I Disagree with Bob Poole

Show me the contract.

In effect, postwar single-family zoning represented an agreement under which homebuyers accepted restrictions on other types of uses in their neighborhood in order to be protected from negative externalities that neighbors might create, without the protection of the covenant provided by single-family zoning.

To abolish single-family zoning is a violation of the contract between a municipality and its single-family homeowners. They selected the neighborhood and the house based on the protections offered by prevailing zoning.

This is from Robert Poole, “A Brief History of Zoning,” Reason, June 10, 2023.

I’ve been reading Bob Poole’s articles since age 18 and have always learned from them. This is the first time I can think of when I strongly disagreed with something he’s written.

Bob makes a point that some commenters have made when I’ve argued against zoning: namely that people who bought houses under the zoning rules are being betrayed by the elimination of those rules. Bob even goes so far as to say that the local government had a contract with the home owners.

Here’s the problem. There’s no contract. Instead, the government made a regulation, people bought assets with the idea that those regulations would be enforced, and there’s some chance that if the regulations are relaxed or eliminated, people who own those assets will suffer a capital loss.

But libertarians aren’t typically in the business of saying that on that basis those regulations should be kept. People who bought medallions giving them the legal power to operate a cab in New York suffered a loss when Uber and Lyft were allowed to operate. Should Uber and Lyft be regulated out of existence?

My wife and I own a house in an area that’s zoned R-1. We bought it in 1986 because we liked the house and by using all the cash we had and borrowing and getting gifts from parents, we could barely afford a 10% down payment. But we recognized that the zoning was a government regulation, not a contract. If I could have bought a house in an area that also allowed apartment blocks, and if the presence of those apartment blocks had made our house cheaper, I might have bought such a house. But we didn’t have that option.

Whenever government gets rid of restrictive regulations, people who gained from those regulations will lose. But that doesn’t mean that the government violated a contract.

Later in his article, Bob points out that state governments often put whole areas off limits for development and implicitly suggests that those limits be relaxed or abolished. I agree.

He seems to think that it’s an either/or. Either we abolishing zoning or we abolish growth limits. I say that we should embrace the power of “and” and do both.

For more on what I’ve written on zoning, see this and this and this.