Paul Krugman, in his current incarnation as New York Times op-ed page columnist, isn't someone I often agree with. But he makes a good point in today's column about how regulation hurts the poor:
Upper-income Americans are moving into high-density areas, where they can benefit from city amenities; lower-income families are moving out of such areas, presumably because they can't afford the real estate.
You may be tempted to say, so what else is new? Urban life has become desirable again, urban dwellings are in limited supply, so wouldn't you expect the affluent to outbid the rest and move in? Why aren't urban apartments like beachfront lots, which also tend to be occupied by the rich?
But living in the city isn't like living on the beach, because the shortage of urban dwellings is mainly artificial. Our big cities, even New York, could comfortably hold quite a few more families than they do. The reason they don't is that rules and regulations block construction. Limits on building height, in particular, prevent us from making more use of the most efficient public transit system yet invented – the elevator....building policies in our major cities, especially on the coasts, are almost surely too restrictive.
As usual with Professor Krugman, even when he is getting something right he's getting something wrong. In this case, he's wrong that the shortage of beachfront lots is not artificial. In fact, regulation on beachfront building is as bad, or worse, than regulation on building in a big city like New York. Has the professor never heard of the California Coastal Commission? Try to build a tall building on a beachfront somewhere like Malibu or even New York's Long Island, and the governmental authorities will give you an even harder time than if you try to do it in Midtown Manhattan. It's not because of some natural scarcity of buildable ocean-front property. It's primarily because the people who already own beachfront property there don't want change or more company.
