Conservative populists should embrace housing deregulation

Let's not make this the next culture war frontier

A lot of housing policy debates take place inside big cities and their inner-ring suburbs, pitting different left-of-center factions against each other. At this point, I think there’s well-developed progressive rhetoric for land-use reform, and both the Obama and Biden administrations have embraced it to at least some extent.

And then there’s the right.

Within the traditional free-market GOP framework, it’s of course easy to see that burdensome regulations on economic activity can hurt growth and make people worse off. That’s why early in Trump’s term, Ben Carson bragged about “taking on the NIMBYs” and said he wanted to reform zoning laws. Unfortunately, though, I think that as progressives have discovered the anti-racist case for zoning reform, people on the populist right are increasingly discovering an anti-anti-racist case against it.

Donald Trump started accusing Democrats of “abolishing the suburbs” when he withdrew HUDs Affirmatively Furthering Fair Housing rule. I don’t really think AFFH was accomplishing anything one way or another, so if Republicans want to scrap it, that’s fine. But then Trump started darkly warning everyone that Cory Booker in particular was going to ruin your “suburban lifestyle dream” if Biden became president. Trump never explained exactly what he meant there and it was widely covered as just him being racist, but a more generous approach might be that Trump was referring to Cory Booker’s HOME Act proposal that would use federal financial incentives as both a carrot and a stick to induce states to adopt land-use reform.

Tucker Carlson has also warned of Democratic plans to “abolish the suburbs” and Christopher Rufo, the anti-Critical Race Theory guy, also occasionally moonlights with op-eds against zoning reform.

While the leftist case against zoning reform is mistaken, the rightist case tends to be nonsensical since the zoning reform proposal is just straightforwardly right-wing — we should let people do what they want with their property unless they are hurting people. It’s even populist because the view is that people should decide for themselves rather than letting fancy-pants urban planners decide for them. But the dynamics of identity politics are strong, and Edward Ring in American Greatness tries to make a right-populist take where housing abundance is good but density is also bad:

Instead of using state mandates to cram the burgeoning population of Texas into the footprint of existing cities, allow cities and town councils to decide at the local level how and where they want to increase density. At the same time, and this is absolutely critical, continue to take pressure off of urban housing stock by new construction of suburbs and entire new cities on open land. Focus on building enabling infrastructure—energy, water, roads—and minimize regulatory obstacles to new suburbs: excessive building code mandates, punitive fees, and permitting delays.

This is fine by me; there’s no reason Texas shouldn’t keep building more homes in the suburbs of Austin. But that said, if some people would rather live in Austin proper, why shouldn’t that be allowed, too?

I want to try to pull out and convince everyone that reforming zoning is just good. It’s good if you care about racial justice. It’s good if you’re a yuppie who wants to live within walking distance from a grocery store and a school. It’s good if you’re a free-market ideologue who hates regulations. And it’s also good if you’re a populist who doesn’t care about either of those things but wants to deliver good jobs to working-class people.

Immigration restriction is not enough

The one really clear idea conservative populists have on economics is that if we got rid of the less-educated immigrants, it would help the less-educated natives. I don’t think that this is right, but we’re not going to get anywhere by insisting on disagreeing about that. What I hope restrictionists will concede, however, is that immigration restriction is not a sufficient answer to working-class economic struggles. Suppose we successfully eliminate all the foreign-born fruit and vegetable pickers, nannies, and housekeepers, and as a result, natives secure the opportunity to do that work at higher pay rates.

I think that’s going to make the economy worse off overall. Populists disagree. But either way, fruit picking is not going to be one of the good jobs of the future that power our economy forward. When people do nostalgia economics, they talk about working in unionized factories, not housekeeper gigs.

This is where zoning comes in.

