When 17 million Americans tuned in to watch the first night of the 2020 Republican National Convention (RNC), they were greeted by the newly famous faces of Mark and Patricia McCloskey.
A few months prior, the McCloskeys had been obscure Missouri lawyers. Then footage of the married couple brandishing firearms at Black Lives Matter demonstrators outside their St. Louis home rocketed them to national notoriety.
Roundly condemned by liberal America and charged with felonious use of their weapons by local prosecutors, the McCloskeys used their brief RNC remarks to defend their names. Rather than the menacing bigots they’d been portrayed as, the two argued they had been lawfully defending their home from a mob of marauding leftists. The violence they faced down would soon descend upon your home too, they warned, thanks to Democrats’ radical plot—to tweak local zoning codes.
Democrats “want to abolish the suburbs altogether by ending single-family home zoning,” Patricia McCloskey told the camera. “This forced rezoning would bring crime, lawlessness, and low-quality apartments into now thriving suburban neighborhoods. President Trump smartly ended this government overreach, but Joe Biden wants to bring it back. These are the policies that are coming to a neighborhood near you.”
These remarks reflected a newly adopted theme of President Donald Trump’s reelection campaign: that he had saved the “American suburban lifestyle dream” by axing housing policies adopted under President Barack Obama. Then-candidate Joe Biden’s promise to revive those rules was presented as proof positive of his plans to destroy all that was good about America.
The words zoning policy probably conjure thoughts of dull board meetings and interminable debates about setbacks, parking requirements, and seemingly small architectural details. Most Americans probably consider zoning about as dry as an unlicked envelope. Yet somehow, during a presidential election unfolding amid a deadly pandemic, divisive lockdowns, raucous protests and riots, mass unemployment, and spiking crime, zoning politics managed to show up center stage.
Looked at one way, it was another strange turn in an already bizarre election year. Looked at another way, it was yet another demonstration that zoning rules have become central to American life and politics, almost entirely to deleterious effect.
Zoning regulations control what kinds of buildings can be constructed where, and then what activity can happen inside them. They effectively socialize private property while controlling even the most mundane features of our physical environment and daily routines. Zoning rules flip property rights on their head, curtailing the owners’ ability to do what they wish on their land. In exchange, they sometimes give people near–veto power over what happens on their neighbors’ property.
Whether a disused shed stays cluttered with rusty lawn care equipment, is turned into a home business, or is converted into an in-law suite might not seem like a major decision. But the existence of a whole body of laws dedicated to controlling that decision tells you how far zoning reaches into American lives. The consequences of these laws are as far-reaching as they are devastating.
The immediate costs of zoning are straightforward: By limiting new housing construction, zoning drives home prices up in—and drives people out of—the most in-demand neighborhoods. By micromanaging commercial activity, zoning prevents entrepreneurs from trying new things, making everyone poorer in the process.
On a macroeconomic level, zoning slows economywide growth and dynamism by wrapping the most productive urban centers in red tape. The distortions it causes in the wider economy have helped fuel large-scale economic and political instability over the past two decades, playing a part in everything from the Great Recession to the election of Trump to COVID-19 craziness.
Zoning also makes America a less welcoming, less interesting place. Whether someone is trying out a new life, a new business, or just a new look, chances are there’s a provision of the zoning code waiting to stop them.
Zoning not only gives busybody politicians the ability to affect everything; it gives them power to stop everything, making it the go-to tool for those trying to restrict everything from abortion to chain stores to goat yoga. It’s only a little bit of a stretch to say that American political debates always come back to zoning—and that zoning makes everything worse.
How Zoning Led to the Great Recession
When the 2010s began, America was in the nationwide economic rut that followed the housing price collapses of the Great Recession. By the end of the decade, most urban areas were experiencing a housing affordability crisis widely blamed on too little housing.
How did we go from one to the other so quickly? Zoning, of course.
That might sound counterintuitive. The conventional view of the Great Recession is that excess demand for housing—caused by some combination of loose monetary policy, government-subsidized credit, and unscrupulous lenders—inflated a bubble that inevitably had to pop. Leftists, liberals, libertarians, and conservatives can all find something to agree with in this theory.
