The Supply and Demand Fraud

“There you go again.” – Ronald Reagan, 1980.

The conservative political columnist Thomas Sowell is back at it. He must have spent all of 15 minutes rearranging a few paragraphs from his previous post criticizing protection of Open Space, a concept he considers to be an example of The High Cost of Liberalism.

Is it plagiarism if you copy the same stuff you wrote a year ago and republish for syndication? No? Maybe it should be.

In his newest column on the topic he continues his geographically illiterate approach to solving the affordable housing problem in the San Francisco Bay Area. It amazes me how economists cling to naive neoclassical theories when they so quickly fall apart in a specific geographical context. Sure, housing supply and demand works the way Sowell argues if you’re inside the bubble of an isotropic plane. Lots of theoretical principles work perfectly in such settings. But, when you’re talking about housing in a real place, a densely populated peninsula on the Pacific Ring of Fire with a uniquely complex physical environment and one of the most dynamic regional economies on the planet, simple supply and demand graphs don’t work. Not at all.

But, I don’t want to be equally guilty of regurgitating a previous post. So, here’s my full rebuttal.

Geography has got to step up it’s game so we can more fully participate in these conversations. How many catastrophic mistakes are we going to allow before we begin to seriously question the applicability of naive economic theory to urban planning and other location-specific public policy decisions?