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Sweeping generalizations, and poorly formed opinions about Metropolitan America

Hi there! The topics here are generally about cities, urban planning, transportation, sociology, politics, and how we live here in America.  I love this stuff so much that I’m starting a blog about it.  It’s my goal to update this site at least twice a week, though hopefully I’ll be inspired to write more than that.

I am not a writer, nor an urban planner by profession, though I studied the topic in school and have always been fascinated by these big picture questions about the way we arrange our lives in big metro areas.

My goal here is to introduce readers to new ideas, and new ways of thinking about old ideas.

I believe much of the conventional wisdom about metropolitan areas, in both progressive and conservative circles, is wrong.

I’ll do my best to cite original ideas and research.  If I’ve inadvertently failed to give credit, please drop me a line and I’ll do what I can to fix it.

Thanks, and enjoy!

 

-Pole Shape

Does Innovation Equal Gentrification?

Does Innovation Equal Gentrification – The linked article at CityLaB is another example of hand-wringing lip-service paid to the plight of the economically displaced in our urban areas when discussing the opportunities for the affluent elite.

Does innovation equal gentrification? Yes. Gentrification is many things, including displacement, but gentrification can still take place on a city-wide or even regional scale even if the classic neighborhood-level physical displacement of people is not taking place in the immediate area of the “innovation district” activity in question.

The University City explosion of growth is mostly taking place in an area that was previously a tangle of parking lots and railroad tracks on the fringes of the university campuses. To be sure, many decades ago the local anchor institutions, particularly Penn, took over established residential areas and displaced thousands, but that was a classic “urban renewal” scheme of slum clearance rather than the more insidious displacement caused by neighborhood gentrification. Today and in recent times, relatively few are being displaced from this immediate area.

However, as most Americans don’t live very close to work, one could argue that the innovation in University City has greatly contributed to the ongoing gentrification of neighborhoods like Point Breeze and Fishtown, as well areas where gentrification is, arguably, “complete,” like Graduate Hospital, Spruce Hill, Queen Village, and Northern Liberties.

Further, the institutions promoting the clustering of high-tech, high-skill jobs are only able to pay lip-service to how the people stuck in the cycle of poverty may be helped, “[c]hanging the opportunity dynamic for low-income communities…align and scale existing skill-building, education, and procurement programs to build a stronger, more diverse talent pipeline…develop tailored curricula for high-turnover occupations that neighborhood residents can fill.” Basically, the poor residents of the surrounding areas can benefit from the service jobs and other ancillary jobs, some of which might even be “decent paying,” but will these jobs allow people to be able to afford decent housing in neighborhoods not plagued by crime and blight? I’m not so sure. We need to admit that while we’d love to improve the lot of the poor and working class residents of a city, that the primary aim of “innovation” and “clustering” has nothing to do with these average folks but rather to attract and concentrate the educated and affluent, who are almost entirely coming from other affluent, educated areas.

 

 

The Problem with Passenger Miles

Randall O’Toole posits that all subsidies for transit should end, in part because it’s by far the most expensive mode of travel per passenger mile.

But the flaw in his reasoning is that the effectiveness of transit, and transportation in general, should not be measured on a per-passenger-mile basis.

It assumes, wrongly, that longer-distance trips are of greater value than short distance trips.  For example, imagine if Person A drives 28 miles each way to work.  Now imagine Person B rides transit just 5 miles each way every day.  It’s shorter in distance, but is most certainly of at least equal value for the person making the trip.  Why should the trip of someone who drives vast distances to work each day in, say, suburban Atlanta be valued more highly than someone in Chicago who rides the subway a few stops, or better yet, walks, rides their bike, or drives a short distance?  It should not.

 

Ross Douthat and the Liberal City

Last Sunday, the New York Times’ resident conservative columnist Ross Douthat published a column suggesting what he referred to as politically implausible or impractical measures designed to help spread some of wealth and power that have concentrated themselves into a handful of what I’ve been calling “high-cost talent magnets” around to less affluent regions of the country.  Moving government agencies out of Washington, setting up tax incentives for businesses to invest outside of these elite regions, and even taxing university endowments are some of the ideas he tosses around.  The reaction from the left-leaning urbanist community was swift and full of umbrage. CityLab’s Adam Sneed’s response was typical – basically, big liberal cities are not thriving at the expense of everywhere else; rather, bad urban planning, segregation, and lack of government investment in “anchor institutions” keep less prosperous places down.

