Bryan Caplan  

Is Suburban America the Product of Regulation?

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Book Watches... Labor Day is Not Union Day...
Now that my baby situation is under control, I'm ready to respond to Matt Yglesias.  Last week, he wrote, "Bryan Caplan specifically cites America's large houses and ample parking spaces as the benefits of our free market approach when they are, in fact, the product of systematic regulatory mandates."  If you re-read my piece, though, I didn't say a word about free markets.  I was merely comparing and contrasting the experiences of visiting versus living in Europe/America, not explaining why the differences exist. 

I'm not being coy.  I make an effort to keep my descriptive and normative analysis distinct.  When I think about the history for opera, for example, I try not to let the facts about government funding color my judgment about composers' artistic merit.  When I visit Bavaria, similarly, I don't try to convince myself that its 19th-century castles would be even better if Ludwig II had cut taxes instead of trying to out-do Louis XIV.  The music of Wagner is divine, and Neuschwanstein and Linderhof are awesome, no matter how they came into being.

Still, Matt does raise an interesting question: Is American suburbia the product of regulation?  He particularly emphasizes zoning - including parking mandates.  He may be right.  Perhaps suburbia is, like the music of Wagner, governments' inefficient gift to people with my kind of preferences.  But overall, I'm not convinced.  The American government does some things that encourage suburbia, but the net effect of government on suburbia is unclear.  A few of the leading anti-suburban policies that governments follow:

1. Regulations against developing empty land.  In many parts of the country, it is difficult to get permission to actually build anything.  Places like the Bay Area are notorious.  But even in my own neighborhood in "pro-growth" Fairfax, there is a vacant 1-acre lot.  It would be worth half a million dollars, but the authorities won't give the owner permission to install a septic tank, and won't attach it to the public sewer at any price.

2. Government land ownership.  The federal and state governments own almost 40% of the land in the U.S.  Sure, over a third of it is in Alaska.  But if the governments' land were in private hands, its owners would be itching to develop a lot of it.

3. Regulations against mixed use.  These actually make suburbia less convenient, encouraging people to move to urban environments where you can walk down the street to a restaurant or a 7-11.

4. Gas taxes.  In congested areas, admittedly, taxes might actually make suburbia more desirable by keeping the roads moving.  But much of the country is virtually uncongested, and they pay the same federal gas taxes as they do in LA and the northeast corridor.

Note: If someone has hard numbers showing that pro-suburban policies outweigh anti-suburban policies, I'm all ears.  My point is that the net effect of all levels of the American government on surburbia are far from obvious.

Finally, I'm frankly puzzled by Matt's conclusion:
But I don't really understand why it is that this kind of thing doesn't seem to bother libertarians very much... [G]iven a set of extremely severe land use regulations that happen to antagonize environmentalist and left-wing Europhilic bicycle commuters, suddenly mandatory minimum parking requirements become the essence of capitalism.
In my experience, 95% of the principled opponents of zoning (as opposed to people who just want a different kind of zoning) are libertarians.  There are over 700,000 hits on google for the words "libertarian" and "zoning."  My former students Ben Powell and Ed Stringham criss-crossed California on behalf of laissez-faire in real estate; here's their article in David Henderson's encyclopedia.  My colleague Dan Klein has a review essay on Donald Shoup's The High Cost of Free Parking.  The title: "Free Parking versus Free Markets."  Bottom line: I'm delighted to hear that Matt's on board, but he's hardly flying solo.


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COMMENTS (26 to date)
Tuttle writes:

It's been evident for some time that Yglesias isn't interested in understanding his libertarian opponents. I find it remarkable that an inability to comprehend intellectual opposition exists even amongst the higher rungs of the liberal intelligentsia.

Why do you suppose it is that libertarians understand their opponents so much more thoroughly than vice versa?

Justin Ross writes:

I like Tuttle's question: "Why do you suppose it is that libertarians understand their opponents so much more thoroughly than vice versa?"

I don't know if it is true, but if it is I suspect it is because most libertarians start from one of the majority positions rather than as libertarians, and gradually move towards libertarianism.

An alternate proposal is that libertarians are one of many minority ideologies, and so it is easier for them to learn their majoritarian opponents on a deeper level than vice versa. How well do libertarians understand their other minority view opponents?

eric writes:

Your examples of anti-suburban regulation are pretty weak. To wit:

1. Regulations against developing empty land were historically weaker, I believe, in suburbs than in cities, and postwar tax codes favored suburban development over urban.

