I received a few comments from fellow libertarians last time I wrote about these issues. Shouldn’t communities have the right to pass whatever restrictions they want? If they want to preserve a $5 million per house replica of 1950s suburbia, and wall out the unwashed masses, hypocrisy aside, why should the state stop them? I counter, this is not libertarianism, the defense of private rights, this is untrammeled majoritarianism, by which your neighbors via the city strip you of your right to sell your house to the highest bidder, do what you want with it, and strip the ambitious kid from Fresno who wants to move here of his right to be supplied by a competitive marketplace.
But there are externalities in neighborhoods. If my neighbor’s house gets sold to someone who puts up a ten-story apartment building, my porch will no longer get any sun. I may have to put up a fence to keep my lawn from being trampled. The increased traffic on our street could mean that every time I want to pull out of my driveway I have to wait ten minutes for someone to let me in. The noise level may be much higher.
In theory, you can handle all of these issues with well-specified property rights and Coasian bargaining. In reality, this is a difficult problem.
I am not saying that government solves the problem well. I am not saying that existing zoning practices make sense. But a simple rule that says that you are allowed to sell your property to the highest bidder, with no restrictions, probably does not make sense either.
The zoning bill in question failed, mainly because of suburbanites who didn’t want the unwashed. The whole effort in California was the usual comedy of errors in which the legislature forgot who really pays the bills.
This is an important point. I think it comes down to a strict version of libertarianism that treats governments as very different from other organizations. Libertarians do not have issues with corporate bylaws and company rules so I think it comes down to a belief that governments need to be constrained for the greater good. Municipal governments are somewhere between an informal community and a sovereign state with varying degrees of coercive power. There is an implicit agreement that property owners will follow the municipal bylaws.
If you buy a fast-food franchise you explicitly agree to a set of rules/bylaws outlined in a signed contract. So my question is what is the difference, or maybe, where is the libertarian line between valid and invalid agreements with respect to organization membership?
Government is just another name for what we choose to do together THROUGH COERCION.
Corporation is just another name for what we choose to do together VOLUNTARILY.
It is difficult for a homeowner to opt out of their local government. Generally, they must give up their home. Opting out of a corporation is fairly easy. Perhaps this explains why Libertarians have trouble with one but not the other.
It’s not so easy to opt out of a corporation, if it has partial title to your land. I’m thinking of things like HOAs.
Yeah, but what’s the threshold of difficulty at which something becomes coercive? If selling one’s home is difficult enough to count, does that not rule out HOAs? What’s the difference between choosing a neighborhood and choosing a local government?
There are vastly more people who favor zoning reform versus the elimination of zoning altogether.
But they don’t agree about exactly which reforms to adopt.
Honestly this reads as a true libertarian, we don’t believe in local community either. Whereas it is fine for very rich, Mark Zuckerberg, erect barriers for housing but when it comes to the upper middle class they are bunch zoning laws, they are anti-democracy autocrats.
1) I appreciate the comment on externalities in neighborhoods. Honestly, if you ask the average homeowner in California about zoning and more population, their first reaction is traffic not home prices.
2) There are real issues of high housing prices as it impacts taxes (teach salaries) and opportunities.
3) I still say the biggest barrier to high multi-family building is current homeowners don’t sell easily. That is not a zoning issue. To build a large complex, you have to get 10 well off homeowners to sell and that takes a lot of capital to do. Think about the homeowner who has lived in a house for 20 years, (mostly if not all) paid off, and has significant savings. They don’t like moving.
4) Honestly, has there been both a successful city that had a high cost of living and was able to substantially build enough housing to lower the high cost. I believe Tokyo has had some success in mitigating the high cost of living as it has not risen since 1994, but Tokyo was also the highest cost in 1994 and has not seen drops in high cost of living.
I still say the biggest barrier to high multi-family building is current homeowners don’t sell easily. That is not a zoning issue. To build a large complex, you have to get 10 well off homeowners to sell and that takes a lot of capital to do.
