Conniptions from me on urban economics

Matt Yglesias, picking up from Ryan Avent, writes:

…some libertarian economists at George Mason University go so far as to
laud America’s large houses and plentiful parking specifically as
evidence of the superiority of America’s free market economic policy,
blissfully unaware that in the United States pervasive regulation
requires the construction of bigger houses and more parking spaces than
the market would provide.

Matt refers to:

…the kind of libertarians who one would expect to go into conniptions if
Fairfax County, Virginia were to propose a stringent rent control law seem surprisingly blasé
about the vast array of land use restrictions that infringe economic
liberty in that county and most other American jurisdictions.

Just for the record, I'd like to add my conniptions on the issue:

1. I would not have brought the U.S. down the path of water subsidies, many of which are pro-suburban.  (Admitted they are not always easy to repeal.)

2. I think pollution externalities should be priced in Pigouvian fashion; this would penalize many suburban developments.

3. I oppose the widening of Route 7 at Tysons Corner and I expect a disaster from the current plans.

4. I favor school choice and charter schools, which would make many U.S. cities livable again for couples with children.

5. I would price many roads for congestion, although as Bryan points out this could either help or hurt cars as a mode of transport.

6. I would allow U.S. cities to become much taller, thereby accommodating more residents.  I would weaken many urban building codes in the interests of a greener America.

7. I much preferred the time when I lived near a gas station and a 7-11.

Maybe Matt and Ryan are picking on Bryan Caplan rather than me but I suspect Bryan would agree with most of this list, maybe all of it.

If I don't throw conniptions on these issues more often, it is because I regard them as unlikely or in some cases they are simply not issues I follow closely.  Fairfax County zoning has such strong political support, most of all from the wealthy Democrats who supported Obama but from Republicans too.  If you find anyone in Fairfax screaming about the horrors of zoning, that person is likely to be a libertarian and not a blase one.  Or maybe they are a Best Buy shareholder.

But today is the day of conniptions.  I truly wish that Fairfax County were more like central Arlington or for that matter Falls Church City and I curse those who have made it otherwise.

Here is a picture of The Conniptions.  Don't forget them.  They are mine!  My conniptions.

Fairfax, by the way, did have rent control before 1973.  Oddly, my main post on rent control is a chat with Tyrone, who of course favors the idea.


Here's one GMU economist (me) on Donald Shoup's 2005 parking magnum opus:

"I much preferred the time when I lived near a gas station and a 7-11." It follows by revealed preference that you don't. Otherwise, all else equal, you would live near one. Or, are you saying that there is some publice service (say, policing) that is underprovided in residential neighborhoods where homes are close to such amenities?

You just wanted an excuse to use the word 'conniptions' a few times in one post, didn't you?

As I posted on some other blog quoting this same passage, Yggy is being dense, as usual. Libertarians, as a rule, hate zoning with a burning passion. But zoning isn't news, and "zoning sucks" is a pretty boring blog post. On top of that, as Tyler points out, zoning is really, REALLY popular among normal folks, so standing in opposition to it really is pretty futile, hence relegation to the Pile Of Topics That Don't Usually Get Talked About.

What's really funny is that Matt rightly identifies one central defect of the zoning paradigm--central planning--in attacking Caplan, but Matt doesn't ordinarily think that central planning is a defect. Does anyone doubt that Matt thinks the answer to the problem of our awful suburuban zoning is "better zoning" (using "better experts"). Someone should get Matt on the record.

Hmm, well, and what about Houston? Without zoning, instead there are private "deed restrictions" on parcels of land. But they end up having pretty similar effects. Yes, Houston's neighborhoods are slightly quirkier than Dallas', but I wouldn't say it looks that much different from, say, LA. How should libertarians feel about that? Seems that indicates that local zoning codes mostly reflect what free-market choices would have given us anyway.

Gadzooks! I certainly would not want those Conniptions in my neighborhood! Calls for zoning, clearly.

There is a new urbanism movement, partly inspired by Jane Jacobs, that calls for much "looser" zoning
with funky mixtures of housing and businesses. This is spreading.

The one city I am aware of without zoning is Houston. I know people who think it is wonderful. I
think it is pretty ugly.

Of course, in the absence of zoning one gets restrictive covenants, essentially a Coasian solution.
In the old days those included such items "do not sell house to any Negroes."

Zoning is not "central planning." It is local planning, a very different bird.

And, no, suburbanites do not experience most of the externalities of where they live, which include
such things as emissions from the cars they drive.

I see a couple of implications of Tyler's conniption:

1) Communities desire zoning law in the face of the negative externalities mentioned (e.g., pollution) and hassles (e.g., water supplies). Non-Economic concerns (space, nature) are more important to these communities and they don't want to have to PAY to keep the benefits when they already have been given control of the lands they protect, maintain and administer.

2) These communities (and the entities they deal with) do not readily realize the negative implications of there decisions and if they were to factor them in they would be more likely to change their policies.

My take is that, absent regulations, sprawl would be more likely than urbanization. The comment from the links that, if privately owned much federal land would be purchased and used for industry instead of "recreation" supports this point - apparently what we have now isn't sufficient and thus more land needs to be developed. If you really want to prevent sprawl have government purchase MORE land and force it to be natural.