But Sneed’s basic assumption – that cities like Flint or Buffalo could too be prosperous and affluent if only the state or federal government would step in to do things like build more transit infrastructure, provide more affordable housing, and spend on education to give residents the skills needed to get  the kinds of jobs that are plentiful in today’s economy.  It’s as though the so-called “anchor institutions” themselves can reasonbly be a metro area’s economic raison d’etre.  They cannot.  With the exception of the federal government’s largess in greater Washington, as well as Hampton Roads, San Antonio, and some other places with a disproportionate number of military installations and defense contractors, it is the general mix of private sector industries that determine the relative prosperity of a metro area.  In New York, it’s finance, media, publishing, and the arts.  In the San Francisco Bay Area (including San Jose and Silicon Valley), it’s the tech industry.  In Los Angeles, it’s the entertainment business.  In Houston and Oklahoma City, it’s fossil fuel extraction.  Automobiles in Detroit.  A diverse portfolio of corporate headquarters in Seattle, Chicago, Denver, Dallas, Atlanta, Minneapolis, and Boston.  The “anchor institutions,” be they transit systems, or government agencies, or public colleges and universities, exist to serve the local economy, and not the other way around.

What’s missing from the discussion of somehow “breaking up” big liberal cities is that while everyone has been focused on less-prosperous regions that have not benefited from the new economic order (i.e., Flint, Akron, etc.), there are a number of fast-growing metro areas that are already serving as “relief valves” for the concentrations of wealth and power in the high-cost talent magnets.  From New York, San Francisco, Los Angeles, Boston, and other high-cost talent magnets, firms and people have been decamping for the likes of Salt Lake City, Denver, Dallas, Austin, Nashville, Atlanta, Charlotte, and Raleigh.  Not all of these prosperous big metro areas are particularly liberal, and they’re poised to continue to facilitate middle class prosperity.  To be sure, while some of them have taken steps to invest in more sustainable urban infrastructure (such as extensive rail networks in Salt Lake City, Denver, and Dallas, and the Beltline light rail and linear park project in Atlanta), left-leaning commentators might decry their relative land-use orientation toward cars and the lack of dense legacy neighborhoods that facilitate convenient car-free living for more than just young singles and childless couples.  But then again, the big liberal cities decried by Douthat have indeed become such bubbles that their denizens genuinely believe that what is truly a niche lifestyle is somehow universally scalable to the rest of the country, where nearly 9 out of 10 people commute alone by car and live in such a way to require a private car to get around conveniently.

While not all of Douthat’s proposed solutions make sense, the problem that he has identified is real.  Too much talent and prosperity is concentrated into too few regions of the country.

America’s Continued Southward/Westward Push

The 2016 U.S. Census estimates are out, and they’re telling a familiar story.  Metropolitan areas in the South and West continue to grow rapidly, while Midwestern and Northern metros stagnate or even shrink.

But population growth does not tell the whole story about the relative prosperity of a metro area by itself.  There are fast-growing regions that are overly dependent upon single industries (e.g., Houston) or retirees (Las Vegas) that have unemployment rates at or above than the national average, while some slow-growth regions (Boston, San Francisco/Oakland) have tremendous levels of education and affluence.

Right-leaning pundits love to crow about how the national population’s continual push southward and westward reveals a universal preference for low-cost regions with few regulatory hurdles in the way of development, and along with that, to business growth.  But there are numerous counter-examples – Phoenix continues to explode in population while Tucson does not; Nashville grows quickly while Memphis does not; Atlanta swells while Birmingham stagnates; Charlotte and Raleigh-Durham grow while Greensboro-Winston-Salem does not; Oklahoma City expands far more than Tulsa.  In other words, it’s the economic building blocks of a region that determine whether it will grow, and whether it will prosper.  But growth and prosperity are not the same thing.  Prosperity in the form of affluence and amenity is concentrated in a handful of “high cost talent-magnets” with high-paying jobs and high-end public amenities, from parks to schools and even transit.  Largely because of the high cost of entry, these rich regions are hemorrhaging the middle class.  This is happening right now in the New York and San Francisco Bay areas.  Conversely, there are metro areas whose growth is largely dependent upon “snowbirds” and retirees moving in, along with real estate and leisure industries that make them highly susceptible to speculative bubbles and associated crashes, such as Orlando, Phoenix, and Las Vegas.

