Market Urbanism http://www.marketurbanism.com Liberalizing cities | From the bottom up Thu, 31 May 2018 20:23:23 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.6 https://i2.wp.com/www.marketurbanism.com/wp-content/uploads/2017/05/cropped-Market-Urbanism-icon.png?fit=32%2C32 Market Urbanism http://www.marketurbanism.com 32 32 3505127 Ch. 1 What is a City?: Concluding thoughts & works cited http://www.marketurbanism.com/2018/05/31/ch-1-what-is-a-city-concluding-thoughts-works-cited/ http://www.marketurbanism.com/2018/05/31/ch-1-what-is-a-city-concluding-thoughts-works-cited/#respond Thu, 31 May 2018 20:20:38 +0000 http://marketurbanism.com/?p=10081 Viewing cities as spontaneous orders and not as works of art helps to explain the tradeoff between scale and order, as well as the role of time in softening the severity of that tradeoff. Complexity and creativity are at odds with scale and the comprehensiveness of design because increasing scale impinges on the action spaces […]

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Viewing cities as spontaneous orders and not as works of art helps to explain the tradeoff between scale and order, as well as the role of time in softening the severity of that tradeoff. Complexity and creativity are at odds with scale and the comprehensiveness of design because increasing scale impinges on the action spaces where creative, informal contact tends to happen. Design might complement that informal contact to a point, but beyond a fairly low level it begins to overwhelm it.

Again, small is not always beautiful, and big is sometimes unavoidable. That makes it all the more important to understand the impact of scale and design on spontaneous social orders.

That applies as much to private as it does to public projects. When the designs are small relative to the surrounding social milieu, the downside of the tradeoff isn’t very steep. The problems start when budget constraints are soft and projects become mega-projects and mega-projects become giga-projects. I don’t want to sound too ideological – Jane Jacobs somehow avoided being ideologically pigeonholed all her life – but soft budget constraints are primarily the domain of governmental and, especially, of so-called public-private developments: Those elephantine-starchitectural-wonder-complexes that too-often strive for off-the-charts wow-factors. Without legal privileges, subsidies, and eminent domain, could the scale and degree of design of purely privately funded developments even begin to compare to those? I don’t think so.

The rules of the game of urban processes interact in complex ways. So deliberately changing some of those rules to achieve a particular outcome is akin to trying to impose a particular design on the social order, killing the social order in the process, although perhaps preserving the appearance of life. Taxidermy again. (That, by the way, is why I have problems with landmarks preservation on the scale practiced in many major cities today, including New York.)

I worry that we pay lip service to “mixed uses” and “density” and “diversity” without really understanding exactly what these mean and how they are important for economic development and liveliness. Jacobs explained how a living city fosters economic development and liveliness – for her the two go together – by promoting the diversity of land-use and of skills, knowledge, and tastes. A government can’t build an entire city (or neighborhood even) because it can only go so far in constructing that kind of diversity and the self-regulating processes that emerge from it. But in the ordinary course of its activities a government can at least refrain from doing the things that would thwart the emergence of the invisible social infrastructure that gives rise to that diversity, development, and liveliness.

And because I’m afraid they won’t refrain, I worry that when planners propose fixes for traffic, poverty, crime, discrimination, pollution, obesity, economic ennui, or whatever, they do so without seeing or caring about the things that constitute what Ken-Ichi Sasaki (1998) calls a city’s “urban tactility,” another part of the fine-structure of society that is the result of human action but not of human design.

So, I end Chapter 1 with this final thought: The more precise and comprehensive and accurate your image of city is, the less likely that the place you’re imagining really is a city. A city is not man-made thing.

 

[In this space I’ll be posting quotes, ideas, and excerpts relating to a book I’m writing (thus far untitled), which I might describe as “What I have learned from the economic and social theory of Jane Jacobs.”  My hope is to get thoughtful, informed feedback that will be useful in shaping the book.]

 

Works Cited In Chapter 1

Gehl, Jan & Birgette Svarre (2013). How to Study Public Life. London: Island Press.

Hayek, Friedrich A. (1948). “The use of knowledge in society.” In: Friedrich. A. Hayek (Ed.) (1948) Individualism and Economic Order. Chicago: Univ. of Chicago Press.

Hayek, Friedrich A. (1967). “The results of human action but not of human design.” In: Friedrich A. Hayek (Ed.) (1967) Studies in Philosophy, Politics and Economics. Chicago: Univ. of Chicago Press.

Ikeda, Sanford (2007). “Urbanizing economics.” Review of Austrian Economics, 20(4), 213-220.

Ikeda, Sanford (2010). “The mirage of the efficient city.” In: Stephen A. Goldsmith & Lynne Elizabeth (Eds.), What We See: Advancing the Observations of Jane Jacobs. Oakland, CA: New Village Press.

Jacobs, Jane (1961) The Death and Life of Great American Cities. New York: Vintage.

Jacobs, Jane (1969). The Economy of Cities. New York: Vintage.

