In fact, land use decisions are generally made by local governments–which is why it is so hard to get new housing built.  This is as true in California as it is anyplace else; when Gov. Brown tried to make it easier for developers to bypass local zoning so they can build new housing, the state legislature squashed him.   Local zoning has become more restrictive over time, not less.  And the fact that state government has added additional layers of regulation doesn’t change that reality.

But did the Atlantic note this divergence from factual reality, or even ask him a follow-up question? No, sir.  Shame on them!

The post Kotkin And The Atlantic- Spreading ‘Localism’ Nonsense Together appeared first on Market Urbanism.

In his new book The Human City, Joel Kotkin tries to use NIMBYism as an argument against urbanism.  He cites numerous examples of NIMBYism in wealthy city neighborhoods, and suggests that these examples rebut “the largely unsupported notion that ever more people want to move ‘back to the city’.” This argument is nonsense for two reasons.

First, the NIMBYs themselves clearly want city life and a certain level of density–otherwise they would have moved to suburbia.  In cities like Los Angeles and New York, a wide range of housing choices exist for those who can afford them.

Second, the fact that some people want to prohibit new housing does not show that there is no demand for new housing.  To draw an analogy: the War on Drugs prohibits many drugs.  Does that mean that there is no demand for drugs?  Of course not.  If anything, it proves that there is lots of demand for drugs; otherwise government would not bother to prohibit it.

For my more in-depth review of The Human City, read:  Joel Kotkin’s New Book Lays Out His Sprawling Vision For America

The post NIMBYism as an Argument Against Urbanism appeared first on Market Urbanism.

Surprise!!  I’ve had the intent to wrap-up the Rothbard The Urbanist series for a long time, and it’s been sitting on my todo list for over 6 years.

I want to thank Jeffrey Tucker, then at mises.org, and now at FEE.org and liberty.me for enthusiastically granting permission to reprint excerpts from For A New Liberty.  Murray Rothbard’s 1973 classic can be downloaded free from Mises.org as pdf, and audio book read by Jeff Riggenbach.  This chapter is also discussed by Bryan Caplan as part of an econlog book club series on For A New Liberty.

It’s been a while, so you may want to catch up on the first six posts:

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

Rothbard the Urbanist Part 2: Safe Streets

Rothbard the Urbanist Part 3: Prevention of Blockades

Rothbard the Urbanist Part 4: Policing

Rothbard the Urbanist Part 5: Diversity and Discrimination

Rothbard The Urbanist Part 6: Traffic Control

We pick up in the heart of chapter 11: “The Public Sector, II: Streets and Roads” to expand on a subject core to Market Urbanism: the pricing of highways, and the consequences of a system where politics, special interests, and top-down planning have incarnated a dysfunctional system severely disconnected with bottom-up pricing signals necessary to be sustainable.  Tragically, Rothbard’s insights on these subjects have been mostly neglected for over 30 years, while apologists for sprawl and automobile dominance have nearly monopolized the conversation among free-market advocates.

We begin the section with Professor Rothbard’s acknowledgement of what sprawl apologists turn a blind eye to, yet urbanists on the left are keenly aware.  Government intervention, fueled by special interests and old-fashioned progressive ideology, massively subsidized the highway system and crowded-out otherwise viable railroads.  As a result, we have an overbuilt highway system, urban neighborhoods were eviscerated, suburbs spread far-and-wide, privately built transit could not compete, and congestion clogs many socialized highways.

Pricing Streets and Roads

If, in contrast, we examine the performance of governmental streets and highways in America, it is difficult to see how private ownership could pile up a more inefficient or irrational record. It is now widely recognized, for example, that federal and state governments, spurred by the lobbying of automobile companies, oil companies, tire companies, and construction contractors and unions, have indulged in a vast overexpansion of highways. The highways grant gross subsidies to the users and have played the major role in killing railroads as a viable enterprise. Thus, trucks can operate on a right-of-way constructed and maintained by the taxpayer, while railroads had to build and maintain their own trackage. Furthermore, the subsidized highway and road programs led to an overexpansion of automobile-using suburbs, the coerced bulldozing of countless homes and businesses, and an artificial burdening of the central cities. The cost to the taxpayer and to the economy has been enormous. [p. 209]

Rothbard cites Columbia University economist, William Vickrey on the extent of subsidies to the automobile.  23 years later, Vickrey won the 1996 Nobel Prize in Economics days before passing away, and is known as the “father” of congestion pricing.

