Recent articles by Politico and the Wall Street Journal detail the difficult economic environment the Fed must navigate in the coming months along with highlighting the missteps the Fed has made in dealing with post-Covid inflation. The articles show that in response to inflation, the Fed executed its steepest and fastest series of rate hikes in 40 years. Once again, this has raised several questions into the internal workings of the Fed and the general obscurity with which it has been conducting monetary policy. While the Fed’s recent performance has garnered significant media attention, as my new Cato working paper shows, this failure is only the latest episode in a long-term trend of discretionary behavior dating back to 2009.

From the mid-1980s through to the mid-2000s, Fed policy was generally considered to be good. Academics and Fed officials alike credited good monetary policy with keeping the economy stable during this period (often called the “Great Moderation”). In my working paper, I show that the Fed was much more likely to follow a rules-based approach during this period as compared to after the financial crisis. In fact, every successive Fed chair since Paul Volcker has deviated further from the rules-based policymaking that helped the Fed be successful in the first place. Just one fact from the paper: the correlation between the good policy rule of the Fed and their actual policy fell from 75% under Bernanke, to 17% under Yellen, to -2% under Powell.

The primary concern with Fed policy has been that it has kept rates too low. While this has been true since the end of the Great Recession, it has been particularly problematic post-Covid. In this period, while a standard Taylor rule suggested the Fed should tighten the economy by raising rates, the Fed was easing the economy further by keeping its target rates near zero and then proceeding to buy more assets. Consequently, it was 20 months too late in raising its target rates, by which time inflation had already become entrenched, requiring the sharpest rate hike in 40 years.

Following a monetary policy rule offers several advantages: the Fed’s actions remain clear and concise, it does not require the Fed to precisely gauge the true structure of the underlying U.S. economy, and social welfare has been higher under a rules-based regime. It is unclear why the Fed has so frequently abandoned the guidance offered by the Taylor rule in the recent past. Particularly concerning is the Fed’s departure from its self-professed successful policy tools. For instance, a seminal paper by Richard Clarida and his co-authors showed that good monetary policy kept the economy stable during the Great Moderation. Meanwhile, interest rates departed furthest from the Great Moderation while Richard Clarida himself served as Vice Chair of the Fed. Why did this happen?

Given the benefits of following the Taylor rule, as well as the serious lapses in monetary policy when the Fed acts in an unclear and discretionary manner, perhaps it is time to revisit proposed regulation such as the FORM Act of 2015. This directive would require the Fed to formulate and abide by a rule as a default, but allow it to deviate from that rule provided it explains any departures.

For a detailed analysis, please see my Cato working paper.

My latest policy analysis published today explains why it is impossible for nearly all immigrants seeking to come permanently to the United States to do so legally. The report is a uniquely comprehensive and jargon-free (to the extent possible) explanation of U.S. legal immigration. Contrary to public perception, immigrants cannot simply wait and get a green card (permanent residence) after a few years. Legal immigration is less like waiting in line and more like winning the lottery: it happens, but it is so rare that it is irrational to expect it in any individual case.

The figure below shows the U.S. legal immigration system for people who are abroad who presently intend to immigrate permanently to the United States. Below I briefly describe the main problems and choke points in this labyrinth.

Guilty Until Proven Innocent

Until the Immigration Act of 1924, everyone in the world was eligible to immigrate to the United States unless the government proved they fell into an ineligible category. In other words, innocent until proven guilty. Since then, the foundational principle of U.S. immigration law is that everyone in the world is ineligible to immigrate unless they prove to the government they fit into an eligible category. The result is that over 99 percent of all those wanting to immigrate to the United States cannot do so legally.

The Narrow Categories

Today, people must show they fit into one of five exceptions to the worldwide ban on immigration: 1) the refugee program, 2) the diversity lottery, 3) family sponsorship, 4) employment-based self-sponsorship, and 5) employer sponsorship. These categories are extraordinarily narrow. Few people can qualify, and thanks to low immigration caps, those who do qualify are often subject to decades-long waiting periods before they can enter legally.

1. The Refugee Program: the Lucky Few

The refugee program is supposed to provide a legal way to immigrate for people who fear return to their home countries. But the rules limit admission to those who fear return based on persecution by a government (or someone the government refuses to control), and only if the persecutor is motivated by someone’s race, religion, political opinion, nationality, or social group. More importantly, the program will only process refugees if they flee from their homes to a group of about 30 countries, and it will only accept applicants from about 30 countries.

