Update: Yglesias responds here.
Matt Yglesias‘s ebook, The Rent is Too Damn High, tells the story of how high housing costs have profound negative impacts on our society. Yglesias explains how current attempts to deal with the issue are inadequate, and how restrictive zoning laws and regulations are severely restricting housing supply in America’s coastal cities, thus driving up housing costs, and hampering the economy by limiting the number of people who have access to high-productivity locations. Long-time readers will be familiar with the arguments against NIMBYism and zoning, and I won’t re-tread that territory here. The Rent is Too Damn High is a thorough walk-through of the arguments in favor of urbanism, and is a great companion to Ryan Avent’s take on a similar subject in The Gated City.
Yglesias’s straightforward prose is an asset, covering the core concepts simply without over-explanation. He provides clear examples and suggestions for improvements on topics ranging from rent control, to buying versus renting, migration to the Sun Belt, and what underlies gentrification. He also finds it curious that there’s no clear coalition around density (a topic of some debate here recently) from both the right and the left. RITDH can be humorous at times as well. When discussing how rent control policies aren’t a good long-term solution to high rents, Yglesias quips “The primary sufferers from the policy are the hypothetical people who haven’t been able to move to the rent-controlled city. But guess what? Those people can’t vote — they don’t even live there!”
As a narrative, the book reads a bit disjointed, mostly suffering from a focus on brevity. It jumps from topic to topic leaving the reader to discover how a passage fits in the overall narrative – and some passages seem to not fit. The chapter on “Investing in a house” is neck-jerking roller-coaster through depreciating manufactured goods, timber shortages and people’s desire for larger houses that finally lands on how “investing” in a house can make sense because of the land it’s built on. It’s a great read, but the chapter never quite fits into the larger narrative of how housing supply is serious issue.
The book is short on elaboration and attempts to deal with counter arguments. Yglesias said on his blog that he “didn’t pad it out with a lot of to-be-sures and efforts to guess what objections people will have” and that he’d rather the conversation take place on the blogs. Well this is a blog, so here are my questions and issues with the book.
Yglesias focuses much of his energy discussing building heights, which I’ve said before is a fairly lazy way of considering density. Kowloon Walled City achieved a density of 3.25 million people per square mile without a single high-rise. Of course we don’t want to live like that, but you can achieve fairly extreme densities without tall buildings; not all tall buildings are dense, nor are all dense neighborhoods tall. Yglesias briefly mentions other restrictions – such as parking requirements – but makes no mention of regulations that restrict supply based on costs, possibly by making construction very expensive with lots of rules and review policies and the like. Anyone who remembers the “Mosque at Ground Zero” controversy knows the issue wasn’t that they weren’t allowed to build a tall building, or that historic protections prevented them from building in the style they wanted.
I think this is where a lot of the low-hanging fruit of housing supply lies. It is easily to imagine a situation where you had land where you could build a much bigger building legally, but the paperwork, codes and by-laws were too burdensome to make the project worth while. A friend of mine wanted to construct an accessory dwelling unit in his back yard in the Central District, but when faced with the paperwork and permitting, decided that it wasn’t worth the effort. If more dense development in expensive cities is a policy goal we want, then we should think of these other ways of inducing the construction and increasing incentives. Obviously current zoning in Seattle allows for a lot more development than is being realized; there are two huge empty holes in the ground downtown where skyscrapers could go up. There are also dozens of parking lots throughout the city where dense development could happen. There have to be more reasons than just zoning that these haven’t been developed, and we should explore what these issues are.
There’s also a little bit too much Econ 101 “common-sense” for my tastes. There’s a hand-waving argument that a you will be “motivated to find a new employer” if “you’re producing much more value than is reflected in your salary” which ignores the fact a worker may be more productive depending on the employer: even though LeBron James isn’t earning anywhere near is productive capacity (thanks to a salary cap), he won’t quit and play ball in China because he’d get paid even less playing in a place where he’s less productive. It also ignores the fact that not all skills are completely transferable. This would be fine as an example, but the argument doesn’t really add much to the book and is completely at odds with the arguments Yglesias made elsewhere that moving to more expensive locations makes you better off.
Yglesias also picks and chooses which economic reasoning he likes based on his stated preferences, which is fine as far as an explanation of a philosophy, but is troublesome as an argument for policy. He says “[i]f people have strong feelings about not wanting to live on the same block as a tall building, they can move or they can pay what it costs to make it worth a neighboring property owner’s while to avoid building taller.” The fact the neighbor doesn’t want the tall building is a cost that is not transmitted in the price in this case, and is called an externality in economics. If the tall building blocks sunlight on the unhappy people’s property, or it increases noise pollution or whatever, that is a cost to those people. I don’t personally believe we should compensate people for shadows, but the argument reveals there’s no attempt to make an even-handed survey of land-use issues.
More broadly, there’s a fundamental issue that is missed in this book. Four hundred years ago, a few dozen people lived in Manhattan and Peter Minuit famously bought the island from the Lenape people for 60 Dutch guilders. In 1848, only a thousand or so people lived in San Francisco, and nearly no one in San Jose, Mountain View or Palo Alto. These two most expensive of American cities (not to mention Toronto and Sydney which are even more expensive) were made from scratch, so why can’t we make another one? Maybe New Yorkers like it just the way it is, but what’s standing in the way of making another one? This is not meant to be a hypothetical question.
Another question I have: Yglesias lays out an argument that denser living can be more desirable: New York doesn’t just have more business than Fargo, it has more kinds of businesses. This variety is itself valuable. Also, if a place is more dense, it can have more frequent bus service, more police on the streets etc. No argument here from me, certainly. But if that’s the case, doesn’t it stand to reason that more units and thus more density could make a place even more attractive and thus could attract more demand hence increasing prices again?
In all, the book works best as an explanation of the neoliberal, urbanist credo Yglesias espouses, which happens to be very closely in-line on this subject with the positions of most of the writers on this blog. So while I agree with the vast majority of what is written and would certainly recommend the book as an introduction to the subject, I wonder if it will be convincing to people who already have made their minds up. There’s a lot to housing supply that even people who don’t want tall buildings on their block might be able to agree on, like simplifying permitting practices. Unfortunately these are arguments that are rarely made, and The Rent is Too Damn High is no exception, though in reality they may be the easiest ways to improve the situation.
Overall, I highly recommend this eBook. It’s short (I read it in maybe a half hour, so I guess it’s in the 50-100 page range), constantly interesting and very engaging. At $3.99, it’s well worth the price.