Seattle has decided to drop that awful head tax idea to pay for housing services, a good, decent, and humane outcome. For it was a very silly idea indeed. The question does remain, though, what should the place be doing about its entirely obvious housing problem? Lots of people cannot afford to have a roof over their heads in one of the most economically successful parts of the country. Something is wrong with this picture, so what can we do to solve the problem?
The obvious answer, as with so many of the problems of modern life, is to stop government doing the dumb things it already does. Here’s the real secret about the price of housing in Seattle: A house costs exactly the same amount it does anywhere else. I mean, come on, a house is a manufactured item, so it’s going to cost around and about the price to manufacture it, isn’t it? Perhaps $150,000, maybe $200,000, for that 3-bed, 2-bath split-level ranch and we’re done.
Of course, there are no such houses for sale in Seattle for that sort of price, so why not?
As the Washington Examiner‘s Phil Wegmann pointed out, tax and redistribute isn’t the answer. So, they’re going to stop trying to do that. Actually, they have repealed the very silly idea of taxing businesses to build homeless shelters. Not that the City Council is willing to take any responsibility at all for having advanced such a plan. Responsibility for that is being passed along faster than a hot potato.
But let’s try to be helpful here; what is it that Seattle should be doing instead? The first thing is to recall that sage piece of engineering advice: Faster, better, cheaper (pick any two). Sure, boss, we can make something better and cheaper than the current machine, but it’ll take some time. If you want it fast, then it won’t be better, or maybe not cheaper — and so on through the three options, we can have two of the three.
With housing we can have lots of people, dispersed and low density housing, and cheap housing. But we cannot have all three. One of them has to give – lots of people in low density will have expensive homes, few people can have cheap and dispersed homes, lots of people can have high density and cheap homes, and so on through the various possible combinations. There is no way out of this, no matter who we tax nor how much.
Despite the power Kshama Sawant thinks government has, the City Council is unendowed with deity powers and is unlikely to be able to create more land. There’s an awful lot of people who want to live in Seattle too, something that, again, despite Sawant’s efforts, is unlikely to be reversed soon. Which leaves just housing density as something that can be changed. Fortunately, such zoning is also the one thing directly and specifically under the control of the City Council.
All they’ve got to do is lift the zoning restrictions, and the price of housing will fall.
For, as I said earlier, a house costs in Seattle just what a house costs anywhere. It’s not even the price of land which drives it up in that locality. It’s the permission to put a house on a piece of land which does. Allow more housing on that set amount of land, and the price of each piece of housing will fall. This isn’t rocket science, just basic economics: Increase supply, and prices fall. And again, it’s permits to build which are in short supply, so issue more permits and the price will fall.
My preferred solution is to simply abolish zoning altogether. You own a piece of land? Build as you wish upon it. That would solve one of our modern world problems by having less government. Indeed, simply stop government from doing something (rationing house-building), and the price of housing will fall.
Even if that’s a bit radical for you, it is still true the Seattle City Council is causing the problem. Thus it’s one the Seattle City Council can solve entirely. Allow people to build more dense housing in Seattle, and the price of housing in Seattle will fall. That’s what they say is their goal, anyway, so why don’t they do it then?
Tim Worstall (@worstall) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute. You can read all his pieces at The Continental Telegraph.
