Urban Planning and the Poor

Many government interventions in markets though they are often justified in terms of the ‘public interest’ work to the disproportionate benefit of organised interests – often the rich or relatively rich – and at the expense of the unorganised and often relatively poor.

One area of public policy where this pattern is particularly evident is that of urban planning. In the United States, as Jane Jacobs showed so powerfully, the subsidised construction of luxury hotels, civic centres and highways has often paid precious little attention to the fate of the people and small businesses that have been ‘relocated’ to make way for politically high profile ‘regeneration’ schemes. The principal beneficiaries have often been large scale property interests who secure access to land on terms that would not have been available in a free market. In the United Kingdom meanwhile, large scale ‘slum clearance’ programmes in the post war era saw hundreds of thousands of low income people ‘relocated’ to high rise blocks – a process which often destroyed local community support networks but secured jobs for thousands of middle class local government housing managers and for large construction contractors which built what turned out to be some of the worst urban housing projects anywhere in the developed world.

As well as crimes against the poor in the name of urban renewal, urban planning has often prevented low income people from accessing housing in suburban and semi-rural areas where new and better paying jobs have been created. The primary culprit here has been restrictive zoning regulation – and in the British context the creation of development free ‘green belts’ around major towns and cities (now imitated by some US cities such as Portland). The effect of these controls has been to restrict the supply of land for housing forcing up the price well above free market levels. The major beneficiaries are of course existing home-owners in areas of high housing demand who benefit from increased property values and who use land use regulation to keep out ‘less desirable’ residents. In the UK specifically many analysts have pointed to a ‘drawbridge effect’ where the middle classes move out of the cities to rural and suburban areas and then promptly demand tougher regulation to ‘keep out’ the less well-heeled and the new building that would be needed to house them. Similar processes operate in the US where ‘large lot’ zoning ordinances that mandate minimum lot sizes of several acres in many states have been used to maintain neighbourhood exclusivity.

These predominantly middle class motivations are reinforced by the gains that flow to corporate housing developers who use urban planning regulation to reduce competition. Corporate developers favour a system which provides permission to develop their own land while affording opportunity to restrict access to land for their competitors. Smaller firms in particular tend to be squeezed out of the market owing to their relative inability to afford the expenses and legal fees needed to lobby effectively to secure development rights through the political process. The effects of this phenomenon have become particularly pronounced in the UK where the ‘self-build’ sector has been almost entirely eradicated. Individuals who might want to build their own homes or contract with a small developer often can’t afford the expense of going through the planning process themselves and must rely instead on the corporate sector.

Of course, to point out the pernicious effects of urban planning controls, is not to suggest that there is a case against all such controls. If we want to protect open spaces and other environmental assets then land use regulation has a role to play – but much of this can be provided privately and need not operate in a zero-sum manner. Homebuyers who value open space protection and other environmental controls, for example, may purchase developments with restrictive covenants or contract into private communities which impose land use restrictions on plots within their domains in order to maintain neighbourhood integrity. In these cases middle class homebuyers have to compete directly in the market with those who value land in alternative uses (land without housing controls) and are faced with the cost (via higher prices) of the level of regulation they demand.

All the evidence suggests that the demand for environmental protection is closely related to income. The rich and the middle classes have a stronger preference for land use controls than the poor. What state enforced, as opposed to private urban planning enables them to do, however, is to secure access to environmental quality ‘on the cheap’ and to do so at the direct expense of lower income groups. When those on middle and higher incomes have to pay directly for the right to regulate land via private contracts then they will tend to demand less of the relevant regulation overall. By contrast, under a state-directed system, middle class groups wanting more restrictive controls can simply lobby the political authorities for ever more restrictions on other peoples’ property. Because they do not face the full opportunity cost (higher prices and fewer homes for those on low incomes) of the policies they support, an excessive amount of regulation is demanded.