2. That the government owns a lot of land has little to do with how the vast area that it doesn't own is developed.

3. Regulations against mixed use make surburbia suburbia!

4. Our gas taxes are absurdly low compared to most other civilized countries--relatively even lower than our income taxes.

It doesn't look like an even playing field to me.

Stephen Smith writes:

Note: If someone has hard numbers showing that pro-suburban policies outweigh anti-suburban policies, I'm all ears.

Zoned Out: Regulation, Markets, and Choices in Transportation and Metropolitan Land Use by Jonathan Levine.

For a more comprehensive treatment, see this blog that I'm an occasional contributer to, whose entire thesis is that government prodding and land use regulation encourage suburbia and discourage urbanism.

For more on how the history of land use planning (which is important, given the extreme path dependency of land use policy) has traditionally favored suburbanization over density, see these academic articles:

There's a long and storied history that you're not taking into account, which is understandable given the very low prominence that economists and historians have traditionally given this topic. But I am glad to see that major econobloggers are finally taking this up.

Doug writes:

Another point he forgets is that it was always the market, and not the government, that actually built the parking lots and large houses. Perhaps the government didn't forbid the building of large parking lots and houses, and did forbid some other uses, but we can still thank the free market for the resources to create the plans for the houses and parking lots, the resources to apply for zoning approvals, the resources to pay for the environmental impact reports required to obtain the approvals, and the resources to actually build the houses and parking lots. Just because the government doesn't forbid the market from producing a good does not mean we take that good out of the free market column, and add it to the big government column.

Sean O. writes:

The regulation of inner city schools has, in my opinion, contributed directly to the growth of the suburbs of many large cities.

wrong! writes:

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shecky writes:

2. A whole lot of govt land seems to be govt land kind of by default. Nobody really wants it. I'm thinking here in So CA, there are huge tracts of govt land that are either used by the military, and/or ridiculously remote and inhospitable. And it's not as if these lands cannot be utilized by the private sector. They are often leased for a song for various uses, without the problems or investment associated with ownership. I have no doubt Camp Pendleton would be tremendously valuable to private developers. But most govt land is more like China Lake or Fort Irwin. Or the vast expanse of nothing in between those places.

3. Regulations against mixed use often seem to be extremely popular with the electorate, particularly suburbanites, and thus with govt policy. Regulations are exactly the sort of thing that makes suburbia so attractive to many folks. Folks seem to like suburbs precisely because there is no 7-11 down the street, and no possibility of one ever popping up. Perhaps folks like suburbia precisely because they can afford the inconvenience. It's a tradeoff they seem to be happy with, and clearly desire.

Patrick writes:

I read somewhere (sorry, too lazy to find the link) that only ~1/3 of total auto-related costs imposed on society are directly paid for by consumers of auto transportation. In other words, car drivers only pay for 1/3 of their costs directly (e.g., gas taxes). The rest is subsidized through general funds.

That seems like the single biggest suburban subsidy possible.

Yancey Ward writes:

Yes, people wouldn't want big homes with yards unless they were forced into it by bad regulations.

Doug has it pretty much right.

John Thacker writes:
I read somewhere (sorry, too lazy to find the link) that only ~1/3 of total auto-related costs imposed on society are directly paid for by consumers of auto transportation. In other words, car drivers only pay for 1/3 of their costs directly (e.g., gas taxes). The rest is subsidized through general funds.

Your summarizing is quite wrong here. The only way you can get to that ~1/3 number is by counting lots of indirect costs, like pollution. Even if that number is correct (and it's somewhat dubious because the estimates I've seen don't count the environmental cost of the alternative choices), it's difficult to say that the other part is subsidized through general funds. To the degree it exists, it's funded through

As far as direct road construction fees go, the gas taxes and tolls paid amount to a little over 70% of the cost of road construction at all levels. Almost all at the federal level, until the stimulus, but the state and local level have progressively less gas tax contribution. However, at the local level, if you're only taxing residents of the suburb to build a road in the suburb, it isn't a suburban subsidy. Source: FHWA. (by highway they mean all roads) Note that a significant portion of gas taxes are re-directed to mass transit and other non-highway purposes, so the portion of money actually spent "covered" by the gas taxes is only 57%, but money is fungible.

