Randal O'Toole on Rising Rents

2016-01-07 · Guest: Randal O’Toole (Cato Institute Senior Fellow) · 52:15

Filed under: Housing and land
Topics: Rent Control · Urban Planning · Zoning

Government intervention and high housing costs in California

Bob Zadek interviews Randal O’Toole of the Cato Institute to discuss the root causes of skyrocketing rents and housing prices in California. They explore how government interventions, such as urban growth boundaries, zoning laws, and rent control, create artificial shortages that drive up costs, contrasting the restrictive California model with the more market-driven approach found in Texas.

Topics: Housing Market, Rent Control, Urban Planning, Zoning, Transportation, California Policy, Texas Housing, Urban Growth Boundaries, Inclusionary Zoning

Speakers:

• Bob Zadek: Host
• Randal O’Toole: Cato Institute Senior Fellow and author
• Caller (Nick): Scientist and listener
• Caller (Charles): Palo Alto resident and listener

---

Introduction: Why is the Rent Too High? [00:00]

Bob Zadek: Hello everyone, welcome to the Bob Zadek Show, the only live libertarian talk radio show on the air all weekend. Thanks so much for listening. I am your eponymous host, Bob Zadek. We are proudly the show of ideas, not attitude. 800-345-5639 to join my conversation at any time.

Randal O’Toole is a Cato Institute Senior Fellow. He’s also a senior economist with the Thoreau Institute. He is the author of several fascinating books, including The Vanishing Automobile and Other Urban Myths. In October of this year, Randal published a blog at Cato at Liberty, a wonderful blog site, and Randal asked a provocative question. Randal asks, “Why is the rent too damned high?” “Because we ignore the real problem,” he answers.

Why is the rent too damn high? Interesting question. To answer that question for us, I’m happy to welcome to the studio Randal O’Toole, who joins us from the Northwest. Randal, good morning and welcome to the show.

Randal O’Toole: Good morning, glad to be here.

Bob Zadek: Now Randal, you asked in your blog, “Why is the rent too damn high?” Now, my non-economist question to start our conversation this morning is, how can rent ever be too high? Why isn’t it simply “is what it is”? Is the price of Amazon stock too high, or is it priced exactly at what it’s worth according to the marketplace? So what is the reference point by which one can reach a conclusion that rent is too high?

Randal O’Toole: Well, I think both rent and home prices for buyers are too high in California because the government is interfering with the marketplace and creating an artificial shortage of both rental and sales housing. And so the rent is too high simply because of government deliberate artificial shortage.

Bob Zadek: So what you’re saying is rent is too high only because it is above what the unmanipulated market price for the rent would be. That is, the government manipulates the market and forces the cost of rent and the cost of single-family houses to be above what they are naturally worth in a free market environment.

Randal O’Toole: That’s right. And if you go back to 1969, you see that home prices and rents were about the same everywhere in the country. Now, I know everybody in California thinks California is a more wonderful place to live than the rest of the country, but home prices weren’t significantly more in San Francisco than they were in Omaha, Nebraska, or Raleigh, North Carolina. What happened is that California, unlike most other states, started imposing these artificial land-use restrictions that created shortages. And today, a house that in Raleigh, North Carolina, might cost you $150,000 is close to a million dollars in San Francisco or more.

Artificial Shortages and Urban Growth Boundaries [04:15]

Bob Zadek: Give us an example of these type of government-imposed externalities that artificially increase the cost of housing.

Randal O’Toole: Well, the number one example is the urban growth boundaries that every county in the San Francisco Bay Area has, except for San Francisco because it doesn’t have any rural land. But because of the urban growth boundaries, the nine-county San Francisco region is only about 16% developed. About 84% of the land in the San Francisco Bay Area remains rural. Some of that land is in parks, but most of it is private land. The private owners would probably like to develop it, but they’re not allowed to. So we’ve taken away property rights from private owners, and the result is that it’s made the region unaffordable for lots and lots of people.

Bob Zadek: In other words, these regulations that deny landowners some of the uses of the land—aren’t they all brought together under this “anti-sprawl” umbrella? Isn’t sprawl the bogeyman which these planners are trying to avoid?

Randal O’Toole: That’s right. And they say there’s a few reasons for reducing urban sprawl. One is that they need to save farmlands. Well, I don’t buy that because the United States has 1.1 billion acres of farmlands. We only grow crops on about a third of them, and the number of acres we need for growing crops is actually declining because per-acre productivity of most of our crops is increasing faster than our population growth. So the farmland argument I don’t buy.

Another argument they say is that, well, urban sprawl costs more. It costs more to provide urban services and infrastructure than in dense areas. Well, yes, it does. It costs maybe $10,000 or $11,000 more per home, according to some studies, for urban sprawl than for dense areas. So which would you rather pay: $10,000 or $11,000 more per home and live in sprawl, or pay $500,000 more per home and live in a contained urban area? So that argument to me falls flat.

A third argument they have is that it reduces driving and air pollution and greenhouse gas emissions. Well, guess what? The San Francisco Bay Area since 1980 has increased in population density by two-thirds. They’ve built hundreds of miles of rail lines, and per-capita transit ridership has fallen by a third and per-capita driving has increased. So that argument doesn’t work either. None of their arguments make sense, but they’ve used these arguments in order to convince people to accept housing that is completely unaffordable. And they’ve destroyed the market not just for housing, but for anything. It’s just as expensive to start a new business, to open a new factory, or open a new office building as it is to build a new house.

The “Housing Crisis” vs. Housing Shortage [07:15]

Bob Zadek: But what’s really strange is around the country, but in the Bay Area and in other urban areas, you hear—and Randal, you have used the phrase in some of your writing as well—that we have a “housing crisis,” that there is a shortage of housing. Frankly, I don’t understand what that means to have a shortage of housing. I haven’t seen anybody who has been sleeping standing up because they have no place to live. What there is, there may be a shortage of housing that somebody wants to live in but they can’t afford. So housing—it’s like saying there’s a shortage of Rembrandt paintings because I want to buy a Rembrandt but it’s too expensive, or a shortage of Bentleys because I can’t afford one. But the fact that a given consumer can’t afford the house they want to live in, that’s not a crisis and that’s not a shortage. So what does a housing shortage exactly mean?

Randal O’Toole: Well, the government isn’t going out and buying Rembrandts and burning them in order to drive the price up. The government isn’t going out and buying Bentleys and dumping them in the ocean in order to drive the price up. The government is making it harder and harder to build new homes. And so for every 100,000 people who move into the Bay Area, maybe 10,000 new homes get built. And believe me, the average number of occupants per home is not going to be 10. It’s going to be more like two or three on the average. So the idea that it’s okay to only build one house for every 10 people is not right. There is definitely a shortage of housing, and it’s 100% caused by government regulation.

Bob Zadek: So we have the government which—we have enough land, that is, if you look at a map, there’s plenty of land, but the land cannot be used to satisfy this pent-up demand because the government, to accomplish other goals like greenhouse gas emissions or less “segregated” housing—in order to accomplish various economic, environmental, or social goals, the government affects how land can be used. What government is doing is it is trying to accomplish other goals by affecting the use of land, thereby—putting aside the fact they don’t accomplish the goals—but putting that aside, that government in the process is pulling land out of play so it cannot be used to satisfy the pent-up demand. Less supply, demand is there, price goes up, absence of affordable housing. Is that pretty much what’s happening?

Randal O’Toole: That’s right. And I think the government planners have a philosophy: “If we don’t build it, they won’t come.” And yet that’s not true. There’s a lot of new jobs in the San Francisco Bay Area, and people are coming to take those jobs and then they’re shocked to find that they can’t afford to buy a house that’s anywhere near as big, or to rent an apartment that’s anywhere near as big as what they lived in before when they earned less money.

