Review of Glaeser's Triumph of the City

Review of Triumph of the City

As the title suggest, Glaeser’s Triumph of the City is a celebration of our planet’s great urban areas, and Glaeser makes no apologies for suggesting that despite the notions that cities are filthy, congested, crime-ridden, and environmentally threatening, they happen to be some of the happiest, healthiest, greenest and most civilized places on earth.

Glaeser bases much of his argument for urban success on premises that are rooted in fundamental social and economic theory mixed with a little common sense. In discussing some of the failures toward preventing the decline of cities, Glaeser reminds us that cities must invest in people rather than buildings, and that it is the ideas of entrepreneurial individuals and small organizations working in creative interplay and in close proximity, not infrastructure, that helps cities grow. “Human capital trumps infrastructure,” according to Glaeser. The author also explains how well-meaning public policy can unintentionally bring about a city’s decline when policy makers fail to properly incentivize small business, or fail to invest enough in educational institutions, basic public infrastructure or efficient public transportation systems.

Glaeser offers a thought provoking perspective on the benefits of urban poverty (as opposed to rural poverty) by explaining the sorting effects that occur in urban environments, whereby people have a greater likelihood of moving out of poverty and into a working middle class. The author explains the advantages of agglomeration economies in dense urban environments where innovations and ideas cluster to create more productivity, economies of specialization and trade, and greater wealth. The author describes how living in dense urban environments, as opposed to lower density suburban environments, reduces our carbon footprint and increases quality of life. Sunbelt cities are compared and contrasted with Rustbelt cities, and coastal cities, to demonstrate the industrial advantages and household amenities that each has to offer. The author challenges environmentalist policies and makes a bold assertion that cities with strict environmental regulations and restrictions on development are essentially exporting affordable housing to inefficient suburban environments. Glaeser challenges our conventional notions of congestion and density, and challenges other urbanist theories that rationalize limits on housing and other development.

In concluding chapters, Glaeser discusses a recipe for city success (and comparative advantage) that includes nation-specific goals of developing and maintaining 1) highly education populations and workforces; 2) government support of innovative industry; 3) dense agglomerations of innovative business activity and competent public sectors; 4) generous investments in efficient infrastructure; and 5) a commitment to “home-grown human capital” through sensible policies and reliable legal institutions.

The Not So Simple Three Simple Rules

In Chapter 6: “What’s So Great About Skyscrapers,” Glaeser makes a few bold assertions that government regulation of development, including building height restrictions, floor-area ratios and landmark preservation, has resulted in a net cost to society by forcing prices of housing and real estate to unsustainable levels, segregating social classes of citizens, preventing agglomeration of industry, increasing traffic congestion and essentially stymieing urban progress. Glaeser proposes three (3) “simple” rules which I argue may not be as simple as he makes them out to be.

1. Simple System of Fees. The proposal of a system of simple fees to replace “lengthy and uncertain” permitting processes sounds reasonable on its face, but charging builders impact fees to cover the social costs to neighbors who lose a view, lose sunlight or lose some other value related to what are relatively aesthetic qualities are no less difficult to quantify than other sorts of impacts and may even turn out to be much more difficult to apply equitably across various land uses, various real estate asset owners and various real estate space users, residents and workers alike. Imagine the difficulty in appraising the social costs of the loss of sunlight, for example, on a multi-story, mixed-use building.

While these may seem reasonable rules in theory, implementation of such rules would certainly not be as easy as conceiving of them. Glaeser admits that such a system may not be easy to design, but in the same breath he suggests that such a system, once designed, can somehow be “universally applied.” Imagine how difficult it would be to universally apply an impact fee imposed on a builder that covers the social cost of diminished sunlight or diminished water views to a select group of neighboring owners/users/residents. How would the group be defined? How would investors or owners of such real estate be able to appraise with certainty the value of their asset when its value is contingent to some extent not on the relative certainty of a municipal ordinance defining a height restriction but on whether a builder is willing to incur the cost of a permit fee to build at any height? Imagine the legal challenges to the validity and application of such a system, with its narrowly defined tax beneficiaries and its subjectively defined sources of impact. Such a system, no matter how well intended, transparent and targeted, may tend to create the kinds of social and legal hurdles that have historically coincided with other similar forms of rigid and narrowly applied land use regulations.

