Survival of the City: Living and Thriving in an Age of Isolation, by Harvard University economists Edward Glaeser and David Cutler characterizes the pandemic as a serious “existential threat to the urban world, because the human proximity that enables contagion is the defining characteristic of the city” (Note on Authors).
This is from the same Edward Glaeser who wrote the highly acclaimed Triumph of the City, just a decade ago. But the clear demographic shifts, and then the pandemic, and responses to it have changed everything.
The Pandemic City
Glaeser and Cutler put the issue starkly. “Our cities have become rigged game that favors insiders over outsiders.” They characterize this as the closing of the metropolitan frontier and opportunities extinguished.
This leads them to a challenging urban agenda. “Business and land use regulations must be reduced and rewritten. Schools must be strengthened. Policing must both prevent crime and respect every citizen. Pandemics must cease so that urban entrepreneurs can again create opportunity, even in the poorest neighborhoods.” Further, they despair of some city leaders, who have “allowed whole districts to become lawless.”
They remind of the immediate threat of the “ease” with which businesses can decamp to other parts of the country.
In this environment, Glaeser and Cutler say that cities need to be more “accountable and capable,” though caution that “the answer is not to just tax and spend more. The spending must be smarter and strengthen the entire city.”
Land Use and Housing Regulation
This review focuses on housing affordability, urban form and land use regulation, areas of my particular interest (see: Demographia International Housing Affordability and Demographia World Urban Areas). Indeed, poor housing affordability is the key to much of the current urban malaise, driving an excessively higher housing costs that lower the standard of living for low-income and middle-income households.
Glaeser and Cutler say “Over decades we have accumulated rules and institutions that favor the old over the young, homeowners over renters, insiders over outsiders.” While this has benefitted incumbents, “people new to the area cannot afford to buy a house or even rent because prices are too high.” They note that the median 35 to 44 year old in 1983 had housing wealth nearly 10 times that of today, after adjustment for inflation.
California: Ground Zero for Housing Opportunity Lost
The authors, unlike many affordability analysts, recognize that California’s housing crisis is not something new --- it has strong historical roots. Glaeser and Cutler remind us that California used to be affordable: “Los Angeles doesn’t have to be that expensive, and it wasn’t particularly expensive before the 1970s, when there was still abundant new construction.” The problem is that when demand “is met with insufficient supply, prices rise and there is conflict over space.”
Glaeser and Cutler fault the California Supreme Court, which “ ruled that every major new project needed to go through an environmental impact review,” which they further characterize as having been “terribly one-sided.” Thy also fault the land use regulations that have driven up land prices in urban areas. They reject the mantra that there is “not enough land,” saying that the “low level of construction in Los Angeles County does not reflect a lack of land.” The same, by the way is true in metro San Francisco, San Jose, San Diego. Developable land is not significantly limited by topography or geography, rather the problem is state, regional and local government land use regulations.
Brookings Institution economist Anthony Downs posited the necessity of a “competitive supply of land,” but that is only a memory. It is now nearly impossible to build on the urban fringe, where land and housing would be affordable if government would allow it.
Glaeser dealt with this issue, in a 2018 paper with Joseph Gyourko of the University of Pennsylvania, providing estimates that in 2013 the San Francisco market (metro area, not just the city) the median priced house price was sitting on land worth $490,000, ten times that of a well-functioning market. This renders an excess land cost more than double that of the US median house price ($197,000).
As Glaeser and Cutler put it, “Too much of that space is off-limits because of fifty years of land-use restrictions and legal rulings that have protected the status quo. Those decisions worked out marvelously for people who bought homes in Los Angeles County in 1970, but not for newcomers and renters.” In other words, in Los Angeles County and California, there is no equality of opportunity for newcomers and renters.
