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My reading of the literature on urban economics (and migratory patterns of humans for 10,000 years) is that the net effect of people moving into cities is positive. Even as urban living introduces a whole host of difficult to bargain externalities, the peer effects, network effects and other agglomeration effects of living in big cities seems to outweigh those challenges.

I don’t want to debate whether that is true, or the implications of more urban living for liberty (wouldn’t it have to be negative?), but simply want to ask a policy question. Given the huge potential economic advantages of having people live in cities, why do we not see a bigger push to subsidize the moving expenses of people who live in rural areas? Further, or more important, why is federal policy silent on the prohibitions on the supply of housing/living space in the most popular cities? After all, if there are huge gains to living in NYC, yet the cheapest place to live, even when sharing, is a zillion dollars per square feet, would it be wise for the Feds to step in and overturn zoning restrictions, force the production (massive production) of additional housing units?

Are there folks advocating this? After all, this isn’t like some wild libertarian fantasy I am asking about here. Would any of my readers support this? I find local zoning regulations to be onerous, but I also find that they likely reflect the preferences of a large majority of constituents in those areas. And so long as there is a sufficiently large number of different places to live with sufficient variations in the strictness of regulations, I am not sure I’d want the Feds to step in. But I don’t really know how I ultimately weigh in here.

One Response to “Urbanization and Externalities”

  1. Rod says:

    Back in the 80’s, I was a township supervisor. In Pennsylvania, townships are the municipalities that encircle boroughs, just as in New York towns encircle villages. I ran against the former chief of police, who wanted to bring back the police department and levy the property taxes that would pay for it. I was the “no police, no real estate tax” candidate, supporting the decision of the supervisors two years earlier to disband the police department and to reduce the township’s real estate millage to zero, from seventeen mills.

    I also ran on the principle that the township’s main responsibility was taking care of the roads, and that the township should not think up new things to do unless they were absolutely essential.

    I out-polled everybody on the ballot, and I took that as a sign that the residents of the township did indeed want minimum government. One fly in the ointment, however, was zoning, a power that can really have a profound effect on people’s property rights. When I got on the board, our planning commission deliberately set out to test the limits of our land use ordinances — the zoning ordinance and the Subdivision and Land Development ordinance. Their view was that it was the township’s prerogative to extend their power as much as possible to limit property rights.

    This extreme point of view was also pushed by our county planning commission, which was populated with bureaucrats who resented having zoning power held by the hicks in the various municipalities. After all, they had degrees in municipal planning and knew best how to make everyone behave. At the time, it was all the rage to encourage “clustering” of housing to pack building lots into little villages and to extort “contributions” of “open space” to the township or to such goody-two-shoes organizations as the Montgomery County Lands Trust. Clustering was supposed to discourage “sprawl” — a thing most dreaded by planners. The only problem was that few developers wanted to do clustering, and the people buying homes loved sprawl. To a Philadelphian who had spent his life in the city close next-door to his neighbors, a house with a yard, a pool, a place for the dog to run, and a place for the kids to play was paradise. Riding the R-5 SEPTA train to work was a small price to pay for a home that was really like a castle.

    Another thing that zoning was used for was to keep “undesirable” uses of property like junkyards and adult book stores as far away as possible. The problem was that the Pennsylvania Municipalities Planning Code requires that each municipality provide a zone for those obnoxious uses (which can include low-income housing), or otherwise a developer can claim that there is a defect in the zoning code that can be cured by a “curative amendment” that places that use right where the developer wants it. Thus municipalities that try to get away with restrictive zoning can get burned pretty bad.

    After I left the board, supervisors who were really opposed to private property rights replaced me, and they also appointed a planning commission that declared that nobody would be allowed to develop land anywhere in the township. The reason for their taking this irrational and extreme position was that Panda Energy, a privately-held merchant power company wanted to build a four-unit combined-cycle gas-fired electric power plant near the little village of Palm. Our zoning code said that “electric power generation was a permitted use in our LIC (Light Industrial/Commercial) zone. I was on the board when we wrote this into the zoning ordinance, as we were considering a trash-to-steam power plant to solve our own trash disposal instead of having the county send all of the county’s trash to Upper Hanover. At any rate, Panda became one of the most important zoning hearings in Pennsylvania, and Paul McHale, our former congressman and the only Democrat to vote to impeach Bill Clinton, was the lead attorney on Panda’s side.

    Palm, by the way, is near Hosensack, a little village in Lehigh County where 600-kilovolt power lines from Met Ed, Philadelphia Electric and PP&L intersect. In the world of electric power, Hosensack ranks up there with Niagara Falls, Boston, Newark and other major junction points. Also, a mile from Palm is the Texas Eastern Gas Pipeline.

    At the same time, if Panda had been built, it would have dominated the landscape and would have been located just a quarter mile from my church. It was a mistake to zone that land LIC.

    Fortunately for everybody, Enron’s collapse dried up financing for merchant power companies on Wall Street, and Panda was unable to renew their shelf registration of a $450 million limited partnership. Panda was winning the case, but they just walked away.

    So does zoning ever work they way people intend it to work? As I said, it was a big mistake to leave the door open for Panda in a zone next to the church. It is just as objectionable to me that the zoning ordinance keeps farmers from selling their land that lies across the road from neighbors who have gotten used to the view and consider it their right to use the zoning law to prevent Farmer Wood from spoiling the view. I also despise the practice of writing bad zoning laws that require developers to seek relief through bribes (AKA “contributions”). Zoning laws should not be used as a lever for something else, and the average person should be able to file for a subdivision and get things done in a reasonable amount of time.

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