This also reinforces my point is that many people would rather have the national parks remain parks and not be forced to out-bid developers. Screw the economy - I want somewhere to go for vacation and not have to pay a fortune to go and stay there. It may not be economically efficient but many/most people are not that hard-core pro-growth/economy.

This last point is probably unintelligible to pro-market libertarians but I would offer that more people hold the "government controlled" beliefs rather than the free-market beliefs. If you want to change their mind you need to show them how - directly - the pro-market belief benefits them; and unfortunately lowering the national debt by itself is not likely to work.

Pigouvian taxes are great in the mathematical, imaginary world of perfect bureaucrats with perfectly beneficent intentions perfectly attuned to the identical preferences of individuals and marginal costs of firms. In the real world of imperfect people and diverse preferences? Not so good. Pigouvian taxes are just a remake of the Ferme generale tax with its special interests, infinite detail, and disastrous economic impact. Just get rid of zoning, privatize water and roads, free the schools, free people to live across the landscape as they chose, and require the common law system sort out liabilities and harms based on sound evidence.

Adam: If you are interested in establishing freedom for individuals then why even introduce a legal system? How you would you establish jurisdiction?

Also, "Sound Evidence" sounds a lot like "supporting statistics" - everyone has them to support their position.

I do agree that Pigouvian taxes are simply an imposition of values upon others but no matter what we as society accomplish this will happen - by taxes, laws, wealth, or power there will be those who suffer as others benefit - so the real question is whether Pigouvian taxes on pollution byproducts is something we want to impose on our current generation in order to try and provide for a better (less bad) future? Perfect or imperfect they are likely to have the desired effect of reducing pollution. You may not be willing to live a little less comfortably now so that your future and future generations can live but others do.

Without some form of government we don't even have these discussions since short-term benefits will indoubtedly rule over long-term concerns since, normally, those in power benefit from short-term gains more certainly than long-term gains and governments (defined as collaborating groups of individuals - nominally those without significant individual power) are the only way for the less powerful to challenge those with power.

those in power benefit from short-term gains more certainly than long-term gains and governments (defined as collaborating groups of individuals - nominally those without significant individual power) are the only way for the less powerful to challenge those with power.

I completely disagree. Those without power benefit more from extra housing. Those with power benefit more from restricting housing and the long-term benefits of a nicer view and better environment. Poor people benefit from short-term gains more; it's the rich and those who already have theirs who suddenly start caring about the long term. Local governments, as far as housing goes, are a way for those with individual power to exert their preferences on those without power by forming coalitions.

To John Thacker

It is hard to say, in some universal way, why some communities take the paths they do. For example, you can not claim that more buildings would be built absent zoning restrictions. You have no idea what path would be taken absent zoning restrictions in general.

And developers in many communities do demand zoning rules. If you want a large factory built in your town you may need to allow access to trucks, rail, etc before any developer will break ground. If you want to attract certain developers to your town it is often easier to do it if you offer them some assurances that their investment will be protected.

Voters in communities often demand zoning rules because they want to protect their investment. Restrictions on airports, prisons, etc are all viewed as a way to protect past investments.

I lived in Cary, North Carolina which had a variety of restrictions. Some silly. But they, the voters, wanted the community to have a certain feel. They wanted to attract some developers and reject others. So what?

Perhaps I am anti-libertarian if that means that a local community can not get together to protect their community from becoming something they don't desire. Does the community make certain tradeoffs when they make choices. Yes. Again so what.

Some people strongly favor rent control. The price they pay is less investment in housing. But some people are big winners under the system.

Some people favor zoning regulations. Can it raise housing costs in the community? Yes. But it increases the value of the current housing without, all else equal, encouraging disinvestment. If anything it is often an incentive to invest in property because some of the risk of owning the property has been removed.

In many cities zoning rules just become another tax for developers. A way for politicians to shake down firms. However the revealed preferences in most cities is that firms would rather pay the tax then try to put together a complex series of business restrictions to get the same result.

There are certainly a lot of non-free-market factors influencing housing and parking in the U.S., but they don't all push in the direction Ygelsias claims, and libertarians can hardly be accused of supporting most of them.

I don't know of any zoning rules that "require" a house to exceed some size, but the mortgage interest deduction certainly encourages people to spend more on bigger houses than they would without it. Will Yglesias join libertarians in calling for the elimination of this subsidy?

Some locales do require that parking be included in residential and commercial development, but other locales actually limit the parking that can be included. By far the biggest non-free-market factor influencing parking is the vast number of street parking spaces that governments construct and offer for free or at below-market prices. If these were eliminated, Yglesias can be sure that developers would build many more parking spaces than they do under the present regieme. Will Yglesias join libertarians in calling for the elimination of subsidizied street parking?

This is probably one of my favorite Tyler posts. Ironic - although he seems to abhor it and rarely utilizes it, his wit is at its sharpest when he's jousting back.

In my experience, Europeans are quite lazy and the population over 25 hardly walks anymore; only sportsmen and outdoorsmen really do.

Houston has no land use restrictions (no zoning), and it is very suburban in character.

Don't forget building codes. Urban areas often have non-standard building codes (forcing the use of, say, copper pipe or electrical conduit). These codes are for the express benefit of unionized trades, and greatly increase the cost of new housing.

My impression wasn't that Yglesias was claiming that GMU economists were supporting current zoning practices, but rather that they were praising the results those practices and attributing them to free markets. Maybe neither of those is true, but they aren't the same thing.

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