Monday, June 15th, 2015
In the last 25 years there has been a huge change in the level of competitiveness of smaller urban areas – by which I mean the small end of the major urban scale, or metro areas of about one to three million people – that has put them in the game for people in residents in way they never were before.
I recently gave the morning keynote at the Mayor’s Development Roundtable in Oklahoma City and talked a bit about this phenomenon, as well as how these generally younger and sprawling areas ought to be thinking about their future.
If the video doesn’t display for you, click over to watch on You Tube (my segment starts at 4:36).
Thursday, June 11th, 2015
Kay Hymowitz is the William E. Simon Fellow at the Manhattan Institute and probably best known for her work on family and gender issues such as the book Manning Up. But she does a lot more than that, including some great writing on her home borough of Brooklyn.
The current issue of City Journal has a great piece by her called “Made in Brooklyn, Again” that is a look at the manufacturing renaissance ongoing at the former Brooklyn Navy Yard. Here’s an excerpt:
The Yard is now home to 330 small to medium-size manufacturing firms employing 7,000 workers—double the total of 15 years ago. Many of the companies are traditional or “analog” in their approach, but firms emerging out of the local north Brooklyn design, crafts, and tech scene—or the “maker movement,” as it’s sometimes known—come to the Yard every day looking for vacancies that don’t exist. Local officials have their fingers crossed that the Yard’s rise from its smokestack ashes will reverse decades of manufacturing decline and make a real impact on the persistent joblessness that troubles nearby, mostly minority, parts of Brooklyn. But in part for reasons related to that 5 Axis router—as well as to New York’s costly regulatory climate—they should be careful not to hope for too much.
There’s more where this came from. Last spring she wrote a piece about the largely Fujianese immigrant community in Sunset Park called “Brooklyn’s Chinese Pioneers.” Everybody first thinks of Flushing, Queens when they think about the Chinese in New York. But Sunset Park is home to an even bigger Chinese community. This one is poorer than Flushing’s, and made up of many people from Fujian, a linguistically diverse and largely non-Mandarin speaking province in China. An excerpt:
What started with a few hundred Fujianese pioneers a few decades ago is now New York City’s most populous Chinatown—considerably larger than Manhattan’s and bigger even than Flushing’s. Sunset Park bustles with Chinese and Vietnamese restaurants and stores selling dried shrimp and scallops and a staggering variety of gnarly ginseng roots, medicinal herbs, oils, and powders. One rarely sees a non-Asian face there. Though official city numbers are considerably lower, Paul Mak, president of the Brooklyn Chinese American Association, estimates that Sunset Park and adjoining sections of Bay Ridge and Borough Park are home to at least 150,000 Chinese.
For all their gumption, the Fujianese don’t entirely conform to the model-minority image. Take, for instance, the way they come to the United States. Long-term visas are nearly impossible to get, at least for those without family already here. Among New York immigrant groups, the Chinese apply for the most asylum visas, many based on trumped-up complaints. Other Fujianese turn to smugglers, or “snakeheads,” to create fake papers and guide them through a nightmare journey that often involves dangerous weeks in the airless holds of barely seaworthy ships, long stretches in safe houses in Thailand or Guatemala, or treks across the Mexican desert. The grueling adventures can cost them $50,000 or more. (Patrick Radden Keefe’s 2010 book, The Snakehead, offers a powerful depiction of the multibillion-dollar Chinatown-based smuggling business.) A large number of Fujianese who come to New York these days do so through Canada, using the passports of relatives; they rely on border guards not being adept at distinguishing Chinese faces. There’s no precise number of the undocumented Fujianese who’ve arrived in New York City since the early eighties, but estimates run as high as half a million. Kenneth Guest, an associate professor of anthropology at Baruch College, says that as many as half the Fujianese in the city are here illegally.
