Abundance

Factories could now be located anywhere. Buses liberated urban workers, too. They didn’t have to live within walking distance of their jobs or on a streetcar line. They could reside anywhere, and working-class apartments could be built anywhere. Homeowners could no longer rely on geography to protect them from the people and producers they wanted to avoid. If distance couldn’t keep them safe, rules would have to do so instead. (Location 565)

It is worth a moment to consider how financially problematic an owner-occupied home was at the beginning of the twentieth century—and remains to the present. An investment advisor whom you have consulted looks at your middle-income portfolio and tells you that you should put almost all of your liquid assets in a single investment. It is not a diversified mutual fund; it is a single firm, and the firm makes only one product in a single location. It has a great upside in that its returns are almost entirely untaxed under federal and state income tax laws, and it insures you against rent increases by the landlord. But its asset value is subject to a multitude of risks. Not least are those from the neighborhood and the single municipality in which the firm is located. Bad events next door, down the street, at the school district, and in city hall can put your life savings in a tailspin.55 (Location 713)

In the ’70s, rising inflation and slowing home building turned the homes people did own into the center of their wealth. But how do you protect the value of that asset? You can insure a home against fire, but you can’t insure it against rising crime rates or local schools slipping in quality or a public housing complex being built down the block. To manage those risks, you need to control what happens around your home. You do that through zoning and organizing. You do it through restricting how many homes and what kinds of homes can be built near you. (Location 721)

But the market in home construction is dominated by small firms: more than 60 percent of employment in single-family home construction is in firms with fewer than 10 employees; in manufacturing, most employees work in firms of more than 500 people.66 Why is home construction in America dominated by such small firms? The researchers pick through the data and find that firms are allowed to build on less and less land, and are subject to more and more land use regulations, in ways that choke off their ability to grow and scale their work across cities and states. A manufacturing plant can locate in one place and sell everywhere. Builders have to negotiate through the regulations and interest groups and political relationships of each parcel of land they work on individually. (Location 1333)