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Skyscrapers as Economic Indicators

Ever hear of interesting economic indicators such as the correlation between the economy and length of skirts?  Here’s one urbanists should appreciate: the skyscraper index, which shows strong correlation between the completion of world’s tallest buildings and downturns in the business cycle.  Mark Thornton discusses the skyscraper index in his article, Skyscrapers and Business Cycles [or mp3 read by the author], which was originally published in the Quarterly Journal of Austrian Economics: The skyscraper is the great architectural contribution of modern capitalistic society and is even one of the yardsticks for 20th-century superheroes, but no one had ever really connected it with the quintessential feature of modern capitalistic history — the business cycle. Then in 1999, economist Andrew Lawrence created the “skyscraper index” which purported to show that the building of the tallest skyscrapers is coincidental with business cycles, in that he found that the building of world’s tallest building is a good proxy for dating the onset of major economic downturns. Lawrence described his index as an “unhealthy 100 year correlation.” Introduction Do Skyscrapers Predict? Table 1: Skyscrapers and Economic Crisis Figure 1: Skyscrapers and Economic Crisis Cantillon Effects in Skyscrapers Cantilloned Buildings and Business Cycles When the Skyscraper Index Is Wrong References Notes While macro business cycle theory is beyond my core strength in economics and the scope of this blog, this is a particularly interesting topic to me as I am an economics enthusiast with a passion for tall buildings.  The basic premise is that construction of worlds tallest buildings has strong corelation with economic downturns.  Construction of these buildings begin during times of economic expansion towards the peak of business cycles.  However, by the time the buildings are complete, the market has taken a turn for the worse.  Could the Burj Dubai be an indicator that tough times are […]

Block on Road Socialism

For quite some time, Economist Walter Block has been one of the more radical thinkers when it comes to advocating free market solutions. Many of his writings on roads and rent control are featured in the Links to Articles, Academic Papers and Books page. Today’s Lew Rockwell Podcast features an interview with Professor Block discussing Road Socialism. The interview begins with a discussion of the fact that certain socialist institutions exist in our supposedly free-market society, and Block mentioned that when he debated Milton Friedman, he accused Friedman of being a “Road Socialist”. Friedman eventually admitted, “Yes, I am a road socialist.” The discussion turns to deaths on highways, competition, congestion pricing, some history of private turnpikes and transit, eminent domain, and homesteading. Many of Block’s thoughts and ideas are highly controversial, but make for fantastic conversation. I can’t say I always agree with his point of view or ideas, but I like the unique perspective he brings that is always thought provoking and sparks interesting debate. I encourage readers to listen to the podcast and discuss their thoughts on the podcast. Also, check out his recent lecture at FEE on Privatizing Roads and Oceans, and articles on rent control and highways.

Housing + Transportation Affordability Index

affordability in New York City Play with the HUD-Brookings Institution’s new index maps here: The Housing + Transportation Affordability Index, developed by CNT and its collaborative partners, the Center for Transit Oriented Development (CTOD), is an innovative tool that measures the true affordability of housing. Planners, lenders, and most consumers traditionally measure housing affordability as 30 percent or less of income. The Housing + Transportation Affordability Index, in contrast, takes into account not just the cost of housing, but also the intrinsic value of place, as quantified through transportation costs. I enjoyed playing with the maps to see the interplay of accessibility and affordability. In New York, some very accessible places are not-so affordable, such as many areas of Manhattan. Same goes for upscale parts of Chicago. At the same time, very affordable housing locations in exurbs become less affordable when considering transportation costs. I plan to spend more time investigating how they produce the index. [tip of the hat to Peter Gordon]

