Physical Address

304 North Cardinal St.
Dorchester Center, MA 02124

Some notes on slums and free markets

Recently I’ve been seeing a lot of articles about slums (the NYT on Gurgaon, India, and the Guardian on Cairo), and inevitably the phrase “free market” gets thrown around. And as it should – so-called “slums” often have very minimal active governance, and as a result they often have very dynamic economies and upwardly mobile citizens (something even the New York Times and Guardian, two very liberal papers, recognize). But it’s lazy to equate them with the free market, and unfortunately I see a lot of people doing that. One problem with slums, from a free market point of view, is that only certain investments are secure. People and their houses (well, at least the owner-occupied ones) are the safest, especially in democracies like Brazil and India. Though of course there are stories of people’s homes in slums being demolished or taken by the government without compensation, it’s my understanding that this is becoming rarer as slum dwellers grow in number and political power. Residents are likely to get titles in some Hernando de Soto-inspired regularization scheme, so people invest in their homes. Residential areas harden as sheet metal turns into bricks, houses get proper roofs, and we start to see two- and three-story structures. Infrastructure, however, is another story. While many newspapers I think generally exaggerate the lack of services (I refuse to believe the Times’ assertion, for example, that Gurgaon only has employer-funded mass transit – there must certainly be share taxi/small bus services, or at least motortaxis), there does appear to be a real lack. The poorer areas often have open sewers, and running water in homes is rare. Many critics take this as evidence that infrastructure – paved roads, mass transit, electricity, waste collection, water – will not be adequately provided for in a free market, which […]

Where have I been?

I (Stephen) have been focused on trying to find a job recently (speaking of which – if anyone’s got any freelance or permanent work or knows of anyone who might, I’m interested! [email protected]), so as you can see, posting has dropped off. Adam also hasn’t been posting much lately, but, as you may have noticed, we have a new blogger – market urbanists, meet Emily Washington! She’s already posted a few articles, and hopefully we’ll see many more. As for me, you can still read my writing, but you’ll have to accept it in 140-character chunks. Adam gave me the password to the Market Urbanism Twitter account (@marketurbanism) a few weeks ago with the idea that I would post links there and then collect them every few days in a post. I started tweeting a lot more than I though I would, though, and have been too lazy to collect them in a post. But, since I post about a dozen links a day there’s a lot of content, and even if you don’t use Twitter you can still check it out. Unfortunately, though, the webpage and RSS feed include what are sort of conversations with other users – basically any message that starts with an “@” sign, though not things that start with “RT @” – so you’ll get a lot of tweets that are just my half of the conversation with someone else. I don’t have a solution for this in the RSS feed (anybody know how to filter them out of the RSS feed, as Twitter would if you were following them?), but if you sign up and make a Twitter account and “follow” @marketurbanism, you’ll see the tweets on your twitter.com homepage as they were intended, without all the annoying half-crosstalk – it’s free and easy, […]

Irrational, or responsive to incentives?

In the Washington Post Brad Plumer editorializes on the choice of many Americans to accept longer commutes by car in exchange for larger homes far from their workplaces. He says that consumers are unable to accurately calculate the cost of their commutes, including time spent driving, leading them to make “irrational” choices about where to live. However, Plumer downplays the policies that encourage consumers to buy homes rather than rent and that allow them to partially externalize the costs associated with driving. Plumer asserts that when buying a house, consumers think they will value additional space more than they do, but he gives no convincing reason that their subjective valuation of home size is incorrect. If in fact if consumers did undervalue the time they spend commuting in relation to home size when they purchased a home, he gives no reason why they would not eventually realize this error and improve their situation by moving to a smaller home closer to a city center. His piece is written in response to Congressman Earl Blumenauer’s recent report on the topic of shielding Americans from volatility in the oil market. Blumenauer does credit the policy environment dating back to the 1944 Federal Highway Act for shaping the car-centric culture that many Americans live in today, and he supports policies that provide incentives for decreased reliance on cars. Blumenauer asserts, “For too long, the Federal government has disproportionately subsidized highways at the expense of other modes, reducing consumer choices.” Rather than moving away from determining transportation and urban development through legislation, he provides policy prescriptions at the federal, state, and local level to decrease consumers’ dependence on oil. For example, Blumenauer suggests that mortgage lenders should be encouraged to take transportation costs into account, making it easier for those living close to their […]

