Zoning by-laws are preventing change for the better

How can we promote job creation, increase innovation, tackle poverty, and also mitigate our impact on the environment?

The answer to all these problems is to liberalize zoning.

Zoning bylaws are what restrict the quantity and type of homes and other structures you can build on your land. Zoning is an artificial (as opposed natural) restriction on new development.

(It’s important to note that zoning is different than the building code, which sets standards for safety.)

For decades, zoning has become more and more restrictive. And our ability to provide sufficient housing for a growing population has suffered as a result.

This is a big problem. There are many important benefits that come with more housing. Specifically, the benefits of more people living closer together in an interconnected manner.

Several big cities in North America are suffering from the negative effects of zoning over-regulation, like New York, Vancouver, and San Francisco. But let’s just make an example of Toronto. Currently, artificially restricted housing development has led to average rents of a one-bedroom condo in Toronto to surge over $2,100 per month.

Despite this, with over 2.9 million residents currently, politicians Toronto still expect the city to grow. The province anticipates an additional million people to move to the city in the next 20 years. But if housing prices continue to go up because we aren’t building enough homes, then the city will become more unaffordable for people to live in. That will lead to fewer people moving here. The city will be smaller than it could have been.

Here are four reasons why getting housing policy right is crucial for several important areas.

First, cities result in faster job creation. In the words of the well-traveled urban planner Alain Bertaud, cities are primarily labour markets. Cities, as superconnected economic areas, allow for the mobility required for many job seekers and employers to quickly find matches to fill positions.

As we become more dependent on each other, and rely less on ourselves, we are engaging in a process called the division of labour.

It is the division of labour that enables such a wide variety of employment opportunities in big cities. Where else other than a city of millions can a software engineer, a lighting specialist, an indoor cycling instructor, and a lawyer all offer their services in the same building?

As many observers of economic life, from Adam Smith to Aristotle, realized, the division of labour is limited by the extent of the market. Cities, as large population centres, offer a large market. They thus offer the opportunity for an extensive division of labour.

Second, cities are where innovation happens. Innovation comes from the sharing of ideas. This is because in cities, the vast confluence of people of different backgrounds enable ideas to have sex — by mixing different ideas together, you get the chance to produce all kinds of new ideas as an outcome.

This innovation then is propagated to other parts of national and international economy. As the underrated urban economist Jane Jacobs observed in the first chapter of her book The Economy of Cities, “The most thoroughly rural countries exhibit the most unproductive agriculture.”

Third, cities decrease poverty. This point directly flows from the previous two. The more income people have, the less impoverished they are. The more jobs there are, the more experienced and connected locals can move up to find higher paying jobs, while inexperienced immigrants will want to move into the city.

The more people move into a city, the more ideas can reproduce and mutate into new ideas. The more new ideas there are — along with the rich pools of labour and capital — the more opportunities for creating even more jobs and paying even higher salaries to attract more employees.

As Harvard economist Edward Glaeser put it, “Cities don’t make people poor, they attract poor people.” And the reason the poor and impoverished move into cities is because of the opportunities they provide to allow economic advancement.

Finally, cities help preserve the environment and produce more and better food. As people and production become clustered in central locations, they free up arable land elsewhere to focus on growing food. By freeing up this land to be put to use for food production, we waste fewer resources producing food in infertile land, while simultaneously allowing ourselves to produce more and better quality food on less land.

This is the conclusion that geographers Pierre Desrochers and Hiroko Shimizu draw in their book The Locavore’s Dilemma. By embracing the global food production chain, while also urbanizing, we will impart a smaller physical footprint on the Earth. And that “the smaller the total area in active human use on the planet, the more environmentally friendly the landscape.”

Humans working together is what enables great things to happen. By building more housing in cities, we are only setting ourselves — and future generations — up for success.

Is building more homes a panacea to all our social ills? No. But keeping our zoning laws as is while expecting things to change is the definition of insanity.

Ash Navabi is senior economist at Housing Matters. Send him mail at ash@torontohousingmatters.com