Tax (REET) for affordable housing. The legislation, House Bill 1797

I can’t put it any other way: This is outrageous.

Consider the facts about REET and non-profit housing in Seattle.

  • The City of Seattle collected about $73.5 million in 2015
  • Last year two affordable housing projects opened with a total of 200 units at a price of $92 million
  • Had Seattle allocated ALL of the REET funding for those projects it would have fallen short by almost $20 million
  • Funds from REET go to the Cumulative Reserve Fund to pay for capital infrastructure
  • Where would those infrastructure projects get funding from after they’re diverted to expensive subsidized housing?
  • One of the biggest demands among angry neighbors is impact fees in Seattle, something that we have argued is not needed because lots of infrastructure is paid for with CRF.
This is from the City of Seattle’s budget for 2017:

The 2017-2018 Proposed Budget appropriates $96.1 million from the Cumulative Reserve Subfund (CRS) in 2017 and $80.6 million in 2018 with approximately 80% of those appropriations backed by the two REET funds. Individual projects and programs supported by CRS resources are described in the departmental sections of this document and in the 2017-2022 Proposed Capital Improvement Program (CIP). A supporting summary schedule provides the amounts for the various City departments utilizing these resources.

So this money would now be available for diversion to projects that cost as much as $500,000 per unit to build and have years long waiting lists. Don’t forget that the Mayor and Council have already started to implement Mandatory Inclusionary Zoning (MIZ) to shake down builders for even more cash. When will this end? Non-profits already get money from the Housing Trust Fund, from local levy dollars, and low income housing tax credits (LIHTC). Now they want to grab money that currently funds sidewalks, drainage projects and other important infrastructure.
My sources in Olympia tell me this legislation is not likely to pass. But still, it reveals that greed commonly attributed to developers, builders, and landlords is really found among the non-profit housing community. Instead of working with market rate developers to lower costs on all housing, the non-profits seem only to be getting started on finding ways to shake down the system for more and more money all the while claiming that we’re having a housing crisis.
But the crisis is the gross inefficiency of how we fund subsidized housing, shoving more and more money into expensive subsidized units and paying for that with measure that, ironically, boost all other housing prices with taxes, fees, and tax shifts. Then when prices keep going up, this rationalizes claims for more money. It’s time to demand changes and more efficiency from the subsidy system, not add more money.

Last Week in Olympia: Sparks Fly Over Rental Legislation

Last week I made comments on Senate Bill 5569, legislation that would essentially roll back some of the new requirements being placed on rental units in Seattle, specifically first in time requirements in Seattle. These requirements elevate the status of the first person to show up at a vacant rental property to the same status as religion, race, or disability. Even if a person renting a property has several qualified applicants, she can’t pick and choose based on need or disposition or anything; the first person to show up gets the unit. This was intended to stop something that nobody has shown is actually happening, renting only to people that work at Amazon or other tech companies. The Seattle City Council is trying to accomplish rent control in all but name with other requirements like limits on deposits and new inspections regimes. All of these things are based on anecdotes not data and are intended to help renters. What would help renters is more housing, so that land lords had to compete with other land lords for tenants. But as long as housing is scarce, life for people looking for housing won’t get any easier. 

You can’t see my face, but at the end Senator Frockt challenges me and I insist on the point that simply being in a room while issues are discussed is not consultation. The Seattle City Council has really ceased to be a deliberative body when it comes to most land use and housing legislation, passing whatever feels good over the objection of people that know about how to make and operate housing. That’s a big reason why I am having to appeal to the State Legislature for help. 

There has always been a dynamic and even creative and healthy tension between state and local control. In Seattle, at a time when demand for housing is outpacing supply, producers and operators of housing have faced an ever expanding gauntlet of rules, regulations, fees, fines, inspections, infringements, and limitations that are confusing for both housing providers and consumers and have become increasingly difficult to manage and administer. It’s time for the state to take back some control.

What’s important for the Committee to know, is that this chimera of regulation does not help poor people, people of color, people with evictions, or people with criminal records. Rather, the City of Seattle has indulged in the imposition of piecemeal rent control for purely political and ideological reasons. Also important, is that the Mayor and Council have pursued this improvisational regulatory spree with no consultation whatsoever with people who make and manage housing.

Limit Demand for Housing? “You Can’t Get There From Here!”

Miguel Keeler on the Facebook group City Builders asked this question and I answered. I lightly edited my response to include come comments in [brackets] about free movement. 

I’ve been thinking a lot about the demand for housing the area.

