Rhys Lindmark: Hello, listeners. Today, I'm excited to chat with Alan Durning. Alan is the founder and executive director of Sightline Institute, a think tank for sustainability in the Pacific Northwest. Alan, thanks for being on the show, and welcome.
Alan Durning: Thanks for having me, Rhys. It's really a pleasure.
Rhys: Yeah, excited to dive in. And as Alan and I were chatting about before the show, we're going to spend most of today talking about housing. But before we dive into housing, Alan, your background is kind of interesting and cool because, you know, if you look on, you have a bunch of books and also through Sightline, you're interested in housing and also carbon pricing and democracy reform. What is kind of the throughline that ties all of your work together?
Alan: Hmm. Yeah. Legitimate question. So I spent the first decade after my schooling in Washington, D.C., at a global issue think tank called Worldwatch Institute, and there I worked on all kinds of aspects of the relationship between social and
inequalities on the one hand and environmental degradation and environmental repair, on the other hand. Then 28 years ago, I moved back home to the northwest where I grew up, and I founded Sightline to be a regional sustainability think tank. That the mission is to see if we can make the northwest a model for other places to do things especially well there that would be worth replicating.
So the land is about sustainability, and it needs to be globally significant in terms of sustainability so that where its, you know, solutions in our region can be worth emulating other places. Then the specific issues that we work on are all especially important to regional sustainability. So they've developed over time kind of emerged out of the analysis that we're doing in the conversation we're constantly in with people around the region.
So we work on democracy reform, for example, because if we can't get our democracy working better to be a better reflection of people's true values and aspirations, then we can't get any of the wins we need in other policy areas. For example, we work on housing affordability because extraordinarily high housing prices are the Achilles heel of the whole urban sustainability vision, right? We're doing a lot of the ideas of smart growth that have been around since the 1990s. We’re building around transit. We're investing in alternatives to driving and but we're not ensuring inclusive communities where everyone can, everyone can afford to live. So the biggest focus of our whole green cities effort is about housing affordability and specifically about zoning rules.
So when I started Sightline 28 years ago, I certainly did not think that Sightline’s largest program was going to be pushing for zoning reforms. But it just turns out that's a crux issue for the region and, you know, carbon pricing and climate policy is up more obvious why we would work on that. But the specific things that we've identified are the places where there's, we think there's substantial leverage, where there's a substantial opportunity for strategic interventions that can lead to dramatic change, we are the largest progressive think tank in the northwest, which is really impressive until you compare us to the rest of the world. We have 20 staff and our budget is about the same as a mid-size used car dealership. We're just trying to change history in the whole northwest, so we had to be very, very selective and strategic about what we do.
Rhys: That's cool. That's interesting. I think it's like when you come home, you're like, OK, it's one of those kinds of things where you start to work on one problem and like, oh, but that's really connected. Sustainability is connected. The housing is connected. The democracy is connected. The carbon... So it's like, how should we each tie those together. For you, how do you think about, one thing that you said that I think is really cool is like creating a model, doing things in the Pacific Northwest that can be a model for the rest of the world. Can you give an example of one or two, like a thing that you've done there that has been exported elsewhere?
Alan: Yeah, I'd be happy to. One thing that we've been working on for the last 10 years is to prevent the construction of new big fossil fuel facilities, particularly fossil fuel facilities for export. So coal export terminals and oil export terminals and all the pipelines and rail lines and all the rest that goes into that. Because if we're going to move beyond fossil fuels quickly enough to avert the worst dangers of climate change, one thing we need to do is stop building new infrastructure. The infrastructure tends to lock us into those old dirty technologies. And so we've been working with great success with a huge coalition of other organizations and local governments and tribes and media outlets and so on all across the region with enormous success.
Now, this program, which we call The Thin Green Line, which is the line between the giant fossil fuel deposits in the Rocky Mountain regions of North America and the fastest-growing energy markets in the world, which are in Asia. You know, we have a chance to stop the extraction of fuels, and it's been enormously successful with this big movement, we were able to, I think there were six coal export terminals proposed at one time or another in the last decade and 12 oil export terminals and 20-something liquefied natural gas facilities and petrochemical plants and so on.
So and we've been able to stop almost every last one of them. In the energy industry now, there's a saying that the Pacific Northwest is where energy projects go to die. So we have a lot of pride about that. But we have been able to export some of the specific tactics, argument types, and strategies to other parts of North America, so now there's a replica organization related to Sightline in the Ohio River Valley-based in Pittsburgh that's working on energy projects there, and some national actors are focusing on using the same kinds of strategies in the Gulf states, for example. So that's one example.
