Urban Development in Charter Cities

In light of approval in Honduras for three new charter cities (REDs), much has been written recently on their potential to improve economic development. Economist Paul Romer makes a compelling case for the potential of charter cities, asserting that countries with institutions that impede economic growth can benefit by designating small areas with rules that permit free trade.

Despite the promise of REDs, designating new areas for urban economic zones may pose some challenges that haven’t been addressed elsewhere. Cities almost always grow through spontaneous orders in locations that emerge through human migration. Cities are a product of human action, not of human design. Older cities grew through their accessibility to trade and natural resources. More recently, towns have become cities as they have become centers for specific industries. This process happens not with top-down planning, but rather as the market process leads individuals to move to specific places, resulting in the urbanization patterns that we see. In the case of Honduras’ REDs, however, the locations were selected by the state.

Unlike the approved sites for REDs in Honduras, Hong Kong and Singapore (models of charter cities) were not greenfields before they became charter cities. Since becoming models of charter cities, both islands’ populations have exploded, but some level of development existed before British rule, and the British did not set out to create large cities. Rather than being planned, the success of these two islands was an accident, in which good institutions in fortunate locations have facilitated enormous economic growth. In contrast, all of the infrastructure and design for the REDs will be built from scratch, at first by one company, MKG, until other investors and individuals move to the city. In a sense, city construction may have to begin before there is demand for it. MKG has pledged $15 million to begin building infrastructure, a small amount in the scheme of city-building, but as of now it’s unclear where future investment will come from, and whether it will be centralized within a few large firms or dispersed.

Greenfield development for charter cities is absolutely key; otherwise, they would coerce people to adopt new rules, eliminating the choice and voluntarism that Paul Romer explains is essential for charter cities to succeed, not to mention potentially leading to violent conflicts. However one firm starting a city in a greenfield will face enormous knowledge problems in beginning to build a city from scratch. The magnitude of this challenge will depend on how much development is required of the few initial, large investors before attracting significant numbers of entrepreneurs. I don’t think either the investors or Paul Romer support top-down city design, but this is a necessary aspect of starting a new city in a government-designated location.

Some towns have been started with charters in greenfields previously, in the American colonies, for example, but none of these were founded with the intent of becoming large cities. Those that grew did so spontaneously because of their advantages over other cities. I don’t think that a state-selected greenfield location will prevent success in REDs or other charter cities, but I do think it bears acknowedgment that starting a city from the top down will create an added challenge. Assuming success, however, REDs will provide a fascinating case study in modern urban development under free markets. Here’s hoping the charter doesn’t include height limits or parking requirements.

New standards for ridiculousness in historic preservation

Because Arlington County, VA is not home to many properties over 100 years old, planning officials have turned their historic preservation efforts to those properties they do have to preserve. The Sun Gazette reports:

The first phase of the effort focused on only a very narrow slice of property types in Arlington: garden apartments, shopping centers and commercial properties more than 50 years old. Leventhal said those types of properties are most vulnerable to redevelopment.

It sounds like preservation efforts in Arlington will be much less restrictive that the often discussed Landmark Designation in New York. However, the new policy will certainly increase uncertainty and cost for redeveloping protected property. And of course the question here is, are strip malls from the 1960s really worth preserving?

Miles Grant at The Green Miles hits the nail on the head with this quote:

But saying properties more than 50 years old are most vulnerable to redevelopment is like saying cars more than 10 years old are most vulnerable to being traded in.

Sure, if classic cars were protected and not allowed to be traded in, we would see more on the road. The trade-off, though, would be that consumers would not be able to choose the cars that best meet their needs.

While Smart Growth supporters and historic preservation activists share the same propensity for top-down control of development, this issue gets to the core of their inherent conflict. The preservation of car-centric development prevents higher density, walkable communities, even when this is what the market demands. While individuals may attempt to embrace both ideologies, protecting mediocre mid-century suburban architecture necessarily comes at the expense of Smart Growth principles.

More Libertarians on Jane Jacobs

The Ludwig von Mises Institute publishes a podcast performed by Jeff Riggenbach called “The Libertarian Tradition”, which discusses significant figures in the libertarian movement.  The most recent edition is dedicated to Jane Jacobs, who’s ideas are highly regarded by many libertarians, despite the fact that she publicly distanced herself  from being associated with the term or movement.  It’s a great listen, and mentions fellow Market Urbanists and friends of the site, Sandy Ikeda and Thomas Schmidt.  It’s great to see more attention given to Jane Jacobs and urbanism by free market advocates.

