To the editor:
I was dismayed at the lack of understanding of basic economic principles by some councilors and City Council candidates during last week’s debates on proposals to increase the supply of housing in Salem.
There is general agreement that the rising cost of both buying and renting a home in Salem and consequent shortage of affordable housing is a problem. Anti-growth councilors, however, have argued that allowing the addition of more housing to the city’s supply will not stem the rise of housing prices. This is simply not possible under the laws of supply-and-demand economics, which state that when demand for something outstrips supply, prices will rise. When supply exceeds demand, prices will fall. In this case, population growth and the increasing desirability of Salem as a place to live have combined to cause a surge in housing prices. The growth in the housing supply has been smaller than the growth in the demand for it, so prices continue to rise. This rise can only be stemmed by increasing the supply to the point at which there is enough housing to meet the demand for it. Councilors can and should have a legitimate debate about how much growth is desirable, but they owe it to their constituents to base their arguments on sound economic principles. Perhaps the councilor retreats at the start of each new term should include a basic economics course?