00:00Mr. Kennedy, the floor is yours, sir.
00:05Thank you all for being here.
00:06Professor Glazer, you're head of the Department
00:11of Economics at Harvard?
00:14No longer.
00:15But you've taught there since 1992.
00:21I think you need to turn your microphone off.
00:25You did your PhD work at Chicago?
00:28That's correct, sir.
00:29How many years ago?
00:30You publish about five articles a year?
00:33I don't know.
00:34I've published a few.
00:40I appreciate your testimony, because you not only
00:42talked about the problem, but you talked
00:46about possible solutions.
00:50No disrespect to anybody, but revamping our appraisal process
00:55or title insurance or talking about power imbalances
01:02is not going to get homes built, not
01:06in a free enterprise country.
01:10Our problem is supply, isn't it?
01:12Yes, sir.
01:14And the main reason we have a problem with supply
01:18is because of land use regulation, isn't it?
01:23I've been saying that for 25 years, Senator.
01:25Yes, I agree with that very strongly.
01:27And land use, zoning, some would call it,
01:33is within the job description of some state,
01:39but mostly local government.
01:41Is that right?
01:42That's correct, sir.
01:43And Congress has a history, it seems to me,
01:46you can disagree certainly if you do,
01:49of just throwing money at the problem
01:52and trying to tell local government how
01:57to get more houses built. And local government
02:01takes the money and pushes back, because politicians
02:06at the local level, they like to eat and live indoors too,
02:11and they like to get re-elected.
02:14And they don't want to make anybody
02:16upset by changing land use regulation in a way
02:22to encourage more housing.
02:24Would that be a fair assessment?
02:26My words, not yours.
02:29I will not disagree with any of those words, Senator.
02:33There's a plan that's been talked about in Canada.
02:38And what the Canadians have said,
02:40they're talking about it, it hasn't been implemented.
02:42But the proponent of the plan, I've
02:46talked with Senator Warren about this,
02:49has said, look, we need to incent local government
02:57to increase housing starts.
02:59But we need to use a carrot and a stick.
03:05What if America had a law?
03:07Congress passed a statute that said, look,
03:09we don't care how you do it, states,
03:13but you need to increase your housing
03:16starts by 3%, 4%, 5% a year.
03:20Do it however you want to do it.
03:22If you do that, we will give you extra federal money.
03:27If you don't do that, we will take federal money away
03:31from you until you start doing it.
03:35Would that work?
03:37If you're willing to champion such legislation, Senator,
03:40I'm willing to be behind you.
03:42I think there are challenges with that in the US.
03:46The difficulties of taking away spending
03:47that was already expected may be particularly hard.
03:49It may be easier to do with discretionary grants
03:51than with spending that's targeted.
03:55I also think it needs to be targeted not
03:57to the state's level of production,
03:59but to production in the most productive parts of the state.
04:02We don't want California to meet its requirements
04:04by building in areas that are very far away from Los
04:07Angeles or San Francisco and so forth.
04:11But I think basically something that creates carrots
04:14and ideally sticks as well that tries to encourage
04:17states to do the right thing.
04:18And from my perspective, the battleground
04:20of affordable housing is in places like the California State
04:22Legislature.
04:23And I would love those legislators
04:25who want to do the right thing, who
04:26want to make California a state for outsiders
04:28to be able to say, look, the federal government is pushing
04:30us in this direction too.
04:32Can we just not lose our spending for x?
04:33Can we do this?
04:34And I think that would be very powerful in the hands
04:36of the state legislature.
04:37Who would be best to decide the most productive areas
04:41to incent housing?
04:43I would use Bureau of Economic Analysis numbers
04:45of output per capita.
04:47I don't think it's, you know, but this can be debated.
04:50We can, you know, lots of people.
04:52I would not hand it over to an agency, though.
04:54I would put it directly in the legislation.
04:56Do you think our problem in America with housing
04:58is caused by a power imbalance?
05:02I don't, I'm not sure I know what that means.
05:04Me neither.
05:05Me neither.
05:08Thank you, Senator.
05:09Thank you, sir.
05:11Right.
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