Stimulus
It really bothers me when people claim action in the name of the free market, especially when they're the ones hindering its true functioning. Housing and urban development, in this country, occur far outside the realm of the free market and are in fact a complex web of government policies and cultural misconceptions and misrepresentations. It’s basically arguing for a level playing field when you’re standing in the grass and your competition is somewhere on the side of Mount Everest.
Ergo...
Too Much Spending on Stimulus? Like Hell it is!
An essay on how highway spending in the United States completely subverts the free market
Preface: I will not claim the ideas or core concepts in this essay as my own. Most of them are the same arguments ignored over and over again by the powers-that-be responding to a public that doesn’t know any better. The point is then, that it’s the public at large and not their representative that need to hear these ideas and concepts. Otherwise the government and the public can only respond to each other and we become deaf to everything else.
You live a lie! Well, at least 68 percent of you do. That was the percentage of Americans living outside of the Urban Core in 1996. We can only assume that that number has since grown substantially and continues to grow. That’s more than 200 million people who have no idea that their way of life is eating up this country’s economic assets to the tune of more than $800 Billion per year… by the way, does that number ring a bell? But don’t worry; it’s not entirely your fault.
In the U.S. were are taught that the free market is king; that only the free market has the power to adequately and efficiently distribute the vast majority of goods and services to make society function and grow (for all the rest we have taxes - one of the lowest rates of taxation in the developed world). This is most likely completely and totally TRUE!
Economics, being the study of human behavior, shows us that, given perfect information, consumers will make intelligent, rational decisions that benefit not only themselves, but others as well. Even without perfect information (which doesn’t by its nature exist) the free market can function at an extremely high rate of efficiency given the proper conditions, despite the fact that efficiency doesn’t mean equity, the results seem to be somewhat fairly distributed.
But here’s the kicker… suburban housing patterns, highway funding, gas prices and to some extent suburban retail distribution and availability in this country do NOT function in anything close to a free market. Since the 1940s, a combination of government policies and cultural paradigms (which feed off of each other) have provided a massive government subsidy which have prompted virtually the entire white, urban middle class to pick up and move to the urban fringes - a process which continues to this day at ever increasing rates so that trillions of dollars have been spent to merely push the population into the countryside at grossly disproportionate rates to population increases.
Why? The goals were multifold, both stated and latent; government subsidies to promote homeownership, promotion of a singular “car culture” (yeah, that didn’t just come out of nowhere, it was an intentional move), economic stimulus vis-à-vis huge scale suburban housing developments for returning GIs (this was a choice, the other option being large scale rehabilitation and infrastructure improvements), and, my favorite, systematic, intentional racial segregation. These things didn’t happen by chance. Each was the result of a set of policies which sought to modernize American culture and minimize racial strife through segregation. It turns out, that it was really just a re-allocation of wealth.
So how do we subsidize sprawl? I don’t blame you for not believing it. In the world of political talking points the one-liner grabs the audience. “We in the suburbs are tired of the government taking our money and spending it on superfluous transit projects and inner city education, health care and infrastructure improvements. If they can’t pay for it themselves, then that isn’t our fault. If we don’t use it, we shouldn’t have to pay for it!” The problem is, there are no one-liner responses to these claims and so they get all the attention. Subsidization of sprawl is not a direct process and is at times counterintuitive. People don’t want to take the time hear someone explain it in full and so they are quick to assume that because you don’t have a fast, one.
The issues boil down to hidden costs and per-capita spending/taxation. Uh oh, I can tell you are already tuning me out. You’re getting distracted by that flashy, 4 word campaign advertisement on the side of your Facebook homepage, but stick with me here!
The Theory Behind It All: Part 1
Picture with me two roads in some state, perhaps Michigan, in the US. Road A is 10 miles and Road B is 2 miles. Road A has 20 people living on it in single family homes and at one end is shopping center. Road B has 250 people living on it in a series of apartment buildings with retail on the bottom floor of each. Everybody pays the same tax rate to the state of Michigan which maintains the two roads. From this picture it is easy to see that 20 people living on road A are receiving more money per person to maintain their road; since the money comes from the same pot, the people on Road B are effectively subsidizing the Road A people so that they can live further apart. This trend is harder to recognize in big cities because we picture them as these complex webs of street after street after street. But because people in cities live in higher densities, the per capita street expenditure is lower. This concept generalizes to all services found in both suburban and urban settings. The father people live apart from one another the more total sewer and water pipes they need, the farther school buses have to drive, the greater the police and fire coverage must be, etc.
