The Gated City

I've just finished reading Ryan Avent's book The Gated City, which UK readers can download for Kindle or PC/Mac reading here. Anyone interested in why we've got cities in the first place, how we ended up with the ones we have, or what's going to happen to them in future should read it. In an appealingly concise ninety or so pages, you get a very clear explanation of the economic advantages of density, a compelling argument that restricting density leads to significant damage to economic growth prospects as well as social costs, and a critique of the ethics of NIMBYism which is all the more persuasive because it is so even-handed.

For a short book it raises a lot of issues, but I'm going to focus on just one or two. Firstly - and maybe this isn't a particularly fair comment on a deliberately brief tome - at some point I'd like to see a deeper exploration of why so many people have come to oppose development so much. After all, it was only as recently as the mid-1970s that Harvey Molotch was writing about how American cities were controlled by 'local growth machines', mostly driven by real estate developers, that rode roughshod over the interests of ordinary residents.

In a way, it's these growth machines that seem hard to explain now. You can see why residents wanted more control, even leaving aside some of the crimes committed in the name of urban redevelopment. It is natural to want to influence what happens to our neighbourhood, since it affects our quality of life so deeply. It is all the more natural if we are particularly attached to our neighbourhood, if it is particularly unique and attractive, or if our major asset's value is intimately tied to it (in practice, these different factors may be difficult to disentangle). Perhaps NIMBYism, like cleaner environments and longer holidays, is something that we choose to have more of as we become more affluent, even if it comes at the cost of lower overall economic growth (I say 'we', but of course as Ryan says there are real clashes of interest and distributional consequences involved).

And the thing is, falling urban densities over the course of the 20th century did seem to be accompanied by real improvements in quality of life. Present day San Francisco is an extraordinarily pleasant place. So why should those who have paid so much for the pleasure of living there have to accept it being changed, perhaps destroyed?

The Gated City is about answering that question from the perspective of society at large, and it answers it very well. But as persuasive as this rootless technocrat found it I don't think it will win over your average NIMBY in San Jose or Chelsea. So what would work? Ryan mainly suggests radically narrowing the scope of planning rules and respecting the right of people to do what they like with their property, and 'zoning budgets' so that local authorities can't restrict development in one place without freeing it up elsewhere.

I'm not sure about these. One problem with trying to radically limit the role of planning is that restrictive rules are typically extremely popular with local people, so removing them implies some sort of top-down direction that, however beneficial in the aggregate, is likely to cause a good deal of strife. Secondly, I think there is a role for planning in that there really are large potential social costs involved with development which good planning can address. There's a danger that removing the system's ability to address these externalities would just lead to more development with high social costs. The problem is that the role of planning has been left open to addressing any kind of 'impact', so people complain on purely private grounds, albeit sometimes dressed up in social terms. Perhaps I'm naive or just speaking my class interests as a sometime-planner (by the way, see the disclosure at the end of the post), but I'd like to see more of an effort to make it clearer which external costs planning can and should address and what the evidential thresholds for complaints should be before we chuck out planning altogether. As for zoning budgets, unless I'm missing something they don't seem to me to really address the legacy of existing constraints.

So what's left? I do think we could look at ways of ensuring that expensive and restrictive neighbourhoods bear more of the costs of their restrictions, which at the moment are mainly borne by others. In this country the new government has introduced a New Homes Bonus which pays local authorities for each new home completed in their area by matching the council tax income for the new home for the first six years. This will provide some additional incentive to increase supply, but the problem is that if supply increases to anything like the levels we need, much of the funding for the NHB will come from top-slicing central government grant to councils in proportion to the amount they currently receive. This means that those councils most dependent on government grant (i.e. those in deprived areas) will pay more for the NHB (if it ever takes off), unless they can get a lot of homes built themselves. In effect therefore, the strongest incentives tend to apply in the areas with lowest market demand.

