Let us talk about zoning regulations

Though we don’t notice it in our everyday lives — it’s hard to see construction not happening, after all — the rise in regulations governing land use in our nation’s largest cities has had an enormous impact not only on the economic and physical geography of the United States. Were American cities less rife with regulation, they would be larger, more vibrant, and more productive — economic powerhouses ideally equipped to engage in the ruthless international competition that characterizes the modern economy. Wages would be higher, housing prices would be lower, and the patterns of American life across the country would look very different. Those are the conclusions of a recent paper exploring the economic consequences of the rise in zoning regulations since 1980. The main problem with excessive zoning is that it imposes barriers to entry in particularly productive economic markets, prohibiting an efficient distribution of people across urban areas. This hurts both city-dwellers who pay inordinately high rents and those Americans who are unable to move to the city in the first place. In the language of economics, they cannot take advantage of the “agglomeration effects” that occur in areas of human concentration, in which each additional person contributes to a whole greater than the sum of its parts.