OK, here’s a silly thought experiment.

Let’s say we put a rule in place that says the United States is only allowed to use X amount of cows to make milk. A farmer can milk his cows as much as he wants, but if a cow dies, we can not replace it with another cow. We are forever limited to that amount of cows.

Now, milk is a desirable thing. Not Rolex or flat-screen TV desirable, but a lot of people buy milk. So now there’s a limited milk supply that isn’t meeting a high milk demand. As a result, maybe the prices of milk go up.

So we have to find ways to meet that demand. Maybe we start cutting the milk with water, maybe we add something else. And for a time that works. People are still buying their milk, even though the quality has gone down a little.

But how long does that last? Well, until the cows all die, which could be a long time from now, or could be next year. But the point is there is a system in place that limits the amount of milk we are able to process, which is making it harder for us to provide quality, affordable milk to people. The answer is to get rid of an arbitrary rule.

Does that make sense? OK.

Here is something that is happening in New York. No, the Mayor is not saying we’re only allowed to buy certain amounts of milk. But what is happening is that the Mayor and the city planning commissioner are toying with the idea of making smaller apartments for a new lifestyle of New Yorker. What that means is that there are more and more single young professionals moving to the city who don’t need a ton of space to live. They can live comfortably in a small studio space.

And this is true: more and more, New York, while I’d argue still a place for families to settle, has become a less-desirable place for families. And so it makes sense to build places that accomodate them.

But here’s where my little analogy comes into play: we’re still using a limited number of cows. We can make the apartments smaller and smaller — cut it with as much water as we’d like — but the reality is we have a limited housing stock, and a limited area to build more housing.

And there are rules in place that make this so, as Matt Yglesias points out in his excellent ebook, The Rent is Too Damn High:

A quick visual guide of the impact can be seen in any picture of the New York skyline. There’s a cluster of skyscrapers in Midtown, and another cluster in the Financial District, and then a broad valley of shorter buildings in between. What explains this valley? The phenomenon is so noticeable that an urban legend has grown up that holds it’s caused by the varying quality of Manhattan’s bedrock. The real answer is simpler—the buildings are tall where you’re allowed to build tall buildings and they’re shorter in places where you’re not.

The reality is we are causing a shortage of housing by enforcing overly-restrictive zoning policies that don’t allow us to build ‘up.’

These often-antiquated rules are the real problem with housing in the city, and make everything from the effects of gentrification to real estate prices worse. This is a city of 8.2 million people, and those people all need to live somewhere. We need to increase the amount of housing available to people.

And while land may be sparse, height is not.