“An interesting lacuna to America’s mostly market-oriented economy is building houses. Most of the population lives in places where this activity is subject to a comprehensive regime of central planning, which states and which parcels of land can have houses built on them, what the minimum size of a parcel is, how many dwellings can be built on a given parcel (typically just one), how tall the building can be, how much yard space and parking there needs to be, etc.
Some of the regulation of house-building is about safety — electricity needs to be up to code and sewage needs to be able to be disposed in a responsible way. But most of it isn’t. There’s nothing unsafe about a 12-unit, four-floor apartment building — it’s just illegal to build one in most places. Building rows of houses that share exterior walls is a space-efficient and cost-effective means of creating single-family homes, but it’s illegal to build them in most places. Big, shiny condo towers only make sense in places where land is very expensive, but there are some parcels of very expensive land where it’s illegal to build them.
These rules profoundly shape the built environment in almost every American metropolitan area.”