Market Urbanism

> Conversely, as I will show, data show that local infections were negatively correlated with subway use, even when controlling for demographic data. Although this correlation study does not establish causation, it more reliably characterizes the spread of the virus than the intuitions and visual inspections that Harris relies on.

https://marketurbanism.com/2020/04/19/automobiles-seeded-the-massive-coronavirus-epidemic-in-new-york-city/

> New York and other subways

> In multiple other countries, one cannot see the transit cities in the virus infection rates. In Germany the rates in the largest cities are collectively the same as in the rest of the country. In South Korea, the infection is centered on Daegu; Seoul’s density and high transit usage are compatible with an infection rate of about 700 in a city of 9.5 million, about 1.5 orders of magnitude less per capita than in most Western countries and 2.5 orders of magnitude less than in New York. In Taipei, the MRT remains crowded, with weekday ridership in February and March down by 15-16%. In Italy, car usage is high outside a handful of very large cities like Milan, and Milan’s infection rate isn’t high by the standards of the rest of Lombardy.

> However, rest-of-world evidence does not mean that the New York City Subway is safe. The Taipei MRT has mandatory mask usage and very frequent cleaning. German U- and S-Bahn networks are a lot dirtier than anything I’ve seen in Asia, but much cleaner than anything I’ve seen…

Japan does real estate development with banks and loans like the US does, and interest rates are even lower so it's easier to borrow a large sum of money. Can you explain what you meant about the finance industry not allowing prices to appreciate?

Their zoning is where they have obvious huge differences. The zoning categories are set at a national level and limit how restrictive local cities can be (there's 12 categories based on nuisance level). The higher zoning usually allows lower density also, so cities just start with a little extra zoning headroom that allows them to grow over time. They also automatically permit things that follow zoning. [1]

In the US zoning is more local, often there are many more zone types that are much more restrictive about what they allow (it's more micromanaged and often prohibits things like mixed-use in addition to multi family). In many of the biggest markets even projects that follow zoning are usually not allowed, every project is an individual years long fight. Also in cities like Los Angeles the zoned-for capacity has actually dramatically decreased over time, even as the population grew. [2]

Some of these policies may be a legacy of people deliberately not wanting it to be too affordable, because neighborhoods didn't want low-income people to move in. Of course now in many places even middle-income people can't afford it.

I think, from a social justice perspective, the US policy has been an abject failure. It's increased…

If you see the phrase positive externality and think to yourself, "Oh, that's good!"—then I hope I can help you see things differently.

Externalities, both positive and negative, mean that somebody other than the owner of an economic resource is affected by its use. A negative externality means that somebody else bears part of the resource's cost, and a positive externality means that somebody else reaps part of its reward. In this sense, positive externalities (just like negative externalities) are a failure of property rights with perverse consequences; part of the return to the investor's investment is placed in the public domain, as economists say. So positive externalities lead to underinvestment, as rayiner noted, because the externalized benefit is captured by someone other than the investor.

And indeed there is an emerging narrative that claims a combination of corruption and over-regulation contributed to the demise of America's early streetcar systems by eroding the property rights of streetcar operators to the point that they could not profitably run their lines. That is, regulation externalized the benefits of streetcars to such an extent that their owners went bankrupt and streetcars disappeared.

A recent article from Vox makes the case [0]. It goes like this: (1) streetcar operators sought monopolies from cities, accepting regulation in return; then (2) regulators fixed fares at a nickel and required streetcar operators to pave and maintain the roads along…

This question was made for me.

It's not the market; obviously there's demand for higher density housing, and were it allowed, people would make more of it. It's almost always local regulations that make producing such housing difficult, or more commonly, flat out impossible.

Most American residential land is zoned for exclusively large single family homes in big lots. This is true even in most major metro areas. You can read a little bit about this here in this article that compared American zoning with Japanese zoning: https://marketurbanism.com/2019/03/19/why-is-japanese-zoning-more-liberal-than-us-zoning/

The gist of how it got this way is: racism and classism. The racism used to be more relevant, these days the classism is. You see, if you require that to live in a neighborhood, you must be able to own or rent a property with a minimum amount of land, it's easy to keep out people of lesser economic resources. A poorer family that might be willing to live an apartment in a nicer area will find that no such housing exists there, and being unable to afford a full house, they are excluded, hence the term 'exclusionary zoning'. This also has the effect of keeping those poor kids out of local schools.

So yeah, it's economic segregation that America pretends doesn't count as segregation somehow, even though the effects are plain as day.

Housing is a very different matter, one primarily defined by zoning. Zoning rules in major metros prevented supply from meeting demand by preventing new construction. Zoning rules outside major metros made the average new home 2X bigger. [1] Combined these make houses dramatically more expensive even though the cost per square foot on average, adjusted for inflation, is exactly the same as it has been since the 1970s.

Japan for instance has seen their M2 money supply 3X from 1990 to 2022, while the affordability of a house there hasn't decreased since 1995. [2]

This is due to their federal zoning rules which permit housing construction practically everywhere. [3]

The increase in price of housing is what's driving inflation, not vv imo.

And for what it's worth, I think Glass-Steagall (brought in as part of the post-Great Depression reforms) did a very good job of preventing retail banks from investing in toxic garbage and its repeal in 1999 was IMO a major contributing factor to the crisis in the first place. [4]

[1] https://fee.org/articles/new-homes-today-have-twice-the-square-feet-per-person-as-in-1973/

[2] https://fred.stlouisfed.org/series/JPNCPIHOUAINMEI

[3] https://marketurbanism.com/2019/03/19/why-is-japanese-zoning-more-liberal-than-us-zoning/

[4] https://www.federalreservehistory.org/essays/glass-steagall-act

So the linked article doesn't directly cite any work but does provide highlighted notes for an article, which I followed... which also doesn't actually cite anything. So I went down a rabbit hole of researching early zoning laws to evaluate a very specific claim: that the origin of zoning laws is racist.

In 1917 Buchanan v Warley mades directly racist zoning illegal... which affected a single city in Kentucky and otherwise had very little effect. In addition, the very first zoning laws didn't get passed until 1910 in the US and zoning didn't exist much until the 1920s [1] so that seems to undermine that claim as an emotional, not a factual one.

Everyone seems to suggest that the fix for high housing prices is to simply build more densely (more supply, same demand, therefore prices should go down right?). Yet that appears to not be the case either - as buildings get taller and more dense, costs seem to increase outside the direct supply/demand system [3] and those units which are built are typically more expensive then low density options.

[1] - https://www.dartmouth.edu/~wfischel/Papers/02-03.pdf

[3] - https://www.forbes.com/sites/joelkotkin/2017/08/31/high-rise-glut-affordable-housing/#6f2ce63753e0

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[2] - http://marketurbanism.com/2017/11/01/does-density-raise-housing-prices/