I've argued that you could redesign the NHB so that it is paid for by top-slicing grant to councils in proportion to the extent of the affordability problem in each area. That would mean that the areas with highest prices relative to incomes will not just earn no NHB if they don't allow new supply, but would lose out the most in proportionate terms to those councils that are building. At the right rates this could be a sharp incentive indeed, perhaps enough to concentrate minds in some expensive areas places (this is also not a million miles from Glaeser & Gyourko's proposal of a few years back).

Now, that's obviously fairly top-down too. And anything that challenges the status quo enough to really make a change is going to be controversial and hard to implement for precisely that reason. The first step has to be to face up to the real magnitude of the costs we impose on ourselves by unduly limiting densities, and for that reason The Gated City deserves to be read very widely.

Disclosure: This post, like everything else on this blog, is informed by my work at the Greater London Authority on housing and planning policy - as a fairly minor functionary rather than someone with much decision-making power. The big decisions are naturally made by the Mayor and his advisors, taking into account a range of factors which I have the luxury of not having to deal with. Just in case it isn't clear, I'm writing in a completely personal capacity here.

Congestion and road pricing links

It's been an interesting couple of days in the wacky world of congestion and road pricing. First, the House of Commons Transport Committee tried to identify some ways to address congestion without resorting to road pricing and came up with ... not very much really, just a lot of well-meaning but essentially small-bore stuff about trying to make motorists behave better or think smarter, and the usual griping about roadworks. None of these are going to have a very big impact on congestion, as the committee probably knows. So this report is actually another piece of evidence in support of road pricing, if only by omission.

Secondly, a much less noticed but more rigorous analysis of the issue was provided by the IFS in its Mirrlees Review of Taxation, which looked at a range of issues including 'Taxes on Motoring'. They make the very important point that while the existing fuel tax regime acts as a sort of indirect tax on road use, increasing fuel efficiency has made it less and less effective in this role, which means that our only national brake on congestion gets weaker over time:

However it is done, we do not underestimate the political difficulties of introducing road pricing nationally. But in addition to the long-standing case for such a move, we need urgently to wake up to the fact that, if the UK and other countries are to meet their targets for reductions in greenhouse gas emissions, petrol and diesel use by motor vehicles is likely to have to fall and eventually end as alternative technologies are introduced. This will leave the UK with no tax at all on the very high congestion externalities created by motorists. So, if we all end up driving electric cars, it seems that we shall have no choice but to charge for road use. It will be much easier to introduce such charges while there is a quid pro quo to offer in terms of reduced fuel taxes ... Of all the challenges raised in this volume, this seems to us one that is simply inescapable. It may be another ten years before change becomes urgent, but urgent it will become and the sooner serious advances are made to move the basis of charging to one based on congestion the better.
(emphasis added)

Lastly, Dave Hill of the Guardian makes the case for the crucial role of road pricing in particular and transport policy in general in fostering urban prosperity and quality of life here.

Speak up

Matt Yglesias recommends that people who want to see progressive policy changes should (a) badger their elected representatives about it and (b) relentlessly tell their friends and family about how progressive policies would improve their lives, even if it basically involves annoying them.

If you are in a car with me and we’re in a rush hour traffic jam, you are damn well going to listen to me talk about congestion pricing. This generally doesn’t work in Washington for national politics, but whatever it is you do I’m sure you interact with lots of “apolitical” or moderately conservative people who remark now and again about things in their life to which politics is relevant. Point this out to them. Tell them who the bad guys are. Recommend some good blogs. Your friend Bob probably thinks he doesn’t care about monetary policy, but does care about the state of the labor market. Explain it to him ... These two things are, I think, the most underrated props of conservative dominance in the United States. Conservatives write and call congress at a much higher rate than progressives, and more-or-less ordinary people hear conservative political messages from preachers and business executives all the time.

That last bit is spot on. If progressives believe that many people's lives would be improved by more redistribution, better public services or (say) widespread congestion pricing, it's odd that many of them are fairly coy about saying so outright and often prefer to keep the discussion in the realm of policy wonkishness.

Perhaps it is because conservative-friendly ideas come pre-legitimised by religion, wealth or power (not to mention a supportive media), while progressive policies often (but not always) involve considerations of the common good trumping immediate self-interest. Maybe that's a harder sell, but that's just all the more reason to put the effort into selling it.

