There’s a theory abroad that’s permeating the corridors of City Hall and the editorial rooms of the local daily which suggests that any high-end housing is good housing because it will relieve demand down the line to lower cost housing, benefiting us all.
If true, that’s great news for our city councilors, because they can just let the market work its wonders on new, high-priced housing all over Munjoy Hill, Bayside, and the West End allowing us all to see rents and house prices decline, stabilize, or only inch upwards.
This theory is being touted across the country, as reflected in this article. This, of course, is the trickle-down theory that Ronald Reagan and his descendants have applied to macro-economic theory, now applied—even by some self-styled progressives—to housing.
Would that it were so!
Unfortunately, it suffers from two flaws, at least as applied to Portland.
The first, a local consideration, is that the theory presupposes that demand for high-end housing here is finite, that building several hundred costly condos will satisfy all the wealthy who want to come here, freeing the rest of city housing for the rest of us.
Those who favor this limit to high end demand include the woman who asked during the debate over the Midtown development, “What? Are people lined up at the turnpike toll booths to move here?”
Newcomers we’ve met in the last few months demonstrate that people are now traveling the Interstates from the metro areas south of us and from around the country to reach our Top 10 City for eating, raising families, recreating outdoors, and retiring; in short, for establishing new residences.
If a city the size of San Francisco can fill up with the wealthy, assuredly a city like ours, less than a tenth its population, can fill up too, without allowing for any new middle class families. Indeed, like San Francisco, we can continue our current trend of pricing middle-class families out to the suburbs and still fill up.
The second flaw with the make-cake-for-the-rich-and-we’ll-have-the-bread-for-ourselves theory proves that the theory, however flawed, has been around for a while. Maynard Keynes, the great British economist whose thinking still underpins many sensible government economic policies, knew of the theory in the 1930s and explained its weakness with a striking metaphor.
If you feed oats to a horse, he said, the horse will digest most of the oats and excrete the rest. Sparrows will come along and find the remaining grains and peck them out of the horse manure. So it is true that you can feed oats to sparrows by first passing them through the intestines of a horse, but it’s a very inefficient way to feed oats to sparrows.
If there is to be affordable housing in Portland, then city government, working with state and federal governments, nonprofits, lenders, and private developers, needs to use all the tools at its command—from land to land use ordinances to subsidies and incentives—to create housing that the middle class can afford.
For housing here in Portland, that is, we sparrows require direct servings of the oats with City Hall helping in the serving.