Spring Fever Links

1) Nate Berg at The Atlantic Cities covers new research on the world’s earliest cities. The findings would make Jane Jacobs happy as researchers have uncovered evidence that the earliest urbanization was a case of spontaneous order. Their construction wasn’t directed by kings as some historians previously thought, but rather by bottom-up decision-making.

2) Alex Block had two interesting pieces a while back on the politics of increasing urban density. He points out that the vested interests in urban development complicate the policy prescriptions that we often advocate here of loosening regulations.

3) Charlie Gardner at Old Urbanist points out that we shouldn’t get carried away with hopes for housing prices dropping in expensive cities with increased housing supply. While land use restrictions that Matt Yglesias, Ryan Avent, Ed Glaeser and others have written on force urban housing prices higher than they need to be, infill redevelopment is inherently a costly, slow process. It’s much easier for the price of housing in, say, Houston to stay closer to costs of construction because Houston has available land to build on cheaply and easily. Housing in New York is expensive in large part because of market fundamentals, but density restrictions make it more expensive than it has to be.

4) The case of the successful parking pricing in San Francisco that continues to receive opposition reminds me of this passage from Murray Rothbard’s For a New Liberty:

The libertarian who wants to replace government by private enterprises in the above areas is thus treated in the same way as he would be if the government had, for various reasons, been supplying shoes as a tax-financed monopoly from time immemorial. If the government and only the government had had a monopoly of the shoe manufacturing and retailing business, how would most of the public treat the libertarian who now came along to advocate that the government get out of the shoe business and throw it open to private enterprise? He would undoubtedly be treated as follows: people would cry, “How could you? You are opposed to the public, and to poor people, wearing shoes!”

Of course the San Francisco case is not nearly so radical, as street parking spaces are still government-owned, but the implementation of Donald Shoup’s market-based prices for parking serves as a step toward allocating spaces to their highest-valued use. The program’s success so far demonstrates that it is possible to move toward a free market allocation of a good that we are used to receiving free from the government, but it will always be a political struggle. Adam previously wrote at length about Rothbard the Urbanist.

TGIF Links

1. A reader from Vancouver wrote in to let Stephen and me know about a proposed policy to tax foreign investors at a higher rate than local property owners. Support for this policy is growing among residents, and with a mayoral election this Saturday, some are hoping to get candidates to endorse the policy now. Of course the higher tax rate would be done in the name of affordable housing for Vancouver natives. Hmm, with this one I’d say that the road to hell is paved with questionable intentions.

2. In other Vancouver news, recently upzoned parcels have sold for three times their previous value.

3. Two NYC taxi medallions sold for over $1 million each this week. On Marketplace, David Yassky, chairman of the city’s Taxi and Limousine Commission said that he believes the fundamentals are solid in the medallion market. When the supply of your commodity is rigidly fixed, you’re already halfway to strong fundamentals.

4. A University of Connecticut study finds that growth in the number of a city’s parking spots is inversely correlated with population growth rates.

5. Some have questioned whether the abismal state of American infrastructure is a fact or just something that everyone knows and repeats. Gizmodo points out that in the United States we have a road system that built with cheap initial construction but expensive and ongoing maintenance costs.

6. Roberta Brandes Gratz at The Atlantic Cities speculates that Jane Jacobs’ female perspective led her to be able to see the small-scale, bottom-up activities of cities more effectively than men, who tend to look at cities from the macro level. Not sure where this leaves Hayek.

Cities and the Market Process: Part 1

In a post about the tendency for emergent urbanists to promote the idea of cities having a single equilibrium, Alon Levy recently wrote that collective choice is the best manner for determining urban form. Many urbanists accept that some of the top-down regulations that limit density or use are detrimental to cities, but they often stop short of suggesting that land use regulation should be abolished and transportation privatized, which I will support here with arguments based in Austrian economics. This post does not get to a critique of the collective choice that Alon supports; later entries in this market process series will address both the problems of creating urban policy through collective choice, and some of the institutions that have emerged within civil society that are essential to cities and their residents.

The cohort of economists and urbanists who support the elimination of land use regulation is small because cities present all of the problems that neoclassical and Keynesian economists describe as market failures, including externalities, high transaction costs involved in Coasean bargaining, non-excludable goods, etc. However, I believe that emergent solutions solve these problems more effectively than either central planning or collective decision making that becomes law, and the failed and inefficient government projects that urbanist bloggers write about everyday suggest that government failure is no trivial concern.

