The Real Problem With San Francisco, and it's Not Socialism

When Elon Musk posts a video of San Francisco's urban decay with the caption “Radical left policies lead to annihilation,” he's not just making a political point—he's engaging in a profound form of epistemic gaslighting. This narrative—that progressive governance has destroyed America's cities—has become gospel on the right, repeated with such certainty that it feels almost heretical to question it.

Two plus two equals four. There are twenty-four hours in a day. And San Francisco's problems stem primarily not from “radical left policies” but from hyper-conservative market restrictions masquerading as property rights.

What we're witnessing in San Francisco is not the failure of progressivism but the predictable outcome of what my friend Vlad Vexler calls “hyper-neoliberalism”—a system where magical thinking about market forces meets the reality of emergent collusion to restrict supply and extract rent from new market entrants.

Let's be clear about what's actually happened in San Francisco and similar cities over the past several decades. Housing prices didn't skyrocket because of socialist policies. They exploded because of restrictions on housing supply—zoning laws, building height limitations, environmental review processes, and permitting requirements that effectively prevented the construction of adequate housing to meet demand.

This isn't a free market at work. It's a market failure—specifically, a form of emergent collusion where homeowners, developers, and local governments create a de facto cartel that artificially constrains supply. Not through explicit coordination in smoke-filled rooms, but through the natural alignment of interests among property owners who benefit from scarcity and the politicians who depend on their votes and donations.

When housing supply fails to meet demand, prices surge. When prices surge, housing becomes unaffordable for middle and working-class residents. When housing becomes unaffordable, homelessness increases. When homelessness increases, public spaces deteriorate. When public spaces deteriorate, businesses suffer. When businesses suffer, they close or relocate. When this cycle continues unchecked for decades, you get the urban conditions we see today.

The neoreactionaries and right-wing critics look at this outcome and blame “radical left policies.” But they've completely inverted cause and effect. The restricted housing supply that created these conditions isn't a progressive policy—it's the result of hyper-conservative homeowner interests using government power to protect and enhance their property values at the expense of everyone else.

This is what happens when capital rules rather than democracy. When the interests of existing property owners consistently trump the needs of the broader community. When “neighborhood character” and “property values” become sacred concepts that justify excluding new residents and preventing natural urban evolution.

Are there legitimately problematic aspects of progressive urban governance? Absolutely. There are reasonable debates to be had about policing strategies, public safety approaches, and the balance between compassion and order in managing homelessness. But these issues are downstream from the more fundamental market failure that created the conditions for urban crisis in the first place.

What's particularly perverse about the neoreactionary critique is that it uses the consequences of market failure as evidence against progressive governance, while simultaneously advocating for an intensification of the very forces that created the market failure. Their solution to problems caused by concentrated capital and restricted housing supply is... more concentrated capital and less democratic control over development.

This isn't just wrong—it's a warning. What we're seeing in San Francisco is a preview of what happens when “hyper-neoliberalism” flourishes: market failures presented as market successes, the consequences of those failures blamed on progressive governance, and the solution proposed as even less democratic oversight of market forces.

The YIMBY movement has recognized this reality, pushing for more housing development across the board. But their critique often stops short of identifying the deeper political economy at work—the way that restricted housing supply represents not just bad policy but a fundamental distortion of market functioning that transfers wealth from renters and future buyers to current property owners.

When capital finds a basis for collusion—even emergent, uncoordinated collusion—it creates market failures that harm the broader public while benefiting the already privileged. This isn't a radical left observation; it's basic economics. Markets function properly only when supply can respond to demand. When supply is artificially constrained, prices rise above what a functioning market would produce, creating economic rent that benefits incumbent players while harming new entrants.

The right's framing of urban problems as the result of “radical left policies” is designed to obscure this fundamental reality. It's easier to blame progressive governance than to acknowledge that many urban problems stem from market failures created by policies that protect property values above all else—policies that the right typically supports or even champions.

This isn't to say that all of San Francisco's problems would be solved by addressing the housing shortage alone. Urban governance is complex, and there are legitimate critiques to be made of how progressive administrations have handled issues like public safety, homelessness, and business regulation. But without addressing the fundamental market failure at the heart of the housing crisis, these other efforts are like bailing water from a sinking ship without patching the hole.

The real solution requires acknowledging both market failures and governance failures. It requires recognizing that functioning cities need both adequate housing supply and effective public services. It requires breaking the emergent collusion that restricts housing development while also addressing legitimate concerns about public safety and urban order.

What it doesn't require is the kind of simplistic narrative that attributes complex urban problems entirely to “radical left policies” while ignoring the market failures that created the conditions for those problems in the first place.

Two plus two equals four. There are twenty-four hours in a day. And San Francisco's problems stem primarily from the restriction of market forces to benefit existing property owners, not from an excess of progressive governance.

The center must be held—not because it is easy, but because it is ours to hold. And holding it requires acknowledging the complex reality of urban challenges rather than accepting convenient narratives that misdiagnose their causes and misdirect our attention from the market failures at their core.

“The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function.” — F. Scott Fitzgerald