California Dreaming, With Nightmarish Consequences

Mike Shellenberger

Mike Shellenberger is a maverick environmentalist and activist who ran for the Democratic nomination for governor of California. He stirred up some good conversation by his willingness to address the myths coastal Californians cling to to avoid recognizing their votes have gradually strangled the rest of the state and led to a crisis of high cost and low availability of housing for younger and poorer people.

His website has policy statements like this one on housing, but let’s start with his epic Twitter thread on the subject:

This is the story about a real-world “Elysium” — a state which has the highest levels of poverty & inequality in the country but whose residents have convinced themselves that they are behaving ethically, protecting the environment, and fighting racism. California seems to be a progressive paradise, but it is number one in poverty and inequality in America. How can this be? And how does California maintain its reputation as a progressive leader…

Everyone believes California is our most progressive state. And why not? It imposes the highest tax on the richest one percent. It is aggressively implementing Obamacare. And it is standing up to President Donald Trump on everything from immigration to the environment. And yet the Golden State is also number one in poverty & inequality. How can this be? Around the world, progressive nations like Sweden and France, which redistribute wealth through high taxes and generous social welfare policies, boast of less inequality than other nations.

What gives? And how does California maintain its reputation as a progressive leader given the reality on the ground? To answer those questions, let’s take a closer look at what might be considered a present-day Elysium. In the 2013 science fiction film “Elysium,” the rich have fled to a luxury satellite orbiting Earth while the poor toil in dangerous conditions below. Life in California today differs in degree, not in kind, from that dystopian vision.

Homeless encampments with hundreds of people have cropped up in the last two years. Occasionally, they are ravaged by hepatitis A, which in 2017 killed 20 people. In Silicon Valley, 132 people died — up from 85. In San Diego, 117 people died, up from 56. Last year, San Diego city workers nearly killed a homeless person after accidentally throwing her and the tent she was sleeping in into the back of garbage truck. She escaped just seconds before being crushed by the trash compactor.

Meanwhile, inside comfortable homes perched atop Berkeley and Beverly Hills, affluent progressives condemn the cruelty of the Trump administration toward the poor. It’s true that workers in California earn 11 percent more than their counterparts nationally. But that amount is not enough to make up for mortgage payments and rents that are 44 percent and 37 percent higher (respectively) than the national average. Where 56 percent of Californians could afford a middle-class home in 2012, in the third quarter of 2017, just 28 percent could.

This matters. Homeownership has been the traditional route for the working class to join the middle-class, notes Chapman University demographer Joel Kotkin, who has been ringing the alarm about the crisis for years. One fact says it all: homeowners have a net worth that is whopping 36 to 45 times higher than that of renters.

California’s elected officials make serious-sounding pronouncements about the problem but back them up with only symbolic actions. Last September, Gov. Jerry Brown signed housing legislation that will raise $250 million per year to subsidize housing. But that’s just enough to subsidize 1,824 units annually at a time when 100,000 to 200,000 new units are needed.

Is the problem too few progressive policies — or too many?

A political machine based on an alliance between the ultra-rich and the powerless must be fueled by hypocrisy. By feigning great concern for the poor and homeless while quietly strangling new housing and industrial development via downzoning and environmental lawfare, the neo-feudal lords of California have preserved their comfortable life in the wealthy coastal cities and gated communities while driving out the middle class. The black population of San Francisco has fallen from 13.4% in the 1970 census to less than 6% in 2010. Wealthy communities make the construction of modest homes and apartments for poor people illegal but rely on service workers who pack rented homes two to a bedroom or commute long distances from poor towns.

