Randal O’Toole of the Cato Institute was in town today offering a novel explanation for the housing bubble that resulted in the 2008 financial panic and subsequent Great Recession. O’Toole argued the culprit was not loose monetary policy, complex derivatives, greed, poor lending standards, lax government regulation, shoddy ratings for mortgage-backed securities or any of the other usual suspects.
Instead, he said strict land-use policies in certain states made housing prices begin skyrocketing in toward the end of the 20th century, to levels that were ultimately unsustainable. He said it was the burst bubble in those states, circa 2006-07, that led to the financial crash of 2008 — and, following that, depressed housing prices in states without so strict land-use policies, such as Georgia, beginning in 2008-09.
I’ll offer a more thorough explanation of O’Toole’s argument after I’ve read his new book and, in the interest of fairness, I urge you to refrain from trying to shoot down his argument before you’ve heard the whole thing. But I wanted to go ahead and draw your attention today to his thoughts on the popular contemporary bogeyman for strict land-use policies: the United Nations’ Agenda 21.
Agenda 21 is a document drawn up at a 1992 U.N. conference in Rio de Janeiro, and it has become a popular target of ire for some people who believe it is an attempt at social-engineering on the local level by a transnational, unelected quasi-government. It was the subject of a presentation at the Georgia Capitol hosted by then-Senate Majority Leader Chip Rogers, for which the since-resigned Rogers took much grief.
But O’Toole explained today that it’s “not really true” that Agenda 21 represents a novel threat.
“These ideas go back to 1961,” he said. “They were in the playbook [for urban planners] for 30 years before Agenda 21″ was written.
(In this paper published in December 2007, O’Toole not only listed on page 10 some of the pre-Agenda 21 laws to which he referred today. He also described the way land-use policies were creating a bubble; interestingly, he cited a 2005 New York Times column by Paul Krugman that noted housing prices had risen the fastest in what Krugman called “the zoned zone.”)
While O’Toole disagrees with the goals of urban planners expressed in Agenda 21 — regulating land use to force more Americans into high-density housing, for example — he pins the blame on the urban planners themselves.
“I don’t regard the United Nations as the threat at all,” O’Toole said. He further suggested that people who, like him, oppose such land-use policies do themselves and their cause a disservice when they invoke a globalist conspiracy to explain policies born much closer to home.
– By Kyle Wingfield
218 comments Add your comment
Kyle Wingfield
February 19th, 2013
2:38 pm
“I mean really it is kind of hard to argue that sustainable development is bad unless you are a fruitcake.”
Nice way to set the terms for debate, JDW. Agree with JDW=ok. Disagree=fruitcake.
Why is sustainable development necessarily a good thing? Is it good if it means people can’t live the way the majority of them want to live? Is it good if it leads to higher housing prices that represent a hardship on working- and middle-class families?
The fact that the U.N. is not to blame for contemporary thinking among urban planners does not necessarily mean the urban planners have it right.
Kyle Wingfield
February 19th, 2013
2:39 pm
“hint hint hint hint hint hint”
Well, we do have a conspiracy theorist among us after all. Just not the kind I expected…
Dusty
February 19th, 2013
2:40 pm
Well, to tell the truth I have not been madly interested in what caused the housing bubble. I just thought somebody built too many houses! What do I know!! (Nevermind saying Nothing!)
Who’s to blame? The people that built them!! I guess no one is going ask me to write a book or make a speech like Mr. O’Toole. Obviously!
In the meantime, I think I shall build a chicken house in the back yard. Love those chicks, except for cornish hens. Let’s see how freedom rings or roosters crow. Or maybe i should ask Mr. O’Toole He’s not a dull tool. (Please don’t put me in moderation. I promise to do better.)
Off into the wild, blue yonder…..
Finn McCool (The System isn't Broken; It's Fixed)
February 19th, 2013
2:40 pm
If the guy’s report/book applies no blame to the effects of MBSs and fraudulent lending (replete with the praise of the rating agencies) then you know he is trying to show a way for what I posted at 2:23.
Kyle Wingfield
February 19th, 2013
2:41 pm
Well, Dusty, some zoning restrictions apply to which houses can have chickens in the back yard.
Tiberius - pulling the tail of the left AND right when needed
February 19th, 2013
2:43 pm
“And, if zoning restrictions had made a meaningful contribution to the bubble and crash, I’m sure we ALL would have heard of this long ago.”
Yes, because as we all know, no one can ever come up with a new theory once liberals have decided what has caused something to occur.
Just Saying..
February 19th, 2013
2:48 pm
” …invoke a globalist conspiracy to explain policies…”
Somebody knows their audience…
Finn McCool (The System isn't Broken; It's Fixed)
February 19th, 2013
2:59 pm
Dusty’s breaking chicken ordinances?
I can’t talk my wife into letting me build a coop. But we can get eggs from friends who have them.
