In a recent article on Bloomberg, Tyler Cowen delved into the challenges of deregulation, highlighting the complexities involved in dismantling government regulations. He emphasized the paradox that while reducing regulations requires a significant amount of state capacity or competence, deregulators are wary of granting more power to the state, fearing potential regulatory actions. This dilemma poses a significant obstacle to achieving substantial deregulation at the federal level.
However, a recent Twitter thread by Brian Hanlon shed light on a similar issue at the state level, particularly in the context of promoting housing construction. Hanlon’s discussion revolved around the dual approach of deregulation and mandates in the Yimby movement, which seeks to address the housing crisis by advocating for more construction.
Hanlon acknowledged the logic behind using mandates as a tool to counterbalance local governments’ regulatory barriers to housing construction. While mandates are not the ideal solution, they could potentially incentivize action on the issue by imposing penalties on local governments that hinder new housing development. For example, tying local grants to the quantity of new housing built could encourage municipalities to relax their restrictive regulations.
Despite the potential effectiveness of this approach, Hanlon expressed reservations about its practical implementation in states like California and Massachusetts, where legislative processes often lead to compromises that deviate from the original intent. Nevertheless, he recognized that in certain regions where housing mandates are already prevalent, they may be a lesser evil compared to the status quo.
Overall, Hanlon’s insights underscore the complex interplay between deregulation, mandates, and state capacity in addressing regulatory barriers to housing construction. While the effectiveness of using mandates as a policy tool remains uncertain, it represents a potential strategy to incentivize local governments to facilitate more home building and alleviate the housing shortage in various parts of the United States.
