On market urbanism, zoning, and freedom

An article on market urbanism, a movement of libertarian-thinking (or leaning) urbanists whose essential case is that suburban sprawl, and other inefficient land use forms, are in significant part the result of zoning codes, parking minimums, and other legal intrusions into the marketplace.

This post, admittedly, is inspired by a brief conversation over in the February 2011 open thread on the merits of zoning, centered on an Edward Glaeser article criticizing land use laws in many cities restricting the supply of skyscrapers.

The subject today is therefore market urbanism, a movement of libertarian-thinking (or leaning) urbanists whose essential case is that suburban sprawl, and other inefficient land use forms, are in significant part the result of zoning codes, parking minimums, and other legal intrusions into the marketplace. Rather than being a response to the demands of a “free market”, as many defenders of suburbia (including many other self-described libertarians) like to assert, market urbanists claim instead that suburbia is in fact codified and mandated, and propose that by merely rescinding or loosening this legal regimen, that more sustainable development patterns will result.
There are many notable writers on the subject, among them:

The Zoning Debate

One area of public policy where market urbanists certainly have a point is the subject of zoning. The Nobel Prize-winning economist, New York Times columinst, and self-described liberal Paul Krugman wrote several columns (in 2005 and 2007 respectively) in which he partitioned the US into what he termed “flatland” and the “zoned zone”, roughly corresponding to the interior of the country and the coastal regions. Krugman then noted that the housing bubble (which was starting to burst by 2007) was more pronounced in the “zoned zone”, a phenomenon that he attributed to more stringent land use regulations that restricted the supply of housing, driving up prices and creating the conditions necessary for an asset bubble. Many conservative/libertarian writers, including Randall O’Toole, have extrapolated Krugman’s columns to a broader claim that land-use laws were the primary cause of the housing bubble (and some go so far as to blame the subsequent near-collapse of the financial markets on land use regulations). The columns have been criticized in some quarters; a common question is how Krugman’s model accounts for cities like Phoenix and Las Vegas (Krugman responds here). My biggest beefs with the column itself is that it fails to control for other aspects, such as the state of the economy generally and the levels of organic demand needed for a bubble to start–the reason there was no housing bubble in Detroit or St. Louis or Buffalo has little to do with a land-use laws or a lack thereof.

However, I have one other (minor) criticism of Krugman’s work here: Zoning, strictly defined, is not the problem. (Krugman’s a sharp enough fellow that I suspect he knows this and was merely using “zoning” as a metaphor; though I’m less certain about many of his readers and critics). All major US cities not named “Houston” have zoning, and Houston has other regulatory regimes (and aggressive enforcement of covenants) which have largely the same effect. More to the point, many of the cities where bubbles didn’t occur have widespread zoning laws which essentially mandate the creation of low-density suburbia, prohibiting more compact urban forms which allow the placement more dwelling units within a given area of land. The vast majority of zoning regulations specify maximum densities, not minimums, and thus act to restrict the supply of housing within a given area. The biggest difference between places like Atlanta and Portland isn’t what’s permitted within the urban footprint, but the rate at which that footprint is able to grow. And while Oregon’s land use laws constrain the power of zoning boards to change zoning (upzoning lands outside of an urban growth boundary is seldom permitted), the nexus of the constraint lies elsewhere. (In some cities, geography or nature rather than law limits the growth of sprawl). Within the “zoned zone”, there was lots of construction going on in response to the ridiculous levels of demand that occurred during the bubble (and this is a necessary condition for a bubble to occur–massive overproduction in response to the rising prices). The difference between Portland and Atlanta in this regard is that here, homes here weren’t being built on quarter acre lots. Places, like San Francisco or Manhattan, which have truly constrained supplies of housing, haven’t seen crashes in the housing market. (Real estate in both locales was expensive before the crash, and remains so now).

