Limbaugh rose to No. 1 in the market, doubling the size of his audience in just a year. . . . When a radio consultant told his friend Ed McLaughlin about Limbaugh’s popularity there, the ABC Radio Networks President traveled to Sacramento to hear him firsthand. . . . McLaughlin, who credited Limbaugh with rescuing AM radio from oblivion in a 1994 Forbes profile, recruited the local host to New York. He debuted a two-hour talk show on WABC in August 1988 that they soon began syndicating across the country. At the time, AM radio was facing an existential crisis. Listeners had gravitated to FM for music, leaving AM radio in search of a winning programming format. Talk filled the silence.

Limbaugh’s program in Sacramento that launched his nationally syndicated “The Rush Limbaugh Show” was only possible after the FCC’s 1987 repeal of the suffocating Fairness Doctrine (created in 1949) had opened up AM radio to free speech and new programming competition. For over three decades, Limbaugh’s program was by far the most popular radio show in America, airing on more than 650 stations nationwide across the Premiere Radio Networks with a weekly audience of 25 million, and on May 7, 2020, Limbaugh announced on air that Premiere had calculated an audience that day of 43 million people with an average listening time of two hours and 28 minutes. But throughout his career, he never lost affection for his successful radio roots in the Sacramento area, regularly returning to the area and often on his show humorously singling out comments “For those of you in Rio Linda.”

We had the memorable opportunity to work with Rush Limbaugh on two pivotal occasions.

The first occurred in the mid-1980s, when I was in the process of producing the paperback edition of a book on the growing problem of affordable housing in California, Resolving the Housing Crisis: Government Policy, Decontrol and the Public Interest. Edited by the late, renowned economist M. Bruce Johnson (U.C. Santa Barbara), who would become the founding Research Director at the Independent Institute, the book assembled the most comprehensive-ever critical analysis of government housing and land-use controls restricting the supply of housing and new construction and creating the unaffordable housing tragedy that has only greatly worsened today, including contributing to the massive problem of homelessness.

The acclaimed Clemson U. economist Thomas W. Hazlett (Ph.D., UCLA) at the time was a new assistant professor at the University of California at Davis (U.C. Davis). Tom had contributed the superb Chapter 10 in Resolving the Housing Crisis, “Rent Controls and the Housing Crisis,” and he had further assisted Bruce in completing details for his Introduction to the book.*

Bruce and I were planning to be in Sacramento in spring of 1984 for a one-day conference I had organized on the housing crisis in California with the California Chamber of Commerce and other groups. Bruce was to be a keynote speaker along with the housing and land-use expert Ward A. Connerly, and all attendees would receive a free copy of the book.

Tom had first met Rush Limbaugh at an event at U.C. Davis at which former U.N. Ambassador Jeane D. Kirkpatrick (1926-2006) spoke, and Tom and Rush became good friends. As a result, Tom helped us arrange for Bruce and me to visit with Rush while we were in town for the housing conference to discuss the book’s findings in the KFBK studio.

We had already arranged for Bruce to be interviewed about the book on numerous radio programs, but none of the show hosts understood the housing issue and were quite clueless of government’s culpability in creating the problem. But in visiting with Rush, we found that just as Tom had promised, he had clearly done his homework on the book and understood its findings, interviewing Bruce at considerable detail for an entire hour.

I recall Bruce’s delight, excitement, and amazement with the interview by this guy who neither of us had ever heard of but who, unlike other radio hosts, fully understood what Bruce was saying and the central need for deregulation, free markets and private property rights.

The second time we connected directly with Rush was when we had published the first edition of the Independent Institute’s book, Hot Talk, Cold Science: Global Warming’s Unfinished Debate by our Research Fellow, the late S. Fred Singer, and featuring a foreword by Frederick Seitz, former President of the National Academy of Sciences.

Rush enthusiastically interviewed Fred, who at the time was in Bonn, Germany, having addressed the Austrian Parliament in Vienna a few days earlier, and Rush subsequently published the interview in The Limbaugh Letter (December 1997):

Fasten your seatbelts—you are about to get some real science from one of the foremost experts on global climate change. In fact, Dr. Singer devised the basic instrument for measuring stratospheric ozone. He was somewhat reluctant to discuss the political aspects of the global warming debate—though I tried. Still, as a scientist, he backed me up . . . and confirmed things I’ve been saying for years. . . .

