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Category Economics

Rothbard the Urbanist Part 1: Public Education’s Role in Sprawl and Exclusion

I’ve been meaning to address the public education system’s complex role in land use patterns, and found that Murray Rothbard does a better job in his 1973 manifesto, For a New Liberty than I ever could.  In summary, locally-funded public education is an engine of geographical segregation, which encourages flight from urban areas, and was a driving motivation for the popular acceptance of exclusionary zoning in newer suburbs.  As a result, wealth is consistently concentrated geographically, and housing affordability is at odds with these restrictions of supply intended to exclude poorer people from draining the property tax base. Here’s a paragraph from the chapter on education: The geographical nature of the public school system has also led to a coerced pattern of residential segregation, in income and consequently in race, throughout the country and particularly in the suburbs. As everyone knows, the United States since World War II has seen an expansion of population, not in the inner central cities, but in the surrounding suburban areas. As new and younger families have moved to the suburbs, by far the largest and growing burden of local budgets has been to pay for the public schools, which have to accommodate a young population with a relatively high proportion of children per capita. These schools invariably have been financed from growing property taxation, which largely falls on the suburban residences. This means that the wealthier the suburban family, and the more expensive its home, the greater will be its tax contribution for the local school. Hence, as [p. 133] the burden of school taxes increases steadily, the suburbanites try desperately to encourage an inflow of wealthy residents and expensive homes, and to discourage an inflow of poorer citizens. There is, in short, a breakeven point of the price of a house beyond which a […]

How Pricing Tolls Right Eliminates Congestion

Chris Bradford over at Austin Contrarian has been making some solid points in favor of congestion pricing. (here, here, here and here)  Chris’s core argument in favor of congestion tolling is that: congestion pricing does more than relieve congestion.  Congestion pricing tells us when a road needs more capacity.  Additional capacity costs money, and drivers are willing to pay only so much for it.  That “so much” is exactly equal to the price they are willing to pay to avoid congestion. The idea that toll profits send a signal to road operators to produce additional capacity is often neglected in discussions of the benefits of congestion pricing.  Without pricing, the only signal is the manifestation of congestion itself.  This is problematic, as the only solution is to build more roads when congestion is observed.  Actually if done right, years before congestion occurs with the help of foresight and luck on the part of transportation planners and agencies.  This problem feeds the dangerous new highway –> sprawl –> congestion –> highway expansion –> sprawl, etc., etc. positive feedback loop.  This feedback loop is quite a powerful mechanism that helps drive the unhealthy types of sprawl. Chris is on the right track, but sets a sub-ideal objective (in my opinion) when he says: The optimal congestion toll should be set just high enough to achieve free-flow (45 mph) traffic. Since the goal should not only be to avoid congestion, but to get the highest number of commuters through the system as possible, I would restate that as: The optimal congestion toll should be set at exactly the price that maximizes traffic flow. As Chris said, “Congestion pricing is hard.”  Although it seems complicated, you might be shocked at how easy it is, in concept, to price roads optimally.  That’s because it’s somewhat […]

The Nature of the Living City

Sandy Ikeda posted an abstract for a short essay he is contributing to a Festschrift honoring Jane Jacobs.  He quite eloquently describes the nature of the living city: A city is not a man-made thing.  Rather, it emerges from the actions of its inhabitants, who interact in unpredictable yet orderly ways.  Under the right conditions – the right “rules of the game” – what arises is vital, creative, radically unpredictable, and profitable:  the living city. Neither can it be inefficient, because that too presupposes a system-wide plan.  Both efficiency and inefficiency presume that we know how things ought to be, what success and failure look like, and that’s impossible in the urban dynamic.  Instead, borrowing from ecology (and certain heterodox schools of economic thought), we might say that a living city is a “dynamically stable” process, in which the forces of positive and negative feedback, as well as sudden mutation and diversity, combine under the right conditions to generate order through time.  It embodies trial and error, surpluses and shortages, apparently useless duplication, conflict and disappointment, trust and opportunism, and discovery and radical change.  These are in the nature of the living city. Another piece to look forward to!  Sounds like Sandy touches on some similar themes to Mathieu Helie’s upcoming piece on Emergent Urbanism. 