I agree with Matt that road pricing / congestion is a case in point. The example of London shows that it would lead to improvements in quality of life and free up space to provide for buses, pedestrians and cyclists. The benefits would also overwhelmingly flow from the better off to the less well off. Yet hardly anyone seems willing to publicly advocate it. I guess they may be scarred by the experience of the lost Manchester referendum, but then that's a reason to be out there organising support and building coalitions so that the next time around there is a stronger strategy with a stronger chance of winning. In other words, don't be shy about your convictions, because you can be damn sure the other side won't be.

Empty homes not to the rescue

Simon Jenkins attacks the NPPF again, and as before the effect is to make you wonder if it's such a bad idea after all. But I just want to pick up on a couple of points he raises. First, there's this:

As for housing, it might seem odd in a recession for a chancellor to be directing savings (and bank loans) from productive investment into the housing market.

That's a bit backwards. Investment in new housing supply is productive, because it's producing something - new houses! There might be more productive investments around, but given the lack of business investment at the moment the idea that spending on new homes would have a big crowding-out effect is way off.

Speculative investment in housing or land assets is not productive, so maybe that's what Jenkins is thinking of. But increasing housing supply to a higher and hopefully stable new level would be a way to reduce this non-productive type of investment, while increasing the productive kind.

Jenkins then honours a time-honoured tradition by arguing that planning reforms are not needed to boost housing supply because of the "750,000 houses lying long-term empty, thanks to the chronic inadequacy of property taxation". This is wrong in two ways. First, in pure factual terms the recorded number of long-term empty homes (i.e. empty for six months or more) in England is 300,000 rather than 750,000, which is roughly the overall total including short-term empties (see table 615 here).

Secondly, and this is something which hardly anyone who raises the specter of empty homes ever properly addresses, the fact is that the places with the most empty homes are also the places with the least housing demand. This really shouldn't be that surprising when you think about it. Broadly, empty homes tend to be most common in areas with an excess of supply over demand, which are obviously not the same as those places which have the greatest excess of demand over supply.

The chart above illustrates the point. There is a clear negative relationship at the regional level between the rate of long-term empty homes and average house prices. Southern regions (including London) tend to have high house prices and low rates of vacancy, while Northern regions tend to have (relatively) low house prices and high rates of vacancy. We can't move all those empty homes to where the people who want housing are, and the people who want housing are strikingly reluctant to move to where the empty homes are, so maybe we do need to build homes where people want to live after all?

The war for the streets

Aaron Naparstek's article from a few months ago on the 'war for the streets' in 1920s America is well worth a read:

University of Virginia professor Peter Norton details the early history of the car and the city in his wonky but fascinating book, Fighting Traffic. He describes the “blood, grief and anger in the American city” and the “violent revolution in the streets” of New York and other U.S. cities as automobile owners bullied their way on to city streets, literally, leaving a trail of mangled children’s bodies in their wake.

In the 1920s, motor vehicle crashes killed more than 200,000 Americans, a staggering number considering how many fewer cars actually existed in those days. These days, 35,000-or-so Americans are killed in car wrecks annually. Most of the dead are drivers and passengers on highways and in rural places. In the 1920s, most of the dead were kids living in cities. In the first four years after the Armistice of World War I, more Americans were killed in car wrecks than had died in battle in France...

Cars were a nuisance and intruder on city streets and drivers were seen as “tyrants that deprived others of their freedom.” City streets were places where kids played, pushcart vendors sold goods and a wide variety of vehicles and traffic moved and intermingled mostly at human-scale speeds. New Yorkers and city people all across America “saw the car not just as a menace to life and limb, but also as an aggressor upon their time-honored rights to city streets.”

It was a war which the car won hands down:

Yet by 1930, the backlash was largely over. The automobile had secured its place on city streets and motordom had won. Rather than conforming to the demands of the American city, the city began its decades-long process of conforming itself to the needs of the automobile...