The freedom to not live near renters

Yet in many quarters, the notion that zoning (and land-use regulation in general) is somehow a pernicious tool of urbanistas looking to force everyone into “Soviet-style” housing (the Soviet Union has been dead and gone for nearly 20 years, yet still is routinely invoked as a strawman), remains a common belief; as is the belief that suburbia is the “natural” state of affairs in a free country, and other urban forms result from market distortions and unwarranted political interference.

In 2007, the GOP-controlled Virginia General Assembly passed a law requiring counties to designate so-called “urban development areas”, areas within the county boundaries which would be upzoned to a higher density than commonplace. The law doesn’t require any higher density development (or redevelopment) to actually occur; no restrictions are imposed upon property owners. (In fact, the affected owners have restrictions eased somewhat, as the number of dwellings which are permitted increases). However, a conservative political group, the Roanoke Tea Party, is sponsoring a new bill (HB1271) in the General Assembly to essentially make the provisions of the bill optional–and many other conservative organizations, affiliated with the broader tea party movement, are lending support. Their arguments, unsurprisingly, are couched in terms of liberty. Quoting from their website:

Speaker Howell [William J. Howell, a Republican] is siding with big corporate developers and eco-extremists to rob you of the right to own and control the use of your private property. He is blocking a critical piece of legislation that is vital to preserving the property rights of every Virginian. If he has his way, you’ll be forced to forfeit your land in the suburbs for the development of high-density ‘urban development areas’ also called ‘smart growth’. This is a gross violation of property rights. The inalienable right to own and control the use of private property is perhaps the single most important principle responsible for the growth and prosperity of Virginia.

Virginia Campaign for Liberty is leading the charge against one of the most egregious schemes the political establishment pushes to control our lives and bankrupt our communities. I am talking about the land use provisions imposed on us in 2007 that Speaker Howell was instrumental in getting passed into law. These provisions are now being used by special interest groups to tag team Virginians with abusive regulations to strip you of your livelihood and property. You see the corporate developers stand to gain high profits from the construction of up to twelve homes on a single acre of land. They also get huge tax breaks for their green building practices in the “new urbanism design”.

Eco-extremists are heavily funded for their lobby effort to grab and preserve up to 90% of all the land that would be off limits to humans and move you into government controlled high-density feudalistic transit villages. They use global warming and environmental disaster to scare the citizens and politicians into abolishing private property ownership. If they have their way, single family homes will be a thing of the past. We’d become mere lease holders of the homes we live in.

The land use provisions passed in 2007 mandating “urban development areas” enables corporate developers and eco-fanatics to capitalize on your loss of property ownership. You and I have an opportunity to stop this violation of our property rights if we can get HB1721 to the floor for a vote and ultimately passed into law. HB1721 would simply make “urban development areas” optional rather than mandatory.

If passed, the decision whether or not urban development areas are appropriate for the community would be kept local where it belongs. It is essential that vital planning decisions for communities stays local, and not in the Capitol, where they can easily be manipulated by nefarious special interests.

Please join me in the fight to pass this crucial legislation! Contact Speaker Howell today and tell him to stop blocking a vote for HB1721. You can contact him by phone at [redacted] or email [redacted].

The right to own private property is as sacred as life and liberty. You either have the right to own property or you become property.

It goes without saying, of course, that the despised law in question does not have any of the effects alleged by the Roanoke Tea Party. It doesn’t impose any regulations, or require homeowners or developers to do so much as lift a finger. It has nothing to do with the spectre of “Eco-extremists” trying to “grab and preserve up to 90% of all the land that would be off limits to humans and move you into government controlled high-density feudalistic transit villages.” It only requires that zoning restrictions be loosened in a few areas–yet this is painted as a grievous assault on civil liberties. The Roanoke Tea Party seems terrified of the “urbanist” bogeyman, a straw-man commonly conjured up in such diatribes that paints environmentalists and their allies as an unstoppable (even in a conservative state like Virginia) juggernaut which will destroy civilization as we know it the moment that a downtown highrise condo is built.

