Anti-Market Activism in San Francisco Housing

Anti-Market Activism in San Francisco Housing

The debate over housing policy cuts to the core of people’s lives. For many families it is their largest expense, and certainly losing one’s home is a disruption that few economic setbacks can match. Thus, the sheer ferocity of housing debates should come as no surprise: generally, on both sides individuals are fighting for their right to belong, to physically fit into, and in many cases the right to exclude others from a space. The construction of new housing also attracts political activism because the process is so deeply enmeshed with the government—almost any new housing unit faces inspections, approvals, and likely hearings, and in most places a multi-family unit of any considerable size will garner additional public comment and votes by local government bodies.

To those with a liberal view of markets, the connection between these two things is easy to make: governments control housing, ergo the ‘market’, such as it exists, is constantly susceptible to interference that reduces its efficiency and reduces the quantities of housing produced. One the other hand, both conservative and leftist commentators are quick to dispute either the efficacy or justice of markets, at least in housing. They argue that only community input, actuated by government control over what gets built, can defend the interests of the community, be that the character of the neighborhood and quality of life of current residents (most often cited by the right), or the availability of affordable housing and stability of existing communities (common concerns on the left). Whatever their ideological differences, these market skeptics have exerted extensive power over local planning decisions, especially in the largest cities. This phenomenon is particularly pronounced in cities where the Democratic party controls most of the political power, so much so that both the Washington Post and New York Times have published articles pointing out the problems of Democrats arguing against wealth inequality while adopted housing policies in Democratic cities that tended to drive out the working class.

Because of his active Twitter usage and position as the furthest-left member of the Board of Supervisors in among the furthest-left cities in the US, San Francisco Supervisor Dean Preston has become something of a symbol of these debates. He recently conducted an interview with the deeply sympathetic Nathan J. Robinson, editor of Current Affairs. Responding to claims by the San Francisco Chronicle  that he blocked considerable new housing in the city, based on his frequent votes against development projects, Preston lays out in considerable depth this strategy and general view on housing markets. He responds to some particular accusations with the argument that his votes were strategic, forcing developers to go ‘back to the drawing board’ and add additional affordable housing. The interview with Robinson gives the impression that all of these negotiations were unmitigated successes—affordable units being built without any cost to the city or additional delays. Preston does not address the largest project in the Chronicle report, the ‘Hub’ project at Van Ness and Market—where Chronicle reporting suggests over a thousand more units could have been constructed if Preston had supported additional rezoning efforts. And predictably, Robinson does not push back on Preston’s narrative at this or any point in the interview.

A worldview

Preston’s precise rationale on each vote, however, is not of primary importance. The impact of any particular vote on the number of housing units ultimately built, and the broader economic impact of delaying housing projects by months in order to negotiate better conditions, would require more insight from the decision makers at development companies and from housing economists studying San Francisco’s market. Preston is only one supervisor, and has held that position for only a short time. More important to understanding what has been happening in San Francisco for decades is his general stance on markets, government, and who ‘belongs’ in the city. In these beliefs, which Preston himself suggests he developed over years of tenant advocacy and non-profit work, he represents a certain sort of socialism in the US today, one which is nationally minor but has had a major impact on the non-profit sector and increasingly in local governance in a few left leaning cities, San Francisco first and foremost.

Core to this worldview is the unshakeable doctrine that needed amenities for workers should come primarily out of business profits. Preston’s rhetoric, with its focus on defiance, refusing to roll over or ‘jump when told’ by developers, suggests an understanding of political economy that believes that governments are too often subservient to capitalists and that they can claw back some of that power at very little real cost. The suggestion that the market could deliver a better outcome for lower income people on its own is considered preposterous (Preston uses the term ‘market’ over a dozen times, always derisively), and those who propose trying to do so can be understood only in terms of corruption and shilling for developers. Preston’s opponents often similarly charge him with impure motives—claiming that as a landlord himself, he in fact strives to keep market rate rents high to benefit himself and his peers. Compared to this accusation, Robinson’s interview depicts Preston in a more sympathetic and more accurate light: he comes from a long tradition of anti-market activism that is broadly rooted in leftist thinking about capitalism but has been particularly influenced by San Francisco history and demographics. The motivation of this tradition is laudable—to protect the city’s vulnerable residents from the ravages of market forces. Sadly, its record is atrocious.

The desire to help low income San Franciscans by having developers pay ‘their fair share’ is understandable, and even admirable. But far from breaking the mold, it continues a trend in California politics of blaming the most apparent actors rather than the most responsible ones. Just as California chooses to place increasing burdens on employers to provide for employees, rather than simply providing benefits itself, Preston’s strategy casts developers in a role more befitting of the state, rather than letting them play the role of developers and collecting whatever taxes are needed for the state to perform its own duties. Providing affordable housing through this Rube Goldberg method—first banning housing of adequate density, and then making exceptions to zoning for firms that will provide some number of affordable houses—carries real costs. In the midst of an enormous jobs boom, San Francisco has permitted far fewer homes per capita than other western cities like Seattle, Portland, or Denver over the last decades. This is despite the vast increase in the number of jobs in the area and demand for the city’s amenities and overall ‘vibe’. Indeed, there has been less than one housing unit produced for every 3 jobs created in the city – and in some years the record was far worse.

