Questing for Atlantis

In Part I of this series we explored the shocking amount of arrogance and hubris it takes to think one can centrally plan the production of something as simple as a pencil, much less the land use policy of an entire state.

Part II was devoted to explaining how PlanMaryland is the natural culmination of individuals allowing the state to take the first steps into planning land use policy via zoning laws.

This final piece in the series is intended to be a preemptive response to the Chicken Littles who insist that without planning we would face horrible disasters, that we’d lose all of our open space or that the economy would crash or other equally horrendous visions.

First and foremost, I want to address the claims that government planning of land use policy is a necessary component of an orderly society and a functioning economy. Anybody who claims that is either lying or ignorant.

I know it’s a strong claim, but it’s a true one and we can know that because it’s been tried. Not only was it tried, it worked and has continued to work. Where you ask? Texas.

For all the talk of the “Texas miracle” on employment numbers, the real Texas miracle is in land use policy. In the Lone Star State counties are prohibited, by force of law, from implementing zoning codes and the state has shown no real interest in implementing anything of the sort at the statewide level. In fact, the only areas that have zoning controls in Texas are municipalities, and not even all of them have zoning codes.

And how has that turned out? In two words, quite well. By severely limiting the capacity of the government to plan land use policy Texas has ensured that it has a highly elastic housing supply that responds to shifts in the market faster and more efficiently than it did in other states. This in turn has had several positive impacts.

As former Center for American Progress staffer Matt Yglesias has observed, when government refused to use land policy controls to artificially limit the housing supply it resulted in much more affordable housing opportunities. Those prices helped draw people to Texas and thus ensure a better economy and lower unemployment through increased population growth:

What differentiates Texas from the rest of the United States isn’t an immunity to recessions, it’s a systematically higher population growth rate. That gap predates President Obama, predates the recession, and it predates Rick Perry, so I don’t think it tells us anything about any of those things. It’s driven, I believe, by proximity to Mexico and relatively cheap housing. This is to Texas’ credit. National living standards would be higher if the Los Angeles, San Jose, San Francisco, Seattle, and Portland MSAs along with the whole Acela corridor from Boston to Washington would adopt more robust Texas-style policies to increase the housing stock.

In addition to the key benefit of allowing the economy to grow, a lack of land use policy has also helped to insulate the Texas economy from the volatility that has rocked the rest of the country.

The above chart is the FHA’s Housing Price Index for Texas and Maryland running from 1992-2011. As you can see, Texas fared far better than my own state; by allowing the market to set the housing supply rather than government Texas largely avoided both the real estate bubble and the inevitable crash that followed when it popped. The evidence is clear – it is not returning control of land use policy to land owners that puts our economy in the hands of property speculators, it’s putting the control in government hands that threatens to derail our economy.

And the people of Texas recognize this. If government planning were as much of a no-brainer as its supporters claim it to be, then one would expect the people of Texas to resent their current policies. But that’s not the case. In Houston the voters have had three opportunities over the years to implement zoning and each time have soundly rejected it, most likely because they recognize that keeping government control over land use policy strictly limited is the secret behind Texas’ economic and job growth.

Moving away from claims of economic catastrophe, it’s my understanding that preserving open space is among of the arguments for PlanMaryland made by its proponents.

Unfortunately for them the claim that not having government plan our land use policy will lead to the complete destruction of open space is pure nonsense, nonsense that only makes sense if you suspend the basic laws of economics.

The issue is scarcity. The more that land gets placed into use (or bought up by conservationists intent on seeing it remain the way it is), the less land there will be available to meet demand. And as Econ 101 teaches us, when supply is reduced but demand stays constant, the result is increasing prices. Eventually the prices for raw land will reach an equilibrium where the natural price is too high to justify purchase for development.

The effect of this simple fact is amplified when one considers the degree to which current land use restrictions limit density. Most people like to live where there are other people and more services, opportunities, etc. available. That means building where there already is building. So why don’t people build there if the demand exists? For the simple reason that zoning laws and other restrictive land use policies prevent them from doing so.