Theory Part 2: Congestion (it’s boring but key to later arguments)
Now, to complete the picture, connect road A and road B to larger network in a single city. Road A in the suburban network and B in the urban network. By nature of the way we build roads in the suburbs, in hierarchies of collectors and arterials, people living there MUST drive everywhere since anything else is prohibitively inconvenient. Because all uses are separated - Residential in huge, continues swaths and commercial in strip-mall-islands, every person on Road A, for every trip, to get out of the neighborhood, but drive the entire length of Road A. Add to that, everything in the suburbs is spread apart so that your dentist and your grocery store on opposite sides of the town so that for ever trip, the entire length must be driven back and forth. So… all of the road A suburban type people are driving further to their destinations, more often and all on the same roads! By nature of the way things are arranged close together on road B, people make fewer trips, shorter distances and they have a whole complex web of streets to choose from that are all interconnected so that they don’t have to drive on the same streets.
When it’s spelled out this way, the language makes it crystal clear why spreading people out, rather than putting people together is what creates congestion. It is because of the way we are brought up to think that everyone drives everywhere and we all need tones of parking that we intuitively think that high density must mean high congestion.
Theory Part 3: Cheap Land (this one isn’t so bad, I promise)
It is said the people choose to move to the countryside, but in all honesty there really isn’t an equitable choice. People will make smart economic decisions and the taxes are lower (as described in part 1), and the houses are cheaper (a result of construction apparatus centered almost entirely on new construction rather than rehabilitation, and government housing programs) and the land out there is just plain cheaper. So where is all of this cheap land coming from? Well, consider the impetus to moving further out into the countryside in the first place. The drive is longer (and time is money), the traffic is really aggravating and there aren’t any commercial services out there. Now, consider what happens when we build a new highway into or expand an existing highway in virgin countryside. Suddenly that drive no longer seems so bad since you don’t have to do it on back roads, there’s more room so there aren’t the problems with congestion and, now that the infrastructure is in place, commercial services begin locating out there.
What’s happening is that Government is basically saying “this land is now prepped for development”. Consider the competition to sell commercial sites along highways (you’ve seen the signs). Building roads into the countryside, as well as sewers (costs conspicuously absent from the cost to build a new subdivision) is what makes the land cheap. What governments deem “preparing for future development” is actually what’s encouraging that development to begin with. It’s a chicken and egg question, and the assumption always starts from the wrong end. When development does occur, it is interpreted as a proof that government was right to expand, rather than an acknowledgment of the power government has to encourage and subsidize expansion and that that development money may have been spent on existing city neighborhoods without opening up new land. Catch-22?
Apart from subsidization there are other reasons it seems to cost less to live in the suburbs. First, the cheap new suburbs all have growing populations and thus an increasing tax base. Second, recall that when the white population picked up and moved out of most inner cities they also took most of the wealth with them. So, without real subsidies of their own, inner cities have no platform with which to boost themselves up, thus they need higher tax rates (to even come close to suburban subsidized levels of service) which push everyone further out to the suburbs. AND, if you still need evidence of the systemic effect of “white flight” look at the rare American exceptions of urban centers with white majorities: Seattle, Portland, San Diego, New York City, San Francisco, Kansas City, Denver; all growing, all vibrant, all upheld as model cities. Since wealth buys political clout and white is still the dominant demographic in this country, is it any wonder to you why America has, with these few exceptions, one of the worst urban climates in the world?
Of course our urban cores are ghettos… every year we vote to make them that way.
Now let’s consider some of the arguments you’ve probably heard in favor of continued priority for suburbanization:
1. Suburban Sprawl and Low Density Housing are expressions of consumer preference
This argument is ridiculous when you consider how much we re-allocate tax dollars to heavily subsidize suburban life (see above). Also, we tend to forget our zoning codes. Suburban codes are usually highly restrictive. They require that densities remain low (usually by way of floor to height and property ratios), uses remain separated and that there must be enormous amounts of parking allocated for commercial services. In light of all of this, it should be amazing how frequently developers (who supposedly understand the market in which they work) are required to revise their design to lower densities. If everyone wants low density living then why is it necessary to artificially lower density? The only answer can be that there’s an underserved market for higher density living and that our governments are, through code and subsidies, restricting choice and the free market. Consider that a large number of baby boomers and young professionals are moving into a number of progressive/urban cities. How much latent demand might there be that is underserved by a lack of choice which drives up prices? Suburban Sprawl and Low Density Housing can only be an expression of consumer preference if there is a free market which there is not!
