My Review of Ezra Klein's And Derek Thompson's "Abundance"

Two Liberals Take a Walk on the Supply Side

Card carrying liberals New York Times columnist Ezra Klein and Atlantic writer Derek Thompson have created quite a stir with their walk on the supply side. They have concluded that the “blue model” of California, New York and Illinois is not working. Simply put, those states are bogged down with procedural liberalism that makes process more important than the end result. Making matters worse the blue states are guilty of “everything bagel” liberalism where before a project is approved every erogenous zone associated with the Left has to be satisfied. (e.g., union labor, day care, affirmative action quotas for contractors and workers, neighborhood input, affordable housing, environmental protection). 

As a result, nothing gets built, or it takes forever. No wonder house prices are out of control in California. And perhaps more stunning is an "affordable" housing project in Santa Monica was recently approved at an estimated cost of one million dollars a unit.

Procedural liberalism arose in the 1970’s to deal with the excesses of the prior decades where projects were built without regard to the environment and the neighborhoods affected. In response a host of national and state laws were passed to control development. Unfortunately, what seemed reasonable in the 1970’s, turned into monstrosity in the 2000’s. 

The change in the development regime can be seen through the window of Pat Brown’s administration in California from 1958-1966 and his son Jerry’s first administration from 1974-1982. Under the first Brown, freeways, water projects and universities were built. Under Jerry Brown’s administration we were in “the era of limits.” Liberalism stopped dreaming big and when it did with its plans for high-speed rail, it got completely bogged down in a procedural morass.

Klein and Thompson’s solution calls for a radical deregulation of the housing permitting process. They look admiringly at the Texas cities of Houston and Austin. The solution to a housing shortage is to build. However, California’s sacred environmental quality act (CEQA) would have to be drastically amended for this to work. That act has been weaponized by homeowners and environmental groups to stop or drastically curtail developments and by construction labor unions to extort project labor agreements into major development projects. Furthermore, in deep blue Santa Fe, a major neighborhood group is using every available legal channel to block a major solar/battery storage facility. What was designed to halt fossil fuel projects is now being used to halt clean energy projects.

The authors cite what can happen when the regulatory burden is lifted. For example, Governor Josh Shapiro rebuilt a break in the I-95 corridor in less than two weeks. Had the normal procedures been followed it would have taken two years just to go through all of the approvals needed. Similarly, Operation Warp Speed delivered COVID vaccines in less than a year, saving the lives of millions. Unfortunately, the liberals did not want to praise the effort in fear saying something nice about Trump, and Trump himself walked away from it because he worried too much about his anti-vax base. 

Government can work and Klein and Thompson rightly believe that we can return to a more efficient model of government. My own thought is that Roosevelt’s New Deal would never have gotten off the ground if it had to operate within today’s regulatory framework. I would note that where after two years Biden’s electric vehicle charging stations and rural broadband; both of which are bogged down in bureaucratic red tape. 

The buzz around “Abundance” is justified. Whether the silos within the Democratic Party yield to the book’s logic remains to be seen, but one can only hope. If I would have major criticism, it would be that nowhere, do they discuss the abject failure of America’s public schools. I guess the teachers’ unions are too sacred a cow for them. I would note that the path to their abundant society has to be built by an educated workforce.

 

My Amazon Review of Ronald Brownstein's "Rock Me on the Water:......."

 

Sex, Drugs, Rock and Roll, Movies and too Much Politics

 

Atlantic magazine editor and political writer Ronald Brownstein has written an ode to the creativity surrounding Los Angeles in 1974. Of a sudden Los Angeles was awash in musical, television and motion picture talent with something to say. He highlights Jack Nicholson and Warren Beatty for their roles in “Chinatown” and “Shampoo”, respectively. Both movies were written by Robert Towne. With respect to “Chinatown,” Brownstein, in essence, summarizes Sam Wasson’s “The Long Goodbye.” ( See:  Shulmaven: My Amazon Review of Sam Wasson's "The Big Goodbye: Chinatown and the Last Years of Hollywood") Just like Wasson Brownstein views the end of Los Angles’ creative moment with the arrival of Steven Spielberg’s “Jaws” the following year. He forgets that most people go to the movies to be entertained.