The book became a major seller with extensive media coverage featuring Fred, and was instrumental in redefining and redirecting public climate debate away from unscientific alarmism, leading up to the U.S.’s refusal to ratify the deeply flawed 1992 Kyoto Protocol to the United Nations Framework Convention on Climate Change.

Incidentally, we have just released Hot Talk, Cold Science in a Third Revised and Expanded Edition (twice the size of the previous editions in 1997 and 1999), completed by Fred before his death in 2020 and co-authored with the climatologists David R. Legates (U. of Delaware) and Anthony R. Lupo (U. of Missouri), and with a new foreword by the eminent physicist William Happer (Princeton U.)

We will forever be grateful for the very kind and generous assistance of the late Rush Limbaugh.

Requiem æternam dona ei, Domine. Et lux perpetua luceat eis.

* * * * * * * *

*Other distinguished scholars who were contributing authors to Resolving the Housing Crisis include Peter Colwell (U. of Illinois), Carl Dahlman (U. of Wisconsin), Robert Ellickson (Yale U.), Bernard Frieden (MIT), Norman Karlin (Southwestern U. Law), James Kau (U. of Georgia), Richard Muth (Stanford U.), Roger Pilon (U.S. Office of Personal Management), Judith Robert (U. of Michigan), Bernard Siegan (U. of San Diego), and Robert Weintraub (U.S. Joint Economic Committee), as well as Stephen DeCanio, H. E. Frech III, Alan Gin, Lloyd Mercer, Douglas Morgan, and Jon Sonstelie (all from U.C. Santa Barbara).

The post Rush Limbaugh on Air appeared first on The Beacon.

Writing at the Washington Examiner, Timothy P. Carney wonders to what extent the state government’s regulatory environment is contributing to both problems.

Land-use regulations make housing more expensive. The Los Angeles metro area ranks as the 15th most restrictive in land-use regulation.

People who own houses in housing-restricted places often don’t want to deregulate. They like the space. They fear the traffic. And they know that adding more housing could harm their home values. Of course, preserving scarcity in housing to keep your housing investments valuable is not really something most people want to admit to, so they make other arguments. They suggest that the regulations drive up home values not by curbing supply but by giving people what they want: green buildings, safe buildings, adequate parking, and uncrowded neighborhoods.

But the one study that has looked into this finds that more than 90% of the price effect of regulation comes not from making the homes more desirable but from limiting supply. So regulation is affecting the market mostly by preventing homes from being built.

That finding raises a question. How many regulations has California put in the way of building homes?

According to QuantGov, last year the state government of California imposed on businesses and residents a total of 395,503 restrictions, as defined by the number of times that words like “must”, “shall”, “required”, “prohibited”, and “may not” appear within the online version of the California Code of Regulations (CCR). Not only is that number more than any other state, it is nearly 88,000 more than the number of similar government-mandated restrictions imposed by New York’s government agencies, the state that ranks second in this measure.

Within the CCR, California’s Building Standards Code (Title 24) contains more restrictions than any other section, totaling no fewer than 75,712 restrictions. At the same time, the section for Housing and Community Development (Title 25) contains 12,204 restrictions, the tenth largest of all sections (or titles) contained in the CCR. Combined to total 88,186 regulatory restrictions, these two sections that effectively dictate what housing may be built in California account for over 22 percent of the total regulatory burden set by all the state’s government agencies.

How does that compare with New York? QuantGov’s 2017 report for New York suggests the Empire State imposes far less of a regulatory burden on homebuilders, but since the state’s building code contains fewer than 12,474 restrictions, it doesn’t even make the list of the Top 10 contributors to that state’s regulatory burden.

It occurred to me that California’s building code might be more restrictive than a state like New York because much of the state is prone to natural disasters like earthquakes, mudslides and wildfires. So I looked at my former home state of Washington, which is prone to similar disasters. Its building code does make the top ten in QuantGov’s list of the state’s biggest contributors of restrictive regulations for 2019, where the state’s Building Code Council (Title 51) ranks ninth by accounting for a total of 4,585 restrictions.

California has over 19 times that number of restrictions limiting what housing and other structures may be built within the state. Those regulations haven’t come about by accident—they are the result of years of effort on the part of California politicians and regulators.

