Mostly, I’m surprised that Yglesias doesn’t seem to recognize one of the primary goals of inclusionary zoning: Keeping neighborhoods diverse by allowing lower-income people to live there, while simultaneously increasing density (one of Yglesias‘ biggest hobbyhorses). Purely spreading around the proceeds from additional property taxes might give poor folks a little more disposable income, but not enough to allow them to buy market-rate condos in places like Columbia Heights, which would quickly become islands of wealth without income restrictions on new developments. In fact, inclusionary zoning is one of the only tools we have to help low-income people share the benefits of a rapidly improving city (and studies have shown that well-designed programs, which are fair to developers, don’t hobble housing creation).
I think this gets the stakes right. I said in my initial post that we don’t often enough ask the question “what if we just gave more money to poor people instead?” And the general shape of the issue is that simply giving poor people money would help them achieve consumer satisfaction better but is a sub-optimal way of achieving specific policy goals. As I said in the initial post, insofar as we care about the future of poor children it makes sense to try to offer them high-quality preschool rather than just give money to their parents. We’re trying to help kids rather than generically benefit poor households. And we don’t cut checks directly to preschoolers because they’re small children.
So I guess the question here is whether you think of the point of affordable housing initiatives as being primarily about making neighborhoods diverse, or primarily about ensuring that poor families share in the benefits of citywide economic development. If you give poor families the money, then that guarantees that they see a decent share of the gains from improved living conditions and a bigger tax base. But it’s very likely that they won’t use that money for the specific purpose of continuing to live in gentrifying neighborhoods even as housing costs rise. Instead, poor families may relocate someplace cheaper and buy more expensive groceries or a used car or whatever. Maybe the right thing to do is to emphasize neighborhood diversity. I could imagine a case for that—it might be better for public safety, upward mobility, and education to do everything possible to avoid concentrated pockets of poverty—but in general I stand by the idea that in-kind benefits deserve more scrutiny. That’s especially the case when the benefits are delivered through regulations rather than direct spending, which is a tactic that’s often used to obscure what the costs are.