In 2013 Kay took a look at “Bed-Stuy’s (Unfinished) Revival.” She observes:
Of all the changes that I’ve witnessed in Brooklyn since settling there 30 years ago, none has surprised me more than the blossoming reputation of Bedford-Stuyvesant, now the fastest-growing neighborhood in New York’s fastest-growing borough. For decades, Bed-Stuy’s nickname, “Do or Die,” perfectly captured the spirit of the place: it was a neighborhood of entrenched black poverty, mean streets, meaner housing projects, and a homicide rate that had reporters using war metaphors. Nowadays, Bed-Stuy has become the latest destination for young professionals and creative-class whites on the prowl for brownstones, tree-lined streets, and express subway lines to Manhattan. Artisanal coffee, prenatal yoga classes, and Danny Meyer–inspired restaurants (one, called Do or Dine, serves foie-gras doughnuts) have followed close behind.
And in 2011 she took a checkpoint on the Brooklynization of Brooklyn in “How Brooklyn Got Its Groove Back.” An excerpt:
Unlike their predecessors, however, these grads are not only artsy; they’re tech-savvy and entrepreneurial. Don’t confuse them with the earlier artists and bohemians who daringly smoked pot at Brooklyn Heights parties. These are beneficiaries of a technology-fueled design economy, people who have been able to harness their creativity to digital media. In a 2005 report, the Center for an Urban Future estimated that 22,000 “creative freelancers”—writers, artists, architects, producers, and interior, industrial, and graphic designers—lived in Brooklyn, an increase of more than 33 percent since 2000. The Brooklyn Economic Development Corporation has dubbed the area from Red Hook to Greenpoint the “Creative Crescent.”
The new gentrifiers have also, surprisingly, re-created Brooklyn’s identity as an industrial center, locating commercial kitchens, artists’ lofts, and crafts studios in retrofitted factories in Sunset Park, Gowanus, and downtown Brooklyn. If they have to commute to work, they want to ride their bicycles, which is easier to do if you don’t have to cross the East River. (Brooklyn may be one of the only places in the world that occasionally offers valet bike parking.) Many have started their own boutique firms. In its report, the Center for an Urban Future also noted that “freelance businesses have been a faster growing part of the Brooklyn economy than employer-based businesses.”
Tuesday, June 9th, 2015
This post originally appeared at New Geography on June 1, 2015.
Discouraging employment data have recently dampened optimism about America’s economic recovery. These challenges are nothing new for developed regions long beset by manufacturing decline amidst globalization. Exemplars of this trend, America’s rust belt cities have battled unemployment, decaying infrastructure, and social challenges since economic decline emerged in the 1960s. In response, some now cultivate service, knowledge, and tourism industries. Explaining these new growth models, analysts often espouse the virtues of diversification. However, legacy industrial systems and native constraints (e.g. geography and culture) can hinder this strategy. Chasing diversification for its own sake diverts policy attention from a more valid determinant of growth. Post-industrial urban policy should target structural flexibility, enabling diversification or specialization – neither deserving preeminent status – to occur naturally.
In exploring rival economic development strategies, two management theories are particularly relevant: Michael Porter’s competitive advantage and Harry Markowitz’s portfolio theory. Competitive advantage describes the strategic orientation of business operations and brand image to command an inimitable market position. Portfolio theory is the logic behind investment diversification to maximize returns for given risk preferences. In management, these are not rival theories. However, when applied to urban economic development they present a direct contrast. The former can be likened to specialization, and the latter to diversification.
In attempting to revive their economies, cities often reduce strategic options to the simple dichotomy of specialization versus diversification. Some compromise by favoring a primary industry and enabling the emergence of secondary industries. Economic orthodoxy generally argues that diversification is the wiser choice in volatile economies. This portfolio-style approach assumes that stability in one industry offsets decline in another. This argument is convincing: many “single-engine” economies have underperformed amidst globalization. Besides the usual cases, overlooked examples are Oakland, California (shipbuilding and automobiles), Birmingham, Alabama (steel), and upstate South Carolina (textiles). A similar fate befell the British Midlands and German Ruhr Valley, where recovery strategies have generated mixed results. Instability in single-industry dependence is not limited to manufacturing. Las Vegas, where the pro-cyclical tourism mirrors national economic trends, remains fairly irrelevant outside its casinos and related industries.
