As the Antiplanner noted yesterday, the Washington Post has observed that unaffordable housing markets tend to be in liberal metropolitan areas while conservative metropolitan areas tend to be affordable. This is based on a comparison by Trulia economist Jed Kolko of housing prices (in dollars per square foot) vs. voting for Obama or Romney in the 2012 election.
Note that not all liberal metropolitan areas are expensive while not all inexpensive markets are conservative. But nearly all expensive markets are liberal and nearly all conservative markets are inexpensive. (The one exception, Orange County, California, is partly land-locked by other, more liberal communities.)
New Zealand economist Mish Shedlock asks if this is merely a correlation or does one factor cause the other? His weak conclusion is that “Union work rules, land availability, and building restrictions (or lack thereof) are all likely in play.” In fact, there is plenty of land available in all of the expensive regions; it is just rendered off limits to development by state or local land-use rules.
Here’s a continuation of yesterday’s post with five more economic principles for planners. Today’s principles are a little more complicated than yesterday’s. To clarify, I am using the word “planners” as shorthand for “advocates of government infrastructure subsidies and regulation.”
6. There’s no such thing as a free lunch.
Planners would like you to believe that there is free money available to do the projects they propose. Sometimes they mean federal money (“it’s going to be wasted somewhere, so we might as well waste it here”), while other times they mean tax-increment financing (“if we didn’t subsidize the development, the taxes wouldn’t come in to pay for it”).
Planners and economists often come to the exact opposite conclusions about various policy proposals. In too many cases, this seems to be because planners (which I define here as “advocates of government spending and regulation”) have a poor understanding of basic economics. To help them out, the Antiplanner has developed ten economic principles for planners. I’ll present five today and five tomorrow.
1. Capital costs are costs.
Too many planners want to ignore, or want other people to ignore, capital costs. Like a high-pressure car salesperson whose job is to get the customer to buy the most expensive car they can afford, they’ll say, “Pay no attention to the number of zeroes at the end of that number. You only have to pay the capital cost once, and then think of all the benefits you’ll get.” Why get a Chevrolet when you can get a Cadillac? Why get a Yaris when you can get a Lexus? Why improve bus service when you can build light rail?
Some two weeks ago, the Antiplanner met regionalist Myron Orfield in a debate over the question, “What is the appropriate role of government in land-use regulation?” A member of the Sensible Land Use Coalition, which sponsored the event, recorded the discussion and asked me to post it to Youtube.
To avoid an overly long video, I elected to post it in four parts. Part 1, above, shows the introductions and my presentation (also available as a 10.5-MB PDF).
Portland doesn’t need to apologize for spending more than $1.5 billion on a 7-mile light-rail line, says Secretary of Immobility Anthony Foxx. “Cities, counties and state need to have bold visions, not be unapologetic about them, and explain them to the public,” he was quoted as saying. Presumably this quote was garbled; otherwise the Department of Transportation is in even worse trouble than the Antiplanner thought.
Let’s see how well Portland is doing as a model for the nation:
- Its streets are falling apart even as it plans to build 140 miles of streetcar lines at a cost that would be enough to repave all 5,000 miles of streets;
- Portland doesn’t even have enough money to maintain city-owned office buildings;
- The general manager of Portland’s transit agency says it will have to reduce all rail and bus service by 70 percent between now and 2025 in order to meet all of its financial obligations;
- Despite all the money spent on Portland transit, transit is so unpopular that, of 50,000 new workers gained between 2005 and 2012, fewer than 100 take transit to work;
- For the Portland urban area as a whole, there were 124,000 new jobs between 2005 and 2012, of which about 700 took transit to work.
- Thanks partly to money stolen from schools by TIF-addicted planners intent on subsidizing TODs, Portland high schools have some of the largest classroom sizes and lowest graduation rates in the nation;
- The “creative class” of young people who have been attracted to Portland (most likely by the city’s 50 brew pubs) do so little work that they have reduced Portland’s per capita incomes, relative to the rest of the country, by 10 percent;
- Portland has funded only half of its pension obligations and just 4 percent of its health-care obligations, giving it one of the worst records of any city in the nation.
Sounds like a model for other cities of what not to do.
The Antiplanner squared off against regionalist Myron Orfield in Minneapolis yesterday over the question of whether governments should try to regulate land uses. My presentation (11.6-MB PowerPoint or 10.5-MB PDF version) argued that urban areas are too complicated to regulate and that attempts to do so end up doing more harm than good. Dr. Orfield responded that letting people do what they want led to housing discrimination and too many septic tanks destroying ground water supplies in exurban areas.