There are lots of different specialties in the construction trades, and they have different earnings profiles with boilermakers commanding much higher pay than generic wages. But overall the BLS says the median construction trades worker earns $22.83 per hour, which is about 10% higher than the national median of $20.17 per hour. That alone underrates construction, however, because the national wage median is a blend of people at all points on the educational spectrum. Construction jobs earn you above-median wages without a college degree. So for working-class work, construction pays well above average. And upzoning induces construction and its associated demand for construction workers, allowing capital to flow out of globalist sectors that employ college grads to create non-tangible goods and into sectors that employ working-class people at above-average wages.

Construction supports local manufacturing

I think populists don’t always take seriously enough the extent to which trying to maintain the United States as a manufacturing hub involves a certain amount of swimming upstream. You can protect the U.S. domestic market for this or that product category, but the European Union has 50% more people than we do, and China has roughly four times our population.

Most of the potential customers are in Asia because most humans live in Asia, so the long-run strategy of trying to manipulate access to the U.S. market has limits. You can probably make it work in a select category or two, but it’s not the general-purpose tool that some want it to be.

More people live inside the highlighted circle than outside the highlighted circle

A nice thing about construction in this regard is that homes are made out of manufactured goods, and a lot of that is heavy and/or bulky stuff where more local production has an advantage. Allowing for more construction also generates more demand for complementary manufacturing, further bolstering the working class economy and encouraging capital to flow to the production of tangible goods.

The same also applies to furniture and appliances. Here’s the kitchen of a $1.2 million house in the Mount Pleasant neighborhood in D.C.

In Kerrville, Texas where my inlaws live and housing is much cheaper, there are still rich people buying $1.2 million houses. But in Kerrville, that gets you a much larger house, which is full of more and fancier stuff.

In other words, in the overzoned zone, we have all these household savings going into what’s essentially land speculation. But absent that zoning constraint, that exact same money is funneled into giant, expensive Wolf and Subzero appliances made in Wisconsin.

Progressive urbanists tend to be, well, progressive and urbanist. They think giant houses are tacky and they are very sensitive to any charge that their ideas might have any benefits for affluent people. Conservative populists don’t need to be so snobby and weird about it. One big advantage of abundant housing is that downscale people don’t need to be crushed by exorbitant costs for basic housing. But another big advantage of abundant housing is that affluent people can live in big houses full of fancy stuff. A populist doesn’t need to be precious. Big houses are good. Fancy stuff is good. Everyone getting jobs manufacturing appliances and furniture to fill everyone’s houses is good.

And of course, there are broader economic stakes as well.

Strict zoning encourages economic divergence

Say you live in the suburbs of Buffalo. And then you notice one day that people living in the suburbs of Boston normally have higher incomes than people in the suburbs of Buffalo. So you think to yourself, “maybe I should move to the suburbs of Boston and get paid more?” But then you read on the internet that housing is also way more expensive in the suburbs of Boston than in the suburbs of Buffalo. So you’re not sure what you should do. Is it worth it to strike out for Boston and seek your fortune?

Well, Peter Ganong and Daniel Shoag have this paper which says that basically “it depends.” If you’re an educated professional like a dentist or a lawyer, your earnings will go up by so much that it’s worth it despite the higher cost of housing. But if you’re a hairstylist or a cook that’s not the case — you’ll earn more in Boston but you’ll get lower living standards overall because of the higher cost of housing.

Then there’s Janna Matlack and Jacob Vigdor, who look at basically the same issue but with the jobs moving rather than the people. Say a new company comes to town and it employs a lot of educated professionals at high wages. Is that good for you, a person who already lived nearby? Well it turns out that it depends. If you’re an educated professional yourself, then yes your pay will probably go up. If you’re more downscale, your pay will also go up a little bit but housing demand rises as well. They find that in strictly zoned housing markets, this means the influx of new high-paying jobs is actually bad for you.

It’s wrong to think of this as just a “big coastal city” problem or something. It’s a systemic national problem that drives class and regional inequality. And while more remote work will change a lot of these dynamics, it doesn’t change them in a way that eliminates the usefulness of land-use reform.

Zoom will not save us

Remote work offers a lot of big advantages for white-collar workers. You could, for example, keep living in the San Francisco Bay Area and still be available to meet up and network in-person with people who work in the same industry without needing to actually deal with the hassle of daily commutes in a congested metro area.