By contrast, many successful cities boast diversified economies. New York has a path-dependent advantage in finance, with recent volatility offset by tourism, business services, and the arts. The 1986 collapse in oil prices tested the resilience of Sunbelt boomtown Houston, whose shipping industry offset energy sector declines while banking, finance, and healthcare kept the city competitive. Large cities are naturally more diversified, but smaller cities can also exhibit diversification: examples are Austin, Texas (research, education, and technology), Nashville, Tennessee (entertainment, insurance, and health care), and Tampa, Florida (military, tourism, trade, and retirement services). Austin added jobs even during the 2008 recession, and has routinely been labelled the nation’s best-performing economy in recent years. These examples show that economic resilience is dependent more on diversified industrial portfolios than on size.
Nevertheless, a larger story underlies America’s revitalization champions. While the flag of diversification flies high, at the base of the pole stands structural flexibility, arguably a more durable, achievable, and powerful mechanism for growth. Cities prepared to re-orient towards emerging opportunities maintain development potential across economic cycles. Furthermore, flexibility gives cities of any size hope for transformative growth. Not every city has the native advantages to meaningfully diversify, but flexibility can be their wild-card strategy.
Two former manufacturing cities have exhibited post-industrial flexibility: Pittsburgh and Bilbao. Once the pride of America’s post-WWII steel industry, Pittsburgh suffered a precipitous decline in the 1980s as manufacturing moved overseas. 200,000 jobs and nearly half the population were lost. However, Pittsburgh’s situational advantages provided a flexible platform for revival. Well-endowed cultural institutions and flourishing medical, education, and research sectors supported a lifestyle economy based on knowledge, services, and creative entrepreneurship. Pittsburgh’s economic performance was seventh best in the nation during the 2008 recession, an example of how flexible planning, private sector creativity, and situational advantages converged to make progress halting seemingly irreversible decline. Similarly, Bilbao, Spain, sharply declined after the withdrawal of manufacturing. Without its economic engine and facing crisis-level unemployment, it creatively turned to tourism and culture. The government’s stated commitment to collaborative policy making and quality-of-life now complements efforts to sustain post-industrial competitiveness. Like Pittsburgh, Bilbao has used flexible, opportunistic planning to pursue economic growth.
Despite their highly publicized transformations, however, these post-industrial success stories are not without challenges. The Pittsburgh metropolitan area has failed to gain population for years, and lost nearly 5,000 residents between mid-2013 and mid-2014. The city’s stagnant job growth has led some claim that Pittsburgh’s amenities, rather than employment opportunities, are a relocation magnet. Others claim that flat overall job growth conceals local economic restructuring, as manufacturing industries give way to the creative sector. Despite recent signs of a recovery, Spain’s persistent unemployment (23.8% in the first quarter of 2015) indicates that the nation, and particularly secondary cities such as Bilbao, continues to struggle in the stubborn wake of the 2010 euro crisis. Further, Bilbao’s top-down approach of museum-based revitalization has failed to generate vitality in the grassroots cultural scene, where artists have collectively mobilized but still struggle to obtain financial support.
Manchester has recently enjoyed consistent growth, and is now considered the UK’s healthiest economy outside of London. Like Pittsburgh and Bilbao, the city experienced rapid mid-century decline with the closure of its shipping port and loss of heavy manufacturing. The city’s economic revival has pivoted towards knowledge, services, and entertainment, a strategy attracting recognition for liveability and cultural vibrancy. Financial services now outsize manufacturing and engineering, with no single industry representing more than 16% of the economy. Poised to benefit further from devolutionary reforms and “northern powerhouse” status, Manchester has garnered recognition for its economic diversity and entrepreneurial spirit. The city exemplifies a flexible approach to post-industrial development, particularly for a hinterland region overshadowed by a dominant neighbour (London).
Other efforts at revitalization, however, have produced lesser results. Like Pittsburgh and Bilbao, Cleveland’s steel industry flourished in the mid-20th century before industrial decline gutted the city of jobs and population. In 1969 the emblematic Cuyahoga River fire brought national attention to Cleveland’s economic crisis. Since 1990 the city has caught fire once again – in a revival driven by services, tourism, and entertainment. Global connections in knowledge industries and education complement Cleveland’s flexible economic vision. However, the city still struggles with disinvested neighbourhoods, ageing infrastructure, and regional competition from Pittsburgh, where flexible strategies also target culture and technology.