 

With respect to the music, he highlights the careers of singer songwriters Linda Ronstadt and Jackson Browne along with Joni Mitchell, the Eagles, Crosby, Stills and Nash and the music impresario David Geffen. The way he writes about Ronstadt it seems that he had quite the teenage crush on her. Brownstein was sixteen at the time and likely was not alone.

 

Among the musicians and the actors Brownstein writes of excessive drug use and bed swapping among his leading characters. At times you needed a scorecard to see who was sleeping with who and as the year progressed cocaine use grew to the extent that it eroded their creativity in the years to come.

 

On television Norman Lear and Bud Yorkin made social commentary and had big hit with “All in the Family.” Archie Bunker, played by Carroll O’Connor, became a caricature of Nixon’s silent majority. But what Brownstein does not understand a good part of the audience was laughing with Archie, not at him. As an aside, I sat next to O’Connor at a wedding and he was far funnier than he was on television. It was also the time of “Maude,” “Mash” and “Mary Tyler Moore.” Brownstein revels in idea that previously untouchable subjects were brought up on television.

 

Where Brownstein goes astray is when he writes about politics of the era. He spends way too much time on Jane Fonda and Tom Hayden. I knew both of them. By 1974 the antiwar movement was a spent force. The real activism on the Left was taking place in the nascent environmental movement which was planting the seeds for today’s housing crisis in California, feminism, and gay rights.                        

On the Right activism was on the rise in opposition to feminism, school busing and rising property taxes. Those movements would flower later in the decade and bring on the Reagan revolution. In 1974 Jerry Brown was not the future, Ronald Reagan was, and I say this as someone who knew Brown then and served on his Housing Task Force. Jerry Brown was a far better governor 40 years later in his second go around.

 

Most troubling and not mentioned by Brownstein was that while all of the actors and musicians were partying on, Los Angeles was beset by gas lines, a recession, and the collapse of its manufacturing base. For most people 1974 was a very bad year and what they longed for was escape. It took a while, but Hollywood finally figured it out, just as it did during the Great Depression.

 

I was on the periphery of the events discussed in the book. To me the book stated out very strong then faded. Brownstein preaches too much and he forgets that entertainment is a business, and that business will not succeed if it beats people over the head by telling them how bad all of the social problems of the country are. As Brownstein notes George Lucas of “Star Wars” fame wanted people to feel better after they left the theater than when they first arrived. I go to the movies and listen to music to be entertained. If I want to look at the flaws in American life, I watch the news and read The Atlantic, of which I am a subscriber.

For the full Amazon URL see: Sex, Drugs, Rock and Roll and too Much Politics (amazon.com)

My Amazon Review of Conor Dougherty's "Golden Gates: Fighting for Housing in America"

Housing Wars

New York Times economics reporter Conor Dougherty has written an important book on the California housing crisis in general and the locus of that crisis in the San Francisco Bay area. Normally when I review books I do so through the lens of an educated reader. In this case, if I am not an expert, I am close to it. From my vantage point of being Senior Economist at the UCLA Anderson Forecast and the UCLA Ziman Center for Real Estate I have looked at reams of data on California housing and before that I ran real estate research at Salomon Brothers. Further I served on Governor Jerry Brown’s first housing task force in 1979. Yes it is a long standing problem and it was there that I met developer Dennis O’Brien who is featured in the Lafayette controversy discussed in the book.

What Dougherty gets right is the need for fundamental zoning reform in California that would allow for substantially increased densification in the major urban areas of the state. He is a full-throated proponent of the legislation offered by California State Senator Scott Wiener as am I. He also understands that there has to be a substantial limitation on the lawsuits filed under the California Environmental Quality Act (CEQA) that can delay projects for years and ultimately stop them altogether. Thus the real enemy of increasing housing supply in California are an elite group of people who I have identified in the past as “enviro-liberals.” In California, a state that is oh so anti-Trump, the enviro-liberals use zoning to accomplish the same thing as what Trump’s Wall is trying to do. What he doesn’t say is that building trade unions use CEQA to force project labor agreements on developers and that California’s prevailing wage laws substantially increase the cost of housing.

