Fighting NIMBY-ism

NIMYBY-ism cannot be combated on moral/ethical grounds; it's grounded in rational and logical argument. However, arguments around NIMBY-ism tend to manifest themselves in an irrational and post-hoc fashion. Arguments range from not enough parking, too much traffic, worries about “undesirables”, and a multitude of other excuses. In reality though, NIMBY's are not incentivized to allow new housing developments.

Incentivizing The Wrong Behavior

Homeowners/Landowners are financially incentivized to block and stop any development that could hurt the value of their property. Let's examine an example: Affordable Housing. Forget any actual definitions about what it means or program specifics; people are reminded of failed project housing of the 60's, 70's, and 80's. Not surprisingly, NIMBY's want to block affordable housing. They don't want a chance that low-income or subsidized housing could ruin the surrounding area. But forget the Affordable Housing boogey-man: homeowners are incentivized for there to be less housing, period.

Less Housing = More Money

Less housing stock means their assets are worth more money. Low supply + high demand = high asset prices. It's understandable that people want to watch their assets grow, but what other factors are at play here? Wage growth: “Over the last 40 years, wages for the vast majority of the U.S. workforce have grown slower than their potential and much slower than for those at the top.” [1] People are relying on asset growth to make up for lost wages. Unfortunately, for those who do not own, they have limited means for making up that difference.

Illiquid Markets

The real consequence of exercising power over developments (affordable housing or not), is that it's akin to cutting off your nose to spite your face. It creates a very illiquid housing market that prevents mobility for the US workforce to move into areas that are experiencing economic growth. It also forces homeowners to pay up for their next house, even if they get a high price for their current one! This causes more capital to be tied up into the housing market instead of flowing through the economy. The only people to truly benefit from this market are either: a) own multiple homes/properties that can liquidate and wait to buy at lower prices, b) people looking to retire and significantly downsize, or c) are able to move to a much lower cost of living region – potentially moving away from friends, family, job networks, and infrastructure, typically causing displacement and gentrification. There are large swathes of the US that are upset about Californian's moving somewhere cheaper: Texas, Nevada, Arizona, etc. They are pricing the locals out of the market. But whose fault is that? The Californian's? No. The real culprit: bad land/housing policy.

Incentivizing The Right Behavior

People tend to act rational given the system in which they operate. If a system is broken and focuses on short-termism, people act accordingly. If a system is scalable, equitable, and fair, people act accordingly. So, to fix NIMBY-ism, we must change the system by changing the incentives.

We must change incentives from people accruing wealth at the expensive of others (exclusive asset ownership) by introducing a tax on the value of land, while simultaneously reducing taxation on income, sales, and other types of regressive taxation. It kills two birds with one stone: No longer are landowners/homeowners going to grow their wealth through asset ownership, but rather effective deployment of capital and labor unburden by inefficient and unfair taxation. (See https://blog.mdunn.io/michael/the-least-bad-tax)

Once the shackles of perverse financial incentives are broken, people's behavior will change. Zoning committees won't care to have power to approve or deny new housing if it's not a detriment to their wealth. In fact, quite the opposite. More people in an area increases business opportunity and wealth accumulation through more customers and more laborers. It also decreases the living costs, effectively increasing wages. YIMBY-ism stands no chance until we change the system of incentives. NIMBY's are going to fight tooth and nail to make sure their most valuable assets stay valuable, at the expense of everyone else.

Sources

[1] https://www.epi.org/publication/swa-wages-2019/