Why it’s not Agenda 21 that should worry you

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

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218 comments Add your comment

Aesop's Fables and other Lib Economic Theories

February 19th, 2013
1:42 pm

Nah, it was karter and klinton.

Finn McCool (The System isn't Broken; It's Fixed)

February 19th, 2013
1:43 pm

LOL, take the blame off the bankers and put it squarely on government and government regulation!

Conservatives are hard at work with the SPIN.

Kyle Wingfield

February 19th, 2013
1:44 pm

And, unsurprisingly, Finn wastes no time attacking an argument he hasn’t even heard yet.

Aesop's Fables and other Lib Economic Theories

February 19th, 2013
1:45 pm

He’s got a point, Kalifornia has pretty much priced the common man out of the market using ecoterrorism as their excuse.

That bubble may never pop however because those people is krazy.

Kyle Wingfield

February 19th, 2013
1:46 pm

Aesop: Actually, he doesn’t even blame the CRA. His argument is that housing prices only rose to the point of being unaffordable for the middle class and working class because land-use policies restricted housing supply.

As I said in the OP, I’ll present his argument more fully after I’ve read his book. I got a pretty good idea of it during his presentation today and a short interview afterward, but I want to be sure I got the whole thing.

Finn McCool (The System isn't Broken; It's Fixed)

February 19th, 2013
1:48 pm

I’ll offer a more thorough explanation of O’Toole’s argument after I’ve read his new book

From one jumper to another. I think most Op/Ed writers try to get a little understanding of the issue before posting a commentary on it. I’m not an Op/Ed writer.

Kyle Wingfield

February 19th, 2013
1:51 pm

Well, Finn, you certainly do demonstrate regularly that you don’t try to understand issues before you comment on them.

Aesop's Fables and other Lib Economic Theories

February 19th, 2013
1:52 pm

Kyle – CRA was created to try and ease some of the restrictions put in place by the land use policy. It’s another liberal vicious circle. They try undo the original damage by inflicting more damage. You can apply that theory to any of their policies.

md

February 19th, 2013
1:55 pm

Well, I haven’t heard his argument yet, but from what I witnessed inside the casino that was the housing boom it better be a good one…….

Tiberius - pulling the tail of the left AND right when needed

February 19th, 2013
1:55 pm

Made this argument time and time again while on the county commission.

It should not be the role of government to determine housing values based on zoning requirements.

And Agenda 21 is just more black helicopters circling above anti-government extremists’ homes.

Finn McCool (The System isn't Broken; It's Fixed)

February 19th, 2013
1:56 pm

Enter your comments hereWe need a thorough understanding of the “why” of land use policies and restrictions in the first place.

Are they meant to appease the developers? the EPA/tree huggers?

Is it meant to appease local government efficiency?
For example: you generally don’t have to police warehouse districts on weekdays as much as you do in after hours when things are quiet and fewer people about to catch thieves

Another example: your sewage and water needs in residential areas are quite different from those business districts – you need more robust electrical utilities in business districts than residential? Time of day is a factor as well – people are at home at night and on weekends but they are in the business districts during working hours.

Is it meant to appease homeowners who want to keep the noise of business life/work out of their neighborhoods?

Aesop's Fables and other Lib Economic Theories

February 19th, 2013
1:56 pm

Look at health care for instance. The liberals jacked up the price of it by regulating it’s free commerce and allowing the tort lawyers to run rampant upon it. And now they’ve inflicted the maximum damage to it, with obozocare, to fix their original damages. It’s truly insane what we allow them to do.

Finn McCool (The System isn't Broken; It's Fixed)

February 19th, 2013
1:58 pm

CRA was created to try and ease some of the restrictions put in place by the land use policy.

total BS. The CRA was put in place to force bankers, who take deposits in one neighborhood, to make loans available to people and businesses in those very neighborhoods. They used to take deposits in the poor neighborhoods and then only lend in the upper class neighborhoods. Both the poor neighborhoods and the rich neighborhoods have their share of risky borrowers.

Bruno

February 19th, 2013
2:00 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. 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.