Mises Podcast on Jane Jacobs

On a similar note, Market Urbanist, Sandy Ikeda will be hosting a “Jane’s Walk” in honor of Jane Jacobs in Brooklyn Heights.  Here’s a description from the site:

Eyes on Brooklyn Heights

The beautiful and historic neighborhood of Brooklyn Heights offers excellent examples of Jane Jacobs’ principles of urban diversity in action.

Beginning at the steps of Brooklyn’s Borough Hall, we will stroll through residential and commercial streets while observing and talking about how the physical environment influences social activity and even economic and cultural development, both for good and for ill. We will be stopping at several points of interest, including the famous Promenade, and end near the #2/3 subway and a nice coffeehouse.

Please wear comfortable footwear and weather-appropriate clothing, and be sure to have lots of questions. See you there!

Date: Sunday May 8, 2011
Time: 1:00pm-2:30pm

Meeting Place: The tour will meet at the steps of Brooklyn’s Borough Hall (2nd stop on the #2/3 subway) and end at the Clark Street station of the #2/3 subway.

Host:Sandy Ikeda

Host Organization: Purchase College

Contact info:

I plan to attend.  It would be great to see some other Market Urbanists there!


1. Systemic Failure calls out the Bay Area for giving an award to a textbook example of greenwashing in urbanism:

Ironically, this project was recently promoted on the SF-Streetsblog website by “New Urbanist” developer Peter Calthrope for its “highest level” of green technology. What does it say for the Bay Area environmental community, that such stupendously ugly, auto-oriented architecture can win “sustainable community of the year” awards?

I love how vociferous and blunt Systemic Failure’s criticism is – it’s something that’s sorely missing in the overly self-congratulatory planning blogosphere.

2. LA rushes to get another giant hulking parking lot in before Jerry Brown turns off the “redevelopment” tap.

3. Interesting charts on the gas tax throughout history.

The roots of anti-density sentiment

Matt Yglesias, Kevin Drum, and Ryan Avent have been discussing the political economy of anti-density regulations, and I have a lot of comments, but I’m not sure I have the time (or, really, the patience) to air all of them. So, we’ll see how long this post gets.

First of all, I think all this talk of federal policy is misguided. Writing about the federal government sells well in journalism since it reaches the widest audience, but even taking into account the feds’ massive power grab over the last century, the real action is still at the local level. Local property tax distortions favoring single family homes are widespread and egregious, but orders of magnitude more ink gets spilled about the relatively ineffectual mortgage interest tax deduction. Fannie Mae and Freddie Mac’s refusal to fund mixed use developments is unfortunate, but it’s nothing compared to the almighty parking minimum. So while obviously the rural-biased Senate isn’t doing urbanism any favors, the nation’s Greatest Deliberative Body is next to meaningless when compared to lowly municipal governments.

Secondly, I think that historically speaking, Ryan Avent is starting his analysis a few decades too late. He cites the Great Migration(s) of blacks out of the South and the law-and-order backlash as a reason that American politicians fear density, but the real anti-density legislation began around the turn of the century, decades before the black boogyman hit the scene. And while the federal highway projects that Ryan cites were bad for cities, they were really the final nail in the coffin – urban business associations welcomed them as a cure for decentralization. In other words, cities were already in decline by the time the interstate highways started papering over neighborhoods. The real germ entered the system decades earlier.

In my opinion, at least, the original sin was the refusal of turn-of-the-century cities to accept elevated rapid transit systems. Huge cities like New York and Chicago got theirs before the anti-el sentiment really set in, and Philadelphia and Boston got barebones networks, but by the time this revolutionary technology reached the rest of America, public opinion was already decidedly against the private rapid transit networks. Though everyone loved the subway (well, sort of), burying rapid transit is much more expensive than building it above streets and alleyways, so few cities ever mustered up the funds to build subways. (This cannot be emphasized enough: Elevated lines were(/are?) cheap and profitable enough to be built by relatively apolitical private enterprise, whereas subways were not.) From this lack of els came horrible street crowding and congestion as people piled into overburdened at-grade streetcar lines. From this congestion came height limits, and from these height limits came sprawl, and from sprawl came the automobile and parking lots, and by the Great Depression, development pretty much ended. In the decades afterward the city was really running on vapors, a dead man walking, only being propelled by the formidable momentum built up during the greatest period of urban expansion that America has ever known. This explains why people like Kevin and Ryan seem to be concentrating on the post-WWII period, but it’s something they’re going to have to get over if they ever want to truly understand what happened to density in America. (Note: Much of my knowledge from this period comes from Robert Fogelson’s Downtown, which I’ve promoted on this blog incessantly.)

