The naive economics of SB 50

By Michael Barnes : mb4albany – except (includes inspired info graphics)

WARNING: THIS POST IS LONG AND DETAILED. BUT IF YOU STICK WITH IT, I THINK YOU WILL FIND IT WAS WORTH YOUR TIME.

San Francisco State Senator Scott Wiener, along with our own State Senator Nancy Skinner, have resubmitted their zoning bill SB 50, which was converted to a two-year bill at end of the last legislative session. The final version of the bill is not yet available, but the flaws in previous incarnations of this bill no doubt will remain.

The rhetoric from the bill’s supporters has been sloppy enough that I think it’s time to frame the issues the bill raises in the rigorous analytic framework of neoclassical economics. The supporters of the bill assume their such a framework supports their positions, but they are mistaken. In what follows, I’ll lay out the groundwork my analysis, which will be familiar to any undergraduate economics major. I know because in the early 1990s, I taught economics at UC Berkeley as an graduate student instructor and as an acting instructor…

SUMMARY

In this blog post I have attempted to explain how the advocates for SB 50 do not understand the basics of supply and demand. These advocates misunderstand or ignore the many constraints to building housing, and they do not have a clear understanding of zoning or the unintended consequences of upzoning. In their arguments they fail to recognize the broader economic context that includes antitrust and negative externalities.

SB 50 cannot fulfill its stated mission of reducing housing costs in the short run. However, if enacted, the bill could be effective in its intended, long run mission–removing local control of land use and encouraging the corporate takeover of housing policy.

(more)

The infographics are worth the read it.


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