And it’s interesting you mentioned segregation. By standard measures of segregation, the San Francisco Bay Area is becoming less segregated. But consider this: between 2000 and 2010, the Bay Area gained 285,000 new residents, all living on the same amount of land because there was no more land available for development. Despite that growth, the number of blacks in the Bay Area declined by almost 49,000. So the reason why San Francisco became—the Bay Area became less segregated is because a lot of blacks moved away from neighborhoods that are traditionally black neighborhoods, like Richmond, and whites moved in. So yay, we’re less segregated, but San Francisco is actually the most racist urban area in the country when measured by the fact that blacks are moving out far faster than anywhere else.

The “Stack and Pack” Philosophy [09:15]

Bob Zadek: Now, one can have a conversation—we’re not going to have it this morning, but I just want to make sure it’s on the proverbial table—about whether one should have a land-use policy, the purpose of which is to limit how one uses one’s land with the goal being to decrease segregation. That’s a separate conversation. But the fact is the policy presently adopted in San Francisco and no doubt elsewhere, which is designed to affect land use, is, as Randal points out—and the numbers bear this out—one of the byproducts is that it decreases integrated neighborhoods and causes minorities to have to leave.

So, and it’s one of those issues, Randal, where the economic, ecological system is so complex, when you start to mess with it, it’s like messing with an ecosystem. You have all of these unintended, unanticipated byproducts. And rather than just simply letting the market take its course, where none of these byproducts would happen except people would be operating in an area of economic and social freedom. So it’s like running and trying to plug holes in the dike and you cause another hole and you go to fix that, and you never can reach social equilibrium.

Randal O’Toole: The sad thing is these aren’t unintended consequences. These are actually intended by the urban planners who put in the urban growth boundaries and who planned the Bay Area. What they said was—this is an urban planning fad, it’s been around for years—people are better off living in dense areas. Americans would rather live in a single-family home with a double-car garage on a large lot, but we don’t think that’s right. We think more people should live in apartments and fewer people should live in single-family homes. And so what we’re going to do is we’re going to put an urban growth boundary around the area and we’re going to impose density on the area. That is their overt goal. And part of that, the methods is to make housing—single-family homes—more expensive to force more people to live in apartments. And they are succeeding. It’s a very successful plan. It’s a very stupid plan, but it’s a very successful plan.

And no matter what problem you name, whether it’s air pollution or loss of farmlands or integration or teenage suicides, their answer is always the same: “If only we had more dense housing and more mixed-use developments and fewer single-family homes, that problem would go away.” Of course, it’s never true, but that’s their answer to everything: to increase densities, to do what we call “stack and pack,” replace neighborhoods of single-family homes with neighborhoods of five-story apartment buildings with shops on the ground floor so that people don’t have to drive because they can walk downstairs and go shopping.

Bob Zadek: And Randal, if we could play back what you—play back the tape, as they say, on what you just said. You were reciting what planners think is good for us and what we really, really want, whether we know it or not. And how do they get the chutzpah to substitute their mind for my mind as to what I “really want”? And so they are trying to repeal and to alter the demand and to tell us what we really want, whether we know it or not. And that’s the most offensive part of the planning, the regional planning process, is it not?

Randal O’Toole: That’s right. Nationwide, about 65% of people live in single-family homes. In the Bay Area, it’s 55%. Under the recent Plan Bay Area, that’s going to go down to less than 50%, and more than 50% will be living in multi-family homes. And planners think that’s a good thing. And that’s what’s really bothersome. Given a choice, given no government interference in the housing market, some people will choose to live in multi-family housing, but two out of three will choose to live in single-family homes, and planners are trying to twist things so that people can’t have that choice, so that more people who would like to live in single-family homes are forced to live in apartments or condos because that’s all there is for them.

Bob Zadek: And just as what happens at the national level with our “regulatory state,” most of the planning is around the country and in the Bay Area—and planning seems benign, like packing a picnic lunch. It seems to be a neutral term. But planning means the denial of core traditional property rights. Planning means imposing somebody else’s view on how you should live your life. It’s not like a plan which is flexible; a plan is a directive. It is a prohibition. It is taking over decisions of one’s life. So the word “planning” is a sinister word, not a benign one. And the planners are typically unelected and unaccountable, operating just like at the national level under very vague statutory mandates. So we have this shadow government denying us property rights, core property rights that we have traditionally held, and just denying them to us to accomplish some goal that they think is laudable, but we never voted on, such as saving the planet.

Randal O’Toole: That’s right. And in fact, in Portland, Oregon, my former hometown, a city commissioner recently told people that “we have to sacrifice our neighborhoods to save the planet.” “We know you would like to live in a neighborhood of single-family homes, but we have to build five-story apartment buildings throughout your neighborhood in order to save the planet.” Now, again, there’s absolutely no evidence that replacing single-family homes with apartment buildings is going to significantly reduce driving, is going to significantly reduce greenhouse gas emissions or save energy. In fact, the best evidence is that the effect it has is too small to be useful. There’s even some evidence that it’s going to make it worse because it’s going to make traffic a lot more congested, and cars actually produce most of their pollution in congestion.

So this has taken hold of cities across the nation, but particularly coastal—in the coastal states: Hawaii, Alaska, Oregon, Washington, California, Florida, Virginia, Maryland, and the New England states—that we have to sacrifice what people want in order to save the planet. And I really, you know, I’m a little bit skeptical of the whole global warming thing simply because it’s so convenient for the planners to use this as an excuse to do what they wanted to do anyway, because they were planning this density stuff long before climate change became an issue.

Caller Nick: The Biotech Exodus [12:00]

Bob Zadek: This is Bob Zadek. I’m speaking with Randal O’Toole. Randal is an economist with Cato. We are answering the question Randal posed in a recent post. The question is, “Why is the rent too damn high?” Rent can be expanded to all housing. Why is the cost of housing too damn high? 800-345-5639 to join my conversation. Randal, we have a caller, as I thought we would already. Line one, good morning, welcome to the show. Raymond? Good morning.

Caller (Nick): Hello? Hi, my name is Nick Tamayo and I live here temporarily. I’m a scientist and I’m here to essentially take advantage of the biotech sector. So my wife is a nurse, she lives in St. Louis, and she makes enough money by coming out here to work one week to live on—if she wanted to, we can live because of the difference in cost of living, as you characterized earlier with the Midwest. What’s interesting is that California thinks that biotech will stay here and that tech will stay here. That is not the case. Biotechnology is very closely essentially digitizing biological processes. And when that virtual component becomes integrated into the things that we do in the lab now, then we will leave here. Genentech was comfortable, but the small startups that are a function that rely on UC Berkeley and San Francisco and Stanford, that’s why they’re here. But they are leaving too, and it’s happening—it’s trickling. And I write a letter a week to Jerry Brown with no response.

Bob Zadek: Are they leaving because of the cost of housing and cost of living in general, in your opinion?

Caller (Nick): Absolutely. So our home in—absolutely. I grew up in the Northeast, but I left when I was 18 because I didn’t like San Francisco. I went to University of North Carolina. But you know, they bought those homes in the Northeast for $5,000, and that was a lot of money for a fisherman back then. Now, San Francisco wants it like that. They don’t want you driving, they don’t want you to have any type of decision, which is why they go back to the central planning mode. But what’s interesting from an economic perspective is if you run the models, the same things come out: chaos. So I’m saying to the fellow speaker, I don’t think that people that are making decisions actually listen to the people who actually have the data. They manipulate the data, they represent it inconsistently, give you half-data subsets. So California’s a disaster. But I’m here because, you know, I don’t want to go back to teaching in Washington University, right? But I mean, I could go back to work for Monsanto, but I’m here because of the biotech sector. That’s it.

Bob Zadek: Randal, is Nick our caller correct that San Francisco and the Bay Area might price itself out of the market simply by having these abusive and thoughtless housing policies? And Randal, we have a minute to go till break.

