In The Zone

In response to Tyler Cowen's post on zoning I'd say the beginning of wisdom is the simple recognition that if you're hoping for deregulation to allow people to build in a higher-density manner, looking to deregulate Manhattan doesn't make a ton of sense as a first step. Not that Manhattan doesn't have a ton of zoning and other regulations (it does) but it's already pretty damn dense. Even restricting yourself to the NYC area, the things to do would be to permit Manhattan-scale building in all the parts of the outer boroughs that are near Subway stations and create more transit-oriented development near LIRR/MetroNorth/NJTransit stations in the suburbs.

But in general, almost everywhere is overzoned. If you start paying attention to hyper-local politics almost everywhere, you'll quickly see the political economy behind this, namely that zoning rules are often made to be broken. But to break the rules, you need to get a variance. And to get a variance you need to do, well, something to persuade the people empowered to grant variances to give you one. So at the margin, regulators will prefer to make restrictions that are too stringent even according to them and then grant variances that involve sundry side payments rather than simply loosen regulations.

Last, it's always worth saying that if every spot of the planet allowed Sao Paulo levels of density it doesn't follow that such density would actually emerge all across the planet. The density of any given American city is determined by (among other things) the regulatory environment, but the overall density of the country is determined by the birth, death, and immigration rates. If all our major metro areas simultaneously allowed for increased density, the short-term impact on any particular place would be relatively modest.