A Case Study of State Tax Reform Efforts

by Levi Russell

Adam Millsap of the Mercatus Center has a new case study on state tax reform. I have not yet read the study, but his Forbes column has some good stuff in it. I reproduce the sections on Utah and Kansas below.

Success in Utah

Of the five states studied, Utah’s 2006 reform appears to have been the most successful. The income tax was simplified from six brackets to one and many deductions were eliminated, which made it less distortionary and easier to understand. The study also notes that Utah was able to improve the efficiency of its tax system without experiencing severe drops in revenue.

According to the study, Utah’s tax reform was successful because its supporters were able to identify key stakeholders and include them in the reform process. This ensured that any reform that reached the governor’s desk had broad support. The study also points out that Utah has had a relatively high level of economic freedom for many years. This is a sign that the institutions and cultural attitude required for comprehensive tax reform were in place.

Problems in Kansas

Contrary to Utah’s experience, Kansas’ 2012 tax reform was more problematic. While the number of tax brackets was reduced from three to two and several tax credits were eliminated in order to broaden the base, Kansas’ reform also created a major distortion by exempting some business income from taxation.

This reform has allowed some businesses to avoid income taxes altogether which encourages others to mimic that behavior in order to minimize their tax own tax burden. One such example is University of Kansas basketball coach Bill Self, who is primarily paid through his business entity that is exempt from state income taxes. The distortion in Kansas’ tax code incentivizes this behavior.

Another problem with Kansas’ tax reform is that the decline in tax revenue due to the reform was not matched by a similar decline in spending. This has resulted in budget deficits. In Utah and the other cases studied tax reform was accompanied by reductions in state spending, which is crucial for maintaining a balanced budget.

Problems with the Definition of Food Deserts

by Brandon McFadden

Food deserts are often used to define areas that have low access to food.  In fact, many people are now referring to food deserts as low access, low income areas.  A Food Access Research Atlas is a map that shows tracts that are defined as food deserts throughout the U.S.  The Atlas is made available by the USDA and can be accessed here.  According to the USDA, “The Food Access Research Atlas maps census tracts that are both low income (li) and low access (la), as measured by the different distance demarcations. This tool provides researchers and other users multiple ways to understand the characteristics that can contribute to food deserts, including income level, distance to supermarkets, and vehicle access.” 

However, the current definition of low access may be too general.  A tract is defined as low income if: 1) The tract’s poverty rate is 20% or greater; or 2) The tract’s median family income is less than or equal to 80% of the State-wide median family income; or 3) The tract is in a metropolitan area and has a median family income less than or equal to 80% of the metropolitan area's median family income.  The original food desert measure defines low access as living one mile from a supermarket in urban areas and 10 miles in rural areas.  For more information about how the USDA defines food deserts read this. 

To illustrate that the current definition of low access may be too general, allow me to use Gainesville, FL as an example.  Below are two maps of Gainesville.  The map on the left is from USDA and the map on the right is a map from a Google search (the scaling for the two maps is not exact).  The green tracts in the USDA map represent the original food desert measure and the brown tracts represent a more stringent measure of access—0.5 miles from a supermarket in an urban area. 

From the Google map you can see that there are many Publix grocery stores in or near these green and brown tracts.  Moreover, there are many other supermarkets in the map area that are not shown.  Also in this map area are 3 Winn-Dixie grocery stores, 3 Wal-Marts, Target, Lucky’s Market, Earth-Fare, Trader Joes, Fresh Market, Ward’s Supermarket, Earth Origins, several ethnic specialty stores, and a weekly farmer’s market.  Something not captured by the Atlas, is the availability of public transportation.  For example, there is a bus system in Gainesville that increases the access to supermarkets.

The high number of supermarkets in this map area makes me wonder how access could be reasonably increased in Gainesville.  Consumers obviously need supermarkets, but consumers also need housing, green spaces, medical services, shops, etc.  The point of this is not to trivialize the effects of access to food.  Rather, the point is that the current measure of food deserts appear to be too liberal.  If we are interested in the effects of access and income on diets, we need more realistic measures of low access and income. 