Randal O’Toole: Well, that’s absolutely true. If you didn’t count foreign immigration, California would be losing population. Texas, of course, is one of the big winners. They’re fast-growing because they have the least land-use regulation of any state in the country, and thus they have some of the most affordable housing. Where the San Francisco Bay Area is growing by maybe 20,000 people a year, the Houston area is growing by 400,000 in the same amount of time. I mean, it’s just phenomenal growth there, and it’s because they have no zoning, they have very little land-use regulation. You can buy land, get permits, and build a house on it and move in within two or three months.

Bob Zadek: Randal and Nick, we’re going to have to go to break. Nick, thanks so much for your call. Nick, thanks a lot. And Randal, when we come back, I want you to explain to our listeners what it’s like to live in a regulation-free environment such as Texas.

The Texas Model: Deed Restrictions over Zoning [15:30]

Bob Zadek: Hello everyone, welcome back to the Bob Zadek Show every Sunday at 9:00 AM, the only live libertarian talk radio show on the air all weekend. 800-345-5639 to join this morning’s conversation with Randal O’Toole. Randal is with Cato. Randal is an economist, has written extensively on land use, on zoning, rent control, and all of those other governmental tools that increase the cost of housing and decrease the supply.

Now Randal, most of the country sort of is used to living in an area where there are zoning restrictions. Zoning restrictions are, as we all know, government-imposed limitations on what you can and cannot do with your land. They are pervasive, and the number of land-use restrictions is growing, which means the rights of private property are decreasing. And most of the country is so accustomed to it, they sort of don’t question it. But zoning is a relatively new creation, and one can live quite happily in an environment without zoning and land-use restrictions, without fear of living next to some toxic waste dump or some noisy factory. So tell us, is there anywhere in the country where there are little or no land-use restrictions, and what life is like there?

Randal O’Toole: Well, Texas does not allow counties to zone. And the largest cities in Texas, Houston and some of its suburbs, do not zone either. And instead, what they have in many places are deed restrictions. When a developer puts in a new development, in order to give assurance to the home buyers in that development that the development isn’t going to end up with, as you say, a toxic waste dump nearby, the developer will put deed restrictions on that say you can’t put anything here except for a house or a business or whatever is being built there. But then the developer will create a property owner association, and the owner association can change those restrictions. So if you move into a neighborhood, you can say to your neighbors, “Hey, we think this is an obsolete restriction, we can change it.” With zoning, you have to go to the city, and the city will say, “Well, you’re going to be zoned R-10 or R-20, those are the only two classifications we’ve got, so if you don’t like it, lump it.” But with the deed restriction system, it’s extremely flexible and it can change quite frequently.

Bob Zadek: And what that means is people get to vote in the most natural sense. People get to, as they say, vote with their feet, and they get to pick the type of community they want to live in, trading off cost for benefit, and basically with enormous choice. And you can pick the community where the cost and the restrictions are just what you have in mind.

Randal O’Toole: That’s exactly right. You can move into neighborhoods that have no restrictive covenants, you can move into neighborhoods that have some that are fairly loose, and you can move into neighborhoods with some that are really, really strict. And you get a choice. And should you live in a neighborhood that has no covenants but suddenly you and your neighbors decide you need some, you can get a petition, and if 75% of your neighbors agree, you can create a property owners association and write your own covenants. And so it’s a system that’s fluid, it’s a system that’s flexible, it’s a system that gives people lots of choice, and it still gives them the same assurance as zoning.

Now, zoning isn’t necessarily bad. In Texas, most new development takes place in the county lands where there’s no zoning. The developer builds to the market; they build what people want. And then often these developments get annexed into a city, and the city zones them to keep them the way they are. So the city isn’t saying, “Oh, you’ve got a neighborhood of single-family homes, we’re going to rezone you for apartments because we think you should be higher in density,” which is what happens in California and Oregon. Instead, they say, “Okay, you’ve got eight homes per acre, we’ll zone you eight homes per acre. You’ve got four homes per acre, we’ll zone you four homes per acre.” It’s a little more restrictive than having covenants because it’s a little harder to change that zoning, but at the same time, it still is responsive to the market. It’s providing what people want rather than what planners think they should want. And that’s the way zoning used to be in California and Oregon and Hawaii and places like that, but we’ve changed it so that now the planners get to decide. And they’ll go into neighborhoods of single-family homes—and this is a part of Plan Bay Area—and say, “We’ve decided you should be apartments, and so we’re going to rezone you for apartments. And if your house burns down, you aren’t allowed to rebuild it, you have to build an apartment. If your neighbor has a vacant lot, they can’t build a single-family home on it, they have to build an apartment,” etc., etc.

Affordability: Houston vs. San Francisco [21:40]

Bob Zadek: And what is—and so here we have Texas, and you’ve described the incredibly free nature of the housing and the land market. What is the result? Is Texas—how would you compare quality of life issues in Texas versus in a heavily planned area like New York or some of the other coastal states or California? Is there any downside to what I’ll call the Texas much more liberty-oriented model?

Randal O’Toole: Well, in 1969, it cost about twice as much to buy a house, a median home, as the median family income throughout the country. It was about 2.2 times as much in San Francisco and about 1.8 times as much in Houston, so there’s a little bit of a difference but not a big one. Today, it costs 2.2 times as much to buy a median home as the median family income in Houston. So Houston is still about the same as San Francisco was in 1969. But today, it costs seven or eight times as much to buy a median home in the San Francisco Bay Area as it does as a median family income. Well, that means you can’t buy a median home if you’ve got a median income, because you could get a 500-year loan on it and still never repay it. You could never afford to buy a home that costly. Whereas in Houston, a median family can afford to buy a median home and pay it off in less than 10 years. That’s the way it should be, and that’s the way it would be in California if it weren’t for all these land-use restrictions.

Bob Zadek: I’m going to ask Randal a loaded question where I think I know the answer, but I want to pose it because I suspect some of our listeners would pose the question if I would not. The fact that housing is so much more expensive in San Francisco with its heavily planned economic model versus Texas without planning, doesn’t that show—remember Randal, this is a question I’m posing, not because I believe it—but doesn’t that show that the California model is more desirable because increased price means there’s more demand for it?

Randal O’Toole: Actually, that is a good question. And the answer is no. You know, there’s always going to be a handful of people who can afford to buy million-dollar homes, but that doesn’t mean that that’s what the general housing price should be. What’s really going on is that there’s a lot of people who bought their homes when they were cheaper and are still living in them, but they couldn’t afford to buy them today. When their children graduate from college, they aren’t going to be able to afford to live in the Bay Area; they’re going to have to move to some place like Houston. And you know, that’s not the dream we have for our children. We don’t necessarily dream that they’re going to live right next door to us, but we dream that they have the choice of living where they want to live and not being forced out by artificial constraints put on the housing market by urban planners.

Caller Charles: Transportation and Water Access [24:20]

Bob Zadek: Randal, we have another caller from another high-rent, high-housing area of Palo Alto in the Bay Area, right in the heart of Silicon Valley. Charles from Silicon Valley, Palo Alto, welcome to the show this morning and what’s on your mind?

Caller (Charles): Yes, thank you for having me on the show this morning, and this is a very, very fascinating topic. Housing and transportation go hand-in-hand. And when you mention about blacks leaving the area, the “flight” if you will, they’re moving to areas that are Antioch and out in the areas where the Delta and things of this nature. So I’m a hovercraft advocate. We’ve been trying to pressure and place that type of vessel in service to access the areas like Hercules and Fremont by water. So when you look at the regional transit options that are available here, you know, in Palo Alto particularly, you have the train and the buses, but the lion’s share of ferry operations are in Marin County, like the Golden Gate Transit. And so what I’m getting at is that water access is not serving the populations that are moving out into the areas where there is water access because the ferries are not able to get out there. So when you look at transportation and housing, what would you say about that as far as providing accessibility to those areas by water and to alleviate the commute that they have to come back into the area where they once lived?