Changing a city’s infrastructure takes decades. Changing social mores can happen much faster. “Before the city could be physically reconstructed for the sake of motorists, its streets had to be socially reconstructed as places where motorists unquestionably belonged,” Norton writes. By 1930, that social reconstruction was largely complete. New Yorkers had mostly accepted the automobile in their midst, despite the fact that 10 years earlier, many considered it to be nothing more than street-clogging, exhaust-spewing, horn-honking, child-killer owned and operated by a small number of wealthy elites.

As Naparstek says, those statistics on road casualties in the 1920s are shocking, in comparison to much smaller casualty figures today which we quite rightly regard as unacceptable. I was interested in what the equivalent figures might be for London, so I put together the chart below from a range of sources, mostly annual statistical abstracts published by the London County Council or its successor the GLC. The chart shows the trend in annual traffic fatalities in London between 1901 and 2010, with the red line (up to 1966) referring to the Metropolitan Police District area and the blue line (1966 onwards) the current Greater London area, both including the City of London.

What the chart shows is that annual traffic fatalities in London rose rapidly from the start of the century, with an interruption at the time of the first world war, and peaked in the early 1930s. In 1933 1,458 people were killed on London's roads. That's an average of four people every day. The general trend has been downwards ever since, apart from another large trough during the second world war and the subsequent rationing period. In 2010 'only' 126 people were killed on London's roads, less than a tenth of the 1933 figure. There were many more non-fatal casualties too, with a total number of casualties (deaths plus injuries) of 59,080 in 1933 and 60,958 in 1934, more than twice as much as in 2010*.

Overall, the 1920s and 30s saw a level of carnage on the roads that would be difficult to imagine today. I don't know much about the metropolitan politics of this period but my understanding is that the London authorities responded in much the same way as those in America: by trying to get pedestrians and cyclists out of the way of motor traffic, and by making the roads 'safer' for cars to drive through, mostly by widening and straightening them. Individuals, for their own part, sought to protect themselves: people who could afford cars bought them, and overall car ownership grew very quickly. At the same time, businesses were switching en masse to motorised transport.

These were all understandable reactions, and over the long run we did see road deaths come down (partly for a host of other reasons, of course), but not without huge costs. By making life harder for pedestrians and cyclists and easier for drivers, the authorities reinforced the individual incentive to protect oneself in one's own steel box, and helped make the car completely dominant, which brought problems of congestion, pollution (which kills plenty of people itself, none of whom are shown in that chart), noise and an ever-present danger which sucked the life out of so many city streets.

It's worthwhile considering an alternative history, one in which the city authorities tried to tackle the problem of road deaths at its source rather than seeking to make roads safer for cars. What if they had imposed a toll or charge on motor vehicles equivalent to the costs they imposed on everyone else, or banned them altogether from parts of the city? Traffic levels would have been much lower, pedestrians and cyclists would have felt safer, and there would have been much less need to redesign streets to accommodate motor vehicles. Car ownership would presumably still have grown, but not to the point where it dominated everything else. We might have ended up in a good equilibrium were people felt free to choose less damaging forms of transport, rather than the one we're in now.

It's easy to say this in hindsight, obviously. The political will and perhaps the technology were not in place to do this in the early 20th century. But that doesn't mean we have to live with the consequences of the wrong decision all these years later. London has already gone some distance towards reducing the dominance of motor vehicles in the city centre, but we can and should go further.

* Total casualties, as distinct from fatalities, didn't actually peak until 1967. I'm planning a post for londontransportdata that will go into all this in more detail.

Taxi cabs: Deregulate and tax

Matt Yglesias says people who want to see less car ownership, less space used for parking and less driving overall "should support relaxing regulatory curbs on the number of taxis allowed to operate in a given place". I think I'd like to see this happen in London, with one small condition: they pay a per-kilometer tax to cover their external costs of congestion, pollution, noise and death/injury through collisions. Currently we don't tax these external costs so they create a lot of problems for everyone else. Removing one type of economic distortion without removing the other will just lead to more of these problems.

Let's get dense

I've been reading Ryan Avent's new book The Gated City, and it provides some good arguments in favour of the point I was making about prosperous cities needing to grow up as well as out.

