Our Zoning Laws are "Anti-Rationing"

Instead of rationing housing, we're "anti-rationing". Our zoning laws are the exact opposite of anything that makes sense.

Our Zoning Laws are "Anti-Rationing"
Credit: Matt Brown

I've been struggling to explain to non-economists why our zoning laws are so wrong.  And I think I've hit on how to explain it to them.  The explanation starts by talking about water.

In the last 5 years, Austin Texas has had three water shortages.  The water plants stopped working due to flooding, freezing, and user error.  Each time, Austinites needed bottled water.

Austin's largest grocer, HEB, had bottled water.  It also had a friendly reputation, and wanted to preserve that by getting water cheaply to all its customers.  HEB didn't want a panicky rich person to buy lots of the water.  And it didn't want a profiteer to buy all the water cheap and extort the thirsty.  So, HEB rationed the water.  They limited purchases to 2 cases of bottled water per customer.

Rationing made sense.  There was a shortage of a necessity and HEB got that necessity to more people by putting a maximum limit on how much each customer could purchase.

Now, enough with water, let's jump back to housing and land.

Housing and land are also necessities: everyone needs housing and land for that housing.  They are in shortage in Austin: rents and land prices are high.  The obvious conclusion is that, if we want everyone to get housing and land, we should ration housing and land.  We should have a maximum apartment size and a maximum lot size.

But Austin does not have that.  We have a minimum apartment size and a minimum lot size.  We have the exact opposite of rationing.  We have anti-rationing.

Anti-rationing is a policy that indulges, even forces, panicky rich people into buying too much.  It is a policy that enables, even encourages, extortionists to drive up prices.  It is a policy to cause shortages.  And the evidence is the homeless in our streets.

That is why our zoning laws feel so wrong to an economist like me.  I don't want to distort the market, but, if we were going to distort the market, our current policy, anti-rationing, is the exact opposite of anything that makes sense.  I'm horrified to think about HEB anti-rationing water.  We need to stop anti-rationing of housing and land.