Applicants usually need a referral from the United Nations, and they have a less than one percent chance of receiving such a referral. Moreover, the program has a cap, and the government has adopted processing procedures that make filling that cap extremely difficult. Barely one in 5,000 displaced persons will be admitted to the United States under the refugee program. The figure below shows the increasing number of displaced persons and the decreasing number of admissions under the refugee program.

2. The Diversity Lottery: the Golden Tickets

The diversity lottery has four basic rules: 1) applicants must show that they can support themselves at or above the poverty line, 2) applicants must have at least a high school degree or work experience in a job typically requiring a college degree, 3) only people from countries from which fewer than 50,000 people immigrated to the United States in the last five years can apply (excluding a majority of the world’s population), and 4) there are only 55,000 slots awarded through an annual lottery. The chances of winning the lottery and getting a green card have plummeted more than 90 percent since the first lottery was held in 1995.

3. Family Sponsorship: Only the Closest Relatives, Endless Waits

The biggest limitation on family sponsorship is having a qualifying sponsor. The family sponsorship is reserved primarily for the closest relatives: spouses and children of U.S. citizens and legal permanent residents as well as siblings and parents of adult U.S. citizens, and minor children and spouses of those relatives can join except in the case of parents, minor children, and spouses of U.S. citizens. The second limitation is the cap. Only spouses, minor children, and parents of adult U.S. citizens are uncapped, but their numbers reduce the cap of 480,000 for other relatives down to just 226,000. The result is a massive backlog of 8 million cases. For most countries and category combinations, sponsors will die before their relatives can immigrate.

4. Employment-Based Self-Sponsorship: Only for the Most Elite

Employment-based self-sponsorship is available only in the rarest set of circumstances. The three categories are for 1) people with “extraordinary ability,” 2) workers with advanced degrees or exceptional ability who are conducting activities of national importance, and 3) investors able to invest not less than $800,000 and—in some cases—more than $1.05 million in a business that creates 10 new jobs for U.S. workers within 2 years. These highly unusual cases apply to very few potential immigrants, but even in those cases, the government strictly enforces the criteria to make them as difficult to meet as possible. In 2019, for instance, the “extraordinary ability” category had a denial rate of over 40 percent.

5. Employer Sponsorship: Backlogs Wrapped in Red Tape

Employer sponsorship is the one chance where, in theory, it should be open to anyone with an employer sponsor in the United States. In practice, the procedures are so backlogged, so costly, and so time-consuming that very few employers are willing to attempt it except for the highest-paid workers in America. Aside from a few specific occupations, employers must advertise the job to U.S. workers. The process takes years, and even if no U.S. worker applies, very few employers can afford to keep a job open for such a prolonged period.

This is why nearly all employer-sponsored green cards go to people already in the United States who can start working on a temporary work visa, such as the H‑1B visa, much sooner while they go through the lengthy green card process. But the H‑1B visa is capped at just 85,000. The odds of winning the lottery and ultimately getting an H‑1B visa were just 16 percent in 2022. But the even bigger problem for potential immigrants is that the H‑1B visa requires a bachelor’s degree, and only 10 percent of the world’s population has a bachelor’s degree.

Even if you have a bachelor’s degree, win the lottery, and convince the employer to pay for the green card processing, the employment-based annual cap is massively oversubscribed. There was a backlog of about 1.4 million in 2020 for a cap of just 140,000. Because every country has the same cap, and immigrants from India account for half of all applicants, the backlog is overwhelmingly Indians who face a lifetime of waiting for a green card.

The U.S. Can Handle Much More Legal Immigration

The U.S. legal immigration system is restrictive in three ways. First, the system is restrictive compared with demand. Nearly 32 million people tried to receive a green card in 2018, while just 1 million were successful, and most could not even try the process. Second, the system is restrictive compared with U.S. history. In the decades prior to the 1920s, the United States routinely permitted a rate of legal immigration three to four times higher than 0.3 percent of the population permitted to receive a green card in recent years.

Finally, the system is restrictive compared with other countries. The United States ranks in the bottom third of wealthy countries for foreign-born share of the population. Even if it accepted 70 million immigrants tomorrow, it would still not surpass the likes of Australia.

