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overregulated
Zoned Out

If there’s one thing America’s anti-establishment populists from both parties agree on, it’s that the American upper and upper-middle classes have rigged the political and economic system so as to favor themselves and their children at the expense of the vast working class. The populist Right frames this problem in terms of immigration and trade, and the populist Left focuses on taxes and redistribution. And while both approaches have some amount of merit, it’s difficult to think of a clearer example of elite self-dealing than U.S. housing policy over the last several decades. Over at Brookings, Richard Reeves and Dimitrios Halikias discuss academic research showing the steady increase in land-use regulations, which have the effect of inflating the real estate values in wealthy communities while making it steadily more difficult for upwardly mobile people without means to share in that prosperity:

Social mobility and geographical mobility have historically gone hand-in-hand in America: people move to places with greater opportunity. But such moves have become steadily more difficult, in part because of the growing regulation of land use. Zoning ordinances that limit density are a particular problem, reducing the availability of affordable housing. […]

NIMBYism is motivated by a rational desire to accumulate financial capital by enhancing home values. But for parents, it is also about helping their children accumulate human capital by controlling access to local schools.

As we’ve noted before in the context of Palo Alto’s widely publicized housing crisis, there are deep structural obstacles to solving this problem. Land-use commissions in upper-middle class communities have no incentive to take the interests of non-residents into account when formulating housing policy. And as their property values climb to new heights, they seem to become ever-more resistant to any regulatory loosening that might slow that growth down in the short term.

Other countries have addressed NIMBYism, in part, by disallowing municipalities from designing zoning policy exclusively around the interests of their wealthiest residents. Ontario has a housing board with the authority to knock down some arbitrary local regulations on construction. And as Alex Tabarrok recently pointed out, Japan’s national constitution protects strong property rights, which has led to a more laissez-faire land use policy and slower inflation in rents and home values. Some U.S. states are attempting comparable approaches: California is considering a bill that would curb the power of local governments to block development projects, and as the Brookings post points out, “two separate bills in the Massachusetts state legislature…would have required towns to create more multi-family zoning districts,” though neither one passed.

Land-use regulation ought to be a no-brainer for both parties. For Democrats, it is a clear example of structural obstacles to upward mobility for the poor and less-skilled. For Republicans, it is an example of overweening government regulation blocking economic growth. And yet, neither party so much as addressed this issue in their 2016 platforms—a testament to the power of the elite interests who will fight to keep their crony-capitalist system firmly in place.

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  • Andrew Allison

    Socialist clap-trap. The narrative that evil homeowners are conspiring to increase the value of their properties is simply false. Attempting to preserve the value of the properties which they earned the ability to purchase is quite a different matter. Attempts to change the character, and hence property values, of neigborhoods by government fiat are outrageous. There is plenty of redevelopment potential to increase low-to-moderately priced housing without doing so.

    • http://geocurrents.info Martin W. Lewis

      You think that it would be a “socialist” policy to allow property owners to respond to market pressures by building higher-density housing on land that they own, thereby creating construction jobs, bolstering the economy, and providing people with places to live? Simply astounding.

      • Andrew Allison

        The question you are really posing is whether a property owner sufficiently altruistic to devalue their own property should be able to impose their values on their neighbors. The answer should be self-evident.

        • http://geocurrents.info Martin W. Lewis

          Far from it — in fact, exactly the opposite is true. The question is whether property owners should be able to realize the full value of their land by developing to the level that the market seeks. The alternative is not capitalism but rather a perversion of it (“crony capitalism”) that thwarts the market by imposing restrictions that enhance the assets of powerful individuals and in so doing reduce overall wellbeing and economic performance. If we simply allowed the market to work its magic in the housing sector, our economy would be booming, employment would be surging, tax rolls would be mushrooming, young adults would be able to establish their their own households, the birthrate would increase, and so on. But no, NIMBY activists, whether eco-romantics or simple greed-heads, can’t allow that to happen. Better to wage war on the economy, the young, the middle class, and the environment, than to tolerate capitalist development (“creative destruction”) in our urban and suburban environments. That way your can enjoy your leafy streets and vast capital gains, and who cares if everyone else suffers? You socialists are so cute!

          • Andrew Allison

            Nope. The question is the extent to which a neighborhood should be able to control it’s nature.. You would encouage a greedy homeowner to destroy that environment. A home is, for most people, their largest single investment and theythe should take the lawful steps they feel appropriate to protect it. As I wrote, there’s plenty of development potential available for starter homes outside the leafy streets which so offend you. There’s a very clear distinction beteen zoning and regulations which affect the cost of construction which TAI appears not to grasp.

          • Thom Burnett

            Andrew,

            You’re the socialist in this argument. You’re arguing that the local majority use the government to enhance it’s hold on value even when some individual land owner might want to use the land otherwise. This is the essence of collectivism.

            The free market or libertarian view would be that each land owner do what he pleases with his own property and the neighbors don’t get a say in that.

          • Andrew Allison

            Nope. I’m arguing that the government should have limited power to override local homeowners’ preferences, and that the problem is not land use planning but regulation which increases the cost of construction so that developers have little interest in building starter homes.

          • http://geocurrents.info Martin W. Lewis

            Yet again, the exactly the opposite is true. Market-driven urban and suburban intensification is profoundly beneficial for the environment, which is one of many reason why I think we should allow it to happen. That does not mean that I reject all zoning and regulation, but the restrictions on development imposted by crony capitalists/gentry socialists in Blue Model metropolitan areas is beyond all reason.

            I can certainly understand why many people want to prevent development in their own towns and neighborhoods, even though I disagree. But to pretend that thwarting the market in such a manner somehow represents “capitalism” whereas allowing the market the freedom to operate somehow represents “socialism,” as you seem to do, is simply fatuous. Thom Burnett is right: in this argument, you sir are the socialist, It would be nice if you had the intellectual integrity to admit that.

  • Jim__L

    Again, the solution is simple — move the jobs someplace else in the country!

    It’s not that hard!

    • Andrew Allison

      It’s a bit more complicated than that. Many low-income jobs exist to provide services of various kinds to those more fortunate. It’s the jobs that support them which need to be exported.

      • Jim__L

        You’re absolutely right, that was what I was referring to… apologies for the lack of clarity.

  • vepxistqaosani

    Another reason to vote Trump — he’ll simply seize everyone’s property by eminent domain and then develop it.

  • Ofer Imanuel

    It is perfectly understandable that someone who bought a house for 1+M$ does not want some affordable housing built right next to it. There are enough less high-end towns / neighborhood where you can add construction of similar kind.

    • Thom Burnett

      It is understandable. But it’s not a legitimate use of government for that rich person to use the government and police to tell his neighbors who they sell to. His property should end at the boundaries – not via zoning laws to property he doesn’t own.

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