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Category Economics

Urban[ism] Legend: Transportation is a Public Good

In a recent post, commenter Jeremy H. helped point out that the use of the term “public good” is grossly abused in the case of transportation.  Even Nobel economists refer to roads as “important examples of production of public goods,” ( Samuelson and Nordhaus 1985: 48-49).  I’d like to spend a little more time dispensing of this myth, or as I label it, an “Urban[ism] Legend.” As Tyler Cowen wrote the entry on Public Goods at The Concise Library of Economics: Public goods have two distinct aspects: nonexcludability and nonrivalrous consumption. “Nonexcludability” means that the cost of keeping nonpayers from enjoying the benefits of the good or service is prohibitive. And nonrivalrous consumption means that one consumer’s use does not inhibit the consumption by others.  A clear example being that when I look at a star, it doesn’t prevent others from seeing the same star. Back when I took Microeconomics at a respectable university in preparation for grad school, I was taught that in some cases roads are public goods.  We used Greg Mankiw’s book, “Principles of Economics” which states the following on page 234: If a road is not congested, then one person’s use does not effect anyone else. In this case, use is not rival in consumption, and the road is a public good. Yet if a road is congested, then use of that road yields a negative externality. When one person drives on the road, it becomes more crowded, and other people must drive more slowly. In this case, the road is a common resource. This explanation made sense, but I was skeptical – something didn’t sit right with me.  Let’s take a closer look. First, Mankiw uses his assertion as an example of rivalrous vs nonrivalrous consumption, while not addressing the question of excludability.  Roads are easily excludable through gates […]

Obama administration pushing dissolution of Fannie and Fredie

Big news out of Washington: Fannie Mae and Freddie Mac – which many (including me) think were at the heart of the financial collapse, and currently have some stake in the vast majority of post-crash mortgages – may be getting wound down soon. This NYT is reporting that the Obama administration may be releasing three plans at the end of the week, and the preferred (!) one is to shut down the two lenders entirely. These lines also stood out to me: Representative Scott Garrett, the New Jersey Republican who is chairman of the House subcommittee that deals with housing finance, on Monday told a mortgage conference in Florida that the government should leave the mortgage business. “I believe that, if there is to be any government assistance to homeownership, it should be limited to first-time homebuyers or rental housing,” Mr. Garrett said. Note that “rental housing” isn’t “homeownership” at all. Personally I think it’s a good idea to get the government out of encouraging homeownership entirely, on the grounds that homeowners are more likely to be in the perverse position of wanting the cost of housing – a basic expense for everyone – to go up, resulting in pervasive government interventions like anti-density zoning and blowing up the housing bubble. But even beyond this indirect sprawl promotion, they have inherent anti-density biases like their refusal to fund small mixed use projects.

Links

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 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 […]

The Texas Transportation Institute’s funny definition of “congestion”

As if anybody didn’t realize it before, it’s now obvious that the Texas Transportation Institute, despite its prestige, is intellectually bankrupt. David Alpert at Greater Greater Washington says it better than I could: The Texas Transportation Institute today released the final version of their report on congestion, which ranks the DC area tied for first with Chicago in hours wasted in traffic. Unfortunately, the report’s methodology completely misleads as to the seriousness of traffic, and TTI is pushing the wrong policy solutions. The TTI report narrowly looks at only one factor: how fast traffic moves. Consider two hypothetical cities. In Denseopolis, people live within 2 miles of work on average, but the roads are fairly clogged and drivers can only go about 20 miles per hour. However, it only takes an average of 6 minutes to get to work, which isn’t bad. On the other hand, in Sprawlville, people live about 30 miles from work on average, but there are lots and lots of fast-moving freeways, so people can drive 60 mph. That means it takes 30 minutes to get to work. Which city is more congested? By TTI’s methods, it’s Denseopolis. But it’s the people of Sprawlville who spend more time commuting, and thus have less time to be with their families and for recreation. Sadly, despite CEOs for Cities pointing out these methodological problems last year, TTI went ahead and finalized its report without fixing them (PDFs). TTI ranks Portland as worse than Nashville, with a Travel Time Index (TTI) of 1.23 for Nashville and worse TTI of 1.15 for Portland. However, because of greater sprawl, Nashville commuters spend an average of 268 hours per year commuting, while the average Portland commuter spends 193 hours per year. What does this mean for public policy and the Washington region? […]