But it’s wrong, according to Kevin Erdmann, a senior affiliated scholar at George Mason University’s Mercatus Center. Erdmann has advanced a heterodox theory that this century’s most serious economic contraction before the pandemic can be traced back to zoning laws in the most in-demand cities.
In a 2020 paper on the origins of the recession, Erdmann and economist Scott Sumner argue that monetary policy was not exceptionally loose in the lead-up to the financial crisis and that new residential investment was not high by historic standards. Most of the toxic assets and bad mortgages originated after housing prices had already started to decline.
Erdmann and Sumner also point out that prices were increasing fastest in coastal “closed access” cities like New York and San Francisco, where the economy was booming but restrictive zoning regulations prevented much new housing from being built. The result was an out-migration of lower-income people to “contagion cities” in Nevada, Florida, Arizona, and other places where home building was less regulated. Erdmann and Sumner lay the housing crisis directly at the feet of NIMBYs—”not in my backyard” activists who opposed the construction of new housing.
“The NIMBY phenomenon that led to housing scarcity in closed-access cities induced households to migrate from large multi-unit buildings in dense coastal cities to single-family homes in cheaper cities,” write Erdmann and Sumner. “The primary source of demand was households looking to economize on housing consumption by moving out of the expensive coastal cities.”
Think of Mark and Patricia McCloskey as a class of activist. The McCloskeys of San Francisco, Los Angeles, and New York City tried to protect their views, their property values, and their relatively low-traffic streets with zoning laws that banned apartments across whole swaths of the city. Lack of supply met huge demand, hiking prices in the process. Middle-class people were effectively priced out of urban apartments because those apartments were simply never built.
So instead of living in Los Angeles and New York City, middle- and lower-income people moved to Las Vegas and Phoenix. That influx of demand saw prices spike and builders respond by throwing up lots of new homes. The glut of new homes in inexpensive Sun Belt cities wasn’t just the result of an overinflated financial system. It was a response to real demand from cost-burdened coastal emigrants.
All this had massive macroeconomic consequences. Erdmann and Sumner argue the Great Recession was ultimately caused by federal officials misinterpreting rising home prices as a bubble rather than the result of a real shortage. So they tightened monetary and lending policy, and that tipped a rational building boom into an artificially induced recession.
It’s an out-of-the-box theory that deemphasizes or disputes many common libertarian diagnoses of the Great Recession that center on an overly profligate Federal Reserve or on reckless financial institutions banking on an inevitable federal bailout. But it does explain how the country was able to go from a supposed glut of housing oversupply to a shortage of somewhere between 4 million and 20 million homes. The glut was overinterpreted—and the shortage never went away.
When economic growth did come back in the 2010s, in the form of a “return to the city” movement, zoning restrictions that were already tight became positively strangling.
Escape to New York
With a decade of data now available, it can be definitively said that the 2010s witnessed an urban renaissance. But zoning ensured that renaissance would be painful and incomplete.
From 2010 to 2020, the densest urban neighborhoods grew faster than their more spread-out suburbs and only slightly less quickly than sparsely populated exurban fringes. After two decades of sprawl, the average American neighborhood grew denser; the percentage of Americans living in the densest urban census tracts ticked up considerably, albeit from a low baseline.
Even in places where urban areas didn’t add that many people, they added jobs and businesses. Real estate prices grew the fastest in the densest neighborhoods.
Economists, urbanists, and city watchers credit this “return to the cities” to urban areas’ longstanding advantages at spurring growth and innovation. When lots of workers and firms are accessible to one another, that allows for more specialization, for more economies of scale, and for ideas to form and spread more rapidly.
The knowledge-based nature of the 21st century’s growth industries make the agglomerative effects of dense cities especially powerful. Tech and biomedical research don’t require large factory floors, so cheap land out in the suburbs isn’t as useful. Those industries do heavily depend on thick networks of highly skilled, highly specialized workers, which can be found in large cities. It also helps to have lots of customers nearby to test products on.
“In the 1970s, ‘Silicon Valley’ literally meant making semiconductors in large fabs that required expensive equipment and clean rooms,” wrote venture capitalist Kim-Mai Cutler in 2014. “The big wave of the last decade has been social networking. And every notable consumer web or mobile product of this wave has been seeded through critical mass in the ‘analog’ world. Facebook had university campuses. Snapchat had Southern California high schools. Foursquare had Lower Manhattan. Twitter had San Francisco. These products favor social density.”
