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