Russ Roberts

Charles Marohn on Strong Towns, Urban Development, and the Future of American Cities

EconTalk Episode with Charles Marohn
Hosted by Russ Roberts
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Charles Marohn, President of Strong Towns, talks with EconTalk host Russ Roberts urban development and what makes a strong town. The two discuss how the post-World War II approach to town and city planning has led to debt problems and wasteful infrastructure investments, and how changes as small as the width of roads make cities more vibrant. Other topics discussed include central Detroit today as a model of city growth, the incentive problems associated with how state and federal infrastructure funds are distributed, and Marohn's efforts to change civil engineers' perspective on growth.

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0:33Intro. [Recording date: April 28, 2014.] Russ: What's a strong town? Guest: That's a really good question. I think at the end of the day, a strong town is one that can pay its bills and is not reliant on others for its own future. So many cities around the country today are completely dependent on aid from other places, from revenue from outside the city, in order just to make ends meet. And a strong town is one that is completely in control of its own future. Russ: How do we get there from here? How did we get here from there? How do we get to a situation where so many towns are either literally bankrupt or near bankruptcy? Guest: Yeah. That's a really complicated question and answer. But in kind of a Cliff Notes version, after WWII, we began--and really before World War II to a degree, but really exploding after WWII--this kind of new experiment in how to build cities. We turned our backs on the way humans had built civilizations for thousands and thousands of years. We did this for logical reasons. We had the automobile now, and kind of felt that this would be the thing that would bring us a great bit of prosperity. And we started building cities in different ways. And in the very short term it created a lot of growth and a lot of prosperity. But over the long term, it is, that horizontal expansion component, has created an enormous number of liabilities. Just essentially spreading everything out. Basically means there is more for everybody to pay for. There is more for everybody to maintain. As we've gone on, that illusion of wealth you get from all the new growth is a real enticement. And so our solution to financial distress has been to generate more and more growth. And at the end of the day, that's only made our problems worse. So, today our cities face these huge financial imbalances in terms of infrastructure they need to maintain, the amount of area they have to police and serve with fire protection and other services. And they just simply don't have anywhere near the tax base to do it. There is not enough there, in a sense. Russ: So, what's wrong with growth, though? That would seem to be a good thing. Growth generally means you've got an enlarged capacity to pay for stuff. Why has that not worked out? Guest: Growth is fantastic, and our cities need growth, and our cities have always been successful when they've had it. I think the trick is that it's got to be productive growth. It's got to be growth that ultimately makes you wealthier over the long term. You know, you look at a business or a family or a city--growth is relatively easy. We can generate growth tomorrow, no problem, if we are willing to take on a bunch of debt and a bunch of long-term liabilities. Really, for cities, the exchange has been near-term growth for long-term liabilities. And the math on that just doesn't balance. We've had modest amounts of growth compared to the enormous liabilities that we are taking on. And that's why cities are drowning in long-term obligations. Russ: So, it's more than just financial problems, of course. There's, say, a whole set of--I think of them as sort of textural--the texture of city living that matters, as well. And of course they are tied together. If you have a lousy texture of living, if it's no fun to live in a city, you are not going to have population growing; and you are going to have population fleeing; and you are going to have problems with your tax base; you are going to have trouble paying for promises you made in the past. But it seems to me that's really--you know, obviously there are many ways to think of, as you said, it's a complicated problem. But the root of the problem to some extent is our cities have become a little bit dysfunctional, not just in the borrowing problem but in what they actually do and what the streets are like and what the businesses are like and what urban life and transportation is like. So I want to focus on that. I want to think about two different ways we could think about what went wrong in the cities that are struggling. One is that they just made mistakes. The other is that there are some special interests that have benefited and profited from these decisions and policies. So, there are a lot of urban fads over the last 50 years. Do you want to pick on a few of them that you just think were mistakes? Let's not worry yet about the special interest part. But what kind of movements and ideas in urban living and in urban planning do you think have been mistakes? Guest: Well, I think that gets to, the point that you just made, where cities are really complex places. And I think, you know, we'd be fooling ourselves if we pretended that cities weren't going to make mistakes or wouldn't always make mistakes. I think what is unique to the last 50, 60 years is kind of the hubris involved in our mistakes and the scale of them. You know--we--I just read an article today about this poor city of Chester in Pennsylvania, where in order to generate growth they went out and built a soccer stadium. Ed Rendell, the big spokesman for infrastructure in this country, was a huge supporter of this when he was Governor. And of course, the stadium got built. A lot of people who built it made money. And nothing has happened all around it. I went and visited the location a couple of years ago, after they had done another tens of millions of dollar projects, to build an interchange. Same basic concept. We would do this and get growth and get all this economic development. And of course nothing has happened. I think at the end of the day what we have done is we have taken cities that grew in small, iterative increments over time and, in pursuit of growth, tried to simplify their growth down to one or two different variables--whether it was running highways through the middle of the city, building interchanges, building frontage roads and getting growth that way. Whether it was, we are going to do urban renewal, tear down neighborhoods and put back things we thought would be better. Whether it's, you know, building a stadium or a convention center or some other kind of sexy, flashy thing that we think will create growth. It's really not the mistakes, but the scale at which we've made the mistakes, and the scale at which we've operated, that is the problem. We need to get to a situation where we make our mistakes early and small, so that they become learning things and not these huge albatrosses that we see all over the country.
