So, I have a question. This might sound like I’m trying to be snarky, but I’m actually genuinely in search of an answer: Is there any economist out there other than Wendell Cox and Joel Kotkin who actually believes this?
This all should give some pause to the relentless hoopla about the country’s supposed “urban renaissance.” The roots of the current economic crisis lie deep in urban economies, where employment growth that has lagged even in good times. During the last economic expansion, urban job growth was roughly one-sixth that of suburbs and one-third that of smaller communities.
I believe the smart growth-caused-the-subprime-mortgage theory originated with Wendell Cox, and while Joel Kotkin’s statement is rather vague and leaves a lot of wiggle room, it sure sounds like he’s buying into it, too. Any others to add to the list?
Thomas Sowell believes as well: http://townhall.com/columnists/ThomasSowell/2007/08/08/sub-prime_politicians But also, Wendell has used comments from Paul Krugman to hammer that point while Krugman pushes back against it: http://krugman.blogs.nytimes.com/2010/01/06/bernanke-and-the-bubble/ and http://krugman.blogs.nytimes.com/2010/01/06/desert-bubbles/
I don’t understand. Hasn’t Randal O’Toole shown that land use policies rapidly inflated housing prices? And that in places without such stringent land use policies there was no housing bubble?
I’m sure he’s tried, but especially if he isn’t distinguishing between density-forbidding and sprawl-forbidding ones, I can’t imagine he’s had much success – the bubble clearly hit sprawling Sunbelt cities the hardest and dense East and West Coast cities the least.
It might have played a minor role, but it was nowhere near a primary cause.
I have to admit that Kotkin is skillful at mixing fact and fantasy – but what he leaves out is just as important as what he says. He makes no mention of the massive intervention that continues to favor the non-urban over the urban, from regulations to tax subsidies to corporate welfare. He’s right that cities are the locus of the worst of the money-grabbing that’s dragging us down – not because of “smart growth” or “ultra-expensive new trains” but because that’s where the power is. He’s surely right that Obama’s dreadfully flawed HSR plans won’t go anywhere – but there’s no mention of the even more expensive investments that will be required of all taxpayers to finance the roads-only transportation network that Obama’s opponents envision – presumably, the pretence that roads are financed solely by users will continue to be common wisdom.