It looks like Israel may be in for its own version of the Mount Laurel experience. A year and a half ago, the government there ostensibly addressed the public’s demands for more affordable housing by adopting some reforms that included incentives for the construction of new rental apartments. Recently, after the fires had died down, Ha’aretz reported that the government began claiming (in response to a lawsuit) that its plan, as written, is ineffective; that it has no power to really accomplish much of anything.
I feel like I’ve read this story before. In New Jersey, it took a decade of toil in the courts and political branches to get from acknowledging the need for affordable housing (Mount Laurel I, 1975) to the development of a framework that could even plausibly begin to address the shortage (Fair Housing Act of 1985). And New Jersey is still one of the hardest places in America in which to find decent, affordable housing. The Mount Laurel cases represent an important legal principle, but it’s one that was drawn from the New Jersey Constitution, and whose footing in other common law jurisdictions remains unclear. These things are maddeningly slow.
My faith in the legal and political systems’ ability to solve the crisis of metropolitan housing affordability is not strong. First, the incentives aren’t there: Property owners, who benefit from high land values, tend to stay and vote and contribute to local politicians; people who can’t afford housing tend to move away. Second, the land market itself is too much of a moving target to lend itself to legislative interventions that will yield predictable results. We’ve seen evidence of this in all of the well-intentioned planning debacles of the 20th century. Given these problems, it’s hard to imagine all of those Israeli kids, who were out in the streets in 2011, now waiting for this to work its way through their country’s version of the system.
If I were there, I would support the litigation and press for policies that would yield more housing — obviously. But I would also re-read Herzl. A limited-equity (LE) model was central to his vision for the country, and it has also worked (at times) to create affordable housing in America. The most promising aspect of the LE model is that, when it works, it truly frees its participants from depending on the sluggish and often capricious actions of the state, and allows like-minded individuals to autonomously pursue their interests outside of the system. Some have even sold their own demand to initial investors, paying out modest distributions to capital investors in exchange for their relatively low risk profiles.