In a few weeks Santa Monica voters will be asked whether they would like to shrink the city—literally, vertically, and psychologically.
Their decision will have repercussions far beyond the beach city’s 8 square miles, setting the tone for political debates over the cost and availability of housing throughout LA County. It could also have costly economic effects throughout the Westside.
In Measure LV, Santa Monica voters will decide whether to sharply restrict the building of future housing, office space, hospitals, schools, and anything else that might exceed a proposed new height limit of 32 feet—about 2 stories high.
The website supporting LV makes many dubious claims—about stopping traffic, about protecting the “low-rise character” of the town, about safeguarding ocean breezes. But behind LV’s martial rhetoric of “Two floors good; four floors bad” is a desire to build fewer homes. While the supporters of LV are coy about it, there is no way to vertically shrink Santa Monica without keeping people away from homes. And that has costs.
When public policy arbitrarily limits the market for something that people want and need—like housing—economists talk about a social-welfare loss, which is just a bloodless way of saying suffering.
Some informed economic estimates of the magnitude of suffering were collected in a recent Legislative Analyst’s Report on the housing crisis in California. Restrictions on housing development has made LA County housing costs among the highest in the nation, and has increased our poverty rate by 40% relative to what it would be without such restrictions. Each new slow-growth policy adopted at the local level—and Santa Monica has had several already—raises housing costs by 3-5%.
Because higher housing costs are associated with longer commutes, these policies can be expected to increase average commute times by about 2%. That may not sound like a lot, but it’s an average over the whole population: many people’s commute will not be affected but some will have to commute far longer. And those who don’t have long commutes may be forced into overcrowded conditions: the Legislative Analyst’s report notes that, because of high housing costs, 10% of residents in LA County live in overcrowded homes—four times the state average. Crowding matters because it significantly hurts children’s well-being and school performance.
Then there is the economy. Economists have estimated that housing restrictions in just three cities—San Francisco, San Jose, and New York—cost the United States economy $1.6 trillion a year. That’s “trillion” with a “T”—roughly twice the size of the LA economy itself.
And let’s not forget the homeless. Although it’s difficult to quantify the effect, fewer homes equals more homeless people.
Of course, it is possible to have too-rapid growth, and no city should be expected to cope with a galloping population. So how much development has Santa Monica had in recent years, and could a reasonable person agree with LV-supporters that Santa Monica has had overdevelopment?
In 1970, Santa Monica’s population was 88,289. Today it is 92,987. That’s an increase of 5.3% over 45 years. That doesn’t sound like overdevelopment to me. Traffic might be a problem, but it’s not because we have built housing.
But while economists are good at identifying the source of suffering in market distortions, we’re not good at telling the personal stories of the suffering that make it real to people.
So while we know that the passage of LV will increase suffering, we don’t know who will suffer. Who will suffer by long commute, and who by sharing a room? Who will face an eviction notice when they can’t pay the rising rent, and whose landlord will redevelop their rent-controlled units into low-rise luxury apartments? Who will be thrust into poverty and who will keep their job and curse their luck as they fight the exodus on Sunset in the afternoon? Who will close their café for lack of a clientele and who in Boyle Heights will be displaced?
As political scientist Bryan Schonfeld points out, “the most important cleavage in politics today may not be between left and right but rather between closed and open.” The Brexit was a decision to close Britain. Donald Trump’s rhetoric is that of closing our economy. And LV would close Santa Monica. It would put a wall around it (as if the 405, the Santa Monica Mountains, the airport and the ocean aren’t already wall enough), and the wall will be paid for by others—by the people not here as a result.
Voters in Santa Monica will decide soon whether to shrink their city. But they can’t decide how others will understand their decision. The people who are elbowed out of Santa Monica as a result of LV may not be seen by the proponents of LV, but they will not disappear. They’ll watch, they’ll reflect, and they’ll decide what else Santa Monicans have shrunk. Our vision of our city? Our belief in our potential to work together? Our hearts and minds?
Fred Zimmerman is an economist at UCLA and a resident of Santa Monica