Intro to Emergent Urbanism

Mathieu Helie has been writing at a blog he calls Emergent Urbanism.  His most recent post is the first part of a series that will be published as an entire article entitled “The Principles of Emergent Urbanism” at International Journal of Architectural Research. This first part of the series, and hopefully the entire published article gives a great introduction to the concept Helie names “Emergent Urbanism.”  In my opinion as a Market Urbanist, Mathieu’s most remarkable contributions to urbanism revolve around the concepts of “emergence” as it relates to urban patterns, particularly with regards to Hayek’s ideas about “emergent order” or “spontaneous order”.  As Mathieu writes: How is it possible for what is obviously a human artifact to arise as if by an act of nature? The theory of a spontaneous order provides an explanation. According to Friedrich A. von Hayek (Hayek, 1973) a spontaneous order arises when multiple actors spontaneously adopt a set of actions that provides them with a competitive advantage, and this behavior creates a pattern that is self-sustaining, attracting more actors and growing the pattern. This takes place without any of the actors being conscious of the creation of this pattern at an individual level. The spontaneous order is a by-product of individuals acting in pursuit of some other end. In this way cities appear as agglomerations of individually initiated buildings along natural paths of movement, which originally do not require any act of production as dirt paths suffice. As the construction of individual buildings continues the most intensely used natural paths of movement acquire an importance that makes them unbuildable and these paths eventually form the familiar “organic” pattern of streets seen in medieval cities. This process still takes place today in areas where government is weak or dysfunctional, notably in Africa where urban planning […]

Undead Ideas: Rent Control

In these days of economists constantly debating the right way to revive the economy, it seems like there is no way to find consensus among economists.  Economists don’t spend much time debating the issues they agree on, and to them, rent control is about as dead an issue as the earth revolving around the sun.  In 1992, 93% of American and Canadian economists surveyed agreed with the statement “A ceiling on rents reduces the quantity and quality of housing available.”  Opposition to rent control among economists spans the political spectrum from Milton Friedman and Walter Block to leftist Nobel Laureates Gunnar Myrdal and Paul Krugman.  In fact, it was the socialist Swedish economist Assar Lindbeck who famously said, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing it.” (Assar Lindbeck, The Political Economy of the New Left, New York, Harper and Row, 1972, p. 39) Never underestimate opportunistic politicians when they smell blood in the water.  With housing prices already falling, politicians want to be seen as champions of the little guy and do something for “affordability” with one side of their mouth, and force housing prices to “recover” with the other.   With the economy in disarray, even widely discredited schemes such as rent control are making a comeback in politician’s playbooks of idiotic moves that please certain constituents. Rent control was implemented twice on a national scale in the United States.  Rents were first frozen during the difficult years of World War II, and frozen again in 1971 as part of President Richard Nixon’s wage and price controls intended to curb inflation.  After Nixon’s wage and price controls expired, many cities kept some form of rent control intact. Could President Obama resurrect an undead Richard Nixon to implement […]

Stadtluft Macht Frei (city air makes one free)

Thomas Schmidt wrote a great article for LewRockwell.com that covers a lot of urbanist ground, with some help from a broad selection of Jane Jacobs’ work.  Here’s a snippet: Though you might blame any number of obvious villains and historical processes for this, the name Ebenezer Howard would probably not come to mind. Howard created the Garden City idea of moving population out of concentrated urban areas like London and into a country setting, (inspired by the socialist polemic Looking Backward) and proved a major influence on urban planning; Radburn, NJ, where perhaps the cul-de-sac was invented, is an example of a place constructed to his ideal. He is one of the villains of Jane Jacobs’ magisterial classic, The Death and Life of Great American Cities, although she takes pains early on in the book to avoid overt criticism of his motives. Check it out the whole article, I think you’ll like what you read.

My Article at FreePo on the Resurrection of Rent Control

The Orange County Register’s new site, Freedom Politics just posted an article I wrote for them on rent control.  Here’s a snippet: In these days of economists constantly debating the right way to revive the economy, it seems like there is no way to find consensus among economists.  Economists don’t spend much time debating the issues they agree on, and to them, rent control is about as dead an issue as the earth revolving around the sun.  In 1992, 93% of American and Canadian economists surveyed agreed with the statement “A ceiling on rents reduces the quantity and quality of housing available.”  Opposition to rent control among economists spans the political spectrum from Milton Friedman and Walter Block to leftist Nobel Laureates Gunnar Myrdal and Paul Krugman.  In fact, it was the socialist Swedish economist Assar Lindbeck who famously said, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing it." The article is part of a series called “Undead Ideas” and I’m told the article is supposed to feature a humorously hideous illustration of a zombie Richard Nixon, which is the reason for the Nixon joke.  I will share the illustration once it is public.     Could President Obama resurrect an undead Richard Nixon to implement nationwide rent control in the face of the impending stimflation?  There’s a 93% chance his economic advisors wouldn’t let him do such a thing.  However, Nixon’s undead corpse has been spotted mumbling "I am now a Keynesian" in places like California and New York City where bad ideas never seem to die. I actually thought of the word “stimflation” on my own, but I checked and learned I wasn’t the first to think of it.  The domain stimflation.com had just been reserved last week… […]