If you remember the sky-high oil and fuel prices of a decade ago, the political slogan of many seeking to bring the runaway prices of that day was “Drill, Baby, Drill.” These advocates recognized that increasing the supply of oil was the only effective path to bring oil and gas prices back down to more affordable levels, so they worked to remove regulatory barriers to producing more supply. It may sound corny, but it worked.

If California’s politicians and bureaucrats ever want to get serious about building a larger supply of affordable housing, they need to start demolishing the artificially restrictive environment they have built and that has produced the opposite outcome they claim they want. The right slogan for California to improve the lives of the state’s neediest residents is “Build, Baby, Build.”

The post California’s Regulations Against Affordable Housing appeared first on The Beacon.

The People of the State of California hereby find and declare the following:

(a) Whereas, Californians are suffering from an unprecedented housing affordability crisis caused by state and local government regulations, fees, mandates, and prohibitions that have overly restricted housing supplies and increased prices to record levels; and

(b) Whereas, California needs about 4 million additional housing units merely to stabilize prices given current conditions; and

(c) Whereas, California issued about 80,000 residential building permits annually during the past 10 years; and

(d) Whereas, 50 years to stabilize housing prices is too long, and by then, California will likely need millions more housing units; therefore, be it

Resolved that the People of the State of California hereby create the following constitutional right to build residential housing, known and cited as the “Affordable Housing Amendment,” to address the housing affordability crisis:

An individual or private entity has a right to build, on privately owned land, residential housing that complies with applicable fire codes and which does not violate the terms of an agreement covering the property arising from a private homeowner’s association or a private neighborhood/community association.

At least six months before the start of construction, the builder(s) must publish a “Plan to Build,” defined as a public notice along with contact information and blueprints of the project posted on the appropriate city-council website or county-board website. This begins a six-month period from the date of publication during which any member of the public may negotiate with the builder(s), if each party chooses, voluntary modifications or limits to the project.

Builders must provide any necessary private roadways, roadway repairs, and/or utility connections. These costs cannot be offloaded onto third-party residents.

The environment is important to Californians; therefore, builders must remedy any actual and meaningful environmental damage (tort) directly caused by the builder(s) during construction of the residential housing project, but environmental review(s) cannot be used to delay or halt a residential housing project.

Purposes and Intent of the Affordable Housing Amendment

(a) Create a constitutional right to build residential housing that would encourage rapid housing development, while also favoring local decision making

(b) Encourage the formation of private associations to address negative externalities or to pay for commonly held assets

(c) Require that changes to proposed projects be the result of voluntary negotiations, during a limited time period, among builders and the public (the sole exception is applicable fire codes)

(d) Hold builders responsible for any actual and meaningful environmental damage imposed on others as a result of their project, per common law principles of torts

The Affordable Housing Amendment reaffirms a simple, yet fundamental, economic freedom: People should be allowed to build housing on private land. Private property rights derive from people’s rights to life and liberty, and are necessary to sustain and enhance our lives. It is immoral, therefore, to use government force to stand between someone who wants housing and someone who is willing to build housing for them on privately owned land.

A crisis of this magnitude demands bold action. California had a Tax Revolt in the 1970s when homes were seized because homeowners could not afford to pay outrageously high property tax increases. Today, California needs an Unaffordable Housing Revolt in the form of a ballot initiative led by Californians to overcome government restrictions on property rights that artificially constrain housing supply, causing sky-high home and rental housing prices.

[For more information on California’s housing affordability crisis, see How to Restore the California Dream: Removing Obstacles to Fast and Affordable Housing Development.

I welcome civil and constructive edits to the proposed constitutional amendment. Please submit edits below in the comments section. Anyone interested in moving the initiative forward, with thoughts on funding sources, please contact me.]

The post A Proposed California Constitutional Amendment to Resolve the Housing Affordability Crisis appeared first on The Beacon.

Beginning today, PG&E announced that as many as 800,000 electricity customers in Northern and Central California, including about 250,000 in the Bay Area, could find themselves subject to the pre-emptive blackouts. Edison followed suit announcing that more than 173,000 Southern California residents could be affected by a similar action.

The blackouts come on the heels of the passage in July of Assembly Bill 1054, which will direct an additional $26 billion over 15 years toward utility safety improvements and financial backstops for the utilities in the event of particularly costly fires, and last year’s Senate Bill 901, another sweeping wildfire measure.

