
[After writing this, I noticed a new David Henderson post that made some similar points. If you only have time for one, read his excellent post.]
In the US, public services such as police, fire and K-12 education are typically provided by local governments. On the other hands, federal rules prevent local governments from certain types of regulation. Local governments are not allowed to restrict speech or interstate commerce, for instance.
What about property rights? Who should get to determine how a landowner uses his or her property. The Fifth Amendment to the US Constitution does provide some important protections for property owners, but courts have tended to view those rights in a very restrictive way. For instance, courts have allowed governments to restrict land use through zoning regulations.
Are local zoning regulations that limit the freedom to develop a piece of property similar to restrictions on speech and interstate commerce? In that case, it might make sense to have a state or federal ban on such regulations. Or are they like local services, where the default assumption is that local governments are best placed to address the needs of local residents?
Matt Yglesias argues that there are important external benefits from new housing construction:
A big part of that logic is that the benefits of increased housing supply, though extremely real, are also extremely diffuse. You are creating more housing supply on a region-wide basis. You are creating more tax revenue for an entire town. So lots of people who would benefit from more housing in Cambridge actually live in Somerville or Boston or Medford or Brookline, but all the costs of more housing in Cambridge fall on Cambridge residents. Since Cambridge residents get to vote on Cambridge town issues, they vote no. Then the same pattern repeats in Somerville. More housing would be beneficial, but many of the people who benefit live in Medford or Cambridge or Brookline or Boston, so they vote no. And more housing in Brookline would be beneficial, but many of the people who would benefit live in Medford or Somerville or Cambridge or Boston, so they vote no.
Trying to tell people that a few more rowhouses and apartments in their neighborhood will address housing scarcity is like trying to drain the ocean with a teaspoon.
But if you make it a state issue and the question becomes “more housing in Boston and Cambridge and Somerville and Brookline and Medford and everywhere else, but especially the highest-priced areas where latent construction demand is highest,” then everyone who benefits gets a vote.
As an analogy, a specific restriction on some political speech or interstate commerce might benefit a particular local special interest group. But the country as a whole benefits from a general rule allowing unlimited political speech and unrestricted interstate commerce.
While the logic of local control is often quite compelling, there is no obvious reason why the argument should end at the city level. If a city government is better able to determine zoning rules than a state government, why isn’t a small city neighborhood even more effective than an entire city? And why isn’t an individual city block better able to set its zoning policy than a city neighborhood? The reductio ad absurdum is to let each property owner set the rules for their own property, which effectively means no zoning regulation at all.
That’s my preference.
PS. Timothy Lee has an excellent post discussing housing deregulation in California. It turns out that my previous post missed California’s most important recent housing initiative.
READER COMMENTS
Thomas Lee Hutcheson
Sep 25 2021 at 6:19pm
There are some hyper local negative externalities from denser residential and commercial development so SOME kind of local zoning can make sense. The problem with zoning laws is that there is no way to compensate the “losers” from zoning changes that permit greater density so as to get to a Pareto Optimum.
This analysis would suggest that for better or worse the municipality is about the right level for reform as the benefits are spread to others largely through tax collections. A special case is zoning to increase the value of state or even nationally financed infrastructure.
David Seltzer
Sep 25 2021 at 6:34pm
That’s my preference as well. Reducing zoning restrictions to zero could have the additional effect of drawing new labor to cities that were previously unaffordable. The tax base would increase with a possible increase in tax revenue without raising taxes.
steve
Sep 25 2021 at 7:10pm
“The reductio ad absurdum is to let each property owner set the rules for their own property, which effectively means no zoning regulation at all.”
Does this actually happen in any larger city anywhere in the first world?
Steve
Scott Sumner
Sep 25 2021 at 11:22pm
I recall reading that Houston has no formal zoning, but has some non-zoning rules that operate a bit like zoning. Perhaps someone else can comment.