Kirzner, Israel M. (1973). Competition and Entrepreneurship. Chicago: Univ. of Chicago Press.

Koolhaas, Rem (1994). Delirious New York: A Retroactive Manifesto for New York. New York: Monacelli Press.

Lachmann, Ludwig M. (1978). Capital and Its Structure. Kansas City: Sheed, Andrews and McMeel.

Lynch, Kevin (1960). The Image of the City. Cambridge: MIT Press.

Pirenne, Henri (1952). Medieval Cities: Their Origin and the Rival of Trade. Princeton: Princeton Univ. Press.

Putnam, Robert (2000). Bowling Alone: The Collapse and Revival of American Community. New York: Touchstone.

Sasaki, Ken-Ichi (1998). “For whom is city design? Tacility versus visuality.” In: Malcolm Miles, Tim Hall & Iain Borden (Eds.), The City Cultures Reader. New York: Routledge.

Wagner, Richard E. (2010). “Entangled political economy: A keynote address.” Manuscript.

Weber, Max (1958). The City. Don Martindale & Gertrud Neuwirth (Trans. & Eds.). New York: Free Press.

Whyte, William H. (1980). “Small urban spaces.” In: Albert LaFarge (Ed.) (2000) The Essential William H. Whyte. New York: Fordham Univ. Press.

Wirth, Louis (1938). “Urbanism as a way of life.” The American Journal of Sociology. Vol. 44(1):1-24.

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The High Cost of Solar Mandates http://www.marketurbanism.com/2018/05/30/the-high-cost-of-solar-mandates/ http://www.marketurbanism.com/2018/05/30/the-high-cost-of-solar-mandates/#respond Wed, 30 May 2018 22:11:24 +0000 http://marketurbanism.com/?p=10084 By Christopher Koopman and Josh T. Smith Facing a current housing crisis that is putting working families on the brink of homelessness, it would seem like California would have one of two options. The state could take steps to alleviate the growing problem. Alternatively, it could sit on its hands and do nothing at all. […]

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By Christopher Koopman and Josh T. Smith

Facing a current housing crisis that is putting working families on the brink of homelessness, it would seem like California would have one of two options. The state could take steps to alleviate the growing problem. Alternatively, it could sit on its hands and do nothing at all. It seems, however, the state has found a third option: make matters worse.

After it’s vote last week, the California Energy Commission took another step toward requiring all new homes under three stories to have solar panels installed beginning in 2020. Right now only between 15 and 20 percent of new single-family homes in California install rooftop solar. While solar may make economic and environmental sense for some, mandating it for all Californians will backfire by worsening the state’s housing affordability crisis, disincentivizing the building of newer, more energy efficient houses, and continuing to hurt the poor in a state that is already home to the highest rate of unsheltered homeless in the nation.

The housing crisis in California is largely driven by a simple economic problem: housing supply has failed to keep up with demand. As the demand for homes in the Golden State has increased, the housing supply has failed to respond.

Why? In particular, restrictive zoning policies continue to slow development and force prices up. Now people making $80,000 a year are having a hard time finding affordable housing.

Make no mistake, skyrocketing housing prices are a growing problem in large cities across the country, but especially so in California. The 2017 Los Angeles Homeless Services Authority report estimated there was a 23 percent increase in homelessness from 2016 to 2017. That’s almost 11,000 additional people without homes.

By mandating solar panels on all new houses, California’s regulators are essentially adding $9,500 to the cost of every new home in the name. A regressive policy disproportionately affects those on the margins, where each dollar may be the difference between homeownership and eviction. And while there can be honest debate over whether the positive environmental impact of solar panels are worth the cost, this cost must be measured against the backdrop of families being stretched thin by an already expensive housing market.

Moreover, requiring solar panels on new homes may work to undermine environmental efforts. Energy efficiency is a worthy goal; however, by increasing the cost of new housing, we can expect to see less of it. This is the same theory underpinning the soda taxes in effect in Berkeley and Oakland. Instead of seeing newer, more energy efficient housing units spring up across the state, many homeowners will remain in older, less energy efficient houses.

If the goal is to increase solar panel installations, there are better ways of achieving this without further burdening the poor or worsening California’s housing crisis. One change would be removing President Trump’s recently ordered taxes on solar panel imports. Those taxes will raise the price of solar panels, slow solar adoption in the United States, and likely cost more American jobs than they save.

Another approach to encourage installations would be to adopt a permitting process like Australia’s. Solar installations in the United States cost twice as much as in Australia. As the former CEO of Sungevity explains, this is the result of superfluous safety requirements that exist in the US but not in Australia. With less red tape and lower solar installation costs, solar panels are found across all types of homes in Australia, both low-income and high-income homes.

While the proposed mandate is still working its way through the regulatory process, there are better ways to promote solar. By focusing on reducing the current barriers to deploying solar panels, regulators can make a positive contribution to furthering solar technology across California without further limiting access to housing.