Particularly subsidized has been the urban auto-using commuter, and it is precisely in the cities where traffic congestion has burgeoned along with this subsidy to overaccumulation of their traffic. Professor William Vickrey of Columbia University has estimated that urban expressways have been built at a cost of from 6 cents to 27 cents per vehicle-mile, while users pay in gasoline and other auto taxes only about 1 cent per vehicle-mile. The general taxpayer rather than the motorist pays for maintenance of urban streets. Furthermore, the gasoline tax is paid per mile regardless of the particular street or highway being used, and regardless of the time of day of the ride. Hence, when highways are financed from the general gasoline tax fund, the users of the low-cost rural highways are being taxed in order to subsidize the users of the far higher-cost urban expressways. Rural highways typically cost only 2 cents per vehicle-mile to build and maintain.⁴

A transportation system without a rational pricing system causes dysfunction in many forms – most visibly, congestion. I first realized this while idling in traffic driving home from my first micro-economics class, which had just opened my eyes to queuing which results from supply shortages induced by mispricing.  If roads were tolled at a profit maximizing price, especially with today’s technologies that tremendously reduce transaction costs, congestion could be effectively eliminated and inform operators where to increase capacity or build new roads.  Instead, the government continuously attempts to solve congestion by buildings more roads without the benefit of price signals. Rothbard calls it, “like a dog chasing a mechanical rabbit,” and references a Washington Post article describing the unintended consequences of Washington’s Capital Beltway construction: more (not less) congestion, sprawl, and hollowing-out of jobs and residents from the central city.  I tried searching Washington Post archives for the 1971 article, “U.S. Highway System: Where to Now?,” by Hank Burchard, but was unsuccessful. Please let me know if you find it.

In addition, the gasoline tax is scarcely a rational pricing system for the use of the roads, and no private firms would ever price the use of roads in that way. Private business prices its goods and services to “clear the market,” so that supply equals demand, and there are neither shortages nor goods going unsold. The fact that gasoline taxes are paid per mile regardless of the road means that the more highly demanded urban streets and highways are facing a situation where the price charged is far below the free-market price. The result is enormous and aggravated traffic congestion on the heavily traveled streets and roads, especially in rush hours, and a virtually unused network of roads in rural areas. A rational pricing system would at the same time maximize profits for road owners and always provide clear streets free of congestion. In the current system, the government holds the price to users of congested roads extremely low and far below the free-market price; the result is a chronic shortage of road space reflected in traffic congestion. The government has invariably tried to meet this growing problem not by rational pricing but by building still more roads, socking the taxpayer for yet greater subsidies to drivers, and thereby making the shortage still worse. Frantically increasing the supply while holding the price of use far below the market simply leads to chronic and aggravated congestion.⁵ It is like a dog chasing a mechanical rabbit. Thus, the Washington Post has traced the impact of the federal highway program in the nation’s capital: [p. 210]

Washington’s Capital Beltway was one of the first major links in the system to be completed. When the last section was opened in the summer of 1964, it was hailed as one of the finest highways ever built.

It was expected to (a) relieve traffic congestion in downtown Washington by providing a bypass for north-south traffic and (b) knit together the suburban counties and cities ringing the capital.

What the Beltway actually became was (a) a commuter highway and local traffic circulator and (b) the cause of an enormous building boom that accelerated the flight of the white and the affluent from the central city.

Instead of relieving traffic congestion, the Beltway has increased it. Along with I-95, 70-S, and I-66, it has made it possible for commuters to move farther and farther from their downtown jobs.