I also recall reading that New York City had no zoning until the early 20th century. Many of America’s best neighborhoods were built before zoning.
steve
Sep 26 2021 at 9:40am
https://kinder.rice.edu/2015/09/08/forget-what-youve-heard-houston-really-does-have-zoning-sort-of
I agree that many of the best were built before zoning but it seems inevitable, or at least it happens everywhere without exception that once built people want zoning or some equivalent. So I guess that if a neighborhood of 100 people wanted to put in a zoning rule that excluded taverns, just an example, with 99 people voting for the rule and the lone libertarian voting against, you think there should not a zoning rule against taverns? I dont think that is going to happen.
Steve
ssumner
Sep 27 2021 at 12:25am
Two points:
The tavern question is interesting, but right now the big issue is building residential housing in residential neighborhoods. Indeed it’s even difficult to builds residential housing in non-residential neighborhoods.
I’m reluctant to make any hard and fast judgments about what is politically possible, as that changes over time. Why was no zoning politically acceptable in 1920?
Lizard Man
Sep 27 2021 at 9:02am
Isn’t the standard libertarian story that zoning was a way to prop up segregation when more informal methods of enforcing segregation were failing?
Scott Sumner
Sep 27 2021 at 8:38pm
Both the libertarian and the BLM story?
David S
Sep 27 2021 at 4:47pm
“Many of America’s best neighborhoods were built before zoning”
Before zoning and personal automobiles—which is an observation made explicitly or implicitly by Jane Jacobs, Kenneth Jackson, and the bright eyed hordes of New Urbanist planners. The nexus between transportation technology and settlement patterns is probably stronger than zoning regulations.
Also of interest is the research by Sam Bass Warner Jr. on Boston’s Streetcar Suburbs. His chapter “Regulation Without Laws” describes how financing structures, rudimentary fire codes, and regional conventions shaped neighborhoods—in good ways and bad.
Check out Randall O’toole at the Antiplanner—he cured me of the optimism I once had about public transportation.
Phil H
Sep 25 2021 at 8:57pm
No regulation at all is pretty much impossible. Because of the nature of public services, there are certain restrictions that have to be imposed on private landowners, like building codes, fire codes, and vehicle access rules.
There could probably be fewer rules; the accumulation of rules is a function of time, and some mechanism for preventing buildup would be helpful.
Christophe Biocca
Sep 26 2021 at 11:04am
Pushing control down has had one success story in Houston. The city wanted to decrease their minimum lot sizes (one of the constraints set by the city rather than in private deed restrictions). To make this measure pass without getting defeated by the NIMBYs they allowed neighborhoods to start mandating minimum lot sizes of their own if they didn’t like the decrease.
This article drills down into the details. I think there’s value in such a strategy because at the neighborhood/block level, the real externalities of noise and traffic exist, but it’s unviable to try to use zoning as a supply cartel mechanism when homebuilders can just go 3 minutes over.
ssumner
Sep 27 2021 at 12:27am
Interesting comment.
Frank
Sep 26 2021 at 3:40pm
External benefits of a greater housing stock? These are pecuniary externalities. So long as there is competition among venues, even those externalities will be reduced or eliminated.
ssumner
Sep 27 2021 at 12:32am
You said:
“These are pecuniary externalities.”
I don’t agree. There is a larger physical stock of housing available to outsiders.
MarkW
Sep 26 2021 at 4:14pm
If a city government is better able to determine zoning rules than a state government, why isn’t a small city neighborhood even more effective than an entire city?
Isn’t that just a neighborhood with an HOA? And if city-level zoning is eliminated, shouldn’t we expect to see even more neighborhoods governed by HOAs?
steve
Sep 26 2021 at 5:04pm
What would stop HOAs from working with adjacent HOAs? We wont let any brothels open in our area if you wont!
Steve
Christophe Biocca
Sep 27 2021 at 7:39am
I think an HOA that doesn’t like brothels doesn’t need a reciprocity arrangement to have a ban inside their own borders. Conversely, an HOA that wouldn’t ban brothels within its constraints wouldn’t be moved by an offer from its neighbors to do the same. The incentive would have to be money or some other actual benefit to the don’t-care HOA.