A second example would be our work on democracy reform. We've done a lot of work on campaign finance reform, and we designed the world's first system of democracy vouchers. Democracy vouchers are a form of campaign finance where you mail to every voter in the district, coupons that they can give to candidates that they like, and the coupons are worth some amount of money. So in Seattle, we give $100 worth of coupons, and then voters can give them the candidates that they like. Candidates have to agree to a whole set of strict rules and regulations on how they can raise money and spend money and so on if they're going to get the public dollars.
But if they do, then they can just spend all their time instead of dialing for dollars from rich people who spend all their time talking with voters in their district just do entirely people focus campaigns and they can fund their campaign along the way has been tremendously successful in Seattle and there are afloat, there's a flurry of interest in other places about implementing the same thing, and it's been included in a number of proposals for national reforms and state reforms. So it has not yet been adopted and implemented in other cities. But I expect over the decade ahead, we'll see half a dozen implementations at the state and local levels.
Rhys: Wow. Cool. Yeah, both of those are awesome. I mean, the first one Super Green. It's like when we get tied into a system that it's hard to move. The next one, so it's like, let's stop them, you know, six oil, 12 coal, you know, 20 natural gas or whatever those numbers are. It's like, that's amazing. That's great work. And it's it makes me think to have like one way to grow and scale things is by, you know, for me, coming from more of ish a startup background, somehow it's like, oh, everybody must use your app, you know, in order to make it scale. It's like, well, another way to scale that doesn't necessarily get you the value capture, but it's still a lot of value creation is by just exporting the tactics.
So it's like, hey, folks, in Pittsburgh, this is a great way to do things. Y'all should do it out there and then they do it out there and it's working out there. So it's like, I love that kind of do something and then, you know, duplicate the model other places and then the other thing about democracy vouchers that also makes me think, you know, for me, I exist to some extent, like the cryptocurrency dow world, and they're so excited by all these new forms of governance and stuff.
That's exciting because there's like a new playground there, but it's also great to like, how can we connect these and put all these things into real life? So like, having democracy vouchers obviously seems like a great way to do some of these slowly but surely working on these campaign finance reforms, H.R. one, et cetera, that that we need for a better functioning democracy. So let's dive into housing for a second because I think that was what kind of initially drew me to you and you're writing. For my reader or for the listeners here just to note, you know, Alan's written, you know, over the last couple of years or so, he wrote this amazing series of pieces on housing reform and how to think about housing in this new way and then connected it into what we can learn from other places around the world.
So it's just, it's brilliant series and maybe, Alan, I want to start just for our listeners. Could you say, could you kind of explain the contradiction at the heart of housing policy?
Alan: Yeah, I'd be happy to talk about that some. Let me step back a tiny bit for context. That most of Sightline's work on housing is focused on local restrictions on building enough homes. So, so the restrictions that are mostly in zoning codes, and some of them are in building codes that are set mostly at the local level and the result of them is that we in most major cities in North America, at least cities with strong economies, we've gone into what we call residential lockdown, where we're building nowhere near as many housing units as there are people who want to live in that community, with the result that the cost of housing spirals and which here in San Francisco, which is the poster child for this situation.
But all with all of the coast, the hot economies on the coasts, and all the other hot economies in North America are evidencing this. We see the same thing in other countries as well to two different degrees. In addition to that local problem, right? In addition to that local problem in the United States, we also have a profound contradiction between what it would take to get housing for everyone, affordable housing for everyone, and the approach that public policy takes towards the housing sector. What I've written about in a couple of articles is that we don't really have a housing policy in the United States.
We have a real estate policy in the United States. If you look at how much federal money goes into real estate-oriented policies, it dwarfs what we spend on housing. So the US Department of Housing and Urban Development spends about $50 billion a year subsidizing housing for low-income families. Two-thirds of that goes into vouchers, rent vouchers. Another third goes out to help the construction of affordable homes, which will then be subsidized in one way or another.
Meanwhile, we're spending hundreds of billions of dollars through the tax code on subsidies to homeowners or to homeownership, more specifically, and the way that these policies are structured, they massively encourage everyone to treat homes as an investment vehicle, right? So the more money you borrow, the bigger tax deduction you get through the mortgage interest deduction, the more that your home appreciates, the more you get capital gains on that home, right? Capital gains are up to half a million dollars per couple. The more property tax you pay, the bigger the tax break that you get through the property tax-deductibility and then there's another big form of tax break to homeownership that is, do I even want to try to explain it? [crosstalk] We're going to have imputed rent.
Rhys: Yeah, we need to get too deep into it. We don't need to talk about imputed rent. But there's another thing which sucks.
Alan: So, you know, somewhere between a hundred and fifty and two hundred and fifty billion dollars per year that the federal government is providing through the tax code, that's encouraging everyone to treat housing as a place to invest as opposed to as a place to live and that's just on the tax policy side. Then there's the whole banking and mortgage regulation side, where the United States has for decades followed a philosophy of what I call feed the horses to feed the sparrows. That is to, the idea is if you support the mortgage banks, they will pump money out and people will be able to buy housing, right? The in the horse, the horse and sparrows references from John Kerry Galbraith, who many years ago said that, no, no, it wasn't, it wasn't Galbraith, who was it?
