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Lessons from Jane Jacobs on The Economy of Cities

At the heart of Jane Jacobs’ The Economy of Cities is a simple idea: cities are the basic unit of economic growth. Our prosperity depends on the ability of cities to grow and renew themselves; neither nation nor civilisation can thrive without cities performing this vital function of growing our economies and cultivating new, and innovative, uses for capital and resources. It’s a strikingly simple message, yet it’s so easily and often forgotten and overlooked. Everything we have, we owe to cities. Everything. Consider even the most basic goods: the food staples that sustain life on earth and which in the affluent society in which we now reside, abound to the point where obesity has become one of the leading causes of illness. Obesity sure is a very real problem and one we ought to work to resolve (probably through better education and cutting those intense sugar subsidies). Yet this fact alone is striking! For much of mankind’s collective history, the story looked very different: man (and it usually was a man) would spend twelve or maybe more hours roaming around in the wild to gather sufficient food to survive. Our lives looked no different to the other animals with which we share the earth. An extract from The Economy of Cities: ‘Wild animals are strictly limited in their resources by natural resources, including other animals on which they feed. But this is because any given species of animal, except man, uses directly only a few resources and uses them indefinitely.’ What changed? Anthropologists, economists, and historians will tell you it was the Agricultural Revolution, which occurred when man began to settle in small towns and cultivate the agricultural food staples that continue to make up the bulk of our diet: wheat, barley, rice, corn, and animal food products. But […]

Can YIMBY policies cause large price declines?

Kevin Erdmann offers a helpful corrective to the “YIMBY triumphalism” of claiming that large relative rent declines in Austin and Minneapolis are results of YIMBY policies. He’s mostly correct, especially about the rhetoric: arguing about housing supply from short term fluctuations is like arguing about climate change based on the week’s weather. Keep your powder dry, promise slow change and long-term stability, and recognize that demand shocks are responsible for most fluctuations. But Erdmann makes a stronger claim: Supply has never and will never cause a collapse of prices and rents. It causes stability.  Is that true? In a case like Austin or Phoenix, sure: prices are not too far above the cost of construction, and abundant supply cannot (durably) push the price of new housing below the cost of construction. But YIMBY has more to offer to San Francisco, Auckland, or London. In those cases, prices are far above construction cost. That means that even when demand is relatively soft, there’s money to made in construction. As Erdmann allows: After a decade of more active construction in Auckland, rents appear to be 10% to 15% below the pre-reform trend. That’s a big win. After a decade. That’s what success looks like. That’s the promise – 5 to 15% relative rent declines, decade after decade. But there are several good reasons to believe this won’t happen in an even, steady pattern, at least not all the time. Hopefully by 2040 we’ll have data from several cases and be able to describe the dynamics of market restoration with much more confidence.

The Death and Life of Great American Cities, Revisited

Jane Jacobs’ The Death and Life of Great American Cities, published in 1961, revolutionised urban theory. This essay kicks off a series exploring Jacobs’ influential ideas and their potential to address today’s urban challenges and enhance city living. Adam Louis Sebastian Lehodey, the author of this collection of essays, studies philosophy and economics on the dual degree between Columbia University and SciencesPo Paris. Having grown up between London and Paris, he is energised by the questions of urban economics, the role of the metropolis in the global economy, urban governance and cities as spontaneous order. He works as an Applied Research Intern at the Mercatus Center. Since man is a political animal, and an intensely social existence is a necessary condition for his flourishing, then it follows that the city is the best form of spatial organisation. In the city arises a form of synergy, the whole being greater than the sum of its parts, for the remarkable thing about cities is that they tap into the brimming potential of every human being. In nowhere but the city can one find such a variety of human ingenuity, cooperation, culture and ideas. The challenge for cities is that they operate on their own logic. Cities are one of the best illustrations of spontaneous order. The city in history did not emerge as the result of a rational plan; rather, what the city represents is the physical manifestation of millions of individuals making decisions about where to locate their homes, carry out economic transactions, and form intricate social webs. This reality is difficult to reconcile with our modern preference for scientific positivism and rationalism. But for the Polis to flourish, it must be properly understood by the countless planners, reformers, politicians and the larger body of citizens inhabiting the space. Enter Jane […]