It has also led to relocation of government agencies and retail and service firms from downtown to the suburbs, putting the jobs they create out of reach of many inner city dwellers.⁶

What would a rational pricing system, a system instituted by private road owners, look like? In the first place, highways would charge tolls, especially at such convenient entrances to cities as bridges and tunnels, but not as is charged now. For example, toll charges would be much higher at rush-hour and other peak-hour traffic (e.g., Sundays in the summer) than in off-hours. In a free market, the greater demand at peak hours would lead to higher toll charges, until congestion would be eliminated and the flow of traffic steady. But people have to go to work, the reader will ask? Surely, but they don’t have to go in their own cars. Some commuters will give up altogether and move back to the city; others will go in car pools; still others will ride in express [p. 211] busses or trains. In this way, use of the roads at peak hours would be restricted to those most willing to pay the market-clearing price for their use. Others, too, will endeavor to shift their times of work so as to come in and leave at staggered hours. Weekenders would also drive less or stagger their hours. Finally, the higher profits to be earned from, say, bridges and tunnels, will lead private firms to build more of them. Road building will be governed not by the clamor of pressure groups and users for subsidies, but by the efficient demand and cost calculations of the marketplace.

In 1973, it would have been easier to argue against Rothbard that widespread tolling was impractical due to the transaction costs involved with tolling.  43 years later, technologies that allow highway operators to charge passengers without slowing traffic are abundant.  The only obstacle to tolling highways, bridges, and tunnels is politics.  Unfortunately, drivers are voters, and they like their underpriced highways.  Can’t we just make Econ 101 a prerequisite for earning a driver’s license?

If highways were priced right, it may become feasible for governments to sell-off the assets.  But as we’ve seen in many pseudo-privatization deals, it’s hard to be optimistic it would be a true privatization where the government gets out of the highway business altogether

In the next instalment, we’ll be able to apply new technologies to Rothbard’s insights of pricing local streets, a less intuitive notion even today.  But as we’ll see, it’s actually not a new idea.

---

4. From an unpublished study by William Vickrey, “Transit Fare Increases a Costly Revenue.”

5. For similar results of irrational pricing of runway service by government-owned airports, see Ross D. Eckert, Airports And Congestion (Washington, D.C.: American Enterprise Institute for Public Policy Research, 1972).

6. Hank Burchard, “U.S. Highway System: Where to Now?,” Washington Post (November 29, 1971). Or, as John Dyckman puts it: “in motoring facilities . . . additional accommodation creates additional traffic. The opening of a freeway designed to meet existing demand may eventually increase that demand until congestion on the freeway increases the travel time to what it was before the freeway existed.” John W. Dyckman, “Transportation in Cities,” in A. Schreiber, P. Gatons, and R. Clemmer, eds., Economics of Urban Problems; Selected Readings (Boston: Houghton Mifflin, 1971), p. 143. For an excellent analysis of how increased supply cannot end congestion when pricing is set far below market price, see Charles O. Meiburg, “An Economic Analysis of Highway Services,”Quarterly Journal of Economics (November 1963), pp. 648-56.

The post Rothbard The Urbanist Part 7: Pricing Highways appeared first on Market Urbanism.

Image via Urban Milwaukee

Debates over land use policy often devolve into opponents arguing over how to interpret the same set of facts. For example, “market suburbanists” argue that because apartments in walkable neighborhoods tend to cost more per square foot than suburban single family homes, high densities make coastal cities expensive. Smart Growth advocates may look at the same data and argue that zoning rules that restrict the supply of high-density housing in desirable locations is what makes housing expensive.

In order to provide clarity to the debate on land use regulations, Mike Lewyn and Kip Jackson survey the zoning codes of the 24 cities with populations between 500,000 and 1,000,000 residents. In their new Mercatus Center study, they find that while some cities have in fact enacted the sorts of policies that market suburbanists fear — minimum density requirements and maximum parking rules — these regulations remain very rare relative to near-ubiquitous maximum density rules and minimum parking requirements.

Lewyn and Jackson list the mid-size cities that have adopted various types of Smart Growth regulations below. While a handful of cities have adopted the types of regulations they surveyed, every U.S. city in this sample has a maze of traditional zoning rules.

A perpetual challenge in studying the effects of both traditional and Smart Growth regulations is finding data. Municipal codes are all housed on unique websites with varying degrees of accessibility. The difficulty of achieving clear answers as to what causes high housing prices contributes to advocates of traditional zoning and Smart Growth to shout past one another.

While Smart Growth as a whole is maligned by some advocates of the free market, many Smart Growth tenets are actually deregulatory. Policy changes including upzoning, reducing parking requirements, and permitting mixed-use development are all steps toward laissez-faire land use relative to the status-quo, even though these policies are sometimes criticized by those who claim to support free markets. A clear analysis of whether and how cities are implementing Smart Growth allows us to evaluate whether Smart Growth as a whole is a step toward or away from the free market.