But the only freedom being threatened is, as Conor Friedersdorf so brilliantly noted, the “freedom to not live near renters”. As noted in a prior article here, many land use regulations aren’t implemented in order to increase density, but instead to limit it in order to keep out the riffraff by pricing them out of the market–in particular, to prevent the construction of apartments, which might cause poor people to move to the neighborhood. (And there is evidence that anti-density zoning contributes to other social problems as well).

There has been much debate over the proposed Virginia legislation in market-urbanist and libertarian circles. David Alpert of Greater Greater Washington criticizes the Roanoke Tea Party for a blatantly “statist” piece of legislation (for those unfamiliar with libertarian dogma, “statist” is a not a nice thing to say). On the other hand, Marc Scribner from the Competitive Enterprise Institute expresses some concern with the 2007 law, claiming that it doesn’t go far enough in undoing zoning and other land-use laws, and that it doesn’t protect affected landowners from “eminent domain abuse”–he’s concerned that upzoning might be followed by condemnation were affected landowners to decline to (re)develop their properties voluntarily. (The law is silent on the subject, and AFAIK no such condemnations have occurred).

However, no non-tea-party affiliated libertarian groups have come out behind the bill, to my knowledge. One interesting thing about the above-cited rant is its frequent anti-corporate language–according to the theory, big business is in league with the political left to screw hardworking Virginians out of their birthright. (Which ought to be news to both big business and the left, who seldom cooperate on anything.) And the non-libertarian right is fond of inverting concepts of freedom and liberty in other contexts as well–the Civil Rights Act of 1964 and other anti-Jim Crow legislation were opposed on grounds such as “states rights” and “freedom of association”, and many religious conservatives oppose recent expansions of gay rights as an affront to their religious liberty–essentially asserting that in the name of religious tolerance, those so inclined should have the right to practice discrimination in the public sphere, as allegedly required by their faith.

The other side

The market-urbanist position, however, does not enjoy uniform support from the US libertarian movement. Many writers claim that low-density suburbia is a widely-preferred development form in the US, and arises primarily due to consumer choice, and that land-use policies in many cities (as well as other policies, such as the mortgage interest deduction) simply codify what the bulk of consumers want. USC professor Peter Gordon writes, in an interview with Reason Magazine:

Compact cities are archaic forms, and they are not coming back. When you study the economics of location, all the textbook models say a firm wants to locate near the urban core or other advantageous sites, and workers must make their living arrangements so that they are close to their jobs. That may be the way it was once upon a time.

But all these firms have become much more footloose. And they go where the workers want to live. The orientation has flip-flopped. Even manufacturing businesses are no longer locked into specific sites, so they have more locational choices. They want to go where the labor force wants to go. The workers and their families want to live where the land is cheap and the air is clean and the schools are good and there are high amenities and so forth. There’s a lot more spatial flexibility than ever before, and the consequences are pretty benign.

Another “sprawl supporter” is ex-Portlander and noted transit/urbanism critic Randall O’Toole, who also writes under the nom de plume of The Anti-Planner, summarizes the argument that sprawl is natural and good for you here, taking a few swipes at market urbanism for good measure. He concludes with:

Sprawl is not the result of central planning and libertarians need not hesitate in their opposition to smart growth. The real hypocrites are the so-called progressives like Yglesias who claim to care about low-income and disadvantaged people yet support policies that will prevent most such people from ever owning single-family homes.

O’Toole does embrace the reduction of zoning laws, while calling for increased use of deed restrictions and covenants (as is done in Houston) to promote the same effect of ensuring neighborhood “stability”.


My first observation is to note that as far as the intra-libertarian arguments go, I don’t really have a dog in that fight. I’m not a Libertarian, and don’t start from the political axiom that government and law is bad until proven otherwise. So whether Glaeser and Ryan are more in line with libertarian dogma, or Gordon and Randall, I don’t much care. However, in terms of describing reality, I think the market urbanists are closer to correct.

