Reform can’t fix
Every solution to the housing
crisis is making things worse.
Cope is not
What’s striking about the modern crisis of the American city is the near-total absence of pushback against it. The hundredth news report on rampant crime or homeless encampments has lost all shock value. Or maybe we don’t react because we can’t see a way out of this mess. To the extent that remedies are discussed, they are mostly limited to short-term crisis management.
Structural problems like traffic congestion, or unaffordable housing, are a rare issue of election campaigns. And long-term solutions, like faster means of transportation, stand far outside the overton window, even though they could re-open the suburban frontier and revitalize our large cities. Elon Musk is betting on tunnels. We prefer flying cars. But those are not the visions of the future you’re likely to see debated in forums on the crisis of the American city.
When structural problems do get discussed, they’re often followed by a set of proposed solutions that harken back to the past, or engage in an escapist fantasy. In this essay, we’ll take a quick survey of three so-called solutions that come up repeatedly in public debates, and we’ll highlight where they fall short. Right off the bat, two out of three are in denial about the dysfunction, while the third tacitly accepts how bad things have gotten, and merely tries to find its place in this new reality.
Unsurprisingly for our era of empty bromides, not a single one of the proposals we’ll be discussing dares to offer a vision for reclaiming the lost greatness of our cities. And it’s this postmodern nihilism, beyond all other shortcomings, that dooms these ideas from the start, and leads us to look elsewhere for a way back to the future.
It’s hard to see a future for mass transit in American cities given the way our suburbs are built. The sprawl of single-family housing makes city-wide coverage far too expensive. It also means that suburbs can never generate enough passenger traffic to sustain the lines without subsidies. So, it’s no surprise that cars remain very popular and used in over 75 percent of trips taken in major American metros.1
Contrast this to Japan, where nearly half of the country’s population lives in just two cities, Tokyo and Osaka. Since Americans don’t pay as much attention to Japan as they used, you may be tempted to imagine these two cities as disaster zones on par with San Francisco. But visit Japan’s sprawling metros, and you’ll find that the streets are clean and safe at any hour, the houses are affordable for middle income families, and the trains run meticulously on time.2
Do the Japanese know something we don’t? At the risk of being too reductionist, the most notable difference in their system is that zoning laws aren’t left to local city councils. The national government sets one zoning policy for the country as a whole. This is unthinkable in the U.S., where any attempt to pass such a policy would be instantly decried as tyranny. But is it better to be ruled by one tyrant or by 10,000?
In fact, Japan’s centralized approach to zoning helps the country stave off the virulent parochialism of local politics, freeing the island nation to have a sensible code that encourages mixed use, narrow streets, and high-density housing.3
So while Tokyo has roughly twice the population of New York City, the higher density of Japanese housing means that Tokyo’s metro area is twice smaller and four times more compact.4 As such, it’s feasible to build a mass transit system with excellent coverage across the city, drastically cutting back on costly car ownership. Hence, cars account for under 15 percent of all trips made in Japan’s two largest cities.5
Unless the U.S. is ready to take a page from Japan’s book on zoning or housing policy, no discussion of mass transit in American cities can ever amount to anything other than fantasy.6
One notable exception is New York City, which pioneered mass transit back when building a metro line could be done reasonably fast and cheap. New Yorkers today benefit from the prudent foresight of their forefathers, but they can’t build those kinds of projects anymore, and sadly neither can other major American cities. For the full percentage breakdown by city and transportation type, see Modal Share, Wikipedia Learn more↩︎
Tokyo and Osaka combined account for roughly 57 million residents or 45 percent of Japan’s population. By contrast, the combined population of the three largest metro areas in the U.S., namely New York, Los Angeles, and Chicago, comes to only 15 percent of the U.S. population. Yet, despite being relatively smaller than their Japanese counterparts, our largest cities are much more poorly run. ↩︎
One reform idea that’s becoming fashionable in elite circles wants to go in the opposite direction and devolve zoning power even more, from city councils down to individual streets and neighborhoods. What the proponents of this idea don’t seem to realize is that the net effect of such a policy would be to multiply by a thousandfold the very problem they wish to alleviate. ↩︎
The New York metropolitan statistical area (MSA) is home to 20 million residents and covers 17,400 sq. kilometers. Tokyo’s urban landmass is twice smaller at 8,500 sq. kilometers and is home to nearly twice as many residents at 38 million. Hence, Tokyo’s population density is nearly four times higher. ↩︎
To put that into perspective, the share of trips taken by car in Tokyo and Osaka is twice lower compared to New York, which is itself exceptional among American cities. When measured against most U.S. metro areas, car use in the Japanese cities is five times lower. This statistic is even more astounding when you recall that Japan is the world’s third biggest producer of cars. ↩︎
That’s not to suggest that the U.S. should give up on its suburbs, but merely that we should heed Churchill’s warning when he apocryphally said: “Americans will always do the right thing, after they’ve tried everything else.“ ↩︎
Gridlock and the city.
First, let’s state the obvious. Zoning laws in the U.S. are set at the local level. Whatever were the merits of this system at its inception, its net effect today is giving mayors and city councils a perverse incentive to restrict the supply of housing and drive up the cost of shelter.