You know what one radical solution just might help? Not allowing any more companies to move in such as Google, and the proposed fifth tower for Amazon, ect. These companies are going to have hundreds or even thousands of people move here (even though there is a housing shortage and they know it) to jack up the prices even more for rents and homes/condos in the city pushing the people/families making a salary or $25k-$75k/year out of the area that are struggling…meanwhile people that make $80k+ are pouring in, creating even more demand for an already slim housing market.<

So why not limit the jobs being created here and let the housing be build first, can’t have people without housing and vise-versa. You know how when a city stops producing housing, rents and home prices go up as more jobs and people come in…why not try and do the opposite for a little while, create more housing and hault jobs being created (we can’t even house the homeless). I know it’s “illigal” to do…but wouldn’t help people working in retail, coffee shops, ect, stay here? Sure it might seem like a stupid idea, but as far as I can tell, no one has tried it before, and it just might work. Think about it, and let me know what you think.

——————————–

Thanks for asking. If we know that price, in the simplest terms, is a quantitative measure of how demand is meeting the need for supply, then falling demand, whether induced or not, would result in lower prices. In theory, if some actor in the economy (or rather outside the economy) could simply dial down demand, then it is true, price would drop as supply, if it was left alone, “caught up” to demand. Then that economy would achieve equilibrium.

However, this discounts the fact that producers of housing would see the end of rising demand as a signal to hold back production of housing. A builder or investor would note that the market was about to face a surplus if production continued. Capital would redirect itself elsewhere. Money would either go to another market or it would invest in something else.

Also, housing production does not induce demand for more housing. Demand for housing is created by a complex web of utility needs when an economy grows. Jobs make a place appealing, or an appealing place draws people which creates jobs. The more jobs and more appeal an area has then more people want to live there AND people that live there begin to resent new people, and then zoning gets used to plan and “manage” growth. [I’d add here, too, that the notion of free movement and choosing where to live is part of what people consider to be basic “rights” in our country. The idea that we’d mandate where people live is, up till now, been something that would be intolerable].

But there are limits to what can be done about growth and demand. When I lived in Santa Barbara County years ago, the regime there put hard limits on building permits. What resulted was not a drop in demand but just a steady increase in prices as more people kept coming. Zoning and other limits to supply end up being used to “make it stop.” It won’t. All that limits to housing production do is make life worse for everyone by creating inflation in the economy, a condition of rising demand, inadequate supply, and thus an inventive by incumbents (single-family homeowners) to keep a lid on supply — the value of their asset keeps climbing.

Dialing up supply isn’t a perfect solution either. Putting a bayonet into the back of builders and saying, “Build!” wouldn’t be beneficial either in an economy that is seeing inadequate production. But if we were going to inventive and even subsidize something, it should be the production of housing. Capital is going to resist going into production of a thing that is getting over produced (and that’s what we want for housing, massive over production) unless there is a cushion. If units are vacant or undersold, we’d have to pick up that slack in the form of taxation or loss in value of property of both.

What keeps us locked in a cycle of limited supply is a combination of the way capital works (money tends to move rapidly toward production of things that are scarce, and away from things that are in surplus) and the headlock current property owners have on the regulatory system that produces housing.

If we eliminated the angry single-family homeowner guarding their cave, we’d still have a dynamic of rapid production in times of scarcity, a possible glut which would be bad for the industry but good for consumers, and then slow production and rising prices. Government can help the cycle along and help people who get caught up in the gears of this system.

It’s like dealing with the weather. When it’s sunny, we all go outside; when it’s raining the government could be ready for that and have umbrellas. Instead, our government passes legislation to ban the rain or mandates that it slow down. It doesn’t work.

Your question and the idea of induced demand — the idea that by creating more jobs and housing we draw in more people and that’s bad — reminds me of an old Burt and I routine about the farmer who’s wife is having a baby. The doctor is working on delivering the baby and the farmer is holding up the lantern. The first baby makes it out. And then the doctor says, “There’s another one!” The farmer is aghast and blows out the lantern. “Why’d you blow out the light?” the doctor asked. “It’s drawnin’ them!”

Supply and demand is really simple. But it’s application in the real world defies that simplicity. I think of the economy like the weather, a natural force we can always be learning more and more about, sometimes control, but ultimately must be prepared for so that people don’t get hurt. There is no such things as too much housing. If there is too much of it, people benefit with lower prices. And if we grow in a dense, efficient way, we make the most of a scarce resources, land and defy the notion that, “they aren’t making anymore.” Trying to tame the economy with mandates and limits never works, unless we look at it like a windmill and work with it.

I turn to another Bert and I routine (sadly I can’t find the audio for the one I mentioned) to answer the question, “Will we ever get to the place where everyone gets exactly what they want and need in an economy with no winners and losers?” Well, the answer is, “You can’t get there from here.”