AB 1054 calls for $10.5 billion to come from ratepayers through the extension of a $2.50 charge on their monthly bills that dates back to the 2000-01 energy crisis and was scheduled to expire next year. These funds will serve as a secondary insurance policy for utilities when wildfire costs exceed their regular coverage. PG&E, Edison, and San Diego Gas and Electric will contribute another $10.5 billion in exchange for limits on their liability.

The utilities must invest an additional $5 billion in maintenance and safety measures, and satisfy other conditions, to obtain a safety certification, which would put the onus on wildfire victims to prove that utilities were negligent in maintaining equipment responsible for starting a fire.

To begin to truly solve the underlying problem, however, lawmakers and regulatory policymakers must recognize how government intervention has made things worse.

Let us start with forest and wildland management. Over the years, California has shifted more of its focus and resources from mundane, but effective, preventative measures such as controlled burns, fuel breaks and forest thinning to more reactive, yet heroic, fire suppression (i.e., actually putting down fires once they have started). This has been encouraged by environmental interests who prefer “natural,” untamed growth, though it has brought catastrophic consequences. As the Little Hoover Commission noted in a February 2018 report, this policy has led to dangerous amounts of overgrowth, which has not only provided more kindling for fires, but also less fire-resistant forests, as greater competition for resources among trees makes them more susceptible to drought and beetle infestations (and leads to more dead trees).

Another big factor is the state-protected monopoly status conferred on the “big three” regional utilities: PG&E, Edison and SDG&E. By shielding these companies from competition while dictating “acceptable” prices, profit levels, energy sources and other business practices, California has reduced consumer choice and drastically diminished the incentives to keep prices low while making prudent investments in innovation and safety. In a free energy market, there would likely be a greater number of smaller energy companies, just as there was before collusion between “utilities” and state governments led to protectionism and severe over-regulation, and companies would compete for customers based on price, service quality, and (especially given recent history) safety records.

One of the main reasons we have seen an increase in the destructiveness of wildfires is that more people have been moving to riskier areas. The state and local governments have encouraged this through policies that increase the cost of housing and drive people to cheaper exurban and rural areas. High development fees, restrictive zoning ordinances, lengthy and litigious planning and environmental review processes, prevailing (union) wage laws for construction, rent control and “affordable housing” mandates that make building homes less profitable and less attractive, and unnecessary building standards and environmental regulations (such as the solar roof mandate that will add $10,000 to $20,000 to the cost of a new home starting next year) all serve to suppress the supply of housing and drive up costs significantly. This has pushed many people out of city centers into more fire-prone areas in search of cheaper housing.

The common thread that makes things worse in each of these varied policy areas is government intervention. This is why the Independent Institute just bestowed its most recent California Golden Fleece Award – a dubious honor given to the state and local government agencies or programs that exemplify waste or a breach of the public’s trust – to Cal Fire and other agencies responsible for wildfire policy in the state. The report also makes 26 recommendations to improve wildfire policy and safety.

Since the wildfire issue touches on such a variety of issues, it will take a number of reforms to provide a comprehensive solution. These include taking a more proactive approach to wildland management; protecting private property rights and allowing greater use of brush clearing, fire breaks and logging; freeing markets to allow for more truly affordable housing in less fire-prone urban and suburban areas; and allowing real competition in energy markets so that providers have the greatest incentives to keep prices low and safety standards high.

Such solutions may not sound as exciting or headline-grabbing as legislation calling for taking billions of dollars from taxpayers’ pockets, but a holistic approach that respects both personal and economic liberty would do far more to reduce the harm of wildfires than more bureaucracy and government micromanagement.

The post More Freedom, Not More Government (or Persistent Blackouts), Needed to Fight Wildfires appeared first on The Beacon.

The SoCal Policy Forum recently kicked off with its first set of issues, tackling housing affordability and homelessness. My responses are available at the project’s site, but I am copying them below since it is easier to see them all in one place, since the site organizes the experts’ responses randomly for each question, rather than by author.

Question 1: From your perspective, how are the problems of housing affordability and homelessness linked, and how are they different?

