About a month ago, I was diagnosed with the coronavirus. Like many, I am keenly aware of the seriousness of this disease and thankfully had only a mild case. While we are still in many respects in the middle of this pandemic, progress has been made, and we can begin to look toward the future.
Government officials often focus only on what’s in front of them. Few look over the horizon to understand how what they do today affects residents, including Californians, tomorrow. The state is locked down. But is the debate that persists the right debate? Is it what we need exclusively to think about? We all recognize the lost jobs, public health risk, and damage to California’s economy that the virus has caused. In my view, we need to move past today’s debate on when to re-open it, what milestones satisfy a reasonable test for reopening, and ask this tough question: what action steps will help to ensure that a re-opened economy works for Californians, given the high cost of living?
Only strong leadership that looks ahead and lowers the cost of living can surmount the cost barriers.
Looking ahead, we must come to grips with the hard reality that re-opening the economy is step one. Step two is lowering the cost of living. That starts with lowering the cost of housing. Achieving that will lower the cost of health care, education, essential services and the cost of doing business. The hard facts are shocking and ought to outrage Californians.
Rents in most place range from $700 to $1000 a month for good middle class residences. In California that range is between $2,000 and $4000 a month. That is outrageous. It fuels higher costs for access to health care, for company costs in paying workers, for costs of paying police, firemen, teachers and first responders. The most important action step towards a solution is not rocket science. California has a burdensome statue, the California Environmental Quality Act (CEQA). This 50-year old law, designed for a previous era, was never intended to apply to homebuilding or housing.
CEQA drives costs for new homes and apartments through the roof. CEQA requires projects take into account all environmental impacts on a project. That’s fine if we’re talking about wetlands or keeping beaches clean. The environmental review process a killer for people who want to provide housing for working people and the middle class. Bureaucrats demand studies, hearings, and procedures that eat up time, resources, and capital that should go to building affordable residences. That’s before we consider the cost of costly lawsuits that delay projects and eat up more money.
Make no mistake. The people of California foot the bill for this red tape and unfair regulation that serves little or no purpose for housing. Applying CEQA to housing twists and distorts its original purpose. It is costing California our future. This is about more than just housing. As struggling businesses get back on their feet, they need a lower cost of living to pay workers and do business. I’ve talked a lot about the potential for new enterprises that California’s skilled workforce, with high technical expertise, might play in improving medicine and health care.
Right now, although estimates vary, some say that 80 percent of our antibiotics and compounds used in medicine are manufactured in China. We should encourage entrepreneurs and our health care providers to start up a new manufacturing base that provides high-quality, safe medicine at affordable prices. We need medical and health care independence. But how can an entrepreneur or drug company invest money in this state if the cost of living makes us uncompetitive with other states who would make to take these jobs.
One thing is for sure. We cannot expect or afford government to permanently subsidize the re-opening of our economy. That is especially true if the current wave of the virus recedes and a second reappears. Government lacks enough money to more or less permanently subsidize everybody through successive waves of a virus that still is not fully understood.
The time to think about realistic solutions is now, so that when the economy reopens, we are prepared. Lowering the cost of living would provide a solid foundation that enables companies to achieve success, and we can start immediately by suspending CEQA for two years. This problem is solvable. It just takes innovative solutions.
John Cox is a businessman in the housing industry and chairman of CHANGE California, a non-profit aimed at empowering independent voters.