Fischel has a long list of explanations for this intensification of zoning that I won’t go into here, other than to mention the one that drives me the craziest — the dressing-up of self-interested economic arguments in the language of environmentalism and morality.
Pointer from Mark Thoma.
My thoughts:
1. In urban areas, there are important spillover effects from development. Your new building might block my view, create noise or congestion, and so on. In theory, this would be resolved in a Coasian manner–either you compensate me for the harm that you do or I compensate you for not allowing you to build. But in practice the mechanisms for Coasian bargaining do not exist. Hence, these spillovers are dealt with by the political process.
2. Land-use regulation is a major source of political power. If the teachers’ unions ultimately determine who can and cannot be elected in Montgomery County, Maryland, then the ability to fund a campaign comes from developers. The developers are effectively bribing the county council to get their projects approved.
3. I am not sure what the free-market equilibrium looks like for major cities. Perhaps there would be a bit more high-rise apartments built and somewhat less upward pressure on prices and rents. But do not be so sure that the effect would be large.
4. Economists and pundits look at the higher incomes in San Francisco and New York relative to small-town Ohio and see missed opportunities caused by zoning restrictions. I think that these observers under-estimate the differences in lifestyle preferences.
It isn’t just relative to a small town. It’s relative to cities with much looser land use restrictions, like Dallas, Houston, and Phoenix.
Zoning is just a backdoor way to making sure your neighborhood remains safe and your schools remain good by making sure the wrong sorts of people don’t move in. If you’ve ever seen what happens to a neighborhood when the wrong sort of people move in you can understand.
The fact that if such a thing happens “all the right kind of people” will blame you for your own misfortune and make it impossible to deal with just adds to the need to keep the wrong sort of people out. When St. Louis managed to push the wrong sort of people out of city center and into surrounding suburbs they destroyed the neighborhood where Michael Brown and Darren Wilson incident happened. Did anyone care that the town had its property values destroyed by all this? No, they just called people racist because they didn’t have the clout that the gentrifiers in the city had.
Until people are allowed free association to protect their neighborhoods, they are going to cling to the only method they have to protect themselves. When they hear “affordable housing” they instead hear “crime and bad schools.”
This seems pretty convoluted.
Rather than instituting zoning that clearly doesn’t accomplish this even if it could, which it couldn’t, even if it were allowed, which it isn’t, why not just not subsidize “affordable housing.”?
The same old question, how do you pass racist policies when you can’t even prevent pro-diversity policies? Because people are too dumb to realize sneaky racism?
When “everything is racist it just needs to be pointed out,” I’m not buying the thought that ham-fisted policies will slip racism through because they claim to be terrible economic policies.
Sounds like a just-so story to me. I’m more inclined to believe the people near where I used to live who didn’t want a gas station not because they thought it was sneaky racist, but because I believed them when they told me they were idiots.
As Bryan Caplan likes to repeat with the old Simpsons joke, “Our Prices Discriminate So We Don’t Have To” What has happened in the US cities in that the prices are as such to only have the right people into the neighborhood. Living in California, I see this reality in the economics in various neighborhoods. In fact, I believe one of the reasons crime has dropped so much is many African-American ghetto neighborhoods suddenly became valuable and the citizens changed their behavior. (I don’t like Steve Sailer endless liberal are rascist by using high prices to protect the neighborhood. In California, the upper end neighborhoods are completely multicultural backgrounds at this point.)
I see the biggest problem of zoning is the current homeowners don’t like having a significantly more people living in the area. They won’t zone a lot more in upper middle class neighborhoods because most homeowners (who will dominate the City Council) don’t want more crowding. (Additionally current homeowners like home prices going up.)
Does the vast majority of zoning discriminate, even accounting for how ineffecient it would have to be?
I doubt it.
It didn’t keep essentially every city from voting blue until the regent gentrification trend for example.
Does the vast majority of zoning discriminate, even accounting for how ineffecient it would have to be?
No, zoning housing discriminates on ‘income’ so it is not surprising it appears to be discriminating against race with the correlation of race and income. So my Cali Middle Class high school in 1988 had say 55% white, 30% Asian, 20% Latino and 5% black. (So it did not match the California average at the time.) So what has happened to traditional minority neighborhoods? They followed gentrification process to where better incomes moved in and now the current residents had home prices and more interest to protect the neighborhood. (And this is what happened to my residence in Cali which start out as a retirement and Agricultural neighborhood. Now middle class money has moved in.)