Review: Escaping the Housing Trap: The Strong Towns Response to the Housing Crisis

In Escaping the Housing Trap, Charles Marohn and Daniel Herriges address the role of zoning in creating the housing crisis. Like some other recent books (most notably by Nolan Gray and Bryan Caplan) this book shows how zoning limits housing supply and thus has led to our current housing crisis. But unlike Gray and Caplan, Marohn and Herriges focus on modest, politically feasible reforms rather than on the benefits of total deregulation. Like other authors, Marohn and Herriges discuss the history of downzoning. For example, in Somerville, Mass., a middle-class suburb of Boston with 80,000 residents, only 22 houses conform to the city’s own zoning code. And in San Francisco, 54 percent of homes are in buildings that could not legally be built today. In Manhattan, 40 percent of buildings are nonconforming. Why? Because zoning has become steadily more restrictive over time, making new housing difficult to build. Where development occurs, it is in a tiny fraction of the region’s neighborhoods- usually, either at the outermost fringe of suburbia or in a few dense urban neighborhoods. For example, in Hennepin County, Minnesota (Minneapolis and its inner suburbs) 75 percent of all housing units built between 2014 and 2019 were in 11 percent of the county’s neighborhoods. In Cuyahoga County, Ohio (Cleveland and its inner suburbs) 75 percent of housing units were built in under 5 percent of the county’s neighborhoods. Marohn and Herriges also critique some anti-housing arguments. For example, one common argument is that only public housing is useful, because the very poor will never be served by the market. They correctly respond that even if there will always be some people in need of government assistance, adequate housing supply will reduce that number. They write that housing policy “will look very different in a situation where the market […]

Mumbai upzoning

A 2017 increase in allowed floor area ratio in Mumbai had a tremendous impact on affordability by accidentally improving the economics of smaller apartments.

Colorado housing reform wins in Round 2

Last year disappointed pro-housing advocates in Colorado, as Governor Polis’s flagship reform was defeated by the state legislature. But Polis and his legislative allies tried again this year, and yesterday the governor signed into law a package of reforms which cover much of the ground of last year’s ill-fated HB23-213. HB24-1152 is an ADU bill. It applies to cities with populations over 1000 within metropolitan planning areas (so, the Front Range – home to most of Colorado’s major cities – along with Grand Junction), and CDPs with populations over 10,000 within MPOs. Within those jurisdictions, the law requires the permitting of at least 1 ADU per lot in any zone that permits single-family homes, without public hearings, parking requirements, owner-occupancy requirements, or ‘restrictive’ design or dimensional standards. The law also appropriates funds available for ADU permit fee mitigation, to be made available to ADU-supportive jurisdictions which go beyond compliance with the law to make ADUs easier to build (including jurisdictions not subject to the law’s preemption provisions). HB24-1304 eliminates parking minimums for multifamily and mixed-use buildings near transit within MPOs (though localities can impose parking minimums up to 1 space per unit for buildings of 20+ units or for buildings with affordable housing, if they issue a fact-based finding showing negative impacts otherwise). This bill was pared down in the Senate and would originally have eliminated parking requirements within MPOs entirely. HB24-1313 is a TOD and planning obligations bill. The bill:– Designates certain localities as ‘transit-oriented’ (if they are within MPOs, have a population of 4,000+, and have 75+ acres total either within ¼ mile of a frequent transit route or within ½ mile of a transit station – in effect, 30 or so localities along the Front Range).– Assigns all transit-oriented communities (TOCs) housing opportunity goals, which are simply […]

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