How the Elites Built America’s Economic Wall

Bloomberg reports on how New York and California hate that middle class lifestyle:

In their paper, Shoag and Ganong don’t look at why high- income states tightened their regulations, thereby increasing segregation by education level. One possible explanation is that as people get richer and cities get more crowded, the tradeoffs between cheaper housing for newcomers and a pleasant (or at least stable) environment for current residents look different. When postwar developers were turning California orange orchards into suburbs, residents focused on the new houses rather than the lost landscape. Now opposition to new construction is not only common but institutionalized. Well-organized residents fear losing the amenities that attracted them in the first place.

Another consideration is the difference between housing as consumption -- a nice place to live -- and housing as an investment, promising high returns over time. Making it hard to build new housing in a place people want to live drives up the price of the existing housing stock. Old-timers reap capital gains. Regulation, Shoag notes, “takes what should be the gain for the worker who wants to move in and turns it into the gain for the owner of the house.”

Finally, there’s the never-mentioned possibility: that the best-educated, most-affluent, most politically influential Americans like this result. They may wring their hands over inequality, but in everyday life they see segregation as a feature, not a bug. It keeps out fat people with bad taste. Paul Krugman may wax nostalgic about a childhood spent in the suburbs where plumbers and middle managers lived side by side. But I doubt that many of his fervent fans would really want to live there. If so, they might try Texas.

An article well worth your time.