2. Historic Preservation Limited and Well Defined. Glaeser is not proposing anything here that isn’t already a major consideration by the regulating agents. Common law in the United States has long held that the authority to regulate land use at the local level—an authority granted by the constitution, known as the police powers—enables elected officials at the local level the opportunity and freedom to experiment with legislation that serves a greater public good. Glaeser’s argument is that such legislation ought to consider the economic costs of preserving too many buildings that may not be deserving of such status and protection and thus are preventing a city, its residents and presumably the owners and users of fixed real estate assets, from realizing the fullest economic benefits. Glaeser’s “own preferences” however must only be considered as part of the aggregate of preferences that ultimately elect the governing bodies that decide how land uses are to be regulated. Part of the economic benefits that Glaeser leaves out of his equation is the benefit that is derived from taking a more cautioned approach to the destruction of a city’s legacy, culture and history—and the economic and social value that a society believes can be derived in part through the preservation of certain historical and landmark real estate assets.

Glaeser argues the scope of any regulatory agency will naturally “try to constantly increase” because of bureaucratic empire building or responses to community pressures. While it’s no surprise that governments can become unnecessarily too large, and “well-connected” neighbors can lobby their own preferences, it does not follow that Central Park—one of New York City’s most beloved amenities—would  have somehow been similarly protected from development if the preservation line had been drawn closer to the less restrictive ends of landmark preservation regulation; further, while the costs of restricting development may make protected areas more expensive and more exclusive, the costs of not restricting development may actually create areas that are less economically viable and less socially beneficial. Glaeser’s focus on affordability loses sight of the fact that what’s not affordable is not necessarily socially or even economically beneficial. While the “forest of cranes” helps to keep Chicago affordable (as does the climate), the complete absence of cranes in Central Park helps to preserve one of the greatest urban amenities in the history of urban development—which in turn has influenced the development of valuable open, green spaces in many other modern cities around the world.

So, to use Glaeser’s own urban economics thinking, we must now compare the economic cost of pricey housing to the social benefits of nature, urban tranquility and social connectivity. Certainly, no one will disagree that exclusivity and diseconomies of scale are undesirable urban qualities; but in capitalist urbanized economies, the argument against the formation of exclusive urban enclaves and politically influential communities is one of degree; whatever inequities exist at the micro level must also exist at the macro level. The formation of cities like Hong Kong and Vancouver, cities that Glaeser would say have “embraced verticality and change,” do so with the luxury of having been largely developed in a modern urban era with all the advantages of having learned from cities like Paris, London and New York, cities that have had a greater challenge of adapting history to the needs of a modern society. 

3. Clearly Delineated Power of Individual Neighborhoods. Rule #3 clearly contradicts a couple of Glaeser’s chief concerns: 1) that good environmentalism requires global action not the “narrow outlook of a single neighborhood trying to keep out builders”; and 2) that power in the hands of a few creates exclusivity which then leads to negative externalities and diseconomies in the pricing and regulation of urban development. This is not to say that individual neighborhoods should not have some “clearly delineated power to protect their special character” to some degree, but again, this is a matter of degree. One must wonder if Glaeser is playing on both sides of the fence; or more substantively, whether Rule #3 really proposes anything novel at all. Contradictions aside, would it really make more sense, as Glaeser puts it, to allow individual neighborhoods to “craft their own limited set of rules”? Glaeser proposes that neighborhoods ought to be able to legislate its own land use regulations according to a majority voting share of its residents. If that were the rule, wouldn’t the myopic views of single neighborhoods potentially conflict with the needs of a larger society? Should the Village of Belle Terre, a single neighborhood in Long Island, have adopted an ordinance that restricted occupancy of a housing unit to some narrowly defined concept of “family” so that it excluded and discriminated against a group of college students who had made an economical decision to maximize their living arrangements, and reduce their cost of housing, while attending nearby Stony Brook University? NIMBYISM presents itself in different shades.

