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ARTICLE

Regulation Helps the Rich and Harms the Poor

OCTOBER 01, 1974 by BERNARD SIEGAN

Mr. Siegan is the author of Land Use Without Zoning and many articles on the subject. He practiced law for 20 years in Chicago before moving in 1973 to La Jolla, California where he is professor of law at the University of San Diego Law School.

The belief that we need governmental regulation to prevent the rich from exploiting the poor is at the basis of many laws. It happens to be wrong; usually regulation benefits the rich much more than the poor.

Fifty years of zoning experience in this country supports this conclusion. Zoning is one of our most pervasive forms of regulation, and its effects are by now apparent and beyond conjecture. They show that instead of providing for the public welfare, it has done well only for the private welfare of the well-to-do. It has generally been harmful to those of average and less income. The most notable exceptions, it seems, are the fortunate ones who become politicians and planners controlling zoning. If they do not become rich, at least they become powerful.

This is how zoning has discriminated against the less affluent persons in our society:

1. The best means for lowering the cost of housing, both new and existing, is to increase the supply. Zoning does exactly the reverse. It restricts the production and supply of real estate from housing to stores. Hardest hit as a result, are those with the least money. For a family struggling to maintain financial solvency, almost any increase in rent can be a serious handicap.

Consider the case of two Texas cities separated by only 242 miles: Dallas and Houston. Dallas has been zoned since the early 30′s and Houston has never adopted it. Both have quite similar economic profiles. There is one major exception however: cost of rent. Apartment rentals in Houston are distinctly lower because the supply of land for apartments is not restricted by political and planning considerations.

2.      Most affluent suburban and rural communities erect zoning barriers to exclude apartments and townhouses. When apartments are permitted, they usually have to comply with rigorous "snob" construction and design standards that make them affordable only by the wealthier. Their practices with respect to mobile homes are worse. These units catering frequently to families that would otherwise seek government housing subsidies are excluded from vast portions of this country.

3.      Typically, these communities also do not want inexpensive homes in their midst. So they require, among other things, large lots or large amounts of interior space per dwelling, both of which add to the bill.

4.       The practical operation of zoning raises development costs that are passed on to the consumer. When the local authorities rezone property for single or multiple family purposes, they are likely to extract conditions, legal and sometimes extra-legal, which can be quite expensive. The installation and maintenance of swimming pools and recreational facilities, for example, add significantly to the cost of housing. One of the motives behind these practices is to keep out projects that attract people of lower incomes.

5.      Zoning prohibitions tend to curtail the construction of stores and repair shops within walking or short distances of homes and apartments. In areas lacking public transportation, this creates inconvenience and hardship for a family without a car or with only one older one, particularly if it is used by the husband during the day. The rise in gasoline prices adds to the problems.

6.      Zoning is harmful to the interests of small builders. There are now so many zoning rules and regulations that it requires the services of lawyers and sometimes planners to process almost any changes. Moreover, obtaining zoning approval may take months or years and that involves the expense of holding or optioning property. These conditions are eliminating small builders to the advantage of the large ones who are in a much better position to cope. These facts hopefully should help put to rest a major myth of our society. The zoning story is not unique; it is duplicated in other areas of regulation.

Copyright 1974 Bernard H. Siegan  

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October 1974

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