The English guy, my mind just giving me right now, anyway. So he said, John Maynard Keynes, there you go. John Maynard Keynes said, If you feed the horses, you feed the sparrows, and the way that the theory was that the oats would pass through the horses digestive tract and end up on the road, then the sparrows can come along and pick in the manure, and that is basically the approach that we have. We said, we will pump money into mortgages. We will essentially guarantee a bailout for the mortgage sector of banking. And therefore, all this money will flow in knowing that there's a federal guarantee, right? That the institutions are too big to fail. We will look the other way and be and only regulate lightly the securitization of mortgage loans, right?
Despite enormous risk to the macroeconomic stability of the economy. So we saw this in the savings and loan crisis in 20 years ago, and we saw it 13 years ago in the global financial crisis, where the entire house of cards of the global economy was imperiled because of mortgage lending and this huge sort of Ponzi scheme of pouring money into housing and treating it as real estate, right? Now, its current policy is not as bad as it was in, say, 2005, 2006, 2007, right? We're a little tighter in the regulation United States, and we're not putting quite as much money into the on the tax side years of tax subsidies.
But still, the overall system is one that's designed to encourage people to treat homes as investment vehicles and this is a fundamental contradiction. You cannot have both affordable housing for everyone and rising home values, right? You have to pick and basically, the United States has picked rising home values, and then we put a little money in the side into affordable housing programs and subsidies. But the fundamental contradiction has not been addressed. That's all piled on top of the local constraints on housing, right, that are written in the zoning codes. I get a little more, I write about it.
Rhys: No, my God, I mean, this is brutal.
Alan: When you listen to politicians talking about their commitment to homeownership into affordable housing and they don't talk about this fundamental contradiction, right? So is it any surprise that housing costs are so high in places with hard economies? No, because the system is designed so that investors in real estate will see appreciation.
Alan: This does not have to be this way, though.
Rhys: Yeah. And we'll talk about the, to be the story in a second. But yeah, that exactly what you're getting at this like. I kind of remember realizing, I had it kind of in my mind, I was like, how does this, and I was telling it to I wrote after I, in my newsletter I mentioned your work and I talked about, you know, I said something like homeownership is bad or something like that. A lot of my friends are homeowners, you know, they were emailing me and stuff, and it was like one of the emails I got the most pushback or whatever.
And it, but it's just things like, OK, if there's bananas and it's like if we want more bananas, we make more bananas as a people, you know, like, let there be abundant bananas, let's just flood the market with bananas. But with housing, it's like, no, no, no, no, no, no. We got to make sure that the housing goes up in value, make it like artificially scarce, treat it housing as equity style instead of housing as a commodity and that's what you get. You get housing, and it's really, really brutal. I think hearing those numbers to just hit, it's cool to hear you talk about all those different layers.
There's the local issues. Then there's the, you know, the $50 billion towards rent, you know, towards like helping folks with rent, but the $250 billion with tax policy on the other side and then in addition, all of the kind of financialization kind of issues as well. So it's like it's a bad system and I see, well, I think that actually your piece got me thinking was just this reframing a lot of the folks in the space already into this, but reframing it away from affordable housing and towards abundant housing. It's like we don't necessarily want things like affordability, yes, but the goal should just be enough homes for all the people that exist. So it’s like, abundance is what we want to create. We're going to make, we want to create lots of supplies of subsidizing demand. So that's all brutal.
So what do you think, what getting to that, what should we do about it? There's some, and like for me, I mean, one of my initial things, it's like, OK, should we treat it less? Should we give homeownership to everybody? So like continue to treat us equity, but just have everybody have equity, you know, stake in it? Or should we say no, no, no, it's definitely a commodity? So like, no one should have, like, how do you think about the answers to this?
Alan: Yeah. Good question, and the answer, of course, is multifaceted, but let's talk, let's focus on the kind of macroeconomic stuff for a minute, and then we can turn to the local zoning constraints and so on, because I think there are different strategies and there's different mindset. But on this question, there's a national policy about the subsidy route, subsidization of and the banking and mortgage regulation. My prescription is that tax policies should be, tax policy should be neutral between owning and renting, right? Owning a home shouldn't be a good way to make money. That's the norm in Germany, in Switzerland, and Austria, countries where housing is abundant, rents are much more moderate relative to incomes than in the United States and other countries.
There are places where the tax system is essentially neutral. You don't get any tax break for renting, you don't get any tax break for owning, or if you do, the two are relatively well balanced, right? And they have plenty of homeownership. Germany has, you know, 40-some percent homeownership. The United States has 67%, right? So, but in Germany, you don't get rich by owning a home, right? Your home value is stable and the explicit goal of policy in Germany is for home values to be stable.
