Metropolitan Visions

Peter D. Salins from the December 1994 issue

(Page 2 of 2)

Where I part company with Downs is in his assumption that the metropolitan dynamics he disparages are the product of natural market forces, and that, therefore, we need intrusive government interventions to reverse them. The simple truth is that the contemporary metropolis is largely a creation of market-distorting government policies and might more easily be reversed by a less-intrusive government presence.

Take suburban sprawl, for example. There is ample evidence that developers, left to their own preferences, would love to build more densely. The denser they can build, the more money they make. Because a large share of their reduced costs would be passed on to home buyers and tenants in a classically competitive urban housing market, most housing consumers, city and suburban alike, would be happy to live at higher densities. They might even welcome the attendant reduction in their travel costs. This is especially true today, as American households are getting smaller and less child-centered.

Other targets of Downs's critique also contravene, rather than reflect, market preferences. Why are workplaces so dispersed in the suburbs? And why do you have to drive three miles to buy groceries or get a haircut? Not because of the market. As in the case of density, developers, employers, and retail entrepreneurs would happily drop commercial enterprises among residential settlements. What prevents these natural market forces from asserting themselves are local zoning codes, with stringent density ceilings and rigid segregation of diverse land uses. Downs recognizes this, but prescribes the wrong remedy. He would take those regulatory powers away from localities and vest them in regional or state agencies, under the perhaps naive assumption that such larger bodies would pursue more efficient or equitable land-use policies.

Such regulatory powers are of dubious validity, regardless of their venue. They are neither necessary or beneficial for theprotection of public welfare and go way beyond the constitutional limits set by the Fifth Amendment. The correct policy response is not merely to boot them up higher in the governmental hierarchy, but to challenge them in legislative and judicial arenas.

What about the metropolitan racial and economic segregation caused by the paucity of low- cost housing in suburbia (and the subsidization of such housing in central cities)? Downs's remedy is to deploy publicly funded housing subsidies in the suburbs. This is obviously unrealistic politically, but also unnecessary. I believe that if we let the market operate naturally, plenty of low-cost housingwould be developed in the suburbs without subsidies, as it once was (remember Levittown?). What keeps it from happening today is a web of zoning and environmental rules that discourage or prohibit the construction of small houses on small lots, and unreasonable subdivision regulations that sharply raise the unit cost of sites. One can build a modest dwelling for under $50,000 in most U.S. urban areas (or deploy a mobile home for under $30,000), and at generally proscribed densities develop sites for under $25,000. That translates into $500�800 in monthly rents or carrying costs, well below the threshold of much subsidized housing.

Another example of regulation that thwarts market impulses and denies countless individuals decent inexpensive housing is the restriction on "accessory apartments" -- renting out spare rooms in underoccupied single-family houses. If accessory apartments were openly legal (they exist now in a growing gray market), they would be eagerly embraced by low-budget singles and couples and empty-nest homeowners grateful for the added income.

It isn't just suburbia that would be transformed by letting markets operate more freely. Some measure of the central- cities' distress is the result of their own anti-market policies. Conventional wisdom would have us believe that households and businesses intrinsically prefer the remote and disconnected urban hinterland to the heart of the metropolis with its dense transportation and communications infrastructure and its still-extensive stock of commercial and cultural facilities. A good market test of this proposition is to look at the price of land. As it happens, the traditional Ricardian urban land price gradient, with its apex in the metropolitan center and its steep asymptotic slide to the urban perimeter, is still very much with us, broken only by local peaks at major suburban commercial centers.

But if central-city land is so valuable, why is it occupied by slums and the rotting hulks of abandoned factories and warehouses? Because cities have devoted a lot of effort (and federal funds) to inhibit or distort their land and housing markets. Suburban regulations may, to a large degree, have kept the poor out of suburbia and lured the affluent in. But, just as surely, central-city housing and other subsidies have locked the poor in the center city while motivating the affluent to flee. And misguided "economic development" and "community preservation" strategies often prevent the recycling of obsolete manufacturing and housing sites for new residential or commercial uses, even as urban renewal schemes substitute planners' judgments for those of the real estate industry in reconfiguring central business and residential areas.

Other market-disregarding policies have also intensified central-city distress, many of which could be reversed by cities unilaterally without new government initiatives. The bad schools that trap the urban underclass in the lowest tier of the economy, for example, could be fixed without spending more by instituting market-emulating reforms. There is growing evidence that measures like public school choice, charter schools, and vouchers can help even the most disadvantaged youngsters to learn. And other city responsibilities (parks, sanitation, infrastructure, public safety) of particular concern to the remaining middle- income, tax-paying residents could be discharged more effectively and cheaply through a combination of privatization and decentralization.

In a more market-driven urban universe, the kind of metropolitan world Downs favors should develop quite naturally: a denser, more heterogeneous pattern of land use and dwellings, a commercially and residentially vibrant central city, and a spatially integrated and better-housed lower class. Such might very well have arisen in the United States after World War II if a broad spectrum of government actions hadn't subverted it.

But the near-total dependence on cars to get around just about any urban area outside New York that Downs decries is both irreversible and irrelevant to the urban policy debate. As Downs concedes, you will never get Americans (including me) out of their cars. But this does not really prevent the density and development alternatives that Downs (and the untrammeled market) favor. As in the great cities of Europe, a more urbanized metropolis would merely induce Americans to drive less, keep their cars at home more often (when they walked, for example), or maybe induce them to buy smaller cars that are easier to park.

Downs is on the right track in calling attention to the flaws in the spatial ecology of U.S. metropolitan areas, and in promoting new visions to correct them. He is both naive and off- base, however, in suggesting that new state or federal government initiatives would be feasible or effective. If the suburban upper-middle class has, indeed, been the main villain in designing the metropolitan paradigm, as Downs maintains, there is little likelihood that it will voluntarily or happily accede to its redesign.

On the other hand, if I am right in believing that the major features of the current paradigm are not natural, but fly in the face of land, housing, and commercial market dynamics, they might be dismantled more easily and effectively by giving market forces greater play. This is not the likeliest of prospects either, but it gains credibility these days from the growing popularity and political respectability of such market-oriented ideas as deregulation and privatization and the recent success of constitutional challenges to zoning and other development constraints. Three cheers, then, for new metropolitan visions, but ones that let Americans keep their cars and rely on the market, not the government, for implementation.

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