YIMBYism without markets or supply and demand

Even in a socialist utopia it matters who sets the zoning rules

There’s a certain kind of person who believes that the key to unlocking sweeping progressive economic policy change is debunking “economics 101”-style thinking.

I think that’s pretty clearly incorrect.

The main impediment to sweeping progressive economic policy change is that creating a European-style welfare state would require higher taxes across the board, and people don’t like the idea of paying higher taxes. But it’s a sincerely held view, and it leads people in the grips of the anti-101 delusion to fulminate against YIMBY solutions to the national housing shortage.

Because it is absolutely true that one way to illustrate the problem with land use regulations is with a chart illustrating the deadweight loss of quantity restrictions.

In this chart that I did in fact poach from an economics 101 lesson, you can see that a quota in the oil market does transfer income from consumers to producers, but does so by generating massive deadweight loss.

You could make the same chart with land use regulations instead of oil quotas, renters instead of consumers, and landlords instead of producers to show why upzoning is good. It’s hard to devise an urban reform plan that makes literally every single person better off. But there is enough surplus unlocked by upzoning in areas where land is expensive that, with appropriate complementary policies, you can assemble a winning coalition and make most people better off.

Unfortunately, one group you do lose in that coalition is intellectuals who hate supply and demand charts. Which is how you wind up with this long-winded Kevin Rogan post arguing against basic supply and demand models and concluding that “supply has no bearing on rental price because supply is unknown by the landlord as they set their rental price.”

I think that’s wrong in some pretty obvious ways,¹ but the whole point of these supply/demand charts is to try to characterize how things work in a market-ish economy. What the leftists want is to not have an economy like that. That’s fair enough. But I think it’s important to understand that even if you completely assume away landlords, private builders, and market incentives, local control of planning still almost always leads to harmful shortages. Different parcels of land are different in terms of their desirability, and that’s just as true under socialism as under capitalism.

Land use in utopia

In the post-scarcity future, replicators make everything a person needs to survive, and all the replicators need to operate are dilithium crystals to generate energy. Dilithium is controlled by the Federation government, but it’s sufficiently plentiful that there are replicators everywhere, making all the food and consumer goods that a person could possibly want.

But, the replicators can only make relatively small objects on the scale of household consumption items.

Really big stuff like the structural components of starships is made by energy-intensive industrial replicators that are also controlled by the Federation. And the same goes for Federation housing, which is constructed very cheaply (by replicator) and allocated for free to citizens on the basis of need. This great triumph has eliminated not just hunger but also homelessness — everyone has a place to live.

But it doesn’t follow automatically that everyone has a place to live with gorgeous views of French wine country. Because even though the Federation could assemble more homes where there are currently vineyards, that would by definition spoil the view of the vineyards. The local population, as part of their self-governance, chooses to define the character of their community in the way they see fit. That means keeping the place rustic, which means limiting the supply of homes. Some people say that this is bad. It makes them sad that kids raised in the neighborhood need to spend years on waiting lists in order to get allocated a house where they grew up. It’s ghoulish to have all these middle-aged couples with young children rooting for their friends’ parents to die in order to obtain their dream homes. Some people say the real issue is that you have empty-nesters inefficiently occupying homes with spare bedrooms, and they should be assigned different, smaller quarters so that young families can get the larger homes. But anti-displacement activists have mostly killed that idea.

And while nobody needs to labor as a wage slave to earn his daily bread, most people continue to work for self-betterment, fulfillment, and a sense of purpose. Some jobs are considered more prestigious, more enjoyable, or otherwise more desirable than others. You might aspire to work at a particular place, and once you do, you’d prefer to have a conveniently located home. Sometimes you’d be lucky, and one would happen to be available. But other times you’d end up stuck on a long waiting list, living somewhere on the outskirts of town and schlepping every morning to the community transporter facility to teleport into the office. Bummer!

The perils of community control

An obvious solution is to build more housing.

The Federation likes to say that its advanced technology has eliminated scarcity. But that’s not really true — the replicators can’t make more land. So occupation of particular parcels remains something that people compete over. Nobody “owns” the land, so the competition doesn’t take the form of bidding for a scarce commodity the way it would under capitalism. But it’s still a rivalrous commodity in limited supply, and whether you get it by queuing or by administrative fiat, there is still a divergence between the fortunate few who get the best locations and everyone else.

But even if this advanced society can’t eliminate land scarcity, they can absolutely make it less relevant.

After all, basic construction costs are cheap thanks to the replicators. And turbo-lift technology allows dwellings to be stacked vertically — one atop the other — to eliminate space constraints.

The problem is that there tends to be some nuisance involved in the construction of a nearby stack-dwelling. It might mean more noise or more crowding of local amenities. The existing set of schools, replicators, and transporters could become overburdened, requiring more public infrastructure. It’s of course possible that it could all work out for the best. But people are fundamentally risk-averse. If the neighborhood as it exists works well enough for the people who already live there, it’s going to be hard to convince them that change is a good idea.

