Zoning out Capitalism

Writing about New York City's "pioneer zones," at City Journal, James Panero fascinatingly misses two golden opportunities presented by his subject matter -- how the Big Apple's zoning laws are needlessly limiting its supply of affordable housing.

First, Panero seems never to question the propriety of the government dictating how people can use their own real estate:

Gotham's zoning codes, which distinguish between residential and industrial areas, weren't originally intended to function as they do today. When the first zoning resolution went into effect in 1916, city elders understood the need to protect residential neighborhoods from the encroachment of heavy industry. The city's disastrous 1961 rezoning turned this protection on its head. In a failed effort to protect a dwindling industrial base, the 1961 resolution artificially enlarged the manufacturing zone to depress the cost of industrial rents. Swaths of the city became off-limits to residential redevelopment. Industry fled anyway, driven out by the high cost of labor and the city's suffocating tax burden. [bold added]

Panero does correctly note the statutory obsolescence brought to entire residential neighborhoods by the 1961 zoning laws -- as well as to industrial areas by taxation. But he fails to note the brilliant counterexample the nation's fourth-largest city, Houston, brings to the whole question of zoning, with its vibrant economy and wealth of affordable housing.

Second, evidence from this very piece offers a stark refutation of one of the major premises behind zoning:

The residents of 17-17 Troutman are a good example. They accepted slumlike surroundings in exchange for inexpensive housing (several were working artists in need of large space). They brought vitality to a neighborhood that had seen generations of flight and decay and was struggling to rise from the ashes of rioting in 1977. These urban pioneers were part of a wave of gentrification that helped transform a forgotten neighborhood, devastated by crime, arson, and misguided urban policy, into a fashionable, bohemian district (see "The Death and Life of Bushwick," Spring 2008). But by paying rent on what was technically a commercial lease and living in their apartments, the Troutman tenants were violating an irregularly enforced law. And their landlord had never converted the building safely into apartments because the whole enterprise was under the table. Hence the unsafe conditions that led to the eviction in 2007.

So much for the idea that zoning "protected" anyone from "encroachment" by industrial land use -- or that it is necessary for (or even conducive to) public safety or "quality of life." Without zoning, this landlord would have had every reason to improve his building to attract better-paying tenants, be that before he ever started renting it out, or over time, as rent income enabled him to make such improvements in the quest for better-paying tenants.

More ominously, note that citizens -- in America -- are becoming accustomed to regarding the law as something besides instructions for how the government is to protect their rights, ignoring the law, and living under the pall of suffering major disruptions to their lives at the hands of capricious government force via arbitrary enforcement. While it is true that the consequences for breaking the law are predictable, I cannot help but worry that people are being "warmed up" for the kind of arbitrary law that comes with dictatorship. Put enough stupid laws on the books, and people practically have to decide which ones they'll run afoul of in order to live.

Panero's story is very interesting, but I disagree with his take-home that, "the real injustice has been the city's unwillingness to embrace market demand for housing by rezoning underused warehouse districts." No. The real injustice is that there is zoning at all.

-- CAV