Gentrification
Glaeser and Cutler chronicle the history of Boyle Heights, just east of downtown Los Angeles. This historically vibrant Hispanic neighborhood has more recently been “discovered” by developers, who have erected more expensive housing. This has driven up rents, to the detriment of the largely low-income population, and there have been protests. Glaeser and Cutler connect the dots, saying that gentrification has moved “into ethnic neighborhoods because regulations have made it too difficult to build more affordable housing in other areas.”
They say that the gentrifying interests and the protesting residents have “a common enemy in the anti-growth activists and the land-use bureaucrats who stop new construction.” These interests, they say, should join with YIMBYs (“yes in my backyard”) “who want to allow more new construction.” Unfortunately, the YIMBYs seem to have no interest in relaxing the excessive urban fringe regulation that underlies the explosion in land costs. So long as this is not addressed, strong incentives for gentrification will remain.
Even so, Glaeser and Cutler have it exactly right --- “The real fight is the city’s need to expand against the enemies of urban growth.”
It Goes Beyond California
I add that some others are following the California agenda. The inexorable collapse of housing affordability in metro Seattle, Portland, Denver and Miami --- particularly for people not cashing out of places like San Francisco --- is evidence of this, where housing costs have more than doubled relative to household incomes since the late 1980s.
California: Exporting GHGs?
The authors raise an ironic but inconvenient truth --- that climate policy leader California exports GHG emissions to other states. The state’s weather is far more greenhouse gas friendly than the rest of the nation, and thus “building in California… lowers America’s carbon footprint.” But people and businesses are leaving the state. For example, a recent Hoover Institution report found an increasing exodus of corporate headquarters from California to other states. With this evidence, Glaeser and Cutler say that building in California should be “ardently encouraged by environmentalists.”
Reopening the Metropolitan Frontier
Glaeser and Cutler are optimistic: “We can make our metropolitan areas more equitable and humane, but only if we allow them to transform themselves. We can make space for all, but only if we understand that our real enemies are the artificial limits on growth.” This is a “tall order,” but the metropolitan frontier needs to be reopened.
Note on Authors: Edward Glaeser is the Fred and Eleanor Glimp Professor of Economics at Harvard University. He studies the economics of cities, housing, segregation, obesity, crime, innovation and other subjects. David Cutler is the Otto Eckstein Professor of Applied Economics in the Department of Economics at Harvard University.
Wendell Cox is principal of Demographia, an international public policy firm located in the St. Louis metropolitan area. He is a founding senior fellow at the Urban Reform Institute, Houston, a Senior Fellow with the Frontier Centre for Public Policy in Winnipeg and a member of the Advisory Board of the Center for Demographics and Policy at Chapman University in Orange, California. He has served as a visiting professor at the Conservatoire National des Arts et Metiers in Paris. His principal interests are economics, poverty alleviation, demographics, urban policy and transport. He is co-author of the annual Demographia International Housing Affordability Survey and author of Demographia World Urban Areas.
Mayor Tom Bradley appointed him to three terms on the Los Angeles County Transportation Commission (1977-1985) and Speaker of the House Newt Gingrich appointed him to the Amtrak Reform Council, to complete the unexpired term of New Jersey Governor Christine Todd Whitman (1999-2002). He is author of War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life and Toward More Prosperous Cities: A Framing Essay on Urban Areas, Transport, Planning and the Dimensions of Sustainability.
Photograph: Mariachi Plaza, by GTD Aquitaine via Wikimedia, in Public Domain.
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Unsolved
Beyond the book's apparent platitudes, the essential political problem seems unsolved: Incumbent homeowners, who dominate local elections, do not want more housing built on the periphery. Why should they, in narrow terms?
They've been brainwashed about sprawl
They are completely irrational but they believe they are doing the right thing voting for politicians who "save the planet from urban sprawl". They don't think through the consquences for the as-yet unhoused, or else they think the cause is so noble that any collateral damage is acceptable - to people other than themselves. They also assent to the general principle that "intensification will be substituted for sprawl" but then they oppose intensification in their own area.