This is how gentrification happens: Northwest DC and the height restriction

Lydia DePillis wrote the Washington City Paper’s cover story on the case for Congress overturning DC’s height limit, which should be very familiar to readers of this blog. It’s got some interesting history in it (DC’s height limit was apparently influenced by George Washington’s personal aesthetics, despite the fact that he never governed from the city), but the part that was really interesting to me was the part where she discusses what the new limitations should be. It’s not politically practical to advocate for lifting the limit without reservations, as we here would like, and there are the usual caveats and equivocations (“What if additional height were granted on a competitive basis, and awarded for the best design?”). But the part that really stood out to me was this graphic (click on the image and scroll to the bottom of the linked page to see a bigger version), outlining where Lydia thinks the height restrictions should be lifted: Anyone familiar with DC geography will notice that the area most insulated from change – Northwest DC – is the richest part of town, full of desirable white neighborhoods. The areas where DePillis advocates lifting the height limit – neighborhoods east of the Anacostia River figure prominently in the graphic – are far blacker and poorer than the rest of DC. Sure, there are pretty buildings in NW and a lot of ugly ones in Anacostia, but there are also beautiful homes off of Benning Road and shitty ones in Burleith. (Which, I should add, could desperately use some taller buildings, given its proximity to the perpetually housing-strapped Georgetown University and its rather ugly architecture compared to Georgetown proper.) This tactic of upzoning poor black neighborhoods while leaving white neighborhoods unchanged is very common, and I realize that Lydia is just trying […]

The economics of redevelopment and the shape of socialist cities

Earlier today I read an article by Daniel Garst about Bejing’s awkward population distribution that reminded me of a journal article about the general shape of socialist cities that I read a while back. Garst talks about Beijing being a “circus tent” when it comes to density, with population density increasing as you travel away from the city center, in contrast to the “pyramid” style of most cities, with high densities in the center and lower densities around the periphery (see chart for a visual representation). This immediately made me think of an article by Alain Bertraud and Bertrand Renaud called “Socialist Cities without Land Markets,” where they describe exactly this phenomenon, and explain it as a failure of administrative urban planning. Here’s an excerpt: As their economy and their population grow, cities expand through the progressive addition of concentric rings, similar to the growth of trees in successive seasons. New rings are added to the periphery as the city grows. With each ring, land use reflects the combined effects of demography, technology, and the economy at the time when the ring was developed. Wile this organic incremental growth is common to all cities, in a market city changing land prices exert their pressure simultaneously in all areas of the city, not just at the periphery. Land prices exert a powerful influence to recycle already developed land in the inner rings when the type and intensity of the existing use is too different from the land’s optimum economic use. Thus, changing land values bring a built-in urban dynamism as ceaseless variations in land prices put a constant pressure on the current uses of land and trigger changes to new activities and/or densities. Under the administrative-command economy, the absence of land prices eliminated the main incentive to redevelop built-up areas by […]

When will New Jersey reverse its sprawling ways?

by Stephen Smith New Jersey has always been an odd state – it’s the most densely populated of the fifty, and yet it lies just outside of the core of both of its metro areas (Philadelphia and New York). North Jersey does have a formidable number of mid-sized cities, but the biggest – Newark – is a posterchild for urban neglect, and New Jersey’s urban areas play a tepid second fiddle to their much larger counterparts across the Delaware and the Hudson. New Jersey’s appeal lies undeniably in its suburbs, which are connected by a network of government-built roads and enabled by anti-density development rules. Despite New Jersey’s predilection for sprawl, the New York Times reports that the state may literally be running out of horizontal space. A Rutgers study claims that around the middle of the 21st century New Jersey will become the first state to develop all its unprotected land development trends remain unchanged. The NYT article then claims that denser redevelopment is on the rise and cites a few of anecdotes as evidence, but frankly I’m not convinced that the state is very reform-minded when it comes to its density-limiting regulations. Even among the examples given by the Times we see the limits of reform: a 217-unit luxury rental apartment building near the Morristown NJ Transit station – an area that was supposedly rezoned as a “Transit Village Core” a decade ago – was only allowed to go forward after the developer agreed to build 722 new parking spaces. On a more general level, New Jersey’s experiment with zoning reform in the ’70s and ’80s has been severely disappointing in terms of liberalization. Researcher James Mitchell used decisions handed down around the same time by both the Pennsylvania and New Jersey Supreme Courts to compare the effects on […]

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. 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 […]

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