The villain in California’s homeless crisis is not a tech CEO writing a tax check. It is a state that refuses to build enough housing and cannot track the money it already spends. In a Wall Street Journal op-ed, editorial board member Allysia Finley argues that wealthy liberals such as Marc Benioff, Reed Hastings, and David Geffen enabled California’s homelessness surge and welfare fraud by funding Proposition 47 and higher income taxes. The donors funded a campaign in 2012. Sacramento built the pipeline. The fraud lives in the pipeline.
Imagine your basement floods every winter. You call a plumber, and he blames the neighbor who paid for the roof inspection twelve years ago. That is Finley’s theory of California: find the billionaire who wrote the check, then skip the cracked foundation.
California has spent four decades refusing to build enough homes for the people who live there. Since 1980, the state has added roughly four housing units for every ten new residents. Texas added about seven. The typical California home now costs more than twice the national median. In Los Angeles, a family earning the area median income can afford to borrow against only one in five homes on the market.
When a state underbuilds for forty years, the people who fall behind on rent do not receive a charming little discount apartment. They receive a tent.
That is the mechanism.
It is not a Proposition 47 mechanism. It is not a billionaire-donor mechanism. It is a housing mechanism. If there are too few homes, the poorest residents are pushed out first. Some become homeless. Others leave the state. The remaining households pay more, and the political class congratulates itself for having preserved the neighborhood’s “character.”
Finley cites a Public Policy Institute of California study that “failed to find a county-level link between homelessness and rising rents, poverty or unemployment.” She is reading it upside down. California’s housing shortage is statewide, not a collection of isolated county accidents. When every county restricts supply, a county-by-county comparison is poorly designed to reveal the statewide pressure. PPIC’s broader published work points toward housing supply as a structural driver.
The Proposition 47 question is real. Finley is right that homelessness rose sharply after 2014, by roughly 60 percent. Decriminalizing small-time drug possession did not create addiction, and correlation is not causation. But removing a legal trip-wire without replacing it with treatment can make street addiction more visible and housing less stable. The initiative’s role is contested and probably modest; homelessness was already rising, point-in-time counts expanded, and HUD methodology changed. Peer-reviewed studies attribute at most a small share of the increase to drug decriminalization.
The honest conclusion is not “nothing happened.” It is that California has several failures at once, and the op-ed chooses one because the others are less ideologically convenient.
Housing scarcity makes homelessness more likely. Untreated addiction can make housing unstable. Weak contracting turns public money into an invitation. Different mechanisms. Different fixes.
Now, on the fraud, Finley has a serious point. The state auditor found in 2024 that California had spent $24 billion across thirty homelessness programs without reliable information about ongoing costs or outcomes. That is not a rounding error. It is a government operating a multibillion-dollar program with the dashboard removed.
The recent cases are real too. Twelve defendants in San Diego allegedly ran sham daycares for low-income subsidies, including claims for children who were not even in the country. Four defendants in Los Angeles allegedly diverted homeless funds toward PlayStation charges, luxury vacations, and vintage-car restorations. The man charged with setting up sham vendors to siphon $118 million in Los Angeles homeless funds did not get his money from Benioff, Hastings, or Geffen. He got it through the Los Angeles Homeless Services Authority. LAHSA got it through Sacramento. Sacramento routed it through a nonprofit pipeline with no working audit.
When fake providers can cash checks for children who were not in the room, the state has stopped running a system. It is running a suggestion box with wire transfers.
The donors did not write LAHSA’s contracting rules. They did not approve a reimbursement model that pays for care at homes where border-crossing records show the provider was not in the country. They did not design fraud-friendly attendance records. Sacramento did. The fraud is a procurement failure, and procurement failures are boring, technical, and fixable. That is precisely why blaming billionaires is so attractive. A villain makes better copy than an audit trail.
The donor class Finley might more usefully examine is the homeowner coalition that finances local campaigns against apartments, duplexes, and every other building that might allow another human being to move nearby. The wealthy liberal who funds a statewide tax measure is not the same actor as the neighborhood donor who blocks construction for twenty years. If the question is who keeps housing scarce, look at the people financing the local veto.
The fix is not mysterious. Build housing. Upzone cities. Stop letting the California Environmental Quality Act function as a veto over every new apartment building. Use public money to expand treatment and supportive housing. Rebuild the trip-wire without turning addiction into a moral failing: require treatment as a condition of receiving subsidized housing where appropriate, keep the door open for people who are not ready, and make it possible to return when they are.
Then make every homeless-services dollar answer a basic question: what happened to the person it was supposed to help? Track nights off the street, housing retention, treatment completion, and returns to homelessness. Audit the nonprofit pipeline annually. Publish every intermediary, subcontractor, and vendor. Cap how much of a contract can pass through a single entity. Make providers compete on results, not on who knows the procurement officer.
Fund what works. Defund what does not. Audit both.
The economy is a set of choices, not the weather. California chose scarcity, then chose paperwork without accountability, and now its opinion pages are choosing a scapegoat. Liberal billionaires may deserve scrutiny. They do not deserve credit for designing a housing shortage and a fraud-friendly contracting system they did not design.
Build the homes. Fix the pipeline. Put the money and the people back where they belong.