Jim Pagels

  When journalists, NIMBYs, politicians, and activists make claims about Airbnb taking potential full-time housing stock and converting it to leisure space, they operate under the assumption that the housing supply must be fixed. This assumption is half true: By no means must the housing supply be fixed, just as the supply of laptops, shoes, or milk has no requirement to be fixed. In reality, though, the supply is, yes, somewhat fixed, but that is merely an option, chosen by NIMBY residents, politicians, and misguided housing activists* that force through restrictive construction policies that either largely inhibit or outright prohibit new housing development. Economists Ed Glaeser, Joseph Gyourko, and Raven Saks estimate that what they call the “zoning tax” accounts for, on average, more than 10 percent of the price of the average U.S. home. In cities with extreme restrictions like San Francisco, the zoning tax is as high as 50%! Here’s a thought exercise: Imagine the U.S. had very restrictive laws regarding smartphone production. If a new Apple factory wanted to produce more iPhones, each phone would have to go through a long, onerous, and costly approval process by the local government and regulatory agencies. In addition, nearby established phone factories or incumbent phone owners in many areas could successfully pressure the local government to prohibit the new factory from producing phones. Because of these burdens, the supply of phones rises only very slowly (far less than the growth in phone demand), and many people have to go about sharing a phone with family or friends or diverting huge portions of their monthly budget to owning/renting a scarce phone. In this alternative phone regulation reality, the criticism that “some tiny portion of phones are used for leisure like social media and games rather than important things like work or talking to […]