While there certainly is a market for detached single-family homes on large lots (many people with sufficient income to live wherever they want choose suburbia), there’s a market for high-density urbanism as well, especially when co-located with high-quality urban amenities. However, there are a lot of forces at work–and not just legal codes–which tend to encourage suburban development. Cheap(er) construction costs in areas where land is not scarce. Much more stringent building codes for multifamily housing. Lending and finance policies, and numerous government subsidies, which encourage home ownership. Historical (albeit now illegal) practices such as redlining. And the longstanding phenomenon of capital flight–migration of people with money out of political entities containing poverty, into separate entities where it is excluded. And yes, many residents of lower-density housing prefer to avoid any higher-density housing nearby, particularly if it consists of rental units.

Furthermore, many of the other benefits assigned to suburbia don’t really have anything to do with density itself, but with other factors. “Good schools” essentially means “few poor people in the district”; likewise with observations about amenities. “Clean air” was truer back in the days when point-source industrial polluters were routinely located in downtowns, but is far less true today; transport-related pollution is easily worse in suburban areas than downtown. (Air pollution from cars downtown is frequently a problem, but one frequently caused by suburban commuters).

The interesting question, though, is one posed by the Roanoke Tea Party’s panicky broadside, and by O’Toole’s missive, and one which ought to give pause to those who claim to value liberty: To what extent should one property owner be able to restrain his neighbor? Some uses are fundamentally incompatible, of course; but many of the arguments about “stability” or “neighborhood character” strike me as questionable–to what extent should a homeowner have to expect that his neighborhood not change, and how far should those rights extend? Deed restrictions, arrangements which are typically imposed on a neighborhood by its initial developer, rather than negotiated and agreed to by neighbors acting at arms length, are very difficult to get rid of, and frequently used for far more nefarious purposes than simply keeping out renters. On the other hand, issues of safety and fundamental incompatibility are easily dealt with via general nuisance laws and building codes.

6 responses to “On market urbanism, zoning, and freedom”

  1. This is a great summary of the debate – especially for being written by a non-libertarian!

    I’d like to note that while I wrote most of the older posts, most of the recent posts at Market Urbanism are by Stephen Smith, who also writes for Reason Magazine.

  2. You are absolutely correct that zoning is used as a tool to limit development and any attempts to ease the regulatory burden on property owners is taken as an attack on the chosen lifestyle of those who support the regulations (and these are often so-called libertarians and conservatives! what gives? where is the ideological consistency?). Zoning artificially inflates property values, because you can’t increase the supply of dwellings on the available land to match demand, and this prices out the undesirables. Thus, the approach should be for progressive cities like Portland to ease the regulatory burden, enabling development at greater densities, thus increasing supply of housing stock to allow property values to fall in line with demand. The key is that this can’t just happen downtown, in the Pearl, and in SoWa, and the increased supply can’t consist exclusively of luxury condos or 300 square foot efficiencies. We need large swaths of land all across the city to be “un-zoned” to allow the market to react organically to the increased demand.

    While I don’t identify myself as a libertarian either, I do agree with the Market Urbanism crowd on almost all counts. Generally speaking, when a regulation is not needed to prevent certain activities, then that regulation is likely not necessary. Over at Market Urbanism (the blog) they often decry the pendulum swings of regulation: for example, switching from parking minimums to parking maximums, without first seeing how things go in the absence of regulation. The idea that developers will go from building just enough parking spaces to meet the minimum to suddenly building too many spaces in the absence of a maximum seems kind of silly. What is it? Is the natural approach to build too few spaces or to build more than will ever be needed? According to (over-)regulators, the natural approach for developers is to do everything completely wrong without considering the return on their investment. Which seems silly.