Kyle–I’ll have to look into Mr. O’Toole’s ideas more before commenting in any detail, but at first glance it comes across as overly simplistic. Prices depend upon market conditions, and it’s hard to see how land-use laws were much of a factor in the housing bubble build-up, especially here in GA. In particular, I own properties in Gwinnett and Cobb counties, and both are now worth about half of what they were appraised for in 2005.

Finn McCool (The System isn't Broken; It's Fixed)

February 19th, 2013
2:00 pm

determine housing values based on zoning requirements.

I’m glad you made the argument against this cause that doesn’t make any sense at all.

Aesop's Fables and other Lib Economic Theories

February 19th, 2013
2:01 pm

I wouldn’t write off the UN as not harmful just yet. The problem is that liberals worship them and their dangerous ideas. They are the main drivers of this climate hoax, and when that finally collapses in a heap, which it will, the libs may well just pick up Agenda 21 and run with it.

They’ve got to have some way of exerting control over us.

Dusty

February 19th, 2013
2:02 pm

Kyle,

Just to be sure I know what we are talking about here, explain “land use”. Is that a reference to zoning issues, Federal mandated environmental issues, national and state parks, flood plains? To what is O’Toole referring exactly?

Kyle Wingfield

February 19th, 2013
2:09 pm

Bruno: He’s referring chiefly to land-use policies in states like California and Florida, where the bubble was far worse. The decline in prices in less-regulated states like Georgia was less severe on the whole (though there are always, of course, exceptions) and began in earnest after the financial crisis, whereas the decline in the more-regulated states began before the crisis. According to his theory, the decline in the more-regulated states drove the crisis, which eventually spread to places like Georgia.

Finn McCool (The System isn't Broken; It's Fixed)

February 19th, 2013
2:09 pm

from Krugman’s article:

Meanwhile, the U.S. economy has become deeply dependent on the housing bubble. The economic recovery since 2001 has been disappointing in many ways, but it wouldn’t have happened at all without soaring spending on residential construction, plus a surge in consumer spending largely based on mortgage refinancing. Did I mention that the personal savings rate has fallen to zero?

banker greed
banker scams
banker greed
banker scams

Tiberius - pulling the tail of the left AND right when needed

February 19th, 2013
2:09 pm

“I’m glad you made the argument against this cause that doesn’t make any sense at all.”

Nice to see your inability to grasp the obvious remains intact, Finn.

Kyle Wingfield

February 19th, 2013
2:10 pm

Dusty: Mostly zoning issues — restrictions on where housing is built, and of what kind (i.e. single-family homes vs. multi-family homes).

Aesop's Fables and other Lib Economic Theories

February 19th, 2013
2:10 pm

Dusty – Land use issues describes almost any method a liberal chooses to exert control over your domain. With the ultimate goal, of course being that it becomes their domain. Property rights is another thing that rubs them raw, like the 2nd Amendment does.

Look at this “energy efficient” home fatwa of theirs. Installing “smart” meters on your home to monitor your energy usage? Dictating certain standards of “efficiency” before you can resell it?

And then go to Washington, DC and look at all the raggedy old buildings that have an AC unit hanging out of every window. Not only do they not care about energy efficiency, they use the most expensive and least efficient methods of providing for their own comforts while they dictate to the rest of us.

MANGLER

February 19th, 2013
2:11 pm

That restricted housing supply you speak of … would that be the 60 month supply of speculation tract built single family vacancies that plagued many suburbs, or the over development of in town condo’s that plagued many cities? I have not once heard anyone say “gee, I just can’t find a house or a condo anywhere because the supply is so restricted”.

Finn McCool (The System isn't Broken; It's Fixed)

February 19th, 2013
2:11 pm

They’ve got to have some way of exerting control over us.

The current way is working just fine – it’s called Karl Rove, Fox News, Rush Limbaugh. The trifecta of our ownership of the Cons.

Finn McCool (The System isn't Broken; It's Fixed)

February 19th, 2013
2:13 pm

The decline in prices in less-regulated states like Georgia

Well, you can pop a trailer home up just about anywhere, right Tiberius?

Aesop's Fables and other Lib Economic Theories

February 19th, 2013
2:16 pm

banker greed
banker scams

krugman and finn don’t know that the federal government is the one paying these banks to refinance the mortgages? Uh, yes they do. It’s that take responsibility for your own actions problem that brings about such gibberish from them.

