Is YIMBYism Reaganism?

No: A Ronsplanation

Some People Want to Fill the World With Silly Nicknames

When I was in elementary school and other kids found out my name was “Ronald,” a few bright bulbs always felt the need to call me “Ronald Reagan” or “Ronald McDonald” in their best teasy voice.

Over the last few years, I’ve run into a surprising parallel in the housing wars. I keep hearing this accusation that housing advocates like me who fight to increase housing supply are somehow promoting Ronald Reagan’s “trickle-down,” or “supply side” economics.

The claim seems like it is supposed to establish that our position on housing is somehow conservative, or that it is rooted in a particular discredited form of economic theory, and should be discarded.

A lot of pro-housing progressives, myself included, have tended to roll our eyes at this claim.

This is in part because the “people-who-want-housing-to-be-affordable-are-secretly- conservatives” take tends to come from bad-faith actors. As an example, Alex Fryer on the Seattle Times Editorial Board cynically cries “Reaganism!” about missing middle housing legislation while shilling for candidates who literally fight for core Reaganite positions like low taxes for the rich and corporations.

It’s hard to take this kind of hypocrisy seriously. 

Serious People Too.

But over time I’ve found that there are thoughtful, earnest, intelligent and progressive people who don’t have Alex’s ethical issues, who genuinely believe a pro-housing agenda is somehow similar to Reagan’s quest to make the rich richer.

They’re wrong, and I don’t want them to think that. 

Given that, I thought it’s worth taking a few minutes to answer that criticism sincerely.

Twitter Warriors v Reality

First, it’s certainly fair to say that there are a few pro-housing twitter warriors who are economic conservatives or libertarians. And libertarian and center-right economists tend to favor less housing regulation. So yes, some housing advocates have a conservative streak. But guilt by association is hardly compelling.

More importantly, I would argue that most of the pro-housing movement isn’t embracing a truly deregulatory agenda. Conservatism certainly doesn’t describe the local housing movement, or the Biden agenda. In fact, while Democrats are pushing for greater supply, we are simultaneously fighting for renters’ rights, second-generation rent control, and much more intense environmental standards for buildings. That is more regulation! 

The restrictions we are trying to eliminate are those that were originally put in place by conservatives seeking to entrench housing segregation – that’s why most people in the pro-housing movement refer to “single-family zoning” as “exclusionary zoning,” for example. The term properly identifies the policy as one designed to keep working-class families out of well-resourced neighborhoods. 

By eliminating exclusionary zoning and other restrictive policies put in place by the same conservative forces that have concentrated poverty and kept schools and neighborhoods effectively segregated, the pro-housing coalition seeks to give more people a chance to build a life in Seattle they can afford.

Reagan or Roosevelt?

Supply Side Shenanigans

I will admit that it is true that “we need more housing supply” sounds a little like supply-side neoliberalism. But the effort to reduce restrictions in places like Seattle sits much closer to antitrust economics. It’s more Roosevelt than Reagan.

Supply-side economics was focused on low taxes, deregulation and free trade. The notion was that taxes and regulation were the primary barrier keeping so-called “job creators” from investing and delivering more goods. If we reduced these barriers, the thinking went, companies would invest in their own operations and expand, putting more people to work. In turn, more people would be willing to work, or work more, and this would grow the overall economy.

It turns out that this was largely wrong. When the barriers were removed, there wasn’t a productivity boom, or a bunch of growth. Companies didn’t invest tons more money in their capital stock or new businesses. If there were positive differences, and even that is a matter of controversy, they were at best marginal. Corporations largely funneled their winnings into high executive salaries, dividends and stock buybacks instead of economy-expanding stuff. As a result, Reagan’s extraordinarily rich supporters got richer, and the rest of us paid the price. Overall growth suffered, and inequality expanded.

If the Shoe Doesn’t Fit

The economic arguments that people like me make for increasing housing supply are intended to do the exact opposite of widening the gap between the rich and everybody else. 

Our arguments are largely about reducing consumers’ costs so people can afford to live, or live near where they work, or have housing and school stability for their children. They are about allowing people access to rent that doesn’t impoverish them, a mechanism of tax-advantaged savings (a mortgage), or even just access to shelter at all. They are about letting them live close enough to opportunity to actually have access to opportunity, and reversing our ugly history of excluding BIPOC Americans from wealth-building.