How FDR’s TVA Went Wrong

Jim Powell’s latest article at Reason discusses the Tennessee Valley Authority, FDR’s most ambitious infrastructure program: It was heralded as a program to build dams that would control floods, facilitate navigation, lift people out of poverty, and help America recover from the Great Depression. Yet the reality is that the TVA probably flooded more land than it protected; much of the navigation it has facilitated involves barges of coal for coal-fired power plants; people receiving TVA-subsidized electricity have increasingly lagged behind neighbors who did not; and the TVA’s impact on the Great Depression was negligible. The TVA morphed into America’s biggest monopoly, dominating an 80,000 square mile region with 8.8 million people—for all practical purposes, it is a bureaucratic kingdom subject to neither public nor private controls. The article seems like it could easily be rescripted for just about any major government infrastructure project, especially our federal highway system. As a remedy for the Great Depression, the TVA didn’t work. It created no new wealth and, through taxation, transferred resources from the 98 percent of Americans who didn’t live in the Tennessee Valley to the two percent who did. Any spending that happened in the Tennessee Valley therefore was offset by the spending that didn’t happen elsewhere. Those taxes reduced net incomes. Much like any other complex public works project, it took an inordinate amount of time to build the TVA. Only three TVA dams were completed during the 1930s. The dams themselves were small—with less than one-twentieth the power-generating capacity of big western dams like Grand Coulee. Although the building process provided work for engineers and skilled construction workers—who earned above-average incomes—the dams simply came too late to have much impact on most people in the Tennessee Valley during the Great Depression. Nonetheless, expect governments to remake the same […]

NY Rent Control Revival

In an act of pure legislative idiocy in the face of overwhelming consensus among economists against rent control, the New York State Assembly started the ball rolling to strengthen rent regulation. NY Times: The Democratic-led Assembly passed a broad package of legislation designed to restrain increases on rent-regulated apartments statewide. The legislation would essentially return to regulation tens of thousands of units that were converted to market rate in recent years. In addition, the legislation would reduce to 10 percent, from 20 percent, the amount that a landlord can increase the rent after an apartment becomes vacant; limit the owner’s ability to recover a rent-regulated apartment for personal use; and increase fines for landlords who are found to have harassed their tenants as a way of evicting them. The legislation would also repeal the Urstadt Laws’ provision that in 1971 effectively took away most of New York City’s authority to regulate rents and transferred it to the state. Opponents of the legislation are concerned that the New York City Council, known for its pro-tenant leanings, would enact laws that are unfavorable to landlords. Expect some amazingly ignorant quotes from legislators while this is debated: Linda B. Rosenthal, an assemblywoman who represents the Upper West Side, said that unless rent-regulation laws were changed, middle class people were at risk of being driven out of the city. Actually, rent control drives out the middle class, making housing only affordable to the rich and beneficiaries of subsidies and rent controls. New housing will be nearly impossible for middle class tenants to find. Plus, for those who favor one particular class of people over others, rent control increases class tensions… “Pretty soon we’re going to end up with a city of the very poor and the very rich,” Ms. Rosenthal said. “Our social fabric […]

Redistribution (a follow up)

I threw up Friday’s Redistribution post somewhat hastily during my break, but there isn’t much more that I haven’t said before.  As a follow-up, I’d like to tie it in with some other interesting reads. Ryan Avent at The Bellows agreed with Yglesias’ post and added: Anyway, I saw in Google reader that libertarian intellectual Will Wilkinson had shared Matt’s post, presumably because he agreed with it. And indeed, this is one of those times when libertarians and liberals can find common cause. On the other hand, most of Cato’s planner types vigorously defend suburban sprawl and highway construction, and vigorously oppose smart growth and transit construction, despite the obvious point that it takes an immense web of regulations and subsidies to support rapid suburban and exurban growth. Over here! Ryan, Will! We’re over here!… Definitely check out The Bellows post. Will Wilkinson stopped in to comment, too. I think the “common cause” concept was conveyed well in Ed Glaeser’s recent NY Times piece, called The Case for Small-Government Egalitarianism. Harvard’s Glaeser reaches out for “common cause” between libertarians and progressives – kinda like the links between Free-Markets and Urbanism: Libertarian progressivism distrusts big increases in government spending because that spending is likely to favor the privileged. Was the Interstate Highway System such a boon for the urban poor? Has rebuilding New Orleans done much for the displaced and disadvantaged of that city? Small-government egalitarianism suggests that direct transfers of federal money to the less fortunate offer a surer path toward a fairer America. and Many of my favorite causes, like fighting land use regulations that make it hard to build affordable housing, aid the poor by reducing the size of government. In the wake of Hurricane Katrina, I also argued that it would be far better to give generous […]

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