The market repercussions are obvious—skyrocketing rents and chronic housing shortages. But it is likely that there are other consequences as well. The city has become notorious for homelessness and is now also a center for drug overdose deaths. Broader population shifts have occurred as well—perhaps most famously, the decline in the Black population. All seem to be directly or indirectly linked to the failure of San Francisco housing policy, and come in sharp contrast to Preston’s claim that his opponents are trying to tear him down because ‘we’re winning’—a statement that presumably refers not just to his recent successes in getting concessions from developers but the decades long history of San Francisco’s left-inspired approach to tenant rights and rent control, a history which Preston is a notable part of and in which he clearly takes great pride, referencing his work as a tenant advocate repeatedly in his interview.

How can Preston make such a claim? Well, he imagines an even worse future. In his interview he argues that “without rent control, there’d be virtually no working-class people living in San Francisco”. This extreme claim has an obvious problem: cities without rent control and with substantial working class populations exist, in this country and elsewhere.

A housing success story

The city of Seattle, perhaps the only one in the country to rival San Francisco in terms of the size of its tech boom, has long been prohibited, like all Washington cities, from enforcing rent control. It has, however, also been one of the leaders in building new housing. The Emerald City has also undergone what activists would decry as gentrification, with higher income, better educated residents moving in all the time. However, a closer look at the makeup of Seattle’s population reveals a very different story than San Francisco. Seattle, which has historically had a smaller Black population than San Francisco, has actually seen a modest growth in the absolute number of Black residents, matching San Francisco in 2010 and surpassing it in recent estimates. Another census category, educational attainment, is often used as a proxy for ‘working class’ status in studies of gentrification. In 2000, 53% of Seattle’s population had no college degree, while in 2020 the number had fallen to 37%—but given that the city also added nearly 200,000 residents in that time, the absolute number of people without a college degree, measured by the American Community Survey, has actually grown since 2010, while it has experienced a modest decline in San Francisco. 

If the concern with gentrification is more than aesthetic or purely conservative, a city that makes enough room to accommodate newcomers without displacing long-time residents should be seen as the success. There is no doubt that Seattle could do better to protect working class neighborhoods—but the strategy of allowing extensive building has allowed it to weather a much larger influx than San Francisco without losing its Black or high school educated communities to the same extent Preston’s city has.

Taking Preston seriously

Admittedly San Francisco faces some unique challenges. Its density is already much higher than other western cities, though still much lower than New York city and somewhat lower than some outlying areas like Hoboken, New Jersey. And California’s property tax system limits the extent to which the City-County of San Francisco can collect property taxes from rising land values. Both issues may require somewhat unique solutions—but there is no evidence the way of thinking championed by Preston and Robinson has the capacity to implement them. 

Preston’s case is far more important than one might imagine, given that he is just one supervisor in what is in reality a relatively small American city (less populous even than its southern neighbor, San Jose). His rhetoric reveals two fundamental cleavages in American discourse. First, he sees housing, and indeed wealth, as fundamentally a fixed pie: if ‘100 people from Palo Alto’ (about 30 miles away) move to San Francisco, San Franciscans necessarily lose out. At the same time, he doesn’t acknowledge the possibility that some wealth creation opportunities could be lost by constantly pushing developers for concessions; instead, there is a fixed pie, and less profit for developers is assumed to mean more goods for the city. When put this way, it’s no surprise that Preston finds that he is able to find common ground with conservatives around California. His brand of leftism aligns with conservatism economically in its fixed thinking about wealth, and, on a cultural level, the consideration owed to those who have the temerity to seek life in a different city. 

How can liberals convince Preston, or at least his voters, to consider the alternative—that wealth can be created as long as we allow it to be, and that comfortable housing for some does not need to entail dislocation for others? Appeals to the market are unlikely to be convincing; the visibility of market failures is precisely what drives this thinking in the first place. And empirical studies on the impact of market rate housing on rents, while interesting and hopefully convincing for professional planners, are similarly ineffective at changing deeply held beliefs. Instead, two simpler messages need to be clearly communicated: one, that a combination of market and social housing can increase the housing stock to accommodate new residents, and two, that restrictions on new housing can slow the growth of the population but are not, as San Francisco goes, effective at protecting existing residents. Whether this is possible in San Francisco—given its challenges, political composition, and history of producing activists and voters with deep suspicions of the market—remains to be seen. However, the city itself stands as a powerful argument in favor of a more liberal approach to city housing, a data point that will hopefully be convincing to some leftists both in regions surrounding the city and other communities facing the same challenge of rapidly increasing demand. Adopting better policies, however, requires taking seriously the concerns of left-wing skeptics like Dean Preston and being ready to respond with on-the-ground realities rather than simply with economic theory. 

Featured Image is Painted Ladies, by Bernard Gagon