The first reason that regulation is a poor tool to for determining urban form comes from Friedrich Hayek. He clearly identified the calculation problem inherent in central planning: the information necessary to coordinate markets (including land use markets) is held by individuals with “particular knowledge of time and place.” Even assuming that urban planners are benevolent and seek to provide the best outcomes for their communities, they could never compile the knowledge necessary to determine what those outcomes are. Jane Jacobs identified the same problem in city planning that Hayek found in market planning because cities and markets are both emergent systems that coordinate human activity. She even coined the term “locality knowledge,” seemingly unaware of his writings on “local knowledge.” Of course urban development involves intense planning, but it should be done by entrepreneurs and consumers, who have the information necessary to make these decisions rather than bureaucrats. For anyone who hasn’t read Hayek previously, his essay “The Use of Knowledge in Society” provides a concise look at some of his most important insights.

Aside from the knowledge problem facing land use planners, another major reason not to forsake the free market for the planning commission is that planners do not have access to the feedback mechanism of profits and losses. Israel Kirzner, a scholar of Ludwig von Mises details the theory of market process most clearly in Competition and Entrepreneurship. He explains that unlike government entities, entrepreneurs get quick and accurate feedback on their products. If, for example, high-density apartments in a mixed-use neighborhood with good access to transit are renting well (as urbanists across the political spectrum tend to think they will) other entrepreneurs will see these profits and provide more of them to take advantage of this profit opportunity. If on the other hand, a certain style of housing in another part of town is not selling well and the entrepreneur is making losses, this development will not be systematically repeated as it might be under central planning (see: parking mandates that are higher than the free-market level, poorly designed public parks, public housing projects surrounded by open space).

Critics of free market urban development may argue that this system will produce less-than-perfect cities, so city planners should step in to make improvements. The Austrian response is that of course the free market cannot produce utopian cities, but no other system could do better. Believing that a regulated city would be superior to the market outcome is succumbing to the Nirvana fallacy. Markets aren’t perfect, but they’re the best we’ve got.

A blog post is clearly insufficient for explaining the knowledge problem and the market process that it took Austrian economists Mises, Hayek, and Kirzner many years and thousands of pages to work out, but I hope to expand and clarify on this subject of why regulators do not have access to the tools that are necessary to design cities. For a more detailed look at some of the areas where private cities would likely fare better than our current system, see Adam’s series on Rothbard the Urbanist.

Meetup before Sandy’s Jane’s Walk this Sunday

From the comments and emails I’ve gotten, there will be a pretty decent turnout of Market Urbanists at Sandy Ikeda’s Jane’s Walk on Sunday, “Eye’s on Brooklyn Heights.”

Here are the details from the site;

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.

One reader suggested we meet for beers beforehand, and recommended The Henry Street Ale House

Let me know how that works for others. Now that I’m thinking about it – we may want to meet closer to Borough Hall where Sandy is starting the walk. O’Keefe’s on Court Street may work better:

I’ll plan for noon – if you plan to be around earlier, shoot me an email.

The best way to spot me is my height: 6′-5″. Or shoot me an email, and I’ll give you my phone number.

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
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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
www.purchase.edu

Contact info:
sanford.ikeda2@verizon.net

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

Even Jane Jacobs thought Houston doesn’t have zoning

“Houston has no zoning” is a very popular urban planning meme. It has its roots in Houston’s lacks one very specific kind of zoning: Euclidean separation of residential, commercial, and industrial uses. Euclidean zoning happens to be the one kind of planning that people easily understand (the whole meatpacking-plant-in-my-backyard fear), and so the usual panoply of density-inhibiting regulations (parking minimums, minimum lot requirements, FAR restrictions, etc.) is downplayed or even outright ignored, despite Michael Lewyn’s claims that Houston is in many ways more restrictive than even its Sun Belt neighbors.

But still, despite its pervasiveness, I was surprised to hear from commenter Alon Levy that in a 2001 interview with Reason Magazine, even Jane Jacobs was still laboring under the myth:

Reason: When the change comes, if it is an incremental, slowly evolving, uncontrolled sort of natural change, it’s easy for society to accommodate that, isn’t it?

Jacobs: Yes it is. But if all that zoning is kept, that can’t happen.

Reason: This is why I’m one of the few people you’ve met who likes Houston, because it has no zoning.

Jacobs: It has no zoning. But all the same, it looks like all the places that do have zoning. Because the same developers and bankers who deal with places that do have zoning carry their same ideas when they finance or build something in Houston.

Reason: There are not enough Houstons to change the way things are built or developed?

Jacobs: Right.

Maybe I’m just a sadist, but my favorite part of the interview was the first few pages where the interviewer tries to get Jacobs to support the usual libertarian “war on cars” line and she deftly avoids it. Finally, he thinks he’s gotten her when she says something bad about New Urbanism, but then it turns out that her issue seems more to be that New Urbanist communities aren’t really urban enough.