The GMO Knowledge Gap

GAINESVILLE, Fla. --- While consumers are aware of genetically modified crops and food, their knowledge level is limited and often at odds with the facts, according to a newly published study by a University of Florida researcher.

Last year, Brandon McFadden, an assistant professor of food and resource economics at the UF Institute of Food and Agricultural ‌Sciences, published a study that showed scientific facts scarcely change consumers’ impressions of genetically modified food and other organisms.

Consumer polls are often cited in policy debates about genetically modified food labeling. This is especially true when discussing whether food that is genetically modified should carry mandatory labels, McFadden said. In conducting their current study, McFadden and his colleague, Jayson Lusk, an agricultural economics professor at Oklahoma State University, wanted to know what data supported consumers’ beliefs about genetically modified food and gain a better understanding of preferences for a mandatory label.

So he conducted the survey to better understand what consumers know about biotechnology, breeding techniques and label preferences for GM foods.

Researchers used an online survey of 1,004 participants that asked questions to measure consumers’ knowledge of genetically modified food and organisms. Some of those questions tried to determine objective knowledge of genetically modified organisms, while others aimed to find out consumers’ beliefs about genetically modified foods and crops.

The results led McFadden to conclude that consumers do not know as much about the facts of genetically modified food and crops as ‌they think they do.

Of those sampled, 84 percent supported a mandatory label for food containing genetically modified ingredients. However, 80 percent also supported a mandatory label for food containing DNA, which would result in labeling almost all food.

“Our research indicates that the term ‘GM’ may imply to consumers that genetic modification alters the genetic structure of an organism, while other breeding techniques do not,” McFadden said.

As participants answered questions designed to measure their knowledge of scientific data on genetic modification, respondents seemed to change their statements about the safety of genetically modified foods, McFadden said.

The study is published in the Federation of American Societies for Experimental Biology Journal.

Last Modified: Mon, 23 May 2016 10:36:46 EDT

Nirvana Fallacy Watch: Stiglitz Edition

by Levi Russell

Joseph Stiglitz recently put out a column called "Monopoly's New Era." He starts off with the standard story that unregulated markets lead to monopoly and that anti-trust is an important check on that process. He talks specifically about power relationships and gives the example of asymmetric information.

Stiglitz claims that, since perfect competition theory can't explain many of the monopolized industries we have today, that his brand of economics, which takes the tendency of "unregulated" markets to monopolization as a fundamental assumption, is rising in popularity.

That may be the case, but, I think, not for the right reasons. Stiglitz seems to think that Smith, Schumpeter, and other "free market" economists take a simplistic econ 101 view of competition:

In today’s economy, many sectors – telecoms, cable TV, digital branches from social media to Internet search, health insurance, pharmaceuticals, agro-business, and many more – cannot be understood through the lens of competition. In these sectors, what competition exists is oligopolistic, not the “pure” competition depicted in textbooks. A few sectors can be defined as “price taking”; firms are so small that they have no effect on market price. Agriculture is the clearest example, but government intervention in the sector is massive, and prices are not set primarily by market forces.

Of course, free market economists don't take that simplistic view, as I've discussed previously here, here, and here. It is this comparison, between wise intervention tutored by Stiglitz's theories and the vagaries of the free market, that I think is problematic.

Stiglitz is right to point out that many industries lobby for special government favors, but he doesn't acknowledge the reality that policies designed to correct market failures are often the cause of monopoly. As I noted in a previous post:

Government regulations essentially amount to fixed costs that prevent new firms from entering markets and existing smaller firms from competing with larger firms. Maybe these regulations are still justified, but it's not plainly obvious using the static model Thoma seems to prefer. From their inception, anti-trust suits were and still are brought mostly by competitors, not consumers. A look at the data from the late 19th and early 20th centuries doesn't tell the same "Robber Baron" story we hear in 9th grade history texts. Output was expanding and prices falling in the industries accused of being dominated by monopolies.

