Arnold Kling  

Matt Yglesias on Urban Development

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Compromise and Priorities... New Commanding Heights Watch...

The book is The Rent is Too Damn High.


Counties, municipalities, states, and everyone else involved in promulgating land-use regulations need to ease off on parking requirements, artificial constraints on lot size, height restrictions, etc.

Other interesting excerpts below.

(Possibly related: In Canada, is a parking space a human right?)

In an economy where the majority of people make a living by performing services for one another, pricing large swathes of the population out of living in the highest-income portions of the country is perverse...decisions to move to cheap land creates downward pressure on median wages.
Many people...are in lines of work where access to other people is a key input
the rewards to human labor are going to landowners rather than working people
Chicago, for example, spreads its 2.7 million people over about 227 square miles of land. Paris crams about 2.2 million people into just 40 square miles.
We've switched from a system in which owning a piece of real estate means you're entitled to do what you want with it, to one in which owning a piece of real estate means you get wide-ranging powers to veto activities on your neighbors' land.
But the fact that houses and offices are built by rich businessmen shouldn't distract people.
Progressives and urbanists need to move beyond their romance with central planning and get over their distaste for business and developers.
His point is that anti-business bias supports a lot of regressive land-use policies.
for all conservatives' talk about small government and free markets...the movement shows little interest in the subject. Ideological battles focus more on questions of identity, and the conservative movement has strongly positioned itself as an anti-urban movement for conformism-minded suburbanites.
I imagine that you can blame conservatives for land-use policy in some suburbs. But the cities are controlled by liberals, and so are many (most?) of the suburbs with the policies that he criticizes. And is it a coincidence that land use is less regulated in Texas than in the Blue states?
If people have strong feelings about not wanting to live on the same block as a tall building, they can move or they can pay what it costs to make it worth a neighboring property owner's while to avoid building taller.
Ah, but there's the issue, don't you see? How do you deal with the Coasian bargaining issues? Suppose somebody wants to put a big apartment building in my neighborhood, without providing parking, creating major inconvenience for those of us who no longer will have street parking available. How do we arrange for the developer to compensate us, or for us to pay the developer to provide us with parking?

In practice, politicians are happy to settle the issue. And the people who already live in a place have more political power than the people who potentially could live there. (This is somewhat offset by the fact that developers have more money with which to bribe politicians.)

I don't think urban planning is avoidable. You could move it from the public sector to the private sector, but it would require a very radical reallocation of property rights. Instead of individuals owning small parcels and government setting zoning rules, imagine it were the norm for a developer to own a large parcel and to choose the allocation of space that maximizes rental income. (Sort of reminiscent of the Rouse communities around here, although those probably did not turn out to have the density that Yglesias would like.) That might enhance welfare on some dimensions, but one can think of other dimensions where it would not do so.

Overall, I'm glad that Yglesias is pointing out to liberals some of the consequences of their anti-development bias. But in terms of his overall goals of increasing density, I don't think it is quite so easy to get there from here.



COMMENTS (16 to date)
david writes:

A larger and more centralized level of land-use planning, at higher levels of government, would be better placed to capture or reallocate rents from land use changes than local governments.

Ted Craig writes:

Are poor Parisians really better off for the higher density? I would say the folks in the banlieues may disagree with that idea.

Steve writes:

Here's an example in my hometown of Coasian bargaining actually working on a private, collective level:

http://articles.courant.com/1997-03-29/news/9703290357_1_land-trust-buys-parcel-town-petition

Philo writes:

“[T]he people who already live in a place have more political power than the people who potentially could live there. (This is somewhat offset by the fact that developers have more money with which to bribe politicians.)” You are presenting a view of (some) bribery that should have more currency, with bribing developers seen as agents for otherwise politically disadvantaged outsiders.

RPLong writes:

Good points all around, but be careful when interpreting Canadians' use of the words "conservative" and "liberal," as these words have carry implications about specific policies of specific political parties. There is far less heterogeneity of opinion in Canada, because the party forms the government and votes as one.

Cmot in Chicago writes:

This is a two dimensional discussion, but life is lived in three dimensions. The missing dimension here is political - high density cities are less responsive to citizen concerns, and more prone to capture form the various extractive classes. Much flight to the suburbs was driven by pharoanic mayors, guided by the high priests of urban renewal destroying intact neighborhoods, and public services that deteriorated even as taxes skyrocketed.

If your an childless hipser, you want density because it delivers lifesyle goodies. If you have kids and a middle class income, you care about schools, public services, and police keeping bad guys away. Density is the enemy of that, or at least, it has been.

So low density serves as a proxy for good public services. And you can change zoning all you want, but cities will still consist isolated islands of those who can work around bad government, surrounded by seas of the permanent underclass of poor people trapped in dependence, and immigrants from areas where bad governance is still better than what they left behind.

One of the most under-reported stories of the Census comes from Chicago - 2nd and 3rd generation Chicago born African Americans are leaving the city to move to the old South as soon as they acquire marketable skills or middle-class status. At least 200,000 in the last 10 years.

Brandon Berg writes:

I imagine that you can blame conservatives for land-use policy in some suburbs. But the cities are controlled by liberals, and so are many (most?) of the suburbs with the policies that he criticizes. And is it a coincidence that land use is less regulated in Texas than in the Blue states?

