Emma Duncan has written a piece for the Times with which I ought to agree. It has the title “The city of billionaires is a vision of hell” and has the strapline “San Francisco shows what happens when rent controls are used to tackle a housing shortage”.
Her article starts with a vivid description of San Francisco’s woes:
… San Francisco and its environs have the highest density of billionaires on the planet. It is also the most visibly poor place of any I have been to outside India or South Africa, and the horrors on show hold lessons for London.
As Tom Knowles reported in The Times yesterday, there are more than 8,000 homeless men and women on the streets of what is, with a population of less than 900,000, a small city. Every time we stepped out of our city-centre hotel, we saw homeless people slumped on the pavements or wandering aimlessly. In the Tenderloin district, a formerly respectable area a quarter of a mile away, there are homeless encampments on most blocks and shit on the pavements. People do not walk there if they can avoid it.
In the four days we were there, I went into maybe ten shops. In three of them, homeless people walked in, took stuff and walked out. In Starbucks, for instance, a homeless man swept a lot of biscuits and chocolates from beside the till into a bag. I started to say something to try to stop him, then looked at the woman behind the till who shrugged her shoulders. I asked the manager how often this happened; he said seven or eight times a day. I asked him what he did about it; he said he filed “an incident report”.
My son said that the police have given up on property crime because they are short of resources, because this sort of crime is so common and because there is a certain sympathy for the perpetrators. We took two buses when I was there; on one of them, the man in the seat in front of us peed on the floor. My son said it was a regular occurrence.
It then offers two possible explanations:
When you talk to San Franciscans, many take the view that homeless people are sent there from cities whose welfare provision is less generous than California’s. That seems implausible, since there is little welfare on offer in San Francisco, and surveys of the homeless population show that the vast majority are local.
Those who have studied the problem say that the main explanation is the price of property. The tech industry is so big and well paid that demand for property has pushed prices to insane levels. Average rents are about twice what they are in London. To pay the rent on a one-bedroom flat in London you would need to work about 170 hours on the minimum wage; in San Francisco, you would need to work 300 hours. As rents rise, people get turfed out of their homes and end up on the streets; combine that with negligible health provision for the poor and you end up with a lot of mentally ill people on the streets.
The response to rising rents in San Francisco has been rent controls. Nearly half the homes in the city are now covered by them. But they have made the situation worse, not better, because they discourage people from letting out property and thus reduce supply, pushing house prices up further.
The Instapundit co-bloggers talk about San Francisco often. Though I would guess that none of them would be reluctant on ideological grounds to mention rent control as the main cause of San Francisco’s problems, as far as I recall they have usually cited the explanation that Emma Duncan rejects, namely over-generous welfare payments that act as a magnet to homeless people from other states. Beyond that they speak of general bad governance, often mentioning that the last Republican mayor of SF left office in 1964.
Of course both causes could be operating. If a single shop has homeless people walking in and openly stealing from it without fear of punishment seven or eight times a day, then bad governance most certainly is operating. But is that the cause or the symptom? My reasons for wanting a more precise diagnosis than “socialism sucks”* are not entirely disinterested. Rent controls are one of the most popular policies offered by Jeremy Corbyn’s Labour party. Apart from a few old fogeys who remember the deleterious effects of the Rent Acts, Brits love the idea of them. As Ms Duncan suggests, London may soon follow the example of San Francisco in re-introducing rent control. Lord knows the world is not short of examples that show this is a bad idea, but San Francisco might make that argument real to a British audience better than most places, as it is a city quite a lot of British people have visited recently and come away from with shit on their shoes. Do any American readers, particularly San Franciscans, have any observations to share?
*Two economists called Robert Lawson and Benjamin Powell, who seem to be more convivial than economists usually are, have written a book with this title that is currently nestling in my Kindle. My husband recommends it. He says it is about beer.