Here are the metro areas that I believe are both growing fast and growing in a manner that promotes widespread and long-term economic prosperity for more than just the affluent (in no particular order):

  • Portland
  • Salt Lake City
  • Denver
  • Dallas/Ft. Worth
  • Austin
  • Nashville
  • Atlanta
  • Raleigh/Durham

I’ve left a few conspicuous gaps here – Seattle is off this list because it is rapidly transforming into a high-cost talent magnet comparable to its California neighbors in affluence and cost of living.  I’ve also left off Houston due to its dependence on the fossil fuel industry, as well as San Antonio due to its dependence on government/military largess.

But, note that these are all metro areas in the South and West.

Myth Day: “Automobility “

I am a “car guy.”  I love driving.  I think cars give us freedom to go lots of places easily and relatively cheaply (at least at the margins).  But I also recognize the larger societal costs of automobile dependency.  Dependency is different than freedom.  I live in a dense urban area and can get around most places I need to go by foot, bike, and transit.  I use the car sometimes too, but certainly not for every trip I make outside my house.  But that is, unfortunately, the predicament that most Americans are faced with.

Wendell Cox’s latest post on New Geography extols driving as inherently superior for mobility, and in this case, job accessibility.  But he compares apples to oranges in a way that makes his results meaningless.  The ‘average employee’ in a metropolitan area can supposedly reach a far greater proportion of jobs by driving than by transit in 30 minutes.  Sure, this would make sense in automobile-oriented metro areas in the South and West where densities are low and transit coverage is sparse, and parking is cheap and plentiful.  But he goes on to assert that even in “legacy” metro areas like New York, Boston, Philadelphia, Chicago, and San Francisco, the “average employee” can reach anywhere from 13 to 29 times as many jobs by car than by transit.

But when you look closely at his methodology you see the big flaws.  First, 30 minutes is an arbitrary cutoff.  Most folks are actually happy to take significantly longer than that to get to work, regardless of where they live, about 45 minutes.  Second, he fails to recognize the complementary nature of modes – a large portion of transit riders drive to or are dropped off at transit stations via private cars.  Is he assuming that one must use transit in an orthodox manner and _only_ use buses and trains in order to achieve such ridiculous numbers?  Third, he dismisses the high costs of driving in many regions, from tolls to congestion to parking fees – that make transit attractive and convenient relative to driving.  Fourth, he fails to mention the opportunity to do other things while riding transit – including being productive.

Cox, Joel Kotkin, Randall O’Toole, and other commentators with a conservative-leaning bent assert that transit is ill suited to most American cities, because transit is only suited to highly-centralized metro areas, and because most Americans prefer to live in single-family detached homes and to own cars, we should therefore invest in road infrastructure to accommodate automobility, and not transit.  They also like to assert that the metro areas where everybody can get around easily by car are inherently superior – more friendly to families and to businesses.  To the extent that the high-cost magnets for the global elite also happen to be some of the densest and most congested and transit-rich metro areas, then it’s true that the hurdles there are much higher for families to live convenient lives, at least cost-wise, and that it’s much more expensive to open and operate a business.  But that has much more to do with their status as centers for the global elite than with their automobility or transit systems.  It’s much easier and more convenient to use transit to get around in Salt Lake City or Dallas, two high-growth business centers, than it is in Detroit, in the stagnant Rust Belt.  Automobility is just fine in the Motor City.  But just as automobility hasn’t been an economic elixir for that region, neither has lack of automobility precluded New York, San Francisco, and Washington from becoming concentrations of the global power elite.

 

 

 

The Concentration of Power

Cities exist as magnets for opportunity and prosperity for their residents.  It’s been this way throughout history, and remains so today throughout the world.  Some cities are so successful at generating prosperity that they become centers of concentrated power.  This is especially true in light of the rapid globalization of the last three or so decades.

Many countries in the world have just one single city that fits the bill – most often the capital.  Most of the political and economic power, and in turn, most of the countries’ elites, are clustered in these places.  This condition does not just afflict poor, developing countries – many middle-income countries are affected.  See, e.g., Buenos Aires, Mexico City, Moscow.  But some rich countries face this condition as well – London has long been known to vacuum (or “hoover” as the Brits say) up talent from throughout the U.K., leaving the likes of Sheffield, Leeds, and Liverpool in the dust.  Same with Paris and France.  It’s no wonder that Brits outside Greater London were responsible for the pro-Brexit vote; similarly, French living outside Ile-de-France (greater Paris) are largely responsible for the rise of Marine LePen.  These folks are actively revolting against the concentration of power in the hands of a small globalist elite in one large cosmopolitan city that doesn’t resemble the rest of the country, and takes away their livelihoods in service of globalism.  (I would be remiss if I didn’t also mention that they’re also resentful of the cosmopolitanism and multiculturalism that they see as usurping their own ethnic identity).