Starting in the 1970s, housing prices began to rise dramatically as new housing was restricted by anti-growth policies, couched in terms of preserving the environment but really designed to pull up the drawbridge to preserve a privileged lifestyle for those who had already bought houses. Because motivations had to be disguised as environmental concerns to appear less selfish, communities contrived to keep water supplies limited and opposed new roads and transit. The propaganda took hold and is now so entrenched that “all right-thinking people” accept that no new supplies of fresh water should be built, new highways only allow more sprawl, and even local roads should have European “traffic calming” design applied, removing traffic lanes and parking. Meanwhile, the state government is wasting billions on a boondoggle high-speed rail project, aka “train to nowhere.” The fantasy of renewable energy and mass transit for everyone is coming into conflict with the development of driverless car services, which may strand those expensive transit investments in the next few decades. The political machine continues to promote higher energy costs for suburban and interior populations and has demonstrated it cannot build new infrastructure at a reasonable cost or on time, but its control over the state is unchallenged.

A few green shoots of rebellion, like Shellenberger’s candidacy, are no threat so far — he received a bare 0.5% of the primary vote. Yet discontent is rising, and nearly half the Bay Area residents polled recently said they’d like to move away. For the well-off in booming industries, the wonderful coastal climate and groomed upper-class population of wealthier enclaves continue to make life sweet. Street crime, poverty, and homelessness are creeping into even some of the most favored areas, though, and the election of Donald Trump as president shattered the technocratic fantasy of rule by the “best people” like themselves.

Some good reading on how this fantasy of environmental and social justice grew to enable the wealthiest to keep control of the state and most local governments while actively harming lower and middle classes:

Good book by MIT Prof. B.J. Frieden, who saw the syndrome’s beginnings in 1979 after only a few years of antigrowth “I’ve Got Mine, Jack” policies in the richest suburbs, notably Marin County:

The Environmental Protection Hustle

Abstract: A powerful, ideologically driven crusade to keep the average citizen from homeownership and the good life in the suburbs is exposed as a warning signal to environmentalists, whose concerns may backfire, and to homebuilders and the general public in other parts of the country where projects for urban growth may soon run up against the protectionist’s blockade. Frieden asserts that the connections between housing and serious environmental issues such as pollution, use of toxic substances, nuclear-testing hazards, and the conservation of natural resources are few and minor. The attack on home-building does not follow from the central concerns of the Sierra Club and other environmental groups, he feels, but stretches the environmental agenda to phony issues designed to keep the average citizen from using the land, while preserving the social and fiscal advantages of the influential few. He documents environmental controversies that have already discouraged large, planned-unit developments with community open space, driven up the cost of housing, and promoted a return to the 1950s-style building practices of expensive freestanding single-family homes, each on its own lot in small, exclusive developments at the urban fringe.

A more recent treatment, “The Rise of the Homevoters: How the Growth Machine Was Subverted by OPEC and Earth Day,” by William A. Fischel, 2017:

In the 1970s, unprecedented peacetime inflation, touched off by the oil cartel OPEC, combined with long-standing federal tax privileges to transform owner-occupied homes into growth stocks in the eyes of their owners. The inability to insure their homes’ newfound value converted homeowners into “homevoters,” whose local political behavior focused on preventing development that might hinder the rise in their home values. Homevoters seized on the nascent national environmental movement, epitomized by Earth Day, and modified its agenda to serve local demands. The coalition of homeowners and environmentalists thereby eroded the power of the pro-development coalition called the “growth machine,” which had formerly moderated zoning. As this chapter shows, these changes in the meaning of homeownership and in the political behavior of homeowners explain why local zoning has become so restrictive.

In hindsight, a state government with foresight might have headed off this slow-motion disaster by preventing local governments from acting against the larger interests of the state and the future citizens who might have chosen to live there had a good supply of housing been available. Curbing the use of environmental lawsuits and zoning to stop or delay new housing and continuing investment in infrastructure projects like highways and water supplies would have led to a larger population in more desirable coastal areas with lower housing prices and rents, and a healthier growth economy not deprived of middle-class labor. The only people not better off under that scenario are the already-wealthy whose spacious estates in Atherton and Beverly Hills are in effect subsidized at the expense of lesser citizens.

A watered-down bill to address the problem recently died in the legislature. It would have lifted some height and density limits statewide in areas served by transit. Without a groundswell of voter support, nothing will be done.

Rubin Report interview of Mike Shellenberg: