California’s Socialist Oligarchy: Making the State Unaffordable

CPR: 

Touted as the “fifth-largest economy on Earth,” and recently heralded as delivering the “greatest increase in average income,” these statistics obscure an alarming reality. California has become a feudal state, where the benefits of prosperity are unequally distributed, rewarding corrupt plutocrats and punishing ordinary working families. Joel Kotkin, a fellow in urban studies at Chapman University in Orange, California, characterized California’s current political economy as “Oligarchical Socialism.” This is a perfect description of a system that destroys the middle class at the same time it protects the ultra rich.

California’s leftist oligarchy benefits financially from precisely the depredations they accuse conservatives of committing. They have enacted policies that are designed to make California unaffordable to all but the wealthiest residents, and hostile to emerging small businesses, at the same time as their preexisting wealth and politically connected corporations reap enhanced returns and profits.

Plenty of Land, Impossible to Build

Nowhere are the consequences of California’s oligarchical socialism more evident than in the cost of housing. State legislation has made it nearly impossible for developers to construct new housing outside the so-called “urban growth boundary.” Instead, development is redirected into the footprint of existing urban areas.

While there is a natural tendency as population increases to see higher density redevelopment in urban cores, by restricting outward expansion of urban areas, the value of the limited remaining eligible land becomes artificially inflated. But established landowners and large development firms benefit from these restrictions. They are able to withstand years, if not decades, of expensive permitting delays and endless litigation. They are able to afford millions in permit fees because these costs are offset by their ability to sell residence units—from high-rise condos to detached single family dwellings—at prices far beyond what they would cost in a normal market.

These billionaire business interests get richer, while ordinary Californians who want to own or develop land cannot afford to go through the permit process. Meanwhile, the median cost of a home in California is $539,400 — nearly 2.5 times the national average of $216,700. And that’s not even in the tougher markets.  read more