Indiana Is the Land of the Free — If Your Neighbor Approves

October 19, 2011

For immediate release (624 words)

“Hell is other people,” quipped Jean Paul Sartre. Perhaps no one knows this better than the homeowner.

If you live near fraternity row in a college town, you must endure bouts of drunken revelry in the wee hours. If you live near a hog farm, you must live with harsh odors when the wind blows wrong. And if you live in the beautiful Lake Michigan hamlet of Ogden Dunes, you might have to cope with, gasp, vacationers.

But not any more. An interpretation of Ogden Dunes’ zoning laws by the Indiana Supreme Court declares such short-term rentals illegal. If homeowners there don’t spend all their time at their lakeside villas, well, nobody else can either, at least not for pay.

The Siwinski family found this out the hard way. They own a house in Ogden Dunes, where the town motto appears to be “We Don’t Want Your Business.” The Siwinskis do not live there full time so they decided to rent it out on occasion — a week here, a weekend there. Other families got to enjoy their lake getaway, and the Siwinskis got some help paying the mortgage.

But the town council cracked down, claiming the Siwinski family’s actions smacked of commercial activity, a strict no-no according to their interpretation of Ogden Dunes’ zoning ordinance.

On paper, zoning seems benign enough. By preventing people from doing the “wrong” thing in the wrong place, zoning promises to ensure order and tranquility in a community. With zoning, alles ist in ordnung, as the Germans say;  “R zones” are for R-uses only, “C zones” for C-uses, and so on. A place for everything, and everything in it’s place.

Zoning thus attempts to place economic activities into predetermined boxes. To be sure, the zones are drawn up by highly trained experts in urban planning, with the best interests of the community in mind. But they remain arbitrary lines on a map, and cases like Siwinski vs. Ogden Dunes make this economist wonder, what if the zone-drawing bureaucrats are just plain wrong? In other words, how do they know how the land should be used, and why do they have a superior claim over the owners themselves?

It’s not that the zoning experts don’t mean well — I’m sure they’ve done plenty of research, held public meetings and written up environmental-impact statements. But the genius of the market economy lies in the primacy of private property. This simply means that the owner of any resource gets to decide what to do with it. It’s inherently moral and just, the very definition of freedom.

It’s also practical, because the owner is in the best position to use the resource in the most economically beneficial way. Landowners lose income if they fail to use their land in ways that give the greatest benefit to consumers in the economy. And as the optimal economic use changes, you can bet that landowners will be first to know — after all, they’re the ones who need to pay the mortgage. The profit motive, combined with this nuanced localized knowledge, ensures that landowners will always be at least one step ahead of the urban planning bureaucrats when it comes to the economically “best” use of the land.

The Ogden Dunes case sets a disturbing precedent. When the state supreme court approves the most liberal interpretation of local zoning laws, it only encourages all those busybodies throughout the state who would seek to use the law to trump market-based, voluntary decision-making in order to achieve their preferred outcome. The more we take land-use decisions out of the hands of landowners and place them into the hands of town councils, attorneys and various bureaucrats, the more we undermine freedom and lock local economies into less-than-ideal patterns of resource use.

Tyler Watts, an adjunct scholar of the Indiana Policy Review Foundation, teaches economics at Ball State University.



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