Regulation Helps the Rich and Harms the Poor; B. Siegan

BERNARDH. SIEGAN THE BELIEF that we need govern mental regulation to prevent the rich from exploiting the poor is at the basis of many laws. It hap pens to be wrong; usually regula tion benefits the rich much more than the poor. Fifty years of zoning experi ence in this country supports this conclusion. Zoning is one of our most pervasive forms of regula tion, and its effects are by now apparent and beyond conjecture. They show that instead of provid ing for the public welfare, it has done well only for the private wel fare of the well-to-do. It has gen erally been harmful to those of average and less income. The most Copyright 1974 Bernard H. Siegan Mr. Siegan is the author of Land Use Wi:hout Zoning and many articles on the subject. He practiced law for 20 years in Chicago before moving in 1973 to La Jolla, Califomia where he is professor of law at the University of San Diego Law School.

612 notable exceptions, it seems, are the fortunate ones who become politicians and planners control ling zoning. If they do not become rich, at least they become pow erful. This is how zoning has discrim inated against the less affluent persons in our society: 1. The best means for lowering the cost of housing, both new and existing, is to increase the supply. Zoning does exactly the reverse. It restricts the production and supply of real estate from housing to stores. Hardest hit as a result, are those with the least money. For a family struggling to main tain financial solvency, almost any increase in rent can be a serious handicap. Consider the case of two Texas cities separated by only 242 miles: Dallas and Houston. Dallas has been zoned since the early 30's and Houston has never adopted it.

1974 REGULATION HELPS T'HE RICH AND HARMS THE POOR 613 Both have quite similar economic profiles. There is one major ex ception however: cost of rent. Apartment rentals in Houston are distinctly lower because the sup ply of land for apartments is not restricted by political and plan ning considerations. 2. Most affluent suburban and rural communities erect zoning barriers to exclude apartments and townhouses. When apartments are permitted, they usually have to comply with rigorous "snob" con struction and design standards that make them affordable only by the wealthier~ Their practices with respect to mobile homes are worse. These units catering frequently to families that would otherwise seek government housing subsidies are excluded from vast portions of this country. 3. Typically, these communities also do not want inexpensive homes in their midst. So they re quire, among other things, large lots or large amounts of interior space per dwelling, both of which add to the bill.

4. The practical operation of zoning raises development costs that are passed on to the con sumer. When the local authorities rezone property for single or mul tiple family purposes, they are likely to extract conditions, legal and sometimes extra-legal, which can be quite expensive. The installation and maintenance of swimming pools and recreational facilities, for example, add sig nificantly to the cost of housing. One of the motives behind these practices is to keep out projects that attract people of lower in comes. 5. Zoning prohibitions tend to curtail the construction of stores and repair shops within walking or short distances of homes and apartments. In areas lacking pub lic transportation, this creates in convenience and hardship for a family without a car or with only one older one, particularly if it is used by the husband during the day. The rise in gasoline prices adds to the problems.

6. Zoning is harmful to the in terests of small builders. There are now so many zoning rules and regulations that it requires the services of lawyers and sometimes planners to process almost any changes. Moreover, obtaining zon ing approval may take months or years and that involves the ex pense of holding or optioning prop erty. These conditions are elimi nating small builders to the ad vantage of the large ones who are in a much better position to cope. These facts hopefully should help put to rest a major myth of our society. The zoning story is not unique; it is duplicated in other areas of regulation. f) Dog-Eat-Dog Competition M. NORTHRUP BUECHNER THE CHARGE of "dog-eat-dog" or "cutthroat" competition is not among the heaviest weapons in the anticapitalist arsenal, but neither is its significance trivia1. It was an important factor behind the Interstate Commerce Act of 1887, the first major intervention by the Federal government into private business in this country. In the depression of the 1930's, during Roosevelt's first term, it was the major impetus behind the attempt ed cartelization of American busi ness through the National Recov ery Administration. It is the pri mary reasoning behind some stat utes of the antitrust laws, espe cially the Robinson-Patman Act.