Unlike the aforementioned examples, here in the U.S. power is not concentrated in a single city.  In fact Washington, DC was established at the confluence of the agrarian South with the industrial North to serve as a neutral ground for the seat of government, for fear that too much power would be concentrated in New York.  But, nevertheless power is still concentrated in the U.S., enough so to generate the Tea Party, the ascendancy of Trump, and a general disdain for globalism, urban progressivism and cosmopolitanism in the hinterlands.  Power isn’t just concentrated in a single city – rather, it’s super-concentrated in four metro areas:

  1.  New York City.  For anyone who hasn’t visited New York since the financial crisis of 2008, the city is a revelation.  Pencil-thin super-tall skyscrapers consisting of full-floor apartments costing upwards of $80 million (yes, $80 million for one apartment); theater tickets going for hundreds of dollars each, luxury retailers catering strictly to the wealthy.  The idyll of Central Park, the great food in Chinatown, the hipsters on bikes all over Brooklyn, the subway – it’s all everything one can imagine, and more than a bit over the top.  Jobs in finance pay so lucratively relative to almost any other industry that for several decades, America’s most talented college graduates from the most elite universities have increasingly entered the financial world, particularly investment banking.  These are the same young people who, before the 1980s, may have lent their skills to industries that produce physical goods and that employ lots of people, or to other, reasonably-but-not-as-lucrative fields like law or medicine.  Instead, the throng of young investment bankers flocking to New York have helped design software algorithms to be able to game securities markets to squeeze every last possible dollar out of the short term value of companies for their own financial gain, rather than the long term health and prosperity of the companies whose stock they trade.  While other industries also concentrate in New York and attract the best and brightest in their respective fields (the arts, advertising, publishing, media), it is the concentration of financial power and talent in New York that has helped turn the city into one giant luxury resort, pushing up real estate prices to ludicrous levels, which in turn has attracted further investment from foreign oligarchs as safe havens for their sometimes ill-gotten billions, resulting in luxury skyscrapers full of pieds-a-terre for occassional shopping sprees on Fifth Avenue.  That the President of the United States is a product of and creature of this world of New York seems to be lost on the millions of rural and exurban denizens who voted for him, people who who not only have a distaste for big cities but may even be afraid of visiting.
  2. Los Angeles.  The entertainment industry is one of America’s biggest exports.  And they all want to be here.   This is the “Hollywood” bugbear of the right – the actors, agents, writers, producers, lawyers, executives, and every hanger-on.  While many movies are filmed outside Los Angeles these days, and other metros have scrambled to attract productions with tax breaks and similar incentives, LA will remain the glamorous headquarters town indefinitely.  The least educated of these four regions, greater LA has gradually lost out on the other industries, particularly defense contracting, that helped grow the area for decades.  And the stark divide between the lush mansions and palm-tree lined streets of the favored quarter and the endless, monotonous sprawl of extremely modest if not outright impoverished districts has led LA to resemble the highly stratified capitals of Latin America.
  3. San Francisco/San Jose.  Technically, these are two adjacent metro areas, but functionally, they are one big region and are classified as a CMSA by the U.S. Census.  Silicon Valley has extended its tentacles into downtown San Francisco, now home to technology companies like Salesforce, Twitter, and others, while Google, Facebook, Apple, and Oracle make their homes in the suburban office campuses between Palo Alto and San Jose.  More venture capital is spent here than anywhere else in the world, and entrepreneurs and software designers continue to arrive from all over, despite the high cost of entry.  The tech jobs are so lucrative, in fact some of the most talented college graduates from elite universities are starting to come here to work in tech instead of a career in finance in New York.  Like finance, aside from the concentrated lucrative jobs in one metro area, as an industry tech is not particularly good at creating lots of jobs for the middle class.  And like the other cities on this list, it has become untenable to live in the Bay Area on a middle class salary.
  4. Washington.  I wrote a whole post about DC, The Myth of Greater Washington, DC. The center of political power has vastly increased its clout as the federal government has grown in size and scope for many decades.  Aside from direct government employees, the Washington region is home to armies of government and military contractors, lawyers, lobbyists, and non-governmental organizations.  It’s now the most affluent and educated metro region in the U.S., hoovering up talented and affluent workers to share in the spoils of federal largesse.

