Housing schemes will make the shortage worse
It's like the March of the Penguins.
Throughout Florida, in county after county, city after city, elected representatives are marching one behind the other into the frozen idea that new laws mandating and coercing developers to build "affordable" houses will relieve the state's housing shortage in any meaningful way.
Talk about futile and disheartening. How is it that these legislative penguins cannot see the obvious? That these legislative schemes for "inclusionary zoning" and "density bonuses" will do more harm than good, that they will exacerbate the problem and , predictably, create new ones.
Watching these efforts play out in nearly every county on Gulf Coast is like watching those penguins trudge across the Antarctic. You just want to grab them, slap them and say: Wake up! Can't you see that this never works?!
It goes without saying that all elected lawmakers believe it is their moral duty to use the force of government to solve every problem of the world. Year after year, they fill city, county and state codes with a succession of new laws to correct the consequences of the old laws - ad infinitum. It is always so, as Milton Friedman astutely wrote in his 1979 book, "Free to Choose" (see box on page 23).
The answer to the shortage of more affordable housing will never rest in government coercion or goofy incentive plans.
Simplistic as this sounds, the path to a larger supply of more affordable housing is to make choices that many do not like, nor have the courage to carry out. Consider, for instance, the actions that have led to the cause of the shortage:
• Construction standards and codes. It is well and good for homes and apartments to be built to withstand hurricanes and to meet stringent design codes. Insurers like these standards because they lower risks and cut down insurance-claim losses. But there is a cost to forcing these mandates on everyone. They make homes more expensive.
In the end, who should really decide the level of construction on a home - the consumer whose money is at stake, or the lawmaker who's good at spending other people's money?
We have an obligation to protect consumers, lawmakers proclaim. (No they don't.) But so many laws are created to stop an exception at a much higher cost to everyone else. Consumers are smart. They and their builders can decide their own construction standards.
• Insurance. Taxpayer-subsidized and government-mandated flood insurance, as well as FEMA-mandated construction rules, have contributed to higher housing costs. Likewise, in Tallahassee, the heavily controlled pricing and regulation of insurance has created a shortage of insurance, driving prices higher still.
• Height and density laws. This is the most obvious cause of rising housing prices. Florida, it seems, is dominated by two groups: those opposed to "sprawl" and those opposed to tall buildings. These two ideas work at cross purposes. If you can't build up in dense high-rises, then you must spread out. But if you can't spread out, you must build up. Denying both drives up prices. Duh.
• Inspections and permitting. Time is money. By making these processes government-performed and government-mandated functions, we have guaranteed inefficiency. A Sarasota-Manatee developer told us Monday he hired a planner recently just to "dog" his application for building permits through the Sarasota County application process. The department, he says, is backlogged and short-staffed. This adds to costs.
• Workers' comp insurance. This is another state-mandated cost that ends up in the price of homes. In the old days, an employer and employee made their own compact about how to deal with job injuries. But once the Legislature (and trial lawyers) got involved and mandated insurance and its price, well... we all know the rest of the story. It led to the next cost driver...
• Legal liability. This is another reason a new roof is so expensive.
• Impact fees. Impact fees are a way of shifting costs that all taxpayers might otherwise pay onto those who buy new homes. Byzantine in how they're calculated and lacking clear accountability for where this money goes, this is another tax that ratchets up the cost of housing.
• Government-owned lands. It's a wonderful idea to preserve land. But when Sarasota County taxpayers, for instance, own one-third of the county's land mass, what is the obvious implication? There's less land on which to build. There's less land that will be available to contribute to the county's future tax base. Ergo: property taxes per household rise; ergo: cost of housing rises. If private preservation groups own land, property taxes would fall.
• Save Our Homes. Here's another Friedman Law of Economics: When you give to one, you must take away from another. So when Lee County Property Appraiser Ken Wilkinson shepherded the Save Our Homes amendment into the Florida Constitution, the tax break given to Florida's year-round residents shifted a bigger tax burden on non-homesteaded owners. This has helped inflate the cost of waterfront property, which has filtered down to higher costs for inland properties as well.
• Insatiable government spending. When special interests ask for taxpayer money to support the arts, to provide subsidized bus transportation, to subsidize baseball stadiums, to subsidize employers relocating to Florida, to provide full-scale health insurance and pensions to government employees, to provide subsidized and free health insurance to children, all of these contribute to the cost of housing.
So go ahead, elected "leaders." Enact more mandates to control prices and artificially increase the housing supply. Go ahead and see what you get. Jimmy Carter tried it in the late 1970s with gasoline, and look where it got him - and us.
The same result will occur with all of these twisted schemes of "density bonus" incentives, exacting penalties on developers who don't build certain percentages of affordable homes or of creating affordable-housing trust funds. These are all gimmicks that satisfy the consciences of the Save-the-World do-gooders who want to legislate the way they think the world should work. But they are gimmicks that also inject an unnecessary and costly layer of inefficiency and penalties upon the buyers and sellers.
If any elected official is really serious about addressing the cost of housing, he'd back off from these errant schemes and do what should be done: dismantle many of the laws that got us where we are today.
But not nearly enough of them has the courage to let capitalism take its course. They will not accept that no other politico-economic system in the world is as smart, efficient, equitable, compassionate and as environmentally sensitive as the decision making and actions of the unfettered buyer and seller.
Give us freedom, not mandates. Take your density bonuses and trust funds and march with the penguins.
MILTON FRIEDMAN'S 'Natural History
of Government Intervention'
"A real or fancied evil leads to demands to do something about it. A political coalition forms consisting of sincere, high-minded reformers and equally sincere interested parties. The incompatible objectives of the members of the coalition (e.g. lower prices to consumers and high prices to producers) are glossed over by fine rhetoric about 'the public interest,' 'fair competition' and the like.
"The coalition succeeds in getting Congress (or a state legislature) to pass a law. The preamble to the law pays lip service to the rhetoric and the body of the law grants power to government officials to 'do something.' The high-minded reformers experience a glow of triumph and turn their attention to new causes.
"The interested parties go to work to make sure that the power is used for their benefit. They generally succeed. Success breeds its problems, which are met by broadening the scope of intervention. Bureaucracy takes its toll so that even the initial special interests no longer benefit.
"In the end the effects are precisely the opposite of the objectives of the reformers and generally do not even achieve the objectives of the special interests. Yet the activity is so firmly established and so many vested interests are connected with it that repeal of the initial legislation is nearly inconceivable. Instead, new government legislation is called for to cope with the problems produced by the earlier legislation and new a cycle begins."
- Milton and Rose Friedman,
"Free to Choose," 1979