    I tend to agree with this concept, but unfortunately, the mandate of suburban development has been codified for so long that it’s all we know anymore. To the point where a suburban home and two cars is now sacrosanct, a birthright, “The American Dream,” the desirable choice (although a “choice” where alternatives are outlawed, how very American). Banks often won’t lend to developers for mixed-use developments, because banks are typically very careful with their money and only make loans for what they know works (or for what is properly insured by the government, i.e., Fanny and Freddie, which promote ownership of single family dwellings over multifamily), which, based on the last 50 years, is low-rise single-use development.

    However, this is where I break with the market urbanists: during a transitionary phase, I believe it makes sense for government to incentivize development for which there is a gross undersupply to show that it can be profitable, thus making it more attractive for private investment. The trouble is knowing where to draw the line, because developers begin to expect the incentives, and then it starts to look like these developments wouldn’t succeed at all without “taxpayer handouts.”

  3. Recently I attended the a Friday Seminar at PSU where a ODOT planner commented roughly, “the one thing my professors at Texas A&M said that stuck with me was that, unlike in the Soviet Union, in the United States we let people’s desire through the market decide planning. People want to purchase cars so we design our cities around those purchases.” In response Joe Cartwright who was giving the presentation made a simple case that even car purchase demand is induced by some form of policy.

    My problem with libertarian logic is that it’s fundamental criteria is that free markets can exist (maybe they do in Somalia). But that even if they could, would they produce the outcome that promotes good things like culture, art, and education. There is no guarantee. I think the best we can do is come up with good policy that enables regulated markets to produce desirable outcomes.

    To disagree with zoning by virtue that it is not free market enough is useless. To get to a place where housing could truly only be determined by this virtue would require a radical revolution of our entire economic structure. You would need to return to some sort of gold standard (so that money would not be determined by a federal reserve) and there could be no more large public works projects that would unforeseeably alter the price of real estate. Most fundamentally you would need to get ride of all inheritance. Only then would the virtue of the market be able to pick it’s most virtuous/profitable members. In the libertarian society Paris Hilton might not be worth as much as she is. The thing with libertarianism is that in order for it to work everything has to be determined by the free market. As soon as something is not the “virtue” of the system is removed.

    When Joseph says, “We need large swaths of land all across the city to be “un-zoned” to allow the market to react organically to the increased demand.” I take offense to the idea that “markets” are somehow “organic” implying that they exist in the natural world. Markets are the result of people with various starting income levels making decisions with imperfect information. A millionaire has one million votes to determine the “organic” nature of development, while someone making $10,000 a year only has 10,000. Markets exists within previous power structures. Good policy in a “democracy” understands those power structures and aims to create policy that is fair to all members of that society equally.

    Maybe we could create a society with less sprawl if we adopted more libertarian measures, maybe not. But by removing the ability of government to regulate and zone land we are placing all our “faith” (in the strictest sense of the word) in the hands of those with the most money, whose only virtue is to increase that pile of money. I’d rather place my bets on public institutions.

    • 2 things:

      1. A land value tax would do much to change rent-seeking behavior.

      2. You seem to propose that the collective decision making of a market (voting with money) is more mislead than the decision making of the government. That is pretentious and elitist. Zoning is effectively a tax on EVERYONE ELSE by the rich, so I really don’t understand what you are getting at.

      • FYI, the “Bob”, posting above, is not me. In the past, I frequently commented here as “Bob R.” and with the move to the new blogging platform if I’m fully logged in when I comment you’ll see my full name.

  4. unlike in the Soviet Union, in the United States we let people’s desire through the market decide planning. People want to purchase cars so we design our cities around those purchases.

    That mentality creates a self-fulfilling prophecy. You design around cars, resulting in cities so nobody can get around without a car. People thus are deprived of their choice to live car-free; while they could theoretically do it, they will be denied full participation in the benefits of society. Thus, everyone is forced to buy a car, find someone to drive them everywhere, or become a second-class citizen.

    Planning should accommodate cars, not (pardon the pun) be driven by them. Sadly, ODOT has a long tradition of not recognizing that.

Leave a Reply

Your email address will not be published. Required fields are marked *