Which means the no-brothels zone would cover all the HOAs that don’t want them, and possibly some of their neighbors, once or twice removed, that have been bribed into enforcing the rule. But how much money would an HOA or group thereof be willing to spend to stop a brothel from opening 15 minutes away by car? At some point it stops mattering much (and the only reason you get citywide bans today is that there’s no incremental cost to getting that instead of a more narrowly-tailored one, and it makes a better slogan).
robc
Sep 27 2021 at 8:42am
See my comment about household level zoning below. It also works for the brothel argument. It reduces to a perfect case of coasean bargaining. The no-brothel property owners can pay the pro-brothel property owners to not put in a brothel. The amount they would have to pay would probably be greater than the expected value of running a brothel, so it might not be cost-effective.
But if it just a hypothetical brothel than the owner might rent to someday, it might not cost much to get the landlord to put a no-brothel restriction in his leases.
robc
Sep 27 2021 at 9:10am
On a related note, one of the reasons I oppose zoning is exactly why so many support zoning. I want a pub on my street. Being able to walk a couple of houses down the street in order to get a beer or three (or five) is very appealing.
steve
Sep 27 2021 at 9:22am
Why don’t you move to somewhere close to a pub? Why is it better that 99 people have to live with what they consider an inconvenience to make you happy when you could just move?
Steve
MarkW
Sep 27 2021 at 12:58pm
On a related note, one of the reasons I oppose zoning is exactly why so many support zoning. I want a pub on my street.
HOAs are unlikely to include commercial properties, but there’s nothing to prevent them from being adjacent to commercial properties. My Mother lives in a condo complex but it’s still only about a five minute walk to the nearest pub (not that she spends her time there).
robc
Sep 28 2021 at 11:33am
Its clearly not everyone, as someone wants to open the pub and if it is successful, clearly other people wanted it too. And if the 99 really don’t want it, they can pay the property owner to not have it.
Contractual restrictions are ok. So, I am much more okay with HOA restrictions than with zoning, although I do have a problem with the perpetuity of deed restrictions. I would be fine if they were limited to 25 years. If the next generation owners want to reapply the deed restriction, they can go right ahead.
But agreeing to an HOA restriction* is individual level zoning. You are choosing to apply the restriction to your own property. It isn’t a mandate from on high.
*unless the HOA changes there rules. That should require unanimity.
robc
Sep 27 2021 at 8:37am
Why isnt a household even more effective than an HOA?
Let zoning be determined at the individual property level.
MarkW
Sep 27 2021 at 1:07pm
Single household zoning or HOA doesn’t mask sense. Both zoning and HOAs inherently collective arrangements. They’re examples of the ‘mutual coercion, mutually agreed upon’ solution to the ‘tragedy of the commons’ problem. Suppose I don’t want to live next to an apartment block. A solution is to move to a place where everybody (sharing similar preferences) has agreed not to sell their property to an apartment block developer. Everybody in this zone gives up flexibility in how they can use or dispose of their property in exchange for living around neighbors who’ve accepted the same constraints. It seems to be a popular arrangement.
steve
Sep 27 2021 at 3:37pm
What if the effects of a single property spill on to other properties? Suppose they build that pub but they dont build parking. Now people are coming to the pub and using up all the parking that the neighbors had been using. There are no zoning rules and each person gets to do what they want so the pub doesnt have to compensate the neighbors.
Steve
Johnson85
Sep 28 2021 at 4:49pm
That’s a property rights and enforcement issue, not a zoning issue. If you have parking on property you own and customers of the pub are using it, then you need the right to have them towed at their expense. If you are just concerned that government provided parking is being used by the pub customers, then probably the answer is to just appropriately price the parking.
Scott Sumner
Sep 27 2021 at 8:40pm
My point is that if it’s a collective agreement, then why not have the state do it? Why local governments?
steve
Sep 28 2021 at 8:48am
My argument is that we cant find examples where it doesnt happen. It seems inevitable and some of it seems pretty reasonable. Who really wants to have to park 3 blocks away every night? There are clearly advantages and disadvantages to whether the state does it or local government. You choose one, live with it and try to minimize the bad parts.
