President Biden’s American Jobs infrastructure plan hopes to shake this country free of wasteful barriers to affordable housing — especially in booming areas.
An “innovative” competitive grant program will act to eliminate these harmful zoning and land-use practices. Mr. Biden has the right goal — reducing regulatory barriers on new construction could have wide-ranging economic benefits that exceed anything else in his $2 trillion plan. But a competitive grant program is too weak to overcome the entrenched interests — like the homeowners who control local zoning boards and the wealthy residents of cooperatives who oppose all neighborhood change — that limit building in productive places.
If the president wants to break the country out of its zoning straitjacket, the infrastructure plan should ensure that no benefits go to states that fail to make verifiable progress enabling housing construction in their high-wage, high-opportunity areas.
Over the past century, America’s local land use controls have come to shape the path of our entire economy. The economists Chang-Tai Hsieh and Enrico Moretti estimate that “stringent restrictions to new housing supply” have “lowered aggregate U.S. growth by 36 percent from 1964 to 2009” — which means that with fewer restrictions, in 2009, the economy would have grown at a “3.7 percent higher” clip and a typical American worker would have earned an additional $3,685. The federal government can affect these hyperlocal laws only indirectly by applying enormous economic pressure on state legislatures to limit the land-use powers wielded by local governments. By putting conditions on so much infrastructure aid, the Biden plan could offer a once-in-a-lifetime chance for states to make America more affordable and productive.
How Biden Can Free America From Its Zoning Straitjacket, Edward L. Glaeser, New York Times, April 12, 2021, available here