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Part II: The need for low-quality housing

Last week I wrote a post highlighting how important it is for major cities to have places for low-income people to live. Without the opportunity to live in vibrant, growing cities, our nation’s poor can’t take advantage of the employment and educational opportunities cities offer. My post offended some people who don’t think that reforming quality standards is a necessary part of affordable housing policy. On Twitter @AlJavieera said that my suggestion that people should have the option to live in housing lacking basic amenities is “horribly conservative.” Multiple people said that my account of tenement housing was “ahistorical.” They didn’t elaborate on what they meant, but they seemed to think I was suggesting that tenements were pleasant places to live, or that people today would live in Victorian apartments if such homes were legalized. On the contrary, I argue that in their time, tenements provided a stepping stone for poor immigrants to improve their lives, and that stepping stone housing should be legal today. Historical trends provide evidence that people born into New York’s worst housing moved onto better jobs and housing over time. The Lower East Side tenements were first home to predominantly German and Irish immigrants, and later Italian and Eastern European Jewish immigrants. The waves of ethnicities that dominated these apartments indicate that the earlier immigrants were able to move out of this lowest rung of housing. The Tenement Museum provides multiple oral histories of people who were born into their apartment building and went on to live middle-class lives. In The Power Broker, Robert Caro provides an account of one community that had moved out of the Lower East Side to better housing in the Bronx: The people of East Tremont did not have much. Refugees or the children of refugees from the little shtetles in the Pale of Settlement and from the ghettos of Eastern Europe, the Jews who at […]

Vouchers, Sprawl and Trade-Offs

Currently, the American public school system is a sprawl-generating machine: urban public schools are less appealing to middle-class parents than suburban public schools, causing parents to move to suburbia. This result arises from school assignment laws: because students must attend school in the municipality of their residence, residents of the most diverse municipalities (usually central cities) must attend diverse schools.  By definition, diverse schools have lots of children from disadvantaged backgrounds.  Because children from disadvantaged backgrounds often learn less rapidly than middle-class children, these schools quickly get a reputation as “bad” schools, causing middle-class parents to flee to suburban schools that are more socially homogenous. The common progressive answer to this problem is to fund urban schools more generously: this strategy has not, when tried, succeeded in bringing middle-class parents back to urban schools.  For example, in 1990s Kansas City, federal courts forced government to fund urban schools far more generously than suburban schools: nevertheless, test scores barely budged and urban schools continued to lose middle-class and white parents.  Even successful urban charter schools (such as New York’s Harlem Success Academy) have failed to bring back middle-class parents. A more market-oriented solution to the problem of sprawl-generating school systems is to break the link between residence and schooling, so that city residents would not be limited to urban neighborhood public schools. One possible option is some form of a voucher system.  Under the purest form of a voucher system, parents who choose to avoid public schools would be given public funds to pay the cost of private schools. Under such a system, parents would have little reason to avoid city neighborhoods: they could stay in the city, and their children could attend private schools for the same amount of money that they would spend on public schools (that is, zero).  Such voucher systems […]

Market Urbanism MUsings March 25, 2016

1. This week at Market Urbanism: Emily Washington described The Need For Low-Quality Housing in America’s most desirable cities. People of very little means could afford to live in cities with the highest housing demand because they lived in boarding houses, residential hotels, and low-quality apartments, most of which are illegal today. Making housing affordable again requires not only permitting construction of more new units, but also allowing existing housing to be used in ways that are illegal under today’s codes. Adam Hengels posted part 7 in his long dormant Rothbard the Urbanist series 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. 2. At the Market Urbanism Facebook Group: Naor Deleanu updated us on San Diego‘s stadium subsidy proposal Mark Frazier shares the pros and cons of a privately-run city in India Nolan Gray:  Classic New York Streetscapes, Then and Now  Interesting what changed and what hasn’t Anthony Ling shared an invite to a conference at NYU. Success Without Design: Lessons from the Unplanned World of Development 3. Elsewhere: Highways gutted American cities. So why did they build them? Stephen Eide makes the case for states taking back control from mismanaged cities. An interview with the author of “Evicted:” a story of “eight peripatetic families in Milwaukee — and two landlords” How Chicago racked up a $662M police misconduct bill …not to be outdone, Chicago’s teachers’ union may strike again 4. Stephen Smith‘s Tweet of the Week: “Housing is a human right,” says the group founded for the sole purpose of preventing new housing from being built https://t.co/mvpBmDda1R — Market Urbanism (@MarketUrbanism) March 19, 2016

Rothbard The Urbanist Part 7: Pricing Highways

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 […]

