Derek Thompson

We're in an environment with an elevated interest rate where Trump is waging war against legal and undocumented immigration, which is complicating the fact that I think 40 percent of construction workers in California are foreign born.

So the labor supply of construction work in California is scarce and therefore very expensive, also raising the cost significantly.

And you look around the country and there just aren't a lot of housing construction triumphs at all for a variety of macroeconomic reasons.

I care about outcomes.

We care about outcomes.

And if California, Illinois, New York, if they're going to pass laws.

that hold up abundance as the inspiration or motivation or philosophy of those laws.

And then three months, six months, two years later, we still don't have the fruits of abundance, whether it's building more housing, building more clean energy.

I am worried that that speaks to a gap between what I call the legislation vibes and the outcomes.

Yeah, the framework that I've developed for this, which I think is a critique of that first chapter of that housing chapter, is that to really understand housing in America, you need to understand a 50 year story, which is mostly about rules, a 20 year story, which is about business cycles, and a five year story, which is about the incredibly weird business cycle that has followed the pandemic.

Chapter one of our book, The Housing Chapter, does, I think, a very good job explaining the 50-year story of how a set of zoning and permitting and environmental legislation and rules that accumulated around the 1960s and 1970s has slowed housing construction across the country, but in particular in blue cities and blue states where there is very, very hot demand.

I think it did a good job of explaining that 50-year accumulation of rules.

But there's also the 20-year story, which is that after the Great Recession, the construction industry in this country was decimated.

And that led to the 2010s being the decade with the fewest houses built per capita of any decade on record.

That's not just a rules story.

That's a story about macroeconomics.

It's a story about the fact that after the Great Recession, there just wasn't demand or available labor or companies sufficient to build the kind of housing that we would need in the 2020s.

And then what happened in the 2020s was just...

One piece of mayhem after another, you had the pandemic, you had inflation, you have now, I think, a scarcity of construction labor, which makes it more expensive to build in many places.

And so I do think that to really understand the problems that states, that governors and mayors face when it comes to housing, you do have to understand that there is this kind of like Russian nesting doll of problems, 50 years of rules, 20 years of macroeconomic crisis, and then five years of macroeconomic and financing crisis.