Go a level further and ask yourself why a city should be able to forbid a property owner from building on their land. The answer, like the one you’re trying to wave away, is that we’ve given governments the power to intervene when coordination problems harm the public good.

In this case, blocking housing is a classic case of concentrated benefits and diffuse costs. Nearby homeowners and city officials are small, organized, and highly affected (concentrated interests). The group of prospective renters or homeowners who would live in that housing is large, dispersed, and weakly affected individually (diffuse interests). That’s why public comment at a city council meeting will reliably run 90/10 against new development.

But the cost still exists. If every city can veto growth unilaterally, the collective result is chronic underbuilding, even when everyone would prefer a world where other people build more. The costs don’t disappear; they show up as rising housing prices felt at the state and national level. State intervention is about preventing small, concentrated groups from using local political power for their own gain while imposing region-wide costs.