#211 – Sam Bowman on why housing still isn't fixed and what would actually work
Dec 19, 2024
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In this insightful discussion, economist Sam Bowman, editor of Works in Progress and a housing policy expert, addresses the current housing crisis exacerbated by 'NIMBY' politics. He argues that political obstacles, not technological barriers, are the main culprits behind stagnation. Sam proposes innovative solutions like 'street votes' for community engagement and highlights the importance of compensating affected residents in urban development. He also critiques outdated regulations that hinder progress while showcasing global housing strategies to inspire change.
Rich nations face a stagnation in infrastructure development due to a 'vetocracy' that enables local opposition to block essential projects.
Housing shortages are exacerbating socioeconomic issues like declining birth rates and energy poverty, necessitating a shift in policy and incentives.
The NIMBY mentality is politically powerful, making it essential to engage communities with innovative solutions for building housing and infrastructure.
Regional differences in housing crises between the UK and US demonstrate unique challenges tied to concentrated urban economies and relocation options.
Restrictive housing policies contribute to regional wealth inequality, negatively affecting mental and physical health as rising rents consume income.
Streamlining planning processes and focusing on community preferences in design can alleviate public opposition to necessary infrastructure projects.
Deep dives
Economic Value of the Thames Tunnel
A proposed tunnel under the Thames aims to connect Kent and Essex, enhancing road haulage between England's two largest seaports. The long-awaited project has yet to begin construction, having been stuck in public consultations for over seven years. The planning documentation for this tunnel spans an astonishing 360,000 pages, costing £297 million, which far exceeds the overall construction costs of Norway's largest road tunnel. Such inflated costs highlight a significant barrier to investment and infrastructure development in the UK.
Sam Bowman's Insights on Stagnation
Economist Sam Bowman discusses the stagnation seemingly affecting nearly every Western developed country, linking it closely to their inability to build necessary infrastructure. He argues that a shortage of construction, particularly in housing and transit systems, is contributing to broader issues such as declining birth rates and worsening climate change. Bowman's research leads him to a hopeful conclusion: the obstacles to building are solvable primarily through politics and incentives rather than technology itself. This perspective positions housing and infrastructure as critical areas needing reform for overall social and economic progression.
The NIMBY Problem and Potential Solutions
The struggle against the Not In My Backyard (NIMBY) sentiment around housing and infrastructure is prevalent in the United States and the UK. Rather than rehashing the existence of the problem, discussions focus on creative solutions that have not yet materialized effectively. Bowman emphasizes the importance of understanding the extensive harms caused by current restrictions on housing development, particularly their impact on socioeconomic mobility and regional equality. He calls for innovative policy changes to engage and unify communities in favor of new construction projects.
Obstacles Within Urban and Suburban Housing Markets
The disparity in housing construction challenges between the UK and the US reveals unique regional differences. In the UK, London dominates economically and politically, making the housing crisis particularly acute, as most industry is concentrated there. Conversely, the US offers more options for relocation due to its larger cities and diverse economy. The regulatory barriers to housing development prevent necessary growth in urban centers, particularly in areas like London, with property prices skyrocketing while available housing remains insufficient.
The Economic Impact of Housing Constraints
Bowman analyzes the relationship between housing availability and economic outcomes, including productivity and income levels. He explains that restraints on construction can lead to a significant loss of potential earnings for individuals who cannot afford to move to prosperous areas. Studies from economists reveal that unbuilt housing would allow 40 million more people to relocate to the greater New York area, resulting in an average income boost of around $16,000 per year per person. These findings underline the necessity of removing barriers to housing construction to unlock economic potential.
Regional Inequalities and Quality of Life
NIMBY policies are not only detrimental to economic growth, but they also contribute to growing regional inequalities in wealth and resources. The stark difference in living conditions between prosperous areas like London and less affluent regions exacerbates interpersonal wealth disparities. Housing constraints particularly affect the mental and physical health of communities, as rising costs compel individuals to allocate high portions of their income to rent. These realities drive people into suburban environments, where limited access to resources can negatively impact lifestyle and well-being.
The Importance of Infrastructure Development
Bowman emphasizes that the challenges faced by the UK's infrastructure sector reflects a broader malaise affecting the economy. He touches on the planning permissions required for projects, citing useless costs and unnecessary delays that stifle growth. The issuance of permits can be exorbitantly complex, with lengthy approval processes often resulting in projects that never even see the light of day. He argues that it is vital to streamline decision-making processes to encourage timely and effective infrastructure development that fosters economic growth.
Cultural Attitudes Toward Urban Planning
The aesthetic appeal of urban environments plays a significant role in shaping public opinions on housing and infrastructure developments. Bowman notes that many architects prioritize their design concepts over the preferences of the general population, leading to buildings that may suffer from unwelcomed styles. The drive for uniqueness can overshadow practicality, ultimately deterring public support for new construction. By focusing on design that resonates with the community, there is significant potential to ease opposition and encourage acceptance of necessary developments.
