[After writing this, I noticed a new David Henderson post that made some similar points.  If you only have time for one, read his excellent post.]

In the US, public services such as police, fire and K-12 education are typically provided by local governments. On the other hands, federal rules prevent local governments from certain types of regulation. Local governments are not allowed to restrict speech or interstate commerce, for instance.

What about property rights? Who should get to determine how a landowner uses his or her property. The Fifth Amendment to the US Constitution does provide some important protections for property owners, but courts have tended to view those rights in a very restrictive way.  For instance, courts have allowed governments to restrict land use through zoning regulations.

Are local zoning regulations that limit the freedom to develop a piece of property similar to restrictions on speech and interstate commerce?  In that case, it might make sense to have a state or federal ban on such regulations.  Or are they like local services, where the default assumption is that local governments are best placed to address the needs of local residents?

Matt Yglesias argues that there are important external benefits from new housing construction:

A big part of that logic is that the benefits of increased housing supply, though extremely real, are also extremely diffuse. You are creating more housing supply on a region-wide basis. You are creating more tax revenue for an entire town. So lots of people who would benefit from more housing in Cambridge actually live in Somerville or Boston or Medford or Brookline, but all the costs of more housing in Cambridge fall on Cambridge residents. Since Cambridge residents get to vote on Cambridge town issues, they vote no. Then the same pattern repeats in Somerville. More housing would be beneficial, but many of the people who benefit live in Medford or Cambridge or Brookline or Boston, so they vote no. And more housing in Brookline would be beneficial, but many of the people who would benefit live in Medford or Somerville or Cambridge or Boston, so they vote no.

Trying to tell people that a few more rowhouses and apartments in their neighborhood will address housing scarcity is like trying to drain the ocean with a teaspoon.

But if you make it a state issue and the question becomes “more housing in Boston and Cambridge and Somerville and Brookline and Medford and everywhere else, but especially the highest-priced areas where latent construction demand is highest,” then everyone who benefits gets a vote.

As an analogy, a specific restriction on some political speech or interstate commerce might benefit a particular local special interest group.  But the country as a whole benefits from a general rule allowing unlimited political speech and unrestricted interstate commerce.

While the logic of local control is often quite compelling, there is no obvious reason why the argument should end at the city level.  If a city government is better able to determine zoning rules than a state government, why isn’t a small city neighborhood even more effective than an entire city?  And why isn’t an individual city block better able to set its zoning policy than a city neighborhood?  The reductio ad absurdum is to let each property owner set the rules for their own property, which effectively means no zoning regulation at all.

That’s my preference.

PS.  Timothy Lee has an excellent post discussing housing deregulation in California.  It turns out that my previous post missed California’s most important recent housing initiative.