Taken superficially, these revival cases support the concept of diversification. Cities focusing on a singular competitive advantage – geography, image, or path-dependent conditions – tend to specialize but often struggle to re-configure inflexible industrial infrastructure for new opportunities. Regardless, specialization versus diversification is a false choice. Beyond this continuum, the true survival instinct is structural flexibility. Diversification often correlates with overall growth but is more a lagging indicator of opportunistic preparedness. Flexible policy broadens structural capabilities and builds resilience into urban systems, in either a specialized or diversified economy. The outputs include infrastructure both hard (transport, technology and housing) and soft (education, culture, and institutions). In providing platforms for investment that adapt to global trends, this strategy transforms industrial determinism into flexible economic opportunism.
Kris Hartley is a visiting researcher at Seoul National University and PhD Candidate at the National University of Singapore, Lee Kuan Yew School of Public Policy. For more details about his argument, see his book Can Government Think? Flexible Economic Opportunism and the Pursuit of Global Competitiveness.
Friday, May 29th, 2015
The evolution of historically poor, but creative, neighborhoods into affluent gentrification is a common trend in many large cities in the U.S. and the West. In new research, Jenny Schuetz examines the role that art galleries play in this trend toward gentrification. She finds that while galleries tend to choose neighborhoods with affluent college educated households, they are not themselves a cause of gentrification, and are not the source of further neighborhood transition after they are established.
Mimi and Rodolfo of La bohème would have difficulty finding a picturesquely dilapidated garret in today’s cleaned-up Latin Quarter – and even more difficulty affording the rent. Other well-known examples of gentrified Bohemia include London’s Bloomsbury and Hackney districts, Berlin’s Kreuzberg, and New York City’s SoHo and Chelsea neighborhoods. These once-shabby, low-rent enclaves became known for their concentrations of artists, writers, and musicians – not to mention their favorite watering holes – then gradually attracted more affluent residents and mainstream commercial activity.
Many historically artsy neighborhoods evolved organically into affluence. More recently, local economic development policies offer subsidies, preferential zoning, or other incentives to artists, galleries, performance venues, or the “creative class” more generally. One popular strategy is to encourage the reuse of abandoned warehouses and similar industrial spaces as art galleries. Galleries, especially “star” galleries owned by well-known dealers, have the potential to draw culturally-oriented visitors to a neighborhood, which in turn may attract new residents, shops and restaurants. Despite case studies of neighborhoods like SoHo, the causal relationship between art galleries and gentrification has not been rigorously established. Do galleries cause neighborhoods to transform, or are they drawn to neighborhoods with higher propensities to gentrify?
New evidence finds that in New York City, galleries choose high-amenity neighborhoods, but do not independently cause those neighborhoods to transform. To examine whether galleries lead to neighborhood redevelopment, I assembled an inventory of art galleries operating in Manhattan from 1970 through 2003. During the study period, roughly 800-1000 galleries per year operated in Manhattan, more than twice as many as in any other U.S. city. The study first examines whether galleries seek out locations with particular economic and physical amenities, and then analyzes whether gallery neighborhoods undergo more physical redevelopment, conditional on initial amenities.
Like antique dealers and high-end furniture stores, galleries are highly spatially concentrated in a few neighborhoods (Figures 1-2). Roughly 70 percent of all Manhattan galleries are located in just four neighborhoods: Chelsea, Midtown, SoHo and the Upper East Side. These clusters are remarkably persistent over time — Midtown and the Upper East Side have been gallery destinations since the 1940s, SoHo since the mid-1970s — despite the relatively short life-span of most individual galleries.