Is Glaeser suggesting that activism that restricts the development of housing is somehow less economically beneficial than activism that discriminates against more affordable, alternative housing arrangements? Sure there are social costs to a community whose “ordinary citizens” are impacted by some adverse condition; but does that mean the citizens, rather than the elected officials and agents (urban planners, for example) of the citizens, are somehow more qualified to set up the rules? The problem with Glaeser’s argument here is that deregulation by government doesn’t necessarily liberate communities (or society) from the powerful private interests, cronyism and other forms of “regulation” that impose other type of economic inefficiencies and social costs. Glaeser says the “failure of places like New York and San Francisco has pushed Americans elsewhere.” Well, if that’s true, then thank goodness for failure! Perhaps those Americans have wisely chosen to move to one of Americas’ other great cities, like Boulder, Portland, Asheville, or Austin. There are much worse places I suppose; certainly not everyone is choosing to sprawl out in Orlando, Las Vegas. Okay, maybe Houston.

Environmentalism in San Francisco Begets Sprawl in Houston?!

I must take issue with some of argument presented in Glaeser’s “Unintended Consequences of Environmentalism” section, in Chapter 8. Glaeser would have us believe that California’s growth limitations are imposing a considerable social cost on the rest of the nation and that the “enemies of development” in California use the scarce water supply defense in support of their opposition to development of the California coastal regions. While Glaeser makes a good point about how California can better utilize its water resources, there is certainly, in my opinion, greater forces at play than the general environmental activism that occurs in California. It’s important to keep in perspective that even if we agree that protection of the environment can sometimes impose certain economic and social costs on a society, be it loss of productivity or job growth or increased living costs; there is also an opposing force—that of growth and development—which also imposes certain economic and social costs. To some extent, without these two opposing forces keeping each other in check, there is good reason to believe that a much higher cost is lurking.

Compare the “Eden” like qualities of San Francisco’s coastal areas with the wretched development and industrial pollution that characterizes the Galveston Bay areas surrounding Houston. It is too short-sighted to suggest that California’s environmentalist culture has somehow exported environmental costs to Houston, just as it would be similarly too easy to suggest that America’s capitalist economy is somehow responsible for exporting GDP growth, employment growth and savings to the rest of the emerging world; or that preserved landmarks in Manhattan have somehow exported affordable rents and other household productive amenities to Hoboken. Growth does not occur in a vacuum and the 20-20 hind sight with which Glaeser offers his critique is somewhat dismissive of a multitude of other social, political, historical, and infrastructural conditions by which many urban areas are constrained from implementing Glaeser’s paradigmatic economic model. But, consider the case of Silicon Valley.

Most agree that Silicon Valley offers agglomeration economies for high tech firms and that the benefits of locating in the Valley is unmatched anywhere else in the country; although the burgeoning tech scenes in New York City and Seattle are proof that the Valley is not the only geographical location where technology innovation is netting its greatest productive benefits. According to Glaeser’s supposition, were it not for the California environmentalists, Palo Alto and San Marcos would have, or could have, increased its density of residential and commercial space in order to lure a greater population of residents and workers into the Bay Area, and away from cities like Houston and Phoenix and Las Vegas. While this may be partly true to some extent, Glaser does not mention the very powerful, hyper-localized governments that may be exerting much greater influence on the zoning restrictions than do environmental activists. Likewise, the utter lack of zoning regulations adopted by local governments, in cities like Houston for example, are exerting a much greater influence on the support of sprawling and environmentally damaging development patterns than are the environmentalists whose policies impact Silicon Valley.

An article in the Economist  points to a “quality of growth” that is jeopardized in places like Silicon Valley where restrictions on development adversely affect job quality and the “pace of growth in real output, productivity and wages.” Much of the desire to limit development in Silicon Valley comes from highly localized and politically powerful NIMBYISM attitudes and culture that existed long before Google and Facebook. According to the Economist article, the city of Mountain View’s Environmental Planning Commission has actually supported proposals by Google to develop higher density work and live spaces in the areas. The commission has been seeking to overturn the city council’s rejection of Google’s proposal, and meanwhile Silicon Valley’s high wages and restrictions on such development have created bidding wars for existing real estate resources.