Christopher Koopman, senior director of strategy and research at the Center for Growth and Opportunity at Utah State University. Josh T. Smith is a research manager with the Center for Growth and Opportunity at Utah State University.

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Ch. 1 What is a City?: Cities cannot be efficient http://www.marketurbanism.com/2018/05/29/ch-1-what-is-a-city-cities-cannot-be-efficient/ http://www.marketurbanism.com/2018/05/29/ch-1-what-is-a-city-cities-cannot-be-efficient/#respond Tue, 29 May 2018 17:06:19 +0000 http://marketurbanism.com/?p=10074 Before we can correct what we think is wrong with a city, we need an appropriate standard of what is right. That standard of rightness in turn depends on our understanding how the thing we are trying to fix is supposed to work. In this regard I’m afraid neither standard macroeconomics nor microeconomics is much […]

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Before we can correct what we think is wrong with a city, we need an appropriate standard of what is right. That standard of rightness in turn depends on our understanding how the thing we are trying to fix is supposed to work.

In this regard I’m afraid neither standard macroeconomics nor microeconomics is much help at all.

In traditional macroeconomics, too much important detail is lost in its pre-occupation with aggregates and averages. For example, standard macroeconomic theory treats capital as homogeneous, and so makes no distinction between a hammer and a harbor, except that a harbor may be the equivalent of many, many hammers. Such an approach is too blunt an instrument for getting to the level of detail needed to appreciate the complex time-structure of capital of an economy, let alone to tell us what would be necessary to promote that structure (Lachmann 1978).  Jacobs expressed antipathy toward macroeconomics.

Macro-economics—large-scale economics—is the branch of learning entrusted with the theory and practice of understanding and fostering national and international economies. It is a shambles. Its undoing was the good fortune of having been believed in and acted upon in a big way (Jacobs 1984: 6-7)

Earlier in this Chapter we saw that, unlike a living city, a nation-state is not a natural unit of economic analysis. In Jacobs’s words:

Nations are political and military entities, and so are blocs of nations. But it doesn’t necessarily follow from this that they are also the basic, salient entities of economic life or that they are particularly useful for probing the mysteries of economic structure, the reasons for rise and decline of wealth. Indeed, the failure of national governments and blocs of nations to force economic life to do their bidding suggests some sort of essential irrelevance (Jacobs 1984: 31-32).

The limitations of standard microeconomics are in some sense even more severe. Efforts to make cities run more efficiently, for example, when “efficient” means something more than simply “the way I want to see things done,” run up against a deep conceptual problem (Ikeda 2010). Strictly speaking, an action is efficient when a person achieves a given end with the least costly of all available means. In other words, if you know what the most valuable end that you could be pursuing is, and if you know what the correct value of each of the possible means to achieve that end are, then your choices have a very good chance of being efficient. It would simply be a matter of matching the known, least-cost means to the known, highest-valued ends. But if you lack knowledge of any part of that ends-means framework, if your knowledge is not perfect, it would be impossible to tell whether any particular ends-means combination is efficient or inefficient. You can’t compare a given outcome with an ideal outcome if you don’t know what that ideal outcome might be. Efficiency might be appropriate in Louis Wirth’s 3-variable city but useless in a Jacobsian system of organized complexity.

The starting point of Jacobs or of Hayek or of Israel Kirzner (1973) is that a person is aware of only a small portion of the total amount of information she needs for the successful completion of her plans. Also, people make mistakes, plans conflict. Again, the social processes in cities are precisely what facilitate the discovery of conflicts and errors as well as harness the knowledge needed for their resolution.

Real markets are never efficient and neither are real cities. But the good news is that, given the nature of the trial-and-error process, we wouldn’t want them to be. As Jacobs puts it:

But I propose to argue that these grave and real deficiencies are necessary to economic development and thus are exactly what make cities uniquely valuable to economic life. By this, I do not mean that cities are economically valuable in spite of their inefficiency and impracticality but rather because they are inefficient and impractical (1969: 86).

To someone trained in standard economics that sounds paradoxical. If you understand why a city cannot be a work of art, however, it’s common sense.

A living city works by effectively combining what I call the “4 Ds,” diversity and density to generate discovery and development. Without going too deeply into what a normative standard consistent with promoting creative discovery would look like, I’ll just say that it would focus on whether the rules of the game empower creativity, more so than on trying to prevent the gales of dark destruction. The focus would be on what keeps creation ahead of destruction, and definitely not on how closely the outcomes we can measure match the ideal outcomes that we can only imagine.

 

*****

[In this space I’ll be posting quotes, ideas, and excerpts relating to a book I’m writing (thus far untitled), which I might describe as “What I have learned from the economic and social theory of Jane Jacobs.”  My hope is to get thoughtful, informed feedback that will be useful in shaping the book.]

