Art Carden  

Save the Planet and Raise Wages: Liberalize Land Use Laws

The Presumptive Puritan... If I Had it to Do Over Again...

I spent Sunday and Monday in Manhattan, so I've been thinking about population density, the extent of the market and what it means for the division of labor, and the deadweight losses of land use. I was pleased, therefore, when this article popped up on my Twitter feed: Matt Yglesias proposes land-use liberalization as a policy that would "cure" wage stagnation. The direct benefit comes from the fact that there's a lot of construction that would start happening if it were easier to build in Manhattan and San Francisco. The indirect, longer-run benefits come from labor productivity gains from higher population density. Larger markets mean a finer division of labor and, therefore, higher productivity and more innovation.

I can see where proposals to liberalize land use regulations would run into political opposition. The first source of opposition would come from people who own real estate that is artificially valuable because of the restrictions. The second source of opposition would come from those who mistakenly think they're saving the planet by preventing new construction in places like San Francisco and Manhattan. As Edward Glaeser points out, allowing more construction in California (for example) would actually be a much greener choice than having extensive land-use regulations that instead make it relatively cheaper for people to build houses in places where energy use is much higher.

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COMMENTS (5 to date)
Mike Sproul writes:

There are lots of other reasons for land use restrictions. Maybe high density leads to sewage disposal problems, or maybe homeowners don't like having a skyscraper next door, or trailer parks, or slaughterhouses, etc. Maybe your building will give your neighbors trouble with flood control, or landslides, or wildfires. Or maybe when the lots were created by the original landowner, he decided to put on a long list of restrictions, knowing that they would appeal to potential buyers. In that case, what you call "liberalization" would amount to breaking the original contract.

awp writes:

Mike Sproul

1)sewage disposal problems- Infrastructure is cheaper to provide to dense development.
2)skyscraper next door- It is almost never going to occur that a lot next door to single family homes is more valuable as a skyscraper, unless zoning restrictions have been in place for a long time.
3)trailer parks- this is almost exactly the point of the post. Zoning is almost always implicitly a means of keeping the poor out by driving up the cost of living.
4)slaughterhouse- see 2), Public Nuisance doctrine
5)flood control, or landslides, or wildfires-not being able to build in a watershed, or on a cliff is different than regulating the type and density of the development. Plus dense construction lowers the impervious area reducing flood risk for a given population.
6)deed restrictions- that is a private matter and not being argued against in this post.

David writes:

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ThomasH writes:

The problem is not land use controls per se. Controls may be the least cost way of dealing with certain externalities although taxes and subsidies are often overlooked alternatives. The problem is correctly estimating costs to be controlled or taxed and the benefits to be subsidized.

But on most margins nowadays, letting property owners do with their property what the want would improve things thought, in municipal areas, it would need to be complemented with optimal charges for use of public roads and streets.

Mike Sproul writes:

1. Sometimes true, sometimes false. In the case where sewage is a problem, land use restrictions might be the best way to deal with it.
2. It can occur, and it does. Land use restrictions could once again be the best option.
3. But I don't want to live next to poor people. Don't I have that right? Can't all of us property owners get together and form a government, then vote (unanimously?) for a minimum lot size of 1 acre, just to keep poor people away?
4. Public Nuisance doctrine=land use restrictions
5. There is a large grey area between things like flood control restrictions, and regulating the type and density of development. You can't draw a clear distinction between them.
6. Then suppose it wasn't deed restrictions. Suppose landowners all voted for 1 acre min lot size. Any objection to that?

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