NIMBY's Confused Defenders

Schleicher on academic supporters of housing regulation

When I was prepping for my podcast with Yale’s David Schleicher, I discovered that my Build, Baby, Build overlooks several academic defenses of housing regulation. In “Exclusionary Zoning’s Confused Defenders,” (Wisconsin Law Review, 2021), Schleicher tells us what the defenders are saying — and what’s wrong with their arguments against the so-called “liberaltarian consensus.” Overview:

But scholars abhor consensus, no matter how much empirical evidence piles up in favor of it. In the last few years, several legal scholars have written articles challenging the scholarly consensus in favor of zoning reform. This Essay reviews their arguments and finds that the consensus… has little to fear.

Some highlights:

The most novel argument in the piece is Serkin's claim that extensive zoning in big cities was a major causal factor in the "return to the city" of the 1990s to 2010s… There would be little demand to live in cities like New York or San Francisco unless their neighborhoods were protected by strict, suburban-style zoning…

He does not provide any empirical evidence that increased zoning restrictions-rather than more common and plausible explanations like falling crime rates, the changing nature of the economy, or changes in school funding mechanisms-caused increasing demand to live in downtown areas. Further, there was demand for both cities with strict zoning restrictions and cities that lacked them. Lightly zoned cities and metropolitan areas like Houston and Phoenix saw big inflows of population.

Zoning doesn’t slow development down to a reasonable pace. It freezes the status quo for centuries. Or at least one century:

Ellickson also looks at the most famous zoning map in American history, the regulations from the village of Euclid, Ohio, that the Supreme Court found constitutionally permissible, allowing zoning to take off around the country. In 1922, a large number of lots in Euclid were zoned for single-family houses, were on streets that were already laid out, and did not abut either of the village's two largest thoroughfares. Of those lots, ninety-nine percent are still zoned for single-family uses today.

And:

Serkin repeatedly calls the tradeoffs between towns and new entrants "zero sum." But the whole point of the research on the broad economic cost of zoning restrictions since the 1980s is that the losses outweigh the gains by enormous amounts. Just because homeowners gain from zoning regulations and new residents lose does not mean the question of housing growth is zero sum. Since the 1980s, the sum has been very, very negative.

The critics focus on distribution, but straight-forward taxes and transfers don’t satisfy them.

RSS [Ricks, Serkin, and Sitaraman] argue in favor of regulating industries and forcing them to cross-subsidize declining areas with profits made in growing ones, rather than using taxes and transfers, because it obscures who is paying for them. "F]inancing through cross-subsidies," they argue, "removes these decisions from the ordinary appropriations and political process," making them "more reliable than annual appropriations and less subject to political capture." Their proposed method of fixing the structural problems of representative democracy is to reduce the transparency of public policy.

Schleicher insists that using regulation to “turn back the clock” makes little sense:

If the 500 largest businesses in a country in 1970 were also the 500 largest businesses in 2020, we'd think it was a sign of a sclerotic economy, one that is not open to change or growth. The same is true for cities. Different technologies allow and encourage people to live in different places. When shipping was the main transportation technology, cities located near ports; when railroads became important, cities sprung up at hubs.

Moving on:

Schragger next argues that state-level zoning reform, whatever its merits, is futile since it will be defeated by homeowners resistant to efforts at regionalization and to building affordable housing. I am a bit more optimistic than he is, and there have been some important recent successes, but betting on massive change is usually wrong. Things are as they are for a reason.

However, thinking that zoning reform faces an uphill battle in state legislatures is hardly a reason to oppose zoning deregulation. Lots of good things are difficult to achieve!244 Perhaps this would make sense as an argument to activists about how to best use scarce political capital, but it is not on its own a normative argument against preemptive state laws.

Consistency is not the critics’ strong suit:

[T]he argument relies on an extreme form of market segmentation, that housing for the rich an poor are different products completely, lest those outside of the jurisdiction who want to move in buy housing currently used by the less wealthy. But Schragger repeatedly discusses gentrification, which involves richer people buying housing in previously less-well off neighborhoods, suggesting he does not believe housing markets are that strongly segmented. Like Serkin, Schragger argues that zoning regulations in big cities drive and sustain demand to live in them by protecting amenities. As discussed above, this is almost surely wrong, given that there is also clearly demand to live in cities and regions with more relaxed zoning rules. If new housing did reduce the amenity value of cities, though, it would drive prices down substantially since amenities are capitalized into housing values. But Schragger denies that new development brings down prices, suggesting he doesn't actually believe that new construction destroys amenities…

Schragger also argues that zoning rules are not the reason why newhousing does not get built in cities. But if this is the case-if new building is held up by factors other than zoning-then governments' ability to demand exactions by relaxing zoning regulations would not exist. And the reason he is in favor of local zoning authority is to allow cities to demand exactions.

One could go around endlessly with this, but it's pretty clear that Schragger does not have one idea about the effects housing development has on the economy, but rather has many inconsistent ones.

That said, at least the scholars that Schleicher critiques are trying to craft arguments in defense of the status quo. Almost everyone else just takes the status quo granted. Which is an odd kind of self-fulfilling prophesy.