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Very true. Almost all of our major problems in Ontario and in fact Canada are either just housing with a fake moustache and glasses, or at least heavily impacted by housing policy.

But honestly I don’t think articles or proposals like this go far enough.

We tend to look at our failed housing system as a problem of policy, through the lens of the “ignorance hypothesis” of why systems succeed or fail – the idea that our leaders have made bad choices that led to bad results, and that the solution is to hire better leaders to do a better job.

This just doesn’t hold up.

If you have one or two or a quarter of cities that have bad policies and outcomes, then the problem is with the leadership and can be fixed with an election or course correction.

If there’s a problem with every city for decades, then the problem isn’t with a local phenomenon like who happens to be mayor, but systemic and stemming from the very way our system of municipal government is structured.

The way I see it, our municipal structure has two huge problems:

**1) Municipalities have responsibilities that far outstrip their mandate and expectations.**

Municipal politics are low engagement and low expectation affairs. The last Toronto mayoral election had less than a 40% turnout. Vaughan had barely 25%. We see them as low level service providers for libraries, cops, fire services and pothole repair, not architects and managers of our economic order. But architects and managers of our economy is exactly what they are.

In our urban industrial economy, the purpose of cities is to efficiently and effectively bring people from very different levels of training, skills and ability to work together in common enterprises, and for those enterprises to be able to coordinate and support each other, too. An engineering firm requires high paid engineers, lower paid novices, bookkeepers, assistants, receptionists, IT support and janitors. Nearby, they’ll need access to lawyers, trades to repair equipment from printers to elevators, accountants, drivers, and suppliers for everything from paperclips to specialized tools. All of these groups have their own internal variety of people. All these people need to be able to comfortably live, quickly travel and work close enough together that these projects make sense. Fail at this by making the system too expensive/ineffecient, and the whole economy breaks apart. Labour at the low end becomes both too expensive to hire and too expensive for the workers to provide. Labour at the high end is highly mobile, and will leave in search of a better purchasing power for their high incomes. Capital will flee as enterprises become too expensive to staff. Municipalities are the order of government that control the microeconomic functionality of our whole darned country, but we don’t think of them that way for good reason – they’re really not set up for that task.

**2) Municipalities have structural perverse incentives to hobble the economy.**

Municipalities run on property taxes. That means they have a core structural incentive to keep property values as high as possible to fund anything they want to do and at all costs.

Whenever there is something that might help the economy as a whole, but would lower local property values, the municipality will oppose it as much as possible.

They have succeeded remarkably at this. The result is that property values (and prices) have soared while investments in things that would make the economy as a whole better have stalled, slowed or blocked.

The result has been the crippling of our productivity, reliably appreciating property resale markets (kept high by extensive policy and regulation) hoovering up capital at ever increasing rates sending capital costs for productivity improvements, new enterprises or public goods soaring, and consequent simultaneous soaring labour costs and diminished purchasing power/quality of life for labour. In short, its the defining economic catastrophe of our time.

This is not a leadership problem. It’s been a problem through Martin and Harper and Trudeau. Through Harris and McGuinty and Wynne and Ford. Through Miller and Ford and Tory and now Chow. Flipping between parties, leaders and ideologies has done nothing, because it can do nothing.

The only solution is to strip municipalities of this responsibility entirely, and vest it in a level of government with an interest in promoting the economy as a whole. The province of Ontario in particular needs to dramatically amend the Planning Act and the City of Toronto Act and take charge. Systemic institutional problems require wholesale institutional change.