Turning Policy Proposals into Action
The books' authors and proponents suggest ways to put ideas like street votes into action, emphasizing the value of experimenting with local governance structures. Encouraging individual communities to adopt new policies empowers residents and generating excitement relative to density changes while addressing housing shortages. By emphasizing how local governments can increasingly engage residents in the planning process, potential solutions may emerge that foster collective benefits. Incremental adjustments in urban policy can lead to notable transformations through engaged civic processes.
The Future of Nuclear Energy
Nuclear energy presents an underappreciated solution to the UK's energy crisis, significantly offsetting reliance on fossil fuels. The past successes of nuclear energy in countries like France and South Korea demonstrate its viability as a sustainable energy source. The challenges facing the nuclear industry, including public resistance and regulatory barriers, must be addressed to maximize its output. A concerted effort to streamline approval processes and incentivize community engagement is crucial to facilitate nuclear energy adoption as part of broader technological progress.
Advancements in Obesity Treatment
GLP-1 agonists, such as semaglutide, offer revolutionary improvements in treating obesity and its related health issues. These medications have proven effective in addressing individuals' weight management challenges, with the potential to alleviate socio-economic disparities caused by obesity. While the media has heavily focused on their costs and accessibility, research is emerging highlighting their far-reaching implications for overall health. The innovations in obesity treatment provide a starting point to reshape societal attitudes toward managing weight and expand access to effective solutions.
Rich countries seem to find it harder and harder to do anything that creates some losers. People who don’t want houses, offices, power stations, trains, subway stations (or whatever) built in their area can usually find some way to block them, even if the benefits to society outweigh the costs 10 or 100 times over.
The result of this ‘vetocracy’ has been skyrocketing rent in major cities — not to mention exacerbating homelessness, energy poverty, and a host of other social maladies. This has been known for years but precious little progress has been made. When trains, tunnels, or nuclear reactors are occasionally built, they’re comically expensive and slow compared to 50 years ago. And housing construction in the UK and California has barely increased, remaining stuck at less than half what it was in the ’60s and ’70s.
Today’s guest — economist and editor of Works in ProgressSam Bowman — isn’t content to just condemn the Not In My Backyard (NIMBY) mentality behind this stagnation. He wants to actually get a tonne of stuff built, and by that standard the strategy of attacking ‘NIMBYs’ has been an abject failure. They are too politically powerful, and if you try to crush them, sooner or later they crush you.
So, as Sam explains, a different strategy is needed, one that acknowledges that opponents of development are often correct that a given project will make them worse off. But the thing is, in the cases we care about, these modest downsides are outweighed by the enormous benefits to others — who will finally have a place to live, be able to get to work, and have the energy to heat their home.
But democracies are majoritarian, so if most existing residents think they’ll be a little worse off if more dwellings are built in their area, it’s no surprise they aren’t getting built. Luckily we already have a simple way to get people to do things they don’t enjoy for the greater good, a strategy that we apply every time someone goes in to work at a job they wouldn’t do for free: compensate them.
Sam thinks this idea, which he calls “Coasean democracy,” could create a politically sustainable majority in favour of building and underlies the proposals he thinks have the best chance of success — which he discusses in detail with host Rob Wiblin.
Chapters:
Cold open (00:00:00)
Introducing Sam Bowman (00:00:59)
We can’t seem to build anything (00:02:09)
Our inability to build is ruining people's lives (00:04:03)
Why blocking growth of big cities is terrible for science and invention (00:09:15)
It's also worsening inequality, health, fertility, and political polarisation (00:14:36)
The UK as the 'limit case' of restrictive planning permission gone mad (00:17:50)
We've known this for years. So why almost no progress fixing it? (00:36:34)
NIMBYs aren't wrong: they are often harmed by development (00:43:58)
Solution #1: Street votes (00:55:37)
Are street votes unfair to surrounding areas? (01:08:31)
Street votes are coming to the UK — what to expect (01:15:07)
Are street votes viable in California, NY, or other countries? (01:19:34)
Solution #2: Benefit sharing (01:25:08)
Property tax distribution — the most important policy you've never heard of (01:44:29)
Solution #3: Opt-outs (01:57:53)
How to make these things happen (02:11:19)
Let new and old institutions run in parallel until the old one withers (02:18:17)
The evil of modern architecture and why beautiful buildings are essential (02:31:58)
Northern latitudes need nuclear power — solar won't be enough (02:45:01)
Ozempic is still underrated and “the overweight theory of everything” (03:02:30)
How has progress studies remained sane while being very online? (03:17:55)
Video editing: Simon Monsour Audio engineering: Ben Cordell, Milo McGuire, Simon Monsour, and Dominic Armstrong Transcriptions: Katy Moore
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