2. Suburban Development is a tool for economic progress and a source for jobs
This claim needs to be put into perspective. Exemplified by regions like Metro Detroit which has almost zero population growth, Suburban Development is a relocation of resources. Does it really make sense that our economic growth is dependent on picking up and moving around every 5 years? Investing in cities rather than suburbs capitalizes on existing infrastructure to strengthen consumer/community networks and synergies providing greater opportunities for innovation (you can’t expect us to innovative if were spending hours in our cars and locking ourselves in fortress America where people live too far apart to properly communicate). Also, we can now see what happens to an economy overly dependent on the state of its housing and construction markets. Finally, There is evidence to show that spending on transit creates twice as many jobs as spending on highways. Really makes you question the priorities of that government stimulus package doesn’t it?
3. Lower Density Housing Patterns and More Highway Lanes reduce traffic congestion
Wrong (see above)! Consider again how the rate of congestion has grown related to actual population growth and suburban development. There is a concept called latent demand in traffic. Basically, people will drive more and more until they reach a threshold of aggravation beyond which they will limit their driving. This suggests that there will always be more demand for lanes of traffic than can be reasonably provided and already transportation costs on the state and federal level are spiraling out of control (despite the fact that we continue to favor building new roads rather than maintaining the ones we have). Every time you add a land of traffic, people will simply drive more often and new, even more distant suburban construction will occur until that lane is also full. Only by fundamentally changing housing patterns and transit funding can you actually begin to address congestion.
4. Sprawl helps keep housing prices low
Again, this is only because we subsidize the crap out of it. Interestingly there is evidence to suggest a fad nature in suburban relocating. People will move to the cheap new suburb until it becomes congested. Tax revenues no longer cover the range of services because population is no longer increasing fast enough. So, people will simply pick up and move to the next cheap new suburb leaving the older suburb to begin its slow deterioration - signs of this have already begun to pop up in the first ring of post-war suburbs.
5. Gasoline is cheap and people will never give up their cars
It is true that the car has become an integral part of our society and will probably never go away. However, what we fail to recognize are the indirect costs associated with our current level of gasoline consumption. Foremost are the pollution costs. Unfortunately these costs take some time to register and can not be directly traced to their causes, both in terms of environmental damage and damage to human health. As a result we delay engaging environmental policy and the longer we delay, the more it costs and the greater the damage to an unprepared economy. Essentially, gasoline is only cheap, because we continue to defray the costs to a later date. what was that critics of stimulus were saying about passing costs on to our children?
6. We need breathing room!
That’s what Hitler Said.
One quick note on parking before I conclude
If we take the size of the average parking space and multiply by the estimated total number of parking spaces, we find that, in the united states, we have paved an area roughly the size of the states of Connecticut and Rhode Island combined and before you say that doesn’t sound like much; A. tell that to a Rhode Islander, and B. that only accounts for the spaces themselves, not the asphalt in between nor the roads it takes to get to them nor the highways full of stopped traffic at rush hour that many people consider parking lots in and of themselves. We have a choice when it comes to parking. Because parking is mostly free in this country there will never be enough, as with most free commodities. So we can either choose to turn our urban centers into giant malls surrounded by a sea of parking larger that the destination itself, or we can find alternatives and there are certainly no shortage of those.
In Conclusion:
Look, the key is, this isn’t some big conspiracy. No one is hatching some evil plan to undo America by destroying civic culture. What this is, is Mass-Delusion. Rather than face the hard facts that we are systematically undermining the quality of our own lives, our own culture, our own planet, we stick our heads in the sand. Like economic behavior, it is human nature and it is self-reinforcing. The only way to stop it is to EDUCATE YOURSELF!
It’s a question of equity. So, when you hear a public official or a friend say that funding for highways is an investment but for transit it’s a subsidy - Don’t believe it! When you hear complaints of unfairness and arguments against transportation and public works funding saying that only those who use it should pay for it - Don’t believe it! When you hear someone say that suburban growth is entirely the result of personal preference and the free market - DO NOT believe it! And, every time we cut funding for the arts, schools, healthcare, parks - the things we value - remember that that tax funding didn’t just disappear, instead, it’s being used to fund even more highway lanes and even further sprawl in ever increasing quantities. Up until this moment you’ve lived a lie… but no more. Now you can choose to live the truth!
-Chris Lee
University of Michigan