The state against the urban poor


Mark Pennington has a good post today on the Pileus blog on urban planning. Although the “public interest” is usually invoked to justify planning laws, he says, they actually have the effect of protecting the rich (who are effective at lobbying politicians) at the expense of the poor (who aren’t):

Urban planning has often prevented low income people from accessing housing in suburban and semi-rural areas where new and better paying jobs have been created. The primary culprit here has been restrictive zoning regulation – and in the British context the creation of development free ‘green belts’ around major towns and cities (now imitated by some US cities such as Portland).

The effect of these controls has been to restrict the supply of land for housing forcing up the price well above free market levels. The major beneficiaries are of course existing home-owners in areas of high housing demand who benefit from increased property values and who use land use regulation to keep out ‘less desirable’ residents.

In the hands of those who know how to use it, the state is a weapon. Planning laws are a good example of its subtle use by powerful interest groups. They effectively control the supply of desirable property, so that the owners of those properties can earn monopolistic profits. As with the barrier-to-entry laws that protect established corporations, planning laws protect property owners.

This is not to say that there should be no controls on urban planning, says Mark. But it may be that private, contract-based controls are more effective than state controls in getting people what they want:

If we want to protect open spaces and other environmental assets then land use regulation has a role to play – but much of this can be provided privately and need not operate in a zero-sum manner. Homebuyers who value open space protection and other environmental controls, for example, may purchase developments with restrictive covenants or contract into private communities which impose land use restrictions on plots within their domains in order to maintain neighbourhood integrity. . . .

All the evidence suggests that the demand for environmental protection is closely related to income. The rich and the middle classes have a stronger preference for land use controls than the poor. What state enforced, as opposed to private urban planning enables them to do, however, is to secure access to environmental quality ‘on the cheap’ and to do so at the direct expense of lower income groups.

This point cannot be underlined enough. As desirable as certain urban planning rules may be – height restrictions to allow more sunlight in residential areas, say – they have an opportunity cost and are often unjustifiable if that cost pushes housing out of the reach of poor people.

I recommend the whole piece, where Mark explains the public choice roots of Britain’s planning laws. The squeaky wheel gets the grease, but it isn't always the one that needs it.