As I said, in the debate over the National Planning Policy Framework I think there has been an undue focus on the virtues of making land on urban fringes available to develop at low prices, because that will lower costs for businesses and households. Avent's argument, as I understand it, is that we should be most concerned with the costs facing high-productivity or highly growth-promoting firms (and the people they employ), and they are much more likely to want to locate in dense urban areas because of the positive impact of density on productivity, innovation and entrepreneurship. So we should be at least as worried about restrictions on densifying in city centres as we are about restrictions on expansion of suburban areas.

You could argue that this is a false opposition and that cheaper land on the fringe will reduce pressure on the centre. The problem is I'm not sure the two locations are good substitutes. To generalise a bit crudely, those that like fringe locations - sprawl developers, lovers of low density housing and low productivity firms- will benefit from cheaper fringe land, while those who don't - higher density developers, lovers of higher density areas and higher productivity firms - will not. Of course, compact, well-planned urban expansion could potentially give us the best of both worlds, but we don't seem to be very good at that in this country and the current draft of the NPPF doesn't really encourage it.

The bottom line is that real estate prices are generally highest in urban centres. Insofar as that represents the market signalling something, it is a strong signal to build more in urban centres, and only a weak signal to build more on suburban fringes. 'Land supply' isn't everything, at least as it's generally conceived: what we are allowed to do with already-developed land is just as important.

People should read Ryan Avent and Andrew Lainton

Just a quick post to point anyone interested in housing and planning issues towards two people currently writing up a storm on these issues.

Ryan Avent blogs for the Economist but has a long-standing interest in urban economics and housing in particular. He has just come out with a slim Kindle-only book, The Gated City, which is concerned with the negative aggregate consequences of anti-density building restrictions in America's most productive places, its cities. I'm reading it at the moment and am very impressed, and incidentally the argument applies just as much to London as it does to San Francisco. Ryan wrote an op-ed for the NY Times summarising the book here.

Then there's Andrew Lainton, who I hope everyone with a passing interest in the NPPF debate is following. It's always good to see someone who manages to be both expert and consistently interesting writing so much, but with the kerfuffle about the NPPF I think Andrew has really found his issue, and he deserves that shout-out from George Monbiot today.

We need to measure subjective cycle safety

Following the recent tragic death of a cyclist in on Cavendish Road in Clapham, a local resident who witnessed the crash asked TfL what they could do to make the road safer, especially in light of a report back in 2008 which recommended that the junction in question needed to be redesigned to make it safer.

TfL said no. Here's their reasoning, posted by LCC on one of their comment threads:

...We found that in this section of Cavendish Road there had been 11 collisions in the last three years (up to 30 April 2011; collision data is supplied to us by the Police, and this is the most recent data available).  None of these collisions involved cyclists and two resulted in serious injury.  This particular section carries a large volume of traffic, more so in fact than the majority of other A roads in the borough.  Given the volume of traffic and when compared to other, similar roads there have been a relative low number of collisions on this section of Cavendish Road.  As I said, TfL is data led in its approach to progressing schemes on the Transport for London Road Network.  We could not progress a safety scheme at a location at which there had been fewer collisions than at other areas.  For this reason, we have no plans to progress a scheme at this section.  I appreciate that this is a sensitive issue, and would be happy to discuss further...

TfL appear to be saying that they will not consider trying to make a road safer for cyclists until a sufficient number of them are killed or injured on it. The obvious problem with this is that people tend to avoid cycling on a road if it seems unsafe or threatening, but by TfL's logic a road with no cyclists must be a road that is perfectly safe to cycle on.

I think this calls for cycle campaigners to try and produce some better data on how safe and friendly cyclists or would-be cyclists perceive different streets to be. We need objective data on subjective perceptions, in other words. This kind of thing is relatively easily available at large scales from sample surveys (see this recent one from Manchester for example), but what we're really interested in is identifying which individual streets and junctions are the most cycle friendly, and which need the most work to make them safe and inviting.

A while back I proposed something along these lines on the GB Cycling Embassy forums, with the idea being to get people to rate images taken from Google Streetview, but I haven't developed it any further, mainly because I don't have any IT skills.