Bob Zadek: Randal, you have written extensively upon access and mass transit and the incredible costliness of fixed rail and light rail versus automobile. So if you can, while you are probably not a hovercraft expert, if you can help Charles understand why in your opinion there isn’t a market-supplied answer since we have water as a very convenient way of commuting, why the market hasn’t satisfied what Charles sees as somewhat of a demand.

Public vs. Private Transit and the “Congestion” Problem [26:30]

Randal O’Toole: Well, nationwide, almost all of our transit systems are run by the government, and they have limited vision, they have an incredible bureaucracy, and they have incredibly high costs. The few public transit systems that have turned their transit over to private operators have reduced their costs by 35 to 45%. And so it’s an incredibly inefficient system.

And in New York, they had the same thing. They had buses and trains going under the Hudson River to New Jersey, they had buses and trains going on bridges to Brooklyn from Manhattan to Brooklyn and Queens, and nobody thought about ferries. And so a private individual named Arthur Imperatore decided to start a ferry service between New Jersey and New York, and it was enormously successful. He now runs a whole bunch of ferries from a whole bunch of different ports on the New Jersey side to several different destinations on the Manhattan side. When that US Air jet landed in the Hudson River because of bird strikes, the first boats to them were New York Waterway ferries that rescued the passengers off the jets. So a ferry service is possible. It might be more possible if a private operator started it up rather than waiting for the government to do it.

But on the other hand, ferries are slow, they use enormous amounts of energy, so they’re not going to save people energy as opposed to driving. The real concern for low-income people is having lots of mobility, and it turns out giving low-income people free access to transit does not provide them with enough mobility to get a job. The best way to help somebody to get a job and keep a job and increase their income is to get them access to a car. And it also helps if you relieve traffic congestion. One of the mantras of urban planners is, “We can’t keep up with congestion by building new roads, and so we’re not going to try. We’re just going to let the roads get more and more congested and hope a few people ride our slow, inefficient transit systems instead.” I think that’s stupid. I think there are simple ways of relieving congestion that they’re not trying, that are not very expensive. For example, traffic signal coordination, which very few cities in the San Francisco Bay Area have coordinated all their traffic signals. So I think, you know, there’s a possible market for ferries, but that’s not going to really solve the problem for most people. The solution is going to come by relieving the existing congestion and relieving the existing unaffordable housing problem.

Bob Zadek: Charles, I live on a boat, so I support your eyeing the water as a solution. But as Randal points out, there are economic issues that make it not viable. But Charles, my heart is with you on a water solution. Thanks so much for your call.

Caller (Charles): Thank you.

Solving Congestion through Pricing [29:30]

Bob Zadek: Now Randal, we have ventured into the area of congestion as part of this land-use planning, and congestion is one of the reasons why planners try to crowd everybody into cities to get them off the highways. And of course, congestion is not a problem which is caused by government not looking for an automobile-based solution. And you have written a lot about all of the ways in which congestion can be solved while maintaining automobile use. And that gets ignored because automobiles—planners hate the automobile. They hate gas-powered vehicles of any type, they hate automobiles. So rather than relieve congestion and encourage automobile use, they’d rather make it as unpleasant as possible to use a car to force you onto their inadequate mass transit systems. So tell us some of the ways that congestion can be relieved inexpensively and easily without getting rid of the convenience of a car.

Randal O’Toole: Well, roads are a unique resource in that when demand increases, supply decreases. I can’t think of anything else where that’s true. When the demand for travel increases at Thanksgiving and Christmas, the number of seats on an airplane doesn’t decrease. When demand for hotels in Florida increases in the winter, the number of rooms in the hotels don’t decline. But here’s the thing about highways: when freeways are moving traffic at speed, they can move 2,000 vehicles per hour or more down each lane of the freeway. But when they get congested, they can often move less than 1,000 vehicles per hour. And so allowing the roads to become congested effectively reduces the supply of road space by 50% or more. If we can prevent them from becoming congested, we’ve effectively doubled the amount of road space during rush hour. That means more people can get to where they want to go.

How do you do that? Well, if a lane can move 2,000 vehicles an hour, we need some mechanism to make sure that there’s never going to be any demand above 2,000 vehicles an hour. It might be for only five minutes a day that 2,100 cars want to use that freeway lane, but because of that five minutes, it becomes congested and then for the next five hours, you’ve got bumper-to-bumper traffic. So the solution is pricing. The same thing we do for hotels and airlines is we price them higher during the congested periods, we price them lower during other periods to try to smooth that out.

Bob Zadek: The same thing that Uber does with its taxi cabs.

Randal O’Toole: That’s right, that’s right. So the way to have road pricing now is through these toll gantries where they have electronic tolls and they charge more during busy periods and that’s a start. But mostly we pay for our roads with gas taxes, and that’s not working very well anymore. Cars are getting more fuel-efficient, inflation eats away much of the taxes because it’s a tax per gallon rather than a tax per dollar. And there’s a lot of other problems with gas taxes, but most important, gas taxes don’t fix congestion. My home state of Oregon was the first state in the country to have a gas tax, and now the state of Oregon is talking about replacing the gas tax with mileage-based user fees. In other words, you pay for the miles you drive, not the amount of gallons you burn. And you can pay more if you drive during congested periods of the day, you pay different amounts depending on which road you drive on. And Oregon has an experiment with a mileage-based user fee, and I was one of the first volunteers to be a part of the experiment. So when I drive in Oregon, I pay by the mile, not by the gallon. California needs to think about that, and they can use that mileage-based user fee to pay for roads and also to limit congestion. We can double the amount of traffic during rush hour if we can eliminate that congestion.

Bob Zadek: And of course, the privacy advocates are a little concerned about putting these transponders in your car for fear that government will use that to learn what your routine is every day and whether you stop off at the tavern on the way home and don’t tell anybody. That’s the fear of the privacy advocates, and there simply is to be a trade-off. That can be done with technology, but that’s the fear of technology advocates about having mileage-based pricing because government will learn more information about you. But that can be overcome, of course.

Randal O’Toole: There are several technical ways to protect people’s privacy without destroying the mileage-based user fee system. And the simplest way is the transponder gets a signal for where you are using GPS, and then it ticks off how many miles you’ve driven, but it doesn’t tick off, doesn’t record on the transponder where you drove or when you drove there. It just ticks off the number of miles, and so it adds up, “Okay, one and a half cents a mile or a penny a mile or whatever,” and then at the end of the month, it’ll say, “Okay, you owe this amount of money,” but it doesn’t record where you’ve been or when you went there, and so there’s no data for the government or anyone else to access to use against you.

Rent Control and Inclusionary Zoning [32:30]

Bob Zadek: Now Randal, we have only five minutes left, and we cannot leave the topic of how government adversely affects the market for housing with bad policies without discussing the 800-pound gorilla, which is rent control. Now, rent control obviously is as profound an interference in the market as one can possibly imagine. And rent control simply creates a lottery, so that it’s unrelated to income, it just protects mostly the middle class and allows the middle class to live in housing they could otherwise not afford. So tell us how rent control affects the cost of housing and the quantity of available housing.

Randal O’Toole: Well, rent control is another way of taking away property rights. It says, “Okay, you own a house or you own an apartment, but you don’t own the rights to price that apartment, and so the renters own that price and you’ve lost property rights.” So if you are a builder, you’re just going to say, “Well, I’m not going to build any apartments. I’m only going to build condos and single-family homes because there’s no market, nobody wants to be a landlord when they lose the right to price the apartment.” And it’s no coincidence that the cities in America that have rent control also have some of the most unaffordable housing. They don’t have rent control because housing was unaffordable; they have unaffordable housing because of rent control.

Bob Zadek: And what happens is people who live in rent-controlled apartments, like a retired couple living in a seven-room apartment, will stay there because they can’t afford to leave, thereby having all of this unused space that a family of four could enjoy. Instead, you have a retired couple who simply would have to replace it with much more expensive housing, so they stay there. So it causes a great disuse in how housing is enjoyed.