Urban density also enables the frictionless interactions that are essential to innovation. “Face-to-face interactions generate a richer information flow that includes body language, intonation and facial expression and the opportunities they create for frequent, even spontaneous interpersonal collaboration,” wrote Harvard University economist Edward Glaeser in a 2020 paper. “As the world became more complex, the value of intense communication also increases.”
But as cities became more popular and productive, their zoning restrictions on new housing development started to really bite. Nationwide, urban rents rose twice as fast as urban consumer prices. Median rents shot past $2,000 in New York and $3,000 in San Francisco. Home prices quickly rebounded and surpassed their recession-induced dips in coastal metros.
The net result: Higher-income young professionals without kids became much more likely to live in the city by the end of the decade, but most other demographic groups ended the 2010s less urbanized. The largest urban core counties also witnessed net domestic outmigration for most of the 2010s. Only international immigration and new children kept their population growth positive.
“This combination of faster population growth in outlying areas and bigger price increases in cities points to limited housing supply as a curb on urban growth, pushing people out to the suburbs,” wrote economist Jed Kolko in 2017.
When NIMBY zoning rules cut off industries from innovation-breeding cities, the economy’s productivity as a whole suffers. Fewer inventions are created; fewer new ideas catch on. The higher wages and standards of living all that growth would have created do not materialize.
In “The Housing Theory of Everything,” a 2021 essay for Works in Progress, Sam Bowman, John Myers, and Ben Southwood cobble together the most recent research to estimate that zoning restrictions cost the average American somewhere between $8,800 and $16,000 a year in foregone income.
If you take seriously the idea that politics is primarily downstream of material factors, you might blame zoning for a lot of the sheer craziness of American politics in the last decade too.
Zoning-Induced Political Psychosis
One October morning in 2018, a strange package appeared in front of George Soros’ house in Katonah, New York. Inside was a homemade pipe bomb intended for the billionaire financier and supporter of liberal political causes. Over the next couple of days, another 15 pipe bombs would show up at the doorsteps of Democratic politicians and liberal media and entertainment figures, including Hillary Clinton, Barack Obama, and actor Robert De Niro, as well as CNN’s New York office. The culprit turned out to be a pro-Trump Florida man named Cesar Sayoc. The pipe bombs themselves were all duds, and likely never intended to work. Sayoc ended up getting 20 years in prison.
Most of the commentary following Sayoc’s arrest focused on whether Trump was culpable for inspiring the stunt, or on the role misinformation or polarization might play in producing political violence. But Sayoc had lost his Fort Lauderdale house during the 2009 foreclosure wave emanating from the Great Recession. As The Intercept‘s David Dayen noted, the loss of his home was among the setbacks in Sayoc’s sad and unstable life that led him to living in a van and becoming a rabid Trump partisan.
Sayoc’s story is just a small example of the ways American politics have appeared to grow increasingly deranged. There are obviously many factors at work, but zoning bears some of the blame. Were it not for overly restrictive zoning regulations, the Great Recession might not have happened. Without that recession, it’s plausible that much of the instability of the past decade wouldn’t have happened either. Zoning is a key ingredient in America’s present political psychosis.
During the economic turmoil of 2007–2009, millions lost their jobs, their homes, or both, and a whole generation of workers entered a depressed job market with poor employment prospects but plenty of student debt. This was also the era of bank bailouts, automaker bailouts, and a massive federal “stimulus” that exploded the government’s debt while failing to arrest the economic crisis. All that spending further enraged a recession-battered public, who saw their government go deeper into the red propping up large and powerful corporations.
The Tea Party movement started sweeping through the Republican Party, condemning government spending and fanning the flames of the ever-so-brief “libertarian moment.” Republican presidential candidates were soon trying to outcompete each other on how many government programs they said they’d eliminate—provided they didn’t touch military spending, Social Security, or Medicare—and who hated Mitch McConnell the most. On the other side of the political spectrum, the Occupy movement channeled outrage at bank bailouts into a general critique of Wall Street and corporate control of politics. For many Occupiers, the problem wasn’t so much that the government was doing too much as that the government was helping the rich at the expense of everyone else.