But now some smart people from MIT have come along and produced something very similar called Place Pulse, which posts two random Streetview images from a handful of cities in the US and Europe and asks people which looks safer. Screenshot below:

They then analyse the results to see which places look safer. It's striking how the places rated as safest are all in Austria and mostly very pedestrian friendly while the least safe are all car-dominated streetscapes in the US.

Place Pulse is focused on 'safety' in the widest sense, but it shows that you could do something similar for cycle safety, and then use the results to understand what people associate with safe or unsafe cycling environments. And then maybe we could get TfL to understand that they should be proactively trying to build streets that invite cycling.

Grow up as well as out

It has been fascinating to see debate about housing take over the news and comment pages in the last couple of weeks, started by arguments over the government's very radical draft National Planning Policy Framework and carried on this week by a timely intervention by the National Housing Federation, cannily exploiting the media's obsession with homeownershp.

I'm delighted to see some serious discussions about housing supply (this one between Tom Chance of the London Greens and Matt Griffith of PricedOut being a great example), but I do have a gripe, which is that most of the supply debate has focused almost exclusively on the rights and wrongs of making more sites in greenfield areas available for development. I agree we do need some of those, and we should be thinking about both how to expand existing towns and maybe planning a few new ones, we can't ignore the fact that the greatest demand for new housing is where housing already is, in our existing urban and suburban areas. Given the scarcity of housing many people would live in a new town or former greenfield estate if we build them, but most of them would prefer to live where the facilities and transport and the other people already are.

The focus on new greenfield sites suits the big housebuilders, who in many cases already own them and understandably want to be able to freely pick and choose which to develop. But there's no guarantee they would build out and release those sites onto the market any faster. We need to improve competition in housebuilding, and that means making it easier for anyone, including homeowners and smaller housebuilders, to redevelop the existing housing stock. This would include allowing homeowners to add floors to their houses, and replacing houses with flats.

Now, some neighbours hate this kind of thing, so they complain to the politicians and the politicians put policies in local plans about 'respecting local context' and new development being 'in keeping' with neighbouring properties, and so on. At every point it seems like the easy thing to do is to push development elsewhere. But in the aggregate this has a huge cost, because we end up not building where people want to live but building where most of them don't want to live, just to please people who don't like the idea of housing development nearby. Letting those are already housed push out those who aren't is not just hypocritical, it's also deeply unsustainable since densifying existing areas saves huge amounts of energy.

Our towns and cities need to be able to change in response to society's needs. They need to grow upwards as well as outwards.

Disentangling economic and environmental NIMBYism is hard

As Gabriel Ahlfeldt of the LSE says, people oppose new developments in their local area for all sorts of reasons, and disentangling these can be difficult. In particular, people might use the rhetoric of environmental concern to dress up a more nakedly economic interest in the value of their own property. He highlights his recent research which supports this, having found that homeowners in Germany were more concerned than renters about the impact of aircraft noise from the proposed construction of a nearby airport.

This is evidence for the homevoter hypothesis that homeowners have a strong interest in preserving the value of their home, while renters have an interest in driving down rents, on top of any environmental concerns they might share*.

More broadly, I think the way economic and environmental concerns overlap for homeowners goes a long way to explain the strength of some opposition to new housing supply. Because house prices depend to a large extent on local environmental quality ('amenity'), new supply that is large enough to change the perceived quality of the local environment for the worse will have a double impact on house prices - first the direct effect of more supply, and then the indirect effect of amenity change. In economic terms, the direct effect shifts the supply curve outwards (lowering price), while the indirect effect shifts the demand curve inwards (lowering it even more). The combined effect on prices could be very large, so it's no wonder that some homeowners are so vehemently opposed to new housing supply in their area.

*Though I'd be interested to see if there was any way to separate out other ways in which homeowners might differ from renters, for example whether they see themselves as committed long-term to the area or just 'passing through'. If renters are less likely to see themselves staying in an area for a long time, we might expect them to care less about the impact of a new airport and that might skew the results somewhat.