And of course there’s the question of status. In a post-scarcity society where everyone enjoys equal (and high) living standards, there’s actually a fair amount of under-the-stable competition and envy. Who gets into Starfleet Academy and becomes an officer and who has to join the enlisted ranks? Who gets a house with a cool view? Having a house in a waiting list district is prestigious. People who’ve got one kind of like that others don’t and are disinclined at the margin to give it up.

So things don’t get built, because even in a world of low construction costs and material abundance, permission to build is in short supply. And even though the planning ministry monitors the waitlists to see which neighborhoods want new housing the most, the local councils tend to reject the ministry’s advice. They say new housing can always be built on greenfield sites on the outskirts of town. Or else there are whole other cities with short waitlists and people can live there. Obviously everyone is for new housing if it’s in an appropriate spot and meets appropriate demand criteria, but these cookie-cutter new projects that detract from the character of the neighborhood are bad.

Whose democracy? Which community?

In this socialist landscape, there’s no question of “deregulation” or “trickle-down” as an alternative to the current scarcity situation.

Instead, the question is purely one of decision procedures. Society has decided that the rules governing land use should be subject to collective democratic control like other major social and economic decisions. But the specific thing they decided is that land use should be subject to collective local democratic control. So the decisions about what to build, or not, in the vicinity of Chateau Picard are made by the people who already live near Chateau Picard. Since those specific people need to bear the downsides of extra house-building while deriving very few benefits, they tend to lean against approving new development. This is harmful on net, but most of the harms are accrued by people who don’t get a say in the community control process.

The result is that the Federation as a whole ends up much poorer than it otherwise might be.

Poorer, that is, until a group of radical YIMBYs comes along and advances two arguments:

• A more liberal permitting regime would lead to more abundant dwellings, leaving most people better off on balance.

• If the permitting decisions were made at a higher level of government, everyone would naturally be inclined toward more liberal views, even without any of their personal preferences changing.

This would obviously be controversial. We’ve seen throughout history that proposals to reallocate political power from one level of a federal entity to a higher level generate dissent and dispute. The pooling of sovereignty across multiple star systems into a United Federation of Planets was very contentious, and individual planets operate (by design) with a great deal of autonomy. Still, the fact remains that neighborhood-level control naturally leads to scarcity, whereas allocating these decisions to regional planning bodies would create a better outcome.

At least, a better outcome as viewed by the YIMBYs. Localizers say this is a bad idea that will lead to less-rooted communities and other problems. YIMBYs counter that housing abundance will allow for more multi-generational neighborhoods rather than naturally occurring retirement communities. It’s a vigorous debate, but that’s the whole point of democracy.

Questions of growth and allocation are inescapable

So what’s the point of all this?

Obviously we don’t have replicator technology or dilithium crystals that generate energy that’s too cheap to meter. Under the circumstances, I think it’s probably better to stick with a system of widespread private ownership of the means of production along with private ownership of personal consumption items. That said, most societies I am familiar with have at least some public ownership of the means of production, and I think there’s a reasonable case to be made for shifting the balance in the United States.

But while these are interesting and important questions, the upshot of all of this is that they don’t make certain other questions go away.

To whatever extent items are scarce, there will be questions about how they should be allocated. And because parcels of land are differentiated from each other, there tends to be an inherent scarcity of “the land that people want the most,” even in situations where land is plentiful in the aggregate. In the Communist Manifesto, Marx has this remark about “gradual abolition of all the distinction between town and country by a more equable distribution of the populace over the country,” which just doesn’t make a lot of sense and doesn’t represent how any socialist or social democratic society has actually functioned. Different bits of land have different characteristics and that matters.

When technology allows for true abundance, distributive questions become less relevant.

Today, unlike in the era of the Manifesto, we have the technology — including elevators, mass timber, and steel frame construction — to pack essentially arbitrary numbers of homes onto a fixed plot of land. Unlike replicators and transformers, that’s not utopian science fiction — it’s reality. But legal barriers to deploying the technology prevent us from living in utopia, a problem that could easily recur in any kind of society regardless of how its economy is organized. I do think the “econ 101” toolkit is a useful lens through which to analyze these issues. But the issues exist completely apart from the question of whether allocation is done by markets or lotteries or queuing or administrative rationing. Housing is either scarce or it’s abundant. The scarcer it is, the more acute the distributional questions become. And the more localized the decision-making, the scarcer it’s going to be.

1. For supply to be the sole determinant of rental price, landlords would need to have perfect information about supply conditions, which clearly isn’t true. But for supply to have no bearing on rental price, landlords would need to have no information about supply conditions, which also clearly isn’t true.