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The “Old People Need Cars” Argument- Myth or Fact? http://www.marketurbanism.com/2018/05/23/the-old-people-need-cars-argument-myth-or-fact/ Wed, 23 May 2018 20:08:58 +0000 http://marketurbanism.com/?p=10061 The needs of the aged are often a political football in disputes over transportation policy.  On the one hand, defenders of low-cost parking and other car-oriented policies argue that older people all need cars because they can’t be bothered to walk.  On the other hand, smart growth types argue that we will all be too […]

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The needs of the aged are often a political football in disputes over transportation policy.  On the one hand, defenders of low-cost parking and other car-oriented policies argue that older people all need cars because they can’t be bothered to walk.  On the other hand, smart growth types argue that we will all be too old to drive someday, so we need to end the reign of car dependency.

One way of examining the issue is to find out whether seniors in fact drive more than everyone else.  Happily, the 2016 American Community Survey comes to our rescue here.  In Manhattan where I live, there are just over 129,000 senior-headed households with no car, and just over 36,000 with a vehicle available.  So contrary to car-lobby conventional wisdom, only about 22 percent of senior-headed households have a car.  How does that compare with other age groups?  On the one hand, only about 25,000 out of 200,000, or 12 percent, of millennial-headed households (that is, households headed by someone under 35) have a vehicle.  But among Manhattan households headed by persons between 35 and 64, about 28 percent (just over 109,000 out of just over 386,000)  have a vehicle- more than senior-headed households, to my surprise.

So I rate the “Old People Need Cars” claim as Mostly False: most seniors here in Manhattan don’t have cars, even though they are more likely to own cars than millenials.  On the other hand, the latter fact suggests that seniors are rarely physically incapable of using cars.

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Ch. 1 What is a City?: What the tradoffs might look like http://www.marketurbanism.com/2018/05/17/ch-1-what-is-a-city-what-the-tradoffs-might-look-like/ Thu, 17 May 2018 14:07:22 +0000 http://marketurbanism.com/?p=10046 We can visualize the tradeoff between the scale of design and the complexity and spontaneity of a social order as a downward-sloping curve. A sort of “scale-versus-order-possibilities frontier.” In addition to scale and spontaneous order/complexity, a third element I would add to the tradeoff is the passage of time. You can to some extent plan […]

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We can visualize the tradeoff between the scale of design and the complexity and spontaneity of a social order as a downward-sloping curve. A sort of “scale-versus-order-possibilities frontier.”

In addition to scale and spontaneous order/complexity, a third element I would add to the tradeoff is the passage of time. You can to some extent plan for complementarity, but you can’t really plan for spontaneous complexity and intricacy. [Helpful to bring in capital theory here?] Fortunately, time allows people to some extent to adjust social networks and physical spaces to better complement their own plans, in ways that the designer could not foresee. That is, for any given scale, time lets people figure out novel uses for, or changes to, the space as originally designed. Those unthought-of uses constitute an increase in the level of complexity in a spontaneous order. Over time, then, the frontier can shift outward.

Figure 1 reflects these relations:

The scale of a structure and the designed or planned uses of the space within that structure are of course two different things. Increasing the dimensions of a room doesn’t necessarily mean the elements that go into its design become more complex. But to keep things simple, Figure 1 treats scale and design as highly positively correlated. [Is this necessary?] Thus, as scale increases so do the designed elements – you move from point A to point B – and together they decrease the potential for spontaneous order. [But think about the tradeoff between scale and order, keeping design constant. Just increasing scale does seem to increase the designed/planned element in a previously undesigned space.]

Then, as time passes, the frontier shifts up from AB to A’B, where point B represents the case where the structure occupies100% of the relevant action space. So for any given scale, the passage of time allows people to find new, unplanned ways to interact with others in that space, thereby increasing the level of spontaneous order. How far it might shift in a given time period and the particular shape the tradeoff might take are critical issues, but unfortunately they are beyond what I can discuss here.

But thinking of the relation between scale, order, and time in this way can still help to explain how, despite the monumental scale of ancient Rome or Haussmann’s Paris or Niemeyer’s Brasilia or Ceausescu’s Bucharest, time has made those places more livable.

Now, what about the impact of deliberate design itself on spontaneous order?

Figure 2 isolates design from scale. It depicts a possible tradeoff between the potential for spontaneous order on the one hand, and the degree to which the order in the structure is planned rather than unplanned.

While I believe a space in which there is no deliberate, overall design can still give rise to spontaneous order, I have drawn the curve emanating from the origin – no overall design, no spontaneous order – but it rises steeply at first to reflect my own priors. [Elaborate on this; does this include rules or laws?] It then reaches a maximum level of potential spontaneous order at D*, beyond which design begins to substitute for rather than complement, unplanned order.

So, precisely because it is not a work of art, not the result of deliberate design, a city can achieve astonishing levels of intricacy, or of Jacobs’s “organized complexity.” But if not a work of art, then what is a city? I’ve been using the term “spontaneous order,” but what does it mean?

