This post is going to be a bit of a rant, because honestly I’m pretty frustrated, and I want the rest of you to understand and share at least a little bit of that frustration.
Specifically, what’s frustrating me is America’s seeming inability to build the things it needs to build in order to prosper and flourish in the 21st century. From housing to transit to solar power to transmission lines to semiconductor fabs, the U.S. has little trouble marshalling the financial and physical capital to create what it needs, but ends up stymied by entrenched local interests who exploit a thicket of veto points to preserve the built environment of the 1970s.
Ever day, new examples of this stasis pile up. In Berkeley, a plan to build student housing was just blocked by a court, which demanded that the university study whether students themselves constitute an environmental hazard. I wish I were kidding, but I’m not.
The court’s opinion also required the university to study whether the project would cause gentrification by increasing housing demand. The left-NIMBY theory that housing construction raises rents has thus been enshrined by a court of law, despite almost all of the empirical evidence being against that theory. The decision brought a fiery retort from the office of California’s governor, who realizes that preventing this kind of abuse of environmental regulations will likely require legislative reform.
Expect to see battles like this proliferate all over the country, especially in the state of California. That state has mounted an aggressive push to build more housing, enforcing old affordable housing planning requirements with newfound zeal and threatening non-compliant cities with a condition called the “Builder’s Remedy” that suspends zoning regulations. But CEQA, California’s extra-strict environmental review law, will provide a strong last line of defense against these efforts, and can only be reformed through legislation. Nor is it the only such environmental law being abused by local supporters of physical stasis.
Meanwhile, across the USA, housing is just not getting built. The recent runup in prices motivated a lot of developers to pull out their checkbooks, but they barely managed to raise housing starts to their pre-2008 levels, and now things are heading back to stasis as prices cool off.
How about transit? The U.S. is famous for its patchy, low-quality train service, but this is not due a lack of dollar spending; instead, it’s a simple inability to build. New York’s Second Avenue Subway line has become the world’s most expensive subway line — an order of magnitude more costly per mile than similar projects in Europe. A recent report by NYU’s Marron Institute of Urban Management finds that the chief culprits in the overspending are the overuse of expensive consultants, overly large train stations, and poor coordination and pork-barrel spending by other city agencies. Meanwhile, California’s ambitious high-speed rail project, started well over a decade ago, continues to see delays and cost overruns.
How about green energy? Last August the nation celebrated the passage of the Inflation Reduction Act, which allocated $400 billion to building green energy in the U.S. But as with housing and transit, allocating money doesn’t necessarily mean anything actually gets built. Here’s a report from the WSJ:
Even as developers plan an unprecedented number of grid-scale wind and solar installations, project construction is plummeting across the U.S.
Despite billions of dollars in federal tax credits up for grabs and investors eager to fund clean energy projects, the pace of development has ground to a crawl and many renewables plans face an uncertain path to completion. Supply-chain snags, long waits to connect to the grid and challenging regulatory and political environments across the country are contributing to the slowdown, analysts and companies say.
New wind installations plunged 77.5% in the third quarter of 2022 versus the same period the year be