Randal O’Toole: And there’s another policy that’s equally bad. It’s called inclusionary zoning or mandatory affordable housing requirements, where builders—any builder who builds more than so many units of so many homes a year—has to sell or rent a certain percentage, usually 15 to 20%, of those homes at below market, often below cost, to as affordable housing. Well, of course, that means the builders first of all are going to build less because they can’t afford it, and second of all, the ones that they do build, they’re going to sell for more, they’re going to rent for more to make up for their losses on the ones that they’re required by law to sell at affordable rates. So inclusionary zoning allows a lucky few people to have affordable housing, and everybody else has to pay more. And it’s the same thing with rent control, where there’s a few winners and a lot of losers, and the winners, of course, lobby to make sure they stay—they keep their gains, and the losers don’t even realize what’s happening, you know, the frog in the boiling water kind of thing.

Conclusion: Government-Made High Rents [34:50]

Bob Zadek: It’s a pretty grotesque analogy, but we can live with that. In the closing seconds of our show, I should just point out that inclusionary zoning creates in numbers so few units of affordable housing, it’s virtually a lottery. We have the Powerball at $1 billion. It creates a lottery where a lucky few people get to pick the winning number and live in cheap housing. So it provides no structural or institutional solution; it just creates a lucky few who get to live in housing they can’t otherwise afford. So it is an abominably bad policy because it just creates a random lottery for winners and losers.

Randal O’Toole: Well, I just want to say that I’ve written a lot about this, and I’ve written a book called American Nightmare: How Government Undermines the Affordability of Housing, and I hope people take a look at that. And I’ve written a lot of papers that are available on the cato.org website. I have a blog called The Antiplanner; just Google “antiplanner” and I’m the first thing on the list, and you can read all about these issues almost every day.

Bob Zadek: So what we have learned this morning is the question that Randal posed in his blog at Cato at Liberty, “Why rent is too damn high?” The answer is because government made rent too damn high so that government can accomplish other questionable, I should add, social, environmental, or economic goals at the expense of the population who never got to vote on those goals but gets to pick up the tab. So government gets to do—take measures that make them collectively feel good and have them give the appearance of “doing something,” but at the clear expense of compromising our property rights, increasing housing values, and we never get to vote on it. Randal, thank you so much for your insights this morning. Thank you for the answer to your question, “Why is the rent too damn high?” and thanks a lot for all of your work at Cato and thanks so much for cato.org for being there and supplying these solutions to us. This is Bob Zadek saying so long for now, and thank you again to Randal O’Toole at Cato. I’ll be back next Sunday. Thanks so much for listening. Have a good rest of the weekend.

Show prep notes

Bob’s own preparation for this episode.

Randal O’Toole on Rising Rents

Blurb:

The Cato Institute’s Randal O’Toole (aka the @antiplanner) returns to the show to discuss the epidemic of rising rents in metropolitan areas across America. As usual, planners at the federal, regional, and local levels have a policy solution in search of a problem (and are creating new problems in the process). They cite the lack of affordable urban housing near public transit as justification for “growth management,” but their plans end up discouraging developers from increasing the supply of the most-needed kinds of housing. Basic economics predicts the devastating endgame for the lower and middle classes: The rent is too damn high. One solution, on which even partisans can agree, is land deregulation. Yet top-down urban transformations like Plan Bay Area, for example, continue to rule the day. While O’Toole grants that some planning and regulation is necessary to minimize the negative externalities of large numbers living in urban regions, he argues that “urban planning itself has become the externality.” Tune in for the show of ideas, not attitude – on Talk910.com or 910AM in the SF Bay Area.

Bio

Randal O’Toole is…

• A Cato Institute Senior Fellow working on urban growth, public land, and transportation issues.

• A Senior economist with the Thoreau Institute

• Author of, The Vanishing Automobile and Other Urban Myths, (2001), and The Best-Laid Plans, which calls for repealing federal, state, and local planning laws

• Writes for Regulation magazine as well as op-eds and articles for numerous other national journals and newspapers.

Read more: at Cato.org, or at The Thoreau Institute (TI.org)

Main Article

Even the potential of future rent control, combined with regulatory uncertainty, serves as a deterrent to development, which means less supply and higher costs for everyone.

The current approach involves mandating subsidized housing, or doing inclusionary zoning, which is a top-down solution that makes the ROI on development much more uncertain. The bottom-up approach would be to deregulate urban regions and allow for developers to increase supply and lower costs.

“So why is so much emphasis placed on a policy that won’t work while a policy of deregulating land markets is ignored? The answer is that long-standing federal subsidies to housing have created an affordable-housing-industrial complex that thrives on subsidies in unaffordable housing markets and whose reason for existence would be severely diminished if those markets were deregulated.”

“They use taxpayer dollars lobby to continue their tinkering at the edges of affordability while they and the people who listen to them do nothing about the overall affordability problem in regions with strict land-use regulation and rent control.”

The Rent Really Is Too Damn High - The Atlantic, by Megan McArdle

Points out that rising rents are a much bigger issue than most of the ‘big issues’ that have dominated the political landscape. This issue should also have the largest bipartisan support, since it primarily benefits the lower class via deregulation.

“…astronomical rents are a result of specific regulatory decisions, not an inevitable malady of urban life.”

Ignoring the Law of Supply and Demand | Cato @ Liberty

“Despite [the fact that boomers want spacious homes], regional planning agencies all over the country are writing plans that presume America will need no more single-family homes, especially on large lots, and instead will need lots of apartments, condos, or townhouses. Many of these plans effectively zone away the possibility of new single-family homes on large lots while they subsidize construction of high-density housing. For example, the San Francisco Metropolitan Transportation Commission’s Plan Bay Area mandates that 80 percent of all new housing be in high-density urban centers.

To justify these plans, the planning agencies often hire Arthur C. Nelson, the University of Utah urban planning professor who in 2006 predicted that the U.S. will soon have 22 million surplus single-family homes on large lots. Nelson wrote a 2011 report predicting that the Bay Area, which has one of the most acute housing shortages in America today, would have a surplus of nearly 572,000 single-family homes by 2040; Plan Bay Area relied heavily on this report to justify its strict land-use policies.

Will Obama Make Housing Affordable? | Cato @ Liberty - 11/23/15

“The chair of President Obama’s Council of Economic Advisors, Jason Furman, gave a speech blaming housing affordability problems on zoning and land-use regulation.”

But zoning and regulation are not the whole problem. The top-down planners are mandating that multi-family homes be built in suburbs, where single family homes are in much greater demand:

“Based on this erroneous assumption, Furman endorses what he calls the administration’s agenda, which is its Affirmatively Furthering Fair Housing program. Rather than making housing more affordable, this program is aimed at ending racial segregation of middle-class suburbs by requiring the construction of multifamily housing in suburbs that are not racially balanced relative to their urban areas. It assumes that multifamily housing is less costly (and thus more affordable to low-income minorities) than single family, but that is only true because units are smaller: on a dollar-per-square-foot basis, multifamily costs more than single family, especially for mid-rise and high-rise apartments. Multifamily also uses more energy per square foot than single family, which means heating bills will be higher.”

“Personally, I would be willing to give up all city zoning restricting density and mixed-use development provided we also give up all zoning and land-use regulation outside of city limits. This will allow developers to meet whatever demand there is for high-density housing as well as for traditional suburbs. Neighborhoods could continue to protect themselves from unwanted intrusions and nuisances using deed restrictions, as is done in much of Houston, one of the nation’s most affordable cities and urban areas.”

O’Toole blames Growth Management planning, like Plan Bay Area.