Regulations against developing empty land were historically weaker, I believe, in suburbs than in cities

Yes, I'd agree with this, but this is largely a case of (mostly wealthy) people in cities preventing further development, and pushing it outwards. It's not a case of the federal or state governments promoting suburbs. I think that the description of the problem changes a bit when you view it (accurately, IMO) as cities and city-dwellers themselves preventing other people from joining them in the city instead of the federal or state governments encouraging suburbs. It's no longer a subsidy if it's cities doing it to themselves.

It's worth IMO distinguishing between federal and state regulations that drive development to certain parts of the country, and regulations that cities and suburbs themselves adopt to drive people away or attract people. The former is a type of favoritism and/or subsidy, the latter cannot be viewed as a subsidy, however counterproductive it is.

Stephen Smith writes:

As far as direct road construction fees go...

It would, however, be a mistake to stop at just counting direct accounting costs. As any Econ 101 student knows, an entrepreneur seeks to recoup not only his accounting costs, but also his opportunity costs. For the suburbs and exurbs these costs might not be large, since the land would be almost useless without a right-of-way flowing through it, however with cities and inner-suburbs, these opportunity costs can be quite substantial. For example, in Manhattan, surely almost no road would be able to pass this test – some may very well be able to be repaved and policed through the funds collected from a gas tax, but the opportunity cost is enormous.

The same applies for rail transit, but since the footprint of a rail system is much smaller (dare I say – orders of magnitude smaller?), its opportunity costs are much smaller.

Vincent Clement writes:

Is the creation of suburban America the product of regulation? Debatable. But the sustenance of suburban America is most definitely a product of regulation.

You argue that regulations against mixed use are an example of an anti-suburban policy. Regulations against mixed use are in response to the wants of the suburban population. They don't mixed use. Well, at least not in their neighbourhood.

Try adding an extra dwelling unit to your existing house or asking permission to build a semi-detached house in a single-family neighbourhood. Listen to the outrage from area residents.

In my city, people in one neighbourhood were upset when a person dared to sever their property to create two 50 wide by 150 deep foot lots in an area with 100 (or more) wide by 150 foot lots. They called the proposed lot "undersized".

As Eric wrote "regulations against mixed use make surburbia suburbia". I am an Urban Planner by education and trade, and when ever we mention mixed use or higher density, the ranting and outrage is deafening.

Benny Lava writes:

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Sam writes:

"Regulations against mixed use make surburbia suburbia!"

Not sure this is true, as it seems to offer a pretty narrow definition of suburbia. For instance, there are spots right outside of Pittsburgh, such as Aspinwall and Dormont, that have walkable downtowns. Generally, the people who live there work in the city. Pittsburgh also has a slew of outer burbs, such as Cranberry, that are not walkable at all. But I think all of these places count as suburbia. On the other hand, if you are simply defining "suburbs" as "unwalkable," there are plenty of suburban places within city limits.

David writes:

As Sean O suggests, the overwhelming reason people move to the suburbs is the school system. While some government actions (e.g. highway subsidies and low gas taxes) may facilitate suburban living, they are not the fundamental cause.

Shane writes:

I agree that it's a complex issue how much all government regulation pushes the equilibrium towards greater urbanization or greater suburbanization. I still fall on Yglesias's side on this though.

I think a lot of commenters are focusing too much on the regulation of suburban municipalities and ignoring the urban regulations that reduce the desirability of living in the city. Sure, the free market created the big houses, but the crappiness of urban regulation created much of the demand for the big houses.

Mixed-use zoning regulations in the suburbs are often just what the community already wants, codified into ordinances. But mixed-use zoning regulations in urban areas reduce density and walkability, making it less desirable to live in the city in the first place. So all in all, I'd actually consider mixed-use zoning regulation to be a net force towards suburbanization, and not the other way around.

In any case, I believe Matt Yglesias was referring to the point that the suburban commuters' very existence in the quantities that they do relies on municipal governments mandating certain ratios of parking spaces to office space, as well as subsidized road construction/maintenance. Yglesias is no libertarian, but his views on local/state regulation are pretty close.

Stephen Smith writes:

Mixed-use zoning regulations in the suburbs are often just what the community already wants, codified into ordinances.

