With rents and the price of houses being historically high in 2024 in the E.U., it is no surprise that housing was a salient issue in the E.U. election campaigns that summer. Legislative action on the state level had been insufficient. Hence, President von der Leyen told the parliament, “I want this Commission to support people where it matters most, and if it matters to Europeans, it matters to Europe.”[1] The Union complementing legislative action by state governments on such an important issue is admittedly a step in the direction of solving an urgent problem, but the impact on the federal system in the future should not be ignored. As important as a pressing issue of the day is, someone should be keeping an eye on the shop itself. The gradual political consolidation of the U.S. federal system over more than two centuries at the expense of federalism is an example of what can happen when policy-makers are too oriented in putting out policy “brush fires” without bothering to ask how the federal system itself could be impacted.
To be sure, homelessness and high house prices and rents had become big problems by 2024. In 2023, an estimated 890,000 people were homeless in the E.U., while over 650,000 people were homeless in the U.S., out of total populations of almost 447 million and 336 million, respectively. Even though less than 1 million out of hundreds of millions looks minor, the trauma of being without a stable shelter, as well as the fear of losing one’s shelter due to a dire change in economic condition, argues in favor of housing being recognized as a human right that governments are obliged to supply where reliance on a market and personal income falls short. Put another way, the sort of existential angst that is triggered by homelessness and, to a much lesser though significant (yet subtle) degree, losing a job (or even knowing that it is possible) belongs in the state of nature rather than in civil society. Where the supply of available units of affordable (i.e., low-income, and no-income) housing is less than the number of homeless in a given geographical area, this argument suggests that government should see to it that the gap is filled. This is, of course, a normative argument, one that has been much more prevalient in the E.U. than in the U.S.
Generally speaking, government
targets for new units tend to fall short of those that would be necessary to
expunge actualized existential angst. In the E.U. state of Ireland, a local-government
official bragged to a journalist in 2024 that the city government would reach
its target, and the journalist pointed out that it is insufficient to eliminate
homelessness in the city. Both in terms of being shy in having more affordable-housing
units built and in standing up to hedge funds that are driving up house prices
by buying up some as investment (and even by keeping some units vacant to
increase the shortage), local governments have fallen short.
Besides spending money on the construction
of new units, government can restrict the use of residential real estate for
investment and even as small hotels (e.g. Airbnb). At least as long as homelessness
exists, so this argument goes, shelter’s use for speculation is inconsistent
with housing as a human right. To be sure, the moneyed interests in a society can
be hard for democratically-elected representatives to resist even when a significant
number of people are paralyzed by existential angst.
Not going nearly so far but
signaling a shift in societal and governmental priorities, President von der
Leyen of the European Commission set up her second portfolio, or term of
office, in the summer of 2024 by stressing “the urgency of tackling the housing
crisis, proposing the first-ever European affordable housing plan and a
commissioner responsible for the policy area, as the Socialists had demanded as
a condition for backing her second term.”[2]
At the time, “a significant investment gap in social and affordable housing”
existed in the Union.[3]
In addition to there being the homeless, people were “struggling to find affordable
homes,” von der Leyen said at the mid-July plenary in Strasbourg.[4]
“Between 2010 and the end of 2023, average rents in the E.U. increased by
almost 23% and house prices by nearly 48%, leading to protests in cities.”[5]
The general economic interest was being negatively impaired by the housing- (and
food-) led cost of living increases.
The E.U. being a federal system
of dual sovereignty, like the U.S., von der Leyen had to contend with the “limited
competency” of the E.U. in housing; by this I do not mean incompetence. Rather,
the federal and state levels could both legislate in housing. Because the
states could “only use public funds to target the most vulnerable groups,”
space was open for the federal government to legislate to bring the cost of
housing down. In other words, the states were oriented to the homeless problem,
which arguably represents a greater, or more severe harm in society, so the Union’s
activity on the wider problem of high rental and house markets would not usurp
the residual sovereignty of the state governments.
This is not to trivialize the
problem of high housing markets, whether in California or Ireland. “In terms of
state aid [at the federal level], we would like to see the recognition of
social and affordable housing for all—beyond disadvantaged groups or social
groups with fewer opportunities—as a service of general economic interest,” said
Christophe Rouillon, president of the PES group in the European Committee of
the Regions (CoR).[6] The
scope not only of the problem, but also of the legislative means, or power, is
such that this “limited competency” of the Union could have a significant
impact on shifting more power from the states to the Union. “The E.U. can
influence housing through financial regulation, competition law, energy
efficiency, regulatory and planning standards, cohesion policy, climate action,
urban/rural and social policies,” Rouillon stated.
The impact of federalism should not be lost on policy makers both at the federal and state level even though the primary focus is on the policy issues (i.e., homelessness and high real estate markets). In reaching a fever pitch of societal displeasure, these issues may give us a glimpse into how modern federal systems, which are characterized by split (or dual) governmental sovereignty, tend to consolidate power at the federal level at the expense of the state governments over time. Europeans would be wise to think about whether the E.U., just over 30 years old in 2024, would be as consolidated at the U.S. in 2024 after more than two-hundred more years. Both unions being of vast territorial expanse in 2024, such that states in each union can differ from one another in the same union so much that “one size does not fit all” in public policies, political consolidation comes with significant drawbacks. Additionally, the “check and balance” feature of federalism is rendered inoperative when a federal government has so much power that the state governments cannot counter-balance it. The question of whether the E.U. might end up as consolidated politically as the U.S. is thus not at all trivial.
2. Ibid.
3. Ibid. For those readers who feel the need to substitute “bloc” for “Union,” there is help.
4. Ibid.
5. Ibid.
6. Ibid.