There is certainly a good deal of overlap between the housing affordability and homelessness crises, particularly here in California, because financial issues are one of the leading causes of homelessness, and housing is typically one’s greatest expenditure. But there are a number of other reasons people become homeless—including job loss, substance abuse, mental health issues, physical disabilities and medical emergencies, death of a loved one (particularly a head of household) and other family issues—so it is far from a perfect correlation.

According to San Francisco’s 2019 survey of the homeless, for example, the loss of a job was the No. 1 primary reason for homelessness (26 percent), followed by alcohol or drug abuse (18 percent), eviction (13 percent), being kicked out by family or friends (12 percent), and mental health issues (8 percent).

As a result, improving housing affordability (as well as other costs of living and making it easier for people to obtain sound employment) will significantly reduce homelessness, but it will not in itself solve the problem, just as focusing solely on substance abuse and mental health issues will not eliminate it. This is why homelessness, especially, is such a difficult problem, and why steps must be taken in a number of policy areas—from taxation and regulation to housing to job growth and economic opportunity—to adequately address these issues.

Question 2: From your perspective, what is missing in the HOUSING AFFORDABILITY conversation so far in Southern California? And in looking for solutions, what role should government (federal, state, or local) play? And what roles should the private sector and non-profits sector play?

There is a growing realization that California’s housing crisis is fundamentally a supply problem, but too many of the commonly proposed solutions fail to address the issues that discourage homebuilding in the state—and many would even make things worse.

Soaking taxpayers with expensive housing bonds will only add to their cost burdens, and making housing less profitable through rent control or affordable housing mandates only inhibits the investment needed for more housing. Even government-funded “affordable housing” developments average about $425,000 per unit, and can reach $700,000 or more per unit.

The state and local governments should, instead, simply remove the obstacles they have put in place that have driven up land and construction prices so much. Restrictive zoning limits the amount of land that can be developed, thus driving up prices, and has been used to discourage more affordable options like boarding houses. Development fees average more than $23,000 per single-family home—about three times the national average—and can be much higher in certain areas, topping $60,000 per home in Oakland and totaling roughly $150,000 per home in Irvine and Fremont. Prevailing (union) wage mandates drive up construction labor costs by as much as 30 percent. The California Environmental Quality Act has been used to squash or tie up developments for years and “greenmail” developers into adopting prevailing wage requirements and extract additional amenities and other concessions, further discouraging homebuilding. Excessive building code requirements also add to home prices, and the solar roof mandate will likely add another $10,000 to $20,000 to the cost of a home, beginning next year.

Getting rid of so many taxes, fees and regulations—which easily account for one-quarter or more of the price of a new home (see here and here)—would bring down housing costs substantially and spur the development needed to meet demand.

Question 3: From your perspective, what is missing in the HOMELESSNESS conversation so far in Southern California? And in looking for solutions, what role should government (federal, state, or local) play? And what roles should the private sector and non-profits sector play?

It strikes me that there are a couple of aspects of the homelessness problem that need more attention, one demographic and one economic.

The demographics of the homeless population are complex, and people become and remain homeless for a variety of reasons, which is why there is no single “silver bullet” to solving the problem. Some see homeless people as primarily those with drug and alcohol addiction problems or mental health issues, while others see people mainly down on their luck due to financial issues, oftentimes beyond their control, who just need a temporary helping hand. There is truth to both views, and both of these issues represent significant pieces to the puzzle, but the reality is more nuanced and varied, as noted in the response to the first question above.

Many acknowledge that securing a decent job is among the best ways for one to get himself or herself out of homelessness, but not enough attention is paid to the impediments that make this so much more difficult. Occupational licensing laws, for example, serve as a barrier to work by imposing government fees and oftentimes unnecessary education and training requirements, like hair braiders forced to attend expensive cosmetology schools to learn skills they will never use.

In addition, a job paying $10 an hour might allow a homeless person to live in a boarding house or stay temporarily in a flophouse until he can work his way up the economic ladder, but minimum wage laws and zoning restrictions prevent such arrangements. Even payday loans, though they may not be cheap and are often demonized, nonetheless help many get through short-term financial emergencies. These may not be ideal arrangements, but they are still much better alternatives than resorting to loan sharks or sleeping in one’s vehicle or on the street.

Question 4: Is there anything else you would like to add on the topic of affordable housing or homelessness?