These populist flames kept burning long after the worst effects of the Great Recession passed, though they soon took different forms. The anti-establishment fervor that the Tea Partiers kicked off within the GOP evolved from supporting libertarian-infused purity politicians to propelling Trump, presenting himself as the ultimate anti-system candidate, to victory in 2016.
Occupy proved less successful at taking over the Democratic Party. For a lot of its organizers, that wasn’t really the point. But its narrative of the 99 percent versus the 1 percent helped fuel a more strident progressivism, embodied by the likes of Rep. Alexandria Ocasio-Cortez (D–N.Y.) and Sen. Bernie Sanders (I–Vt.).
As urban areas started to rebound from the worst of the Great Recession, urban progressives’ targets shifted from the big banks to anything that smacked of growth or that ill-defined concept, “gentrification.”
The people most harmed by restrictions on new housing supply teamed up with their more well-off NIMBY neighbors to oppose anything that might bring more young professionals to town. They protested hipster coffee shops and tech employee shuttle services. They fought new bar arcades and Amazon offices. Anti-growth activists also targeted new apartment buildings themselves, under the mistaken belief that these developments create their own demand and thus raise prices even more.
Ocasio-Cortez might have gone to D.C. to bring about the socialist revolution. But her biggest political victory to date is her successful opposition to Amazon opening a second office headquarters near her district.
In his 2016 campaign for the Democratic presidential nomination, Sanders touted his opposition to bank bailouts as a sign of his independence from Wall Street. During his 2020 campaign, he tried to win over Boston-area activists by opposing the redevelopment of a dilapidated horse racetrack into new homes and businesses.
About a decade after the Great Recession, another hugely destabilizing event came along. And while zoning restrictions didn’t cause the COVID-19 pandemic, they made it even crazier than it would have been.
Zoning helped create single-use central business districts where everyone works but few people actually live. Mandated business closures quickly turned downtowns into ghost towns. The disappearance of office workers, tourists, and the businesses that catered to both meant that cities lost the “eyes on the street” that are important to maintaining urban order. That helped fuel crime and vagrancy, both of which spiked.
In the late 1910s and early 1920s, judges frequently pointed to the death toll of the Spanish Flu pandemic as justification for upholding early zoning codes’ bans on allegedly superspreading apartment buildings. A century later, those apartment bans ensured that more people were living in overcrowded housing, where COVID was more likely to spread. A number of studies have linked more people per housing unit to faster COVID spread and higher COVID mortality rates.
Those early days of empty cities, rising death tolls, and collapsing public order set the mood during 2020 that the apocalypse was nigh. Mass racial justice protests, the riots that sometimes followed, and the occasional outbreak of leftist street communes seemed like an almost natural reaction to the end of the world.
American society did not collapse. But legal restrictions that kept people from changing their built environments reduced the flexibility that’s crucial to weathering these system shocks. That rigidity means individuals fleeing crises elsewhere have a harder time taking advantage of the peace and prosperity America still provides.
In August 2021, the American military made a chaotic final pullout from Afghanistan. The news was filled with images of desperate people hanging to the landing gear of aircraft in a vain attempt to escape impending Taliban rule.
In the aftermath of the withdrawal, government refugee agencies and nonprofits set to work resettling the thousands of people who did manage to flee the country. To ease their transition, the U.S. State Department gave them an important piece of official advice: For the love of God, don’t try to rent an apartment in California.
“Some cities in California are very expensive places to live, and it can be difficult to find reasonable housing and employment. Any resettlement benefits you receive may not comfortably cover the cost of living in these areas,” the State Department warned, recommending lower-cost cities such as Houston, Salt Lake City, and Atlanta.
There are a handful of issues that don’t directly connect to zoning restrictions. The war in Afghanistan and immigration are likely two of them. But the fates of people fleeing the Taliban end up being shaped by zoning nonetheless.
San Francisco, New York City, and Boston were once havens for new immigrants, because they offered both affordable housing and economic opportunity. The “return to the city” movement of the past decade has ensured the opportunity remains. But zoning regulations that choke off new housing has made those cities all but closed to poorer arrivals.
The State Department’s direction to Afghan refugees to steer clear of California’s cities is just one example. Another came a year later, when 49 Venezuelan asylum seekers showed up on the resort island of Martha’s Vineyard, Massachusetts.