Pizzaman
February 19th, 2013
3:03 pm
Sorry Kyle! It was and still is all the things you mentioned id para 1 not agenda 21 or land use policies. Greed, pure and simple!
Finn McCool (The System isn't Broken; It's Fixed)
February 19th, 2013
3:04 pm
Zoning restrictions and limited supply led bankers to throw their ages-old risk aversion out the window and start writing loans with no proof of income and no money down?
If that’s what it takes for you all to sleep at night….
JDW
February 19th, 2013
3:10 pm
@Kyle…”Why is sustainable development necessarily a good thing?”
Because by definition if development is unsustainable there is an inevitable collapse….why wouldn’t you want to prevent that?
“The fact that the U.N. is not to blame for contemporary thinking among urban planners does not necessarily mean the urban planners have it right.”
I don’t see how you avoid urban planning…I mean have you been to Houston..it is really disjointed and inefficient and not a lot of fun. Here in Atlanta we have some of those same issues and they lead to bad things like traffic, smog and incredibly low livability quotients. As for planners…like any other discipline it is an ongoing process. They don’t have it right, just better than before given the demands of the future.
“Is it good if it means people can’t live the way the majority of them want to live?”
Bottom line is that if a majority of the people…voters…don’t like it there will be a change.
“Is it good if it leads to higher housing prices that represent a hardship on working- and middle-class families?”
I see no tangible evidence of that.
Agenda 21 is a is a non-binding, voluntarily implemented action plan regarding sustainable development. It is not a bogeyman, it is not a take over agenda and it is not a UN driven plot. It is a framework that can be used as a tool to build better communities.
I don’t see how that should be controversial…it is just one more thing for a select number of people to harp on that wastes time.
getalife
February 19th, 2013
3:12 pm
You cons are losing it.
Get a grip Kyle and talk about the gop civil war:
“Tea Party Portrays Karl Rove As A Nazi” HP.
They put rove in a nazi uniform.
Too funny
Kyle Wingfield
February 19th, 2013
3:12 pm
JDW: Sorry, I should have said “sustainable development”…obviously, it’s one group’s idea of what’s sustainable. (No, that group is not the U.N.!)
JDW
February 19th, 2013
3:13 pm
@Kyle…”some zoning restrictions apply to which houses can have chickens in the back yard”
As they should…have you been in a chicken house? I would be incredibly pi$$ed if one moved in next door and I am guessing you wouldn’t like it much either.
getalife
February 19th, 2013
3:18 pm
I read the economists that predicted the collapse to know the cause of the collapse.
“Their is plenty of blame to go around” but I want to see the list of those people.
atler8
February 19th, 2013
3:19 pm
Kyle,
There is a big elephant in the room you and others who talk about the more restrictive land use policies prevalent in some states or metro areas seem to be ignoring. That elephant is “geography”.
In the case of much of the heavily populated areas of Florida, there are restrictions put in place based on the close proximity of the below ground water table or tidal lowlands. It’s just common sense not to build on land where the natural tendency leans heavily towards it remaining a swamp or a flood prone area.
In California, Oregon & Washington State, there is a a different geographic factor at play that heavily influences development & where it can go. That component is called “elevation change”.
If you were to lay a map with elevation contours over a street map of places like greater L.A., San Francisco, San Diego, Portland or Seattle, you would see that many areas that are smack in the middle of or vey close to the cities or metros are not readily buildable because of the extreme changes in elevation as shown by the contour lines on a geographical map.
Additionally out west, many of the edge city areas are at a higher fire risk than the inner core areas of the metro. Thus, the cost of insurance is prohibitively high for a continued willy nilly sprawl that the population & housing price pressures there would seem to support.
By the way, both metro Portland & metro Seattle boomed in population during the last decade despite their more restrictive land development codes so you can’t just say that a more laissaz faire area, such as Houston or Atlanta is going to have an automatic built in advantage toward population growth.
JDW
February 19th, 2013
3:20 pm
@Kyle…yes there are differenct views on sustainable and quality of life for instance. Take bike paths. When I lived in CA I loved to ride. Every road has a bike path and there are numerous trails and off road paths available. Here my bike rusted out. It is damn near impossible to ride. You ride on the road you get killed. To find a path you have to drive 20 miles.
Do bike paths cost money…yes which is why they don’t exist here. Little things like that add up over time and really should be part of the planning process.
Aesop's Fables and other Lib Economic Theories
February 19th, 2013
3:21 pm
Democratic Colorado state Rep. Joe Salazar apologized Monday for suggesting some women are so unjustifiably afraid of being raped that they are liable to start shooting wildly.
I would say that the libs have some kooks too but they all are.
getalife
February 19th, 2013
3:24 pm
Since the tea party is targeting gop to purge, I think they should look at the list of “there is plenty of blame to go around” and target those gop too.