The City as a Spontaneous Order

Jacobs defines of a city as “a settlement that generates its own economic growth from its own local economy” (Jacobs 1969: 161). Ancient Rome and contemporary Washington, D.C. are not cities in this sense because on net they consume more wealth than they produce. While you could argue that each of these cities does create wealth, in the form of legislation and regulations that foster economic development, the consensus is that the output of legislation and regulation has for various reasons reached the point of negative returns. On the other hand, New York City is a city because, in addition to the net wealth it creates for the rest of the world, it generates more tax revenue for the rest of the country than it takes in in subsidies. In this sense, too, Paris, London, and Tokyo are also cities in Jacobs’s sense.

Note that Jacobs’s definition of a city is an economic one. It is different from, say, that of Richard Sennett: “…a city is a human settlement in which strangers are likely to meet” or of Edward Glaeser “At their core, cities are the absence of space between people and firms” both of which would include a prison, a mall, or Yankee Stadium.

[Add Weber, Pirenne here]

But it is a bit awkward to deny that Ancient Rome and contemporary Washington are cities. Perhaps Max Weber’s distinction between a “consumption city” and a “production city” might be more helpful. Instead, however, I have found it useful to term a “living city” what Jacobs defines as a city, and to use the term “city” to refer to any large settlement where strangers peacefully interact over a long time.

And as I am defining it here, a spontaneous order is a set of stable and coherent relations or patterns that is the result of human action but not of human design (Hayek 1967: 496). Moreover, it has the property of “emergence,” which is the ability of a complex system to arise from a multitude of individual interactions and to adapt to changing conditions without command. [Define “order” also?] It’s true that at some scale there is always deliberate design. Spontaneity exists at a level just above a set of designed elements. Thus the decision to buy from a particular supplier is deliberate, but the pattern of response of the entrepreneur over time to unexpected changes in supply (for example) is not. The architect’s plan of a home is designed, but how it interacts with other houses and those who live, work, and play in and around them over time to generate the character of a neighborhood is not. The spontaneity of an order then refers to the unplanned patterns that emerge over time at a level “above” a particular set of designed elements.

Like Jacobs, I see cities as highly adaptive systems that can achieve a level of complexity and orderly dynamism well beyond anything anyone could impose by design. Cities are the result of human action but, for the most part, not of human design. They are largely emergent, self-regulating, and self-sustaining.

I say “largely” of course because sometimes a city starts out as a deliberate creation and at different points in its history may be subject to extensive re-design. But over time, it evolves in ways that no one who played a part in its deliberate construction could have foreseen. The original designers of the New York City subway system in the late 19th century could not possibly have accurately predicted how the network would evolve over the next 100 years. And the ambitious public mega-projects undertaken at various points in a city’s history – such as Haussmann’s Paris – are eventually absorbed into the urban matrix. A city outgrows the elements designed at its beginnings or later in its history. The living flesh of a city heals, but no one can predict just how.

Like the spontaneous orders of language, judge-made law, and culture, cities evolve in response to myriad impulses from the people who constitute them. Cities thrive when there is freedom in one’s voluntary interactions with others. When they flourish, cities draw together socially distant strangers who are seeking profit, however they might interpret that word. And as Hayek explained in his essay of 1945, “The use of knowledge in society,” because people with limited knowledge can use the money prices that emerge from countless market exchanges as signals, the market process is much smarter than any human mind. In exactly the same way, the collective intelligence of a city can solve problems that no one can solve by herself. Even more importantly, cities serve to make us aware of what those problems are in the first place.

Now it’s true that some of these problems would not have existed but for large numbers of people with diverse knowledge, skills, and tastes packing themselves together into dense agglomerations. But these are also the conditions that foster informal contact. They make cities incubators of ideas and the principal sources cultural and scientific innovation.[1] Innovation and creativity are not possible without experimentation, trial-and-error; and trial-and-error is characteristically messy and often dangerous. Even though the number and diversity of opportunities you find in a city significantly lowers the uncertainty and the cost of experimenting, failure and disappointment will always be part of the bargain. Life on the cutting edge is the price and the value of living in a dynamic social order. Rem Koolhaas (1994: 59) put it well:

The entire spectacle defines the dark side of Metropolis as an astronomical increase in the potential for disaster only just exceeded by an equally astronomical increase in the ability to avert it. Manhattan is the outcome of that neck-and-neck race.

That, of course, could be said for any living city.

A city is the unintended consequence of people following their own plans, their own dreams. And when free to do so they will shape and abide by norms, conventions, beliefs, and institutions – i.e. the “rules of the game” – that promote social cooperation and create wealth in ways no one can fully imagine. And their choices will also intentionally or unintentionally nudge those norms, conventions, and the rest, in unpredictable directions. That is, as long as they are free to do so.