If by "the community" you mean "current owners of large-lot houses." But if you mean developers (i.e., the aggregated preferences of those who have any interest in possibly moving into the neighborhood), then that's definitely not true – see my first link to the book up in the comments, which lays out pretty clearly that a large proportion of developers feel that anti-density and anti-walkability regulations constrain their building projects.

Scott Wood writes:

I don't quite get the parking space regulation argument. I don't doubt that there are park space regulations (I don't doubt the existence of pretty much any unnecessary regulation) as a force for suburbanization. Do we really think that the people who build strip malls, and conventional malls, wouldn't provide parking as a draw, given that the whole criticism of "suburbanization" is that you have to drive everywhere?

As for Justin Ross's question about libertarians starting out elsewhere and migrating, I wonder if that's true. It certainly wasn't for me. As I became more intellectually aware it came as a shock to me that essentially everyone didn't share my understanding of how the world works.

Stephen Smith writes:

Do we really think that the people who build strip malls, and conventional malls, wouldn't provide parking as a draw, given that the whole criticism of "suburbanization" is that you have to drive everywhere?

It's important to remember that land use involves a lot of feedback mechanisms, so small changes put into play larger changes. For example, building a parking lot too large is progressively eating away at the area's walkability, which depends on short distances between places you want to go. So, to begin with, parking lots would be a lot smaller, which would encourage walkability, which might make them a little smaller (and so and and so forth, with diminishing returns).

Next there's the issue of cost. Parking is free, pretty much everywhere in the US. This is because people are required to build more parking than necessary, so the price falls to zero. Also it has to do with lots of publicly provisioned parking, which is pretty much ubiquitous (think: parking on the street). Unlike roads, for which you can conjure up some economic theory that proves that they ought to be publicly provisioned, there is really no excuse for a society that call itself capitalistic to be offering free parking. Then apply the positive feedback loop to this issue – those who are relatively undecided between walking/taking transit and driving will move to the former, which will lower the size of parking lots, encouraging walkability.

I don't think anybody is arguing that the transitions from car to mass transit/walking/biking/whatever would be swift. At first they will only affect the inner suburbs and cities (outside of Manhattan and a few other places which are accessed primarily without cars), but it would creep outwards. These things that seem small will matter in the long run, and if the lag between change in policy and change in the built environment is indeed very long, then we'd better start now to turn it around.

Doc Merlin writes:

Sean O. WINS THE THREAD

People move to the suburbs to get affordable housing that is away from crime and has good public schools.

shecky writes:

Sean O's response was inadequate. Suburban public schools are just as regulated as inner city schools. I can buy that some folks might move to the suburbs because of the prospect of better schools. But it won't happen unless there is an accompanying prospect at a better neighborhood, bigger house, bigger lot, increased privacy, lower crime, possibly lower cost, etc.

Steve writes:

Yancey Ward writes:

Yes, people wouldn't want big homes with yards
unless they were forced into it by bad
regulations.

Umm, just because people use and like a subsidized good doesn't mean that their decisions would be the same if it weren't subsidized, or that said subsidies are efficient. So at the very best these regulations are useless and redundant if preferences and codes match up but are cost-disadvantaging those who want something different.

Mo writes:

Most of the federal land is largely worthless (think Nevada or California desert), military bases (the aforementioned Pendleton) or national parks. Only the national parks and the bases would have value if the government up and left. The former for resources, such as timber, and the latter because it actually is close enough to a city to be valuable to develop on. But government ownership does not have much of an effect on development. None of the things you list are really inhibitors to suburban growth.

David C writes:

My main thought was the heavy subsidization of highways beginning after World War II, and what effect that has had on the switch from public to private transportation, and the growth of suburbs. Sure, we have the gas tax now, but we didn't back then. My other thought was how much politicians and political news have emphasized the greatness of the suburbs (car in every garage, TV in every living room); that "Leave It To Beaver" mentality that was being beamed into everyone's heads through heavy regulation of TV.

Doug writes:

"Most of the federal land is largely worthless (think Nevada or California desert), military bases (the aforementioned Pendleton) or national parks. Only the national parks and the bases would have value if the government up and left."

To the contrary, Las Vegas is literally encircled by federal land. That land would be extremely valuable if it were put up for sale. Some of the fed's inland so-cal land would be somewhat less valuable, but certainly valuable enough to sustain development, especially if right of ways for new freeways and roads are set aside when the land is sold.

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