Like much of life, the academic job market is a Keynesian beauty contestâ€”one in which the judges try to guess the contestant that other judges will find most attractive. When we academics receive a promotion, we often receive headhunter calls from rival universities. I received several such calls when I received my current professorship. One was from a school in DC. Another was a school in New York. The third was located in San Francisco. In all three cases, I took a quick glance at the various local real estate sections, pondered my current $1,000 monthly mortgage payment, and gasped at the high financial hurdles I would need to surmount in making such a move.
I donâ€™t want to move, anyway, though it is somewhat unnerving to realize that housing prices so constrain my potential future choices.Â And these episodes remind me of the barriers that constrain so many people who want to work and live in the most productive and prosperous sections of our country. The unnecessarily high cost of housing in our coastal metropolises is a huge social and economic problem. Many millions of people would benefit from better policies to facilitate denser and more intelligent urban development. Outmoded approaches to planning and preservationâ€”along with the perverse political economy of cities and suburbs–lead us to limit the construction of high-rise apartments near transportation hubs, impose zoning restrictions on the construction of small-scale affordable housing in many of the places people most want to live and work.
This harms the environment, fosters urban congestion, and slows the entire economy. Greater density would bring other benefits, too. Population density creates opportunities for niche producers of goods and services that would otherwise be impossible. You wonâ€™t see too many Cambodian restaurants in rural New Mexico, for example.
Matt Yglesias has just written a terrific little book on these issues. Itâ€™s called The rent is too damn high. I sprung $3.99 for it and read it on a flight. (FD–he is a casual acquaintance.)
I donâ€™t generally plug books here. I will now. Yglesias is certainly not the first to swim in these waters. The modern arguments go back at least to Henry George more than a century ago. Ed Glaeser and RBC’s own Matthew Kahn have usefully contributed to this debate. I particularly like Yglesias’s book for teaching, because it is such a well-argued and engaging, totally accessible contribution to this debate. If you are interested in housing, urban policy, or the environment, you should read it.
As I prepare for my morning commute, I wonder if Yglesias should be angrier about the issues he notes. Affluent, organized constituencies greatly benefit from policies that impose wide social costs. Restrictive zoning and preservation policies keep housing artificially scarce, protecting the interests of current property owners. Not entirely by accident, these same policies prevent families of modest means from accessing safe neighborhoods with good local schools. Almost by definition, thatâ€™s part of what people are buying when they move into these exclusive communities.
Neither liberals nor conservatives give such issues much analytic attention the subject deserves. Liberals are rightly attuned to the value of stable neighborhoods that remain on a human scale. We correspondingly overlook the human, environmental,Â and economic costs of policies designed to curb development and to limit population density. Conservatives all too readily overlook the harm done to poor people by exclusionary policies that maintain high home prices.
Land in nice places is expensive. We canâ€™t do very much about that. It should be cheaper and easier to build large buildings to house people on top of this expensive land. We need to open our great cities. Mattâ€™s little book is a nice way to think about these very large issues more productively.