But you don’t have to build a large complex. A small complex on a small number of single-family lots (or even a single lot) is entirely feasible. But larger projects aren’t impossible either. I live in Ann Arbor and many such projects of varying sizes have been built in recent years, including this one where a developer did, indeed, buy out an entire block of single-family homes. Here, on the other hand, is a 4-unit condo project to be built on a single lot.
The problem isn’t just the protectionism of successful communities and neighborhoods, although that certainly exists. In America, we really do have enough room.
The problem is the widespread lack of political and economic incentives for development of low cost housing. There is no natural marginal incentive to pursue such projects for most developers or municipalities.
This causes the problem to fall to the weakest, most poorly run, most problematic communities, and we get concentrations of social problems, which inevitably cause some of the racial and class fears we will inevitably hear expressed in the other posts on this topic.
There is no elegant way to fix this. The best of the bad ways is for states to force changes to the incentives. At least California is trying a little.
As a libertarian, I’m always surprised how much some other libertarians stress about zoning. Zoning isn’t really different from a neighborhood covenant where the neighborhood is the whole city. The city sold the land originally and essentially attached a restriction on the deed that said you could only build stuff that was approved by the city. This is something any private entity could do as well (as covenants demonstrate). The effects of that restriction are pretty well baked into the price of the land at this point.
Which isn’t to say we can’t complain about the efficiency of the particular set of restrictions we have. But I don’t see a case for saying zoning is unlibertarian.
“The city sold the land originally”
It is not clear that this statement is true. In most cases, on the east coast at least, cities became chartered only after a certain number of people lived there. There was no city that owned a chunk of land and then sold it off; you might be thinking of developments where usually one group does buy all the land, puts houses or whatever on it, then sells the bits to individuals.
The big problem with zoning seems to be that generally the group doing the zoning did not own the land first, but rather moved in, or was created, and then assumed the power to curtail certain rights that had existed previously in the ownership of the land. Incentive-wise, the group has no responsibility or stake in the land of others, but does possess power to dictate its use. We should predict that the group operates for its own good, that is of the land it owns and its preferences, as opposed to the good of all the land owners.
The libertarian solution to those problems is (1) to privatize the street, which would produce contracts with the property owners for access, and (2) for people affected by the externalities you listed to sue under the common law of nuisances.
Obviously, there would need to be an adjustment period in which all this is thrashed out by litigation. But when it was over we’d all have truly stable and reliable property rights, to a degree that hasn’t been seen since zoning began. I submit that that would be a huge benefit to the public.
Indeed, zoning law has allowed the local governments to displace civil lawsuits as a vehicle to resolve negative externalities. I think it would not be difficult to get these kinds of externalities decided locally on the basis of reasonable case law and a free market.
I wonder why you believe that this would result in an improvement in liberty? Have you ever tried to seek any form of relief through a court? If you have, I doubt you’d think this was a good idea.
The inefficiency of such an approach seems obvious. There are an endless number of possible externalities, and an endless number of strategies for which such things could be avoided or manipulated. In the end, you end up with a mess.
Three points:
1) Liberty-maximization is often at odds with efficiency
2) The slow and uncertain process of the courts would incentivize settling differences of opinion about externalities outside of court
3) Ideally, a patchwork of different statues and case law would allow people to exit to a jurisdiction with amenable property rights.
At some point I heard a great solve for this problem on an economics podcast. The idea was that all homes can be up-zoned or down-zoned 1 level every five years. So if you buy a single family house you have the right to tear it down and build a 2 family house. Five years later you can tear it down and build a four family unit. This means areas can get more dense slowly and organically. From a property rights perspective, I can be sure that if I buy a home surrounded by a single family homes, it could become denser eventually, but at worst in 5 years I could be surrounded by 2-family homes, and in 10 years by 4 family condo buildings. If instead I buy next to an 8 family 5 story tall building I can predict that I might eventually be faced with a 10 story building next door.
I always liked this solution. Predictability, really helps define your rights and expectations.