More fuel for the transit policy fire

Controversy over the construction of high speed rail in California provides a glaring example of the rigidity inherent in using infrastructure projects as economic stimulus. A state study suggests that the Central Valley is not the most efficient location to begin the project’s construction, and that construction should begin in a population center such as Los Angeles or San Francisco. However, US Department of Transportation officials said funding would be revoked with a major change to existing plans because construction must begin by 2012.  The LA Times reports: Until those issues could be addressed, analysts called on the rail authority to push back its federally required construction deadline and consider relocating the initial segment to a major urban area where there was more potential for trains to run sooner. Analysts further recommended that the Legislature not spend any more money on the project if the federal government did not allow the changes in the route and construction schedule. Because the federal funding for the project comes from the American Recovery and Reinvestment Act, the project must be comply with the federal timeframe. However, for the long-run benefit of California residents, the flexibility to adjust plans as the market is reassessed makes more sense than adhering to the stimulus schedule. Furthermore, many politicians and academics have questioned whether or not the train will be a long-run drain for California taxpayers.  The federal funding is contingent upon $9 billion in state bonds to fund construction of the rail line, but will allegedly be operated at a profit by a private company once construction is complete. In fact, Proposition 1A that voters passed to fund the project forbids subsidies to the train operator. The rarity of profitable high-speed rail systems and the US track record of rail subsidies call into question the feasibility […]

Obama administration sells transit out to protectionists (again)

I’m not sure how I missed this (actually, I have an idea – more on that in a minute), but back in February the Federal Transit Administration issued the following warning about strengthened “Buy America” transit procurement protectionism: Congress and the Obama Administration asked Americans to provide $787 billion to help avoid an economic catastrophe and restore and modernize America’s infrastructure.  In return, the Federal Government asks recipients of Recovery Act funds to be held accountable to the American public by using these resources to maximize opportunities to put Americans back to work and to support our domestic manufacturing industry. In order to support this goal, the Federal Transit Administration (FTA) will not consider any requests for a public interest waiver of FTA’s Buy America regulation for Recovery Act projects.  If issued, such waivers would allow recipients of Recovery Act funds to procure steel, iron, or manufactured products, including rolling stock, that are not produced or manufactured in the United States.  I will not waive Buy America for Recovery Act projects because such action would undermine the very purpose and intent of the Recovery Act—to preserve and create jobs in America.  In addition, FTA will continue to carefully scrutinize requests for waivers based on non-availability to determine whether suitable American-made alternatives exist, and if none do, whether the funds can be used in an alternative manner that fulfills the goals of the Recovery Act.  Similarly, FTA will examine requests for cost-differential waivers to determine whether the cost savings justifies the loss of American jobs, especially in critical manufacturing sectors.  By necessity, FTA will extend existing, standing waivers—for products exempted by the Federal Acquisition Regulation, microprocessors and microcomputers, and small purchases—to Recovery Act-funded procurements, although I encourage recipients to use their best efforts to carry out the intent of Congress and the Obama Administration […]

Clear case of the damages inherent in policy uncertainty

Current policy evolution in Los Gatos, CA demonstrates the power that urban planners have to alter property rights.  The Silicon Valley municipality is currently debating whether or not to upzone a parcel where a developer would like to build 550,000 square feet of office space, replacing 250,000 square feet of an older office park. The lots, located near the Netflix headquarters, are thought to be the potential site for the company’s needed expansion. However, the Bay Area is already home to ample vacant office space, so the developer would like the alternative option of building multifamily housing in the location. In response to this request for a change in zoning that would allow either use, the planning commission chairwoman said she was “blindsided” by the owner seeking permission for options to use the land in various ways. In today’s world of master plans that dictate acceptable uses for each parcel of a city’s land, asking for the freedom to build different types of buildings, rather than approaching a commission with a plan in place for a specific zoning change, may seem out of line. In reality the owner is simply seeking permission to put his land to its most efficient use given future uncertainties. Entrepreneurs profit by seeing through these uncertainties to put resources to their most profitable uses, but in the market for land, policies limit their ability to do so. In curent conditions, in which developers are not building much new office space unless it is pre-leased, the planning commission has the power to determine the land’s expected value by requiring the owner to commit to a plan before moving forward with redevelopment. This is a classic Coasean case of the care that policy makers must take in assigning property rights. Russ Roberts and Richard Epstein did a […]

Five union work rules that harm transit productivity

Since Alon’s comment a few weeks ago that union work rules, not wages and benefits, are the real problem with labor unions at America’s transit authorities, I’ve been looking into the matter, which seems to be something that a lot of transit boosters don’t like to talk about. It’s an uncomfortable subject for two reason: 1) urban planners and unions have an ideological affinity, and 2) it’s hard to lobby for increased subsidies for transit when you admit that you’re making poor use of the money you already have. But despite planners’ reticence to talk about the problem, it needs to be addressed. Throwing money around is what governments do best, and while it might be an easy solution to problems in the short run, the money is running out. Some will surely quibble that we can afford to raise taxes and do more deficit spending, especially for something as vital as transit, but whether or not that’s true, the fact is that voters are increasingly doubting that it is, and so politicians are going to become stingier about doling out money for transit. Anyway, the most obvious area for savings is in actual wages and benefits, but many mainstream conservative and libertarian publications have written a lot about this issue, so I want to focus on just inefficient work rules. These are rules that are written into union contracts hashed out in a political process, and management doesn’t have the authority to overturn them. I found surprisingly little on the issue in the academic literature, but there’s plenty on it in newspapers, and so here’s a round-up of the major issues that I found with various American transit unions. The list is by no means comprehensive – either of all the cities that have these problems, or even of […]

What good is form-based zoning when you just keep everything the same?

