Must-Read: Chang-Tai Hsieh and Enrico Moretti: How Local Housing Regulations Smother the U.S. Economy

Must-Read: I could wish for a little more attention to the on-the-ground dynamics of local political economy. In California, it was the right-wing anti-property tax revolt (yes, I’m looking at you, Proposition 13, Jarvis, and Gann) that shifted local governments from being broadly pro-development to regarding developments as burdens that required more in services than they would pay in property taxes In New York (and, to a much lesser extent, Boston), it is an unwillingness to invest sufficiently in transportation infrastructure(yes, I’m looking at you, Chris Christie).

When I do Nimbyism in America: A Back-of-the-Envelope Finger-Exercise Calculation http://www.bradford-delong.com/2016/08/nimbyism-in-america-a-back-of-the-envelope-finger-exercise-calculation.html quick-and-dirty for introductory economics students, I start with this slide:

Thus there seem to me to be two problems: a NIMBY problem that afflicts Washington, Boston, and—overwhelmingly—San Francisco, and an infrastructure problem that afflicts New York, Boston, Washington, Chicago, and Philadelphia.

I should rerun the fit line excluding New York, shouldn’t I…

Chang-Tai Hsieh and Enrico Moretti: How Local Housing Regulations Smother the U.S. Economy: “For most of the 20th century, workers moved to areas where new industries and opportunities were emerging… https://www.nytimes.com/2017/09/06/opinion/housing-regulations-us-economy.html

…This was the locomotive behind American prosperity. Agricultural workers moved from the countryside to booming cities like Pittsburgh and Detroit. In the Great Migration, some six million African-Americans left the South for manufacturing jobs in cities like Chicago and Buffalo. What allowed this relocation to places with good-paying jobs that lifted the standard of living for families? Affordable housing.

Today, this locomotive of prosperity has broken down. Finance and high-tech companies in cities like New York, Boston, Seattle and San Francisco find it difficult to hire because of the high cost of housing. When an unemployed worker in Detroit today finds a well-paying job in San Francisco, she often cannot afford the cost of housing there.

New housing construction in America’s most dynamic cities faces growing regulatory costs, delays and enormous opposition from neighboring homeowners. Since the 1970s, a property-rights revolution — what critics call Nimbyism, from “not in my back yard” — has significantly reduced the development of new housing stock, especially in cities where the economy is strongest…