Stiglitz's mistake is that he compares the real world with a rose-tinted view of government regulation:

Many of the assumptions about market economies are based on acceptance of the competitive model, with marginal returns commensurate with social contributions. This view has led to hesitancy about official intervention: If markets are fundamentally efficient and fair, there is little that even the best of governments could do to improve matters. But if markets are based on exploitation, the rationale for laissez-faire disappears. Indeed, in that case, the battle against entrenched power is not only a battle for democracy; it is also a battle for efficiency and shared prosperity. 

Arnold Kling's article on Masonomics effectively responds to Stiglitz's claim:

Somewhere along the way, mainstream economics became hung up on the concept of a perfect market and an optimal allocation of resources. The conditions necessary for a perfect market are absurdly demanding. Everything in the economy must be transparent. Managers must have perfect information about worker productivity and consumers must have perfect information about product quality. There can be nothing that gives an advantage to a firm with a large market share. There cannot be any benefits or costs of any market activity that spill over beyond that market. 

The argument between Chicago and MIT seems to be over whether perfect markets are a "good approximation" or a "bad approximation" to reality. Masonomics goes along with the MIT view that perfect markets are a bad approximation to reality. But we do not look to government as a "solution" to imperfect markets. 

Masonomics sees market failure as a motivation for entrepreneurship. As an example of market failure, let us use a classic case described by a Nobel Laureate, which is that the seller of a used car knows more about the condition of the car than the buyer. Masonomics predicts that entrepreneurs will try to address this problem. In fact, there are a number of entrepreneurial solutions. Buyers can obtain vehicle history reports. Sellers can offer warranties. Firms such as Carmax undertake professional inspections and stake their reputation on the quality of the cars that they sell. 

Masonomics worries much more about government failure than market failure. Governments do not face competitive pressure. They are immune from the "creative destruction" of entrepreneurial innovation. In the market, ineffective firms go out of business. In government, ineffective programs develop powerful constituent groups with a stake in their perpetuation.

Stiglitz is right that static models of perfect competition don't explain the economy well, but he makes an unfounded leap of logic based on his idyllic view of policy. Harold Demsetz warned about these leaps of logic when he wrote about the Nirvana Fallacy. Avoiding this fallacy is, I think, an important part of policy analysis.

P.S.
Don Boudreaux points to one tragically bad prediction of Stiglitz's model: Venezuela.

Supply of and Demand for Environmental Regulation

by Levi Russell

I have a project in mind that I thought I'd share here and hopefully get some feedback. On previous posts (here and here) I've discussed some supply factors of environmental regulation. I think there's a lot more that can be done to find measures of factors affecting the supply of and demand for environmental regulation that I think would make a good public choice type paper.

There's already a lot of literature out there on supply and demand of regulation. The foundational theoretical papers by George Stigler, Gary Becker, Sam Peltzman, Fred McChesney, and Richard Posner are obvious starting points for a project like this. Some empirical/historical papers can be found here, here, here, here, here, here, and here. The last one is a lighter read.

I'm interested specifically in environmental regulation. I'm interested in it as an ag economist but also as a student of regulation in general. Environmental regulation makes up a significant portion of all regulation in the US and has for a coupe of decades.

Demand factors I have in mind include the number of species on the endangered species list, dollars spent on lobbying efforts by environmental groups on key environmental legislation, and results of surveys of public opinion on environmental problems.

Supply factors include indices of legislator support for environmental causes, majority parties in congress and the executive branch, legislation published by environmental groups, and measures of legislator ideology.

I’ll probably use data from the Mercatus Center’s RegData on Title 40 of the Code of Federal Regulations which contains most of the EPA's regulatory text. I want to look at environmental regulation in general, but also focus on specific industries such as agriculture, airlines, mining and fossil fuel extraction, manufacturing, construction, and transportation.