Lewyn and Jackson’s study shows that rather than embracing the deregulatory tenets of Smart Growth, regulators in some cities have layered Smart Growth rules on top of their traditional zoning rules, creating a complicated web of regulations. They explain:

Fort Worth imposes a variety of minimum parking requirements, adding simply that the “maximum number of parking spaces shall not exceed 125% of the minimum parking requirement.” For example, the city requires one parking space per bedroom for multifamily housing, which means the maximum parking requirement is 1.25 spaces per bedroom. Because the difference between Fort Worth’s minimum and maximum parking requirements is so small, it appears that almost all parking that is not prohibited is compulsory.

The authors show that while many Smart Growth objectives of such as permitting higher density, mixed-use neighborhoods could be achieved with deregulation, urban planners have instead chosen in some cases to replace traditional zoning rules with Smart Growth rules, in some cases requiring development that would have been prohibited under the traditional zoning regime. As Stephen has pointed out previously, some cities have gone from parking minimums directly to parking maximums without giving the market outcome a chance.

By assessing the legal environment in this sample of cities, Lewyn and Jackson have set the stage for empirical work on how Smart Growth rules are affecting prices. This empirical work is badly needed. Understanding the costs of both these new rules and traditional zoning rules is crucial for evaluating these policies, and these costs cannot be estimated without a clear understanding of which rules cities are putting on the books. This paper demonstrates that today Smart Growth policies are unusual relative to traditional zoning rules that restrict density. However Smart Growth is in some cases complicating the policy landscape rather than providing more freedom for developers to respond to consumer demand.

The post The Status of Smart Growth Regulation appeared first on Market Urbanism.

For the last question, someone from the audience says he’s a fan of Randal’s who lives in DC, and asks Randal, and the rest of the panelists, what they about the recent calls to lift the city’s height limit in response to development pressures.

Randal responds first:

Well this is where I think the policy questions [and the difference between Randal and the other panelists] come in on density. I think we ‘ve got Maryland, which has all these restrictions on supposedly protecting agricultural land, we have Loudoun County and other counties in Virginia that have zoned most of their land for 20-acre large lot sizes, those have restricted the ability of people to live in single-family, to build new single-family homes in the Washington, DC, metropolitan area. And so it’s created a pressure for more density in Washington, DC, but if you didn’t have those suburban restrictions, you wouldn’t have that pressure for density in Washington, DC. So I’d say, let’s get rid of the suburban restrictions, and then see if there really is a demand for high-density high-rise in Washington. If there really was a demand, there’s a lot of three-story buildings that could be redeveloped to be six and seven stories if you wanted to.

Matt: “You’re not allowed to!”

Ryan: “You should try to do that – if you can make it happen, then that would be a great profit opportunity.”

Randal: “Well, I’ve seen streets of row houses here [in DC] where every other house has been replaced by a six-story building – a three-story row house replaced by a six-story building. So obviously you can do it in some places.”

Matt: “Which street was that on?”

Randal: “I think it was on Wisconsin.”

Ryan, sarcastically: “Oh yeah, there’s no NIMBYism on Wisconsin Avenue.”

Randal: “I actually took a picture of it – I’ll show it to you afterwards…”

Ryan: “I think the argument that it is restrictions on the fringe of the metro area that are driving demand in the core simply doesn’t hold water when you actually look at the premiums you can pay in different places. I mean, if that were true, then we would expect prices in a place like Prince William County to be extremely high above construction cost – more about construction cost than we see in the center, and that’s not in fact what we observe.”

The post Randal O’Toole: “If you didn’t have those suburban restrictions, you wouldn’t have that pressure for density in DC” appeared first on Market Urbanism.

I’ve often heard libertarian and conservative types say that they prefer suburban or rural living because city residents are more dependent on government services, but is it really true that city dwellers depend on government programs more so than others? City residents clearly pay higher local taxes and receive more local government services, but I would argue that this isn’t as important as federal taxation and spending because local taxes benefit the taxpayers more directly than the wider net of federal redistribution.