The Most Racist Urban Area in America? | Cato @ Liberty (July, 2015)

“In one form of disparate impact analyses, HUD compares the racial makeup of a city or suburb with the makeup of the urban area as a whole. If the city doesn’t have enough minorities, it is presumed guilty and must take steps to attract more. Under the Affirmatively Furthering Fair Housing rule, that could mean subsidizing low-income housing or rezoning land for high-density housing.

…

The real problem with housing affordability is not at the community level but at the regional level. In a region that has few land-use restrictions, a community that has attracted wealthy people is not going to have much of an effect on the affordability of the region as a whole because builders can always construct more affordable housing elsewhere. The problem is in regions with urban-growth boundaries and other restrictions that limit the construction of affordable housing over the entire region.

…

Based on this, the most racist major (more than a million people) urban area in America is San Francisco-Oakland. Though that region’s population grew by 285,000 people between 2000 and 2010, or 9.5 percent, the region’s black population actually shrank by nearly 49,000, or 14.2 percent, for a difference in growth rates of minus 23.7 percent.

That decline was entirely due to strict land-use policies that prevent development outside of the 17 percent of the region that has already been urbanized, making the Bay Area one of the least affordable housing markets in the nation. Moreover, a recent plan to improve affordability by following HUD’s prescription of building more high-density housing was found to actually reduce affordability.

California cities with rent control:

Berkeley

Beverly Hills

East Palo Alto

Hayward

Los Angeles

Los Gatos

Oakland

Oakland residents plead for action to address housing crisis - San Jose Mercury News

Palm Springs

San Francisco

Community Meeting on New SF Mission Housing Turns Ugly

People object to new developments on grounds that not enough units will be affordable housing. The end result is that nothing gets built and everyone’s rent stays high.

San Jose

Santa Monica

West Hollywood

General notes:

Remind people to subscribe to the iTunes or Stitcher (new) feeds. Links to subscribe on the sidebar at BobZadek.com. They can also leave feedback in iTunes.

Phone number:

Randal O’Toole is…

• A Cato Institute Senior Fellow working on urban growth, public land, and transportation issues.

• Author of, The Vanishing Automobile and Other Urban Myths, (2001), and The Best-Laid Plans, which calls for repealing federal, state, and local planning laws

• Author of numerous Cato papers. He has also written for Regulation magazine as well as op-eds and articles for numerous other national journals and newspapers.

• An Oregon native, O’Toole was educated in forestry at Oregon State University and in economics at the University of Oregon.

People can read more of his work at Cato.org, or at ti.org (Thoreau Institute).

Featured article:

Who is Transit For? [Cato blog, July 24, 2014]

Public transit is expensive to build, expensive to maintain, and very expensive to staff:

“Transit has become nothing more than a source of political favors to unions, downtown property owners, and rail contractors.”

Subsidies are not delivering value, and are applied unequally:

“I’ve noted before that urban planning professor David King worries that transit is “not living up to its social contract” of providing “the social benefits of mobility for non-drivers.” This view is affirmed by my friend Wendell Cox in New Geography, not to mention this graph comparing subsidies to different Bay Area transit systems and the race of the patrons of each of those systems.”

“Unfortunately, the census tables don’t show vehicle ownership by income, but even to the extent that some low-income households lack cars, it would cost a lot less to give each one a car than to continue subsidizing transit at the rate we do.”

Subsidies are actually slanted toward the relatively affluent white riders of Caltrain versus minority riders of BART and AC Transit.

The Collapse of Private Transit and Rise of Public Transit

“Showing the Flag: The Transit Policy Failure” [CityLab.com, June 26, 2014]

“Today most mass transit systems are publicly provided and subsidized. That wasn’t always the case. Decades ago, transit systems were largely run by private interests. Due to many market and regulatory factors — but not a vast conspiracy by automakers — private transit collapsed in the United States, and by the early 1970s nearly all mass transit was publicly owned and operated.”

Aims of publicly-owned transit were environmental and social (reducing congestion, aiding non-drivers and assisting the poor). As the above article and much of O’Toole’s work points out, most government subsidized transit fails to achieve even it’s stated aims.

Planning increases poverty:

Plan Bay Area: ‘Smart growth’ and ‘sustainable communities’ hurt the poor (San Jose Mercury News, 11/7/13)

Gentrification: Most permitted building zones greenlight under Plan Bay Area will increase land/housing prices in areas concentrated with mainly minority residents.

Planning Bad for Environment or Minimally Beneficial:

Plan Bay Area sued by Sierra Club, other environmental groups (San Francisco Business Journal, 8/23/13)

While the Sierra Club is arguing for more transit, the article also mentions the Pacific Legal Foundation’s lawsuit:

This lawsuit is the third such suit against Plan Bay Area since it was approved last July. A libertarian group, the Pacific Legal Foundation, sued claiming the plan violates the California Environmental Quality Act by failing to “justify the plan’s high-density development scheme, and refusing to consider the feasibility of a less-restrictive alternative.”

Plan Bay Area centers Housing around Transit – particularly rail hubs:

Ostensibly the plan is for a reduction of greenhouse gases – so-called “sustainability planning”. However, worse than failing to achieve its stated aims, the plan for transit in the Bay Area reduces the power of property owners to do as they please with their land and forces people into “transit villages” that fit the planners’ preferences rather than the actual residents.

Plan Bay Area is the product of two regional agencies:

1. The Metropolitan Transportation Commission (MTC), the regional transportation funding agency for the Bay Area and the agency that historically produced the RTP.

2. The Association of Bay Area Governments (ABAG), the council of governments responsible for growth projections and housing allocations and the agency responsible for RHNA.

Reducing Livability: How Sustainability Planning Threatens the American Dream

(Cato Paper, October 23, 2013)

“In general, this means increasing urban population densities and in particular replacing low-density neighborhoods in transit corridors with dense, mixed-use developments. Such planning tramples on property rights and personal preferences. To increase urban area densities, planners use containment policies such as urban-growth boundaries or greenbelts.

Owners of land outside these boundaries are restricted from developing their land. Inside the boundaries, housing prices rise, making homeownership in general, and single-family homes in particular, unaffordable to large numbers of people.

…

Plan Bay Area, a plan recently approved for the nine-county San Francisco–Oakland–San Jose metropolitan area, proposes to spend $14 billion in subsidies for high density housing and $5 billion in subsidies for rail transit. Yet the combined effect of these subsidies will be to reduce the region’s greenhouse gas emissions by less than 2 percent, at a cost of nearly $1,200 per ton of abated emissions. By contrast, a separate “climate initiative” program for the region includes projects such as car sharing, van pooling, and incentives for people to buy more fuel-efficient cars. It is expected to reduce the region’s emissions by nearly 3 percent, at a cost of just $22 per ton of abated emissions. Planners are undiscouraged by the wastefulness of their density-and-transit programs.”

Comments on Plan Bay Area by Randal O’Toole, Cato Institute

• Planners “project greater demand” for the kind of houses they want – namely dense apartment buildings along transit lines, rather than single-family homes in the suburbs – and then base their plan on that assumption.

• Bay Area has a history of failed plans since the 1960s-70s, when it started implementing urban-growth boundaries, outside which development was restricted, resulting in home prices to skyrocket relative to median incomes

• Funding began to be shifted from buses to BART, resulting a decrease in total ridership of public transit. (Note: O’Toole is not opposed to all public transit — He authored a Cato paper titled, “Rapid Bus: A Low-Cost, High-Capacity Transit System for Major Urban Areas”)

• Plan Bay Area continues failures of the past, by shifting more resources toward rail and making urban growth boundaries even more strict.

O’Toole participated in a “Great Debate” in May to debate the effects of Plan Bay Area on Marin County [VIDEO]

He also spoke back in 2006 to a group that opposed the Sonoma-Marin Area Rapid Transit Line (aka SMART)

Audio

[:20 - 1:05] - Man at Townhall meeting calling out planners for presumption that people of a certain races prefer a certain form of housing

General notes:

Remind people to subscribe to iTunes at BobZadek.com, and leave a review so others can discover the ideas of liberty. Shirts available for sale featuring ideas, not attitude logo.

