To this end, some propose mere welfare measures – while others come forward with grandiose systems of reform which, under the pretense of re-organizing society, are in fact intended to preserve the foundations, and hence the life, of existing society.

Frederick Engels, on Bourgeois Socialists
The Principles of Communism

Seattle is entering a dangerous phase in its experimentation with socialism. City government has declared a housing “crisis,” and while it convened a task force (commonly known as the HALA Committee) that recommended building more housing to ameliorate rising prices, it’s doing exactly the opposite, engineering legislation that is intended not to expand supply, but to spread existing supply thinner. The latest example is a crack down on short-term housing rentals, more commonly called Airbnb.

The argument made by the legislation’s sponsor is that by imposing limits on the number of days a housing unit can be rented using a service like Airbnb, owners of the units would be incentivized to turn them back into long-term rentals. How many units? Burgess said in the Seattle Times that,

“We don’t know how many of those are primary residences,” Burgess said. “But imagine if we put 300 homes back on the long-term rental-housing market. That would be worth a lot. To build 300 new units would cost more than $70 million.”

Oddly, the same Burgess said this, through a staff person, about the loss of 250 units from a similar crack down he supported against building on smaller, irregular lots in single-family neighborhoods that dominate the share of land in Seattle.

Single-family zones are not the most efficient zones to target for new development to achieve greater density and affordability. The number of additional development sites [250] created through the proposed exception is not likely to meaningfully add to the overall supply of housing in the City.

In the small-lot case almost the same number of units would have been added into the city’s housing supply. Seattle saw 4,337 units built between April of 2010 and April of 2012. So 250 new single-family units would have been an annual increase of about 5 percent per year if built over a similar comparable period, hardly meaningless.

But Burgess, Mayor Ed Murray and his colleagues seem to think they are being champions for the poor, not by building or incentivizing the building of 300 new rental units, but taking those units out of circulation for short term rentals.

The demand for short-term rentals won’t go away. Instead people in need of short-term housing solutions will now be wading into the long term housing market to compete with people looking for leases. And many of those looking for housing for a few weeks or months are not sightseers — they’re coming to work in Seattle’s hot job market.

In fact, the City’s own projections are that between 2005 and 2024 the city will add 47,000 households or about 2,350 households per year. So what will happen as Burgess and the Mayor apply their cure of not building when there is opportunity and creating more competition for existing scarce housing while demand increases?

With short-term workers now on the long term housing market it’s likely that those workers will out bid local workers for cheaper housing solutions. The room in a house, the month to month basement, or that cheap apartment will get snapped up; better than paying $160 a night at a suburban hotel. Meanwhile, a person who needs that unit for a year or more will have to look elsewhere.

And the extent to which short-term rentals do accommodate tourists, the demand to build hotels on scarce land that would otherwise be used for long-term housing will increase. So we’ll get hotels instead of housing? Wasn’t there supposed to be a housing crisis?

What Burgess and the Mayor apparently believe in is taking the existing housing pie out of the oven, counting out how many people they thing want a slice, and then slicing that pie as thinly as possible for existing demand. Never mind that people with more money can buy more slices, and as the line for a slice grows longer and longer those with less money walk away with nothing.

What would motivate his kind of thinking and policy? A big supporter of the crackdown on short-term rentals is a group called Puget Sound Sage, a group that infamously argued that Seattle’s Rainier Valley remain “majority minority.” How they would accomplish that is still unclear (maybe they could build a wall!), but the organization seems to the single purpose of seeking penalties for new housing development and having those dollars wind up with their non-profit housing allies.

The problem in Seattle is that many people see housing as a right, not a commodity. But what they fail to see is that even if it were a right established and enshrined in some legally binding document, someone would still have to produce that entitlement. Simply calling housing a right that nobody should profit by building doesn’t magically end the housing shortage in Seattle or anywhere. It seems that Burgess and the Mayor, philosophically anyway, would rather have rationing and waiting lists that high housing prices. Either way, it’s the people at the bottom of the economic ladder that hurt the most when production is stifled.

The most sensible thing to do with short-term rentals like those proliferating through services like Air BNB is to tax them appropriately but allow them to thrive. And if we want more long-term rental options why not just allow them to be built. There is simply no good reason to force competition between long-term and short-term renters for scarce housing while demand continues to rise.

Perhaps it’s unfair to socialists to call what Burgess and the Mayor are doing in their efforts to stifle entrepreneurial and innovative housing solutions socialism. Even Deng Xiaoping recognized his choice was between redistributing poverty or redistributing wealth. Perhaps the effort to slice the housing pie thinner and thinner in the face of rising demand in order to prevent anyone from earning additional money should be just called what it is: misgovernment.