LA needs fewer government rules, not a Marshall Plan
By Sal Rodriguez | January 24, 2025
California Gov. Gavin Newsom has a knack for putting forth “big hairy, audacious goals.”
From his vow to end homelessness in San Francisco in 10 years, to deliver single-payer health care in California or to have the state make its own insulin, Newsom also has a knack for overpromising and failing spectacularly.
A common through-line in many of his failures is his insistence on putting government action at the center of innovation and progress.
Which is why his recent talk of a “Marshall Plan” in response to the still ongoing wildfires in the Los Angeles area is at least mildly concerning. The Marshall Plan was the United States’ recovery plan for Europe after World War II and entailed the transfer of the modern equivalent of over $170 billion to enact.
In a Jan. 12 interview with NBC News reporter Jacob Soboroff, Newsom declared “we’re already organizing a Marshall Plan, and we already have a team looking at reimagining LA 2.0.”
Heavy on hand gestures and light on specifics, Newsom asserted he and others were seeking to “galvanize the community with folks that love this community to really develop a mindset so that at scale we’re dealing with the scope of this tragedy and responding to it at scale.”
The following day, his office reiterated the talk of a Marshall Plan, announcing California was “organizing a Marshall Plan to help Los Angeles rebuild faster and stronger – including billions in new and accelerated state funding so we can move faster to deliver for the thousands who’ve lost their homes and livelihoods in these firestorms.”
Parsing what’s Marshall Plan-esque, what’s part of his vision for “LA 2.0” and what’s just never-to-be-built-upon rhetoric is unclear. This isn’t to say Newsom hasn’t taken some reasonable actions in the wake of the fires.
On Jan. 12, he issued an executive order to “suspend permitting and review requirements under the California Environmental Quality Act (CEQA) and the California Coastal Act” for those impacted by the fires. He later extended those exemptions to accessory dwelling units and suspended rules prohibiting “issuance of a certificate of occupancy for an accessory dwelling unit before the certificate of occupancy for the primary dwelling.”
He also ordered “state agencies to identify additional permitting requirements, including provisions of the Building Code that can safely be suspended or streamlined to accelerate rebuilding and make it more affordable.”
You might notice a pattern here. Yes, getting the government out of the way can help get things done. Who knew?
It’s a pattern also seen in the executive order of Los Angeles Mayor Karen Bass, which waives discretionary review processes for impacted properties and even directs the city’s building department to identify permit reviews that could be “undertaken as a self-certification procedure by a licensed project architect” rather than a city worker.
There are big asterisks next to all of these things, especially Newsom’s orders. These broad deregulatory actions are limited in scope, with eligibility for relief restricted to destroyed and damaged properties that are rebuilt with similar sizes and dimensions as before.
These directives also sidestep the obvious implication that “bureaucratic red tape” (Newsom’s words) not only slows things down but can be waived or streamlined, but are generally left in place for unjustified reasons. And Newsom has offset much of the good of his orders with eviction bans and bans on “price gouging,” defined as charging more than 10% more than before.
All of this is to say that Newsom’s vision of a Marshall Plan probably won’t be great once he conjures up some scheme that will see lots of money spent but not much actually reformed. But his better actions since the fires point to something better, a deregulatory agenda rather than a spending binge.
If Newsom really wants to help the LA area (and the state as a whole), he should push for comprehensive reform to the California Environmental Quality Act to simplify compliance, exempt wildfire prevention efforts and mitigate the risk of the law being weaponized to slow development.
He could also use this opportunity to tackle one of the other elephants in the room, which is the state’s counterproductive meddling with the insurance market. As Nolan Gray noted in a piece for The Atlantic, “the politicization of risk has been a catastrophe. Artificially low premiums encouraged more Californians to live in the state’s most dangerous areas. And they reduced the incentive for homeowners to protect their houses, such as by installing fire-resistant roofs and siding materials.”
It’s time to let the insurance market do what it’s supposed to do, which is price risk, so people are incentivized to make better choices.
If leaders in the city of Los Angeles want to do their part, they should encourage development away from the city’s high-risk fire zones. The City Council recently signed off on a zoning plan which encourages greater density along transit corridors and areas already zoned for high-density, which is fine if not for the fact that over 70% of the city is zoned for single-family residences.
Tight land-use regulations have encouraged sprawl into increasingly risky areas at great cost as we now see. The city needs to legalize multifamily housing through the city, enable more by-right development, streamline permit processes further, repeal Measure ULA and repeal its even more antiquated rent-control policy.
Plans, schemes, visions and galvanized mindsets are nice and all. But what Los Angeles and other communities need isn’t a Marshall Plan or Newsom’s idea of LA 2.0. They don’t need Newsom’s “big hairy, audacious goals,” they just need some common sense.
They need the state and local government to do what they need to do to clean up the mess of the fires and make sure they don’t happen that badly again, obviously. But beyond that, the government just needs to get out of the way of pretty much everything else. Let markets work, let builders build, let communities take shape free from arbitrary “bureaucratic red tape.”
Sal Rodriguez is opinion editor for the Southern California News Group and a senior fellow with the Pacific Research Institute. He is the author of Dynamism or Decay? Getting City Hall Out of the Way, published by the Pacific Research Institute.
