Newsreal 98105

A commentary on complexity in government The Cost of Complexity -from the Free Enterprise Forum Weblog dedicated to discussing local policy issues in CENTRAL VIRGINIA – raises some excellent questions on Seattle housing policies in the context of a well publicized UW study on housing prices.  “The creation of laws and ordinances has often been compared with sausage making,” writes Neal Williamson;”  “In reality, it is nowhere near as organized or efficient as your typical pork packaging plant.”   The policy-making process, he explains, rarely includes clear communication of  how eventual change in local ordinance or regulation will impact the involved community. 

From Williamson’s blog:

In a February 2008 paperon housing prices, University of Washington Professor Theo S. Eicher used regression analysis to study housing prices and their relationship to regulatory environment in five major cities in Washington State (Everett, Kent, Seattle, Tacoma and Vancouver). His findings, reprinted below, are not surprising but are eye opening.

“Aside from demand factors, housing prices are found to be associated with cost-increasing land use regulations (approval delays) and statewide growth management. For example, after accounting for inflation, regulations are associated with a $200,000 (80 percent) increase in Seattle’s housing prices since 1989, while housing demand raised prices by $50,000. This constitutes about 44 percent of the cost of a home in 2006. Cities with less stringent land use regulations had significantly lower price increases due to regulation.” Emphasis added – NW

If we accept the conclusion that an onerous regulatory environment increases the cost of housing, is this perhaps the true goal of such regulations? Each time housing affordability comes up in meetings when regulations are being considered, such concerns are quickly dismissed because the homes that are being built are not designed to be affordable.

If we fail to recognize the impacts of regulation on affordability across all price points, we will end up with government induced housing inflation pushing the working class even further out creating increasing demands on our transportation infrastructure and leaving only the very high end and the very low end in our urban core. Complexity breeds bigger government and bigger government breeds increased complexity. It is in everyone’s best interest to strive for clarity of intent and implementation at the front end of the sausage factory.

What do you think?