Book review: "Build, Baby, Build" by Bryan Caplan

The Science and Ethics of Housing Regulation

Build, Baby, Build: The Science and Ethics of Housing Regulation By Bryan Caplan

The Cato Institute. Washington. (2024), pp. 253. ISBN: 978-1-952223-41-9 (pb, $20,01); 978-1-952223-42-6 (e-book, $12.99)

Build, Baby, Build is an excellent book which puts forward the case for the deregulation of the housing market with great clarity and much force. As a graphic novel the work is very easy to digest, indeed, reading it takes less than two hours and it remains a pleasure throughout. The cartoon nature of the book though should not be thought to disguise cartoon arguments. No. Its free-market arguments are robustly set out, rebuttals are dealt with in an even manner, and, the practicalities and second-best politics of implementing deregulation are discussed too.

Bryan Caplan, professor of economics at George Mason University, begins his book by explaining how government regulation of the housing market has increased its price enormously by restricting its supply. He takes aim at three policies in particular throughout the work. First, height restrictions on skyscrapers and tall buildings in cities, second, requirements to build housing with lots of vacant land, and, third, exclusive zoning for detached single family homes. Amongst other policies these are said to have increased accommodation costs to 20% of American’s budget; ‘inflation-adjusted house prices have roughly doubled since 1980 even though building costs have stayed about the same’ (55). Caplan makes a point of citing left winger such as Paul Krugman, Jason Furman and Matt Yglesias who agree with his diagnosis to emphasise the broad consensus among economists.

‘Simple estimates suggest that serious housing deregulation would cut average U.S. house prices by 11%’ (82); boosting living standards by 11%. Caplan doesn’t stop with this great virtue of deregulation though, and, instead, a robust case is made for it being ‘the panacea policy’, i.e., the policy which will solve a great deal of problems all at the same time. In Chapter 3 Caplan argues housing deregulation would increase social mobility, reduce deaths of despair due to an increase in meaningful jobs in construction for left behind workers, and, reduce the rate of homelessness too. I found the following point to be of particular interest. The share of national income going to capital has increased since 1948, ‘but once disaggregated this increase turns out to come entirely from the housing sector’ (90), meaning, the complaints about increased inequality by those such as Thomas Piketty can be primarily blamed on housing regulation.

Photo by Cosmic Timetraveler on Unsplash

Following this tour de force, Caplan considers objections to housing deregulation and deals with each in a forthright manner. Increased congestion could be dealt with via road pricing; concerns for the environment are misplaced because new homes (those less than 20 years old) emit 30% less than the average, and, aesthetic concerns are mainly rooted in a status quo bias which is in large part irrational. A short discussion of how all the major forms of political philosophy, i.e., egalitarianism, libertarianism and utilitarianism, should favour housing deregulation shows the multidisciplinary nature of the work too and shows the level of consilience among serious thinkers on this issue as well,

Much of the rest of the book concerns itself with the second-best politics of housing deregulation. According to the author ‘private property rights are the rigid bright line’ (145) which should be adhered to in deciding housing policy because making exceptions to them, see the Euclid Supreme Court case of 1920 permitting local zoning, creates a slippery slope of state control, the end of which is worse than a rigid adherence to respecting private ownership in the first place. In the final chapter Caplan lays out why he believes so many people are Nimbies. According to him ‘stubborn economic illiteracy’ (205) is mainly to blame along with status quo bias and ‘sheer paranoia’ (208). His first point is backed up by a 2018 study which found 62% of renters backed banning development in their neighbourhood compared to just 40% of homeowners.

None of the arguments in Build, Baby, Build are new, yet, the great value of the book does not lie in its originality, rather, the graphic novel presentation of old arguments is where its great value lies. So applause to the cartoonist Ady Branzei too. Caplan’s work is pitched at the layman and he claims it to be the most exciting work there is on housing deregulation, and he’s right; it is barrels of fun to read and this dry review cannot do that aspect of it justice. Were it not for the price of the work at $20, I would definitely recommend it for undergraduate courses on urban affairs as supplementary reading to academic articles. Certainly, Caplan’s book would engage students. But academics could also gain from reading it too as a very quick reminder of arguments for deregulation which they may have forgotten.

I have three criticisms of the work though. First, Caplan doesn’t mention immigration at all. I don’t think he needs to discuss it much, but given a popular audience will often oppose house building and instead propose restricting immigration to reduce prices, I think it should have at least been acknowledged. Second, I believe his case against housing regulation on the basis of preserving historic buildings and beautiful places to be pretty weak. The essence of his argument is stopping the demolition of historic buildings for new developments protects the beauty of yesterday at the expense of the greater beauty of tomorrow. He gives the example of the Waldorf Astoria Hotel being torn down in 1929 and replaced with the Empire State Building as an instance of what could similarly occur in the future without state regulation. A better argument against aesthetic regulation and historic preservation would simply have been to draw analogies to other areas though. If people are free to have whatever aesthetic car they want; why can’t they have whatever aesthetic construction they want too.

Third, Caplan could have given a better explanation of how house prices fall when the supply of housing moves out. When greater construction is permitted, he talks about how ‘builders…cut the price’ (46) to entice customers. True. Yet I think the focus on builders is misplaced. Building costs in terms of bricks and mortar do not fall when housing deregulation is implemented, rather, land prices fall, a fall which builders then pass onto consumers. His four-page explanation of falling prices could have done with an additional page of landowners all with planning permission underbidding each other until the price they could get from builders is equal to its non-construction use as a better explanation of how the main cost of regulation is eliminated.

Build, Baby, Build makes a superb case for the deregulation of the housing market, deals with objections to it thoroughly and discusses the practical issues of its implementation too. It will be especially valuable to the layman who doesn’t have much time on their hands and will only read a book of nonfiction if it is very engaging; which is exactly what this work is due to its graphic novel form and the humour which is laced throughout it. And yet it remains robust enough and well sourced that even academics in the field of housing can get something out of it too. In sum, I would definitely recommend reading this book.

Charles Amos is author of The Musing Individualist