Or you could keep your apartment in Manhattan because you like Manhattan, but also spend 10 weeks a year at your house in coastal Maine. If you don’t like Manhattan but do love skiing, you can move to a ski town out west and work remotely from there. Or a beach town. If you’re rich enough, you could have two houses, one in a ski town and one in a beach town, and bounce between them.

If you work with your hands — whether that’s swinging a hammer or cutting hair or cooking food or whatever else — that doesn’t work, and you need to be on location.

And while remote will move the white-collar workforce around, it’s not like it’s going to distribute them randomly across the country. I think the best forecast is that some of today’s superstar metros will decline to be replaced by new zoomtowns that are mostly leisure destinations today.

Dror Poleg @drorpoleg

It's happening again.  In the 18th and 19th Centuries, the weekend villas of the emerging merchant/middle class were the precursors to the permanent suburbs of the 20th Century. Now, many 20th Century vacation destinations are becoming the Zoom towns of the 21st Century.

And Stephen Smith points out that this isn’t an entirely new trend. Miami was a tourist destination before it became a major city. But the difference between a place like Miami and a place like Santa Fe or Monterey is that Miami accepted quantitative growth rather than insisting on becoming an overpriced boutique area.

We need free choice, not culture war

Technological change will alleviate some problems with the current land use paradigm, but change is also inherently somewhat unpredictable in a way that raises the costs of overly prescriptive regulation.

In his manifesto “The Density Delusion,” Ring argues that the push for more infill is a mistake and the real villain is regulations that contain suburban sprawl.

California has passed dozens of laws discouraging development. Notable among them are Sustainable Communities and Climate Protection Act, passed in 2008, which has made it nearly impossible to build housing outside the "urban service boundary." Two other significant environmentalist laws are the landmark 1970 California Environmental Quality Act, and the precedent-setting Global Warming Solutions Act of 2006, along with numerous others at the state and local level. These laws make it nearly impossible for Californians to build affordable homes, develop energy, or construct reservoirs, aqueducts, desalination plants, nuclear power plants, pipelines, freeways, or any other essential enabling infrastructure.

Ring is absolutely right that California needs CEQA reform, and all the YIMBY types I know agree with that. As for the general proposition that the aggregate impact of California land-use law is to produce less rather than more suburban sprawl, my experience driving around Los Angeles tends to suggest otherwise.

My basic diagnosis of housing policy in America is that the country basically has adopted Ring’s sprawl-central housing affordability strategy, which is why the worst affordability problems are in cities that face geographic constraints on sprawl due to being next to an ocean.

That said, I don’t disagree with Ring that we should allow the construction of new suburban housing. To an extent, these disagreements sometimes seem to me to hinge on semantics. Years ago I was in an argument with Randall O’Toole from Cato about whether anti-sprawl rules or anti-density rules were the bigger problems in the D.C. area, and it turns out that he was characterizing the Montgomery County Agricultural Reserve as an anti-sprawl rule and I was characterizing it as an anti-density rule. I found it to be an educational experience in the merits of debating specifics rather than broad ideological themes.

What I don’t understand is why Ring is so hostile to the infill argument. There is clearly demand for it and it should be allowed. In fact, the more you roll back restrictions on infill, the more you make it possible for people to afford their suburban lifestyle dream without needing to live really far away from the core destination.

And ultimately, with new technologies in place, we now have increased uncertainty as to what the core destinations even are. So it’s important to get zoning reform out of the “urbanist” policy silo since it’s at least possible that the future of excess housing demand won’t be in today’s biggest and most expensive cities. The next big fights may be about whether we can build tacky subdivisions near what are today’s cute historic small towns. Or it might be tall apartments right by the beach. Or both! It’s just not totally known or knowable. But whatever the future of housing demand is, having a regulatory framework that accommodates it is going to be central to the economic welfare of blue-collar America. And we are all going to be better off if we can see this for what it is — an economic policy debate, not a validation or denigration of individual families’ lifestyle choices.