Glaser’s environmentalism-leads-to-greater-environmental-costs argument forgets that Houston owes about as much fiduciary duty to the rest of the nation as does Silicon Valley. The Valley’s choice to limit growth through environmental policy or NIMBYIST attitudes does not mean that Houston (or any other city in the country) is somehow any less liable for the environmental costs imposed on the rest of the nation. The economic focus of the environmental argument may need to be more evenly applied to those urban areas who fail in their own way to be as environmentally conscious as the activists in Silicon Valley.

The Economist article cites a more palpable economic justification for easing the limits on development in the Valley. Because limited development constrains supply and thus raises the prices of real estate, the Valley is essentially exporting potential innovative business investment. These are the “opportunity costs” created by artificial limits on development, and which come in the form of foregone industrial innovations and business opportunities, that obstructs the Valley’s ability to leverage efficient employment multipliers for faster job growth and higher productivity and so on. Of course, the New Economists, like those at the Levy Institute, are becoming increasingly skeptical of this quest for productivity and growth; perhaps the Valley is wise beyond its years if its environmental preservationist policies are also designed to mitigate a relentless pursuit of growth and productivity deemed to be unsustainable in the long run.

Nevertheless, given all the restrictions on growth, the Valley remains unrivaled as a labor market and innovation hub for high tech industries. There is not much evidence that Houston is becoming the new Silicon Sprawl. In fact, exportation of high tech jobs to Texas is deposited in Silicon Hills (Austin), another hotbed for progressive environmental activism and smart growth initiatives. Perhaps Galeser’s argument ought to focus on how environmental activism and local government initiatives can better work in harmony with industry and the demands placed on housing needs in urban as well as suburban areas. As the article suggests, zoning authority at the micro-level may tend to place too much political power in the hands of those whose costs are greatest relative to the benefits of productive new growth. Perhaps those costs can be transferred, or perhaps those small but powerful groups can (or should) be compensated to allow for a more balanced approach. Perhaps zoning liberalization may need to place policy-making at a metro or regional level so that macro impacts and benefits of development are given greater consideration. Of course liberalizing zoning regulation at a regional level must strive to achieve balance with smart growth initiatives at the local level. Some urbanists, like Richard Florida, claim there is an optimum density that boosts innovative activity in places like Silicon Valley; and that vertical development isn’t necessarily compatible with interactions facilitated by more right-sized work and live spaces.

Policy Implications

Two of the more important policy implications discussed in the book pertain to government’s efforts to reduce poverty and protect the environment. In Chapter 3, Glaeser compares Empowerment Zone policies to housing voucher policies and suggests that neither is really effective at solving the larger problems of urban poverty and that policies aimed at place-making in general are not nearly as effective as the more localized, community-based efforts of social entrepreneurs. In reference to the successful Harlem Children Zone’s program, Glaeser asks, “[c]an the federal government successfully replicate the social entrepreneurship that sprang up in New York City?” There is much to consider in whether distant federal policies can be as effective (in concert or not) with local initiatives in solving urban poverty.

The other important policy implication deals with global warming and the energy-intensive lifestyles of Americans, which is partly caused by suburban sprawl in many of America’s largest cities. There are competing initiatives that seek to protect the larger environment on one hand, and those that seek to preserve low density urban space on the other. These policies have the effect of transferring the costs and problems of energy-intensive lifestyles to browner areas in the country that have not yet embraced progressive environmental policies and incentives that work to create more dense urban environments. San Francisco’s progressive environmentalist attitudes and limits on urban growth, for example, are pointed out as being partially responsible for Houston’s suburban sprawl. Glaeser’s suggestion that richer countries ought to develop policies and incentives that essentially subsidize green technology in other less developing countries may face huge political hurdles, since it summons a the larger issue of global social responsibility.