As much as we would all like to eradicate homelessness altogether, we must recognize that some portion of the homeless population will refuse all help, and direct our scarce resources to those who can most likely benefit from them. The hard truth is that we cannot force assistance on those who reject it, and we cannot afford to waste time and money on them when those efforts could be so helpful to others willing to do what it takes to improve their situation.

Finally, precisely because our resources are scarce, it would be more effective for individuals concerned with the homelessness problem to direct their time and money to private charities, rather than large, sweeping government programs (with their large, sweeping government bureaucracies). Private charities generally are more responsive to the needs of their communities because they have greater local knowledge of what must be done, and they have greater incentives to show positive results in order to generate future donations. Heavy-handed government involvement, by contrast, relies on compulsion (i.e., taxation) instead of charity, and need not be effective in order to continue receiving its funding.

The post Thoughts on Housing Affordability and Homelessness in California appeared first on The Beacon.

On paper, this combination of pleasant environment and economics should mean that California would rank very highly among all states for its business climate thanks to its established relative advantages. In reality, the state ranks among the worst, thanks to a tax and regulatory regime that puts it in dead last place among all states for its cost of doing business in CNBC’s Top States for Business in 2019.

Responding to California’s dismal ranking in this category, the editorial board of the OC Register point their fingers at the “crippling cost of doing business in California”:

... consider the costs of doing business in a state consistently ranked by the American Tort Reform Association as the nation’s leading “judicial hellhole,” where businesses are routinely forced to fend off lawsuits.

Add in costs imposed by the California Environmental Quality Act, which desperately needs revamping, and you have a splendid mix of laws and regulations that would give even the heartiest business owner pause.

If Sacramento lawmakers have taught us anything, it’s that they cannot, they will not, surrender their central planning urges, which of course much be fueled by more and more taxes and manifest in greater laws and regulations of dubious value.

Coming on the heels of a World Bank study that connected the reduction in regulatory burdens for creating businesses with the escape from extreme poverty for millions of people, it might be useful to consider how California’s increasing regulatory burdens harm the state’s residents.

James Broughel and Emily Hamilton described the state of California’s overall regulatory environment in a recent op-ed in the Los Angeles Times:

The California Code of Regulations—the compilation of the state’s administrative rules—contains more than 21 million words. If reading it was a 40-hour-a-week job, it would take more than six months to get through it, and understanding all that legalese is another matter entirely.

Included in the code are more than 395,000 restrictive terms such as “shall,” “must” and “required,” a good gauge of how many actual requirements exist. This is by far the most regulation of any state in the country, according to a new database maintained by the Mercatus Center, a research institute at George Mason University. The average state has about 137,000 restrictive terms in its code, or roughly one-third as many as California. Alaska and Montana are among the states with as few as 60,000.

Local zoning codes justifiably receive a lot of blame for the state’s high housing costs. They restrict new home creation—particularly multifamily homes, from duplexes to large apartment buildings. There’s no doubt that zoning rules are a key driver of California’s sky-high housing costs, as economists have found extensive evidence that regions where land-use regulations stand in the way of new housing supply suffer from high house prices and rents.

But California’s state building code is also especially restrictive and deserves scrutiny from policymakers concerned about housing affordability. By itself, this section of the Code of Regulations contains more restrictive terms—more than 75,700—than some states’ entire codes. The residential housing subsection alone has nearly 24,000 restrictions.

These restrictive regulations have resulted in California’s failure to build as much new housing as required to support the population’s need for shelter. City Journal‘s Kerry Jackson’s story of how the planned construction of 21,500 new homes in Santa Clarita has been stalled for nearly 25 years illustrates the challenge to build faced by Orange County’s FivePoint Communities:

Though the developer tirelessly met environmentalist demands and generated “green” credibility, the project has endured more than a quarter-century of roadblocks and red tape, courtesy of California’s mammoth bureaucracy—including “lawsuit after lawsuit after lawsuit,” says Wendy Devine, who oversees a website focused on Newhall Ranch news. The litigation primarily addressed environmental issues, as is typical for California, where the California Environmental Quality Act (CEQA) has delayed housing development, reduced it in scope and size, and even shut it down. The developer produced more than 109,000 pages of documents, navigated the review of 25 government agencies, appeared at 21 public hearings, and attended over 700 meetings. Finally, the project broke ground last year.