“Freedom” here means the ability to break old, strong ties and to make new, weak ties. All that making and breaking, like all change, entails some amount of disappointment, even tragedy. But the payoff, the “bright side of metropolis,” is creativity and innovation. In that sense, innovation and disappointment, creativity and conflict, go hand-in-hand. The same human tendencies that create the dark, destructive side of metropolis are responsible for the bright, creative side. Trying to eliminate the dark side, to put a stop to unwanted change, or imposing rules to avoid disappointment, stifles creativity, and results in even more profound disappointments. In other words, taxidermy. As long as ordinary people are free to apply their intelligence, knowledge, energy, and resourcefulness where they see the opportunity to do so, the forces of creation will stay just ahead of the gales of destruction. People will adjust to or change the built environment; more importantly, they will adjust to or change the invisible, social infrastructure.

But then amidst all this change and motion, how can we tell when things are getting better or worse?

 

[1] “The same age, which produces great philosophers and politicians, renown generals and poets, usually abounds with skilful weavers, and ship-carpenters.” David Hume

[In this space I’ll be posting quotes, ideas, and excerpts relating to a book I’m writing (thus far untitled), which I might describe as “What I have learned from the economic and social theory of Jane Jacobs.”  My hope is to get thoughtful, informed feedback that will be useful in shaping the book.]

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Loving the Stranger- Not! http://www.marketurbanism.com/2018/05/11/loving-stranger-not/ Fri, 11 May 2018 22:24:59 +0000 http://marketurbanism.com/?p=10036 The Bible says again and again and again to “love the stranger”. Although this phrase has been interpreted in a variety of different ways, one highly plausible interpretation of this maxim is that we should be at least somewhat hospitable to newcomers and temporary sojourners in our midst.   But American land use and transportation […]

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The Bible says again and again and again to “love the stranger”. Although this phrase has been interpreted in a variety of different ways, one highly plausible interpretation of this maxim is that we should be at least somewhat hospitable to newcomers and temporary sojourners in our midst.

 

But American land use and transportation regulations seem to be motivated by hostility to “strangers” (or, as they are more perjoratively termed, “transients”).  For example, the most privileged uses in zoning are the most permanent: single-family houses and businesses tend to be the least controversial land uses, while the most transient-oriented land uses tend to be the most controversial.  Owners of single-family houses try to zone out apartments because renters are “transient”, and homeowners and renters in turn may ally try to zone out hotels and other forms of short-term rental because the users of these services are even more ‘transient” than renters.

Street design often seems hostile to transients as well; a visitor to a city is least likely to be disoriented in a place where one can guess a place’s location based on an address.  For example, if you are going to 1125 M Street, SW, in Washington, DC you know that your destination is near the corner of 11th and M Streets.  Other gridded areas are a little less legible, but even so you can somewhat guess where you are going if you know a street name or two.  By contrast, newer suburbs often tend to be much less legible to visitors:  for example, in suburban Atlanta, there is no street grid and the proliferation of cul-de-sacs makes navigation confusing for visitors.

 

 

 

 

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The Case for Subsidizing Deed Restrictions http://www.marketurbanism.com/2018/05/09/case-subsidizing-deed-restrictions/ Wed, 09 May 2018 17:46:19 +0000 http://marketurbanism.com/?p=10021 In most of my discussions of Houston here on the blog, I have always been quick to hedge that the city still subsidizes a system of quasi-private deed restrictions that control land use and that this is a bad thing. After reading Bernard Siegan’s sleeper market urbanist classic, “Land Use Without Zoning,” I am less […]

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Houston skyline

In most of my discussions of Houston here on the blog, I have always been quick to hedge that the city still subsidizes a system of quasi-private deed restrictions that control land use and that this is a bad thing. After reading Bernard Siegan’s sleeper market urbanist classic, “Land Use Without Zoning,” I am less sure of this position. Toward this end, I’d like to argue a somewhat contrarian case: subsidizing private deed restrictions, as is the case in Houston, is a good idea insomuch as it defrays resident demand for more restrictive citywide land-use controls.

For those of you who haven’t read my last four or five wonky blog posts on land-use regulations in Houston (what else could you possibly be doing?), here is a quick refresher. Houston doesn’t have conventional Euclidean zoning. Residents voted it down three times. However, Houston does have standard subdivision and setback controls, which serve to reduce densities. The city also enforces high minimum parking requirements outside of downtown.

On top of these standard land-use regulations, the city heavily relies on private deed restrictions. Also known as restrictive covenants, these are essentially legal agreements among neighbors about how they can and cannot use their property, often set up by a developer and signed onto as a condition for buying a home in a particular neighborhood. In most cities, deed restrictions cover superfluous lifestyle preferences not already covered by zoning, including lawn maintenance and permitted architectural styles. In Houston, however, these perform most of the functions normally covered by zoning, regulating issues such as permissible land uses, minimum lot sizes, and densities.

Houston’s deed restrictions are also different in that they are heavily subsidized by the city. In most cities, deed restrictions are overseen and enforced by parties to a deed, typically organized as a homeowners association (HOA) to which members are required to pay dues. When a resident in a subdivision breaks the rules of the deed, the HOA takes them to court on their own dime. In Houston, however, the municipal government covers the cost of enforcement, much like with zoning. Neighbors complain, the city reviews the complaint, sends the offending party a letter, and eventually takes her to court if her noncompliance continues.

