Some Critical Thoughts On The Rent Is Too Damn High

I just finished reading Matt Yglesias’ new e-book about the negative consequences of restrictive housing regulations, The Rent is Too Damn High (which I’ll refer to as RTDH in this post). I like the idea of the shorter e-book rather than the full book-length argument on a topic, though I think this was a bit too short.  Compared to most books that are the expansion of an article, this is about half the length.  But instead of cutting the number of chapters in half and keeping their depth, it keeps roughly the same number of chapters but at half length.  The result is that the material goes by quickly, though it is still a worthwhile read.

It’s meant for a general audience, one who hasn’t been at the deep-end of the issues before, so some topics go by quick and some are treated at a very high level.  I used to read and think about these issues more than I do now, so it was fun to get engaged in them once again.  I think there’s huge consequences for these issues, and I like how Yglesias made them general issues for everyone anywhere in the United States as it is related to health, opportunity, diversity, the environment, etc.  As Yglesias notes, I also think there’s room for political overlap on these housing regulation issues, so its good to see movement on this.

Rather than try to write a formal review, I’m just going to expand my notes I took as I read it.

(Special thanks to Josh Mason for bouncing around some ideas about the meta-topic.)

1. The book opens with the issue of rent control, treating the issue as one of price ceilings rather than the actual goals that rent control tries to achieve – neighborhood stabilization and preventing excessive turnover.  Mason had a great post on this that I won’t try to reproduce.  RTDH is implicitly for more renting and less homeownership – yet this kind of stabilization and hedging is much of what people find attractive about ownership.

2. RTDH, when talking about housing, doesn’t end up with a strong presentation that much of our civic and governmental infrastructure is distributed through housing and location.  It talks about it at points, but I think that discussions going beyond just the land, shelter and investment potential of housing to how and where location places us in civil governance is important.

This helps explain why a lot of the housing market is screwy.  Elizabeth Warren has argued this is a reason housing became problematic for middle-class households (“Schools that scored just five percent higher than other local schools on fourth-grade math and reading tests added a premium of nearly $4,000 to nearby home”).  The quality of your schools, the relationship you have with the police, your ability to move freely and transport yourself, how you’ll be represented democratically, the primary means through which you’ll transfer wealth across generations (if you are a homeowner) and more are all in play even before you get to the economic efficiency, public sphere and social/health arguments about what housing brings.  Perhaps we can reform housing regulations without having to reexamine these issues, but it will be difficult.

3. Yglesias alludes to sprawl as a reaction to high city costs (and later crime waves of the post 1960s), but as Thomas Sugrue has documented, suburbanization, urban crises and racial anxieties go back to at least the 1940s.  Detroit’s suburbs managed to grow 2% in the last decade, even though the city lost 25% of its population.

There’s a good Foreign Affairs review of Glaeser’s Triumph of the City, which points out the trouble the economics-driven, supply-side housing costs arguments have with dealing with the suburbs.  As someone who read Suburban Nation early when he began to think critically about these issues, I find that a lot of these arguments just focus on city regulations while ignoring the whole existence of suburbs.  Foreign Affairs review:

Glaeser overlooks one of the central issues confronting cities for most of the last century: their competition with suburbs. Glaeser sees the competition as primarily between cities that restrict growth and those that accommodate it…

The weakness of the claim that regulation impedes population growth can also be seen in Glaeser’s comparison of Chicago and Boston. Glaeser commends Chicago for issuing 68,000 building permits between 2002 and 2008 and chides Boston for issuing only 8,500 — about half Chicago’s rate considering their relative sizes. But Chicago’s liberal issuance of building permits did not stop the city from losing more than 200,000 people between 2000 and 2010, even as its suburbs continued to grow. Over the same period, the smaller and purportedly more restrictive Boston grew by more than 28,000 people, or nearly five percent, and its housing supply grew by more than eight percent.

Yglesias does a good job tackling the way that everything from parking restrictions to zoning requirements impact the suburbs just as much as cities, especially when it comes to health, the uncompensated work time of commuting, the environment, etc.  To its credit, RTDM doesn’t feel like a skirmish against historic districts while forgetting the vast number of people who live in the suburbs.

4. Yglesias develops a theory of how high rents should be thought of as a new era of rentier income.  There’s a history lesson about sharecropping and debt peonage systems over the course of the United States, and a discussion of how in an expanding service economy (with expanding inequality too), location and density will be crucial.

I’m curious how well we can generalize the new rentier economy arguments.  We’ve talked about this before, using Michael Hardt’s The Common in Communism as a guide.  Are we moving to an age of a new rentier economy where immobility rent income has been replaced with rent income from “scarcity and reproducibility”?  How will housing regulations impact this?  Hardt (my bold):

Whereas in Marx’s time the struggle was between immobile property (such as land) and moveable property (such as material commodities), today the struggle is between material property and immaterial property – or, to put it another way, whereas Marx focused on the mobility of property today at issue is centrally scarcity and reproducibility, such that the struggle can be posed as being between exclusive versus shared property. The contemporary focus on immaterial and reproducible property in the capitalist economy can be recognized easily from even a cursory glance at the field of property law. patents, copyrights, indigenous knowledges, genetic codes, the information in the germplasm of seeds, and similar issues are the most actively topics debated in the field.

5. There’s a lot of well-deserved celebration of density, particularly in the expansive diversity of opportunities it brings as well as access to better work.  It’s not essential to RTDH, but I’m curious how much the changing character, especially the privatization, of public spaces impacts this.  Reading City of Quartz was influential for me, and there’s a lot about how public spaces in LA are redeveloped towards private ends and for people with money.  The recent fasciation with the landscape of walls and the policing of borders around communities in an era of globalization is part of this.