From Matt Yglesias again:

If you go up to the Columbia Heights Metro station and then walk east just a block east you’ll be struck by the hard transition from the large-for-DC new apartments on 14th street and the low density structures right around them. What’s going on, you’ll wonder. What’s happened, simply put, is that you’ve moved out of an area zoned C-2-B and into an area zoned R-4. In R-4 areas, (including almost everything north of Euclid between 14th Street and Georgia Ave, pretty much the entire square between P, U, 14th, and 7th and many other parts of the city) you can’t build a house taller than 3 stories (or 40 feet), you can’t occupy more than 60 percent of your lot, and you can’t build apartments smaller than 900 square feet per bedroom.

As a result, even though these places have become much more desirable places to live, they simply aren’t allowed to accommodate very many additional residents. Instead of seeing new, denser construction to allow more and more people to live where they’d like, we see zero sum battles over “gentrification” as working class residents can’t afford new, higher rents. Meanwhile, the central city’s inability to accommodate all the people who’d like to live there puts enormous price pressure on the closer-in suburbs, pushing people who want the suburban lifestyle ever-further from the city center in search of affordable housing.

Once again, the evidence is clear. It’s not a lack of regulation and government control that is driving sprawl and leading to the loss of open space, it’s the policies themselves that are doing it. We need to have a little trust in individuals ability to make decisions for themselves so that, via their free choices, market forces can determine the real dynamic housing stock needed and in doing so both create better places to live that meet actual people’s real desires and still preserve open space.

This brings me to my final and really my most important point. When control of land use policy is taken from the land owners and put into the hands of government what it ultimately amounts to is, whether they be NIMBY neighbors or eminent domain wielding land grabbers, giving the powerful and well-off control over land use.

This inevitably is bad for the weak and least-well-off among us. In either case those who are well-off have more time to push for policies to their benefit, more knowledge of how to work the system, and more direct incentive to manipulate things in their favor. In contrast, the young, the poor, immigrants, and others less well-off are too busy trying to get by to speak out at hearings, they don’t generally have the knowledge necessary to fight if they did have the time, and more often than not, as people seeking the join the community of an area it’s easier to simply try and find somewhere else to live rather than fight against a system stacked against you.

The end result is that existing property owners are able to ensure stasis in the housing supply, stasis that drives up both housing prices and rents and drives out those disadvantaged types – the young, the poor, immigrants, and others who can’t afford to stay.

And that’s not even touching on the more insidious ways people use land use policy controls as ways to promote their own interests against less popular minorities.

Zoning laws are not limited to construction and development. They can control the smallest details and nuances of an owner’s use of his property, and they can be used for nefarious purposes even beyond the immediate violation of property rights, such as “banning” unwanted individuals. For instance, the city council of Manassas, Virginia, passed a zoning ordinance that restricts residence in households to immediate relatives, thus excluding aunts, nephews, cousins, and other members of the extended family—and the council acknowledged that the ordinance targeted Hispanics, who apparently were not wanted in the area.

And that is ultimately why I support returning land use policy control to the people. All of the other arguments are important, but the fact is that it’s wrong for existing home owners to be able to game the system to their own benefit and to do it on the backs of those least able to afford it and least able to fight back.

Taking back control of land use policy will lead to more robust property rights, reduce government intrusion into our lives, create a more efficient economy, and enable housing that better suits people’s needs and desires, but more than anything, the real benefit is that it will put everyone on equal footing to participate in the housing market instead of letting the rich and powerful use government to enshrine themselves as the winners.

In the previous installment, I made clear the unbelievable amount of arrogance it takes to think that the production of a single pencil could be centrally planned, much less the land use policy of an entire state.

However I also made the more controversial claim, that Gov. O’Malley doesn’t deserve all the blame for implementing such a foolish plan, that we all need to take ownership of this folly.

