US Economists Bark Up The Wrong Tree

A Benjamin Cole post

There is a rough consensus among US macroeconomists that topics for discussion are the bad minimum wage, the virtues of free trade, and inflation.

Housing shortages are rarely mentioned, and as for decriminalizing push-cart vending, that is a topic for oddballs.

So I was encouraged that a name economist, John Cochrane, tipped his hat in his blog to an April working paper by Chang-Tai Hsieh of the University of Chicago and Enrico Moretti of Berkeley entitled, Why Cities Matter.

Long story short, the pair conclude U.S. GDP could be nearly 10% higher if the most-expensive cities, such as San Francisco, San Jose and New York, went gung-ho on housing production. Their argument is that the most-productive workers are concentrated in the “hip” cities (my words). But the hip cities simultaneously have artificially tight housing that is limiting the number of people that can live in these productive metropolises.

Everybody loses, except property owners in the hip cities.


No doubt some can take issue with the Why Cities Matter paper, but it is nice to see “serious” economists discussing the issue of property zoning and tight housing markets, instead of another re-hash on the glories of free trade and evils of minimum wage laws.

In fact, if Why Cities Matter is even roughly true, property zoning easily eclipses free trade and minimum wage as the outstanding macroeconomic issue of the day.

Let me say from personal observation: The West Coast suffers from obviously tight and expensive housing, and incredibly stipulative property zoning. It is a much bigger issue than minimum wages (slated to move back to 1972 levels in California, after adjustment for inflation) or international free trade.

Will the U.S. econo-blogocracy begin daily rants against the property-owning class that aids and abets property zoning, thus shrinking the national economy?

Probably not.

And as for decriminalizing push-cart vending? Meet me at the Oddballs Convention. If there were phone booths left, we could hold the meeting in one.


4 thoughts on “US Economists Bark Up The Wrong Tree

  1. I often agree with you , but what is it about this push-cart vending thing? Where can I read more about your position on this? There are a lot of things that I would not be in favor of allowing just anyone to legally sell on the street just for public health and safety reasons. Guns, antibiotics, explosives, and many prepared foods are the some things that I think people, as in the public as a whole, have an interest in some level of regulation to at least attempt to set minimum safety standards. Things like books, or shoes and clothing, fresh fruits and vegetables, or computers, well I would be all for that. But I don’t see that many people would buy computers off a push cart.

  2. Jerry Brown: Thanks for reading.

    Actually, in Thailand there is a guy who sells i-pad and smartphone repair out of the back of his pick-up truck. He has a shell over the bed. He also sells used phones. For all I know he could sell laptops, meaning he does in fact sell computers.

    Prepared foods are commonly sold in push-carts through much of the world. The act of cooking of course of tends to sanitize food. Soups (hot water). BBQ and deep-fry tends to kill bacteria. A fresh salad is dangerous to eat outside the developed world, or the skin of a fruit.

    As for antibiotics and guns, I think push-carts should comply with law, as do other retailers. I share some apprehension about the open selling of firearms, but after all there are storefronts that sell firearms. Would someone contemplating a crime buy a registered weapon from a push-cart (possibly with a webcam photo taken) or buy black-market? In any event, why not try it and see if problems evolve, or in fact if the push-cart gun-merchant actually lowers the crime rate in his or her vicinity? Would you plan a stick-up near a gun-merchant?

    In general, I think US cities should make push-cart vending easy, not hard or illegal. It takes $500k to open a restaurant in L.A. In other words, forget it, unless you are rich. Other retailing is illegal unless done on land zoned retail. Again, expensive. But with legalized push-cart vending, or pick-up truck vending etc. we would open up business ownership to hundreds of thousands of new entrants, and self-employment.

    I am sure there will be attendant problems. Trash. Objectionable merchandize. Push-cart fights over who “owns” sidewalk space. Free enterprise is messy. But colorful, and good for consumers!

    Join my Odddall Club!

    PS There is no literature on push-cart vending out there. That reveals just how conventional the practice of economics has become.

  3. Thanks for the reply. I live in a city, Hartford, in the U.S. and would really very much not like to have anyone selling guns on the sidewalk in front of my house. Or, to be honest, pretty much selling anything. Zoning laws do have some purpose. I’m not yet the ‘get off my lawn ‘ grumpy old man, but if your guy with the pickup truck parked in front of my house everyday, then I would be for sure.

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