Any thoughts you have are greatly appreciated!

From A&M to UGA

by Levi Russell

I'm happy to announce that I have accepted a position with the Department of Agricultural and Applied Economics at the University of Georgia in Athens and will be moving there around the end of July! I will certainly miss my colleagues at A&M, but I believe this is the best move for me professionally and for my family. 

My responsibilities will be primarily in livestock extension, but I'll also teach one course per year. I look forward to working with my extension, research, and teaching colleagues in the department and with the animal science, agronomy, veterinary medicine, and other scientists for the benefit of Georgia's livestock producers, the University, and the rest of the state.

Potpourri

by Levi Russell

A survey of Europeans indicates that the public sorely under-rates the challenges with feeding the world, especially when it comes to the beneficial effects of pesticide use.

When asked what percentage of global crop yields they think are currently lost to plant pests and diseases each year, only 12% of respondents in the United Kingdom correctly identify the correct figure, which is 40%.

The USDA announced last week that 800,000 acres have been added to the Conservation Reserve Program (CRP) during its 49th signup. The press release has some good information for those who aren't familiar with CRP.

Participants in CRP establish long-term, resource-conserving plant species, such as approved grasses or trees (known as "covers") to control soil erosion, improve water quality and develop wildlife habitat on marginally productive agricultural lands. In return, FSA provides participants with rental payments and cost-share assistance. Contract duration is between 10 and 15 years. 

CRP is currently protecting more than 100,000 acres of bottomland hardwood trees, nearly 300,000 acres of flood-plain wetlands, and 300,000 acres each for duck nesting habitat and nearly 250,000 acres of upland bird habitat. In addition, CRP is creating economic benefits that include at least $545 million per year in recreation benefits and water quality benefits from reduced sedimentation of $587 million per year.

 Drought relief over the past year has been good for the Ogallala Aquifer in northern Texas and western Kansas.

Here (and here) are some columns I found interesting on the subject of a Universal Basic Income or Basic Income Guarantee and redistributive policies in general.

Do cities make us more productive?

by Levi Russell

I came across this blog post late last week and thought I'd share it. In the post, the author (a geographer) presents the typical case that city density is positively correlated with productivity. This is thought to be due to "agglomeration externalities" which are "the benefits that firms obtain by locating near each other."

The author presents some statistics showing a positive correlation between productivity and city size or density. Part of the problem of establishing a causal link between density and productivity is that once you dig into the data to figure out exactly who gets more productive in denser places, it tends to be only people who are highly skilled with "nonroutineized work." His second critique is that we don't know how density drives productivity. He gives this task to economists.

He then mentions some policy problems and alludes to an issue I've often thought about when taking courses on urban and regional economics. Do we need to reign in urban sprawl? If density doesn't actually drive productivity, is sprawl really that bad? What about technology that allows a lot of people to telecommute effectively?

I found the post thought-provoking and it has some interesting data. Let me know what you think!

Precision Agriculture Implications for Farm Management: Farmland Leasing Example

By Terry Griffin

In the US, most farmland is owned by the farmer. However, substantial percentages are owned by someone other than the farmer. In the most recent USDA Census of Agriculture, 62% of farmland was owned by the farmer-operator. The percentage of rented farmland has ranged from 35% in the 1960’s to nearly 43% in 1992. Rented farmland proportions are higher in the Delta, Corn Belt, and Plains states than the rest of the country (USDA Census of Agriculture 2012). Therefore, a primary focus of farm management has been on acquiring and maintaining control of farmland; and an important topic that precision agricultural technologies can be a useful tool.

During my precision agriculture presentations I have been discussing the value of data. In particular, the prevalence of farmers and service providers creating printed maps from yield, soil, and other data as the ultimate use of data was discussed. The value of these printed maps was debated. Upon stating that unused data has no value, I mentioned that printed yield maps usually end up with similarly very low values, but with a notable exception for farm management. One exception is that some landowners appreciate printed yield maps, especially when presented in a format such as framed like a picture suitable for hanging or as kitchen table place mats. Several participants at the meeting paused to make written notes, and several hallway conversations followed. Given the interest, it seemed worthy of a short write-up to share this idea.