Immigration benefits the United States, so there is no reason to place hard caps or strict categorical limits. Moreover, enforcing restrictive laws is costly and results in illegal immigration. The entire legal immigration system is actually designed not to be followed by most people, but to keep most people out. America should return to its system of openness that reflects U.S. traditions and benefits the country.

David J. Bier, “Why Legal Immigration Is Nearly Impossible: U.S. Legal Immigration Rules Explained,” Cato Institute Policy Analysis no. 950, June 13, 2023.

This article appeared on Substack on June 13, 2023

The state of Oklahoma has recently approved a charter for the St. Isidore of Seville Catholic Virtual School, whose curriculum will include religious teaching. Taxpayers will fund the school, so a battle will ensue over whether such funding is desirable or constitutional.

Economic reasoning suggests three possible justifications for government support of education.

First, one person’s education might benefit society more broadly. Economic productivity might be higher, for example, if everyone has mastered “the three Rs.” Some individuals, however, might ignore this “spillover” and therefore choose too little education relative to the social optimum.

Second, people for whom education would be productive (by raising their future income) might underinvest due to myopia, suggesting that even without spillovers, the laissez-faire level of education might be too low. Some parents, in particular, might choose too little education for their children unless policy makes education cheaper.

Third, people for whom education would be beneficial, with or without externalities, and even without myopia, might have insufficient income to pay for private education and face difficulty in borrowing to finance such an investment (credit constraints).

Reasonable people can debate whether these arguments are convincing. Each has some plausibility, yet each is easily overstated.

In Libertarian Land, governments play no role in education, whether via mandatory schooling, public schools, funding for vouchers or charters, state colleges and universities, or subsidized student loans.

The reason is that, while government support might have the benefits described, this support requires government to define what constitutes education, as the Oklahoma controversy illustrates. Government definition of education limits variety and innovation, and in the extreme facilitates thought control. It is no accident that totalitarian regimes exercise extreme control over their educational systems.

If one nevertheless takes as given that, for the foreseeable future, government will fund education, and have the power to determine what kinds of education receive this support, should taxpayer funding be available for religious schools?

Assuming such education meets the curricular standards that government imposes on all schools, public and private, the answer is yes.

Why? Because religious schools can generate the three benefits that potentially justify government support of education. This is the standard reasoning for allowing private religious schools (or home schooling) to satisfy mandatory schooling laws.

Stated differently, allowing taxpayer funding to religious schools that meet the criteria for funding under the state’s general rules (e.g., teaching the three Rs) is the neutral position for government with respect to religion. This neutrality is the natural interpretation of the Constitution’s establishment clause, which states that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.”

Thus libertarians would prefer little or no government involvement in education. If government does fund education, however, it should not exclude religious schools a priori but instead determine funding based on the criteria that might justify such intervention in the first place.

New York City has maintained a system of rent control since the 1940s. Property owners in the City are subject to a thicket of regulations that affect their ability to rent and limit their right to exclude—arguably the most fundamental right in the “bundle” of property rights. The cornerstone of the City’s rent control regime is the Rent Stabilization Law (RSL) which was enacted in 1969 and has been amended on multiple occasions—most recently in June 2019. The RSL has been the subject of several lawsuits throughout the decades.

There are approximately one million units under the purview of the RSL, comprising half of all New York City apartments. The RSL authorizes a government board to set annual maximum rent increases for stabilized units. This board is required to consider tenants’ ability to pay as one factor in setting rents, alongside owners’ costs and housing affordability.

The RSL severely limits property owners’ rights to occupy, use, change the use of, and dispose of their property. The RSL requires owners to renew tenants’ leases in perpetuity with very few exceptions, and those exceptions are entirely within the tenants’ control. Additionally, these renewal rights may be passed on to any member of a tenant’s family who has lived in the tenant’s apartment for two years.

Once a tenant occupies a stabilized unit, an owner may not retake possession of the apartment for personal use. Only upon a demonstration of “immediate and compelling necessity” may an owner reclaim just one of his or her units. And buildings held in the name of a corporate entity have no personal use allowance at all.

The RSL also severely restricts owners’ rights regarding the buildings themselves. Owners may not withdraw their buildings from residential use, change their units to commercial rentals or cooperatives, leave their property vacant, or demolish their property.