This effectual transfer of wealth from the young to the old is enforced without any thought given to the damage inflicted on the economic prospects of younger generations. Is it any surprise then that fertility rates are near their all-time low?7
The political solution to this problem is unpopular. The greatest period of construction and expansion in New York City’s history was between 1924–1966, when Robert Moses held quasi-dictatorial powers over the building of parks, highways, bridges, tunnels, and housing around the city, holding 12 concurrent titles at one point. Through wits, force, and astonishing speed, Moses built visions of colossal scale to remake the city before objections even had time to mobilize.8
When Moses retired, the building effectively stopped. New York City hasn’t built any large-scale infrastructure since, and what it does build ends up costing a fortune and taking forever. For example, work began in 2007 on a 6-mile subway track in Manhattan that has so far taken 15 years to complete and cost $3.5 billion for each new mile of track.9
The zoning restrictions and the lack of new infrastructure to keep the city growing conspire in creating a state of gridlock that only serves to push real estate prices higher. This effect was described by Stiglitz in the Henry George Theorem, and empirically proven by later economists in city after city. The theorem states that in a static city where growth has stalled, any spending increase on public goods will only drive rents higher by an equal or greater amount.10
In short, contrary to every political promise, no amount of government spending by rule-bound agencies can make housing more affordable. If anything, it can only make matters worse.
The national U.S. birthrate fell every year between 2014–2020, hitting its lowest point ever in 2020 before making a tiny rebound in 2021. But the U.S. is not alone, as fertility rates have collapsed across all OECD countries. For country by country stats, see Total Fertility Rate by OECD Country, World Bank Learn more↩︎
Moses would often quip that “critics don’t build anything.“ He ran into opposition from all sides during his tenure, but rare is the case when he did not prevail in the end. It helped that he was an honest man. He had no qualms bribing others but never took bribes himself. He was also an efficient operator who built a reputation for getting things done, which won him the support and praise of hopefuls running for high office. The beginning of the end for his happy run came in the early 1960s when local opposition forces led by Jane Jacobs fought to stop a plan to build an expressway through Greenwich Village. In many ways, that fight foreshadowed the rise of the environmental movement on the national stage a decade later. ↩︎
High costs and long delays are sadly the norm rather than the exception for public works projects in New York City. See The Most Expensive Mile of Subway Track on Earth, New York Times, 2017 Learn more Archived↩︎
The theorem is named after the 19th century economist Henry George who's most famous for proposing to replace all forms of taxation with a single land tax. Stiglitz put forward the theorem in The Theory of Local Public Goods, Joseph Stiglitz, The Economics of Public Services, 1977 Learn more↩︎
A bad exit
Faced with this dysfunctional state of affairs, it’s not surprising that working and middle class families have started exiting New York and California for more affordable places like Florida, Texas, Arizona, and Nevada.
Although this strategy may very well pay off for the early movers, one has to wonder what’s to prevent the same problem from taking root at those destinations as well. After all, they make use of the same system of local zoning and show a similar pattern of urban sprawl. Indeed, the evidence suggests that this may already be underway, as real estate prices in popular cities like Austin and Miami rose by 50–100 percent since 2020 in response to the influx of housing refugees.11
But there’s a hidden cost to this exit strategy too, because despite all their dysfunction, New York City and the Bay Area are still the nation’s premier hubs of economic and productivity growth. So, driving people out is not just at odds with New York and California tradition, but also carries a big price tag for the whole U.S. economy by slowing down economic growth and lowering social mobility. In turn, these negative effects can only serve to further aggravate our politics.12
There’s something also to be said for the ugly aesthetics of this exit. When Steinbeck wrote The Grapes of Wrath in 1939, he told the story of the destitute driving from Oklahoma to California to escape the Great Depression. It was a tragic yet optimistic picture.13
Today, when we see people driving the other way, we get the sense that things have gone terribly wrong in this country. And that image can’t be squared with the political rhetoric that still paints a picture of a thriving nation making rapid progress on all fronts. This makes both the picture of this exit and its politics deeply pessimistic.
Ultimately, we can’t escape the dysfunction forever. The escape to the past leads us back to the messy present, and the escape to a virtual metaverse is no escape at all. Instead of giving up on our once-great cities, we should fight to recover their greatness. And the very first step in that fight is to bring transportation back to the future.
Since 2020, the median price for a single-family house in Miami has more than doubled from $250,000 to $585,000. In 2022, the city beat Los Angeles for the dubious title of the least affordable housing market in the nation. See RealtyHop Housing Affordability Index, April 2023 Learn more↩︎
Larger cities are disproportionately more productive than smaller cities. So, while exit is undoubtedly the saner choice for many, it’s worth noting that its true cost is often understated by all sides. ↩︎
In the 1930s, more than half a million people migrated from the southern states of Oklahoma, Texas, Arkansas, and Missouri, heading mostly to California. Their move across the country became a big media story even before Steinbeck published his novel. For a historical perspective on the period and its aftermath, see Dust Bowl Legacies: The Okie Impact on California 1939–1989, James Gregory, California History, 1989 Download PDF↩︎