Glaeser: State of the City

I’m a little slow picking up on this one, but the Wall Street Journal recently interviewed Harvard Urban Economist, Ed Glaeser. Here are some excerpts from State of the City: THE WALL STREET JOURNAL: What effect will higher gasoline prices have on urban planning in the U.S.? MR. GLAESER: I would be very surprised to see a wholesale change in the nature of American urban development. We should certainly see changes in the short run, [such as] a slight decrease in demand for housing that’s particularly far away from city centers and dependent on long drives. That [type of housing] won’t be abandoned entirely, but it will certainly be cheaper. WSJ: What about the idea of having the government purchase foreclosed homes and convert them into affordable housing? Would that be good for the economy? MR. GLAESER: The government’s track record as a property owner is not so great. I am less enthusiastic about the government getting into this business. If we want strong policies towards taking care of the least well-off in our society, we should make sure supply is unfettered and continue working on the Section 8 [low-income housing] voucher program — that’s the right strategy. Glaeser discusses Chicago’s success: MR. GLAESER: I think Chicago has been remarkably successful in lots of ways. The city has managed to stay pretty affordable and Mayor [Richard] Daley has been extremely pro-growth. Chicago, for many years, has had a relatively pro-growth environment, at least relative to California and New York — especially [before current Mayor Michael Bloomberg]. The climate in Chicago is, of course, far less pleasant than San Francisco and wages are lower than New York. Still, it is somewhat remarkable that condo prices in Chicago [a median $232,000 in 2007] are less than those in Trenton, N.J. [$248,000], and […]

Dealing With NIMBYs

NIMBYism is the biggest obstacle to the evolution of vibrant urban communities, but the incentives for some to use public forums to impose restrictions on neighboring properties are great. Local politicians often bow to the most vocal residents, often with minority opinions, to avoid making waves, but their impositions are at the expense of the overall community (and the environment). In a recent ULI post and on his own blog, Rob Goodspeed discussed NIMBYism: NIMBY (Not In My Back Yard) activism is as bad as ever and getting worse, according to startling new statistics from a consulting company that specializes in overcoming opposition to development. The third-annual Saint Index, a gauge of public opinion on urban development, found one-quarter of Americans say they or a family member have actively opposed a development project. That means Americans are twice as likely to oppose development than support it. Among the findings, 78 percent of Americans think there should be no new development in their community, 44 percent oppose new apartments or condominiums (up from 34 percent in 2006), and 69 percent say their local government is doing a fair to poor job on planning and zoning. In his blog Rob discusses varying definitions of NIMBYism: The key to understanding NIMBYism comes from political science, not the technicalities of zoning. NIMBYism occurs when a politically unrepresentative minority exacts unreasonable costs on the larger community, up to and including blocking otherwise supported developments. This definition comes from a provocative article by Morriss P. Fiorina titled “Extreme Voices: A Dark Side of Civic Engagement” that appears in this text. Rob discusses strategies and solutions for dealing with activists. I tend to agree that as much as we would like to just ignore them, they don’t just go away. The best strategy is to be transparent […]

Links and Weekend Listening

I’ve been swamped in my day job, but want to share the following: The blog, Agents of Urbanism recently gave praise to Market Urbanism. Thanks Matthew! Please check out Agents of Urbanism and Life Without Buildings, who followed up on Agent of Urbanism’s praise. I enjoy both blogs. Carl Close wrote How “Urban Renewal” Destroyed San Francisco’s Fillmore District for The Independent Institute’s blog, The Beacon. And finally, I came across some fantastic lectures at the Foundation for Economic Education, by Sandy Ikeda. I highly recommend listening to the MP3s during your free time this weekend. He discusses Jane Jacobs, urbanism, history, sprawl, economics, and most things of interest to readers of Market Urbanism: Urban Planning Private Cities

Urban[ism] Legend: Gas Taxes and Fees Cover All Costs of Road Use

No doubt, mass production of the automobile is one of the greatest innovations of all times. It has allowed for increased mobility of goods and people, which has greatly improved productivity and leisure. But, is subsidizing mobility at the expense of taxpayers taking things too far? In various blogs and forums, I frequently come across the argument that the costs of automobile use are fully (or mostly) internalized through gas taxes and fees. Often, this argument is used by free-market impostors against transit subsidies, or by automobile enthusiasts in defense of highway socialism. The usual argument is that the costs of roads and infrastructure are paid through gas taxes, and thus the users of the roads are funding what they use. This is a powerful and pervasive myth that will continue to distort the truth, unless serious scrutiny is given to the assertion. Let us first examine the validity of the assertion through studies of the explicit costs (actual dollars) of roads in the US and the taxes and fees collected. Next, we will look deeper and discuss the implicit costs (ie opportunity costs) of roads and automobile use as well as acknowledge externalities involved with automobile use. The Explicit Costs We can see the extent of the Urbanism Legend by looking at wikipedia: Virtually 100 percent of the construction and maintenance costs are funded through user fees, primarily fuel taxes, collected by states and the federal government, and tolls collected on toll roads and bridges.[citation needed] (The claim that only 56 percent of costs are funded by user fees is based on the misinterpretation of a table that applies to all highways, roads, and streets, not just the Interstate Highways.[citation needed]) In the eastern United States, large sections of some Interstate highways planned or built prior to 1956 are […]

