The American economy is defying the pessimists.
One economic model had put the odds of a recession in 2023 at one hundred percent—not 90 percent, or 99 percent, but 100 percent. Throughout last year, professional forecasters were gloomy across the board:
In a survey by the Philadelphia Fed that has been conducted since the late 1960s, the number of economists anticipating an imminent recession hit an all-time high [in 2022], meaning the level of expert pessimism was greater than before the stagflation crisis of the 1970s, the brutal recession of the early 1980s, and the Great Recession of 2008.
But none of this happened. Inflation is falling. The threatened recession never materialized. Unemployment is at a generational low. Real wages are rising. Inequality is decreasing. The stock market has returned to all-time highs. By almost any measure, the U.S. economy is doing very well.
However, one indicator still stands out as a glaring problem. The U.S. has the worst homelessness ever:
Homelessness in America spiked last year, reaching a record high, according to an annual count that provides a snapshot of one night in January. The report… found more than 650,000 people were living in shelters or outside in tents or cars. That’s up a whopping 12% from the year before.
“Homelessness in the U.S. hit a record high last year as pandemic aid ran out.” Jennifer Ludden, NPR, 15 December 2023.
Why we have a housing shortage
Like many developed countries, the US is suffering from a massive housing shortage. The lack of supply pushes prices into the stratosphere for the few units that exist. Many of the people “lucky” enough to get a place are rent-burdened or house-poor, spending unsustainable percentages of their income on housing. When they’re so close to the edge, a job loss or other setback can tip them into homelessness. Meanwhile, people on the lowest rung of the ladder get priced out entirely.
Here’s where I go against progressive orthodoxy: rent control isn’t the solution. Rent control and similar ideas, like property tax caps, are great for existing residents, who never have to worry about being priced out of their homes. But that doesn’t help people who want to move somewhere and can’t afford to. To accommodate them, what America needs is more housing. Why don’t we build it?
Part of the problem is the ultra-wealthy buying up property as investments, rather than to live there. But here’s an unpopular truth: At least as much of the responsibility can be laid at the feet of NIMBYs.
NIMBYs—short for “not in my backyard”—are the privileged people who fight any new development, especially dense development like apartment blocks. They cite arguments like the “character” of the neighborhood, or noise, or traffic. But whatever the reasoning, it works out to the same thing: don’t build more housing where people want to live.
READ: The Fountainhead: NIMBY & BANANA
The NIMBYs’ weapon of choice is zoning regulations which make it almost impossible to build more housing in desirable neighborhoods. Often, new buildings can’t even be the same height as existing buildings. By one estimate, 40% of Manhattan’s existing skyscrapers couldn’t have been built if modern zoning rules had been in place at the time.
NIMBYism is a cross-party problem. White-dominated suburbs use zoning to strangle new development, with the none-too-subtle goal of keeping minorities out. In my diverse, liberal neighborhood in Queens, NIMBY activists loudly protested the construction of a new apartment building… across the street from another apartment building… on the site of an abandoned gas station. (It eventually got built, but only after much commotion.)
New York’s governor Kathy Hochul, a bland centrist Democrat, had one good idea—a comprehensive housing plan that would force communities to permit more building—and she dropped it after opposition from the legislature.
The prisoner’s dilemma of NIMBYism
Homeowners have a financial incentive to be NIMBYs. By blocking new development, they keep supply artificially scarce. This drives up their property values, which guarantees a jackpot payoff when they sell.
However, we pay a collective price for this selfishness. When people can’t afford housing, they don’t just disappear; they end up on the streets. That’s why states and cities across the country are wrestling with homelessness and all the problems that accompany it: squalid tent cities, drug addiction and overdoses, vandalism, littering and petty crime.
The individualist, NIMBY mindset is useless for addressing homelessness. Owners fortify their property with fences and gates. They build hostile architecture that no one can lie down or sleep on. Or they summon the police to harass homeless people and force them to move on down the road.
Of course, none of this solves the problem; it merely pushes it onto someone else. In fact, this is the most expensive way to deal with homelessness. It’s as if a neighborhood tried to solve flooding, not by building storm drains to protect an entire block, but by each homeowner trying to pile up a higher wall of sandbags around their property than their neighbors.
This is the Prisoner’s Dilemma in action. Our selfish choices create a worse outcome for everyone than if we had just agreed to work together. Homelessness is a fixable problem, and not an especially difficult one.
Housing is a human right
Having a roof over your head shouldn’t be a privilege for those who can afford it, but a guarantee extended to every human being. It’s shameful to allow people to suffer when we could easily afford to house them.
On top of that, it makes every other problem worse. People with mental illnesses or drug addiction have little hope of getting better while living on the streets. People without stable housing find it almost impossible to keep a job. Victims of domestic violence often have to face living with their abusers or risk homelessness. Not only would it be compassionate to give a home to everyone who needs one, it would lower the overall costs to society.
I can imagine a housing program along the lines of New York’s BPRA, where private developers get permission to build, and if they can’t fill the gap, then the government steps in to build enough affordable or free public housing for everyone. It can be minimalist, just as long as it’s safe, clean and comfortable. (The stigma of public housing projects only exists because of racist policies that acted to segregate them and then starve them of resources.)
That won’t happen tomorrow. But it’s a good start to reject NIMBY thinking when it rears its head where you live. Instead of the selfish mindset that tries to pull up the drawbridge and keep everyone out, we should be opening our doors to welcome new neighbors.