In other words, our economic arguments are largely distributional, in favor of the have-nots. The Reaganite rubric simply doesn’t fit.

Yes, there would be aggregate economic benefits to expanding housing supply too. Agglomeration effects mean that when people can afford to move to higher productivity cities, their productivity increases. Economists argue about the details, but the total lost productivity that results from bad zoning is significant. And because our current regime hoards wealth, addressing it would mean less inequality and broader wealth distribution. Paired with the deflationary effect of lower prices, we could expect that some of the millions of Americans with more discretionary income would spend it, increasing overall output. 

But even then, the fact that the arguments for housing abundance include macroeconomic benefits doesn’t make them “supply side.”

None of this is  about making the rich richer, so they invest more, and somehow that trickles down. That is the trickle-down kool aid and we aren't drinking it!

Our arguments are instead about increasing competition for housing by making it legal to compete for buyers by building more homes on land. That is much more like antitrust economics.

And in this Corner, Roosevelt

Antitrust economics is focused on how incumbents use what economists call “market power” to restrict competition, reduce supply, and increase prices. A classic example of this kind or cartel behavior is OPEC picking oil production quotas. All else equal, when the OPEC cartel cuts production by a million barrels per day, global oil prices rise, and we all pay a higher price at the pump. 

Antitrust law restricts this kind of coordinated behavior domestically, but we don’t have any control over foreign entities like OPEC. And domestically, we also provide carve-outs through individualized laws, like patent law, which grants legal monopolies. 

But what is legal is not always what is good! Facebook spends obscene amounts of cash lobbying Congress to make sure our laws protect it from liability for using algorithms they know increase the likelihood of teenage suicide.

Similarly, those fighting for exclusionary housing rules have used their political power in wealth- maximizing ways that increase the likelihood that the next generation cannot afford to buy homes, or cannot afford to even rent a place to live, or even end up homeless. They have hijacked the law to allow them to engage in cartel behavior, restricting supply.

In other words, our exclusionary zoning practices are a massive oligopolistic exercise in what economists (confusingly!) call “rent-extraction.” When people can extract rents from a market, it means that normal competitive market mechanisms aren’t working, a kind of market failure. In this case, homeowners have made it so that the housing market isn’t a competitive market, so like with a monopoly or oligopoly, consumers don’t have enough choices to discipline the price of housing. This artificially inflates prices, reduces overall economic value, and redistributes some of what is left from buyers to the landowner. It is classic antitrust economics.

And in fact, the “deregulation” that most housing advocates push for is not classical deregulation at all. It is not about reducing housing quality or protection for consumers. Most of us do not want us to eliminate environmental requirements, seismic safety standards, or anything like that. 

True, there is some conflict inside the housing movement over things like design requirements and tree preservation. But this is largely because both of these have been weaponized by the same interest groups who have put housing production caps on land. And, in an environment starving for more shelter, these quality issues do start to take a back seat for some advocates who will do anything to get more people a roof over their head. And many of us do fight for a path to a world with more housing and more trees.

In any case, the primary focus of the housing movement is repealing the rules that have the same practical effect as cartel-like production quotas. These are primarily zoning requirements, minimum lot sizes, and parking requirements. They put a hard, often quite low limit on how much housing can be built on our fixed amount of land. 

In other words, pro-housing advocates are trying to change the law to bust up these landowning cartels.

We are following in the tradition of Teddy Roosevelt, not Ronald Reagan. 

Falling Prices?

We have great statistical evidence that increasing even localized housing production has a modest price-muting effect on the neighborhood. But the real target here is serious relaxation of the housing quotas, at at least a regional level. If we do this, the cost of land, and for sure the cost per home on it, will be far more affordable in the long run. 

No, home values won’t plummet, like those 1990s Walmart commercials with prices falling off the shelves. But we can bend the cost curve, putting housing in reach for more of the population. Far, far more people will be able to afford housing without hampering their ability to live a normal life and far fewer will be driven into homelessness because they can’t afford to keep a roof over their heads. 

That’s something everyone should support.