When you zone not to build cheap housing, it keeps poors out.
When you have HOAs with crazy requirements, it keeps out the kind of people that can’t go through those hoops. Or creates an excuse to get rid of who you wanted to get rid of anyway.
http://demographics.coopercenter.org/DotMap/
http://nymag.com/daily/intelligencer/2015/05/grim-racist-methods-of-one-brooklyn-landlord.html
I say we just look at people’s words and deeds.
I think it is impossible to look at zoning without looking at school and neighborhoods. The intensification of zoning is in my opinion a completely predictable perverse effect of the way non-discrimination law applies to schools.
Two large potential externalities of new development are 1) the new development won’t pay enough property tax to fund schools for the children who live there and 2) the children who live there will be below-average students, and thus take more resources than average and/or make the peer effects of the school less desirable.
In a free-association equilibrium, these effects can be managed by conditioning residency, or school attendance, on factors in addition to ability to pay; with those factors banned from consideration, zoning to make residence conditional ability to pay at the level of a two-professional-income family is the best available substitute.
I am having difficulty separating a smart-sounding explanation from the supporting logic that says people are idiots.
I want my property to be more valuable, yes, but not to cost more. Why wouldn’t I invest the difference in buying into a place where the price translated into value instead of an entry fee?
“I think that these observers under-estimate the differences in lifestyle preferences.”
Yes. Economists and pundits are largely urban, coastal, and upper middle class — they have little sense of how fundamentally unattractive dense urban living in New York or San Francisco would be to the average ‘flyover country’ resident (and not just for those in small towns).
When people are not allowed to advocate for their legitimate interests directly and explicitly, they will find some socially acceptable alternative way to get to the same result. Price-based discrimination and inherently conservative zoning rules give people the predictability they need regarding neighborhood character that justifies large, long term investment. The terms of legal covenants over which people might negotiate are unenforceable, so the government makes Coasian bargaining on the key points illegal. Moralistic narratives justifying zoning frictions arises via residents trying to circumvent one imposed market failure with another, countervailing one.
Incomes are higher but the cost of living is higher still. The trade off is between work and standard of living. Work easier to find and keep at the cost of a lower standard of living, vs work harder to find but offering a higher standard of living, but where lack of work offers the lowest standard of living. In addition to work, cities offer greater investment opportunities and what results in a lower standard of living, rents, can be turned into a higher investment return through owning, thus turning a lower standard of living into a greater investment gain. A higher standard of living can be lowered and savings turned into a greater investment gain elsewhere but is rarely done, the temptations of consumption being too great.
The developers are effectively bribing the county council to get their projects approved.
If this were widely true it’d be a big improvement. Instead, most homeowners / NIMBYs win most battles, which is why we see the cost of housing being driven up so sharply in so many cities and their first-tier suburbs.
This is cited a lot, and it may be partly true, but it may also be overblown. Places like SF, NYC, etc are already very dense. Much denser then Houston by far, which is often cited as a zoning utopia.
In addition many of these cities have historical geography that creates bottlenecks for both housing and commuting, usually some body of water. By contrast, many of the “good zoning regimes” all exist in inland cities surrounded by cheap land to build on. This is reflected in the kind of development places like Houston get. It’s mostly flat, not up. More sprawl, not more skyscrapers.
So what we really have is a bunch of less dense second tier cities with lots of free land expanding their sprawl. It’s unclear if this means already crowded global cities can try to stick even more skyscrapers into existing land that already has buildings.
San Francisco has 40% of the population of Paris in about the same area. There’s plenty of scope to increase density, and plenty of people who would sell to developers who want to build denser. But the City doesn’t build infrastructure, instead wasting it’s ever-increasing tax revenue on public housing boondoggles and making traffic more difficult, which justifies denying permission to increase density.
Is it? I try to gather data on this myself, and it can be a bit difficult. For one its often important to consider what statistical area your considering “the city”. London for instance is often cited as being low density, but its more accurate to consider it as being medium density over a wider area. Many other cities have very dense city centers, but less density spread out. Depending on the way you measure it London seems pretty normal.
