Open Space or Affordable Housing?

Would you like to preserve open spaces in N.C. cities?  Would you like for there to be affordable housing for lower-income families?  How about preventing urban sprawl? Want enough tax revenue to support vital infrastructure? Most of us would answer these questions in the affirmative. The trouble is all these values compete. It may not be obvious, but there is a little known and less well-understood thing called the Law of Scarcity. “Wolde you bothe eate your cake, and have your cake?" people have been asking since at least 1546.

A new report by the Partnership for North Carolina’s Future (PNCF) says you can have it all. In a new brochure called “Reality Check for North Carolina,” PNCF demands infrastructure, open space, affordable housing, and more – all of which will they claim can be produced by government.

But to see why we can’t have all these things, we have to think holistically:

What happens when government “protects” open spaces (private property) from being developed? It means there is less of something people value. If there is less of that thing but people still value it, what happens to the price? You guessed it. And when the price of developable land goes up, that means it’s less affordable. People of lesser means will have fewer opportunities to own their own home, much less rent it cheaply. But at least advocates who didn’t want open space badly enough to pay for it will get it anyway.

Now, the lucky few who can afford the remaining scarce property must pay more in taxes. This is probably unpleasant for those owners. But the problems don’t stop there. Know how much tax revenue all that open space generates for vital infrastructure? About the same as enjoyment generated by eaten cake.  Maybe there will be enough tax money generated by those lucky remaining owners’ whose property values have been artificially inflated. Maybe. But the more people have to pay in taxes, the less they have to spend or to invest in the economy. Diminished economic activity means fewer job opportunities; lower income people have now been hit doubly. But at least wealthier people get subsidized and have open spaces at others’ expense.

But what about all those people who can’t afford to live in the city where there are fewer jobs and housing is expensive? (Also suppose, like in North Carolina, they’re still coming from out of state.)  They move to the suburbs. And that, folks, is called urban sprawl. So it looks like we can’t have everything. Or can we?

Enter government again. Since there aren’t enough Open Space advocates to pool their resources and pay for the property they want, they can use the machinations of special-interest politics to have government grab the land at everyone else’s expense. Then government can give lower-income families tax-subsidized handouts so they can afford the otherwise unaffordable housing. Government planners can then have developers build upwards—mandating high-rise buildings so people don’t seek out suburban life, which creates sprawl. (Indeed, you might take a leaf from the Chatham County playbook and limit building permits in suburban areas, too—never mind the affront to private property rights, or the retirement investment now lost to a property owner.) How to pay for all this? Well, there’s always the wealthy. While their increased taxes may no longer be going to producers of goods and services that create jobs for poor people at the margins, government can always soak the rich a little more to pay for the earned income tax credit (EITC) and increased welfare for the poor.

As economist Mark Henderson wrote recently in a popular piece on government intervention in the energy sector:

[G]overnment intervention designed to benefit certain members of society inevitably imposes costs on others. Those who are inconvenienced by intervention—especially because they have seen that government is willing and able to alter the market that would exist in the absence of government intervention—will seek intervention that offsets the undesirable side-effects of the prior intervention. However, any new interventions will themselves generate new side-effects, new costs, on other citizens, and so the political process lurches clumsily but powerfully in the direction of ever-greater government control that, taken to its logical conclusion, leads us further down the path of socialism.

Now, I’m not writing here to argue that open space alone is the path to socialism. But I do want to show the government Rube Goldberg contraption that is created simply by trying to satisfy special interests like the Open Space crowd. And when you add up all the special interests out there and give them government goodies, the road to socialism does get wider and longer. The main thing to remember is that when we try to implement too many contradictions, we are not only causing unwanted effects, but trampling on the values we hold most dear. -Max Borders