A not‐​for‐​profit trade association representing many New York City apartment building owners sued to challenge the RSL in federal court, but the Second Circuit upheld the law. Now the owners are petitioning the Supreme Court to take their case. Cato, joined by the Manhattan Institute, has filed an amicus brief supporting that petition.

Our brief makes three key points. First, the Supreme Court’s recent opinion in Cedar Point Nursery v. Hassid (2021) casts serious doubt on the constitutionality of the RSL, since the City has appropriated building owners’ right to exclude and granted that right to third parties. All of the Supreme Court’s precedents addressing the constitutionality of rent‐​control statutes long predate the per se rule for physical takings articulated in Cedar Point, which calls for those precedents to be reexamined.

Second, there is already a circuit split between the Eighth and Second Circuits over whether property owners can allege that rent control effects a per se taking under Cedar Point. We argue that the Eighth Circuit correctly followed the Supreme Court when it held that a per se takings claim could proceed against an eviction moratorium, while the Second Circuit erred here in denying plaintiffs’ claim against New York City.

Finally, we argue that the Supreme Court should take this opportunity to reaffirm the foundational takings principle that government cannot require a subset of society to privately incur costs that should rightfully be borne by society as a whole. The RSL impermissibly imposes societal costs on property owners alone when it forces them to charge lower rental rates based on tenants’ ability to pay. For all these reasons, the Supreme Court should take the case and ultimately reverse the Second Circuit.

The Biden–GOP debt deal adjusted work requirements in the Supplemental Nutrition Assistance Program (SNAP) but did not cut the program’s spending. Cuts are needed because SNAP outlays have exploded from $63 billion in 2019 to an estimated $145 billion in 2023. Congress will have another chance at reform later this year when the program is reauthorized as part of the farm bill.

One chronic failing of SNAP is that billions of dollars are lost through fraud and abuse. Individuals, businesses, and organized gangs steal benefits. The switch from paper food stamps to electronic benefits transfer (EBT) cards two decades ago created new avenues for abuse.

My new article for National Review discusses 10 types of fraud and abuse in SNAP.

Card skimming has become a particularly severe problem in recent years. EBT numbers and PINs are a great target for theft because the cards do not have chips.

SNAP is difficult to police because it includes 250,000 retailers and 42 million recipients, who have changing income levels and other factors that affect eligibility and benefit levels. And because the federal government funds SNAP benefits, state administrators have little reason to minimize the fraud and abuse.

In a series of Twitter threads posted on April 12, April 21, April 27, May 2, May 9, May 16, May 24, May 30, and June 6, the Federal Reserve tried to dispel some of the concerns that FedNow is a central bank digital currency, or CBDC. To its credit, the Federal Reserve is largely correct that FedNow and CBDCs are distinct issues. However, the Federal Reserve left out an important part of the story in the campaign: its authority to issue a CBDC.

Maybe the Federal Reserve’s framing of the issue was simply an oversight rather than an intentional effort to mislead anyone. Yet considering it has been quoted in the Washington Post, AP News, Forbes, Central Banking, and other outlets, this framing should not be allowed to persist.

The issue at hand is where the Federal Reserve said:

Testifying before the House Financial Services Committee in March, Powell said a central bank digital currency is “something we would certainly need congressional approval for.”

This statement was an attempt to dispel concerns that one of the Federal Reserve’s CBDC pilots could suddenly go into operation without any say from Congress. The problem, however, is that the quote supplied is only half of what Chair Powell told Congress.

In his full response, Chair Powell said that a retail CBDC would require authorizing legislation, but that might not be the case for other forms of CBDCs:

That is absolutely the case as it relates to a retail CBDC. There are potential forms of a wholesale CBDC that we would need to look at—it’s less clear. But we’ve always been talking about a retail CBDC and that’s something we would certainly need congressional approval for.

For those that might not remember, the Federal Reserve built its entire proposal for CBDCs on the idea of a CBDC being “intermediated,” not retail. So it’s concerning to hear Chair Powell frame the conversation this way. However, if nothing else, Chair Powell’s full statement shows that the issue is more nuanced than what the Federal Reserve is presenting on social media.

Now, to be fair, the character limits on Twitter could be reasonably cited as a reason to not include the full quote. Setting aside that they could have included the quote as an image as I’ve done here or as a video as I’ve done here, it is always difficult to present the full story on social media. Yet, that argument does not explain why the Federal Reserve’s official website also fails to provide the full quote.