7:30Russ: Yeah, you're very critical of what you call 'mega-projects'. Which reminds me, incidentally, of foreign aid problems in trying to alleviate poverty in poor parts of the world. We do have a romance about the giant, savior project that's going to "fix everything," rather than being patient and understanding that that's not the way the world usually works successfully. Guest: Well, especially at sea level. There's a seductiveness to go in and have the big flashy thing that you believe created the success in the neighboring city. Historically--I like to point out that Rome didn't get the Colosseum and then build Rome. The Colosseum was the byproduct of centuries of success. And you know, you can look and say Rome was successful because they had a Colosseum. And go out and build a Colosseum and then say, why isn't Rome appearing here? The process is much messier, much more complex. And, last, kind of quick and easier than that, whether it's politically, socially, or financially, we've been able to kind of short-circuit that route to get to what we perceive the end destination, you know, the Colosseum, a lot more quickly in the last 50, 60 years; and it's really damaged the finances of our cities. Because we haven't done that hard iterative work to get to that point. Russ: Well, you lose the benefits of trial and error, right? Like you said, you make a big mistake and you pay for it for a very long time, and it's too late. It's been made; you've sunk all those resources into that, and it's done. Guest: Well, and then you have this weird situation. I was in Memphis last week, and Memphis, in the 1980s, really wanted a basketball team. They felt a basketball team would bring them success and make them a world-class city. And they went out and built a stadium. And they had their college team playing in there. But it was this pyramid-shaped stadium, kind of iconic structure. When the Memphis Grizzlies were enticed to move to Memphis, they didn't actually want that stadium. They wanted a different stadium. And so they built a new stadium, a Pro-ex[?] Stadium there, for the Memphis Grizzlies. The college moved over and plays there now. And the pyramid has been standing empty for a long time. They are now left with the question: What do we do with this? And they've wound up having to sink another $35 million subsidy in order to get Bass Pro Shop to move in there and open a retail establishment. They already have a Bass Pro, so they are basically shutting down the other one and just relocating some of that. I suppose you could argue it's a bigger destination now and may be a bigger draw. But there are Bass Pros all over the place. Russ: Ah, but how many are in a Pyramid? Guest: Precisely. And so-- Russ: It kind of ends the argument, doesn't it? Guest: Yeah. Exactly. And you wind up having to essentially double down on dumb money spent because you are so far down the path. This is a city, Memphis, where--they've got a great neighborhoods, but they've just lacked this investment for generations. You've got sidewalks falling apart; you've got streets you can hardly drive down. You've got lots of crime. It's a wonderful city in many ways, but a city that, if you could have taken those tens of millions of dollars and invested them in actual neighborhoods, it would have paid a much greater return than these kind of huge mega-projects that were supposed to change everything. Russ: Just for the record, I was born about a mile from that Bass Pro Shop/Pyramid location. Guest: Oh, really? Russ: Yeah. St. Joseph Hospital. I think it's still there. I get back to Memphis about once a year. I still have family there. And, as you say, it's a town that--it has a lot of advantages, it has a lot of history. It's got a river. It's got some great, great iconic history--in music, in food. But it doesn't exploit it very well.
