I just read a law review article complaining that some white areas in integrated southern counties were trying to secede from integrated school systems (thus ensuring that the countywide systems become almost all-black while the seceding areas get to have white schools), and it occurred to me that there are some similarities between American school systems and American land use regulation. In both situations, localism creates gaps between what is rational for an individual suburb or neighborhood and what is rational for a region as a whole.
In particular, it is rational for each suburb to have high home prices (because that means a bigger tax base)- but I don’t think San Francisco-size rents and home prices are rational for a region as a whole. Similarly, it is rational for each individual neighborhood within a city to have restrictive regulations, because if one neighborhood is less restrictive it suffers from whatever burdens might result from new housing, without the broader benefit of lower citywide housing costs.
How are school districts similar? Since the prestige of a neighborhood is related to its school district, and the prestige of school districts depends on their socio-economic makeup, it is rational for each suburb (or city neighborhood) to be part of a school district dominated by white children from affluent families, rather than to be part of a socially and racially diverse district. But if every middle-class or affluent area draws school district lines in a way that excludes lower-income children, the poor people are all concentrated in a few poor school districts (such as urban school districts in Detroit and Cleveland). Is this rational for the region as a whole? I suspect not.