There are a few “honorable mentions” that I could have, arguably, added to the list like Houston (oil and gas) and Boston (academic and medical research).  Or a handful of other places. But the point is that the four aforementioned metros are the places often deemed as out-of-touch with, or somehow apart from the rest of the country.  And the people who make these assertions are not wrong.  Their cosmopolitan denizens often look upon the rest of America in a way that is, at best, patronizing, and at worst, disdainful.

Now, imagine, as a thought experiment, that all the power clusters of San Francisco, Los Angeles, New York, and Washington, were in just one single city.  That’s exactly the scenario faced in many countries, including our friends in the U.K. and France.  Perhaps the U.S. has remained relatively stable for so long because having the power elite split up among several metro regions has created the perception that any region can become thriving and prosperous.

Supply Alone Doesn’t Explain Home Prices

 

People expect the value of their homes to continually go up.  But would it be better if home prices were not constantly rising?  Perhaps.  Rising prices have been a major generator of middle class wealth, but perpetually rising home prices keep more and more folks from being able to afford to buy.

What if we could solve the affordability problem by making homes more like other durable goods that don’t appreciate over time, and possibly decline in value?  The argument made by economist Ed Glaeser and colleagues (NYTimes: Why Falling Home Prices Could Be a Good Thing) is that this would open homeownership to greater numbers of people, and that the way to achieve steady or declining prices is simple: to increase supply, and by a lot.  This would ostensibly provide incentives for people to move from economically distressed regions, like Flint, MI, to more prosperous, job rich regions, like the San Francisco Bay Area.  The assumption is that land use regulation is behind the unreasonably high home prices in places like the Bay Area, New York, and others.

I think they’re only part right, and mostly wrong.  Yes, constrained supply raises home prices in metro areas with restrictive land use regulations.  Whether it’s NIMBYism in trendy urban neighborhoods putting the kibosh on new apartment towers, or growth boundaries and other sprawl-containment strategies like agricultural zoning, the rules of supply and demand are definitely a factor.

But land use regulation is not the primary driver of overpriced housing.  Two counties with the most restrictive land use in the US – Lexington-Fayette, KY, and Baltimore County, MD – rank nowhere near the most expensive regions in the US and aren’t on any lists of places with overpriced housing, certainly not on the scale of, say, New York and San Francisco.  No, the right question to ask is: is the metro area in question a magnet for highly educated and highly paid talent?  In the United States, there are a handful of metro areas that meet this qualification: New York (finance and banking, media and publishing, marketing, the arts, etc.); San Francisco Bay Area (high technology); Washington (government and military); Los Angeles (entertainment); Boston (elite universities, biomedical research and technology), and a few more honorable mentions.  What binds these disparate places together is that they have attracted a disproportionate share of wealthy people who are willing to pay through the nose to be in these locations.  Assuming that it’s even logistically possible to construct all of the housing needed to lower costs to the point of accessibility for the middle class, the amount of housing that would need to be constructed in order to lower home prices to levels commensurate with the national average is absurdly high.  Furthermore, the study fails to account for the relative _desirability_ of metro areas.  There are simply far more affluent and educated people who want to be in New York, Boston, Washington, San Francisco, and Los Angeles than in, say, Milwaukee.

There are many fast-growing metro areas that are often cited as paragons of American prosperity.  But the home prices in these places varies widely, depending on just whom exactly is flocking there.  Consider Austin and Denver, two high-growth metros with little significant land use restrictions to supply.  Their home prices are appreciating rapidly as more and more affluent, educated people move in to fill corporate and tech jobs.  Houston and Oklahoma City, by contrast, are also growing quickly, but their home prices are growing far less quickly, largely on account of attracting many lower-skilled, lower-paid workers for the oil and gas industries that predominate those regions.   While Austin and Denver may gradually join the ranks of America’s high-cost talent magnets, the fate of Houston and Oklahoma City, tied largely to fossil fuel extraction, may also grow indefinitely, but are eventually fated to join Rust Belt metros too dependent on a single industry nursing blue collar workers.

Ultimately, home prices are whatever the market will bear.  If home prices are too high in elite coastal cities, then people will stop buying them.