11:36Russ: So let me ask you a tough question: I'm going to put you in charge for a little bit. And by the way: Memphis reminds me a lot of Kansas City. It reminds me a lot of St. Louis. It reminds me, I'm sure of other cities I haven't been to--they would remind me of each other, because it's a city where the downtown is--there's a few good little blocks that are nice, that you are happy to go visit. There's others that are really depressing and sometimes a little bit scary. There's not a lot going on there. It's dark at night. There's not street life or other things that bring people down there except for those few blocks that they've thrown a lot of money at to try to improve in those cities. And everybody--not everybody--a lot of people have fled to the suburbs. The suburbs are growing; the cities are shrinking--in terms of population. The overall metropolitan area might be doing pretty well, in St. Louis for example, or in Memphis or in Kansas City. But it's not happening in the city core, in the city limits. And that part of the city is pretty awful. And so: What would you do? I put you in charge of any of those cities: What are some of the small incremental steps that you would put in place instead of fixing that Bass Pro Shop location up? Guest: Yeah. That's a very good question. And I think it's important as part of that question to just note and understand that while the edge is growing--and it's a little bit reversed in Memphis now; the edge has really slowed down a lot and there's actually been a little bit of population decline-- Russ: What do you mean by 'the edge'? Do you mean the part right next to the city? Guest: No, no. I'm sorry. And I shouldn't use 'the edge,' because there actually is a neighborhood in Memphis called the 'Edge.' No, I'm talking about the periphery of the community. The suburbs, in a sense. Germantown, and some of those areas are growing or have grown over the last two decades. But it's important to know and understand that that growth is in that illusion-of-wealth phase, that phase where, you know, where the developer comes in and builds it, when all the infrastructure is brand new, when the transaction costs for the local government are very low. You feel very, very wealthy with that kind of growth. But the liabilities are sitting out there in the ground. And they are enormous. And they are going to come due in a generation. So there is a kind of natural end to that style of growth. And so, really, I want to make sure if we are comparing apples to apples, we are talking about where do we make the most productive investments. I think if you look at Memphis's neighborhoods--and you look at, like, the Edge neighborhood, which we spent some time in last week, really there's a chance to do some really high-return investments. Things like painting crosswalks. Putting in striping on the streets to narrow the lanes and slow the lanes down. Changing some of the codes so that you can re-use the buildings that are there without having to go through 23 different inspections and, you know, have it, as if it were a brand new suburban place out on the Edge. There's a whole bunch of things you can do at the very, very small, small scale. Most of them, though, are not going to be government kind of things. Most of them are going to be government kind of getting out of the way: changing the regulatory approach. Maybe the financing part needs to be fixed. We met with a guy last week who is trying to put just an accessory apartment onto his place--basically take his garage and be able to have an apartment in it and rent it out. He got through all the city hoops, which were not minor. But now he can't get financing, because that's the kind of thing you can't get FHA (Federal Housing Administration) backing for; and so none of the local banks are necessarily willing to make him a loan on it. He can't get an appraiser to go out there because there are no comparables. And because there is no secondary market for it. So these are things that I think the answer to are going to come more in the philanthropic community, in the private sector, and in the very neighborhood level more than they are going to come from the government, per se.
15:57Russ: You mentioned striping the roads. It's hard to imagine the mayor running on this in his re-election campaign, that that would be a centerpiece. And that's one of the challenges, I think, of the approach you are advocating--the incremental approach. It's not dramatic; it's not as easy to market or sell to the citizens. But let's step back from Memphis and talk about why something like striping and narrowing the roads. Why do you think that's a good idea? I've seen you write about that. What's the idea there? Guest: Well, what you are really trying to do is we're trying to get back to a place where people will invest in the neighborhoods again. Just from a physical standpoint--and understand, I'm a civil engineer, a land use planner. So this is kind of my bailiwick a little bit, like: why do people inhabit places? Why do they invest in them? And what we have found is that the highest returning land uses--so, the highest returning types of building form--are the kind that were built prior to WWII. It's where you've got the line of shops with a second story of apartment or living unit. The kind of stuff that you see on Main Streets all over this country. There's a reason our ancestors built that way. It's really, really financially productive. Some of the obstacles to doing that today: one of them includes the fact that we've just over-engineered and over-built our streets. A lot of that comes from national standards that have been established; a lot of it comes from the way that funding comes down through the Feds and the state and the mandates that come with that in terms of what the design capacities have to be. But one of the simplest solutions to getting these neighborhoods back is just to go out and narrow up the street lanes. When you narrow up the street lanes, cars drive slower, people feel more comfortable there. They walk across the streets, to a store across the street. And in a real subtle and cheap way you get a lot more pedestrian traffic, a lot more retail, a lot more people. And people spend money, and that's what makes a place wealthier. When people are there, people invest more. And we've seen again and again--and actually Memphis has one of the best case studies in the country, on Broad Ave. A group went out there, actually painted in some narrower driving lanes, painted in some bike lanes, and put in some crosswalks. And really that was about it. They hosted a block party over the weekend and just kind of showed off what this neighborhood could look like if people wanted to live there and move there. Subsequent to that--it's been about two years now--they had about $20 million of new investment in that neighborhood. They've basically restored every dilapidated, blighted building on that block. And by 'they' I mean the private sector, not the government at all. Individuals have come in and made better use of these properties. And it really was just the catalyst of narrowing the lanes, doing a little bit of superficial work, and holding a block party that got it all kicked off. Russ: Well, there might have been some other stuff going on there at the same time. But I like the idea that if you create the right environment for people to explore and expand and use the environment in creative and productive ways, you'll get more of it rather than less.