Steve
MarkW
Sep 28 2021 at 4:59pm
You ask ‘why not have the state do it?’ But if you’re asking that, why don’t you go one step further and ask, ‘why not have the federal government do it?’ I’d think a libertarian would have an inherent preference for decentralized rather than centralized regulations.
That said, I think a better question is ‘Should we prefer privately zoned single-family neighborhoods (in the form of HOAs) over community-zoned single-family neighborhoods? And if so, why?’
If you prefer a single-family neighborhood, your current options are:
A single-family zoned neighborhood in a city or suburb
A gated development governed by an HOA
A exurban-enough neighborhood where dense, multifamily development is impractical.
A large-enough lot that surrounding development is irrelevant (and this often goes along with #3)
If we use centralized state (or federal) power to kill option #1, shouldn’t we expect more of 2-4? And would that be a good thing on net?
robc
Sep 29 2021 at 9:32am
2 is clearly better than 1. Not sure why you put the “gated” in there, most HOAs are not gated.
3 and 4 are fine too, if that is what someone prefers.
My only issue with 2 is the perpetuity of the deed restriction. I favor a 25 year sunset limit on deed restrictions. The other option would be to acknowledge that the entity who originally put in the deed restriction still owns a portion of the property (the right to build multi-family homes or whatever) and should continue to pay property taxes on that portion for as long as the deed restriction exists.
MarkW
Sep 29 2021 at 12:24pm
2 is clearly better than 1.
Why?
Not sure why you put the “gated” in there, most HOAs are not gated.
My experience is that they mostly are even though there’s usually no guard or keycard. But you typically do enter through a single entryway (or maybe two) into large development that’s sealed off in all other directions and within which you find houses that were all developed in the same style by the same builder at the same time. I find HOA communities much more isolating, much worse aesthetically, much more auto-dependent, and impose much heavier-handed restrictions on owners’ ability to use their property than mere single-family zoned neighborhoods. I’d hate to see things go even farther in the ‘gated’ community direction.
David Henderson
Sep 26 2021 at 7:51pm
Thanks for the shoutout, Scott.
Justin
Sep 27 2021 at 2:04pm
Completely against Yglesias’s point of view here.
Local communities should certainly have the right to decide whether or not their low density neighborhoods are polluted with high rise apartments and things of that sort. There are plenty of cities out there which are already high density.
The preferences of people who already live in an area matter much more than those who would move there. If nice little town doesn’t want to build large apartments, then tough cookies for the would be apartment dwellers.
Scott Sumner
Sep 27 2021 at 8:48pm
You said:
“The preferences of people who already live in an area matter much more than those who would move there.”
That’s like saying that the preferences of restaurants already in a town matter more than the preferences of businesses that would like to move in and compete with them. It’s also an argument for interstate trade barriers (tariffs and quotas). Is that really the argument that you are trying to make, that not all Americans count equally? Are you claiming that local governments can put up economic barriers that make the country as a whole worse off?
You said:
“There are plenty of cities out there which are already high density.”
Much of the problem is already dense cities like San Francisco, New York and Boston restricting new development. There are plenty of new houses in Phoenix and San Antonio.
Justin
Sep 29 2021 at 12:36pm
Yes, I maintain that people who are already established in an area should be able to regulate their own communities. If I live in a rural area, me and my neighbors may not want a shopping development or high rise apartments being built across the street from our homes. Why should the concerns of newcomers take precedence over those who have lived in an area for years, perhaps even generations?
If I live in an urban area and want to move somewhere rural, it’s okay if the community I plan to move to regulates what I can do. I’m an outsider joining their community, after all. If their restrictions are too much for me, I am free to join another community, or remain where I am.
I am a collectivist who places a high value on subsidiarity, so I’d be okay with more local areas governing their own economic situations. At the end of the day, who cares if total GDP is 1% or 3% bigger if it comes with massive human costs, such as the loss of good jobs, consequent inability to form or maintain families, anxiety, depression, despair, addiction, etc?
For all this economic growth, median income for men has not been rising for a half century, and despite the implementation of the ACA, which should help improve life expectancy by expanding access to health services, life expectancy for white men in particular has been falling for years.
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