Even though not all landowners would find value in receiving printed yield maps at the end of the year, many would cherish this and it ultimately could make the difference for a farmer to continue farming that tract. The overall farm management principle here is that farmers who get to know what makes their landowners happy can position themselves better to maintain and enhance that relationship (assuming some level of utility maximizing behavior). Some landowners view their investment just as that, an investment, and value the revenue stream only (i.e. profit maximizing). Others would enjoy telling their friends about their asset, the history, and current events expressed through a printed yield map, either framed or imprinted on a coffee mug or perhaps some other creative expression of it.

At a time when cutting-edge agricultural discussions include ‘big data’, telematics, and autonomous decision-making processes, there are still many opportunities to use precision agricultural technologies to improve basic farm management. In particular with the current economic farm environment of potentially increased financial stress, existing technology on the farm may aid in ways not previously considered. Other examples of using precision agriculture technology for farm management exist that will be discussed at a later time.

Intentions, Faith, and the Nirvana Fallacy

I've addressed the Nirvana Fallacy several times on this blog, and keep finding new examples of it, especially in the popular press. Many economists seem to be unaware of this fallacy and Mark Thoma is no exception. I've critiqued him previously on this issue, but his most recent commission of the fallacy is especially interesting. Below I share key parts of his recent CBS News column (in block quotes) with some of my commentary.

The Nirvana Fallacy, as put forth by UCLA economist Harold Demsetz, is the comparison of real-world phenomena to unrealistic ideals. The mere fact that economic models can specify a perfect policy solution to a problem doesn't imply that real-world political and legal institutions can successfully implement that policy. More importantly, though, imperfections in markets which are the result of informational inefficiencies can't be solved readily by governments because the governments themselves lack the necessary information.

In addition to being quite confident about the ability of economic models to generate policies that "break up monopoly" and "force firms to pay the full cost of pollution they cause," Thoma seems to put a lot of stock in the intentions of regulators and politicians.

When government steps in to try to correct these market failures -- breaking up a monopoly, regulating financial markets, forcing firms to pay the full cost of the pollution they cause, ensuring that product information is accurate and so on -- it's not an attempt to interfere with markets or to serve political interests. It's an attempt to make these markets conform as closely as possible to the conditions required for competitive markets to flourish. 

The goal is to make these markets work better, to support the market system rather than undermine it.

It may very well be that all legislators and regulators have the purest of intentions. Even so, that doesn't imply that their policies will actually achieve the results they desire. Good intentions are a necessary but not sufficient condition for efficient and effective government solutions. Decades of work in public choice economics and more recent work in behavioral public choice show that the implementation of government policies is fraught with its own government failures. Why doesn't Thoma mention these?

Perhaps the clearest example of the Nirvana Fallacy in Thoma's column comes a few paragraphs down:

In other cases, it's less well understood that failure is the reason for the government to regulate a market, or even provide the goods and services itself. Social security and health care come to mind. But once again, the private sector's failure to deliver these goods at the lowest possible price, or to deliver them at all, is at the heart of the government's involvement in these markets. (emphases mine)

Here we have Thoma's standard for real world markets. They must deliver certain goods and services at the lowest possible price. What does he mean by "possible?" Possible in the abstract world of economic theory? Why is this a relevant comparison? Does Thoma also propose we hold the actual activities of politicians and regulators to such an ideal?

Further, I'm not sure what he means by "deliver them at all." We have accidental death and dismemberment insurance, life insurance, and health insurance in private markets and have had them for a long time. We've had health care for much longer than the government has been as heavily involved as it is now. In fact, the evidence suggests that political favoritism killed a very useful alternative health care system for the poor and blue-collar folks back in the 1930s. On the insurance side of things, it's at least plausible that increases in payroll taxes decades ago helped bring about employer-provided insurance and exacerbate the problem of preexisting conditions.