While ground has finally been broken, it will still take years for the builders to construct all these homes, during which they will almost certainly face new regulatory hurdles to overcome before they are done, adding to their costs.

If not for the state’s growing mountain of restrictions that held up their construction for decades, the planned houses at Newhall Ranch could easily be home today to more than 53,000 Californians. If these houses had already been built, as they would have in a more sane world, not only would they be housing thousands of Californians, the homes and apartments where many of these future residents are living today would have been freed up to house others at more affordable prices and rents.

Instead, California’s regulatory regime has helped inflate the state’s cost of housing far above the levels that would be affordable to many of the state’s households, which has had dire consequences for the most marginal parts of the state’s population, with homelessness shooting up to a crisis level.

California’s state and local governments were already spending billions to address the problems of the state’s homeless population, even including building new housing, but have gained no ground because of the regulatory barriers they put in their own way. Worse, rather than making positive progress, they have lost ground and ended up even further behind, bearing a heavy human toll.

Returning to the OC Register‘s editorial, which concludes:

Indeed, California has many advantages over other states. But rather than use those strengths to facilitate even greater economic activity, California’s politicians have instead exhibited a tendency to take California’s advantages as a given and use California’s businesses as piggy banks for their grand visions.

Someday, we’d like to see California’s politicians realize that pulling back and letting markets work will yield more benefits over the long-term than perpetually using the force of government at every opportunity.

California’s problems have not arisen by chance. Its housing shortage is a political choice, just as are many of its other problems. There is so much more the state could be for the people who live there, if only its politicians and bureaucrats would choose instead to restrict themselves from imposing such a regulatory burden on others.

The post Blame California’s Housing Shortage on Dubious Regulations appeared first on The Beacon.

I go to New York University, which is known in New York for being egregiously expensive. At NYU’s London campus, the story is the same. In particular, housing costs turn a high tuition bill into a monumental cost of attendance. But it doesn’t have to be this way. NYU is much smaller than a state, but its housing woes reflect the problems caused by governments that limit economic competition and enforce state-run monopolies; it can learn from these experiences.

When I was choosing where to live in London, I was given the option of choosing between three different dorms: two operated by NYU and one operated by a private company called Urbanest, which also rents to students from other universities. In the two NYU dorms, you are most likely to be placed in a double room in a suite. You’ll have a roommate and share a bathroom with three or more other people. That costs about $8,500 per semester.

In Urbanest, you are guaranteed your own room, most likely in a suite with four to eight other rooms. You’ll have your own bathroom in your room, and share a kitchen with the suite. That’s listed on NYU’s housing website at around $10,000 per semester.

I stayed in Urbanest my first semester and an NYU dorm in my second, and I can say that the quality of Urbanest is undeniably better. The beds are comfortable. The kitchens are large and have ceiling-height windows. And Urbanest rents bikes to students for very cheap. None of this is true of the NYU dorms. It makes sense, though—Urbanest is more expensive, so the quality should be better. The problem is, Urbanest is actually not more expensive—for non-NYU students, that is.

As the Bedford Square News reported last year, NYU students who rent a room in Urbanest through the university pay $3,000 more per semester than non-NYU students, who can book directly through Urbanest for around $7,000 per semester. This means that, in reality, the private company is able to provide a superior product while charging much less than NYU.

And there are other, better—and cheaper—options outside of NYU housing. I stayed in three different Airbnbs in London over winter break (NYU kicks students out of the dorms over holiday) all costing from $28 to $44 a night. Taking the highest rate, $44, that’s just over $5000 for the seventeen-week semester—much cheaper than anything NYU provides. Unfortunately, though, living full time in an Airbnb—as well as booking directly through Urbanest—is not actually an option because NYU requires students studying abroad to live in university housing. Students must book through NYU and pay whatever rate the university decides to charge.

While the motivation behind such a policy may be to ensure the university has enough revenue to cover the costs of its dorms so it can guarantee students housing, the market already does a fine job providing housing at higher quality and lower cost.

NYU’s high housing costs are rooted in the same lack of choice that makes state-mandated monopolies inefficient, and NYU would be well-suited to look at the experiences of economies that have been dominated by these monopolies.

