It’s been a prolific few weeks for big pronouncements about cities from well-known writers about cities, and I don’t know what to do with them because in general, I hate big pronouncements and generalizations but like Richard Florida and Paul Krugman very much and enjoy their writing. I do empathize, particularly with Krugman. When you have a column to write, you’ve got a column to write, and unlike me with this blog, Krugman can’t just slap up a picture he drew on the subway or a random quote from a book he’s just read. (One of the benefits of obscurity: you can do what you want, and people have loooooooow expectations, including you.) So staying fresh for somebody like Krugman is difficult–note David Brooks, who I think ran out of things to say about 10 years ago. In Richard Florida’s case, he’s a popular thought leader in urbanism, and when you are a leader, you have some responsibilities to lead. That said, both have done everything within their power and more to make sure they have a platform and a spotlight, and that means they are going to have to take their lumps when they’ve got a spotlight and say things that don’t really help much.
Ok, no more subtweeting or vaguebooking, or whatever the kids call it today. These are the columns in question:
The Urban Revival is Over by Richard Florida, New York Times, Sep 1 2017.
“Why can’t we get cities right?” By Paul Krugman, New York Times, Sept 4, 2017
Randy Crane posted this with a trigger warning; I don’t know if Randy ever thinks of me, as we’ve not chatted in some time, but I’d like to think he posted the trigger warning largely to prevent me, his old student, from having a stroke.
So here’s my overall reaction for those who want to save themselves the reading.
Let’s talk about Florida first. I get that public intellectuals have to make names for concepts that represent zeitgeisty things, like “The urban revival” but such terms are often as distorting as they are useful. Think of the word “Millennial.” Yes, demographic shifts are real, but beyond age grouping, generalizing from there is a bit of a mug’s game. Just so, there are cities who never really had much population change in their downtowns, let alone populations that came back down to downtowns from 2000 to 2010, and probably none now, either, so they are waiting for their revival even as Florida just told the world “well, it’s over.”
David Harvey got deservedly famous for pointing that urban development hinges on cycles of uneven development, where locations go into and out of desirability so that land markets in the city can continue to chug along their way extracting profits out of the same locations again and again. The fact that the building stock of central cities themselves became aged, somewhat ignored, and then renovated becomes predictable when you think about durable goods cycles: the junky Model Ts of the 40s are collectors’ items today. As cities have poured new investment into their downtowns and waterfronts, with stuff that is nice and new now, and will eventually age just like the first round of convention centers, etc etc etc do, we can expect this cycle to go on. Aging malls in suburbs will get reinvented, and so on and so forth.
Is the urban revival over? I don’t know; these pronouncements are above my pay grade. I do know I’d need more evidence than Florida uses before I went to the NYT with it, much as I like the work that Brookings and William Frey do. I don’t know what it would mean if the urban revival were over besides what I outlined above. I do know the whole thing has me thinking about this song:
Krugman gives us the insight that NIMBYism is a tough issue (gee, thanks), with some very popular sport right now: Monday morning quarterbacking on Houston:
The point is that this is one policy area where “both sides get it wrong” — a claim I usually despise — turns out to be right. NIMBYism is bad for working families and the U.S. economy as a whole, strangling growth precisely where workers are most productive. But unrestricted development imposes large costs in the form of traffic congestion, pollution, and, as we’ve just seen, vulnerability to disaster.
Why can’t we get urban policy right?
Because cities are f**king complicated, that’s why. Here’s one of the argggghs:
It’s not hard to see what we should be doing. We should have regulation that prevents clear hazards, like exploding chemical plants in the middle of residential neighborhoods, preserves a fair amount of open land, but allows housing construction.
Oh is that all we need to do?
Hey, I can do this, too. Why can’t we get the macroeconomy right? All we need to do is make sure everybody is employed and gets a proportionately fair share of the proceeds of economic production (cinch), eliminate or soften business cycles, and avoid inflation.
Obvious. Get on it.
In practice, however, policy all too often ends up being captured by interest groups. In sprawling cities, real-estate developers exert outsized influence, and the more these cities sprawl, the more powerful the developers get. In NIMBY cities, soaring prices make affluent homeowners even less willing to let newcomers in.
Can America break out of these political traps?
Ok, fine. Yay, YIMBY. But sorta not Yay, YIMBY because we can get hand-wringing and open-ended rhetorical questions from the average well-inteded online urbanist. We do not need economists of Paul Krugman’s gifts to be doing it.