O’Toole Phone number:

Blurb:

With tensions mounting between armed ranchers and the Bureau of Land Management in Oregon this week, most media outlets have lined up on one side or the other – reporting only the facts that support their narrative. The Cato Institute’s Randal O’Toole (@antiplanner) warns against any black and white portrayal, writing that there are “no good guys in the west.” It’s all too easy to make this a story of patriots vs. tyrants (or conversely, public servants vs. fundamentalist terrorists), but there is more important debate in the underlying issues of land management. The ranchers may have a stump to stand on, with the Constitution’s prohibition on federal land ownership, but they are out on a limb when it comes to established precedent. Amid all the confusion and noise, you will find safe haven in Bob and Randal’s analysis of the root problem: the conflicting mandates of a bureau that should be operated more like a business. Let’s talk land management solutions, this Sunday on the show of ideas, not attitude.

BIO:

Randal O’Toole is…

• A Cato Institute Senior Fellow working on urban growth, public land, and transportation issues.

• A Senior economist with the Thoreau Institute

• An Oregon native, O’Toole was educated in forestry at Oregon State University and in economics at the University of Oregon.

• Author of, The Vanishing Automobile and Other Urban Myths, (2001), and The Best-Laid Plans, which calls for repealing federal, state, and local planning laws

• Writes for Regulation magazine as well as op-eds and articles for numerous other national journals and newspapers.

Read more: at Cato.org, or at The Thoreau Institute (TI.org)

Broad Strokes and Conflicts:

“[The Hammonds] shouldn’t have lit the 2006 fire without coordinating with [the BLM]. [The federal government] shouldn’t have prosecuted them for prescribed burning using an anti-terrorist law. [The Bundys] shouldn’t have occupied the Fish & Wildlife Service office.”

The government moves next.

The dispute can be seen as a kind of Shakespearean tale of rivalry, loyalty, which helps explain the life or death stakes.

Environmental concerns and BLM mandates conflict with the livelihoods of ranchers who have been sustaining their way of life this way. They are given a set of rules that make it impossible to operate their businesses. Many of the BLM workers themselves are displaced ranchers and lumberers who lost their jobs from poor management and ambiguous mandates of BLM. Ranchers are in a sense the victims of a government policy, supported by the majority of urban dwellers on the West Coast who think BLM stands for environmentalism.

However, there is plenty of blame to go around, allowing both sides to charge the other with reckless abandon.

Oregon ranchers’ fight with feds sparks militias’ interest | OregonLive.com

Oregon newspapers are very supportive of the Hammonds.

No one seems very supportive of the Bundys. This “TweetStorm” by Ryan Cooper captures much of the spirit of the civil libertarian intellectual sphere:

Bundy d*bags aside, the sentencing of the Hammond guys is completely insane

nice to know federal prosecutors spent tons of money in court to get a 73-year-old rancher put *back* in prison for 4 years. excellent work

also a nice contrast with the Bundy clan, still unpunished for millions in unpaid grazing fees & pointing guns at federal officers

Timeline of events:

Eastern Oregon Ranchers Convicted of Arson Resentenced to Five Years in Prison | USAO-OR | Department of Justice

2001 - Hardie-Hammond Fire - Hammonds set a fire, for which they are charged with arson. It might have been good management practice, and they informed BLM of the fire, but were in violation of certain rules, and may have lied about where the fires were started..

2006 - *Krumbo Butte Fire - “*The second fire, which was aimed at protecting the Hammonds’ winter feed from a wildfire sparked by lightning, burned about an acre of public land. Although the Hammonds did not seek the required government permission for either burn, the damage to federal land seems to have been unintentional.” They didn’t inform the BLM and endangered firefighters lives.

2012 - Dwight Lincoln Hammond, Jr., 73, and his son, Steven Dwight Hammond, 46, both residents of Diamond, Oregon in Harney County, are sentenced to five years in prison by Chief U.S. District Judge Ann Aiken for arsons they committed on federal lands.

2012-2013 - The Hammonds serve one year in prison.

2014 - Cliven Bundy standoff

March 2015 - The Supreme Court rejects the Hammonds’ petitions for certiorari.

October 7, 2015 - Chief Judge Aiken imposed five year prison terms on each of the Hammonds, with credit for time they already served, demanding they report back to prison on January 4.

January 2, 2016 - Cliven Bundy’s relative Ammon Bundy brings an armed militia out (Militia occupation of the Malheur National Wildlife Refuge - “Although their sentences and imprisonment were a stated cause of the dispute, the Hammonds have repeatedly rejected the intervention of militias. Dwight Hammond’s wife stated, “I don’t really know the purpose of the guys who are out there.”)

January, 4, 2016 - The Hammonds report to Federal prison to serve remaining four years.

Primary article: No Good Guys in the West | Cato @ Liberty

“The Hammonds shouldn’t have lit the 2006 fire without coordinating with the BLM. The federal government shouldn’t have prosecuted them for prescribed burning using an anti-terrorist law. The Bundys shouldn’t have occupied the Fish & Wildlife Service office.”

Two issues:

1. Mandatory minimums:

“It is always disturbing when the federal government uses laws aimed at foreign terrorists to oppress citizens who have political differences of opinion with government policy. The Hammonds, who have paid $400,000 in fine related to the fires they lit, probably should not have been re-sentenced to four more years in prison, but that’s a problem with mandatory sentencing laws and overly aggressive prosecutors, not federal land management.”

Reason.org takes up the issue of mandatory minimums:

“In rejecting Hogan’s conclusion that the mandatory minimum was unconstitutional as applied to the Hammonds, the 9th Circuit noted that the Supreme Court “has upheld far tougher sentences for less serious or, at the very least, comparable offenses.” The examples it cited included “a sentence of fifty years to life under California’s three-strikes law for stealing nine videotapes,” “a sentence of twenty-five years to life under California’s three-strikes law for the theft of three golf clubs,” “a forty-year sentence for possession of nine ounces of marijuana with the intent to distribute,” and “a life sentence under Texas’s recidivist statute for obtaining $120.75 by false pretenses.” If those penalties did not qualify as “grossly disproportionate,” the appeals court reasoned, five years for accidentally setting fire to federal land cannot possibly exceed the limits imposed by the Eighth Amendment.

In other words, since even worse miscarriages of justice have passed constitutional muster, this one must be OK too. Given the binding authority of the Supreme Court’s precedents, the 9th Circuit’s legal reasoning is hard to fault. But it highlights the gap between what is legal and what is right, a gap that occasionally inspires judges to commit random acts of fairness.”

2) Constitutionality of Federal Land Ownership

“Section 8 of the Constitution authorizes the federal government to control land in the nation’s capital, but nowhere else. If you believe that any power not granted to the federal government belongs to the states, then the Bundys are correct. However, the federal government has owned land outside the capital since 1790, when Alexander Hamilton convinced the states to yield land west of the Appalachians in exchange for federal assumptions of state debt. A few years later, Thomas Jefferson himself questioned the constitutionality of the Louisiana Purchase even as he persuaded the Senate to approve it.”

However, precedent has always cut in favor of the constitutionality of federal land ownership.

Taken together, these issues give people like the Bundys and the Hammonds a feeling that the government is out to get them. With allegations around the conduct of the IRS and other government agencies, their suspicions are hard to dismiss altogether.

A Conflict of Visions

The Perspective of the Pro-Government Left:

The Oregon militia standoff, explained - Vox

Heavy use of quotes around terms like “patriots” and “tyrants.” It’s clear that they think very little, if at all, about the grievances of the ranchers.

Why did Harry Reid call the Nevada rancher a domestic terrorist? - The 2014 controversy over Nevada rancher Cliven Bundy, explained - Vox

Yes, Harry “went there.” Both sides seem ready to go the brink – one member of the Bundy’s crew commented that they would put women out in front, so that’s who FBI would have to shoot.