Luckily, there’s a simple solution for the Federal Reserve. It just needs to issue a statement or press release explaining Chair Powell’s full statement at the hearing or simply commit to not issuing any type of CBDC without authorizing legislation from Congress.

San Francisco is proving to be ground zero in the nationwide commercial real estate collapse. While the values of offices and malls are tumbling in many US cities, the losses in San Francisco are more dramatic and, unlike elsewhere, have extended to hotels. City and state government mismanagement have played a major role in destroying billions of dollars in assessable real estate values, but the role of these policies is easily overlooked.

San Francisco’s plight was thrown into sharp relief on June 5, when the owner of two downtown hotels containing a combined 2,925 rooms announced that it would cease making payments on a $725 million mortgage backed by the properties. Commercial bond investors will now have to find a company willing to purchase the hotels at a small fraction of their estimated 2020 valuation of $1.561 billion.

In explaining the company’s decision to walk away from the hotels, Thomas J. Baltimore, Jr., Chairman and Chief Executive Officer of Park Hotels and Resorts stated:

After much thought and consideration, we believe it is in the best interest for Park’s stockholders to materially reduce our current exposure to the San Francisco market. Now more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges – both old and new: record high office vacancy; concerns over street conditions; lower return to office than peer cities; and a weaker than expected citywide convention calendar through 2027 that will negatively impact business and leisure demand and will likely significantly reduce compression in the city for the foreseeable future.

Another nearby hotel is also experiencing a dramatic valuation decline. The 1,195-room Westin St. Francis Hotel has asked the local tax assessor to slash the combined assessment of its two parcels from $1.037 billion to $101 million.

The hotels are within walking distance of the Westfield San Francisco Centre mall that is losing its anchor retailer, Nordstrom, this summer. Before Nordstrom announced the closure, S&P had already estimated that the mall’s value had declined by over 70% since it was appraised in 2016.

An even larger value decline was suffered by a 22-story office tower at 350 California Street. After being valued at around $300 million in 2019, the property recently changed hands for between $60 million and $67.5 million according to media reports.

When considering why San Francisco has suffered so much commercial real estate value destruction in the 2020s, it is tempting to conclude that the city’s tech-heavy workforce was better equipped to work from home. This factor played a role but should not be overestimated. Indeed, one common software development methodology, known as agile, often involved daily in-person team meetings. So, it is not strictly true that software engineering is a solitary job.

Rather than blame the pandemic or the local business mix, San Francisco and California political leaders should look inward at their policy errors that exacerbated the city’s distress. Among these unforced errors were their harsh lockdown policies and the failure to provide adequate security in the downtown core.

The Lockdown

San Francisco and neighboring counties were the first to impose sweeping stay-at-home orders at the beginning of the COVID pandemic in the US. More importantly, San Francisco and its neighbors were slower than most other population centers to relax COVID-19 restrictions.

Over a three-year period, San Francisco’s public health officer issued a blizzard of rules that were often lengthy and challenging to implement. As late as January 27, 2021 (over ten months into the pandemic), he issued an order that required “all residents in the County to reduce the risk of COVID-19 transmission by staying in their residences to the extent possible and minimizing trips and activities outside the home.” At the time, California had more cases per capita than the less restrictive states of Texas and Florida, begging the question of how effective lockdown measures were.

By continuing shelter-at-home restrictions for so long, San Francisco normalized remote work, thereby encouraging employers and employees to adopt to a new normal. Many employees moved beyond easy commuting distance from the city on the assumption that they could retain hybrid or fully remote work arrangements permanently.

Although San Francisco’s political leaders trumpet the city’s low per capita death rate from COVID-19, some of that is attributable to individuals temporarily or permanently leaving the area, thereby deflating the true denominator of any death rate calculation. Economist Stephen Hanke has concluded that lockdowns had “a negligible effect” in COVID deaths.

Lack of Security

As the accompanying map shows, San Francisco has a very high concentration of high value properties in a small geographic area. Many of these $100 million plus properties (based on assessed value) are within walking distance of the Tenderloin neighborhood which has struggled over several decades. But in recent years, the social problems of the Tenderloin have increasingly spilled over into the adjacent, high-value areas, deterring tourists, shoppers, and office workers from visiting.

