California's Government Has Turned Homelessness Into Big Business

The new money will be consumed in a bureaucratic hiring frenzy, used to pay state-level salaries and pensions, and build a bigger "homeless industrial complex."


At a leftist event years ago, I heard a speaker disparage economist Adam Smith and his idea that a nation can best prosper by letting individuals make their own decisions. With the Bernie Sanders candidacy on the rise, anti-market attitudes have gained steam—even among people who express them on nifty electronic gadgets and do so, presumably, with a full belly. Attendees seemed to find the Smith approach crazy.

Granted, the "invisible hand" of the marketplace is, well, invisible. One doesn't see the millions of individual decisions that place the exact widget you need for your repair project in your hardware store. I'm not sure why leftists don't see the marvel of this process. If they want real insanity, they should look at the alternative: the clenched and visible fist of government.

You might have noticed California is enduring housing and homeless crises. The market solution to housing shortages is simple: Government should reduce regulations, slow-growth restrictions, rent controls and fees that limit supply and drive up prices. Let builders build. Homelessness is a more complicated problem because homeless people often have addiction and mental-health issues, but more housing would help.

I can't say exactly how it will work, just as I can't say exactly how a molly bolt gets from the foundry in India to Home Depot in Sacramento. But I can tell you what won't work—namely the policies our government now is championing. Gov. Gavin Newsom spent most of his recent State of the State speech detailing a blueprint for dealing with the "disgraceful" homeless situation, which involves more public spending and programs.

But, as The Sacramento Bee reported following the talk, the governor's ambitious plans "depend on a state department that is understaffed, lacking permanent leaders and struggling to adjust to change, according to documents and interviews." You can take this to the bank: The new money will be consumed in a bureaucratic hiring frenzy, used to pay state-level salaries and pensions, and build a bigger "homeless industrial complex."

That's a facetious, but accurate, phrase used by critics of the state's homeless policies. They've noticed there's big money in the homeless business. I'm not referring to the serious and important work Rescue Missions and other charities do to alleviate the sting of homelessness, but rather to the armies of bureaucrats and subsidized businesses who have little incentive to reduce homelessness—and every reason to seek more public revenues.

An investigation from this newspaper group found that a third of the apartments being built through the $1.2 billion Prop. HHH bond measure, which voters approved in 2016 to fund supportive housing, "will each cost more than $546,000, the median sale price of a condominium in Los Angeles." The report found it "uncertain if the program will reach its goal of 10,000 new permanent housing units."

I'd think it's fairly certain the bond will run out of cash before its targeted numbers are met and city leaders will be back asking voters for more money. It's also certain such projects will at best help a fraction of LA's homeless. Some projects in Southern California have seen per-unit costs approaching $700,000. This is nuts. So, too, is a widely discussed tweet Gov. Newsom recently made regarding the homeless situation.

Newsom's initial tweet was fine, albeit mostly pabulum: "We need to start targeting social determinants of health. What's more fundamental to a person's well-being than a roof over their head?" Well, sure, no one suggests that sleeping in the cold near a freeway interchange is healthy. But then he tweeted this eye-opener: "Doctors should be able to write prescriptions for housing the same way they do for insulin or antibiotics."

This shows a fundamental lack of seriousness on the part of our governor. I doubt he really would want doctors to prescribe such things. I can imagine what Blue Cross would say when it received a bill for a three-bedroom bungalow in Santa Monica. (I'd hope my doctor would say my health depended on beachfront living.) As others have noted, this amounts to the "magic wand" theory.

The federal Boise decision limits the ability of localities to remove homeless people from public places—unless officials have a place to house them. Apparently, our governor hasn't followed the ensuing problems. Cities don't have a place for all of them. When cities build these units, they end up costing more than a mini-mansion in Texas, so cities run out of money fast.

It gets zanier. Assemblywoman Lorena Gonzalez, the San Diego Democrat who authored the anti-contracting law (Assembly Bill 5) that is decimating the freelance industry, just announced her "Housing for All" package. I fear she'll do to the housing market what she already has done to the labor market. At some point, even Californians might realize that free markets are the best way to address problems and that trusting officials is true madness.

This column first appeared in the Orange County Register.