Figure 1 – Galleries in Uptown neighborhoods, 1970-2003
Source: Manhattan Gallery Database
Figure 2 – Galleries in Downtown neighborhoods, 1970-2003
Source: Manhattan Gallery Database
Some of the persistence is due to agglomeration economies: new galleries benefit from opening near existing galleries, especially “stars” that attract high-volume (and high net-worth) visitors to the neighborhood. Galleries also prefer neighborhoods with place-specific amenities, such as high quality architecture, museums and parks. For instance, about 80 percent of SoHo’s galleries are located within the Cast Iron Historic District (Figures 3-4).
Figure 3 – Gallery in Cast Iron Historic District, SoHo
Source: Photo taken by author
Figure 4 – SoHo galleries (1990-2003)
Source: Manhattan Gallery Database
The high-ceilinged and large-windowed structures were originally built for manufacturing and today contain upscale apartments, restaurants and shops, as well as galleries. Galleries on the Upper East Side also occupy historic structures, mostly elegant 19th century townhouses, and are located near prestigious museums (the Metropolitan Museum of Art, the Guggenheim and the Frick) and Central Park (Figure 5-6).
Figure 5 – Upper East Side galleries in historic townhouses
Source: Photo taken by author.
Figure 6 – Upper East Side galleries (1990-2003)
Source: Manhattan Gallery Database
Starving artists may seek out low-rent, bohemian enclaves, but art galleries prefer to locate among well-to-do households. New galleries are more likely to open in neighborhoods with affluent, college-educated households and above-average rents. These trends are particularly pronounced for star galleries – perhaps not surprising, given the price of an original Matisse or Jeff Koons.
To determine whether neighborhoods with high concentrations of “star” galleries undergo more physical transformations, conditional on the initial level of amenities, I perform a variety of statistical analyses. Based on the evidence of previous case studies, we would expect gallery-rich neighborhoods to be especially dynamic, undergoing more frequent redevelopment. Gallery neighborhoods may also shift from industrial uses or vacant buildings towards mainstream residential and retail activity. If galleries increase nearby property values, the quantity of building stock should increase (in the form of more or taller buildings).
The results indicate that star galleries do not lead to neighborhood redevelopment, once initial amenities are controlled for. The simplest statistical models show a positive correlation between initial density of star galleries on Manhattan city blocks and several metrics of physical change. City blocks near many star galleries have a higher incidence of overall building changes, increased land shares devoted to residential and retail uses, and larger gains in aggregate building stock. However, these correlations are not robust to more sophisticated models, which control for initial physical and economic conditions. The results suggest that star galleries choose locations that subsequently undergo more transition, but redevelopment is due to observable and unobservable amenities, rather than galleries themselves.
Two policy implications emerge from this research. First, this study focuses on one type of arts venue in one city, but cannot speak to potential impacts across other cultural activities or other cities. Policymakers should rely on hard evidence when designing economic development strategies, targeting public funds to activities and locations that provide the greatest return. Second, should the arts be subsidized as a tool for economic development, or because they contribute other benefits to society? Does the value of La bohème extend beyond Rodolfo’s now-gentrified garret?
This article is based on the paper ‘Do art galleries stimulate redevelopment?’, in the Journal of Urban Economics.
Note: This article gives the views of the author, and not the position of USApp– American Politics and Policy, nor of the London School of Economics, and do not indicate concurrence by the Board of Governors of the Federal Reserve System.
Jenny Schuetz – Board of Governors of the Federal Reserve System
Jenny Schuetz is an Economist in the Division of Consumer and Community Affairs at the Board of Governors of the Federal Reserve System. Her research focuses on urban economics, real estate and housing policy. Jenny received a PhD in Public Policy from Harvard University, a Master’s in City Planning from M.I.T., and a B.A. with Highest Distinction in Economics and Political and Social Thought from the University of Virginia. Her current projects include a study of transit-oriented development in Los Angeles and an evaluation of the federal Neighborhood Stabilization Program.
This post originally appeared in the London School of Economics USA Policy and Politics blog on October 22, 2014. Reposted with permission.
Tuesday, May 26th, 2015
Last week I linked to an article by Kris Hartley about a Chicago model for global cities. I wasn’t planning to analyze it, but Greg Hinz over at Crain’s did a short writeup, so I decided to share a few thoughts.