Measuring crime trends is challenging. According to Police Department statistics, reported crimes in the first five months of 2023 are below pre-pandemic levels. But some proportion of crime goes unreported and it is possible that this proportion has increased given the low likelihood that San Francisco police will identify a suspect. In 2022, only 2.9% of larceny thefts were cleared within one year.

Also, residents clearly perceive an increase in crime. The most recent City Controller survey found that San Franciscans rated the city’s safety a C+, the lowest grade since 1996. Safety ratings were especially low in the Tenderloin and two adjoining neighborhoods with high-value commercial real estate: South of Market and Financial District/​South Beach.

Critics have highlighted various public safety policy concerns including the defund the police movement, lax prosecution, reclassification of shoplifting goods worth less than $950 as a misdemeanor, disincarceration, and lack of enforcement against open air drug markets. Since these issues have been covered elsewhere and libertarians have varying opinions about them, I’ll address a couple of other aspects that have received less attention.

First, the city has encouraged many individuals who may be more prone to criminal activity to concentrate in and around the Tenderloin. It has done this by establishing a cluster of thousands of supportive housing units, mostly in converted hotels in the area. Although residents of supportive housing are no longer defined as “homeless”, many if not most are still dealing with issues such as drug addiction that contributed to their loss of shelter.

During the pandemic, the city converted hundreds of additional hotel rooms in the area to temporary residences for unhoused homeless individuals in hopes of preventing them from getting and spreading COVID-19. But the unintended effect of this program, known as Project Roomkey, seems to have been to increase drug abuse and disorder at the periphery of the Tenderloin.

One Project Roomkey property, Hotel Whitcomb, housed about four hundred homeless individuals, many of whom were continuing to use drugs. Shortly thereafter, a new open air drug market became established in an alley just south of Market Street. Both the hotel and the drug market were near a new Whole Foods store which was forced to close due to high rates of theft and violent criminal activity.

Aside from concentrating potential offenders in the area, the city and activists appear to have neutered two quasi-private mechanisms that allow business districts to enhance security levels beyond that which the city government would normally provide.

Since 1847, San Francisco has had a category of law enforcement officers known as a Patrol Special Police. These trained officers can be directly hired by groups of merchants and/​or homeowners to patrol and provide other security services within a designated area. In 1994, there were 72 patrol special police serving 65 areas. But their ranks decreased in recent decades and, as of 2022, only one officer remained.

Although clients expressed a high level of satisfaction with their services, city policies have decimated the program. San Francisco’s charter requires the city’s Police Commission to approve new patrol special officers, but in recent years it has rarely done so. At the same time, the San Francisco Police Department offered a competing program under which city-employed police officers could provide security services to local business when they would otherwise be off duty.

Since clients must cover officer pay at overtime rates, this alternative is more expensive. Further, given the shortage of police officers in San Francisco today, there may not be enough staff to regularly serve clients who might be interested in purchasing their services.

California has also given property owners the ability to form their own Business Improvement Districts (BIDs) since the 1990s. BIDs, also known locally as Community Benefit Districts (CBDs), are formed when owners representing a majority of the assessed valuation in a given area vote to tax themselves to finance district operations.

San Francisco’s Union Square area, the hotel and retail center that borders the Tenderloin, has had a BID in place since 1999. By 2018, the district was employing a large staff of cleaning ambassadors and safety ambassadors to deal with trash and quality of life issues respectively. The BID also installed a network of security cameras.

But the district’s efforts to force homeless individuals out of the area faced criticism from UC Berkeley’s Public Policy Clinic and local activists. Since the pandemic, the BID, now known as the Union Square Alliance, may have become less effective at maintaining cleanliness and safety in its neighborhood. It is not clear whether this is due to the criticism it has received, the retirement of its long-time executive director, or some other factor.

Conclusion

An overly energetic lockdown and actions that concentrated violent and unstable individuals in the downtown area have contributed to the collapse of real estate values in San Francisco’s prime hotel, office, and retail districts. Quasi-governmental institutions that might have stepped in to provide improved security and street conditions have been enfeebled in part by city policy.

At this point, it does not appear that any set of feasible policies can restore downtown San Francisco to the heights it reached in 2019. A more realistic possibility is that it will stabilize at much lower levels of occupancy, activity, and value forming a new base from which to grow. New and remaining property owners should be given the tools and the space to restore a sense of security among those visiting, shopping, and staying in the neighborhood. Finally, city and state leaders should avoid overreacting to pandemics.