There are few more significant economic trends in America today than the rising cost of housing, and Dr. Ben Carson is on the case. The HUD Secretary is on a mission to force states and localities around the country to pare back zoning regulations so that more housing can be built in America’s most economically vibrant localities.“We must look at increasing the supply of affordable housing by reducing onerous zoning regulations,” Carson tweeted Wednesday. “Zoning laws are holding back America’s cities.”
That we have a housing affordability crisis is undeniable. The nations most productive cities have sprawled as far as geography, and reasonable commute times, allow hile rising cost of labor, construction, and land has made what new homes are built more expensive than ever. Generally weak growth in average incomes has compounded the problem, so that when adjusting for rent inflation, the median American income has risen just 6 percent over the past 38 years.
As a loyal adherent to conservative economic orthodoxy, Carson has identified the cause of the problem as government, and in this case, he has mountains of evidence to back up his claim. Economists like Edward Glaeser have documented the explosion of land-use regulations over the past fifty years, and he has found that these regulations have caused 10% of American homes to be worth twice the amount they cost to construct and that these homes are concentrated in America's most vibrant cities. Economists Chang-Tai Hsieh and Enrico Moretti have argued that land-use regulations have lowered aggregate US growth by 36% from 1964 to 2009.
Reducing these zoning restrictions seems like a no-brainer, an initiative that both the left and the right can get behind for different reasons. Folks like Carson are painting it as an effort to reduce government control over the economy, while left-leaning groups frame it as a means to reduce segregation of American cities and make housing more affordable for low-income Americans. To achieve this goal, Carson has proposed new regulations that would “tie HUD grants, which many communities use to build roads, sewers, bridges and other infrastructure projects, to less restrictive zoning,” according to a recent interview in the Wall Street Journal.
Carson is winning plaudits for his efforts on both the liberal and conservative factions of the commentariat, but his chances of forcing significant reform are slim. The first and most simple reason is that the federal government just doesn’t spend that much on housing programs. HUD distributes $3 billion to 1200 states and localities each year, which sounds like a lot. But it pales in comparison to the more than $40 billion it sends to states each year for transportation, or the hundreds of billions it sends to states for assistance programs like SNAP. More important, the cross-party support among the intellectual class for zoning reform is matched by a cross-party opposition of it by actual voters. Research by Dartmouth Economist William Fischel shows that voters become more motivated to be active in local government when they become homeowners and that their interest rises along with the price of their asset.
Homeowners love zoning restrictions because they protect both the character of their neighborhoods as well as the price of the asset, which in most cases, represents the vast majority of their life savings. Not that this is a rational bias—homeowners too must deal with the economic cost these regulations, in terms of slower growth. And if they ever want to actually sell their asset, they’ll have to pay the same inflated prices for their next home as everyone else. But history says that it most localities, voters will pressure elected officials to forgo federal aid if it means they can maintain restrictive zoning laws. So even if Carson’s effort doesn’t get bogged down in the rule-making process or in the courts, it’s unlikely to have a significant impact on the problem.
The fundamental problem for Carson, or anyone fighting against NIMBY zoning laws, is that the American Dream itself is synonymous with property ownership. Unfettered control of property is a transcendent American value to which nearly all other values are subordinated. The Constitution was written to protect property owners. Our corporate law has evolved to protect the interests of shareholders. And our patent law is designed to benefit inventors and not the society at large. There are great benefits to this orientation, like America’s entrepreneurial prowess and resultant wealth. But now this tendency is starting to look pathological—a disease for which Dr. Carson has no cure.
Christopher Matthews is a writer who splits his time between New York City and Accra, Ghana, with an interest in the intersection of markets, the economy, and public policy. He previously held staff positions at Axios, Fortune Magazine, and Time Magazine, and has been published in Forbes and Debtwire.