Where I’d disagree with Hartley is that I don’t think Chicago is in fact pursuing industry dominance. What’s I’d say is that it’s acting like it already has it. That’s part of the roots of its financial challenges as Chicago’s spending big without the economic base to support it.
Where I agree with Hartley is that industry dominance is only one aspect of global cities. Another crucial part is what economic and other networks a city participates in. I think this network based view is pretty aligned with Sassen too. The idea in Hartley’s piece is that Chicago should identify and cultivate the global networks in which it competes, and build a model based on that. I think Hartley offers a pretty pretty positive take on the city, saying that Chicago doesn’t need to dominate an industry to thrive. In any event, I agree that Chicago should built its own model since it is a different kind of city. Less Big Spend, more networks.
On another topic, Ted Nesi from Providence’s WPRI-TV wrote a two-part online series on the badly botched ridership estimates for the commuter rail extension to Wickford Jct. The first part covers the ridership gap (and how project champion Sen. Jack Reed is still defending this white elephant). The second part is about the high and going losses that will need to be subsidized in perpetuity to keep this thing going. Not only did Rhode Island build an expensive line to a sprawly/ruralish area, it also built a huge parking garage that will cost a ton of money to operate.
Back in 2013 I wrote a piece at Greater City Providence challenging the philosophy of expanding rail to far flung areas where there is no market, and instead said that the state should focus on improving connectivity from Providence and the urbanized north of the state to Boston.
Thursday, May 21st, 2015
Here we are once again with a roundup of a few highlights from places where I’m a contributor.
First the Guardian, which published a longish interview of Ed Glaeser by Simon Jenkins. Here’s an excerpt:
“You can’t stand in the way of progress” is indeed a really crappy argument – there are times when you can, and you must. But let’s go back to our friend Jane Jacobs, who I actually admire enormously. She was certainly right that Greenwich Village was a magical space, but think of her chapter in Death and Life about how cities need old buildings because they need cheap space … Well, now those townhouses in Greenwich Village start at $8m. Which shows there are real dangers in shutting off the supply valve everywhere.
They also posted a look at the bad old days in New York.
Myron Magnet rebuts bus drivers’ demands to be exempt from a crackdown on driver who kill pedestrian in “You Work For Me, Mac!” An excerpt:
Never was there so perfect an emblem of public employees’ public-be-damned attitude than the outrage of New York’s Transport Workers Union over the February arrest of veteran bus driver Francisco DeJesus for running down a 15-year-old girl legally crossing the street in a crosswalk. The seriously injured girl, who had the “walk” sign in her favor, was on her way to school. Bus drivers, the union whined, are being treated like “criminals.” Henceforth, the union demanded, cops must exempt its members from arrest for failure to yield to pedestrians in crosswalks. After all, why should they be treated like other motorists under Mayor Bill de Blasio’s Vision Zero program to reduce pedestrian traffic fatalities and injuries? How can anyone expect them to be “perfect”?
Paul Beston also wrote about the state of boxing in the context of the Mayweather-Pacquiao fight.
Scott Beyer talks about how to make pedestrian malls that work.
A look at the tough challenges facing Rhode Island Gov. Gina Raimondo.
Wendell Cox takes at look at Central Business District employment. There was very strong growth in select cities, with NYC, Chicago, SF, and Boston combined accounting for 2/3 of national job growth. Here’s the not unsurprising chart:
And Kris Hartley talks about a Chicago model for global cities.
Friday, May 15th, 2015
One unique aspect of Baltimore is that it is a so-called “independent city” that is not part of any county. Because of this, migration data from the IRS allows us to look specifically at the city of Baltimore. So I wanted to take a quick look at migration between Baltimore and its suburbs.
As you might expect, there’s been a net outflow of people from the city for quite some time. From 1990 to 2011 (the most recent year the IRS has released), Baltimore lost almost 151,000 people on a net basis to its suburbs. Here’s the chart:
You see here that Baltimore had an accelerating net loss of people, but then showed a steep drop in net loss through the 2000s. This is consistent with county level migration I’ve seen in other regions.