I’ve not gotten the impression that San Fransisco has abnormally low density, and its certainly more dense then cities held up as zoning success stories.
https://geovisualist.com/2015/05/18/who-knew-milwaukee-is-so-dense/
http://www.citylab.com/housing/2012/10/americas-truly-densest-metros/3450/
http://www.huffingtonpost.com/wendell-cox/americas-densest-cities_b_5888424.html
Ninety-three thousand acres in Montgomery County, Maryland, are zoned as an “Agricultural Reserve,” See: https://en.wikipedia.org/wiki/Montgomery_County,_Maryland_Agricultural_Reserve I am absolutely positive that no equilibrium of any sort would produce such inanity.
“2. Land-use regulation is a major source of political power. If the teachers’ unions ultimately determine who can and cannot be elected in Montgomery County, Maryland, then the ability to fund a campaign comes from developers. The developers are effectively bribing the county council to get their projects approved. ”
Sorry, I don’t see how this follows. Can someone explain this to me?
Feels to me like we need new cities to simply circumvent the problem via competition. Perhaps a bit of targeted infrastructure at 2nd & 3rd tier cities to make them more likely to become top-tier (airport, transit hub, etc)?
I tend to assume that when people say they don’t want a gas station that they really just don’t want another gas station, not that they are coding for not wanting Pakistanis or affordable gasoline for blacks and latinos. I should assume that rather than simple economic ignorance, people have really complex racism strategy?
Some years ago, a developer wanted to build some apartments on his own land (where he stored equipment and supplies) for his Mexican laborers to stay in. This required a zoning change and went to the county zoning board.
I went to the hearing after several neighbors told me they strongly opposed it. While the Commissioners focused nominally on economics and neighborhood character issues, the public comments were strongly opposed in that they didn’t want the Mexicans living in their neighborhood. So that’s at least one anecdote of using zoning to keep undesirables out.
( I gave a statement that the developer should be free to do what he wants with his own land and pointed out that the Mexicans were likely going to end up in the neighborhood anyways since they worked there and any issues with too many Mexicans in the neighborhood should be taken up with the Feds and not the zoning board. However, my view did not carry the day)
The rule making in most cities and towns is largely dictated by a small group of inside players; mayors, selectmen, town councils, etc… far more than the preferences of the majority of homeowners. Try getting something done in your town that your selectmen or mayor is opposed to. It is nearly impossible.
Well established towns that are gentrifying aren’t orienting themselves to draw in people like them to protect the character of their neighborhoods. They are targeting new people who have more money than the existing order, and those people usually have different values. The existing order often doesn’t like it, and they resent that some of them can’t afford it anymore and have to leave.
So why do they gentrify? Because most cities and towns now have long term structural financial problems and they have to. The insiders know that they need to improve their margins or they will run out of money. Any town that can get away with it is attempting to get more taxes from less citizens. They want one family with a 600K house, not two families with 300K houses.
> 3. I am not sure what the free-market equilibrium looks like for major cities.
Supposedly, Houston, Texas is zoning-free, Here is what the city’s website says:
> The Department of Planning and Development regulates land development in
> Houston and within its extraterritorial jurisdiction (ETJ). The city of Houston
> does not have zoning but development is governed by codes that address how
> property can be subdivided. The City codes do not address land use.
> The Department checks subdivision plats for the proper subdivision of land
> and for adequate street or right-of-way, building lines and for compliance with
> Chapter 42, the City’s land development ordinance. Development site plans are
> checked for compliance with regulations that include parking, tree and shrub
> requirements, setbacks, and access.
A quick skim of the regulation on that site seems to confirm that this is a much more limited ordinance.
http://houstontx.gov/planning/DevelopRegs/dev_regs_links.html
Sure, a lot of people don’t want to live in coastal cities. No one doubts that. (I grew up in a small town in Oklahoma. It’s a nice place! I might want to live there except that I could never get a job in my area of technology.)
But I live in the Bay Area and I see a lot if people I know moving out. Probably 80% would rather stay if prices had not gone up. Just last night I had a conversation with our babysitter about this, who is considering moving to Texas, but only if her rent goes up again to the point where she just can’t pay it anymore.
It’s not primarily about preferences for a different kind of living. (I respect that!) It’s about how supply constraints are raising prices.
It’s also about how network effects pull all the jobs into a few places. I suspect many of the residents of large cities would rather not live there, all other things being equal – but their job prospects would be limited in the places they’d rather live in.