+1. This seems pretty clever. Also, it means that someone who wants to develop 2 levels up needs to build and tear down the intermediate level, imposing a natural tax on leveling up too fast.
You could even imagine different neighborhoods with different refractory periods. There would be slow, medium, and fast growth neighborhoods. But at least everyone would know up front what the deal was.
I think a lot of NIMBYism is unclear expectations. So there’s some sort of endowment effect psychology were a deviation from your expectations feels like a defection from the social contract by the other party.
***But can we at least agree that the same municipality having slow growth zoning policies and affordable housing standards is incoherent?
Arnold, I think you are obscuring the point. JHC does not advocate for getting rid of zoning altogether, nor for pure unrestricted rights of property owners to do whatever they want. His point, on zoning and historical preservation grounds, is that the rights of your nosiest neighbors to object have gotten far to strong, to the point that we have the rule of the mob.
This is a thing that happens whenever anyone suggests looser zoning restrictions, or greater rights of property owners to build denser. Somebody says, what if they put a 10-story apartment by my house? It’s a straw man argument.
Also, the legislature have not forgotten who pays the bills. Because of Prop 13, assessed values of property only goes up when the property sells. They are creating incentives for land to sell at higher valuations by allowing denser buildings.
And Seattle’s recent building boom has led to housing prices to level off. Tech boom here continues apace.
Of course there is a scale between complete freedom and complete lack of freedom on this issue, as there is with most. One minor quibble I have is that it’s not necessarily about restricting sales to the “highest bidder”, it’s restricting what any owner of a given piece of property can do with it (whether or not it’s resold at all, or perhaps sold to someone other than the highest bidder for whatever reason). Both ends of this spectrum are probably unworkable in a real-world society. As things stand, though, I think we lean too heavily toward the lack of freedom side of the scale in many places in America, and this is one area of many where democracy appears to not serve libertarians’ interests particularly well.
Well, this may be one of many situations– situations libertarians are fond of pointing out generally– where:
1. no regulation isn’t a viable option, at least for now
2. but we know that there is a strong tendency toward regulatory capture that results in the distortionary use of regulation in defense of existing interests against new entrants
So one key question is then what locus of regulatory authority will minimize the severity of capture.
This question is what motivates bills like Scott Wiener’s that transfer zoning authority away from local governments. Local governments arguably have the absolute worst regulatory capture problem of any entity that could make zoning rules, because they incent local homeowners to resist any change to their precious “neighborhood character” regardless of the cost of that resistance to others’ rights, economic opportunity, environmental efficiency, etc. Centralizing zoning authority in larger entities, while it has some disadvantages of its own, brings in constituencies for broader-scale optimization that push against local resistance. Japan is a somewhat extreme success case of this, where nationally centralized zoning codes have produced much greater freedom to build without apparent negative effects on the livability of residential neighborhoods.
There is also a clear disparate impact case here, in that history strongly suggests that much residential zoning– in particular, residential zoning that permits only single family residences, often also including large minimum lot sizes, setback requirements, restrictions on numbers of unrelated occupants of a house, etc– is motivated not by a desire to reduce traffic and noise, but a desire to keep out lower-income people, especially nonwhites.
“Japan is a somewhat extreme success case of this, where nationally centralized zoning codes have produced much greater freedom to build without apparent negative effects on the livability of residential neighborhoods.”
“is motivated not by a desire to reduce traffic and noise, but a desire to keep out lower-income people, especially nonwhites.”
Maybe what works in Japan works precisely because there isn’t a large underclass that people don’t want moving in and destroying the neighborhood.
This is another one of those vague areas that libertarian theory hasn’t quite worked out.
In theory there is a sharp division between the public (government) and the private. But in reality the distinction between an HOA and a local government is not that clear. At least we can say that local governments have cops, and HOAs don’t. (Although they might employ private security forces.) But is that distinction relevant to the issue of zoning?