Boudreaux: Roads Don’t Need New Taxes

Don Boudreaux to the Washington Times: LETTER TO EDITOR: Roads don’t need new taxes Thursday, July 24, 2008 Upset that Virginians’ taxes were not recently raised to construct more roads, State Delegate Brian J. Moran, Alexandria and Fairfax Democrat, declares that “Government has an important role to play in strengthening our infrastructure, developing our economy and creating new jobs” (“Virginia’s transportation conundrum,” Op-Ed, Tuesday). Not so fast. Infrastructure that we today naively suppose must be supplied by government has in the past often been supplied by the private sector – supplied so well, indeed, that these private-infrastructure projects helped to spark the Industrial Revolution in 18th-century Britain. Harvard University historian David S. Landes explains: “At the same time, the British were making major gains in land and water transport. New turnpike roads and canals, intended primarily to serve industry and mining, opened the way to valuable resources, linked production to markets, facilitated the division of labor. Other European countries were trying to do the same, but nowhere were these improvements so widespread and effective as in Britain. For a simple reason: nowhere else were roads and canals typically the work of private enterprise, hence responsive to need (rather than to prestige and military concerns) and profitable to users…. These roads (and canals) hastened growth and specialization.” DONALD J. BOUDREAUX Chairman Economics Department George Mason University Fairfax Also, Cafe Hayek – Infrastructure and the State (by Don Boudreaux) for some good discussion in the comments.

Conservatives and Urbanism

Matthew Yglesias – Straight Talk on Gasoline on drilling and how conservative deviation from free-market principles has hurt the environment: Meanwhile, take something like the accessory dwellings issue. Here you have a bunch of regulations that make it illegal for people to live more densely. Illegal, in other words, to build the kind of communities where the gas price issue wouldn’t hurt so much. But there’s a movement afoot to change things. Similarly with minimum parking rules — regulations that interfere with the operation of the free market in such a way as to make it more difficult for people to live energy efficient lives. And again, there are people trying to change this. These things are regulatory barriers to solving our energy problems every bit as much as the ban on offshore drilling is. And conservatives are against regulation, right? Except the anti-drilling regulation is good for the environment and for coastal economies whereas anti-urbanist regulation is economically inefficient and environmentally destructive. Naturally, conservatives have chosen to aim all of their fire at anti-drilling regulations. And that’s the sort of thing that makes the conservative movement hard to take seriously — it’s an organized defense of existing power and privilege that now and again adopts principled rhetorical modes of various kinds but basically can’t be moved to act unless some lobbyists pay them too. Similar arguments could describe progressives too, but that (and drilling for oil) is a topic for other blogs… I agree about the inconsistent anti-market sentiments of conservatives when it comes to urbanism. Conservatives tend to embrace socialism when they can abuse government to create barriers that exclude others from their communities, but not when others benefit from socialism. (Public schools, free parking, government roads, exclusionary zoning, community centers, etc…) They are just fighting over different […]

Video: Driven to the Brink

I enjoyed this short video that compares Chicago’s Lincoln Square, where I have lived and Buffalo Grove, which is a suburb similar to where I grew up. The video was produced by CEOs for Cities, a Chicago based organization that advocates for cities. Their website gives this description: A new analysis shows that high gas prices are not only implicated in the bursting of the housing bubble, but that the higher cost of commuting has already re-shaped the landscape of real estate value between cities and suburbs. Housing values are falling fastest in distant suburban and exurban neighborhoods where affordability depended directly on cheap gas.

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