Rhys: Yeah. That's the crucial piece.
Alan: Recently, there was a revolutionary proposal from the government in New Zealand that was proposing to make that explicit goal of policy stable house values, right? It shouldn't be revolutionary, but it is.
Rhys: Yeah, yeah. I'm just laughing so hard over here for you and I was like, oh my God, yes. But for other risks like, oh no, this is not housing are supposed to make money. You're supposed to make money.
Alan: That's right. And you have to pick if we want housing to be affordable for all, I mean, like another dimension that is like if you want to stop distorting the entire economy to pump trillions of dollars into real estate values that should be going into the startup economy, that should be going into improving productivity for businesses and for workers and families, right? Like this is a giant macroeconomic problem in terms of productivity and growth. It's not just a problem about it makes life hard for working-class people. It's also a massive distortion and massive underinvestment in the things that the economy needs more of. We need green technology, we need green infrastructure, all these things.
But meanwhile, we're pouring all, all the systems are encouraging people to pour money into real estate, right? So the prescription is tax policy should be neutral and banking a regulatory policy should be to deflate all real estate bubbles immediately and to aim for stable real estate values, right? It's easy to say that. It's really hard to do that when the entire economy and all the political economy that has resulted from it is now built around the expectation of rising real estate values, right? But you can't, but at least if you understand the goal and begin to identify what kind of policies you would need.
So I want to say that we have had we've had remarkable progress on this. In the 2017 Trump tax cut, somewhat shockingly there was a huge reduction in the mortgage interest deduction. There was a scale-back of the capital gains exemption for homes and there was a reduction in the property tax deduction as well. So, so like a 50% reduction in the amount of money flowing annually into tax credits for home investment.
Rhys: Amazing, you know,
Alan: It's amazing. It's amazing. It is. I wrote in a long article about the politics of this, and it is conceivable to me that the somewhat bizarre shifting in the composition of the two major parties may make the United States much more amenable to this kind of argument than it has been in the recent past, right? I won't go into all the arcane details about it, but I feel actually slightly optimistic, right? That we may be able to, we may be able to win changes on the tax policy stuff. I don't see exactly how we went on the banking policy, but maybe we should turn to, maybe we should turn to a certain level, and you said like abundance, abundance is the core concept. Like people should have the experience in the housing sector that they have when they go into modern American grocery store, right? Like the experience when you go into a grocery store is, oh my gosh, I can have anything I want, right? People aren't competing to get, you know, the only loaf of bread.
Rhys: Yeah, exactly.
Alan: They're not arguing, really. You're bidding up the price of that box of spaghetti. There's just a loss of everything and you have to make then choices about what's the right tradeoffs and people buy different things. But housing should feel like that. Housing should feel like that. The only way we get to that is if we close the gap that has developed over the last 40 years in the United States between our demographics and the housing stock in cities with hot economies. Now, overall, in the United States, there is a lot of housing, but a lot of it is in places where people can't find jobs and the whole rust belt.
Rhys: Mm-hmm. Yes. How do you think? I mean, I love what you're saying. Just like hearing again, this great meme about like stable real, you know, stable housing values that just being the policy goal and then working from there about changing the whole political economy and shifting it and that gets into these difficult. I love the grocery analogy to kind of similar to my banana one but better. As you said, there's all those ones, those macarons, the Trump stuff actually was pretty good for it. Then the financialization tougher. How do you think about local zoning laws? Because for me, that's kind of one of the harder things, because something like that we talked about, of course, OK, there's all of this housing is equity versus housing is commodity baked into the tax code.
But there's also this feedback loop between what the tax code thinks and what the humans think. And so all of my friends and even these liberal folks, they're all like, oh, no, you know, not as much housing or they don't say some of them were giving business up like, how do you think about local, and I think about local policy and NIMBY organizations, it's difficulty in local control. How do you think about how to change things on the local level to get the zoning better?
Alan: Yeah. So this is a separate, but of course related issue to the national level banking and tax policy questions, and it is in some ways, as of you know, 10 years ago it was an unsolved problem. I think we're figuring out ways to solve it now. I'm feeling cautiously optimistic. We still have a long way to go, but we now have one substantial victory at the city level and at the state level against the worst forms of exclusionary zoning and excessively restrictive zoning, right? So maybe not yet in San Francisco.
Rhys: SB9 was nice. It was a nice thing for all of California, which is great.
Alan: Right. So California has now legalized duplexes on every single-family lot, but almost every single-family lot in the state. That's an enormous victory. It’s an enormous victory and huge credit to all the Californians. We've been working for that and everyone all over the place who has been making this point that, that our political assumptions about land use are outdated, right? We're operating with a 1970s small is beautiful mindset. And, you know, I really have Schumacher and I still get misty, like I'm old enough that, that philosophy, you know, resonates for me and the idea that, you know, that the right way to live in the to live is, is to have a lot of have a big yard and trees all around you and so on, and just one family per lot.