To understand why, look back to our friend the pencil. Remember how complex the process of his manufacture is? And think about how much more complex it is therefore to make something much more complex, like a house or a community.

Nobel Prize winning economist F.A. Hayek had many great insights, but his greatest insight was with regards to the astounding complexity of our economy, the ways in which it spontaneously ordered itself, and the folly of trying to centrally plan that economy.

Simply put, Hayek’s great insight was that the economy, and even small sectors of it, are too complex to be centrally planned. The myriad needs and desires of all the individuals who make up the economy simply present too many variables to be accounted for by any person or board.

As a result, when such central planning is attempted, it will inevitably fail. Planners will allocate too little in one area, too much in another, ignore people’s desires and instead force their own preferences. And when the planning fails, how do the planners respond?

Once in a blue moon, they recognize their mistake and roll back their initial planning, allowing the spontaneous ordering of the market to address the issue. More often though, they insist the failure was not theirs, that all that is needed to fix the problem is yet more planning.

In this way, planning begets yet more planning, and what started as relatively minor and benign escalates into massive assaults on individual liberty.

The situation is no different here in Maryland. PlanMaryland did not emerge out of whole cloth from the ether. It is the product of a natural evolution that began the day Marylanders accepted government planning of land use policy via zoning laws and other ordinances controlling land use policy.

Had we protested earlier, refused to accept the lesser invasion of private property rights, then we would never be facing the much larger assault that is PlanMaryland. But it’s not too late, we can fight off PlanMaryland, but we can’t stop there, we need to continue to push forward and rollback zoning ordinances, comprehensive plans, and all the other intrusions on the free exercise of private property rights in Maryland.

And contrary to what some might say, not only can a place survive without government planned land use policy, it can thrive. I’ll explain that in Part III.

Now that Gov. O’Malley has implemented PlanMaryland via executive order, more than a little ink and plenty of angst has been spilled over it.

It’s been declaimed as part of a War on Rural Maryland, an example of executive overreach, an assault on private property rights, and an effort to undermine local planning boards. All of these are true characterizations of PlanMaryland, but they’re also all wrong.

Alright, they’re not exactly wrong. But they miss the real problem and in doing so the obscure the real issue with PlanMaryland. Simply put, the real complaint against PlanMaryland isn’t what it proposes to do, it’s that it proposes to do.

Take a moment and pick up one of the pencils that is undoubtedly on your desk. Consider it for a moment. Just how did it come to be there?

This is a question explored in the famous essay “I, Pencil.” As Leonard Reed, its author explains, not a person in the world knows how to make a simple pencil. Simply obtaining the raw wood alone is a monumental task, requiring the coordination of hundreds of people and skills – not just to cut the wood, but the mine and smelt the saws and other tools, to grow hemp and make it into rope, to run and maintain the lumber camp, even to make the coffee the lumberjacks drink.

As a simple a task as that would seem, it only continues to grow more complex. To transport the wood, to mill it, to fill with graphite and finish the pencils, to ship it to stores across the world, to produce the energy that powers all of this and to generate the capital that finances it all – all of this involves the unplanned coordination of untold thousands and thousands of people.

With such awe-inspiring complexity, what person in the world could ever make a pencil on their own. And in a vacuum, without the way having been shown first, what person or even group of people could ever centrally plan the process? What minds could ever conceive of, much less manage such an intricate and intertwined system, one that spans not just countless humans across the globe but across time as well.

The answer is simple, none could, and only a fool would think they could.

But if the creation of a pencil is such a complex process, how much more complex is a whole house. And how much more complex a community, or the network of communities we call counties? And for someone to think that one person or even a committee could mastermind the collection of counties we think of as a state?

What hubris. What bald-faced arrogance.

But, in spite of his egotistical belief that government is up to the task of capably managing a system of such infinite complexity, Gov. O’Malley doesn’t deserve all the blame. We all need to accept our share as well. I’ll explain why in Part II.