Charticle: Texas miracle vs Plan Maryland

Kevin Waterman joined us on The Broadside radio program last night (listen here) to give us his unique criticism of Plan Maryland–a three-part series he did over at Questing for Atlantis

First and foremost, I want to address the claims that government planning of land use policy is a necessary component of an orderly society and a functioning economy. Anybody who claims that is either lying or ignorant.

I know it’s a strong claim, but it’s a true one and we can know that because it’s been tried. Not only was it tried, it worked and has continued to work. Where you ask? Texas.

For all the talk of the “Texas miracle” on employment numbers, the real Texas miracle is in land use policy. In the Lone Star State counties are prohibited, by force of law, from implementing zoning codes and the state has shown no real interest in implementing anything of the sort at the statewide level. In fact, the only areas that have zoning controls in Texas are municipalities, and not even all of them have zoning codes.

And how has that turned out? In two words, quite well. By severely limiting the capacity of the government to plan land use policy Texas has ensured that it has a highly elastic housing supply that responds to shifts in the market faster and more efficiently than it did in other states. This in turn has had several positive impacts.

As former Center for American Progress staffer Matt Yglesias has observed, when government refused to use land policy controls to artificially limit the housing supply it resulted in much more affordable housing opportunities. Those prices helped draw people to Texas and thus ensure a better economy and lower unemployment through increased population growth:

What differentiates Texas from the rest of the United States isn’t an immunity to recessions, it’s a systematically higher population growth rate. That gap predates President Obama, predates the recession, and it predates Rick Perry, so I don’t think it tells us anything about any of those things. It’s driven, I believe, by proximity to Mexico and relatively cheap housing. This is to Texas’ credit. National living standards would be higher if the Los Angeles, San Jose, San Francisco, Seattle, and Portland MSAs along with the whole Acela corridor from Boston to Washington would adopt more robust Texas-style policies to increase the housing stock.

In addition to the key benefit of allowing the economy to grow, a lack of land use policy has also helped to insulate the Texas economy from the volatility that has rocked the rest of the country.

The above chart is the FHA’s Housing Price Index for Texas and Maryland running from 1992-2011. As you can see, Texas fared far better than my own state; by allowing the market to set the housing supply rather than government Texas largely avoided both the real estate bubble and the inevitable crash that followed when it popped. The evidence is clear – it is not returning control of land use policy to land owners that puts our economy in the hands of property speculators, it’s putting the control in government hands that threatens to derail our economy.

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