Housing Restrictions Hit Harder Than Tariffs
When I started to write this article, I was ready to blame Krugman for not discussing this far more important economic restriction. Then I did some research. Research is most useful when it changes your mind, and my research did change my mind. It turns out that Krugman has been very good at laying out the large costs to the economy of making housing artificially expensive. Caplan, in Build, Baby, Build, quotes the following from Krugman:
High housing prices in slow-growing states also owe a lot to policies that sharply limit construction. Limits on building height in the cities, zoning that blocks denser development in the suburbs, and other policies constrict housing on both coasts.
Krugman also notes, “Meanwhile, looser regulation in the South has kept the supply of housing elastic and the cost of living low.”
Many economists, to their credit, criticize these restrictions on building. But they are, on average, less outspoken against these incredibly destructive restrictions than they are against the less damaging restrictions on international trade.
The above is from my most-recent Hoover article, “Housing Restrictions Hit Harder Than Tariffs,” Defining Ideas, June 5, 2025.
Read the whole thing.
When I started to write this article, I was ready to blame Krugman for not discussing this far more important economic restriction. Then I did some research. Research is most useful when it changes your mind, and my research did change my mind. It turns out that Krugman has been very good at laying out the la...
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For 35 years, I taught economics at the college level. When teaching the theory of supply and demand, I would explain how a temporary shortage of goods would lead to higher prices in the short run. The resulting excess profits would draw new firms into the industry, eventually bringing prices back down to their long ru...
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