Should We Let California Go Bankrupt?

Steven Malanga reports:

In just one decade California made a remarkable turnabout, going from a state with one of the highest levels of net in-migration to the state with the second highest level of domestic net out-migration. Typically people either head for the exits because they are seeking more economic opportunity or because they are being driven out by high housing costs. You get a little bit of both in California because the state’s zoning regulatory schemes keep housing production artificially low and housing prices high even in a mediocre economy.

As the economist Randall O’Toole points out in his study of housing restrictions, The Planning Penalty, “Thanks to a variety of land-use restrictions, California suffers from the least affordable housing in the nation.” The planning penalty, O’Toole estimates, adds from $70,000 to $230,000 to the cost of a home in the Central Valley, $300,000 to $400,000 in Southern California, and $400,000 to $850,000 in the San Francisco Bay area because in California, 95 percent of the population lives on just 5 percent of the land. “The problem is supply, not demand,” O’Toole observes. “Austin, Atlanta and Raleigh are growing faster than California cities, yet have maintained affordable housing.”

You'll want to read the whole article.Another great one by Steven Malanga.