The dems should do the same thing and break up the banks like the fed official said today.
ad
February 19th, 2013
3:29 pm
It would be interesting to compare the housing bust for areas with strict land use rules vs. areas that have plenty of land available for housing. Georgia, for example, seems to allow new neighborhoods anywhere. I don’t know about Arizona or Nevada, but they seem to have plenty of land, although water might be a restriction. Those places got hit very hard by the housing bubble bursting. Places with higher population density and more restrictions, such as New York, seem to have not experienced the degree of price declines of less restrictive areas.
getalife
February 19th, 2013
3:33 pm
Why did Georgia have the most banks collapse Kyle?
Tiberius - pulling the tail of the left AND right when needed
February 19th, 2013
3:36 pm
ad, you cannot equate Arizona or Georgia to New York when it comes to this subject.
People move to places that have space, climate and opportunity, and housing naturally follows as a by-product. New York fails 2 of the 3 criteria. You cannot have a building boom when the area is already built or where people are not moving to, therefore, speculation is a lot less rampant.
md
February 19th, 2013
3:38 pm
“David Axelrod, a former senior adviser to President Obama, will join NBC News and MSNBC as a senior political analyst across “all broadcasts and platforms of both networks,” according to to the network.”
I didn’t realize he ever left……..
Thulsa Doom
February 19th, 2013
3:38 pm
“Instead, he said strict land-use policies in certain states made housing prices begin skyrocketing in toward the end of the 20th century, to levels that were ultimately unsustainable.”
Kyle,
Interesting that you bring this up. In Sowell’s book about the housing boom and bust he goes into this as one of the root causes. The reason was precisely as you describe- sky high housing prices concentrated mostly in cities with notoriously high housing prices brought on by restrictive land use and zoning ordinances.
The fascinating thing is that it was liberal policies in many of these cities- especially in California coastal and central cities like San Fran, Berkely, San Jose, and on and on that made housing unaffordable. In the name of terms such as “smart growth”, “eco friendly growth policies”, etc. what the liberals did in these cities was effectively restrict the amount of land available for housing. And for this abuse through govt they enriched themselves in the way of high values for their own homes and a barrier against newcomers. And for doing this they paid no price and suffered no consequences for their decisions which only affected outsiders and newcomers.
Well then of course the mantra that then came along later on was the mantra of “affordable housing for Americans” when in these selected cities and areas that liberals artificially created the high housing programs to begin with. Conversely housing costs were dirt cheap in cities that had little to no land zoning ordinances. Houston would be a prime example.
The guy is dead on right. The need for “affordable housing” brought on by artificially high housing prices in selected areas throughout the country is what got the ball started with all the effort to ensure “affordable housing”. And the irony is that it generally started in liberal cities with exorbitant housing costs all because the liberals cut off most of the available land for housing due their fancy notions of “smart growth” housing policies for which they paid no price and suffered no repercussions.
Tiberius - pulling the tail of the left AND right when needed
February 19th, 2013
3:39 pm
“Why did Georgia have the most banks collapse Kyle?”
A large amount of incredibly stupid people being appointed to bank boards that didn’t understand banking basics.
josef
February 19th, 2013
3:42 pm
DUSTY
I heard you were looking for me. How may I be of service, ma’am?
getalife
February 19th, 2013
3:43 pm
“A large amount of incredibly stupid people being appointed to bank boards that didn’t understand banking basics.”
Wrong.
Try again.
md
February 19th, 2013
3:47 pm
” When I lived in CA I loved to ride. Every road has a bike path and there are numerous trails and off road paths available. ”
“Do bike paths cost money…yes which is why they don’t exist here. Little things like that add up over time and really should be part of the planning process.”
Hmmm…is this the same CA that has a budget crisis and cities filing for bankruptcy??
Of course bike paths cost money, and in a balanced budget state like GA it hasn’t been a priority. Evidently it might have been better if it wasn’t a priority out there.
Wants vs needs…..wants vs needs.
Tiberius - pulling the tail of the left AND right when needed
February 19th, 2013
3:48 pm
The problem with Agenda 21, and frankly everything else associated with modern-day planning ideas, it that when someone sees something that works in one area, they feel the need to implement it in completely different areas that have nothing in common with the area where the idea first worked. It is the usual government response to everything – let’s ignore everything else around us and implement this, and let’s also double down on it because it worked so well there!
Just because basic planning works, doesn’t mean you automatically do even more planning.
Moderation in everything – especially government – is the best way to go.
Tiberius - pulling the tail of the left AND right when needed
February 19th, 2013
3:49 pm
getalife obviously doesn’t know any bank board members in Georgia, especially since he doesn’t even live here.
Which makes his last post so totally expected.
md
February 19th, 2013
3:54 pm
“Why did Georgia have the most banks collapse Kyle?”