Finally, let's unpack the last two paragraphs in Thoma's column. He writes:

Conservatives tend to have more faith in the ability of markets to self-correct when problems exist, and less faith in government's ability to step in and fix market failures without creating even more problems. Honest differences on this point are likely, but there are certainly cases where most people would agree that some sort of action is needed to overcome significant market failures.

Where to start? From his use of the word "conservative" as the only descriptor of his intellectual opponents, it's clear that Thoma is thinking about this as a purely political issue, not as a technical economic issue. He also seems to think that mere faith is the only reason someone might disagree with his view. Conservatives, he says, have more faith in markets and less faith in governments. Again, the public choice literature documents quite well the problems actual politicians and regulators have with implementing the idealized policies derived from economic models. He goes on to say that honest differences are "likely," not "possibly justified" or "important to consider." It seems Thoma can't conceive of a reason for his opponents to doubt the ability of the government to fix the problems he sees with the world outside of pure ideology.

Thoma's final paragraph really demonstrates the problems with the static model through which he views the world:

However, when ideological or political goals (such as lower taxes for the wealthy or reduced regulation so that businesses can exploit market imperfections) lead to attacks on those who call for government to make markets work better -- often in the guise of getting government out of the way of the market system -- it undermines government's ability to promote the competitive market system the opponents claim to support.

Government regulations essentially amount to fixed costs that prevent new firms from entering markets and existing smaller firms from competing with larger firms. Maybe these regulations are still justified, but it's not plainly obvious using the static model Thoma seems to prefer. From their inception, anti-trust suits were and still are brought mostly by competitors, not consumers. A look at the data from the late 19th and early 20th centuries doesn't tell the same "Robber Baron" story we hear in 9th grade history texts. Output was expanding and prices falling in the industries accused of being dominated by monopolies.

Richard Langlois' recent testimony to the British Parliament on dynamic competition provides some important critiques of static models. Here are some excerpts:

On monopoly and barriers to entry:

There are only two ways that a platform can maintain prices above marginal costs. One is to be more efficient that one’s competitors – to have lower costs, for example. Such a situation would not be “policy relevant,” in the sense that taking regulatory or antitrust action against the more-efficient competitor would make society worse off. The other way to maintain price durably above marginal cost is to have a barrier to entry.  

The static and dynamic views are in agreement that competition requires free entry. Taking a static view often leads to intellectual confusions about the nature of barriers to entry (that they can arise from the shape of cost curves, for example); but in the dynamic view it is clear that barriers to entry are always property rights – legal rights to exclude others.(1) For example, one can have a monopoly on newly-mined diamonds if one owns all the known underground reserves of diamonds. More typically, especially in the case of platforms, the property rights involved are government-created rights of exclusion, either in the form of intellectual property or regulatory barriers.

On the abuse of market power:

What if it is customers who complain about the “abuse” of market power? To an economist, the problem with market power is the (static) inefficiency it creates. There is no such thing as the “abuse” of market power. Economists have understood for some time that a firm possessing market power cannot by its own actions increase that market power. The only way a firm can get market power (apart from being more efficient) is to possess a barrier to entry. What many see as “abuses” are usually what modern-day economists have come to call non-standard contracts: contractual practices beyond the simple calling out of prices in a market, practices that seem “restrictive.” These practices are often solutions to a much more complicated problem of production and sales than is contemplated in the simplified models of market power. They are very frequently an effort to overcome problems created by high transaction costs.(2)

The quality of discussions of the benefits of government intervention would be greatly improved if some notion of the costs of such intervention were mentioned. This would include discussions of dynamic models of competition and the explicit admission that politicians and regulators are subject to the same cognitive biases and information problems that cause real-world markets to deviate from the perfection of static economic models.