Why does the Infrastructurist hate libertarians so much?

by Stephen Smith

Among urban planners, libertarianism gets a pretty bad rap. Melissa Lafsky at the Infrastructurist goes so far as to call libertarianism “an enemy of infrastructure,” and dismisses entirely the idea that private industry can build infrastructure with a single hyperlink – to a poorly-written article on New Zealand’s economy written over a decade ago that barely says a word about transportation, land use, or infrastructure. She goes on to criticize the Reason Foundation’s transportation writers (something we too have done), and with it, negates entirely libertarianism’s contributions to urbanism.

Here at Market Urbanism we’re used to these sorts of attacks from the left, and we work tirelessly to disassociate ourselves (well, mostly) from Reason’s brand of (sub)urbanist libertarianism. Normally I wouldn’t expend so much effort, but the Infrastructurist is a blog that I read daily and we’ve linked to them approvingly over the years, so I figured it merited a rebuttal.

To start, I would recommend that Melissa bone up on her history. At least in North America, every great intracity mass transit system was build by private enterprise, almost without exception. From subways to streetcars, private enterprise showed a willingness and eagerness to build and profit from rail-based transit. Sure, the systems weren’t totally private and unregulated (exclusive franchise monopolies were often granted by municipal governments, among other interventions), but the system was far more “private” than the current mostly-suburban road/automobile transportation system that Reason and many other self-identified libertarians champion.

While many progressives today like to blame the demise of rail-based transit on GM, Firestone Tire, and Standard Oil (what I like to call the Who Framed Roger Rabbit theory of urbanist history), the truth is that progressives themselves were the ones who really did mass transit in. Through populist measures like the mandatory five-cent fare and costly pro-union regulations, planners hobbled the “traction magnates” with onerous regulations that were not applied to the nascent bus and jitney industries. This shift away from rail-based transit was accompanied by the rise in sprawl-promoting zoning and parking requirements. The Nation, which is now known to decry sprawl, was an adamant supporter of mandating it through zoning back in 1920, and was not above using coded racism to bolster its position.

Aside from her curious reading of urban history, Melissa Lafsky appears to have a very narrow picture of what constitutes the libertarian position on transportation and land use. Her description of the Reason Foundation’s take on urbanism is admittedly quite apt, but her assumption that Reason’s viewpoint is the only libertarian one couldn’t be farther from the truth. I can understand if she doesn’t read our blog, but surely she should have read her own blog’s favorable take on Tyler Cowen – one of the most prominent intellectual libertarians and owner of the most popular economics blog of all time – and his NYT column on America’s free parking glut. The debate has even spilled out of the libertarian and transit blogospheres and into Newsweek and Matt Yglesias’ blog, but you wouldn’t know it from reading Melissa’s post.

So feel free to call out the Reason Foundation for its whacky positions on urbanism – lord knows we’ve filled many pages doing it. But please don’t assume that libertarianism (or even Reason, whose magazine once called Jane Jacobs “one of the greatest libertarians of the last century”) is a monolithic entity without any redeeming urbanist qualities, and that this fact is so self-evident that you don’t need to seek out more than one organization’s opinion. Might we suggest adding our blog to your feed reader?

Correction, Reason.org’s Plug, and Glaeser on Jacobs

In the comments of my most recent post, insightful commenter, OldUrbanism pointed out some items that need attention:

The last two factors, legal costs associated with eminent domain and opportunity costs of land, are in fact often included in typical project cost estimates for both public and private projects. The former is fairly straightforward, as it is a project-related cost. The latter, opportunity cost of land, is simply the purchase price of land.

In the case of this example, where land acquisition costs are assumed as part of the project cost, OldUrbanism is exactly correct. I’m truly embarrassed for being sloppy in that statement and will correct it.

Of course, I still stand by my exposure of the ignorance of land opportunity cost by those who assert that existing highways “pay for themselves.” I invite you to check out the discussion of that matter (and other items) with OldUrbanism in the comments of the post.
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The other day, Reason Foundation’s Samuel Staley had some very generous things to say about Market Urbanism:

I just ran across the Market Urbanism web site, and it has a lot of really good analysis and resources available for anyone following urban policy issues. The sub-title of the web site is “Urbanism for Capitalists/Capitalism for Urbanists”. The blog includes lots of references to F.A. Hayek, free markets, and even takes the Cato Institute to task for advocating “socialism for roads.”

and

This site is well organized and designed. I think it’s a great addition to the debate and discussion, and its refreshing to see a new voice enter into the fray.

Thanks Samuel!! I share Reason’s objective of “Free Minds and Free Markets.”

I just have to admit I found it a little ironic that he had such nice things to say after I blasted reason.org on twitter for their recent pro-government infrastructure pieces (here, here and here).
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Ed Glaeser wrote a book review for the New Republic discussing his mixed opinions towards Jane Jacobs and Robert Moses. Of course, my opinions of Glaeser’s piece are also mixed: wrong on infrastructure, right on NIMBYism.

Tyler Cowen and Matt Yglesias also chime in.