California’s landmark SB 827 died in the committee yesterday. The bill would have over-ridden local restrictions on the construction of high-density housing, near public transit. Even the measure’s strongest supporters acknowledged that it would be an uphill battle and that early defeats are to be expected.  From the Mercury News:

In a statement issued after the vote, Wiener said the outcome was not a surprise, given the scope of the proposal.

“I have always known there was a real possibility that SB 827 – like other difficult and impactful bills that have come before – was going to take more than one year,” he said. “… I will continue to work with anyone who shares the critical goals of creating more housing for people in California, and I look forward to working in the coming months to develop a strong proposal for next year.”

I’m even more sanguine about it. The primary benefit of SB 827 isn’t that it would have alleviated the Bay Area’s housing problems. Indeed, the opposition is correct in its assertion that affordability would still be an issue even if SB 827 had been on the books for decades. Instead, the benefit is that it raises the profile of an issue that affects not only Northen California but the health of the nation as a whole.

Estimates suggest that land use restrictions are currently reducing US GDP by about 9%. That makes it one of, if not the most, costly public policy failure we face. That cost, however, is only likely to grow. Other estimates show that the productivity slowdown since 2000 can be completely explained by land use restrictions. This implies that under business-as-usual the cumulative costs grow exponentially over time.

Now as always, things that can’t go on forever, eventually stop. The economy and society adapt. So we shouldn’t expect this or any of other problems of this type will be, in themselves, catastrophic. What can develop, however, is chronic sclerosis that saps living standards and leaves us more vulnerable to intermittent crisis. Indeed, the Great Recession looks ever more like a consequence of this phenomenon.

The sooner we start to grapple with the policy and political tradeoffs the sooner this condition is likely to be relieved.