The effects of urban planning referred to in this post have been documented by academic analysts on both the ‘left’ and the ‘right’.* Virtually all of the studies conducted in the UK, USA and in many other countries confirm that government-led urban planning redistributes income and opportunity away from the poor and towards the middle class and the rich. The big question that needs to be asked is why, in light of this evidence, so many British ‘socialists’ and American ‘liberals’ who profess to be concerned about ‘social injustice’ continue to support it.

*‘Left of centre’ analyses of these effects include Logan and Molotch (1987) Urban Fortunes, University of California Press. Pahl (1975) Whose City? Penguin. (1975) Hall, P. et al (1973) The Containment of Urban England, London: Allen and Unwin. My own earlier work analysed these effects from a public choice perspective – see Pennington (2000) Planning and the Political Market: Public Choice and the Politics of Government Failure, London: Athlone/Continuum.

11 thoughts on “Urban Planning and the Poor

  1. “The big question that needs to be asked is why, in light of this evidence, so many British ‘socialists’ and American ‘liberals’ who profess to be concerned about ‘social injustice’ continue to support it.”

    Isn’t the answer usually, “Well, we didn’t have enough: a. Money, b. Power, c. Knowledge, d. All of the above, to make it work correctly, but as soon as we can get more of the same, we will surely make it work correctly”?

  2. “Homebuyers who value open space protection and other environmental controls, for example, may purchase developments with restrictive covenants or contract into private communities which impose land use restrictions on plots within their domains in order to maintain neighbourhood integrity. In these cases middle class homebuyers have to compete directly in the market with those who value land in alternative uses (land without housing controls) and are faced with the cost (via higher prices) of the level of regulation they demand”

    I would point out, this is overwhelmingly the case in the Houston Metropolitan area where I live. The interesting thing about this type of development is that Houston has more dedicated park space per capita than any city in North America. Housing is very affordable. Also development tends to be quite spread out with large open, even rural spaces within the urban ones, Most of the time everyone gets along.

    There are three really good blogs on planning and the pernicious effects thereof:

    First, there is the Anti-planner, hosted by a Portland urban-planner-with-regrets:

    http://ti.org/antiplanner/

    The Austin Contrarian is hosted by an Austin real estate attorney who reports on land use issues and problems in centrally planned Austin:

    ttp://austinzoning.typepad.com/austincontrarian/

    Finally, here in Houston, the un-Austin, there is Houston Strategies which reports on the generally laissez-faire approach taken on the Gulf Coast:

    http://houstonstrategies.blogspot.com/

    The three taken together make for very interesting reading on land use and planning both in their native locales and nationally.

  3. “The big question that needs to be asked is why, in light of this evidence, so many British ‘socialists’ and American ‘liberals’ who profess to be concerned about ‘social injustice’ continue to support it.”

    I think it’s largely because ‘socialists’ and ‘liberals’, like all human beings, often act in hypocritical and self-interested manners without fully thinking through the consequences of their actions.

    That said, this was a lovely post. Housing and urban planning policy are extremely important and more attention should be paid to them.

  4. Late for a new comment – but got pointed here in a tweet.

    I think you make the common mistake of looking at this as a static system. You haven’t thought of how your new system will look in the future.

    If your plan had been introduced in the UK (say) 200 years ago, by now the ‘desirable’ areas would all have restrictive covenants on them put in place by the wealthy people of the past… So today would probably look very much like it currently does – except probably less developed, and no method of changing the ‘planning rules’ because they are now enshrined in restrictive covenants instead.

    You have simply handed planning control to the rich, with a teaser suggesting that the poor people here right now might get a bit of influence. I suggest they won’t get any influence (they will be outbid), and the future poor will be entirely locked out because ‘the rich’ of today locked future generations too.

    1. Restrictive covenants aren’t unbreakable (or shouldn’t be). There should always be a claimant on each and every legal right: the right to develop will always belong to some entity, which can change its mind or renounce or transfer the right.

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