Opening up the nation’s more prosperous cities—and providing housing opportunities within them—is the key to economic growth, according to the U.S. News and World Report [1].
In “Open the Gates,” writers Emily Hamilton and Adam Milsap argue that foster innovation—and “expanding cities that do this—can bprovide a major push to the economy.
“Economies like Silicon Valley's are possible because as workers move between firms, they take what they know with them,” Hamilton and Milsap wrote. “This spreads knowledge and results in serendipitous innovation. People socialize with others both within and outside their industry, which creates another avenue for spreading ideas and learning across people.”
But Silicon Valley and other bustling areas just aren’t seeing the population growth that they should, the writers argue.
“Even as the economic benefits of living in large cities are increasing, the most productive areas are not seeing large population increases,” the wrote. “San Francisco, San Jose, and New York City are the three most productive cities in the country. Each is experiencing rapid wage growth and housing price increases without taking in many more residents.”
And while new construction could certainly help, strict zoning rules make it nearly impossible.
“Zoning rules in these cities make it so difficult for developers to build new housing that their housing stock hasn't kept up with demand over the past few decades,” Hamilton and Milsap wrote. “Rather than growing to accommodate more people, the existing housing is just getting more expensive.”
In fact, the writers say zoning regulations “are contributing to inequality and decrease income mobility.” The solution? They say it’s simple: Reduce land-use and zoning regulations.
“People are staying in places where they're less productive, but housing is more affordable,” they wrote. “One estimate finds that if productive cities reduced their land-use regulations to allow for more population growth, gross domestic product would increase by over $1 trillion annually as people moved to locations where they could secure better jobs and contribute more to economic output.”