But even the anti-el animus requires an explanation. This is a much more philosophical debate, but I believe that it’s simply human nature to want the government to provide goods (and sprawl – “light and air” – are definitely goods; as much as I love the city, of course my money-is-no-option ideal would be to live in a sprawling mansion in the middle of Central Park) that the state really has no business providing. (Now, I recognize that this might be hard for the liberals engaged in this debate to accept, since they don’t seem to see the question of private vs. public as particularly relevant.) The question then becomes, why did Europeans and Asians resist the temptation to subsidize sprawl, with the US only now vaguely coming to its senses? The reason, I think, is twofold: a) we have a lot of physical space to sprawl, and b) we are a very prosperous nation with a lot of wealth for the government/suburban constituencies to leach off of. After WWII, Europe and Japan were devastated and could not afford to bear the cost of subsidized sprawl. Later in the century we could leach off of our tech sector (think: Silicon Valley, the Research Triangle, and Route 128) to sustain the sprawl. Eventually I think that will come to an end and we’ll have to scale back (land will never be a constraining factor for us), but unfortunately, I’m not sure that I see that in the near future. Yes, there are rumblings now, but we’re still too rich of a nation to be forced to reconsider these wealth-sucking policies in any serious way.

(Also, a sidenote to Kevin Drum: That rural vs. urban chart you showed leaves out the suburbs entirely, lumping them instead in the “urban” column. This has always been a pet-peeve of mine. I understand why researchers do it, because it’s difficult to disaggregate “cities” from “suburbs,” but if that’s the best we can come up with, it’s probably better to just leave it out of the debate entirely.)

The origin of user fees?

I just started reading Paving the Way: New York Road Building and the American State, 1880-1956by Michael R. Fein, and though I don’t have time to talk as much about it as I’d like, I will say that I’m only a couple pages in and I can already tell it’s going to be great. Its thesis is essentially that the development of the road building bureaucracy was as important as the New Deal, if not more so, in shaping 20th century political development (this may be something that liberal urbanists, who otherwise support the expansion of the state, don’t want to hear). There’s much I’d like to excerpt, but I’ll stick with this paragraph in the introduction:

Engineers framed their decisions in the language of scientific rationality and professional expertise. But these were merely forms of political expression that advanced their traffic-service vision of highway planning. Though New York’s road-building program predated mass automobility, engineers quickly seized on the phenomenon as a means of cementing their political legitimacy. Traffic censuses became the main foundational beam to engineers’ authority, a scientific measurement of public demand for highways that was difficult to contest [ed. note: reminds me of the Texas Transportation Institute]. As long as state highway construction focused on the improvement of existing roads, dissent was weakly expressed. As engineering projects increased in scale, impact, and potential for controversy, resistance spiked. It was in the process of responding to increased opposition that strong tensions developed between engineers’ service to their professional agenda (building a better highway system) and their responsibility to the public (balancing highway construction with other aspects of social development). These interests, once operating in tandem and instrumental to the engineers’ rise to power, began over time to feed conflict and meet with cross-purposes. The engineers’ solution to this problem was to stop treating motorists as citizens and start treating them as consumers, who paid “user fees” through motor fuel taxes and registration fees that were then dedicated toward the maintenance and expansion of the highway system. The adoption of this “motorist-consumer” logic suggests the extent to which highway engineers sought to crowd out dissenting political voices, diminishing the public nature of highways whilte interpreting the simple act of driving as an unqualified endorsement of the highway program.

Has anyone else ever read this book, or otherwise have anything to say about it? Is the author overstating the purpose of user fees?

Exporting (sub)urbanism: Kuala Lumpur and the communist world

by Stephen Smith

Adam Martin at William Easterly’s development blog Aid Watch has a post up warning about the tendency among developing nations to adopt Western styles wholesale, even if such styles are not even efficient in their countries of origin. He posits this as a sort of developmental Whiggishness, and cites education policy and intellectual property law as possible examples of the trend. We here at Market Urbanism, by virtue of language and location, tend to focus on urbanism in North America and Europe, but I thought this would be a good opportunity to discuss the state of urbanism in developing countries.

The starkest example of misplaced developmental Whiggishness in planning I can think of is the city of Kuala Lumpur. The city was practically brand new when it was made capital of the Federal Malay States in 1895, and as a British protectorate, the Crown sent New Zealand planner Charles Reade to the Malaysian capital in 1921 to head its planning department. Schooled in the methods of the nascent Garden City movement in the UK, Reade made a name for himself by spreading the sprawling, proto-suburban style throughout Australia and New Zealand before his posting in British Malaya. Under Reade’s aegis, Kuala Lumpur became a test case for the movement’s applicability outside of the industrialized West.

Housing estate in Malaysia

Unlike in the West, where dense, built-up urban cores relegated Garden City developments to small new towns and the outskirts of large cities, Kuala Lumpur offered an opportunity to build a metropolis from scratch as a Garden City. Charles Reade eagerly set to work building sprawling, low-density housing estates alongside wide roads which anticipated widespread private vehicle ownership. Residential, commercial, and industrial areas were segregated and separated by grassy, undeveloped parkbelts, characteristic of the Garden City style.

