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Urbanization and GDP

I am no macroeconomist; however, I think there are some important dots to connect between cities and economic growth. The Gated City by Ryan Avent, (discussed more in depth here), explores this thesis and offers a nice overview of the research that links population density and productivity. He cites Ed Glaeser and others who see a strong correlation between the two. Glaeser finds that with a 50 percent increase in population density, productivity increases by 4 percent. Additionally, I find Geoffrey West’s work (not cited by Avent) particularly intriguing. West is a former physicist who has studied the correlation between city size and all sorts of variables from the number of gas stations to the number of bank deposits per year. He’s found that every time a city doubles in size, worker productivity increases by 15 percent. The distinction between West and many others who study this issue is that he focuses on a city’s total population rather than its population density. Increasing worker productivity is the holy grail of macroeconomics. As worker productivity grows, it raises our wages and standard of living. This is what lifts poor countries out of poverty and ensures that future generations will enjoy a higher standard of living than we do today. Some of the factors that economists widely agree contribute to higher growth rates include education, property rights, and rule of law. Perhaps urbanization should be added to the list too. I won’t weigh in here on whether the variable that influences productivity is population size or population denisty; maybe they both do. In the context of land use policy, I would argue that it doesn’t matter which variable we look at. By limiting development, land use restrictions typically lead cities to be both less dense and of smaller populations. This applies equally to traditional land use […]

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.

Affordable Housing vs. Density: The Unintended Consequences of Zoning Bonuses

California Assembly Bill 710 was introduced to earlier this year to tackle the problem of municipalities requiring onerous amounts of parking for new development, widely recognized as one of the main impediments to transit-oriented development and infill growth. The bill would have capped city and county parking requirements in neighborhoods with good transit to one space per residential unit and one space per 1,000 sq. ft. of non-residential space, with an exemption process for areas with a true parking crunch and some other caveats….

Alon Levy on the Suburbanization of Poverty

Over at Pedestrian Observations, Alon Levy has a typically well-written and researched post on the gentrification of poverty. He explores the well-researched trend that low-income Americans are increasingly moving to the suburbs as gentrification is driving up rents in inner cities. He hypothesizes that this “current” trend has really been happening for the past fifty years: Both the inner and the outer limits of poverty are pushed outward. What we saw last decade was just a tipping point in which the expansion of the gentrified core was by itself enough to offset the wealth loss coming from the expansion of the ghetto. Levy suggests that this trend is largely due to the typical pattern of poverty moving outward in a “donut” pattern, but today the center of the donut is in the suburbs. He writes: In general, a similar story played out in the first-ring suburbs of many Rust Belt cities, especially in ill-favored quarters: the places that people used to flee the city to are now cities that people flee. His post sparked two thoughts: 1) Could part of the reason that wealthy and middle income residents are moving to inner cities have to do with the demand for time? As we as a society are becoming wealthier, the value of time — the ultimate finite resource — is increasing. So as the price of free time rises, people may be moving to places where their commute times are shorter. In many cases, they are trading off quality of public schools and public safety to enjoy shorter commutes. When they move to Jacobian mixed-use neighborhoods, they could enjoy the added benefit of shorter travel time when running errands and seeking out entertainment. I think this pull toward inner cities helps explain gentrification, in addition to the push away from […]

Does Urban Growth Have to Mean Gentrification?

When libertarians (and liberals) argue that increasing the supply of urban housing will lower the price of urban housing, they’re drawing on some pretty basic and well-established economic concepts. And yet, the coexistence of gentrification and housing supply growth seem to put a lie to that theory – in cities across America, we see neighborhoods adding housing while still seeing rapid increases in the price of housing. From the point of view of the poor and often non-white residents who are being pushed out, the market remedy of increasing supply just doesn’t seem to be working. …

Transit Oriented Development in Chevy Chase

In Chevy Chase, MD county planners have revised plans for the Chevy Chase Lake Sector from high rise, mixed-use development to low-rise, primarily residential buildings. The trigger to allow for higher-density development will be the arrival of the Purple Line, a proposed light rail that would stretch across Metro’s Red Line. The light rail would connect Bethesda directly to New Carollton. Construction is scheduled to be completed by 2020, but I for one am not betting on a light rail by that time. For one, no funding has been secured, and for another reason the project is met with considerable opposition to NIMBY-ists in Bethesda and Silver Spring. The town of Chevy Chase has been the most vocal opponent of the project. Personally, I could see the Purple Line being very well-used, and potentially coming closer to profitability than the “cherry blossom” line. However, waiting for the arrival of transit to permit Transit Oriented Development creates a chicken and egg problem. When high-density development is not allowed where there is demand for it, the restriction limits potential for other viable transit options. For example increasing density along the proposed Purple Line could allow for a Circulator or increased MTA routes to provide service in the meantime. And opposition to the light rail is likely to remain strong as long as residents don’t see the clear value of mass transit in their municipalities.  