When people leave, they take their money with them. Baltimore’s cumulative net loss of annual income to its own suburbs from departing residents is about $2.75 billion from 1992 to 2011. (Income data isn’t available for 90-91 and 91-92 movers). That’s annual income, so this loss in effect recurs every single year. That’s a lot of money. Here’s the chart on adjusted gross income loss (in thousands of dollars):
What was a small post-recession bump in the people numbers is a more sizable one in the money figures.
Since we can, let’s also look at the individual flows of people leaving and people coming in. Here are people moving from Baltimore to the suburbs:
And here are people moving from the suburbs to the city of Balitmore – and yes, lots of people do that:
Here we see that the decline in Baltimore’s net loss was driven both by a decline in the number of people leaving and by an increase in the number of people coming in. This is similar to what I’ve seen in other similar places. The uptick in the recession is due to a drop off in the number of in movers.
There are some pretty dramatic movements in the early 90s, which were an interesting time in urban America to put it mildly. I’m not familiar with the specifics of Baltimore in that era. Some other regions I looked at – including St. Louis, which is also an independent city – show higher early 90’s migration, but nothing like the swing in Baltimore.
We will have to see what happens in post-2011 years. The IRS is delayed in issuing data, and has been trying to kill off this data program entirely, so who knows when more data will be available. 2012 data should in theory be out right about now, but we are some years away at best from finding out what impact this year’s riots might have had.
I should caveat this data by noting that it is based on tax returns that can be matched from year to year, so there are some movers who aren’t captured. As you can see, this is a pretty large data set, however.
Monday, May 11th, 2015
My latest piece is online at City Journal and is called “Libertarians of Convenience.” It’s a pretty tough take on too many progressive urbanists’ highly selective approach to deregulation. Many take a pretty radical libertarian view when it comes to things like blowing away zoning codes to permit more building. But in too many other areas urban progressives are calling for ever more regulation. Here’s an excerpt:
Left urbanists also decry zoning that requires city developers or businesses to include a minimum number of parking spaces before moving forward on a building or an opening, rather than leaving that decision to the market. Streetsblog decried parking-space mandates as “absurd.” The Walking Bostonian commented on high minimum parking requirements at, of all places, bars: “It’s almost as if there’s a kind of sickness which seems to get into city planners’ heads whenever the topic of parking comes up, and it causes all common sense to fly out the window.” Greater Greater Washington sarcastically observes that Steve Jobs, by founding Apple in a garage, “broke the law by building computers in required parking spaces.” As liberal urbanist Payton Chung sums up, “A parking minimum demands that the rest of us subsidize one economically infeasible land use above all others.”
Other aspects of housing regulation have also come under scrutiny, including minimum unit size: “The fanaticism of neighborhood groups opposed to microhousing is hard to fathom,” says the Stranger, a Seattle alternative weekly. On height limits, “It seems like a no-brainer for D.C. to at least ease the Height Act to promote some growth,” says the Next City website. Even historic districts seem to have gone too far for some liberals, becoming a kind of “neutron bomb zoning—preserving the buildings but driving out the working class communities,” according to MoreNYC.
The immediate critique I’ve already gotten of course, is that there’s no inconsistency. The call is to regulate things that cause harm and deregulate things that don’t. But virtually every activity harms someone somewhere, or has some risk. The question is always what risk is acceptable to take on, and what externalities to attempt to control. In these cases it’s clear the posture is really not about the appropriate response to harms or risks or externalities, but rather the principle is whether the underlying activity in question is one urbanists like or don’t like.
I should note that SF bookstore Borderlands apparently got a one year reprieve on closing thanks to a successful crowdfunding campaign they completed after we went to press. This is hardly a viable model generally, however.
Tuesday, May 5th, 2015
Privatization done right can be a great boon. Done poorly, it can harm the public for decades. We see another example of the latter ongoing in North Carolina (h/t @mihirpshah). The Charlotte Observer reports:
The N.C. Department of Transportation’s contract with a private developer to build toll lanes on Interstate 77 includes a controversial noncompete clause that could hinder plans to build new free lanes on the highway for 50 years.