Following independence, a nationalist Malaysian government used a hybrid Japanese/American industrial policy (under the inauspicious moniker of “five-year plans”) to foster a domestically-oriented automobile industry, fulfilling Reade’s prophesy of Kuala Lumpur as an auto-oriented city. With two state-owned car manufacturers – Proton established in the ’80s and Perodua in the ’90s – middle-class car ownership became a national prerogative. In addition to bankrolling the two auto companies, the government subsidized gasoline and civil servants’ car loans, and embarked on an ambitious road-building scheme.

Beyond the British-style town planning of the 1920s and the hybrid American/Japanese industrial policy of the 1980s, Kuala Lumpur also began instituting American-style restrictions on density. Private minibuses were regulated out of existence and public bus service has not adapted to changing land use patterns.  In addition to height and density limitations, developers are faced with sprawl-promoting minimum parking requirements to the point where Kuala Lumpur’s downtown has twice as many parking spaces as not only its middle-income Asian counterparts, but also wealthy Asian cities like Singapore and Tokyo.

Kuala Lumpur may be the most blatant example of poorly-advised adoption of Western land use policy, but other cities around Asia exhibit similar anti-urban tendencies. Bangkok, Jakarta, and Manila are also “parking requirement enthusiasts,” and urban transportation scholar Paul Barter believes that similar dynamics may be at play in South Asian cities. The state of apartment buildings in Mumbai, 60% of which had controlled rents as late as 2006, makes the South Bronx look like the Upper East Side. The late Vietnamese Foreign Minister Nguyen Co Thach once said that artificially low rents were more destructive to Hanoi’s housing stock than American bombing.

Bucharest, post-Ceaushima

Outside of the immediate region, the communist world has adopted, to its detriment, many Western planning tendencies. Communist planners pursued the urban planning theories of Le Corbusier, the eminent Swiss architect and designer, with particular zeal, turning what to the West was a passing fad into the communist world’s sole planning style. While the French never seriously considered Le Corbusier’s plan to demolish most buildings within central Paris’ Right Bank and replace them with towers and parks with highways along the Seine, Romanian dictator Nicolae Ceau?escu implemented his ideas quite faithfully in Bucharest, once known as the “Little Paris of the East” for its architecture. He razed vast swathes of the oldest, densest parts of the city and replaced them with towering apartment blocks, vast open spaces, and massive roads. In keeping with the Vietnamese foreign minister’s bombing theme, locals have dubbed Ceau?escu’s planning disaster “Ceaushima.”

Other communist cities, like Moscow and Pyongyang, built their typically-communist tower blocks on the outskirts of town, wherever there was open land. This resulted in a peculiar situation where density rises as one gets farther away from the city center, making mass transit difficult to implement. And while communist regimes didn’t envision widespread car ownership, their sense of grandiosity and love of military parades led to the construction of wide boulevards that discourage walkability and are now choked with cars. Like Le Corbusier, the communists despised the sort of petty commerce and consumerism that bustling streets and alleyways exude, so the isolated residential towers that dot the urban landscape of former communist countries have little in the way of ground-level retail. While Le Corbusier’s urban planning legacy in the West is limited to a dwindling number of decrepit high-rise public housing projects, the damage in communist countries, where all housing was public housing, is much longer-lasting.

In some ways, pro-sprawl urban planning has done more damage to countries like Malaysia and Romania than to the West. Unlike the Anglosphere and Europe, which already had relatively dense and developed urban cores before sprawl set in, developing countries are still in the process of urbanizing, so their older, denser cores do not have the capacity to hold much of the population. Some cities, like Kuala Lumpur or Pyongyang, had almost no pre-planning development; others, like Bucharest, had their historic centers redeveloped into Corbusian wastelands. The US had its freeway revolts and Western planning professionals have started to reconsider forced suburbanization, but the developing world is still waiting for its Jane Jacobs.

Academic references

  1. Garnaut, Christine. “Chronicles from the far east: the garden city model of planning in the Federated Malay States, 1920-1929.” [source]
  2. Mohamad, Jamilah and Amin T. Kiggundu. “The rise of the private car in Kuala Lumpur, Malaysia.” [source]
  3. Barter, Paul A. “Transport, urban structure and ‘lock-in’ in the Kuala Lumpur Metropolitan Area.” [source]
  4. Renaud, Bertrand. “The urban dimension of the North Korean economy: a speculative analysis.” [source]
  5. Richards, Simon. “The anti-social urbanism of Le Corbusier.” [source]