I tend to think the key should be the voluntary consent of the individual. In an HOA an individual presumably consents, but he doesn’t necessarily consent to the government he is born under. But then, many individuals move around and have a choice of places to live. But, BUT, those choices are also constrained by forced they can’t control like the job market. So really, the individual is always enmeshed in a web of constraints involuntarily imposed upon him both by market forces and by government. The left is (usually) more inclined to worry about market constraints and in favor of formal government intervention, while the right is (usually) wary of government and favors using these market constraints to replace government. But at this borderline region between HOA and local government, it becomes very confusing to decide what counts as “government” and what counts as “market”, so people have trouble deciding which side they should be one.
Local government’s lure people to buy homes in their jurisdictions with zoning. The zoning provides some assurance that your home is unlikely to be suddenly surrounded by apartments and the nature of the community suddenly changed. Usurping this local control at the state level might allow more density but it comes with a cost. It is not a free lunch and all violations of the principle of subsidiaries eventually come with regrets. The California bill sounds like Pruitt Igoe all over again. People will adapt and find alternatives to the schemes of the overlords of the libertarian universal master plan for high density living conditions.
Here is a thought experiment. Rather than attacking neighborhoods directly, why not just ban school attendance zones and require open admissions to all students within a jurisdiction? You would likely see similar property devaluation but you also get more integrated schools. And you would likely see leveling of test scores among all schools in a district with less variation. I suspect the teachers unions would riot as the teachers with the most seniority teach in schools whose attendance zones are drawn to serve high income populations.
Are you going to pay $XXX,XXX to all homeowners in the good school districts to compensate them for their loss?
Integrated schools are a total failure. They failed the market test, nobody wants them.
My point exactly. How are homeowners who invested in living in a particular neighborhood going to be compensated when the state tears that investment to shreds by opening the neighborhood up to high density development? Which may have the same effect on school demographics.
I recently sold a property in a gentrifying part of Baltimore. When the neighborhood was first set up in mid-2000s it was a dump, but it had lots of historic buildings and could be made “cool” with the right effort. It was good commuting distance to downtown and near a university.
The first people to move in were mostly artists, single yuppies, and retirees. To ensure that what they were building would pay off, they built in a special zoning for the neighborhood right into its birth. And it worked. Residents and businesses moved in. The economy picked up. Things got relatively safer. The artists did an amazing job turning the neighborhood into something aesthetically attractive. You could even maybe see the light at the end of the tunnel where the elementary school might become a place you could send your kid in ten years.
And then a developer came in and bought out most of the buildings. They want to build on the parking, tear down the historic buildings, basically turn it into something more like the mass yuppie developments you see elsewhere in the city. They also, bizarrely enough, want to build substantial low income housing there (I think this is a payoff the the city council). Their first act was also to cancel the leases on all of the original artists who built the community up.
Naturally, everyone is against this and has been fighting it. The developer has only moved in because of all the hard gentrifying work the original residents did in building the neighborhood up. They should enjoy the fruits of their labor, not have it stolen. Protests have ensured. Lawyers were hired to enforce the original zoning from the founding, and the developer has tried everything to get around that zoning. Recently the developer took a wrecking ball to two historic buildings in the middle of the night so that nobody would know until the deed was done.
I don’t see anything libertarian here. I see some people who did a lot of work creating value, and who took steps to use zoning to protect that value, getting railroaded by a powerful corporation that couldn’t give two shits about liberty.
A government (city, county,state) depending on which entity governs an area could legislate that it has a right of first refusal to any legitimate (backed by earnest money?) offer. The government would have the right in this instance to match the offer. The government would then have the right to sell or use the property. This would eliminate the zoning problem altogether. Of course I assume a representative government.
> But there are externalities in neighborhoods.
This is lazy. Every change of any kind involves some externality to others.
> Given that California will not allow more land to be devoted to housing — wisely, in my view
I’d like to hear Cochrane elaborate on this one. I noticed a lot of open, unused land in California, and I wonder why it isn’t developed.
Remember, rent control and minimum wage laws are bad bad bad!
But property zoning is something that needs undefined reforms at an undefined future date.