But the reality, meanwhile, has changed. So we've come an enormous distance in the last decade, but still, in most places in the United States, 75%, in most cities in the United States, having 75% or so of land, it's reserved for single-detached homes. Almost all of the growth in construction of homes in the last 20 years has been the dense areas of cities, in apartment buildings, or on the exurban fringe, right? So we and that's the pattern that I referred to before as residential lockdown. We have reset. We have, you know, the number of homes being built is now is lower than it was in the 1960s and 1970s, though our populations are larger and growing just as fast, right?
We are just dramatically under building, just dramatically under building. This is a problem in very much the problem in Seattle, Portland, and Vancouver, B.C., the three big cities where Sightline works, but also in smaller outlier cities like Boise, Anchorage cities which are in red states and blue states. So the, like the solution to all this varies a little bit by place, in terms of the politics of the place and so on. But the overall story I want to tell you is this is a giant problem and we are finding solutions to it. We are finding solutions to it, we're starting to win some victories.
Rhys: Yeah, and specifically with things like taking away some of the exclusionary zoning or, and I actually really liked your article about New Zealand because they just made a law that was like, look, they had real issues with their increase in property values. You know, it's up from, it's up 200%, you know, a 3x since 1990 or whatever. So they said they just made, they removed all the parking lot restrictions or parking restrictions if they said anything near a transit center can be at least six stories, you know. And it was just like, you can do this. So I think that's part of what something like SB nine or some of the other victories you've had kind of shows us that this is possible.
I also think one thing that you hit on there, which is actually really important, is this vision, and I actually want to double click on that for a second because it's like we've been told this vision of the American dream or at least, you know, I was kind of told this and my parents definitely told us or whatever. It's like, OK, yeah,the family, you know, green grass, you know, two car garage, et cetera. And then when I tell people, I used to tell people, hey, San Francisco has like a third, the density as Japan and every, it's like, oh God, I don't want to be like Japan or whatever. So now I say, oh, San Francisco is the third. The density is Paris, which is also true. But they're like, oh, Paris, like, I want to be like Paris.
How do you think about a vision that you kind of want to pitch to people like, this is what like living in a city should be like, you know if it's not or like living if I have a wife and kids or whatever and we like, are we going to, if we don't live in the suburbs, it's a nice house and car? What do we do or like in the dense city with all their apartment buildings or what?
Alan: Yeah. Well, first of all, the abundant housing movement or the YIMBY movement, as it's sometimes called, is it is not saying you can't live in a house. It's not against any housing type, it's just against restrictions on construction, more suitable, on construction of all types of housing for everyone who wants to live in our cities, right? So what it's saying is right now, with this massively imbalanced set of rules and regulations that restrict in most metropolitan areas, 75% of the land, for only one housing type, which is the most expensive housing type, and that is a single-detached house on its own lot, right?
That's an outdated form, it is bad for the climate, it's bad for social mobility, it's bad for economic growth. It's bad for racial and class integration. And it is time that we allow more types of housing all over the cities, right? So there's, you know, the fight ends up being, it has ended up being at the local level for, you know, changes in zoning rules. But I mean, I'm going to circle around, I promise I'm going to come around to answer your question about what my vision is, right? But I want to talk a little bit about the kind of political economy analysis that I'm trying to engage in a series of articles to reflect about winning abundant housing, which an attempt to kind of move to a level of political theory. Sightline has a staff of about six working on this.
We've got all kinds of detailed arguments to help win specifics issues, but I'm trying to move up a level and think about what's the structure of the fight. Okay. Yeah. And a key dimension of it takes us back to homeownership, right? Because what we find is that in most places, homeowners are the overwhelming share of voters, and they because all of the incentives have encouraged them to invest in their home as their most valuable asset and as their path to increased assets, right? The way that they're going to be able to retire, the way they may be able to, you know, help send their kids to college what have you, right? There are intense pressures on them to defend their property values and to be risk-averse about changes in local rules.
That is the root explanation here. It's not that anyone's bad. Is it that the pursuit of people, that folks pursuit of their own self-interest makes them risk-averse. So the solutions that we need to implement are ones where we're no, we're not very many people suffer a big, a big loss in their assets, right? Now, the good news is that most folk’s property value actually goes up when you allow them build more types of housing. But they are like there's a chance it'll go down. And we know we know that human psychology is asymmetrical with respect to losses and gains, and people are more worried about minimizing losses than they are hoping to get wins, right?