Right. Conservatives may be anti-urban in some theoretical, rhetorical sense, but in practical terms I'm not seeing that they're the ones backing the legislation that impedes development.

Steve Sailer writes:

Was the rent too damn high on the two youths who attacked Yglesias last May 14 in a racial hate crime?

The problem with living in a low rent neighborhood is low rent neighbors.

Jack writes:

I applaud Yglesias' goal to convince policymakers to rethink urban regulation, but I think he's wrong about the basic economics. The rent is too damn high, as he puts it, because the big city is where the best jobs and the best amenities are. Suppose you somehow fix all the foolish city planning regulation. Rent falls 15-20%. The rent is still too damn high. (In fact, rent would probably not fall that much--elasticities, hard to explain without a graph.)

A better inquiry, I think, is about how to encourage commuter work in metropolis jobs. I would be curious, though, to find out how many people would leave, say, NYC if they could keep their job and work from a distance. Could the high rent be mostly explained by amenities rather than jobs? In which case there is not much to do about it.

txslr writes:
"for all conservatives' talk about small government and free markets...the movement shows little interest in the subject. Ideological battles focus more on questions of identity, and the conservative movement has strongly positioned itself as an anti-urban movement for conformism-minded suburbanites."

I'm not seeing this at all. Suburbs tend to vote Republican, but how does one conclude that conservatives are anti-urban? Maybe I don't see it because I live in (urban) Houston rather than New York or Chicago. Note, too, that Houston has no zoning laws. Perhaps that is anti-urban?

John Thacker writes:
A larger and more centralized level of land-use planning, at higher levels of government, would be better placed to capture or reallocate rents from land use changes than local governments.

Perhaps. But all the political units with land use planning at higher levels of government that I'm familiar with have *more* restrictions on land-use, not less. Look at Oregon, look at any number of states with state level land-use planning.

I don't think your theory holds up. What I see in practice is that state level land-use planning is captured by the NIMBYs, who then pressure to cut off the growth in the suburbs as well.

The only places that I see that allow extra land use is where there is competition between political units for the local tax money. Chicago does a relatively good job-- because local aldermen both approve things in their district and get a share of the money.

The suburbs grow because the people who are likely to allow development (conservatives and libertarians, mostly) live in the suburbs. Not their fault that the urban dwellers are against.

James Liu writes:

You deal with someone building a big building near you making it hard to park where you live by selling your car and riding your bike places. Kidding. Well, only half kidding.

What you really do is you count on developers having a clue about how much parking their customers (condo buyers, renters, commercial lessees) are going to require in order to make money. I thought developers were rational agents as well. Ex ante parking regulation short circuits that, and replaces it with a planner's idea that parking should be more convenient.

Re: Coasean bargaining. Land is one of those subjects where you have to think about transaction costs. I think the right way to expand the framework is something like the Calebresi & Melamed's Property Rules, Liability Rules: One View of the Cathedral. A property right is an entitlement in the sense that Coase assumes away in The Theory of Social Cost. Who should hold the right to build the big apartment building: the owner of the parcel, all its neighbors (let's assume the owner is a business entity), or the local planning commission? Who has to buy whom out? If you believe in property rights, surely you don't believe the planning planning commission should hold that entitlement. And surely you don't want all of the neighbors to have it either.


Re: Density. Density is not the enemy of good schools and safe neighborhoods. It came to be that way because of racists. And busing. Once upon a time, if you were white and you didn't want to send your kids to schools with black children, then you could get out of busing by moving to the suburbs. This has since become entrenched even though busing and racism (to a lesser degree than busing) have gone away.


The real solution is less centralized planning in general, whether from local bodies or regional bodies. The only reason to support putting planning in the hands of bigger regional bodies is that they would be less inclined to interfere. I suppose that would be the case because bigger planning units have less NIMBYism, and there's some reason to believe that would be true. But I agree with John Thacker that it isn't necessarily the case.

Lewis writes:

What I see among my yuppie friends is that we're supposed to oppose development, because a developer is making money off of it in an obvious way, which is a signal it's wrong. There are so many movies in which someone has to get $X by the end of the month or else a developer will destroy their precious building. I tried to explain to one of my friends that building more units in DC would limit the rent increases, and it was total news to him that you could think about apartments with the same supply and demand you use on carrots or whatever.

Lori writes:

Overall, I'm glad that Yglesias is pointing out to liberals some of the consequences of their anti-development bias.

Actually, so am I.

Likewise, small government advocates stand to get real support from and alliances with progressive types by making zoning deregulation a decidedly higher priority than other parts of the deregulatory agenda.

Our perception of conservatism is shaped way too much by frank class hatred embodied in remarks about "low-rent people." We think of them as the party of "the rent is too damn low."

Siyphus writes:

The common law has a well-developed solution to this problem that predates zoning, which are covenants that run with the land. They can either be put into place as part of the initial, master development plan for an area, or they can be negotiated by the neighbors later.

One of the advantages, from a libertarian perspective at least, is that covenants can be rejected by individual property owners if later property owners seek to bind their use of the property, as happens in contemporary zoning/development fights. And if a potential purchaser doesn't like the covenants on property when they are considering buying it, they can just choose not to buy the property.

As a legal tool, these mostly show up in suburban developments these days to preserve the "look and feel" of a neighborhood, but there is no particular reason for that to be their only use.

Lori writes:

The covenant, like so many mechanisms, has been poisoned by the racists.

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