Randal O’Toole: Transportation in COVID-19 Era, 4/26

Title: Cato Institute Senior Fellow

Website: Cato.org, or at The Thoreau Institute (TI.org)

BLURB:

The words “never let a good crisis go to waste,” spoken by then-Chicago Mayor Rahm Emmanuel, are seared into many libertarians’ minds as a concise formula of the central planner’s mindset.

We’ve seen massive stimulus rammed through with little deliberation, including fat subsidies for transit agencies. Randal O’Toole, aka “the Antiplanner,” has shown how central transportation planning epitomizes the misguided use of federal funds – diverting resources to expensive, energy-inefficient, underutilized “mass transit.” As if that weren’t bad enough, it’s looking like mass transit is a key vector in the spread of mass disease.

In his April 17 Cato at Liberty post, ‘Why Are Transit Systems Still Running?’, O’Toole observes, “I don’t think it is a coincidence that 44 percent of all transit rides in 2019 took place in the New York‐​northern New Jersey urban area and, at last count, 45 percent of all COVID-19 fatalities were recorded in this same area.”

So why is the disease vector known as mass transit running while many other industries have been deemed “non-essential”? Once again, the contradictions in the government’s response are revealing what most of us already knew – that science always takes a back seat to special interests.

Randal “Antiplanner” O’Toole returns to the show this Sunday to step back from the emotional arguments surrounding COVID-19 and discuss whether it’s time to re-assess the role of public transportation in American life. His brand-new report identifies transit as an “urban parasite,” sucking up more and more resources despite declining ridership, and a growing maintenance backlog. The report shows the growing irrelevance of transit to most Americans’ lives everywhere except NYC, where it is proving relevant but deadly.

As transit systems begin to hemorrhage in the wake of even further reduced ridership from fears of contagion, the taxpayer will have to bear more of the burden. Randal suggests privatizing transportation and letting the services stand on their own two legs. While this may seem radical, many have noted how the Coronavirus shutdown has expanded the “Overton Window” - making previously impossible reforms more likely.

Perhaps Rahm was right, and we libertarians shouldn’t let a good crisis go to waste either.

BIO: Randal O’Toole | Cato Institute

Randal O’Toole is…

• A Cato Institute Senior Fellow working on urban growth, public land, and transportation issues.

• A Senior economist with the Thoreau Institute

• An Oregon native, O’Toole was educated in forestry at Oregon State University and in economics at the University of Oregon.

• Author of, The Vanishing Automobile and Other Urban Myths, (2001), and The Best-Laid Plans (2006), which calls for repealing federal, state, and local planning laws, and Romance of the Rails (October 2018)

• Writes for Regulation magazine as well as op-eds and articles for numerous other national journals and newspapers.

• Lives in Central Oregon

The @AntiPlanner on Twitter

Randal O’Toole’s blog post, “New York MTA Forbade Employees from Protecting Themselves by Wearing Masks,” is cited on The Armstrong & Getty Show | Cato Institute

A few months ago, government was giving backwards advice “don’t wear masks!” Today, masks are mandatory and we are being punished for going outside. They couldn’t be trusted then, but we are to expect that NOW they have their act in order.

Why Are Transit Systems Still Running? | Cato @ Liberty

2018 paper from a Finnish Symposium on bio-threats, Abstract:

Transportation plays an important role in the spread of infectious diseases. The continuously increasing global air travel facilitates the quick and sometimes uncontrollable spread of naturally or intentionally released person-to-person transmissible pathogens around the world, while mass transportation systems offer an effective way of accelerating the spread of infectious diseases within communities. PANDHUB - Prevention and Management of High Threat Pathogen Incidents in Transport Hubs - is a European Union-funded project whose goal is to aid transport operators and relevant actors in transport hubs in the development of their current pandemic and dangerous pathogen preparedness and response plans. The project is intended to cover the extraordinary aspects specific to pathogen threats in the transport hub environment. In order to balance the needs of both transport hub business continuity and health protection in the face of a serious public health threat in a transport hub, it is vital that hub operators and public health authorities together work together to develop operational preparedness and response plans.

People who use transit are more likely to have respiratory diseases.

Not surprisingly, a study published a few days ago found that New York City subways were “a major disseminator — if not the principal transmission vehicle — of coronavirus infection.”

…

I don’t think it is a coincidence that 44 percent of all transit rides in 2019 took place in the New York‐​northern New Jersey urban area and, at last count, 45 percent of all COVID-19 fatalities were recorded in this same area.

O’Toole debunks the idea that Transit is cost or energy effective, and notes that it mainly serves the relatively well off.

When the pandemic took away most of transit’s customers, instead of shutting down, which would have been the responsible thing to do, transit agencies demanded that Congress give them $25 billion, tripling federal support to transit this year. Thanks to transit’s sacred cow status, Congress agreed without any serious debate.

“Restaurants, bars, shopping malls, amusement parks, and barber shops are all supposed to shut down, but let’s keep transit running even though one study has found that “mass transportation systems offer an effective way of accelerating the spread of infectious diseases within communities.”

…

Why? For “medical staff, first responders and other essential workers.” So we’re encouraging health care and other “essential” people to use the form of transportation whose riders are nearly six times more likely to suffer from upper respiratory infections. That’s smart!

Accelerating Spread of COVID-19 Earns $25 Billion April 3

Pure and simple: a bailout for transit and their employees.

Resilient Transportation in a World of Black Swans | Cato @ Liberty This article appeared on the Orange County Register on April 1, 2020.

People in New Orleans couldn’t evacuate because of dependency on transit over automobiles. Other regions with natural disasters and higher rates of automobile ownership effectively evacuate everyone.

COVID-19 Is No Excuse to Bail out Urban Transit | Cato Institute

Focus on transit as special interest group. Agencies hire too few people and pay gross amounts of overtime.

“At the same time, the highest paid city employee in Madison, Wisconsin was a bus driver.”

Cities are adding new lines when existing lines are decaying.

People are safer travelling in their own vehicles.

The reality is that there’s not much room for transit in a world of social distancing. We saw the same problem with natural disasters, which are another reason to encourage autos over transit. When Hurricane Katrina hit, New Orleans had the second‐​lowest rate of auto ownership of any major city in the country. Those with cars got out; those who relied on transit did not. When Hurricane Rita hit a few weeks later, Houston, with one the nation’s highest rates of auto ownership, saw four million people successfully evacuate.

REPORT: Transit: The Urban Parasite | Cato Institute, April 20

Choice quotes:

“A recent Department of Transportation report indicated that the transit industry has a $100 billion maintenance backlog, mostly for its rail lines, and expenditures will have to increase by at least another $6 billion a year to fix this backlog within 20 years.

…

Instead of helping low‐​income people, transit’s major growth market is people who earn more than $75,000 a year.

…

Preliminary data from the FTA also indicate that 2019 will be the fifth straight year of declining transit ridership, with ridership falling 7.8 percent since 2014 and, in many urban areas, falling by 20 to 30 percent.

…

In short, the relationship between transit and most urban areas is not a symbiotic one but a parasitic one. Like any parasite, transit saps the vitality of the entities it is parasitizing, in this case by demanding huge subsidies from taxpayers.”

Bad for the environment:

“Among the nation’s 100 largest urban areas, transit is more energy efficient than cars only in New York, San Francisco–Oakland, and Honolulu, and more energy efficient than light trucks in those regions, plus Atlanta and Portland. Counting all 488 urban areas, transit is more energy efficient than the average car in just 4 of them…”

Unreliable: failures of maintenance and frequent delays discourage riders

Ride-hailing apps like Uber and Lyft have also accelerated the decline.

Fewer downtown jobs make the hub and spoke system less relevant.

Low income people are less reliant - more have cars.