Or to put it a different way, the normative, democratic implications of a public sphere and common space should reinforce the good things Yglesias likes about density, but it doesn’t have to, and cities are evolving in ways that don’t necessarily create this.

6.  Yglesias argues against those on the left who are reflexively against gentrification.  I think that’s fair.  But it does miss what those on the left will oppose about government policy in this space: the practices and politics of “urban renewal.”  The issues of eminent domain, investment and tax bonuses for private agents, aggressive policing and selective government services, etc. designed to bring in certain groups and exclude others.  Sometimes this is all about managing bodies and spaces – much of the public housing of the mid-century period was all about demolishing previously existing slums to put the land to better use.

(Is it telling that RTDH doesn’t even mention public housing?  Is that something to revisit post-ownership society, with scarce land, inequality, etc.?)

Sometimes it is all about building highways through cities.  Other times, it is about reconfiguring what cities do entirely. (I’m moving The Assassination of New York to the front of my reading queue as a result of this.)

The gentrification in Yglesias’ account seems bloodless because it works through supply, demand and the resulting price mechanism, and has a decentralized, invisible quality to it.  But in practice the government is a very active agent in these processes.  This is actually where the fruits of a left/libertarian alliance is most likely to start (think anti-Kelo), one that could end up tackling something like “free” parking.

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13 Responses to Some Critical Thoughts On The Rent Is Too Damn High

  1. JW Mason says:

    Your point 2 seems very important. I hadn’t seen it stated this clearly before. Yes, it is a big problem when civil society gets capitalized into asset values.

  2. Chris Wilson says:

    Re you good point: “The recent fascination with the landscape of walls and the policing of borders around communities in an era of globalization is part of this.”

    Walled communities in places like La Quinta, California would be worth some study – the keeping out of hypothetical undesirables (immigrants, etc, none to be seen in daytime) results in crippling the residents of the compounds, who must travel a mile or so (by car, normally) to get around the walls to enjoy beautifully landscaped walkways (along the perimeter walls) that now have no walkers.

    At least the walls should have gates every 100 yards or so to make it easy for walkers and cyclists to get out of the walled compound and enjoy the perimeter amenities.

  3. Steven Clarke says:

    If you are worried about rentiers, get the Government to collect rents through a Land Value Tax.

    • Yeah_No says:

      I’m with Steven Clarke on this.

      4. Yglesias develops a theory of how high rents should be thought of as a new era of rentier income … I’m curious how well we can generalize the new rentier economy arguments.

      I fail to see what’s new about this theory. In the U.S., it goes back to Henry George and the single tax movement. In 18th century France it was the physiocrats (Adam Smith’s predecessors). According to this theory, land rents cause poverty, and because they can’t be evaded or passed on to tenants, the solution is to tax land rents and land values.

  4. Urban Prof says:

    There’s a bunch of great work on these issues (especially points 5 and 6) from critical urbanists, especially on the role of local governments in supporting gentrification (and not adequately dealing with displacement, affordability, inequality, etc etc). Yglesias misses most of it, which is not surprising. On NYC alone, alongside Fitch’s great book there’s Neil Smith’s New Urban Frontier, William Site’s Remaking New York, Miriam Greenberg’s Branding the City, and (self promotion alert!), Julian Brash’s Bloomberg’s New York, all of which talk about how private actors in league with the state have worked to radically transform NYC’s economy (including housing markets), culture, and politics. There’s a whole theory of this — called urban entrepreneurialism, urban neoliberalism, or neoliberal urbanism — that has worked through these issues, albeit not in the American Prospect-y, sensible liberal way that Yglesias favors.

  5. (Is it telling that RTDH doesn’t even mention public housing? Is that something to revisit post-ownership society, with scarce land, inequality, etc.?)

    Of course it doesn’t. MY wouldn’t know hard times if it hit him upside the head. He can’t relate to anyone outside the 1.5%. Why do you think he thinks gentrification is always a good thing? In fact, MY reminds me of a George Will-type. Someone who never has contact with someone outside his social/economic class.

  6. Azad says:

    One response to the difference between Boston and Chicago regards the relationship between suburbanization and gentrification. Rapidly gentrifying areas can gain lots of new housing stock but lose population, as densely populated single family homes are replaced by new but relatively less populated (per SF) and richer populations. Until the long equilibrium (despite its cause) of inner cities being seen as low amenity areas compared to the suburbs changes, looking at pure population change probably isn’t a decent metric of whether enough permits are being issued.

  7. Many thanks to Matthew. This is one of the biggest tragically underdiscussed issues [Another is the lack of subsidization for the monumental positive externalities of serious analytical and investigative journalism. See: http://richardhserlin.blogspot.com/2009/10/lets-consider-magnitude-of-costs-of.html. A third is positional/context/prestige externalities. See: http://richardhserlin.blogspot.com/2012/02/to-john-cochrane-re-positional.html. In fact, a great post would be, the biggest tragically underdiscussed issues.]

    Selfish local zoning to keep locals housing prices high does monumental harm to society and massively lowers total societal utils, especially over the long run. Thank goodness this is now finally starting to be recognized and taken seriously. See also the work by Glazer and Paul Romer on cities.

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  10. Pingback: The rent is still too damn high « City Block

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  12. David Pineda says:

    The main difference between the work of Yglesias and Jacobs can be summarized as thus: Yglesias is interested in increasing intensity of use, but doesn’t dwell on the other three characteristics of successful districts. Actually, it is curious that he doesn’t mention them at all, since he is clearly aware of her work. However, his basic argument is sound: that land use regulations must be relaxed to permit more free market use of land. This is something that needs to be more widely understood by just about everyone.

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