This has at least three effects: First, this encourages the creation of overly detailed and broad deed restrictions, which might otherwise be a hassle to oversee and enforce if all the costs were falling on residents. Second, this leads to consistent enforcement of all rule violations, even in minor cases where residents might otherwise agree to let harmless violations that aren’t worth enforcing slide. Third, following on this second effect, this preserves the legal force of deed restrictions far beyond what might otherwise occur. If so many violations go unenforced, eventually courts stop enforcing certain rules or enforcing the rules in certain parts of the subdivision. This gradual withering away of deed restrictions is still somewhat common in Houston, indicating that many violations aren’t even worth the phone call to the city to complain, but it is less common under a system of municipal enforcement.

Houston further subsidizes deed restrictions in at least two other ways: First, the city will not issue permits for developments and improvements that run afoul of any deed restrictions. Second, Texas state law allows deed restrictions in unzoned cities (e.g. Houston) to be created, extended, or renewed with a simple majority of residents in a subdivision and they can be modified with the support of three quarters of residents. In every other state, unanimity among the affected parties is required to create, renew, or modify a deed restriction, as with most other contracts. Similar to enforcement, this acts as a kind of subsidy, making it much easier for subdivision majorities to adopt and maintain deed restrictions, meaning that Houston probably has far more active deed restrictions than one might find under regular conditions.

All of this might sound bad to you, and with good reason. Why should majorities be able to strip minorities of their property rights?  Doesn’t this lead to an arbitrary patchwork of regulations, undermining comprehensive planning? Why should the city pick up the tab to enforce the preferences of middle- and upper-class homeowners?

Indeed, these are all issues under a system of subsidized deed restrictions. Yet each of these issues are far more challenging under conventional land-use regulations. Under deed restrictions, residents only have the power to downzone their immediate subdivision. Outsiders have no say in the matter, but at the same time, many residential areas, and virtually all commercial and industrial areas, are almost completely unaffected. This is in contrast to conventional land-use regulation, where active minority interest groups (i.e. homeowners) can and do capture the process and dictate the property rights of entire cities.[1] Under conventional land-use regulations, these groups nearly always decide the zoning of their local neighborhood, which can often be in conflict with regional housing or mobility planning. Again, the city then picks up the tab and enforces these preferences citywide using public resources. At most, Houston’s private deed restrictions only affect 25 percent of the city.

Yet my argument isn’t simply that deed restrictions are less bad than conventional land-use regulation. You can find that argument here. Rather, my point is that subsidized deed restrictions perform a useful political function: they give those residents with the strongest preferences for restrictions the restrictions they crave, thereby obviating the need to agitate for restrictive land-use regulations. The “homevoters” who drive land-use and zoning policy are essentially allowed to opt out of the laissez faire status quo, with some support from the city. This allows Houston to avoid having to adopt citywide conventional land-use regulations for things like land use and densities, as has happened in every other major city.

There is substantial evidence for this from Houston’s history. Consider the failed 1939 zoning push. According to Siegan, the most enthusiastic support for zoning came from Montrose, whose covenants had expired in 1936, leaving the neighborhood open to then-unwanted commercial and multifamily development. At the time, there was no city enforcement of covenants and renewal or extension often required unanimous support. This is an important point to state plainly: When their deed restrictions expired, residents started agitating for citywide zoning.

This exact same plot unfolded surrounding the failed 1948 and 1962 zoning referenda. In 1955, the deed restriction for River Oaks—an affluent white neighborhood—were set to expire after their original 30 years run (they began in 1926), after which renewal would be required every 10 years. It won’t surprise you to learn that the city’s elites, who disproportionately lived in River Oaks, became enthusiastic supporters of zoning in Houston around this time. In both referenda, River Oaks was the source of zoning support. In fact, in 1962, it was one of only two neighborhoods that voted for zoning. Again, when their deed restrictions were threatened, homeowners started agitating for zoning.

 

Units Built per Half Decade in Houston: Spikes in 1946 to 1950, 1976 to 1980, and after 1996

Data from the Harris County Appraisal District

There is some evidence that the same phenomenon occurred with the 1993 referendum. As you can see in Chart 1, there was a massive residential subdivision building boom in the mid- to late-1970s. Assuming for our purposes that a standard share of these developments were subject to deed restrictions, and that these deed restrictions had a standard initial run of 30 years, these deed restrictions were poised to start expiring between 2005 and 2010.[2] If we take all this together, we would expect a zoning referendum somewhere between 1995 and 2000, with deed expirations on the horizon. Lo and behold, one arrived two years early in 1993. The narrative again comes into focus: when deed restrictions are at risk, homeowners start agitating for zoning.[3]

The natural takeaway is that if you want to avoid restrictive land-use regulations, the city should actively support deed restrictions. That is to say, you must provide an effective and inexpensive way for those with the strongest preferences for strict regulations to “opt out” of the lightly regulated status quo. When you do that, you take away their incentive to lobby for conventional land-use regulations.