In Triumph of the Cities, Ed Glaeser points to the mortgage interest tax deduction as an important factor that pulls people to the suburbs by way of home ownership, and I would certainly agree that all federal policies with the goal of promoting home ownership or facilitating easy credit harm cities. Another much-talked-about tax expenditure for ethanol fuel blenders has benefits that fall on drivers, and this is on top of all of the other tax benefits that domestic oil companies receive.

Several government programs subsidize those who choose to live in inconvenient places. The USPS delivers many packages for a flat rate fee, while I doubt that FedEx would find this pricing profitable. Similarly, the American Recovery and Reinvestment Act provided funds for expanding broadband to areas of the country that could not otherwise support the service.

Does anyone know of  existing research on this topic? The Tax Foundation provides at least two data sets that are somewhat relevant, but neither answer the question. They show here which states receive more money than they spend and here the per capita federal tax revenues by municipality.

The post Cities and the Tax Code appeared first on Market Urbanism.

Getting There: The Epic Struggle between Road and Rail in the American Century

Seeing to advance these watershed ideas, yet wary of the power of the highway coalition, FDR set up the urban-oriented Interregional Highway Committee (IHC) in 1941. He borugh traditional engineers and visionaries together and named his osmetime-nemesis MacDonald its chair. Its mix of disciplines led the IHC to the pregnant conclusion that highway building was not merely an end in itself but a way to mold the declining American city while reviving it. At the core of the concept was a twofer: by cutting a selective swath through “cramped, crowded and depreciated” cities and routing downtown highways along river valleys, Washington could eradicate “a long-standing eyesore and blight” while easing gridlock. The autobahns may have inspired the interregional highways, but on one element they differed fundamentally: the German roads sought to serve the cities, while the American roads aimed to change them. The variance would become startingly apparent a generation later.

To the highwaymen, the Roosevelt administration’s visionary proposals were anathema. Michigan Representative Jesse P. Wolcott warned that a “small coterie of individuals who would socialize America” were taking control of American highway policy. A member of the House Roads Committee decried the NRPB’s “cradle to the grave” recommendations, under which Americans’ lives were “mapped out, and planned and controlled and regimented.”

Of course, the old highwaymen were themselves practicing a brand of socialism – the roads they built might have taken in small user fees in the form of gas taxes, vehicle registration fees, and the capital costs of owning an automobile, but they were (and indeed still are) relieved of general tax obligations and much of the land costs, so say nothing of being insulated from the competitive pressures of of opportunity costs by virtue of their socialist allocation.

But the idea of one highway advocate accusing another of socialism reminds me very much of today’s road advocates at places like Cato and the Reason Foundation, who levy the charge of statism (essentially a less politically charged accusation of socialism, or general state interventionism) at New Urbanists and smart growth-inclined planners, while at the same time holding up places like Houston as a paragon of free market urbanism and refusing to acknowledge the massive state intervention in favor of the automobile. Of course, that doesn’t mean the New Urbanists and liberally-inclined planners in general aren’t guilty of much of what they’re accused of – after all, their designs may be different than what we have now, but they’re no less totalitarian.

The post Socialism and the roads, then and now appeared first on Market Urbanism.

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 per acre for commercial development, or any proportional combination thereof.

The Tea Party and Del. Marshall want to make the program voluntary, essentially killing it. Despite what appears to me to be a move against liberty, the Tea Party affiliate is using the language of the free market to argue against state enforcement of the UDAs:

Speaker Howell is siding with big corporate developers and eco-extremists to rob you of the right to own and control the use of your private property.

He is blocking a critical piece of legislation that is vital to preserving the property rights of every Virginian.

If he has his way, you’ll be forced to forfeit your land in the suburbs for the development of high-density ‘urban development areas’ also called ’smart growth’.

This is a gross violation of property rights. The inalienable right to own and control the use of private property is perhaps the single most important principle responsible for the growth and prosperity of Virginia.

Thanks again to Greater Greater Washington for staying on top of this story. David’s blog and Washington City Paper‘s Lydia DePillis have been running laps around the Washington Post on land use/transpo coverage. I’m not old enough to remember a time when newspapers weren’t struggling, but I doubt that even in their heyday they were doing half as much reporting on these issues as David & Co. and Lydia do today.

The post David Alpert calls out Virginia Tea Party group as land use statists appeared first on Market Urbanism.