Paul Krugman Blames Over-Regulation for Urban Unaffordability

Progressive economist gets supply-and-demand, to a point.

By Anthony L. Fisher of Reason.

"In an op-ed published in yesterday's New York Times, What? Me Over-Regulate? Nobel laureate, economics professor and "Conscience of a Liberal" blogger Paul Krugman took aim at what he believes is the culprit for the US' "shortage of urban dwellings" and the un-affordability of existing housing inventory.

In Krugman's view, "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." He adds that increasing urban density could actually have environmental benefits:

Furthermore, within metropolitan areas, restrictions on new housing push workers away from the center, forcing them to engage in longer commutes and creating more traffic congestion.

Though long an advocate of regulation and central planning in just about every economic sphere, Krugman has railed against rent control and land-use restrictions as drivers of inequality and artificially-inflated prices for years. In late 2015 he argued, "this is an issue on which you don’t have to be a conservative to believe that we have too much regulation."

Much like Vox's Matt Yglesias, who also vocally opposes the over-regulation of the urban housing market, Krugman fits into a group which City Journal's Aaron Renn dubbed "Libertarians of Convenience," supporters of the free market "but only for things they like or want to do":

While they’ve assailed density limits, height restrictions, minimum-unit sizes, and other housing regulations, for example, they have celebrated New York’s access-to-buildings law, which mandates that commercial buildings allow bicycles on freight elevators. Similarly, while car parking minimums have drawn fire, sites like Greater Greater Washington have simultaneously embraced bicycle parking minimums in the District of Columbia. When Los Angeles mandated reflective roofing materials, CityLab described the regulation approvingly as banning “heat-sucking” roofs. And progressives’ call for food freedom abruptly reverses itself when trans fats, genetically modified foods, or large sugary drinks are in question—they think all should be banned or strictly regulated.

Krugman's support of increasing the housing supply comes with a pretty important caveat: his backing of New York City Mayor Bill de Blasio's plan to "selectively loosen rules on density, height, and parking as long as developers include affordable and senior housing."

But Krugman doesn't connect how requirements to build "affordable housing" in concurrence with new development inherently involves the creation of yet another layer of red tape. This, in conjunction with calls to "landmark" more and more businesses and buildings, makes finding space to develop the longed-for increased housing supply a much more difficult prospect."