Their arrival had been engineered by Republican Florida Gov. Ron DeSantis. The migrants reportedly received papers promising jobs, housing, and other benefits. It was a political stunt aimed at exposing liberals’ immigration hypocrisy, premised on the idea that they say they care about immigrants until they actually have to deal with them.
On that front, liberal hypocrisy didn’t materialize. The surprised Martha’s Vineyard residents put up the migrants in a local church for a few nights, providing them with clothing and food before sending them to stay at a military facility on Cape Cod. Within a few weeks, all had either left Massachusetts or settled in more permanent housing.
But why didn’t these migrants, coming in search of work, find housing on their own on the island where they landed? Because Martha’s Vineyard’s zoning laws are exclusionary, even if its citizens aren’t.
Residential developments larger than two units are all but prohibited in the community. The island’s minimum lot sizes are gigantic, stretching up to two acres or more. Much of the island is reserved for “agricultural” purposes where nothing can be built.
All this limits the housing supply on the much-in-demand island. Average Martha’s Vineyard home prices are $1.3 million—well out of reach for a penniless Venezuelan migrant. (They wouldn’t be that much better off in the Boston area, where median home prices are just under $1 million.)
Meanwhile, Martha’s Vineyard has been suffering a labor shortage, which has forced businesses to cut back on the services they offer for want of staff. Local business owners know exactly why there’s a shortage. “There’s no place for them to live—why would they come here?” one local hardware store owner told The Martha’s Vineyard Times. It’s not just desperate Afghans and Venezuelans who have a hard time moving to jobs and opportunity.
“Closed access” cities and towns aren’t just losing out on units of labor. So much of what makes cities interesting comes from the culture, cuisine, local traditions, and neighborhood character added by migrants, foreign and domestic. Zoning doesn’t just make cities more expensive, less accessible, and poorer. It also makes them less vibrant, less fun, and less interesting.
More Rules, Less Fun
George R.R. Martin needs no help in delaying the completion of a story. The Historic Districts Review Board of Santa Fe, New Mexico, gave it to him anyway.
In September 2020, the board denied the fantasy author’s request for an exemption to the district’s height limit so that he could build a giant library-containing keep as part of the castle-like home he was designing.
While zoning makes our economy more unstable and our politics more deranged, it keeps everything else much more boring. When people want to try new ideas on their property, whether it’s a startup business or just a fresh look, they are stopped by a litany of rules aimed at separating “incompatible uses” and eliminating “out-of-context” designs.
Often those rules govern what exactly a building can look like. Just as frequently, it’s business practices that run afoul of voluminous zoning restrictions. The people who craft and enforce zoning codes can’t predict every activity that people might possibly want to do. So ideas that don’t fit into preexisting use tables get squelched.
Take Indiana farmer Jordan Stevens, whose goat yoga operation was shut down by county zoning officials. Goat yoga, for the uninitiated, is a lot like traditional yoga—but with goats on the premises. For a time, Stevens ran Indiana’s only full-time goat yoga operation. As a relatively new practice, it’s no surprise the county zoning code didn’t spell out where exactly goat yoga is allowed. So county officials ordered Stevens to shut it down. She could legally raise goats and sell goats on her agriculturally zoned property, but letting people stretch next to them was apparently out of line.
Many home business operations meet a similar fate, regardless of how innocuous they are. Whether someone wants to sell dresses on Etsy from their house or clip hair in their garage, zoning codes are there to get in the way.
Home business bans can mean aspiring business owners need to rent prohibitively expensive commercial space. Even entrepreneurs with the means to rent a shopfront can still be undercut by long and complicated zoning approval processes. These restrictions can kill off innovative experimentation, and they can squelch the shops that give a neighborhood more vibrancy and character.
Even when most of the public is ready to live and let live when it comes to kooky new businesses, zoning gives the minority with a strong desire to control others’ property ample opportunity to get in the way.
Then there’s the controversy over Oregon’s newly decriminalized trade in magic mushrooms. In 2020, voters approved an initiative that legalized the supervised consumption of psilocybin at state-licensed facilities. In 2022, a majority of voters in Jackson County rejected local ballot initiatives that would have imposed local bans on these new mushroom “service centers.” That didn’t stop Jackson planning officials from proposing zoning rules that would de facto prevent these businesses from establishing themselves.
