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Liberalizing Cities
From The Ground Up
A lot of words have been written about how horribly FRA safety regulations cripple US main line passenger railway budgets (and you should read them!), but it’s also important to remember that even as a safety regulator, the FRA fails. You have to see it to believe it: …
No, but really – fly California. On Tuesday, the California High-Speed Rail Authority laid down their cards in the form of a new “business plan” for the proposed line, and its cards are not good – the system is now projected to cost $98 billion in year-of-expenditure dollars, which, taking into account inflation, is about twice the $33 billion figure given in 2008.* But despite the price hike, not many people’s opinions on the project seem to have changed – those who were for it are still for it, while those opposed are even more set against it….
1. Stephen writes at The Atlantic Cities on Japan’s largely privatized rail system. He points out that free market reforms have benefited both cities and transit there. 2. For readers in the DC area, the Urban Land Institute is holding Capital Markets Interchange in McLean on November 10th. The event will focus on real estate investment in the current climate of political uncertainty. 3. Ryan Avent is on Econtalk this week. I’ve not yet read The Gated City, but I hope to read it this week and offer my thoughts on it next week. His conversation with Russ Roberts was great, and I was excited to hear that they covered some of the themes of yesterday’s post on opportunities for lobbying planning departments and city councils for land use privileges. 4. I am shocked, shocked by the increase in the estimated cost of California’s HSR. Check out The OC Register’s account of yesterday’s new developments compared to CAHSR blog’s for an interesting contrast in perspectives. 5. Four readers commented and two emailed me saying that they would be interested in my copy of The Instant City (reviewed last week). At random, I selected the second email that I received, so I will be sending the book to that reader shortly.
In the first post of this little series, I addressed the problems of top down land use regulation through the lens of Austrian economics. Because cities contain public space and infrastructure that is used by many residents and cannot be bought and sold in the way that many goods can be, Alon Levy suggests turning to collective choice to solve these problems. I will agree that collective choice, or its close cousin communal property rights can be employed well in cities. For example, business improvement districts can work together to undertake projects that would not be worthwhile for any business to take individually, benefitting themselves and their customers in the process. Similarly, these voluntary and emergent organizations can emerge among homeowners or neighborhoods, circumventing some of the coordination problems involved within communities. In a future post, I will go into further detail about the benefits of these types of organizations, whether they’re formal or informal. But now, I want to point out the problems of collective choice when carried out through legislation or land use regulation. As Alon points out, collective choice is inherently biased toward favoring a city’s or neighborhood’s current residents, against potential future residents. This makes policies created through collective choice inherently anti-density and anti-growth. It also means that cities come with a built-in vested interest that wants to protect their property. When planning departments allow this group to protect their interest through the political process, the market process is stifled because entrepreneurs cannot take advantage of available profit opportunities to increase urban density. Furthermore, collective choice leads to many unholy alliances, such as NIMBYs and historic preservationists, NIMBYs and environmentalists who want to protect open space, NIMBYs and those opposed to new transit projects, etc. In other words, collective choice leads to many of the results that urbanists criticize. […]
A few days ago, Mayor Bloomberg made a startling announcement: The 7 train extension to New Jersey is still on. The idea was first floated last year as a replacement for the canceled trans-Hudson commuter rail ARC project, but it was a hard sell then, and at $10 billion, it’s still a hard sell. The federal ARC funds have long since been redistributed, and New York City has no idea how it’ll even finish the Second Avenue Subway – where does Bloomberg think money for a subway line to New Jersey is going to come from? …
I’m reviewing Instant City: Life and Death in Karachi by Steve Inskeep as part of a TLC Book Tour. Other bloggers are also reviewing the book throughout October, and you can find links to their reviews here. I received a complimentary copy of the book, and I’d like to send it to a reader if anyone who’d like to read it doesn’t mind a copy with some underlining and margin notes. If you’d like it, just comment saying so by Wednesday, November 2nd. If multiple readers would like it, I’ll pick one at random. _____________________________ In a manner that is rare for non fiction, Instant City is really a page turner. Inskeep takes us through the history of Karachi from Pakistan’s independence in 1947 through the present, stringing personal stories of social entrepreneurs, politicians, activists and real estate developers together to tell the city’s story. He revolves the historical accounts around a 2007 bombing, in which unknown perpetrators bombed a procession that was part of a Shia religious holiday. Following the bombing, rioters burned down blocks of wholesale retail buildings. Despite the arrests of four suspects, many of the city’s residents are so distrustful of the city’s MQM government that they believe that city officials caused the bombing and subsequent fires in order to clear out the neighborhood’s current tenants to make way for more glamorous businesses. While the city’s mayor passionately denies that city government had any involvement with burning its citizens’ property, that residents have so little faith in their government demonstrates how absent the rule of law is in Karachi regarding property rights to land. In with the history of the city’s history, growth, and conflict, Inskeep covers land use in Karachi in considerable detail. To me, “Groundbreaking” is the most interesting chapter, where Inskeep details the experience of slum clearance in the […]
In a post about the tendency for emergent urbanists to promote the idea of cities having a single equilibrium, Alon Levy recently wrote that collective choice is the best manner for determining urban form. Many urbanists accept that some of the top-down regulations that limit density or use are detrimental to cities, but they often stop short of suggesting that land use regulation should be abolished and transportation privatized, which I will support here with arguments based in Austrian economics. This post does not get to a critique of the collective choice that Alon supports; later entries in this market process series will address both the problems of creating urban policy through collective choice, and some of the institutions that have emerged within civil society that are essential to cities and their residents. The cohort of economists and urbanists who support the elimination of land use regulation is small because cities present all of the problems that neoclassical and Keynesian economists describe as market failures, including externalities, high transaction costs involved in Coasean bargaining, non-excludable goods, etc. However, I believe that emergent solutions solve these problems more effectively than either central planning or collective decision making that becomes law, and the failed and inefficient government projects that urbanist bloggers write about everyday suggest that government failure is no trivial concern. The first reason that regulation is a poor tool to for determining urban form comes from Friedrich Hayek. He clearly identified the calculation problem inherent in central planning: the information necessary to coordinate markets (including land use markets) is held by individuals with “particular knowledge of time and place.” Even assuming that urban planners are benevolent and seek to provide the best outcomes for their communities, they could never compile the knowledge necessary to determine what those outcomes are. Jane […]
Ministry of NIMBYs is more like it! Talk about man-bites-dog: London’s Ministry of Sound, perhaps the world’s most famous nightclub, has gone on an all-out offensive against new residential skyscrapers near its home at Elephant & Castle, in Southwark. Their latest target is a 41-story tower in an area which, along with the City of London across the Thames, has a newfound fondness for tall towers, including the recently built Strata SE1 (silly name: “the Razor”)….
There’s a lot that bothers me about preservation policy, but one of the weirdest has to be rules that make it difficult to fill in gaps in building height. I’m not a big fan of the idea that historic neighborhoods have to stay the same “scale” forever, but it boggles my mind that people can both support keeping neighborhoods “in scale,” but oppose people who want to bring a building up to the neighborhood’s scale. 33 Bond, practically begging for more height …
Following up on my post yesterday skyscrapers in Europe, I’d like to explain why, in detail, central business districts are generally superior to off-center ones like La Défense outside Paris or Washington’s Virginia suburbs. It’s not that I just enjoy the spatial symmetry and organic shape of a centralized city – it’s actually more efficient! Neglect it, and you’re doing a disservice to your poorest citizens, who too often find themselves out of commuting range of many of a city’s jobs. …