Perhaps the most difficult question anyone asked us is where we agree. We both stared at each other for a minute before answering. Obviously, we both oppose racial discrimination and water pollution. The question is how these problems are solved. Dr. Orfield thinks that regional government is needed; I would push things down to the local level as much as possible.
It is one thing to say that people shouldn’t impose costs on others by polluting the water table. It is quite another thing to have a regional government restricting growth beyond an urban-growth or urban-service boundary based on the idea that it is too expensive to allow leapfrog development.
Unless you live in a neighborhood or town that has a perfect balance of all racial minorities, you are a racist. At least, that’s the view of the Department of Housing and Urban Development and of the plaintiffs in a new lawsuit against the Twin Cities Metropolitan Council. According to the cities of Brooklyn Center and Brooklyn Park, which have a lot of low-income minorities, the Met Council’s housing plans perpetuate segregation by assigning more low-income housing to the plaintiff cities and not enough to wealthier suburbs such as Edina and Mendota Heights.
The notion that every suburb should have a perfect balance of minorities and those that don’t are de facto racist is absurd. Different people have different needs, and the things that low-income people need–access to public transport, social services, and family support–are not the same as the things that moderate- to high-income people need.
The solution of advocates of “affirmatively furthering fair housing” is to require that cities with racial imbalances build new, high-density housing and require the developers of that housing to set aside a share of those homes for low-income families. But, even if that were a good idea, that wouldn’t solve the problem that low-income people would rather live in areas where they can get the support they need than in wealthy suburbs.
Paul Krugman argues that housing costs, not taxes, are what is drawing people to Georgia and Texas and away from California and New York. He’s partly right, but he’s mostly wrong.
What he fails to see is that the same impulse that attempts to control land uses in California, making housing expensive, also makes unduly regulates California businesses and boosts taxes to make California undesirable. The same impulse the attempts to control rents in New York City also leads to nanny-state rules and excessive bureaucracy that makes that city undesirable to many businesses.
Contrary to what Krugman says, housing prices in California and New York are high not because they’ve run out of land. California especially has plenty of land available while a good share of the New York and Connecticut counties bordering New York City are rural open space. Nor are prices high because cities won’t allow higher densities: if California cities didn’t have urban-growth boundaries, few people would want to live in higher densities.
The sad events in Ferguson, Missouri are being used by urban planning advocates to popularize their latest cause: suburban poverty. Ferguson is “emblematic of growing suburban poverty,” says the Brookings Institution. “Hit by poverty,” says CBS News, “Ferguson reflects the new suburbs.” According to a Brookings info graphic, between 2000 and 2011 the numbers of central city poor grew by 29 percent while the numbers of suburban poor grew by 64 percent.
There was a time that the suburbs were demonized because only middle-class and wealthy people lived there, leaving poor people in the inner cities. Now that lower-income people are living in the suburbs, the suburbs are being demonized for having “concentrated poverty,” with a distinct implication that wealthy whites have moved back to the cities leaving the undesirable suburbs to the poor and minorities.
The reality is that all demographic classes–all ages, races, and income levels–are growing faster in the suburbs than the cities. The suburbs offer less congestion, lower-cost housing, and often better schools and other benefits over the cities. Instead of turning the movement of low-income people to the suburbs into some kind of crisis, this movement should be celebrated as a success.
The Antiplanner is in the Twin Cities this week giving presentations on land-use and transportation issues in that region. Here are the sessions, most of which are open to the public:
- “Thrive Planning vs. the American Dream,” sponsored by the SW Metro Tea Party, Chanhassen Recreation Center, 2310 Coulter Blvd., Chanhassen, 7:00-8:30 pm, Monday, August 4
- “Rebalancing Transportation Planning,” sponsored by Expose the Truth, Dayton’s Bluff Recreation Center, 800 Conway St., St. Paul, 5:00-8:00 pm, Tuesday, August 5
- “Transportation and Your Business,” sponsored by the MetroNorth Chamber of Commerce (must pre-register), Harvest Grill, 12800 Bunker Prairie Road, Coon Rapids, 11:15 am to 1:15 pm, Wednesday, August 6
- “The Folly of High-Speed Rail,” Goodhue County Fairgrounds, 8:00 pm, Friday, August 8
By coincidence, the Antiplanner’s faithful ally, Wendell Cox, will also be speaking in Minneapolis about the Thrive plan at 7:30 am, Wednesday, August 6 at the Doubletree Hotel Park Place, 1500 Park Place Blvd., pre-registration will save money if done by noon, August 5.
If you are in the Twin Cities area this week, I hope to see you at one of these events.