An honest discussion is now taking place concerning the unintended consequences of limiting new construction. Paris hasn't allowed many high rise buildings to be built. Would Paris continue to be "Paris" if there were Hong Kong style buildings? Everyone appreciates the basic prediction of econ 101 that by limiting supply that real estate prices rise in restrictive cities. People seem only now to be willing to contemplate that a select sample of cities (those that are liberal and run by progressives) are most likely to engage in these policies.
Here are some quotes from Paris:
"But many older Parisians fear that city officials did not learn the lesson of Montparnasse, a building that regularly makes lists of the 10 ugliest buildings in the world. They believe that skyscrapers are simply out of place in the heart of Paris.
“We are not in Dubai,” said Danielle Outreman, 60, who is retired. “I like it that in Paris I am not surrounded by enormous buildings. I think that putting them all in La Défense is just fine.”
So note the generational war. Those older people who own properties in Paris enjoy the fact that housing constraints inflate their house values and they value the continuity of the city (that it does not change over time perhaps except for a few Starbucks opening up). The young renters (if they understood general equilibrium effects) are likely to support more real estate construction. There should be more European economists working on the cross-generational fights across Western Europe concerning what are "good public policies". In the case of housing supply limits, is this a zero sum game or a negative sum game? When incumbents control laws through local voting, is the efficient allocation of resources achieved?
Many environmental economists work on the demand for non-market goods. This Paris case raises this same issue. What is "Paris" with respect to its characteristics? Which of these attributes would be "injured" if more development took place? How do we measure the character of a city and its uniqueness? How do we know if small changes to its architecture and its neighborhoods produce great changes in the local quality of life? If people who live there say this, is that merely cheap talk? What is the market test that Paris' quality of life is declining? To an economist, tourism trends would offer one market test. Do mobile tourists continue to visit? If the answer is "yes", then an economist would conclude that Paris still "has it".