A conversation with urban planner Mark Wolfe

Mark Wolfe, J.D., M.C.P., is a land use and environmental lawyer and a lecturer in Urban Studies and Public Policy at Stanford University and adjunct faculty member in the Department of City and Regional Planning at University of California, Berkeley. Wolfe is a regular contributor to KQED Public Radio’s “Perspectives” series, and also a native of the Bay Area with degrees in law and urban planning who has a keen understanding of San Francisco and the surrounding area. As a partner at a small firm that generally represents nonprofit organizations and citizens groups, he challenges projects that are detrimental to health or welfare of the community.

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Micaela Suminski: We interviewed Palo Alto’s Mayor, Patrick Burt, who said that Palo Alto’s biggest problem right now is massive job growth. He also said that we should focus on sharing the tech industry with other areas, to encourage housing and jobs to move to places that need them more. Do you agree?

Mark Wolfe: I think part of what he’s saying is inevitable. The startup ecosystem that used to be so characteristic of Silicon Valley and the Bay Area is now getting replicated in other cities: Austin, Portland, Boise. It continues to thrive in places like Boston, Manhattan, and Seattle. The primary asset of the knowledge economy is the smart person — and there are a lot of smart people out there. There’s a pipeline of them coming from schools like Stanford, and certainly not every Stanford grad is going to be able to find a place to live in San Francisco. Quite literally there’s just no place for them to go. So those people who have no place to go will inevitably go to other places like Portland, and they’ll bring their intelligence and skills and creativity with them and employers will follow them. Venture capital will follow them.

And in the long run, all other things equal, there should be a return to equilibrium — a regional convergence. And as that happens — as people go to the next city — price pressures in places like Palo Alto will at least stabilize, if not come down. This isn’t going to last forever. Chances are there’s going to be another “thing,” and it’ll be in a different city.

MS: So do you think that people who are really concerned about the lack of housing in San Francisco or the Bay Area should advocate for industries to settle in some other area?

MW: I’d say that’s already kind of happening in San Francisco. You see the protests — they’re saying “don’t come here.” People want the Googles of the world — who incidentally are opening up 300,000 square feet of space in San Francisco — to go somewhere else. Now, is this an effective tool of housing policy? I’d say probably not.

MS: So you’d say lack of housing leads to employees going elsewhere and employers following them? If this is a vicious circle, what will break it?

MW: If you look at the urban economic geography, which has a historical component, certainly there’s ample evidence for that pattern. One need only look at Detroit or Akron or any of the great Rust Belt cities, which 60 to 100 years ago were successful cities because they were the center of agglomeration economies for a particular industry. But they died when the industry left. Tech is going to change. It’s probably going to change in a way that will make what’s going on here in Silicon Valley obsolete, or at least different. But again, that’s not an acceptable approach to housing policy for the here and now, because we have these pressing needs that we must address.

MS: Do you believe that US government intervention in housing markets does more good or harm?

MW: Well, it probably does more good than harm. But the degree of intervention is plummeting. And the amount of money that is going toward housing for low-income families keeps getting reduced. If you look at all of the money that the federal government spends in the housing arena, whether through direct expenditures or tax subsidies, an obscene amount of money goes to benefit households earning more than $200,000 per year. This is because the number one expenditure is the mortgage interest tax deduction, which helps people who can buy homes. Number two is the real estate tax deduction, so you get to deduct real estate taxes from your income. So it’s only homeowners who benefit from this. And then a tiny little amount is actually spent on the low-income Housing Tax Credit Section 8 vouchers and public housing projects. It’s not that much.

So it turns out that 80% of the money is benefiting people who have zero need, while a small fraction of the money is being spent on people who have very serious need. Therefore, the current manner of federal intervention in the housing market seems to be just categorically unfair, and if that money were redirected toward low-income families or people who were actually constrained, I think it would work. But right now, it’s extremely skewed because of the tax code.

MS: So should we change the tax code?

MW: A lot of affordable housing advocates would say that’s the most important thing you can possibly do.

MS: If you could do one thing, is that what you would advocate for?

MW: Well, you couldn’t just change the tax code and call it quits. All changing the tax code would do would be to free up a lot of money that could be spent on something other than subsidizing wealthy households. It would then take a separate act of Congress to direct those funds into some program — whether that’s more housing vouchers, more low-income housing tax credits, or more affordable housing development, it’s hard to pick one. Different regions, different markets, are going to respond differently to each.

MS: Should we give the decision to the states or the localities?

MW: Probably the states and not the localities, for two reasons. First, history shows that local housing authorities have shown a high level of corruption and incompetence, most notably the San Francisco Housing Authority; half of its directors are under indictment by the FBI. They’re supposed to use government dollars to fix toilets and elevators, but they just don’t do the fixing — the money goes to contractors who are their friends. Second, a lot of localities won’t actually get in the business of doing things that benefit lower income households because they don’t want them there. The state, while it isn’t a perfect recipient, is a good medium between the federal and the local level.

MS: In terms of privatization of the housing market, can you see a purely capitalistic approach like Trump’s changing the housing market at all?

MW: No. I don’t think anyone really gets the housing market — and no one really gets what attracts people to certain cities or certain areas versus others. It turns out that having a mixture of races, ethnicities, and incomes makes a neighborhood more attractive and raises property values. In other words, integrated neighborhoods are the most highly desirable neighborhoods now, relative to purely white, suburban neighborhoods. So the problem is, it’s not each person for herself in the housing market. So it’s hard to say.

MS: What’s the most significant factor causing the Bay Area housing crisis, in your opinion?

MW: Thomas Piketty wrote a book called Capital, very consciously based on Marx. Piketty tracked, through the history of capitalism, levels of income and income inequality, starting in Europe in the seventeenth century. His sad, depressing takeaway was that this period in the United States between 1945 and 1980, when there was an extremely strong middle class, when there was a high level of union membership, when income inequality was relatively low, was a tiny blip in history, and in fact is the anomaly. Rather, the status quo throughout the history of capitalism has been radical income inequality.

And, by extent, someone else did something similar with housing, and they found the same pattern of historical inequality. So if you buy this, the depressing thing is that we’re just going back to the normal thing rather than this period that we just happened to be alive for. So I’d say that’s the biggest thing: deep structural issues related to extreme income inequality.

MS: So as long as we’re a capitalist society, are we confined to this?

MW: Well, we were a capitalist society after World War II and we mitigated to a significant extent — but we also did it in ways that were huge problems. People look back at the 50s with rose-colored vision, saying people had money and there was a strong middle class and there was union membership — but there was also Jim Crow and extreme levels of discrimination and racial inequality and redlining. So it was great for the white folks. So I think one thing all economists can agree upon is that the key to income is productivity, and the key to productivity is education. So if you had to pick one thing to focus on, if you can get kids into an environment where education is valued, the next generation will be more successful.

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Micaela Suminski, a senior studying urban studies, is the chief of staff of Stanford Political Journal.