The left reconsiders zoning

The impact of exclusionary zoning.

Many on the political left have begun to rethink restrictive zoning and point out the ways in which it makes housing more expensive for the poor and lower middle class, and deprives them of job opportunities. Historically, zoning has deep roots in progressive thought, and today it is most aggressively used in more liberal cities. But liberals are increasingly recognizing that this progressive institution has gone way too far.

In a recent New York Times op ed, economist Enrico Moretti points out the awful consequences in the Bay Area of California, which has some of the nation’s harshest zoning regulations:

The area has some of the most progressive voters and policymakers in the nation, yet it has also adopted some of the most regressive housing policies, with large costs for low-income renters and the environment….

[T]ens of thousands of workers want to move here every year. The problem is that the supply of houses in the region’s core remains wildly inadequate. Over the past two years, San Francisco County added 38,000 jobs, reaching its highest employment level ever. Yet only 4,500 new housing units were permitted. For all those new families knocking on San Francisco doors, new units are available for less than 12 percent of them. The numbers for Silicon Valley are even worse. This is why the rents skyrocket.

The problem is largely self-inflicted: the region has some of the country’s slowest, most political and cumbersome housing approval processes and most stringent land-use restrictions…

The lack of supply means rents and housing values increase faster than necessary. For homeowners, this is a boon, as their assets keep appreciating. For renters, this means an ever-increasing cost of living and for some, an impetus to pack up and leave.

One way to think about it is that the enormous increase in wealth generated by the tech boom is largely captured by homeowners in the urban core who bought before the boom. By fighting new market-rate housing, Nimbys and Bay Area progressives are de facto making the housing shortage worse. Ironically, given residents typically progressive political leanings, this has regressive consequences, because it helps rich insiders at the expense of everyone else.

In a recent paper (coauthored with Chang-Tai Tsieh), Moretti estimates that cutting back zoning in highly restrictive cities like San Francisco to the national average level would increase GDP by a whopping 9.5% and provide hundreds of thousands of workers with access to better job opportunities and housing.

Liberal housing policy specialist Shane Phillips, director of of Policy for the Central City Association, laments the “disconnect between liberal aspirations and liberal housing policy”:

The people who live in coastal urban cities tend to be a pretty liberal bunch….

We care deeply about equality of opportunity, and we’re willing to invest our time and money to advance that effort… I’m proud to count myself among their number….

And then we turn to housing…. [W]hen I look at our inability to solve the housing crisis in places like San Francisco, New York, and Washington, D.C., I’m left feeling nothing but depression and hopelessness. It’s all the more frustrating because unaffordable housing might be the most important economic problem facing residents of liberal U.S. cities, and we’re perfectly, comprehensively, and unmistakably blowing it….

The outcomes of our housing policies fly in the face of our ideology. For those in need, we support providing supplementary income, health insurance, educational support, and other social welfare programs—and then we erase their value by making our cities too expensive for those most in need of these benefits. Either low income residents can’t afford to live in the city at all, or the cost of housing is so high that the value of the benefits is exceeded by the added cost of rent.

By doing essentially nothing but letting things happen, conservative America is kicking our ass at providing opportunities for low income and working classes to build wealth and get ahead. Cities like Dallas, Phoenix, and Atlanta have managed to stay affordable by simply allowing housing to continue to be built as their populations grow….

Along the same lines, the Brooking Institution – a leading liberal think tank – recently published an excellent article surveying the enormous harm inflicted by zoning restrictions, authored by Harvard economist Edward Glaeser, one of the world’s leading experts on the economics of cities. Yale Law School Professor David Schleicher has done  important work explaining how zoning (along with other regulations) has become a major impediment to economic mobility and income gains for the working class.

In The Captured Economy, a  compelling new book coauthored by libertarian Brink Lindsey and liberal political scientist Steve Teles, restrictive zoning is singled out as one of the most significant government policies that slow growth and enable wealthy interests to enrich themselves at the expense of the poor.

Over the last several years, other leading liberal academics and public policy commentators have made similar points, including Nobel Prize-winning economist Paul Krugman, Matthew Yglesias, and Jason Furman, Chair of President Obama’s Council of Economic Advisers.

In June, I experienced this growing trend in left-wing opinion first-hand when I gave a talk on this subject at a panel on housing at the American Constitution Society annual conference (video available here and here). ACS is the liberal counterpart to the conservative/libertarian Federalist Society (of which I am a longtime member). Being a libertarian, I was invited to the ACS panel in part to provide ideological balance. Yet the audience reaction was so positive that I felt almost as if I were a member of the “home team” rather than an “oppositional” speaker. The liberal panelists echoed many of the points I made, and vice versa.

It is a great thing that liberal policy experts are pointing out this grave shortcoming in the housing policies pursued by many of the nation’s most liberal cities and states. It is always harder – and for that reason more admirable – to point out the flaws of your own side of the political spectrum than those of the hated partisan enemy. That is especially true in this era of severe partisan polarization.

Conservative Republicans are far from blameless when it comes to zoning. But, as Shane Phillips noted in the excerpt quoted above, liberal jurisdictions tend to be among the worst in this field.

Sadly, the growing recognition of this problem by scholars and policy analysts across the political spectrum has so far not resulted in much political action. It is rarely, if ever, mentioned in campaigns by Democratic politicians. Similarly, the cause is rarely taken up by liberal activist groups.

In fairness, conservative Republicans also rarely focus on  the harm caused by zoning. During the 2016 election, much was made of the problems of the white working class. But neither major party pointed out that restrictive zoning is one of the main causes of those problems. This is actually an area where working-class whites have an important common interest with the minority poor – one that is largely ignored by both politicians and voters.

Transforming widespread expert agreement on zoning into effective political action will not be an easy task. The neglect of this issue by parties and policymakers is rooted in the broader problem of widespread political ignorance.

The vast majority of voters quite rationally devote little time and effort to understanding policy issues. And the ways in which zoning inflates housing prices and destroys job opportunities are not immediately obvious to most ordinary people, especially those who do not know basic economics.

Most well-meaning liberal voters probably do not realize the harmful side-effects of liberal cities’ zoning policies. As a result, politicians and influential interest groups who benefit from the status quo can continue business as usual, with little or no fear of political backlash.

Breaking through this logjam will be difficult. But we must keep trying. The rewards of success are potentially enormous.