Kyle Wingfield

February 19th, 2013
2:17 pm

Mangler: Are you talking about pre-bubble or post-bubble?

Finn McCool (The System isn't Broken; It's Fixed)

February 19th, 2013
2:17 pm

Two new reasons for Cons to hate NBC:

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.
He joins former White House Press Secretary Robert Gibbs, who signed on as a contributor to both networks last month.

indigo

February 19th, 2013
2:17 pm

Kyle, I’m not surprised you’d tout the views of someone who denies Big Banks greed and poor lending standards in favor of some quirky “strict land-use policies that no one has ever heard of.

Trolls Bane

February 19th, 2013
2:20 pm

He does have a valid point, in some aspects.

Many local communities have created a zoning scheme that restricts the land available for any commercial enterprise or productive enterprise. This artificial restriction in the supply causes the price of this property to be much much higher than it would otherwise be, raising barriers to entry.

However, I would disagree with the “percieved” right to live in a humongous mcmansion. And the current trend is for more denser living arrangements… condos and townhouses …

Finn McCool (The System isn't Broken; It's Fixed)

February 19th, 2013
2:21 pm

What made the restricted land use areas zoned for residential so restricted? Could it have been due to banks pushing subprime loans without any proof of income? Banks pushing loans that involved fraud by steering people, who qualified for sound loans, into risky loans?

Could all these new housing needs perhaps had something to do with supply problems which led to rising prices/bubble?

Nahhhhhhhhhhhhhhhhhhhhhhh.

MANGLER

February 19th, 2013
2:22 pm

Since zoning is mentioned, we can discuss Houston, which has no zoning codes. They still suffered a housing bubble and subsequent deflation of values. However, with Houston (as with Texas in general) there were enough low wage jobs being created as a derivative of the “growth” industry (similar to the one Atlanta enjoyed since the Olympics) that the influx of people moving from lost manufacturing jobs in the rust belt skewed those numbers a little. They also have horrid traffic and air pollution that now rivals Los Angeles and to compensate for the sprawl (of those restricted access housing units) all new highways are toll roads.
Or one could look at Portland, OR, or Seattle. They both have very strict land use regulations and high density zones. The cost for housing is the same based on median income, which is also higher there than here. Seattle’s bubble didn’t crash their local economy, since it is diverse and strong. Yet Atlanta’s economy took a wallup, since it is apparently based on logistics and complaining about the traffic.

Trolls Bane

February 19th, 2013
2:23 pm

I would also have to add, many many local communities have zoning schemes that maximize the land for housing … and usually specify a minmum square footage, and thus price, and minimize the land for commerial / productive enterprise.

The local communities have a perverse incentive … each mcmansion brings in 1500 to 3000 or more tax dollars per year … 20 houses on a 10 acre plot is 60,000 per year instead of much less for a single commercial or productive enterprise on the same land.

Finn McCool (The System isn't Broken; It's Fixed)

February 19th, 2013
2:23 pm

What the guy is arguing is that the bubble wouldn’t have burst if bankers could have gone on forever writing those risky/bad loans. But, the restrictions which led to limited supply contributed to the bubble reaching an end point and a burst.

Tiberius - pulling the tail of the left AND right when needed

February 19th, 2013
2:25 pm

“Well, you can pop a trailer home up just about anywhere, right Tiberius?”

No, you cannot, Finn.

Many communities have restrictions not only on where trailer homes can be located, but in our county no NEW trailer homes can be brought in. Existing ones are grandfathered into the zoning laws.

JDW

February 19th, 2013
2:25 pm

@Kyle…seems a bit dodgy to me. Real Estate like anything else is driven by supply and demand. Land use policies not withstanding I don’t believe there was ever a shortage of supply anywhere.

Seems to me the bubble was caused by artificial demand…too many people trying to flip houses they had no intention of living in…and fueled by the loose money and low standards that let them get away with it.

As for the hardest hit areas…seems like California, Florida, Nevada have lots of things in common other than land use policy. They have long been and continue to be hotbeds for second and vacation homes for example.