More 2014 Farm Bill Correlations

I thought I'd share some more correlations I've calculated as I work on my paper on the 2014 farm bill. The paper is about the way electoral incentives and legislator characteristics impacted votes on the bill. Check out my previous post for more. Keep in mind that these are simple correlations that don't necessarily tell us about causality between two variables.

Here is a cross-tabulation of the "yea" vote on the 2014 farm bill and the four Census bureau regions: Northeast (0), South (1), Midwest (2), and West (3).

Fewer than half the legislators in the Northeast voted in favor of the bill. This might have something to do with the cuts to SNAP and increase in crop insurance spending (which offset cuts in direct payments), but I can't be sure. Over 75% of Midwestern legislators voted in favor of the final bill. A majority of Southern and Western legislators voted for the bill but their margins were thinner at 67.5% and  59%. 

The correlation between "yea" votes, the percentage of households in a district or state that received SNAP funds in 2011-2013, the farm share of gross state product in 2013, and the percentage of the households in a district or state designated "rural" can give us a basic idea of how these legislative incentives affected the passage of the bill.

There's a weak positive correlation between SNAP household percentage and "yea" votes (0.0036), but it's not statistically significant. Legislators representing states or districts with larger farm economies or rural household percentages were more likely to vote in favor of the bill with correlations of 0.1627 and 0.3267, respectively.

Finally, looking at the correlation between ideology and PAC spending tells an intuitive story: more agricultural PAC money goes to more right-leaning candidates while more environmental PAC money goes to more left-leaning candidates. The correlations of interest are 0.2167 for agricultural PACs and -0.3314 for environmental PACs. Both are statistically significant at the 1% level.

To clarify, the ideology variable ranges from 0 to 1 with extreme left-wing being closer to 0 and extreme right-wing being closer to 1. This doesn't by itself imply that PAC spending by either group buys votes, but it is interesting to see just how strong (or weak, depending on your expectations) these correlations are. 

The correlation between environmental PAC spending and ideology is higher because environmental PAC spending seems to be more targeted. While agricultural PACs give quite a bit of money to almost all legislators, environmental PAC spending is lower with relatively high percentages of their total spending going to specific legislators. I'll get into this more later when I have a full summary of the paper. For now I plan to keep sharing interesting information as I go.

Does Houston have Zoning Laws?

by Levi Russell

Since 2013 I've done plenty of driving in the major Texas cities: Houston, Dallas, San Antonio, and Austin. Doing so always reminds me of the land use portion of my transportation and urban economics course back in college. My professor brought up Houston and its status as one of the few major cities in the US without any zoning regulation. The funny thing is, Houston looks a lot like all the other cities in Texas: big and sprawley. I came across a Rice University blog post from last year about that very issue.

It turns out that Houston has plenty of zoning laws that simply aren't called "zoning laws." Specifically, the author notes that Houston has deed restrictions, density regulations, tax increment reinvestment zones, zoning laws around its 3 major airports (thanks to federal laws), buffering ordinances, historic preservation, and lot size regulation. So there you have it: a popular myth busted in one short blog post. I recommend you read the whole thing.

The author laments that there is no "comprehensive plan" to this de facto zoning regulation. As you might expect, I'm skeptical that such a comprehensive plan would solve the problems Houstonians (?) face. City planners have to wrestle with much the same problem politicians and bureaucrats face when trying to impose a top-down order on a complex system like a city.

This brings to mind a site I heard about recently on a Cato Institute podcast called The Antiplanner. On the site, run by independent scholar Randal O'Toole, there are no shortage of posts providing counterargument to the typical justifications for urban planning, public transportation, and other such topics. I like to point out websites that oppose the conventional wisdom and O'Toole does a fantastic job. Here, here, and here are some recent posts I found interesting.

Just to be sure there's an ag component in this post, I recommend Virginia farmer Joel Salatin's book "Everything I want to do is Illegal" which chronicles some of the practical problems of land use regulation from the first-hand perspective of a farmer and this Farmer Hayek post from last year for something more academic.