Krugman–who should know better given his contributions to regional economic geography and his gigantic big brain–is not really wrong, but also not exactly right either. NIMBY is not the only reason cities have high land prices. Scarcity is only one potential component of land value; the other is productivity, and low-skill workers can lose out because of by density as much as everybody else can be by supply restrictions. This is not just an American city problem. This is an every city in the world problem. Richard Green and I were chatting about this last week and he said “There’s not a beautiful, growing, opportunity-filled city in the world where custodians can make market-rate rents.” The cities that succeed in keeping little old lady pensioners and custodians living in decent flats near transit are cities or countries that subsidize their housing consumption, often deeply.
I can’t really think of any other way to reconcile, either empirically or theoretically, Krugman’s claims about how zoning dampens economic growth and the notion that scarcity drives value for homeowners. I can not conceive of a way that those two claims can be true at the same time. A landowner that bought every scrap of land on Manhattan and cleared every single other person off it would have monopoly control, but his returns would be much less than if everybody else, and their economic productivity, stayed.
Scarcity is just as likely one result as well as an input of homeowners potentially playing a noncooperative game where individual optimization prompts people to seek to free ride on the economic productivity gains to their land that come from being proximate to agglomeration while simultaneously capturing scarcity rents–and the quality of life gains that come to some from keeping others out. It’s entirely possible that homeowners collectively cost themselves returns because of this noncooperation rather than getting super-rich through scarcity. The capitalized value of the productivity gains to their land could outpace the scarcity gains, and this likely becomes increasingly true the more noncooperation occurs (i.e., the more neighborhoods that try to lock themselves down.) The only scenario where this is likely false is when we have diminishing returns to agglomeration, but if that is true, then the growth we are losing because of homeowners may not be as consequential, and everybody doubts that. It’s possible, but it’s not likely. It could be that there are vast productivity gains to be had in additional agglomeration, all of which would be capitalized in land which would, in turn, benefit homeowners rather than cost them just because they lost some margin of scarcity rents.
We don’t have an empirical handle on these things, and while none (I repeat, none) of it suggests that “no-build” is a good idea, it’s probably wrong to assume that homeowners are the only people in urban governance gaming land and building regs towards supply scarcity in specific locales (see David Harvey comment above). There is plenty of anti-competitive behavior all over markets, and we have little reason to believe that local business owners would be thrilled with new competition from a new mixed use development if they are likely to lose to business to it.
Cities do have political problems (which is one reason I have a job, thanks), but there is more than one political problem here, and Krugman spotlighting only part of the problem, and the deference he gets because he’s Paul Freaking Krugman, is itself a political problem that creates its own barriers to coalition-building we’d need to ease supply constraints. Appeals to justice from YIMBY advocates are certainly useful, and having Krugman echo those is swell, but potentially not as useful as changing the incentive structure embedded in local development. YOU ARE THE ECONOMIST, Krug, I SHOULD NOT BE THE ONE POINTING OUT THE NEED FOR INCENTIVE CHANGES HERE.
Let me rewrite the “We only have to do X” part of Krugman’s column:
It’s not hard to see what we should be doing. We should have regulation that prevents clear hazards, like exploding chemical plants in the middle of residential neighborhoods but somehow keep manufacturing workers employed but only in clean industries and within a reasonable commute and not on the urban fringe because that would be sprawl and that doesn’t look unsightly because visual delight is an urban amenity that adds utility (and thus value) to cities , preserves a fair amount of open land because we all know what “fair” means here and open land is obviously necessary to Paul but not to me because what are we keeping land open for and what does open even mean here, but allows housing construction everywhere all the time but in an entirely sustainable way, that allows neighborhoods to retain their character and culture because that’s one reason so many people want to locate there in the first place, and that affords empowered democratic citizens an actual say in what happens in their local environments because freedom of association and local environmental control are fairly big factors in human flourishing just like shelter and development are, and that will survive every possible catastrophic risk from terrorism, flash floods, heat waves, bad water, viruses, and ugly naked people..
It seemed a bit easier when Paul wrote it.
I’m not saying we can’t make progress in the city. We have in tons of ways that make people’s lives better, often through policies that aren’t obviously urban, such as Social Security. For me, it’s important that we respect the difficulties that “the right things” entail in every context, and for the struggles those reflect even as we try to improve.