Kyle Wingfield

February 19th, 2013
2:26 pm

indigo: I have written many times in the past that imo the private sector played a large role in the bubble and crash. Nothing about this post endorses O’Toole’s view — not least because, as I wrote in the OP, I’m not yet completely sure I understand. But I thought it was worth mentioning — particularly the part about Agenda 21, which no one seems to be discussing.

Tiberius - pulling the tail of the left AND right when needed

February 19th, 2013
2:26 pm

“What the guy is arguing is that the bubble wouldn’t have burst if bankers could have gone on forever writing those risky/bad loans.”

No, he’s not, but if that’s the only way you can make a comment, by changing the argument, please continue, Finn.

MANGLER

February 19th, 2013
2:26 pm

Both pre and post bubble. Prices were going up on land and buildings since the speculative nature of investing switched from commodities into housing. This caused an explosion of speculative construction. When that base fell through, the speculation went into energy and oil. The speculation that causes the spikes in “value” of items does it’s damage and then moves on to another area. This time, the area left behind affected people who had nothing to do with the speculation. Typically when it’s a hedge fund or a manufacturing sector, those who get burned are the ones with the most stakes invested into that system. When the system was everyone’s houses, that packed a punch felt by many more people.

Kyle Wingfield

February 19th, 2013
2:27 pm

And, indigo: Just because you haven’t heard of the zoning restrictions in CA, FL and elsewhere doesn’t mean they didn’t contribute to the bubble and crash.

Kyle Wingfield

February 19th, 2013
2:29 pm

No, Finn, what I think he’s arguing is that there wouldn’t have been so many risky/bad loans if prices hadn’t skyrocketed due to artificial limits on supply. It’s less risky to lend $100,000 to someone than $250,000.

indigo

February 19th, 2013
2:30 pm

Kyle – 2:26

The UN has been in business for many years now.

At NO time have they ever made any credible threat to, in any way, take over part or all of American law.

You’re not going to darkly hint that Agenda 21 is an evil UN plot against Americans, are you?

Kyle Wingfield

February 19th, 2013
2:31 pm

Mangler: Certainly, there was some speculation in housing. But does that really explain why prices in metro areas with strict zoning regulations grew at a much faster rate than those in metro areas without them — particularly when the less-regulated areas, such as Atlanta and Houston, were experiencing much faster population growth at that time?

Kyle Wingfield

February 19th, 2013
2:32 pm

indigo @ 2:30: “You’re not going to darkly hint that Agenda 21 is an evil UN plot against Americans, are you?”

DID YOU EVEN READ THE POST?!?!?!?

JDW

February 19th, 2013
2:32 pm

@Kyle…”particularly the part about Agenda 21″

That is because it is really not worth discussing…unless you are a Tea Party fueled Wingnut that sees bogeymen behind every bush….I mean really it is kind of hard to argue that sustainable development is bad unless you are a fruitcake.

Tiberius - pulling the tail of the left AND right when needed

February 19th, 2013
2:33 pm

“DID YOU EVEN READ THE POST?!?!?!?”

Kyle, don’t you remember the lawyer mantra? “Never ask a question you don’t already know the answer to.”

indigo

February 19th, 2013
2:35 pm

Kyle – 2:32

Yes, I read the post.

I also read your Agenda 21 “which no one seems to be discussing” line.

hint hint hint hint hint hint

Finn McCool (The System isn't Broken; It's Fixed)

February 19th, 2013
2:37 pm

what I think he’s arguing is that there wouldn’t have been so many risky/bad loans if prices hadn’t skyrocketed due to artificial limits on supply

Well, I disagree and take the opposite view. I think the bed was made to let bankers write bad loans with the advent of MBSs. In effect, the promise of collateralizing any risky loans removed “risk” from the equation for the bankers. Even the riskiest loans could be sold with AAA ratings.

The greed and fraud inherent in this is what led to the supply issues as people started buying hosues who couldn’t afford them and people found it much easier to buy houses for the purpose of flipping them.

indigo

February 19th, 2013
2:37 pm

Kyle – 2:27

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.

Don't Tread

February 19th, 2013
2:38 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.