The need for low-quality housing

The market urbanism axiom — permitting housing supply to increase is key to achieving affordable housing — has been made recently by Rick Jacobus at Shelterforce and Daniel Hertz at City Observatory. However both argue that even with an increasing supply, low-income people will need aid in order to afford what the authors feel is adequate housing. History shows us, though, that if developers are allowed to serve renters in every price range, they will. The movie Brooklyn portrays the type of housing many of our grandparents and great-grandparents lived in when they emigrated to the United States. People of very little means could afford to live in cities with the highest housing demand because they lived in boarding houses, residential hotels, and low-quality apartments, most of which are illegal today. Making housing affordable again requires not only permitting construction of more new units, but also allowing existing housing to be used in ways that are illegal under today’s codes. Young adults living in group houses with several roommates have found a way around these regulations, but low-income renters were better-served when families and single people could pay for housing that was designed to meet their needs at an affordable price. Alan During explains the confluence of interest groups that successfully eliminated cheap, low-quality housing: The rules were not accidents. Real-estate owners eager to minimize risk and maximize property values worked to keep housing for poor people away from their investments. Sometimes they worked hand-in-glove with well-meaning reformers who were intent on ensuring decent housing for all. Decent housing, in practice, meant housing that not only provided physical safety and hygiene but also approximated what middle-class families expected. This coalition of the self-interested and the well-meaning effectively boxed in and shut down rooming houses, and it erected barriers to in-home boarding, too. Over more than a century, […]

Market Urbanism MUsings March 18, 2016

1. This week at Market Urbanism: Nolan Gray‘s latest post, Liberate the Garage!: Autonomous Cars and the American Dream At present, zoning laws effectively prohibit entrepreneurs from using their garages for business. In many Americans cities, hiring employees, hosting visitors, putting up signs, and altering your garage for business purposes are all outright banned. As urban planner Sonia Hirt notes in her most recent book, these regulations reflect American zoning’s dogmatic insistence on separating work from home. These restrictions effectively mandate sprawl by forcing commercial uses and residential uses into segregated districts. More troublingly, these regulations fall hardest on low-income entrepreneurs by significantly raising the cost of starting a business. The article was cited at streetsblog, and Nolan discussed the article on KCBS radio San Francisco Michael Lewyn wrote his first Market Urbanism article, Rent Control: A No-Win It therefore seems to me that pro-rent control municipalities are caught in a no-win situation: if they adopt strict rent controls, they limit housing supply by making housing a less attractive investment. But if they adopt temperate rent controls, they don’t really control rents. 2. Where’s Scott? Scott Beyer is leaving Oklahoma City tonight for Houston to see the rodeo. This week, he delved into foreign policy, writing in Forbes about The Case For Another Cuban Boatlift. Since 1980, Miami has been one of the fastest-growing metro areas by population, and has become one of the best for startup activity and upward mobility. Along with other Latin American immigrants, Cubans have bolstered this, making up over a third of the city’s population…Well into the 21st century, Cubans had among the highest median incomes and homeownership rates of U.S. Hispanic groups. 3. At the Market Urbanism Facebook Group: Michael Hamilton is happy to see good news for once:  Arizona Senate Votes to Ban Cities from Banning Airbnb, Couch-Surfing Nick […]

Rent Control: A No-Win

In an otherwise excellent article on NIMBYism and luxury housing, affordable housing consultant Rick Jacobus writes: “economist Anthony Downs reviewed the published studies and found that while ‘stringent’ rent control imposed over a very long time had reduced private apartment construction in the UK, there was ‘no persuasive evidence that temperate rent control ordinances inhibit the construction of new rental housing’.” Since I am familiar enough with Downs’ work to know that he is not a flaming radical, I was a bit surprised to read this. So I looked at Downs’ paper.  Downs is generally critical of rent control, writing that while rent control transfers resources from owners to tenants, “the total net amount of benefits received by the tenants is usually smaller than the total net amount of costs imposed upon the owners; hence, rent controls are not efficient.” (p. 26). Downs adds that “the experience of the United Kingdom strikingly confirms that stringent rent controls reduce new construction of rental units in the long run…the share of all housing in the United Kingdom provided through privately owned rental units dropped by about 85 percent from 1950 to 1986.” (p. 18). Then he discusses the U.S. experience, contrasting New York City’s stringent rent controls with the more moderate controls of Los Angeles. Downs cites a Rand Corporation study that “estimated that 1968 rents under New York City’s stringent ordinance averaged 57 percent below what they would have been without controls [while] 1990 rents under Los Angeles’ temperate ordinance would average only 3.5 percent below what they would have been without controls.”  (p. 25).  This small gap “helps explain why Los Angeles has not experienced many of the adverse effects generally associated with more stringent rent control ordinances.” In other words, “temperate” rent control ordinances don’t do very much to […]

