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Cato Institute scholar talks zoning at business luncheon

Posted by lbanner on October 1, 2007

The Charlottesville Regional Chamber of Commerce, on Thursday, September 27, hosted their annual Community Government Luncheon. This year’s topic was “regulation” and the speaker was Dr. Peter Van Doren, a senior fellow at the Cato Institute and Editor of Regulation, a magazine published by the Cato Institute focused on regulation, antitrust, and trade.

Held at the Holiday Inn on Emmet Street, but for the chocolate mouse served in wine glasses in most everyone’s hand, Dr. Van Doren presented to the attendees much like he might in a class filled with graduate students. In fact, he warned the audience of his expectation of their having already taken – and passed – courses in the fundamentals of economics and policy.

To sum up his presentation for anyone who was not there would be difficult to say the least, but fundamentally, from an economic perspective, he made the point that the rationale that regulations are enacted to correct “market failure” and improve market efficiency is flawed and that fifty years of economic scholarship has proven this point. Dr. Van Doren had written in his outline, “So the evidence suggests that regulation is not about making markets work better. Instead regulation is about what all politics is about: transferring money from diffuse losers to concentrated beneficiaries through what I call microeconomic privileges.” To fully comprehend that point, I think you’ll have to read through a few back issues of Regulation or take one his classes.

But Dr. Van Doren’s primary focus was the analysis of whether or not land use regulation, “zoning,” fit the same pattern: a challenging topic for Albemarle County at present, both generally and in regards to the upcoming Board of Supervisors election. Not surprising, Dr. Van Doren concluded that the “rationale of zoning as efficiency enhancing is deficient.”

Dr. Van Doren outlined three points on zoning’s inefficiency, “Zoning reduces some property values (land that could be used more intensely), more than it increases other property values; zoning is not necessary to ‘preserve’ wealth; and the market for change in zoning is political rather than explicitly economic.”

This last point had a number of people in the room laughing nervously as Dr. Van Doren explained the current method of zoning change as a “black market.” Essentially, developers know that in order to get a zoning change they must work with the “right” local lawyers and consultants. Therefore, the compensation on change goes to lawyers and consultants and not to the local property owners, where it rightly belongs in Dr. Van Doren’s view of the fundamentals of private property.

Will Dr. Van Doren’s viewpoint on regulation impact the local discussion on zoning, especially within the upcoming County Board of Supervisor’s race? Not likely. Of the elected officials and candidates at the luncheon, Delegate David Toscano was the only one willing to brave a question, and the less development minded candidates for County Supervisor weren’t even in the room.

Nonetheless, kudos to the Chamber for bringing such radical views to Charlottesville. I’ll leave you with one more interesting Dr. Van Doren definition: When asked about zoning and the “public good,” in particular the siting of roads through poorer neighborhoods because those poorer neighborhoods lacked the wealth to oppose it, Dr. Van Doren defined “public good” as, “Your wishing that things might be somehow different than they are but not being willing to pay for it.” Hey, debate is good!


Posted in Charlottesville Regional Chamber, Policy and Regulation | 1 Comment »