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Book Review: The Rent is Too Damn High by Matt Yglesias

Generally, our living situation plays a very large role in life. Location, rent, transportation, and probably most important, with whom we share our space with are all personal factors that drive our housing decisions and circumstances.  Yet, along with the personal factors above that play a part, there is also a broad swath of social policy and economics that help determine where we live and what prices we pay. In his new e-book, The Rent Is Too Damn High, Matt Yglesias delves into the policies of housing, density, and regulation to argue that the free market is being restricted by regulation and is creating an artificial housing scarcity in desirable areas.

Yglesias’s main assertion is that there are two ways to lower prices of housing, either lower demand or increase supply. Lowering demand would entail making an area less desirable, so it’s preferable to increase the supply in order to lower prices without harming the value of the land. Since there is little to no technological barrier holding us from increasing density by building up, then the supply is not being increased due to some other reason or reasons. According to Yglesias, the major reason is burdensome regulations imposed by the new rentiers and the thrust of the e-book is that this is harming everyone in American society.

Yglesias takes care to explain the difference in the value of housing and land, going even further to explain that the real value of land is derived from the “permission to build.” However, the density restrictions, such as height or parking mandates, drive up prices and drive people out to the suburbs and even exurbs in search of affordable housing.  After describing the price paid by suburban sprawl and examining the exodus to the Sun Belt, Yglesias then moves on to claim that there is a new rent seeker in the form of incumbent land owners who restrict in their own self interest but harm potential future residents. Also discussed in the chapter titled, “The Politics of Urbanism,” is the problem of political identity which unfortunately tends to keep both Republicans and Democrats on the same side, that is, against urban development. In the case of Republicans, it’s ignoring free markets in favor of “conformism-minded suburbanites.” For Democrats identity politics entails demonizing the developers and ignoring that scarcity is “inherently anti-egalitarian.”

Yglesias brings the same tight logical construct to The Rent Is Too Damn High as he does on his blogs which makes the book a quick but insightful read. He posts a lot of ideas in a rather short space, and that’s fortunate in this case. The format of the e-book is well suited for policy topics such as urban density. This is mainly because the time investment is not very high which allows the ideas to be more prescient and reach a wider audience. Anyone that is the least bit interested in public policy, economics, or city planning should definitely take the opportunity to read The Rent Is Too Damn High.

That being said, despite the book being a great discussion starter in this topic, I fail to find the Yglesias’s case for urban density overwhelmingly compelling. This is primarily due to three reasons:

1) The housing costs in the desirable locales may be higher, indicating there is demand. Yet, they’re nowhere close to a breaking point, like Yglesias would portray. Manhattan restaurants are not having a crisis because waiters can’t find a place to live and work near enough to the restaurant. Sure, there may be some burden placed on Manhattan waiters that is undesirable and, maybe, even fixable (!) but that doesn’t make it a compelling priority. Optimal takes a back seat to practical in many cases. So after reading this, it’s not as if I’m going to so wildly inspired as to run down and knock on the office of my City Manager and start complaining about burdensome regulations.

2) Related to the above point, is that Yglesias never addresses any of the negative aspects of increased density and why many may not find it as appealing. Now, Yglesias does cross his t’s and dot his i’s by noting that many will still prefer the suburbs and will have the option to live there, but that rings hollow after continuously extolling the merits of higher density in the chapter, “The Virtues of Density.” One example is crime. One could make the argument that crime stats would stay the same per population, or even decrease with higher density, but it would be impossible to claim that people’s proximity to crime wouldn’t be increased. Let’s face it, a lot of the flight to the suburbs is to escape, or be far away, from those types of things that density by nature brings with closer proximity (crime, trash, noise, etc.), whether it’s economically rational or not.

3) Finally, it seems to me that the distinction between value and desirability is tenuous in the case of land for urban use. Incumbent owners want to maintain high prices and either use existing regulations or form covenants to protect that price by creating scarcity. This exclusivity is what drives the desirability, and once the exclusivity is gone so is the desirability. That creates the whack-a-mole scenario where hot-spots of desirability are going in and out all over the city, which is what Yglesias wants to allow by letting developers build wherever the market dictates. Yet people don’t want to do that dance every year or so when their neighborhood changes identity at the whim of the free market. Most people that are not young, single, mobile, and well-off want to stabilize and to protect the neighborhood’s desirability from the free market for price reasons and quality of life reasons. If people cannot, it’s then that they head out to the suburban oasis to do so. This desire for stability shouldn’t be ignored.

Again, I’m a big fan of most of Matt Yglesias’s blog writing and I believe this book is a solid entry into the discussion of urban policy; but there were definitely areas I would have liked to have seen addressed, mainly a more thorough comparison of the virtues of density versus the disadvantages of density. The bottom line is, despite the fact that I agree with many of his assertions and his ideas are insightful, there’s a certain sense that you’d be forcing policy changes on a large segment of people that don’t want it and have valid reasons for being against higher density policies and there’s little recognition of that in the book.

** Since I link to Amazon in order to find the book, I feel obligated to mention that many of the reviews on there are purposefully denigrating the book without having read it. This is more of an attack on the author’s political bent than the merits of the book.