Liberate the Garage!: Autonomous Cars and the American Dream

Apple garage

When it comes to the impact autonomous cars will have on cities, there’s plenty of room for disagreement. Will they increase or decrease urban densities? Will they help with congestion or make it worse? At the same time, there seems to be widespread agreement on at least two things: First, far fewer people will own cars. Second, we are not going to need nearly as much parking. By combining the technology of autonomous cars with the business model of transportation network companies like Uber and Lyft, low-cost, on-demand ride-hailing and dynamic routing bus lines could eliminate the need to keep an unused car hanging around for most of the day. When that happens, we will need far fewer parking spaces, turning on-street parking into wider sidewalks and bike lanes and surface lots and parking ramps into residential and commercial uses. So how does the humble American residential garage fit into all this? On its face, the garage is little more than the sheltered parking space that comes with most single-family homes. Yet the garage holds a certain mythological status in the American psyche: It gave rise to iconic American brands like Disney, Harley Davidson, and Mattel. It offered a space in which the firms that would launch the digital economy could get their start, including HP and Apple. Google and Microsoft, which both started in garages, maintain “garage” work spaces to this day in order to cultivate innovation. By providing a flexible space in which knowledge, free time, and ambition can transform into entrepreneurial innovation, the garage has played a crucial role in the American economy.   At least in the near term, garages are not going anywhere. Unlike municipal governments and large private landowners who will likely face immediate political and market pressures to retool their parking spaces, many homeowners are structurally stuck with their garages. Millions of garages could go unused, occasionally kept active by automobile hobbyists, most likely turning into de facto storage units. But it doesn’t have to be […]

Market Urbanism MUsings March 11, 2016

1. This week at Market Urbanism: Matt Robare contributed his first Market Urbanism article, Protectionism Is Already Harming American Workers And Cities The delays and high costs associated with Buy America have helped to make American transit costs the world’s highest. The Congressional Research Service found that new bus prices were double in the United States versus Japan and South Korea. According to Alon Levy, locomotives purchased by Amtrak cost 30 percent more than the European equivalent, increasing costs by $100 million. Stephen Smith also touched on Buy America’s unintended consequences in 2010 2. Where’s Scott? On a related note, Scott Beyer, who finished his third week in Oklahoma City, wrote a Forbes piece titled Does Bernie Sanders Actually Think NAFTA Is What Killed Detroit? Detroit has long stood near the top in all the big-government indicators, with some of the nation’s highest taxes, strictest business regulations, lowest economic freedom rates, largest per capita public workforces, high rates of public and private sector unionization, and an Occupy-Wall-Street-style civic and governing culture. This model has produced exactly the dystopia that conservative critics fear, marked by human and capital flight. Scott’s previous MU photo essay on Cuba was translated into Spanish by the Latin American news site PanAm Post. 3. At the Market Urbanism Facebook Group: Anthony Ling warns about when “When city development goes wrong. Very wrong.” in California Bjorn Swenson tells us “Greyhound is rebranding itself as a relevant twenty-first century company” Tom W. Bell published a paper on Special Economic Zones in the United States and asks “Would USSEZs encourage innovation in urban design?” If you are in Toronto, come see Sanford Ikeda, who will be speaking about “Why a city can’t be a work of art” at the Ryerson University Planning Expo Krishan Madan reminds us that Seattle raised it’s minimum wage to help people get by, but neighbors still […]

Protectionism Is Already Harming American Workers And Cities

Both Vermont Senator Bernie Sanders and New York reality television personality Donald Trump have based their presidential campaigns in part on the issue of trade. Both of them oppose free trade policies like the North American Free Trade Agreement and the pending Tran Pacific Partnership, arguing that free trade has resulted in American jobs going overseas, leaving American workers worse-off. To remedy this situation, Trump has proposed declaring China a currency manipulator and imposing duties on Chinese-made goods, while elsewhere he’s advocated a 35 percent import tax on items made in Mexico and a 20 percent tax on all other imported goods. Sanders has also advocated imposing tarrifs on countries that manipulate their currencies to subsidize exports. To counter both candidates’ narratives of heartless corporations offshoring American jobs or unscrupulous foreigners “stealing” jobs that belong to American workers, economists and commentators from across the political spectrum have compiled impressive arrays of statistics proving that free trade actually benefits everyone. But they didn’t have to do so much. There are already examples, right now, of protectionist legislation that explodes the myths of the Trump and Sanders crowds. Since 1978, the “Buy America” provision of the Surface Transportation Assistance Act has forced transit agencies and passenger railroads like Amtrak and commuter rail services to have around 60 percent of the equipment and structural components manufactured in the United States if they want federal funding for their projects, unless they apply for and receive a waiver. Has this provision protected American workers? Does the United States now have a thriving rail equipment industry capable of competing with European, Japanese and Chinese companies, bearing out Alexander Hamilton’s “infant industry” argument? No. According to Metro Magazine, the Buy America provision makes “significant supply-chain disruptions” likely because the American market share for bus and train components […]

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