So this is, that's like the root core issue here that politics struggles with and why most places have gone into residential lockdown even though they're in the United States. They're whatever 22,000 cities and counties that are making zoning decisions. And almost everywhere the zoning is ended up being really restrictive, and it's because of this route, you know, human psychology. So we have to first acknowledge that and not make this like a morality play of like good people against bad people, right? It's not is not that, right? We have to figure out policies and strategies, political strategies that can work and that's the purpose here that I've been focusing on in my research. So we have had wins and we have wins in cases where we have been able to mobilize the constituencies who stand to gain from abundant housing and give them political voice.
Those are important strategies in themselves. Like, so, for example, we know that we know that getting renters to actually participate in politics helps, helps get wins. And then the other big thing that the movement in North America has been doing has been moving from the city level to the state level, right? The move to the state level is really important because it changes the game, it changes, who shows up, right? When you move to the state level, then big employers will participate in discussions of land-use rules and trade unions will participate in discussions of land-use rules and tenant advocates and the AARP and all of the folks who have an interest in big economic policy will show up, they're not going to show up for a city by city fight over the local zoning rule, right?
They have an interest in it, but the only one who shows up for the local zoning rules are the, a few NIMBY homeowners and the person who's trying to build a new project. So moving to the state level is a key strategic choice, and that's confirmed by my analysis of the process of change in other countries, the countries that do housing well, Japan, and the German-speaking countries in Europe. They have different paths, but they have transformed the politics. In Japan, the situation is that that all the decisions are made at a higher level. They made at the national level. Japan is a very centralized country in terms of decision-making, but that changes the game. So by moving to the state level, we get a little bit more of the Japan model in the mix. Different constituents show up and participate in the fight, which is how California, by moving to the state level, was able to legalize duplexes statewide, able to legalize accessory dwelling in statewide, and a number of other wins over the last few years.
In Oregon, we have been able to win duplexes statewide and in fact, in all large cities by state law. Now fourplex's are allowed on almost every urban lot. So, you know, we could go around and, you know, talk about the movement in other places. But the move to the state level is a key strategy and it's because it brings more constituents into the fight. All right? No one in North America is yet doing well is what Germany and the German-speaking countries in Central Europe do, and that is to create incentives for localities to welcome more homes. In Germany, local governments get about a quarter of their funds, according to a formula that rewards them for having more population.
So whereas in the United States, localities participate in what's called fiscal zoning, where they try to avoid the types of land use that are going to cost them more revenue than they bring in, typically they will avoid apartment buildings. In Germany, here's sort of the locals are kind of competing to attract more people because that's how they increase their local budgets. Similar things in Switzerland and in Austria. So in the northwest, we at Sightline have begun introducing bills in the Legislature that would start to incentivize cities so that they get a direct reward for adding more homes. We've just had, well, one legislative cycle where we started work on that idea and we saw the cities become big supporters of this, but we haven't won that fight yet. So those are the two big charities move up to a higher level government and create incentives for cities.
Rhys: Yeah, I love it. I think it makes me think of a couple of things. A and kind of just like popping off the stack there. I love what you said about, hey, thinking about the political economy. But actually think about the structure of the political economy, like what is it, the root cause here? As you said, it's like, yeah, these folks who are defending their property values, which makes sense and that's why some of the, like the YIMBY versus NIMBY language can be negative in a way, because just this binary classic like meme that spreads.
But actually, it's not like the, even though that you and I are like over the most YIMBY or whatever, like, I wouldn't want to even call myself a YIMBY, you know, and I wouldn't want to like, sell to, oh, you're YIMBY, you're so bad. It's like, what you're doing makes sense, you know, it's like that. That's all good. So I think they like that kind of polarization is bad. I think that this, which is kind of why the reframe to abundant housing I'm into and as you said, I think there these, just like human psychology thinks the risk, you know, loss aversion is a thing that humans have and we should talk about that.
We should talk about how that then makes us, you know, build less house. So it's like, and it makes me think of some other things that exist, like the coding side, where it's like adding more like lots of spaghetti kernels. So instead of you're just trying to do is like, be very, very chill with like adding new code because it's we're so much more game to add more code than it is to take away code. So it's like you should just know where entropy is heading and things like that. So I think that there's a similar thing happening here and as you noted, it's like, OK, once you understand this kind of, the deep-down kind of desire for local property values to rise, then you can get the renters more power. You can do the kind of incentivize locally piece which you were trying to do here, but as other places do it or you can kind of move up a level and kind of I guess it's interesting because I guess we have had success in America moving up the state level.
The federal level obviously seems difficult. Then the local level, I guess we just haven't tried that much, but I'll be curious to see how that works.
Alan: No, I think that we try the local level for years and years and years and mostly lost.
Rhys: Oh, OK.