One of the best examples of such an economy is China. In his new book, China’s Great Migration, Bradley M. Gardner outlines how the migration of over 260 million Chinese people from rural China to urban centers helped transform the Chinese economy into the second largest in the world. The migration was so large and rapid that it forced the government to greatly loosen its control over the economy.

In 1979, the Chinese government legalized self-employment (private employment) to absorb the millions of unemployed people who could no longer find work in state-owned enterprises. Since then, the number of private firms has grown substantially and, as Gardner notes, these companies have consistently outperformed the SOEs. That’s because the private sector is forced to adapt to the market—to lower costs and improve quality as the market demands cheaper and better products.

State-owned enterprises, on the other hand, lack such adaptability and do not face actual market costs and prices. Just like NYU’s housing, Chinese SOEs that are still viable stay above water only because they enjoy monopolies. In both cases, monopolies created by central planning are inefficient, and the private sector can do a better job.

Mr. Gardner notes that SOEs are the biggest threat to China’s continued development and that China would only benefit from selling off these companies. Similarly, as NYU faces increasing pressure over its cost of attendance, it would do well to end its monopoly on housing and the corresponding price inflations at its campuses abroad, letting the market dictate where students live.

The post How NYU Can Learn from China appeared first on The Beacon.

Things are going fine, but then, your tenant stops paying their rent.

The solution to this situation is relatively straightforward. You serve the tenant notice that they will be evicted if they do not pay. As the landlord, you will incur the costs of evicting them, but are likely compensated for the forgone rent by your tenant’s security deposit. You have the option to sue your former tenant if you incurred greater losses.

In many places, however, this process isn’t so easy. Imagine that, instead of evicting your delinquent tenant, you must instead keep providing them living space because it is against the law to “make someone homeless.” Eviction requires producing countless documentation, multiple court appearances, and spending ample amounts of additional time and money to remove the problem tenant. In some cases, the process takes years.

Although the illustration above may seem exaggerated, it is the reality in many places. Venezuela, for example, maintains a law similar to the one described above. A landlord cannot evict a tenant if the tenant does not have other arranged housing. The issue has become a serious problem. In 2014, multiple outlets reported some 3,000 squatters were living in a 45-story building in the capital city of Caracas.

This issue of eviction is illustrative of the broader importance of private property rights. Issues of tenants’ rights are often the subject of news. Everyone has heard stories of the “terrible landlord,” the tenet who was wrongfully evicted, the security deposit that was never returned. Perhaps this is why there are frequent proposals in the U.S. and elsewhere to make it more difficult for landlords to evict tenants, limit the prices they charge, and so on. Certainly, tenants’ rights are important. Renters do, after all, pay for their right to live in another person’s property.

It’s this point that many often forget, and it’s important. Private property means that an individual has exclusive rights to use a particular asset. He doesn’t have to worry about someone else using his assets without his permission. As a result, the owner internalizes whatever action he takes with regard to his property. If he takes good care of his house and makes improvements, for example, he benefits when it comes time to sell. If, by contrast, he allows the home to fall into disrepair, he will face the negative consequences of his actions in the form of a lower selling price.

This dynamic benefits not only the individual, but society as a whole. Private property rights provide incentives for individuals to take care of their property and to consider both the present and future value of their assets. In the context of housing, these rights induce owners to care for their property and increase its future value.

Violating private property rights can sometimes sound like a noble idea. After all, most people do not like the idea of people living on the street, or spending most of their monthly income on housing. But the broader implications of denying or limiting private property rights are disastrous. Without private property rights, the above incentives to care for and enhance the value of property are weak or all together absent. If a landlord knows he cannot reap the full benefits from his property, what incentives does he have to make repairs to his property? If individuals know landlords cannot evict problem tenants, they are much less likely to rent their property. This is exactly what has occurred in Venezuela, where a housing shortage has resulted in not only the confiscation of homes, but also the use of metal from old automobiles in a desperate attempt to erect more housing.

Though not as extreme as the Venezuelan case, attempts to undermine private property in the U.S. occur regularly. Rent controls are a prime example. As recently as this spring, groups in San Francisco urged the city to further restrict apartment prices. The use of eminent domain laws that allow the government to take individual assets is another illustration. It is important to remember that even though such policies may sound appealing, they have serious consequences. For those of us concerned about the wealth and well-being of all individuals, protecting and strengthening private property rights is of the utmost importance.

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