The clause has long been part of the proposed contract. But it was changed in late 2013 or early 2014 to also include two new free lanes around Lake Norman – an important $431 million project supported by local transportation planners.
Some area officials were surprised that under the contract with I-77 Mobility Partners, the developer would likely collect damages if the state added two new general-purpose lanes from Exit 28 to Exit 36 at the lake.
Many of these long term privatization contracts are loaded with “submarine” clauses like non-competes that lurk underwater ready to rise up torpedo the public without warning. Did the people of North Carolina know that they were signing away their right to make public policy for the next 50 years when they did this deal?
What raises serious a red flag is that the clause that incorporated the I-77 added lanes project was added late in the game, which suggests that the current impact were not an accident:
Bill Coxe, a transportation planner with Huntersville, said he doesn’t know who lobbied for the revision. The new language wasn’t part of the draft contract from 2013, but it was added before the final deal was signed in June. “We saw that late in the game,” he said. “We aren’t sure who modified that.”
Mooresville’s representative on an advisory committee that helps make transportation recommendations said she didn’t know about the change to the contract with the developer. Neither did Andrew Grant, a Cornelius assistant town manager who helps shape regional transportation policy.
So many of these deals have less to do with bringing in private capital to finance infrastructure improvements than they do contractually creating a decades long stream of monopoly rents for the contractor.
Chicago got burned when an arbitrator ruled it owed $58 million to the group that leased the city’s lakefront parking garages. The city had promised it would not allow anyone else to build a garage open to the public to compete with the lessee. But it did anyway and they had to pay damages.
Contra the claim in the article that these clauses are necessary to attract investment, simply look around and see that businesses take huge investment risks every single day in markets with no barriers to entry for competitors. You don’t see Walgreens going to city governments and telling them they won’t open a store unless the city promises not to approve a CVS within a two mile radius, for example. We often see retail competitors right across the street from each other
But why invest in the actual marketplace when you can sign a sweetheart deal that grants you a five decade monopoly?
In this case, it appears to be free lanes and toll lanes side by side on the same facility. So there’s some justification for some sort of agreement on the state’s plans for the free lanes. But given that the free lane expansion was already on the books and supported by transportation planners, to have the project de facto killed through a clause slipped into a private contract in a way that does not appear to have been vetted by the public is dubious. If the residents of the area had known the free lane project they were banking on would be basically taken off the table for 50 years, it might have created protests that could potentially derail the contract. So by simply adding a non-compete clause, the state and contractor could do the same thing without stirring up the public until it was too late. It’s all the more reason why there needs to be much, much more scrutiny on the terms of these deals.
Thursday, April 30th, 2015
My latest piece is online over at the Guardian. It’s called “Have we actually reached peak car?”
My piece is quite different from the typical US consumer preference change story. Rather, it draws on research from the UK that’s not widely publicized here in which traffic experts going back as far as the 50s and 60s predicted a saturation in demand for driving. In short, while total driving levels may grow with increasing population, individual (per capita) demand for driving may be at or close to its peak.
Here’s an excerpt:
What’s frequently lost in the debate is that traffic experts themselves predicted a driving peak long ago. Models developed as far back as the 1950s and 60s anticipated that at some point the demand for driving would reach saturation point. A 1974 report in the UK predicted that point would be reached in 2010, a remarkably prescient view. As Goodwin points out: “In fact, the 1970s predictions were official government forecasts by its own research laboratory … The institutional memory collapsed and the generation who remembered or were involved in those forecasts is now only a few elderly specialists, like me. I was as surprised as anybody when I re-examined the old reports: I had no idea that the forecasts were turning out so accurate 30 to 40 years later. Mind you, that does not prove the method is right, of course, but it is food for thought and certainly demonstrates that the idea of eventual saturation is not alien.”
UCL’s David Metz, formerly chief scientist of the UK Department for Transport and author of Peak Car: The Future of Travel, has taken up the saturation theme. “Saturation of daily travel demand is to be expected and is a likely explanation for the observed cessation of per capita growth of personal travel.”
There’s a lot in this piece, so click through to read the whole thing.