In 1916 New York City adopted the first citywide zoning plan in America. Its centennial is a good time to reconsider the rationale for what has since become almost ubiquitous.
Zoning gives local government massive arbitrary power, creating opportunities for special dealing and corruption. Within a decade of New York’s lead, the federal Standard State Zoning Enabling Act had created a model for states to follow, which made this power apparent. Cities can “regulate and restrict the height, number of stories, and size of buildings and other structures, the percentage of the lot that may be occupied, the size of yards, courts, and other open spaces, the density of population, and the location and use of buildings, structures, and land for trade, industry, residence, or other purposes,” provided it promotes “health, safety, morals, or the general welfare of the community.”
It is hard to imagine much broader power.
Proponents of zoning promise to provide stability, but this is dishonest. If planners knew enough to zone wisely, they wouldn’t have to re-zone properties or grant exemptions so often. But the prevalence of such changes demonstrates how zoning creates increased complexity and high-stakes uncertainty rather than stability.
Friedrich Hayek long ago demonstrated that central planning is oblivious of valuable information — details of time, place and circumstance known only to particular individuals — and with it, the wealth-creation it enables. Zoning is a prime example; effective zoning would require massive amounts of detailed and often rapidly changing knowledge that planners simply do not have about “what goes where and why.”
While zoning supposedly prevents widespread “incompatible” land uses, many effects on nearby properties fail to justify government intervention. And the marketplace is often more effective in dealing with such issues because profit potential provides better incentives than nonprofit planning, and bankruptcy provides a means for correcting private mistakes, unlike zoning mistakes.
If two parties’ uses would interfere with each other, they would locate apart. Self-interest would similarly bring uses together where the effects would be mutually beneficial. Zoning is unnecessary in such cases. Further, voting with their feet allows individuals with different preferences and circumstances to mitigate much of the harm from nearby land uses. (For example, those with unreliable cars who value a neighborhood garage’s convenience more than any inconveniences would tend to live nearby; those who weigh the inconvenience more would avoid harm by living elsewhere.)
Many urban-legend horror stories to justify government zoning also ignore the effectiveness of marketplace zoning. We need not fear glue factories in Beverly Hills because high land prices would make them unprofitable. We need not fear gas stations invading cul-de-sacs because the streets could not carry sufficient traffic to make them profitable. Firms in the same industry often locate together for shared benefits, and any negative effects are voluntarily borne by those who receive even greater benefits.
Enforcing private property rights can also address zoning’s rationale. Nuisance law can handle physical invasions of property (noise, smells, vibration, etc.). Performance standards for mitigating impacts (e.g., adding left-turn lanes to offset congestion) can be far less costly than mandating land-use separation. Private communities and restrictive covenants have also averted undesirable spillover-effects and provided more stability. Not only do such voluntary arrangements prevent arbitrary changes, they also provide a superior mechanism for change when appropriate.
Even absent zoning, government retains powerful leverage over land use. It controls the transportation network and other infrastructure, and it can impose general restrictions, when necessary, without zoning. As Bernard Siegan demonstrated, in Houston, the one major American city without zoning, private arrangements don’t produce chaos; rather they generate land-use patterns similar to other cities and offer more affordable housing.
Neither zoning’s premise that government planners know enough to do it efficiently nor its promise to provide stability rather than chaos is demonstrated. Zoning reflects what Hayek called “the pretense of knowledge.” Americans should reject it in favor of voluntary alternatives.
Gary M. Galles is a research fellow with the Independent Institute and a professor of economics at Pepperdine University. He wrote this for InsideSources.com.