E-books for everyone!

The era of liberals writing e-books about market urbanism is upon us! I knew about Matt Yglesias’ upcoming “Kindle Single” The Rent is Too Damn High, but Ryan Avent’s The Gated City took me by surprise. Ryan’s book has a “print length” of 90 pages, costs $1.99, and despite the name “Kindle Single,” can be downloaded to pretty much any computer or smart phone. I haven’t read it yet, but I’m going to download it soon. Consider this an open thread to discuss the book(s).

Covenants as a substitute for Euclidean zoning

Recently, Adam, Stephen, and I did a podcast with Jake at The Voluntary Life about The Voluntary City. The book is a collection of papers on free market solutions to urban challenges, and we will post a link to the podcast here when it’s available. In one chapter of the book, Stephen Davies discusses covenants as an emergent solution to the externality challenges inherent between neighbors using their property as they see fit. Since this topic came up in the comments of a recent post about neighborhoods built before Euclidean zoning was widely adopted, I thought it deserved further discussion. A couple of commenters suggested that because properties in Baltimore’s Roland Park neighborhood were sold with deed restrictions attached, the development there was not “organic.” My word choice was ambiguous, but in the post I meant it to signify that the development occurred in response to a market process as opposed to a regulatory regime. Private contracts governed land use as opposed to municipal rules. Davies explains that covenants first came into widespread use in England, as the country was urbanizing between 1740 and 1850. Because developers could achieve higher values for their land by ensuring complementary uses between adjacent property owners, they put covenants in place to restrict the land uses that would be permitted within a community. Some of these covenants even went so far as to specify house’s architectural details. He writes: Covenants were used in almost all urban development of the period and for a long time thereafter. Whenever a piece of land or the power to use that land was transferred from one party to another, the transfer, whether a lease or a sale, would normally contain a number of specific stipulations, or covenants. Covenants (literally, treaties) were legally binding agreements between the parties that […]

The Little-Known History of “Light and Air”

“Light and air” is a very common excuse that people give for why we must have basic zoning laws, and while nowadays a lot of people mean it simply in an aesthetic sense – another way of saying “I like to be able to look out a window and not see another skyscraper 50 feet away” (though for some reason when said interaction happens on the second or third floor, it’s okay?) – the origins of it are very interesting, and I believe crucial to understanding today’s urban plans. Of course, the ideas that turn-of-the-century planners had about disease and density turned out to be totally incorrect – privacy and being able to look out a window is nice, but the lack thereof is not a great health risk. As Robert Fogelson writes on pages 125-26 of Downtown: Skyscrapers were also a serious menace to public health, advocates of height limits charged. As early as the mid 1880s, they said that tall office buildings were turning the streets below into dark, damp, and gloomy canyons. During the winter they blocked the sun, leaving the cold streets even colder. During the summer, wrote American Architect and Building News, they acted as “storehouses of heat,” driving up the temperature after sunset, making the once cool and refreshing nights unbearable. The skyscrapers also shrouded the nearby buildings in darkness, forcing the office workers to rely on artificial light – which, it was believed, put a strain on the eyes. Worst of all, the skyscrapers deprived both the streets below and the adjacent buildings of fresh air and sunlight. To Americans who still held that disease was a product of the “miasma,” the noxious vapors that permeated the cities, the lack of fresh air was bad enough. To Americans who believed in the new […]

David Alpert calls out Virginia Tea Party group as land use statists

David Alpert at Greater Greater Washington has been on top of a story out of Virginia about a Virginia Tea Party group and its bizarre and seemingly anti-free market opposition to a state law forcing local governments to make room for dense growth. The law – which was passed a few years ago by Republicans, as David notes – included a few provisions, but the one in question, which a longtime Northern Virginia Republican is seeking to overturn, required each locality to designate an “urban development area” in which it would allow medium density development. It appears that the original plan was to have an urban growth boundary too, outside of which development would be much harder, but I’m not sure that was included in the version that passed. But whatever the rest of the law contained, Del. Robert G. Marshall and Virginia’s Campaign for Liberty are only opposing the provision that forces localities to provide upzoned land “sufficient to meet projected residential and commercial growth” for the next decade or two. I’ve read the bill (it’s relatively short), and the provision in question doesn’t even put a floor on density in the zoning area or cap the amount of parking allowed – all it does is force local governments to allow developers to build at higher densities. Here is, as far as I can tell, the strictest condition on the UDAs, which also have to allow mixed uses and smaller lot set-backs: The comprehensive plan of a locality having a population of 130,000 or more persons shall provide for urban development areas that are appropriate for development at a density on the developable acreage of at least eight single-family residences, 12 townhouses, or 24 apartments, condominium units, or cooperative units per acre, and an authorized floor area ratio of at least 0.8 […]

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