Many were community banks loaning to their communities, but forgot the golden rule of diversification.
And some were just playing the speculation game where they wanted to build up a portfolio quickly in the hopes of being bought out by the big guys that were all in expansion mode.
Aquagirl
February 19th, 2013
3:55 pm
Maybe geta prefers civilized company, not “make a pantsload of money then stick the FDIC with the bill” company.
Tiberius - pulling the tail of the left AND right when needed
February 19th, 2013
3:56 pm
md, it all comes down to cost / benefits on things such as bike paths. Do you spend hundreds of thousands or even millions of dollars for extra right-of-way and construction costs in order to enable a few dozen people? Most would not. California obviously feels differently and will be pay the price for that for years.
Here, we sometimes plan for bike paths where we think they will get the most use. If a new mall is being planned for an area, higher density (lower cost) housing is included in the plan so as to have people who will work at the mall be close enough to it and be able to afford the housing near to it. Bike paths are often included in those plans as those residents / workers will be more willing to use them.
But we don’t go throwing bike paths on state highways.
getalife
February 19th, 2013
3:56 pm
Tiberius,
They knew it was a high profit scam.
The AJC wrote about it so use your 800 bucks a share Google.
Tiberius - pulling the tail of the left AND right when needed
February 19th, 2013
3:59 pm
I always find it amazing that getalife can assign motive to people whom he has never encountered.
getalife
February 19th, 2013
4:00 pm
“Maybe geta prefers civilized company, not “make a pantsload of money then stick the FDIC with the bill” company.”
Yeah, I don’t hang around white collar criminals like Tiber.
getalife
February 19th, 2013
4:02 pm
BTW, the FDIC sued to recover some of that scam money.
Did your friends pay up Tiber?
Cheesy Grits is gone but not forgotten
February 19th, 2013
4:02 pm
Good luck forcing me to live in a tiny box under some dictatorial rule set.
If the “urban planners”, UN or otherwise, don’t like the fact that I have “too much land” to suit their little socialist desires, they can shove it
Classic Strawman
duke
February 19th, 2013
4:03 pm
O’Toole isn’t saying anything. His “argument” against Agenda 21 is empty. Of course this has been going on since 1961. It’s been going on a lot longer than that. This agenda changes it’s name periodically, as people begin to realize what the old name really stands for; but the plan does not change. Read John Stormer’s book, “None Dare Call It Treason:25 Years Later”. The original book was written in 1964. In 1989 Stormer added 200 pages to cover the intervening years, but he changed nothing in the original part of the text. Nothing needs to be changed. All his analyses and predictions have proved true. These are not conspiracy theories; they are straightforward, well-documented historical facts.
Cheesy Grits is gone but not forgotten
February 19th, 2013
4:04 pm
and in a balanced budget state like GA
Wanna know why GA has a balanced budget.
Alot of federal money from blue states.
Georgia is one of the biggest taker states.
Aesop's Fables and other Lib Economic Theories
February 19th, 2013
4:05 pm
“We have now sunk to a depth at which the restatement of the obvious is the first duty of intelligent men” (George Orwell).
And that, my friends, is why I’m here.
getalife
February 19th, 2013
4:05 pm
I think we should cut red State welfare.
Aesop's Fables and other Lib Economic Theories
February 19th, 2013
4:05 pm
But I am unable to help cheesy. Too far gone.
Cheesy Grits is gone but not forgotten
February 19th, 2013
4:06 pm
A large amount of incredibly stupid people being appointed to bank boards that didn’t understand banking basics.
Good ole boy network is another way of saying it
md
February 19th, 2013
4:06 pm
Tibs….yep, and it makes sense to me to put in payhs in places of recrestion or high density where bikes are a common form of transportation.
The comment was meant more as an illistration of the thought process of some on the left…..that is “I want so someone needs to provide it”.
I can see it as a need in some communities, but for the most part I see it as a want. I’ve been to Amsterdam on several occasions and even they don’t have bike paths all over the city, you ride on the roads downtown and take your chances.
getalife
February 19th, 2013
4:07 pm
“But I am unable to help cheesy. Too far gone.”
Pot to kettle.
Tiberius - pulling the tail of the left AND right when needed
February 19th, 2013
4:09 pm
I see that Repetitive Poster #2, otherwise known as Cheesy Grits, has been released from daycare.
md
February 19th, 2013
4:09 pm
“Wanna know why GA has a balanced budget.
Alot of federal money from blue states.
Georgia is one of the biggest taker states.”
Do you know the difference between having a balanced budget and being a balanced budget state?
They are NOT the same thing……
getalife
February 19th, 2013
4:10 pm
I did have a family member involved in the housing scam and the stress from his fraud gave him shingles so I do know the scam.
Aesop's Fables and other Lib Economic Theories
February 19th, 2013
4:10 pm
At least I have more than one kernel of information to share.