The past decade has seen a growing trend of regulatory overreach at the local level. Mayors and city councils already have broad control over many aspects of urban and suburban life: public safety, education systems, sales and property taxes, public amenities, and land regulations. Nevertheless, local leaders have concerned themselves with limiting or banning seemingly innocuous goods and services, often in the name of health, safety and social/environmental concerns. But do these measures really benefit local residents?
Let’s look at four things cities ban and find out.
1. Plastic Bags
Environmentalists have advocated banning plastic grocery bags for a long time, arguing they excessively litter landfills and oceans. Many cities have followed suit:
- More than 260 city and county governments have passed some kind of ban on plastic bags and require retailers to charge customers for the purchase of both paper and reusable shopping bags.
- Of these bans, more than 50 percent were passed in California alone. (These have now been replaced by a statewide ban voters passed last year.)
- Another 13 cities tax plastic bags.
In 2012, a study from the National Center for Policy Analysis (NCPA) found that stores affected by the plastic bag ban in Los Angeles County saw a 6 percent average decrease in sales, on average, and an average employment reduction of 10 percent. Additionally, the Beacon Hill Institute found that the District of Columbia’s plastic bag tax reduced overall disposable income by $5.6 million in the first nine months of 2010.
Like most consumption taxes, these hit lower-income families the hardest. Since 2015, eight states have passed laws that prevent cities from banning or taxing plastic bags. Three other states are currently weighing similar measures.
In 2008, the Los Angeles City Council waged a war on fast food by banning new fast food restaurants opening in South Los Angeles, one of the poorest areas in the city. The measure was meant to combat obesity and attract healthier restaurants and grocers to the area.
Seven years after the ban was passed, a study from the RAND Corporation found that it failed to reduce obesity or increase the availability of healthier food options in the area. In fact, obesity rates rose by 12 percentage points and 17 more fast food restaurants were opened due to a loophole in the law. Despite its failure and ineffectiveness, the ban remains today.
In another case, New York City banned trans fats in food purchased outside of grocery stores, such as at restaurants, bakeries, and street vendors. However, unlike the fast food restaurant ban in Los Angeles, a recent study from Yale University found this ban was effective for the public’s health. Hospitals in New York counties with a trans fat ban saw 6 percent fewer patients with heart attack or stroke than counties without a ban.
Since their inception, ridesharing companies such as Uber and Lyft have faced many attempts by city government to regulate them like typical taxi companies. According to an analysis by Business Insider, Uber is cheaper than taxis in every major U.S. city but one.
But government officials are motivated by dubious claims about passenger safety, even though there is no evidence to suggest ridesharing is more dangerous than traditional taxis. At the behest of taxi companies, local governments have imposed fingerprinting requirements and fines that have delayed or stopped Uber and Lyft operations in cities like Las Vegas, Portland, Fort Lauderdale, and San Antonio.
Austin, Texas, is perhaps the most famous example of ridesharing regulations gone awry. The city council required fingerprint-based background checks for ridesharing contractors in late 2015. After failing to overhaul those rules, both Uber and Lyft responded by suspending operations in Austin. In the following months, consumer demand for ridesharing was so strong that black market alternatives emerged on Facebook and Craigslist.
Finally, after a year without ridesharing, the Texas state legislature stepped in and passed a statewide regulatory framework to override the local government, allowing Uber and Lyft to return to Austin. At least four other states have taken similar actions, while three more are considering statewide legislation of their own.
4. Home Sharing
Home sharing has also come under local scrutiny and regulatory efforts. Companies like Airbnb allow owners to rent out their rooms, apartments, or homes short-term, often providing affordable alternatives to hotels. After the hotel industry expressed concerns about “unfair” competition and neighbors complained about unknown guests, cities have begun regulating home sharing.
Fort Lauderdale has levied hundreds of dollars’ worth of fees on owners listing units on Airbnb. Santa Monica has banned owners from renting out units for fewer than 30 days, resulting in a lawsuit from Airbnb. Chicago even tried to force owners to keep lists of renters’ personal information and make them available for city inspection without a warrant.
Although these regulatory battles are recent, state governments have already begun passing legislation in response. Arizona has limited the regulations local governments can impose on home sharing and preempted their authority to impose outright bans. Florida and Texas are also considering laws that prohibit cities from banning Airbnb and similar services. Earlier this year, Tennessee state legislation to limit Nashville regulations on home sharing was delayed until 2018 due to a lack of support.
Why City Officials Overreach
The increase in local overreach can be traced to geographic sorting. In “The Big Sort,” authors Bill Bishop and Robert Cushing explain that cities are becoming more uniformly liberal while rural areas are becoming more uniformly conservative. The conservative uniformity in rural counties has led to more conservative state control, as evidenced by the record number of Republican-controlled state legislatures. This ideological difference at the state and local level further pushes cities to pass progressive regulations and state officials to step in to curb burdensome restrictions.
Cities and counties only hurt their residents when pursuing restrictive regulations that limit consumer choice. In many cases, these policies are leveraged to benefit competitors (such as the taxi and hotel industries) and limit consumer access to affordable alternatives. Other times, the stated benefits are dubious, as in the case of limiting fast food restaurants.
Although decentralized governance often yields positive results, states have felt the need to correct onerous local restrictions in the consumer sphere. If residents of a city are truly passionate about not using a good or service, consumers would act and markets would respond without the consequences of excessive regulation.