Alan: I mean, there are counterexamples and there are cities that have been doing a lot better. But I think it's, you know, you got to pick the arena where you're going to, you know, you're going to have your fight. The more local you get, the larger the interests of incumbents that these homeowners, the larger those interests loom
Rhys: Yeah. Yeah, that makes sense.
Alan: It gets, you know, the moving up the ladder, you bring in more constituents, and then the decision-makers are weighing more concerns. More interests, right?
Rhys: Yeah. So how do you think about one thing that I want to ask here is there's this great New York Times video that was about I'm not sure if you saw it, it was like, it was looking at kind of signaling progressivism, which exists these days, or it’s whether it's in San Francisco or in Seattle and things like that. It was like looking at the people who are really into signaling. But then like the progressives are like, yeah, we're signaling, like it says in the democratic platform like we want housing values to be fair or whatever.
Then you look at, 800,000 new jobs in the Bay Area and only 200,000 new houses or whatever. And it just went through and it showed the one I didn't know it was in Washington. I guess that the tax code in Washington is, very unequal. It's like and but oh, it's very unequal all of the top 10 states. Three of them are blue that have these super unequal, the most unequal tax codes. How do you think about like the work that you're trying to do in this kind of like impact on that type versus like the current state of progressive politics are like signaling or, how do you think about that?
Alan: Yes, it's a really good question. Because the places that are the worst offenders on housing abundance are under one party rule by Democrats.
Alan: So this problem of housing abundance is a problem that Democrats could fix. In most cases, right? I mentioned before that scientists working in places like Anchorage and Boise that are in red states, and we need different kinds of arguments, right? I think that there's, a few points to make here. One is that we need to teach the choir a different song and we're making progress on that, right? Like there is now a lively debate within the progressive world between the abundant housing people and the kind of older school view, it is a little harder to articulate what it is exactly, but it's sort of an anti-developer narrative, right?
Rhys: Anti-market like market-solving something. Oh, you know, it's like, ooh, you know?
Alan: Yeah, well, well, there's some really interesting analysis about this that the way that our political discourse has evolved in the United States, as in most industrialized countries, is that the right has, well, its own story.
Rhys: Become more authoritarian as judged by various different [crosstalk].
Alan: More recently, yes, but that the right is essentially anti-government, right? That has historically been, you know, the post-World War Two where all of the right has been skeptical of all government things and the left has been for regulation, more regulation of the market, and then some subsidization at the bottom of the market, right? So if you present a problem, if you have a problem in a left rural place where the problem is overregulation. The left doesn't really have a, the neural pathways well developed to recognize that, right? Like my view is that the U.S. economy, like most industrial economies, is rather under-regulated at the macro level around certain huge problems like climate change or the systemic risk posed by too big to fail financial institutions.
But is quite overregulated at the local level on issues like building, right? But that's not like a learned discourse that's hard to put in a City Council campaign, right? So it just takes some time of educating and re-educating and building movements and so on that says, no, actually, the problem that we have is a shortage, right? Anyway, so the left's solutions are more subsidy and more regulation. So we end up with rather than a reform movement within the left that says, well, the reason that Airbnb is such a huge controversy, for example, is because we have a housing shortage and tighter regulations on Airbnb as good as that's going to feel to us and, you know, no matter how good that's going to fit into our left paradigm that says pro-market players are suspect and the bigger they are, the more profitable they are, the more we should regulate them.
The right answer is probably, oh, well, we probably should tax those activities and make sure that they're paying like a hotel tax. And then we should recognize that there's an enormous shortage of housing, right? That we should build a lot more housing. And in fact, there's recent research that shows that places that have not regulated Airbnb are having more rapid increase, bigger investments, homebuilding places that have tightly regulated Airbnb. We're seeing a drop-off in homebuilding. So that's like that's to take the fight to the hardest place for us. Like there's even less sympathy for Airbnb than other things. But up and down the line, right? Like the big city left Democrat impulse says, well, let's stick it to the landlords, them more, right?
Let's subsidize more. Let's allow construction of buildings, but put tight rules on that say well, a quarter of the units have to be for rent-regulated for low-income households and some of that's OK. We do need more equity in the system, and my personal belief is that the best way to do that is to provide housing vouchers as an entitlement or better universal basic income or even just a child allowance, right? Giving people money is a better solution than trying to get each individual building to have tight rules about what how many of their units are going to go to people at what income levels, right?. Like, let builders build buildings and then let's give poor people money so they can afford to move there, which, by the way, is which, by the way, is what France does very well.
France is a social democracy, and the way that they provide most housing to poor and middle class, lower-middle-class families is very generous housing vouchers and they trust people to then use the vouchers on housing if that's what they want to spend on or in fact, but in fact, no one's checking if they decide that and said they wanted to go, go to the grocery store and buy, you know, more bread. They can do that, too. So but this is I mean, there should be something that's good about this problem, that it's it is not a partisan fight, but it does take a different kind of organizing within progressive places, right? And I see that it's, the way it's breaking down in the northwest is sort of a generational argument within the Democratic Party. I am 57 and the youngest age to still be a baby boomer. People, people who are my age and older, I think are in an earlier generation of progressivism.