Houston history indicates that I am not the first person to figure this out. A mere three years after the failed 1962 zoning referendum, the Texas state legislature changed the law to allow Houston to enforce private deed restrictions and lowered the barriers to creating, renewing, and modifying them, which we discussed above. That is to say, they created an “opt out” option. After four decades of constant agitation for zoning beginning in the 1920s, there wouldn’t be a major push after 1962 for three decades. Within a decade of the 1993 referendum, the city of Houston again scaled up the enforcement of private deed restrictions in 2003, broadening enforcement to include things like design and maintenance rules.

This general policy of allowing NIMBY residents to “opt out” of liberalization isn’t just limited to preserving the non-zoning status quo. It also makes easing up on existing restrictions easier. In 1998, Houston policymakers substantially lowered minimum lot sizes from 5,000 to 1,400 square feet within the I-610 loop.[4] This constituted the most dramatic liberalization of subdivision rules in any U.S. city to date.

How was this possible? Because everyone who might have preferred a larger minimum lot size either was either already shielded from the change by deed restrictions or could easily “opt out” of the new rules. At the same time that Houston lowered minimum lot sizes, they created a process whereby a majority of local residents could petition to set higher minimum lot size rules based on the prevailing lot dimensions within their local block or neighborhood. Residents with a strong preference for large minimum lot sizes had no reason to go out and raise hell about the city as a whole, as their community was protected in proportion to the preferences of local residents.

As with deed restrictions, these local minimum lot sizes are still even less restrictive than conventional land-use regulations. Not only do they only affect a limited area and require a majority vote; they also automatically expire after 40 years. Predictably, when the city expanded these newer, more liberal subdivision rules to the city as a whole in 2013 (i.e. beyond the I-610 loop), they also lowered the threshold for adopting higher local minimum lot sizes.

Is a system of subsidized private deed restrictions and “opt out” provisions the ideal policy arrangement? No. Like zoning, they can create a messy patchwork of rules and regulations for which, as far as I’m aware, there is still no public database. But we aren’t operating in the realm of ideal policy. We are operating subject to very real political constraints, namely a vocal and powerful special interest group (i.e. homeowners) that desires strict land-use regulations around their home.

This is the genius of Houston’s unique system: Let those with strong preferences for tight restrictions have them and the city as a whole can go on operating under a largely liberal land-use regime. There is a valuable lesson here for other cities: when attempting to liberalize land-use regulations, consider strengthening the private (subdivision deed restrictions) and public (stricter local rules subject to local consensus) mechanisms whereby the most powerful opponents of liberalization can simply opt out. Houston figured this out in 1965 and again deployed this strategy to great effect in the 1998 subdivision regulation overhaul. In relationships as in city planning, sometimes you have to give a little to get a little.

 

For future content and discussion, follow me on Twitter at @mnolangray.

 

[1] Refer to Bill Fischel’s “The Homevoter Hypothesis” (2001) and associated papers, which convincingly argue that middle- and upper-class homeowners play an outsized role in determining zoning and land-use policy, particularly in smaller municipalities.

[2] These are standard assumptions about length based on Houston history. Note that this expiration length maps onto the length of a standard mortgage. As you might have guessed, FHA and private sector underwriters were major boosters of deed restrictions, as a way to secure property values in the face of non-zoning.

[3] If my theory is valid, expect a fourth zoning referendum somewhere between 2020 and 2026, 20 years after the 2000 to 2006 building boom.

[4] The causes and effects of this liberalization are the topic of a forthcoming paper. Stay tuned!

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The Attack on Airbnb http://www.marketurbanism.com/2018/05/08/the-attack-on-airbnb/ Tue, 08 May 2018 15:13:37 +0000 http://marketurbanism.com/?p=10011 New York politicians’ attacks on Airbnb are now getting national press; they argue that because Airbnb units could be used for long-term rentals, Airbnb reduces the housing supply and thus raises rents. But just as a matter of principle, this claim leads to absurd results.  The logic underlying the claim is: a housing unit that […]

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New York politicians’ attacks on Airbnb are now getting national press; they argue that because Airbnb units could be used for long-term rentals, Airbnb reduces the housing supply and thus raises rents.

But just as a matter of principle, this claim leads to absurd results.  The logic underlying the claim is: a housing unit that is used for short-term rentals such as Airbnb could be easily used for long-term rentals.  Thus, Airbnb reduces the long-term housing supply.

But this argument proves too much.  If you own a house, your house could also be used for long-term rentals.  If you have a spare room, you could rent out that spare room.  And even if you rent out every room in the house, your house sits on land that could be used for a much larger number of rental units.  Since there are far more single-family houses than there are Airbnb units, bulldozing every house in the city would increase housing supply to a much greater extent than would outlawing Airbnb. Does this mean the city should bulldoze your house to build more rental housing?

 

The post The Attack on Airbnb appeared first on Market Urbanism.

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