Tuesday, February 01, 2005
No trade-offs here
Land use regulations crimp supply and push up housing prices. It's a no-brainer but it always helps to have hard evidence to assure that nothing is overlooked when applying Econ 101. Some of the evidence is presented in a recent paper by Glaeser, Gyourko and Saks.
I have never been able to understand how so many people can voice concerns for the plight of the poor and at the same time champion highly regulated land markets. They seem to resolve the paradox by insisting that "affordable housing" be mandated -- when not directly supplied by the state. But these approaches also have repercussions and costs.
But they also expand the role and reach of the state and, perhaps, that is what is so attractive. Expanding the role of the state, they enlist developers who are attracted to what is proferred and who reciprocate, etc.
The textbooks highlight equity-efficiency trade-offs. There are some, to be sure. Yet, these are mainly absent from the world of policy, where we simply get less of both.