I think people that are Gen X, and especially Millennials are much more ready to embrace the idea that the root problem we have here is shortage of housing. And if the frame for the problem is we have a housing shortage. Then it's a lot easier to solve it if the frame is landlords are charging too much or developers are gouging, right? Then we get to the wrong answers.
Rhys: Yeah, yeah, I love that. I think and what you said there is. Yeah, just having just a slightly more nuanced view of life instead of just like regulation good, you know, it's like, OK, we have under the regulation of the federal level and overregulation at the local level and even just getting that. Then, as you said, just like this of it, just in the words which have abundant housing issues, we don't have abundant housing. Talking about the grocery store, those kinds of things can get people into this mindset and then showing them also, it's like you can, and that's why I love some of the things like this recent New York Times. It's like, OK, this is literally what it says in the Democratic Party platform.
Then you look at these top three places, you know, they’re ruled by Democrats. So what's going on here, people? And I think that hopefully having and this gets into network democracy and things like that, but having politics where the people's values get more represented in the representatives and that those representatives are not just doing public performance, but are doing more kind of like private policy and policy that's like, you know, transparent with its outcomes or whatever. So that is exciting and we're getting into wrap mode here. I'm thinking about, I guess, maybe my final kind of going away question for you is. I mean, I guess, you know, so it sounds like so if you're a random person listening or if you're just me, you know, living in one of these like urban cities, how do you think, what would you tell them as they go forth in their life in terms of like either why to be optimistic or the things that they should do in their day to day to kind of, you know, get excited by possibly this abundant housing future?
Alan: Well, the first thing is to remember that that the building sector of the economy, the housing sector of the economy is both massively consequential in so many ways for our lives, right? The quality of our lives and our personal economies, our bank balances, also our carbon emissions. And so this is massively important, massively important, and also quite slow in changing, right? You know, we have huge fights over planning policies that take several years to get implemented. And then the planning policies don't get built out for a decade or two.
Rhys: So sad, I'm so sad about this thing, by the way. It's like, oh, in California, we got this plan that's going to have the regional housing allocation thing. It's like, OK, well, that's going to build 300, 440,000 more units by 2035 or something? It's like, oh, no, like the zoning just needs to be ready by that. And then the housing can get built. It's like, oh, that's a long timeline.
Alan: It's a long timeline. Yeah, but I mean, this is it's important that we set expectations realistically, right? OK. So the first is it just takes a long time. But the second is, but we're actually making progress, right? We have had big wins at the state level in California and in Oregon and in a bunch of cities now, and the win is at our backs. We're going to have a lot more wins in the time ahead. We're going to have we're going to see cities sort of leapfrogging over each other to do more dramatic things. So the city of Portland has adopted a rule that allows a fourplex on almost every single family light in the city.
You can do six if two of them are subsidized for families. Six, right? So we went from one to six, right? So you know who's going to...? So now we need to get all the suburban cities around Portland to, you know, to go to four, they probably not go to six. But we're making progress. Now, it's going to take another 20 years to build a lot of that stuff. But it took us 40 years to get into this mess. So, you know, if it takes us 20 years to get out, well, that's the best we can probably hope for. That's, you know, I think that's good enough. I think people need to lower their expectations and then hold their leaders even more accountable.
Rhys: Beautiful. Yeah, I love that. I think, I just want to thank you personally for doing this work for a long time. You know, fighting those hard fights over and over again, talking with people, empathizing with them, thinking about the political economy in the metapolitical economy, and just excited for the work you're doing. And again, for my listeners, if you want to check out Sightline, I think it's just Sightline.org. Is that right?
Alan: Yeah, that's right.
Rhys: Yeah. And then they're on Twitter and then check out Alan's. I'll put them in the show notes. But these great, a bunch of these pieces are just like, as I was thinking about stuff, I was like Googling, and I saw Alan's stuff. I was like, oh, this is great, and I read the whole series. I was like, oh, all these are great. So definitely worth checking out.
Alan: Thank you.
Rhys: Now, Alan, is there anything else you want to say for our listeners, either place to check out Sightline or anything else to get involved?
Alan: Yes, Sightline, S I G H T line and well, I appreciate, Rhys, what you're doing, and I appreciate whatever, whatever else is struggling, struggling forward through this. It's a difficult time for folks who share our values. But we are making progress. We really are. Let's just keep, we just got to keep at it. Together, we're going to get to it. We're going to get you a much better outcome.
Rhys: I agree. 40 years in, 20 years out. We got this people. Oh, thank you again, Alan, and goodbye, everybody. Thanks for listening.