Former air pollution control officer Terry Dressler, a regular contributor to these opinion pages, submitted something recently whereby he questioned if I, and others as well, understand how capitalism works. I like reading Terry’s opinions because they’re always thoughtful and well written.
However, his most recent opinion caught me by surprise. It doesn’t seem that Terry is a fan of this economic system, but irrespective of that, in his description of how capitalism works, he used an interesting example to make his point. Terry described two fictional families to illustrate the inherent inequities of capitalism. Or more precisely, how capitalism will always result in a disparity of wealth, resulting from the systematic transfer of wealth from the poor to the rich.
Using homeownership to illustrate the inherent immorality of capitalism seems a curious tactic, in my view, since housing is perhaps the least free-market capitalist example one could probably find today. And this is especially so in Santa Barbara County, but to be fair, it is also so in any coastal area in California. And even in non-coastal regions of California and other high cost-of-living states throughout the country, housing is perhaps the most insulated industry from free-market forces and the invisible hand.
To put it as succinctly as I can, housing costs, as a result of the supply and demand for it, isn’t a refection of capitalism, but, instead, of governmentalism. Yes, that is a word. Or it certainly is now. Governmentalism is what limits the supply of housing, not capitalism. Government planners implementing the land-use policies of politicians, who take their marching orders from voters infected with a terminal case of NIMBY-itis, is why some people can afford to own a home, and most others cannot.
Local zoning ordinances, building codes, environmental impact reports, architectural review boards, planning commissions, city councils and boards of supervisors are the determining factors that explain why we have a chronic shortage of housing today, resulting in home prices beyond the reach of a large percentage of working families. It is also the principal factor behind the escalation of housing values, which also exacerbates the housing market. Why sell your home when it is the best performing asset in your investment portfolio?
Does this result in some lower-income families transferring their income to others with significantly more wealth in the form of rent? Absolutely. But it isn’t the cruelties of capitalism’s invisible hand that is at fault, nor is it a systemic failure of spontaneous order in the housing markets either. It is the intentional policy decisions of those who control the use of land that are responsible for this transfer of wealth to the haves from the have-nots.
But it’s important to understand that it isn’t just local housing policies that disadvantage those who don’t own a home; the same political dynamic that limits the supply of housing also limits the supply of local jobs, especially in those industries that are out of favor with the politicians who control the planning and development process.
Without a permit to operate, no new jobs will be created. And there’s no better example of this than our local energy industry. Today, right here in Santa Barbara County, there are at least five oil and gas projects either under review by the county or under consideration by the companies doing business in Santa Barbara County. If all of them were to get approved and secure a permit to operate, thousands of new high-paying jobs could be created within the next six to 18 months.
The jobs that I am referring to would be some of the highest-paying jobs in our countywide ecosystem, with some exceeding $112,000 a year. Moreover, many of them, if not most of them, wouldn’t require anything higher than a high school diploma. And nearly all of them would be in North County, where the disparity of wealth between the haves and have-nots is the most pronounced and severe.
So while I appreciate Mr. Dressler’s position that inherent in capitalism is the freedom to succeed and the freedom to fail, when it comes to those who fail to find affordable housing or a high-paying job that could sustain a family, it isn’t because of the invisible hand snatching it away as part of some cosmic conspiracy to keep the masses down. Instead, it is the well-intentioned but insidiously wrongheaded decisions of politicians acquiescing to the wishes of the people who put them into the office they hold and who also retain the power to send them packing.
Poverty in America, as well as right here in Santa Barbara County, isn’t due to some irreversible glitch in capitalism that causes the exploitation of the working class, it is due mainly to the arbitrary and often self-interested decision making by an ambitious political class.
The author is director of public affairs for the Santa Barbara County Taxpayers Association.