Not all government departments are created equal. When whole bodies to control land use are set up, land use control freaks end up dominating them.
Even when zoning rules try to protect local, character-enhancing businesses, they can have the opposite effect. If there’s one thing San Francisco’s zoning code hates more than new housing, it’s chain stores. The city’s “formula retail” restrictions were enacted to keep national franchise businesses from dominating neighborhood commercial strips. But they also had the effect of stopping a beloved local burrito chain, El Farolito, from opening another location in the city’s North Beach neighborhood. The chain had just enough preexisting locations that looked just similar enough to each other to qualify as a chain store. The rules designed to keep Starbucks and McDonald’s out of town ended up strangling a local favorite as well.
Thanks to the favorable intervention of a city supervisor, El Farolito was eventually able to open its North Beach location after agreeing to modify its signage at its preexisting businesses. That was a welcome break. A business without a powerful city politician on its side wouldn’t have been so lucky.
Everyone’s Favorite Tool
Prior to the U.S. Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, states had limited ability to restrict abortion. As a workaround, some conservative states passed zoning-like regulations that required abortion clinics to be within a certain distance from a hospital.
When the Dobbs decision did come down, it kicked off a wave of commentary from pro-choice commentators arguing that blue states needed to liberalize the zoning rules that were driving up housing costs. That way, women from across the country could afford to relocate and have as many abortions as they wanted.
Somehow, everything in American politics traces back to zoning.
The universe of activities to which zoning regulations apply has grown substantially over time. These rules were once meant to keep glue factories away from houses and apartments away from single-family houses. They’ve since become an all-encompassing net weighing down nearly everything about a community.
The power we’ve given zoning means it’s often the first thing officials reach for when trying to achieve social goals. But even the awesome scope of zoning powers hasn’t reorganized society in the ways that its proponents might hope.
Restrictions on “yuppie fishbowl” apartments didn’t turn tech out of San Francisco. They just made the city more expensive.
Single-family zoning didn’t end up isolating Patricia McCloskey’s neighborhood from 2020’s racial justice protests. Nor was Trump’s NIMBY rhetoric about saving the suburbs in 2020 enough to get the country’s suburban communities to vote for him in large enough numbers to win the election.
The consequences of this hubris are increasingly being recognized and fought against. The high costs of housing in the most expensive cities birthed the “yes in my backyard” (YIMBY) movement of pissed-off city dwellers tired of seeing their urban wage premium eaten up by the urban housing premium. They are now out to make zoning pay for the damage it has done, either by substantially reducing its restrictiveness or eliminating it altogether.
The YIMBYs have scored impressive partial victories in eliminating restrictions on residential density in California, where they’ve legalized duplexes and in-law suites almost everywhere in the state. They’re now putting teeth into forgotten state laws aimed at overcoming the zoning rules of anti-growth localities. Such reforms are spreading to states as different as Oregon and Virginia.
The material impacts of these wins are minor for the moment. But they represent an ideological inflection point. No longer are zoning restrictions being treated as boring and ordinary. Their high costs are now being calculated for all to see. The rules in place have to be justified and defended, or they risk being eliminated entirely by YIMBY activists.
Something similar is happening with zoning’s use restrictions. The libertarian legal movement is increasingly convincing courts and legislatures that bans on people selling goods and services from their own home are unwise and, occasionally, unconstitutional.
Everything is zoning in that zoning’s assumed task has become a general ordering of society. That’s not just a big mission. It’s a goal that goes beyond the zoners’ ultimate capabilities. The task they’ve set for themselves has nevertheless had a profound, and profoundly negative, impact on society.
A general truism of free market economics is that individuals, when given the freedom to choose, will engage in mutually beneficial trades with the people around them. One argument for property rights is that these voluntary transactions need a physical space to happen in.
By constraining those property rights through restrictions on use, density, and more, zoning controls the physical substrata on which free markets are built. It is central planning brought down to an almost elemental level. It has made individuals and society poorer, less dynamic, more unstable, less interesting, less welcoming—and a little crazier too.
The post The Zoning Theory of Everything appeared first on Reason.com.
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