Say what you want about the Trump administration, but it has done a solid job when it comes to deregulation.
When we cut through the media sensationalism and Trump’s unconventional antics, we see one of the boldest attempts in the past few decades to scale back the administrative state. Trump’s Executive Order 13771, which eliminated two existing regulations for every new singular regulation passed, helped give businesses of all sizes more breathing room.
Homelessness has become a major problem in the last few years. It is especially pronounced in California, where, according to estimates from the United States Interagency Council on Homelessness, there are nearly 130,000 homeless on the streets. After increased press coverage on homelessness, several elected officials, such as California Governor Gavin Newsom, took action by writing President Trump a letter urging him to acknowledge that homelessness is a “national crisis decades in the making that demands action at every level of government.”
The California officials then wrote, “Mr. President – shelter solves sleep, but only housing solves homelessness.” Housing and Urban Development (HUD) Secretary Ben Carson responded to Newsom with a rejection of his main premise about America’s homeless problem.
In a reply to the letter in September, Carson said, “California cannot spend its way out of this problem using Federal funds…More vouchers are clearly not the solution the State needs. To address this crisis, California must reduce its regulatory burdens on housing.”
Carson is on the mark here. California’s homeless problem is the product of its restrictive housing policies. The Left Coast is notorious for its zoning policies which restrict the housing supply. Cato’s Freedom in the 50 States index offers a great overview of which states have the most economic freedom in various categories.
Particularly relevant for this discussion is housing policy. According to this ranking, California is 47th in terms of its land-use regulations. This is in stark contrast to Texas, which is ranked 10th, and has no housing affordability issues or a pronounced homeless problem like California does.
When taking into account housing policy, one realizes that California’s housing situation is not a random occurrence. The state is already known for having one of the most expensive housing markets in the nation, which can largely be attributed to housing policies that restrict the supply of housing.
At the end of the day, it’s basic economics, something that California has a reputation for ignoring. The state is already known for its oppressive tax system and monopolized utilities. Restrictive housing is just the icing on the cake for a state that simply has too much government involvement in the economy.
Carson is correct in calling attention to the fact that a government response would not be the antidote to California’s housing problems. The Golden State will have to embrace some form of land-use deregulation if it really wants to get to the bottom of its homeless problem. It is the state, not the market, which makes housing more expensive, pricing out the most humble citizens who are then forced to live out in the streets.