Where Dougherty is squishy it is on the topics of rent control and suburban development. On rent control his liberal heart seems to over power is economics head. He uses the pejorative term “rent gouging landlords.”  The problem here is that out-sized rent increases cannot be sustained without market support. It is tenant competition for scarce space that triggers big rent increases thus making rent control counter-productive. I know that all too well as I was the expert witness for the Santa Monica Rent Control Board in case called Baker v. Santa Monica that upheld the constitutionality of Santa Monica’s 1979 rent control law.

With respect to suburban development Dougherty is concerned about the climate impacts of low density housing on the urban periphery. However many people prefer that lifestyle and if one is serious about solving California’s housing problem, part of the solution is suburban housing.

What makes Dougherty’s book a great read is he brings real people into the dialogue. We see Hispanic families being displaced and we see a fighting Catholic nun in Redwood City protecting tenants and putting together donors and financing to buy up apartment buildings to turn them into affordable units. We see a young and very spunky Sonja Trauss creating a YIMBY (Yes in My Backyard) organization in San Francisco called BARF (Bay Area Renters Federation) to advocate for developers to increase housing supply. She reminds me of my much younger self where I was a leader in group that successfully advocated for an affordable housing component in of Santa Monica’s redevelopment projects.

Dougherty has written a very readable and timely book on California’s housing crisis. It should be read by every legislator, county supervisor and city council member in the state and his zoning recommendations be acted upon.

For the full Amazon Review see:https://www.amazon.com/review/RIMCO9JQBR67C/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv 

The Insurance Subsidy Behind the Horrific Malibu/Ventura Fires

The fires in California are horrific, but few realize that much of the housing in the fire zones of Malibu and Ventura County has been encouraged by the insurance subsidies coming from the FAIR Plan. Fire Insurance usually is hard to come by or extraordinarily expensive in areas subject to high fire danger. 

However California has something called the FAIR Plan which stands for fair access to insurance requirements. The program was initiated in 1966 after the Watts Riots to establish an insurance facility for inner city neighborhoods. It was expanded to cover the hillsides after the 1968 Bel-Aire fire. As a result a program to help poor homeowners and small businesses became a subsidy program for the wealthy.

The FAIR Plan works like the assigned risk programs for automobile insurance. As a practical matter  all insurance buyers are assessed to pay for the high risk assets and it is run by a consortium of insurance companies. The maximum amount covered is $1.5 million, but homeowners with the first loss covered can then buy wrap around policies to cover any excess.

Just like the federal flood insurance program subsidizes coastal development in flood prone areas, the FAIR Plan subsidizes development in fire prone areas. Perhaps it is time for the California Legislature to take another look at the program in light of what Governor Jerry Brown calls the "new abnormal."

In the Sacramento Bee, "Think rent is really high in California? Here's why it probably will get higher," June 19

“President Trump wants to keep people out by building a wall. California is more sophisticated – it uses zoning and development laws to keep people out, but they have the same effect,” Shulman said.

For the full article see, http://www.sacbee.com/news/politics-government/capitol-alert/article156864219.html

Read more here: http://www.sacbee.com/news/politics-government/capitol-alert/article156864219.html#storylink=cpy

In Bloomberg Newswire, January 3, 2011

“If you look at Jerry’s history, in 1975 the first thing he did was cut Ronald Reagan’s budget,” said David Shulman, a senior economist with the Anderson Forecast at the University of California, Los Angeles. “The Democratic legislature didn’t like it, but his poll numbers were high. It wouldn’t surprise me if he did that again.”


Full URL:
http://www.bloomberg.com/news/2011-01-03/brown-says-calif-budget-he-proposes-next-week-will-be-painful-.html