A Flawed Attempt at a Libertarian Defense of Exclusionary Zoning

Robert Poole's effort to defend exclusionary zoning falls prey to a combination of logical fallacies and factual error.

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For many years, libertarian economists, housing experts, and legal scholars have been at the forefront of efforts to oppose exclusionary zoning. Regulations restricting the type of housing property owners can build on their land severely constrain property rights and also cause immense economic and social harm by excluding millions of people from areas where they could otherwise find better job and educational opportunities.  Libertarian legal scholar Bernard Siegan was a pioneer critic of zoning as far back as the 1970s, and other libertarian-leaning experts have made more recent major contributions to this literature, most notably those of Harvard economist Edward Glaeser. Few ideas are as central to libertarianism as the notion that private property owners have a  strong presumptive right to use their land as they see fit, subject only to those restrictions they voluntarily accept.

In a recent Reason article, Robert Poole challenges the standard libertarian view on these issues by offering a defense of single-family zoning. The latter is one of the most severely restrictive types of government-imposed land-use constraints. It bars a vast range of housing options, including duplexes, quads, apartment buildings, and much else. Poole's defense of single-family zoning founders in a morass of logical and factual errors. Here is an excerpt from it:

When zoning laws began to proliferate in the 1920s, they were a newly imposed restriction on what homeowners could do with their properties. In those days, most people lived in long-established communities in cities. Today, after 70 years of suburbanization following World War II, the large majority of homeowners bought their homes in suburbs built in response to market demand for single-family living. Local governments (typically county governments outside the main city) responded to the kind of housing the developers wanted to create to meet the growing single-family market demand.

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.

It is simply not true that single-family zoning restrictions were a response to "market demand" that property owners voluntarily agreed to. In reality, these rules were - and are - imposed by government coercion, including on many property owners who would have preferred to build multi-family housing on their land. At best, one can say that these policies met a "demand" that some property owners had for imposing constraints on others.

By that standard, almost any form of government intervention can be defended as a response to "market demand." Protectionism is a response to "market demand" from producers who seek to be free of foreign competition. Price controls are a response to "market demand" for lower prices. Even socialism can be justified as a response to "market demand" from those who prefer a collectivist society.

In his description of the historical origins of single-family zoning, Poole also omits the large role of racism. In many places, such policies were enacted as a seemingly neutral tool for excluding blacks and other racial minorities, after the Supreme Court invalidated explicit racial discrimination in zoning in 1917.

It is true that single-family zoning can sometimes protect homeowners against externalities. For example, some affluent homeowners dislike the aesthetics of mixed-use housing, and others may prefer to live in an area with few or no working or lower-middle class residents. Others simply want to avoid changes to the "character" of their neighborhood.  But exclusionary zoning creates far larger negative externalities than it prevents, most notably by excluding millions of people from housing and job opportunities, thereby also greatly reducing economic growth and innovation. Moreover, even many current homeowners in areas with zoning restrictions stand to benefit from their abolition.

Poole also tries to defend single-family zoning restrictions by claiming that they are a kind of "contract":

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.

The simple answer to this argument is that no such "contract" exists. A true contract arises through the voluntary agreement of the parties. By contrast, zoning restrictions are imposed by governments on all property owners in a given area, regardless of whether they agree to it or not.

It is true that, after the initial coercive imposition of zoning, some of those who buy property in the area may do so in part because they like the restrictions. But if that qualifies as a "contract" that future government policy is morally bound to respect, the same goes for virtually any other type of coercive government policy that some people have come to rely on.

We could equally say that protectionism is a "contract" between the government and protected industries. After all, many investors and workers may have "selected" that industry "based on the protections offered by prevailing" trade restrictions. Similarly, abolishing racial segregation violated the "contract" between the government and white racists who "selected" segregated neighborhoods "based on the protections offered by prevailing" segregation laws.

Libertarian economist David Henderson offers a similar critique of Poole's argument here. As he points out, "[w]henever 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."

There may be some situations where completely abolishing unjust government policies that violate libertarian principles would be wrong, because of reliance interests. The most compelling examples are cases where people rely on welfare programs, without which they might be reduced to severe poverty. If, someday, libertarians succeed in abolishing Social Security, there will be a strong case for exempting the elderly poor who have come to rely on that program, and have no other way to support themselves. But few if any beneficiaries of single-family zoning restrictions are likely to suffer any comparably terrible privation if those restrictions are abolished.

In another part of his article, Poole analogizes single-family zoning to private land-use restrictions, such as private planned communities. This analogy (more often made by left-wing critics of private communities), is badly flawed for reasons I summarized here. The most important distinction is that, unlike zoning, private land-use rules really are contracts that only bind those landowners who have voluntarily consented to them:

The requirement of unanimous consent ensures that [private] restrictions rarely, if ever, violate owners' property rights. It also makes it unlikely that HOAs and other private communities can significantly restrict mobility in the way zoning restrictions do. It is nearly impossible for an HOA with severe restrictions on building to take over a vast area, such as a major metropolitan area or even a good-size suburb. The city of Houston, which has no zoning, but gives relatively free rein to HOAs, is an excellent case in point. The extensive presence of HOAs hasn't prevented Houston from building large amounts of new housing, and featuring far lower housing costs than cities with zoning restrictions. Indeed, the city's openness to consensual private land-use restrictions may even have facilitated new housing construction by allowing those who really want restrictions to create small enclaves for themselves instead of imposing those rules on everyone else.

In his article, Poole rightly praises Houston's policies. But he fails to recognize the fundamental distinction between them and government-mandated single-family zoning.

Poole claims that single-family zoning restrictions do not significantly constrain new housing construction, and that the best way to address the housing crisis is to focus on lifting restrictions on the development of previously undeveloped land. I agree the latter should be abolished. But exclusionary zoning rules are also a major constraint on housing construction. In suggesting otherwise, Poole ignores a vast amount of  research compiled by economists and land-use experts across the political spectrum. Recent evidence suggests that the effects are even larger than previously thought.

Allowing more development in currently undeveloped areas is not an adequate substitute for zoning reform. Much of the benefit of the latter comes from increasing the availability of housing in places where there are important job and educational opportunities. Most undeveloped land is relatively further away from such locations, and building more housing there offers fewer benefits than allowing increased construction close to major centers of commercial and social interaction.

Finally, Poole complains that "preemption of local government policy violates basic principles of limited government: that any government action should be carried out at the lowest possible level of government." I always thought that one of the most basic principles of limited government is that private property owners should be allowed to decide for themselves what they can build on their own land. Allowing them to do that actually promotes greater diversity and decentralization of power than leaving that authority in the hands of local government.

Poole's article also contains a number of other errors. For example, it is not true that California "recently [became] the first state to enact legislation that invalidates single-family zoning, as an effort to increase housing supply." Oregon enacted a state-wide ban on single-family zoning in 2019 (exempting only communities with fewer than 10,000 residents). SB 9, the California law Poole refers to, is less far-reaching. It allows owners of property in areas with single-family zoning to build additional housing units, but only if they meet a variety of restrictive criteria. SB 9 is an important step in the right direction, but does not completely abolish single-family zoning.

In sum, Poole's defense of single-family zoning restrictions is at odds with libertarian principles. More importantly, it's based on weak arguments that should be rejected regardless of their ideological valence.