“Form-based zoning” is something that I’ve never entirely understood. It’s always explained to me as regulating form not use, and generally the example given is that form-based zoning will require certain design aesthetics but not dictate whether something is used as a residence or a place of business or whatever. And instead of setbacks, FAR requirements, etc., it will dictate overall size (I guess with a height limit?). But while it seems marginally more pleasant to mandate parking lots go behind buildings, it doesn’t seem to me like zoning by “form” is inherently better than the status quo American planning tools. A planner can use a Euclidean designation to accomodate high-density development just as easily as he can use a form-based code to force suburbia on an area. In other words, the devil’s in the details, and just moving to a form-based code doesn’t really change anything if you don’t also allow for more growth overall After reading this paper (abridged ungated version as a .pdf here) on parking in Miami’s new form-based code – “Miami 21,” implemented in 2009 – I fear that I was right, and that form-based codes will probably end up looking just like the old ones: In general, there are minimal parking requirement changes in the Miami 21 form-based code. Lower minimum requirements or the establishment of appropriate parking maximums in existing, compact urban neighborhoods would protect the existing character of these areas and encourage the development of context-sensitive development that promotes walkability. Yet the proposed parking requirements in the Miami 21 form-based code still include relatively high minimums, even in the more urban transects This is partially a critique of DPZ’s SmartCode, which does not reduce parking requirements signi?cantly even in the more urban transects. Considering the level of public transportation service in its […]

“The Joys of Staying Put,” or “The Joys of Rent Control”?

The New York Times is unusually good at ignoring economic forces at play in land use and transport markets, but I think this piece called “The Joys of Staying Put” by Constance Rosenblum takes the cake. Here’s a quote: New Yorkers typically move a lot. Prompted by the arrival of a partner or a child, or money that buys more space or a nicer neighborhood, or simply an appetite for change, some New Yorkers move house every year or two. According to census estimates for 2009, 650,000 New Yorkers lived in a different house or apartment within the city than in the previous year. But a few stay put, immune to the call of a larger apartment or a swankier neighborhood. They plant themselves in the same place for decades or for their entire adult lives. Some have been in the same apartment since graduating from college. Shortly after sinking roots in the city, they find a place that suits them and don’t budge. Are they really “immune” to anything, or did they just make a good call a couple decades ago by not moving out of their rent-stabilized unit and are now responding rationally to price incentives? While the author does admit that a lot of the people have rents fixed by law (“you hear the words ‘rent-stabilized’ a lot”), the whole implication seems to be that there’s something about these people beyond the rent controls, like they’re some sort of special breed of über-New Yorkers. And while anyone who knows anything about real estate will realize that the places she’s describing must be rent stabilized (under $1,000/mo. for a 1-bedroom in Greenwich Village, for example), she never mentions anyone in particular as being rent stabilized. So for example we hear about Esther Cohen, who’s paying “just about $1,000” for […]

NYC tries to fine its way out of the laws of supply and demand

Having failed to deregulate New York City’s highly restrictive taxicab market, it looks like City Council and Bloomberg are opting for the populist reaction to NYC cabdrivers’ frequent refusal to take you anywhere outside Manhattan and, if you’re lucky, northwest Brooklyn: fines. Quoteth the Wall Street Journal: The bill passed Wednesday increases the fine for a cabbie’s first offense from $350 to $500. If he gets caught again within the next two years, he’ll have to pay $1,000—double the current fine. The bill also adds a $1,000 fine for the third offense, on top of the license revocation already required. Unfortunately for New York, I think it’s gonna take a lot more than a few hundred more dollars in fines to have any effect on this problem. And if it does somehow work, then I fear that it will actually be counterproductive and encourage cab drivers to discriminate. They won’t even bother pulling over for people think aren’t traveling within Manhattan for fear of either having to take them or be fined – in other words, it will become even harder for people of color, who are less likely to live in Manhattan, to hail cabs. And then there’s this gem from the hack union, which reminds me of David Yassky’s “the city should be circumspect about substituting its judgment for the judgment of business people” comment: Bhairavi Desai, the director of the Taxi Workers Alliance, a drivers’ group, said she was disappointed in the vote. Drivers sometimes refuse to take people to faraway places because they’ll get stuck in traffic before they can get another fare, she said. She said the city should find an “economic solution” to the problem. “Otherwise, you’re just scapegoating people,” Ms. Desai said. It’s interesting that she even admits that there is even a problem – I guess […]

Trending now

gentrification
Only 2 Ways to Fight Gentrification (you’re not going to like one of them)
The problem with “public” transportation
The Great American Streetcar Myth
O’Toole Under More Fire