“Drill, baby, drill!” Those words were first popularized at the 2008 Republican National Convention in St. Paul, Minn. Republicans were widely mocked at the time for their sloganeering, but they largely carried the day. Domestic oil extraction came to 302.2 million metric tons in 2008. That was a 10-year low according to Statista. By 2022, domestic extraction had more than doubled to 759.5 million metric tons.
That new capacity paid off for American drivers. Oil fell from a high of $127.47 per barrel in July of 2008 to a low of $25.52 per barrel in January 2016, according to the US Energy Information Administration. It took the disruptions of a protracted war in Europe hiking worldwide energy prices to really make most Americans feel pain at the pump again.
“Drill, baby, drill!” worked because it was seen as the only real choice to make, given the available options. “Drill we must,” even vice presidential candidate Joe Biden conceded in a debate before arguing that green energy was also part of the long-term answer.
Bryan Caplan is a George Mason University economics professor who likes to argue without concern for Overton Window calculations about what is permissible in public discourse. His past books and booklets include “The Case Against Education,” “Selfish Reasons to Have More Kids,” “The Myth of the Rational Voter” and “Don’t Be a Feminist.”
Still, one has the suspicion that he’s quietly hoping for this year’s RNC in Milwaukee, Wis., to bust out some “Build, baby, build!” call-and-response. That would undoubtedly help sell a few more of his comic books of the same name, though with the decidedly less populist subtitle of “The Science and Ethics of Housing Regulation.”
Conditions are ripe for that to happen. There’s something like a national consensus that not just rent but everything about housing is too damn high these days, backed up by copious evidence.
The widespread though not quite national housing shortage is delaying family formation, fueling homelessness and squatting, and exacerbating many other social ills. Americans are increasingly sick of the housing crisis, and want a ready-made solution. You could say that the problem has many causes, but Caplan blames one main problem, government regulation. That’s probably close enough to right, a la, “drill, baby, drill!” to move the needle.
The front cover is drawn by the interior artist, the able Romanian cartoonist Ady Branzei. It features a Godzilla-sized giant lizard dressed as Uncle Sam, crashing against skyscrapers in a soaring, futuristic cityscape. The raging lizard with flaming breath is chasing after a flying car piloted by Caplan himself with 19th century French economist Frederic Bastiat riding shotgun.
The book brings many additional economists, social scientists, philosophers and eminences, living and dead, along for the ride. A non-exhaustive list of people with at least cameos would include Paul Krugman, Tim Harford, Jason Furman, Joe Gyourko, Anne Case, Angus Deaton, Matt Kahn, Bernard Siegan, Mario Rizzo, Glen Whitman, Richard Thaler, John Stuart Mill, John Rawls, Richard Posner, Robert Nozick, Alexander the Great and Jesus Christ.
In seven chapters, Caplan both tells a story and pursues an argument. The story is how housing prices got so high in some places: chiefly the states that abut the Pacific Ocean as well as the Eastern Corridor from Washington, D.C. to New York. In those places, American governments at every level have spun a complex spider web of regulations that make it hard for housing projects to move through.
This spider web greatly slows down building projects. Those projects that do make it through are not allowed to maximize the use of land by building higher or occupying most of the lot. Rental and real estate prices have gotten so high that many are fleeing to less-regulated states and thereby bidding up housing there as well.
American families spend about 20 percent of their incomes paying for housing at present. Caplan believes that figure could be much lower. Joe Gyourko, an economist at Penn’s Wharton School, says that deregulation “could plausibly cut housing prices by 50%.”
In certain places, thorough deregulation could cut housing prices much more. By looking at vacant lot data, Gyourko was able to calculate a per-acre “zoning tax.” That expense, which developers pass onto buyers, comes to $1.6 million per acre in San Francisco, $800,0000 per acre in LA, $700,000 per acre in Seattle, and $600,000 per acre spread out over the five boroughs of New York City.
Before the COVID lockdowns, the high earners largely sucked it up and paid the higher housing prices. Lower income earners either moved out of these expensive real estate markets or stayed put in cheaper markets, with lower costs but also less wage competition. After COVID, some of those high-earning, now-remote workers, are moving from major metros into cheaper markets and thereby making things more expensive for the locals.
The newcomers are bidding up housing at a time when inflation is already making budgets tight. The children of folks in, say, Boise, Idaho, are having to stretch much further than their parents did to afford shelter.
One stock urbanist progressive response to all this is subsidies for affordable housing. Those subsidies are a drop in the bucket at best. American governments simply don’t have the money to assure widespread affordable housing for those who need it, as evidenced by the growing homeless problem.
Worse, what money governments have to throw at the problem is subject to the same spider web of regulations that is making housing so expensive in the first place. The need for much more housing is obvious as a bell. The only plausible way to make that building happen at present is for regulators to give up some of their control.
That will take some doing. The federal government will have to ease up on wetlands regulation of large puddles, for instance, which may take an act of Congress. States will have to change zoning laws to get beyond single-family zoning, at the very least. And residents of cities and counties are going to have to find creative ways of telling local officials, “Yes in my backyard, so my kids can afford to live here.”
“Build, baby, build!” indeed.
Jeremy Lott is a writer based in Washington state and creator of the comic book Movie Men and the writer of several AdamSmithWorks webcomics.