19:19Russ: You've said some interesting things about streets versus roads. You've written about that. Talk about why these really wide roads, these boulevards--I'm in Montgomery County, Rockville Pike is a typical example of this. They are all over Memphis, where you've got two lanes on each side. Which seems great--plenty of room, there's never any traffic. If you are in a city like Memphis. What's wrong with those? What's the problem with them? Guest: Well, there's a thing we call a 'stroad,' which is a street-road hybrid, and we actually call it the futon of transportation. If you think of a futon as being an uncomfortable couch that makes into an uncomfortable bed, it's a thing that doesn't work well either way. And when you look at a stroad environment, what you see is an investment that's trying to do the road function and the street function at the same time. The road function is to move vehicles quickly from one place to another. And if you think of a road as a replacement for a railroad--a railroad is a road on rails; and a railroad, you get on on one place and get off at another; there's no frontage railroads or drive-through railroads. You just have a high-speed connection from one place to another. When we build infrastructure to capture that type of motion, the ability to get from one productive place to another productive place, the roads work really well. Wider lanes, more sweeping corners, get the traffic out of there. But what happens is, we also try to make it function like a street. A street is a platform for creating wealth, for capturing wealth. And with a street you really need a mixing of different things. You can't have all automobiles. You have to have people walking, biking; people able to get across in wheelchairs and what have you. You need humanity to make a street productive. When you have the cars moving through too quickly it really detracts from the overall street function. What we've done in the engineering profession is just compromise between the two. And so you get these over-engineered stroads where you've got highway capacities, highway-style lanes, and then accesses every 50 feet or 100 feet. So you've got turning traffic in and out. And what you wind up with is a land-use pattern that financially costs a ton and yields very little back in terms of overall tax base. Russ: And that's why you think narrower, lower-capacity streets would be better? Guest: When you are trying to build a street, you really have to look at the place you are designing and say: Is the function of this place to create wealth or is the function of this particular roadway to move cars quickly. Russ: Just a thoroughfare. Guest: Yeah. If you are trying to move cars quickly, then don't dumb down, in a sense, or screw up the roadway investment by trying to get cheap development along it, trying to essentially mine that public investment in the roadway for like quick, easy returns. If you are building a street, then you have to actually slow down the cars and design it to function as a street, so that you have an opportunity for really good wealth creation. That's just a design trick. Essentially, Design 101 at the local level. Russ: So, how much of this is--going back to my earlier question about mistakes versus special interests. Obviously, people who build roads like to build roads. It's kind of their specialty. It's what they make their money from. Guest: Right. Russ: Engineers like to build roads. It's what they were trained to do. It's kind of a natural thing. So, at the same time, the citizens--a lot of us like city living, the idea of city living; but we also like yards. We want a place for our kids to play. We might not want a city park as our only option. We want to have a backyard and we like privacy and we're wealthy now. So, the suburbs have a certain draw because of that, because people like yards. And yet at the same time, there are people who like--I'll take my wife as the quintessential example--my wife's ideal place to live, which she doesn't live in now, is where you can walk out the door--she doesn't like to get in her car--she walks out the door, she can get her coffee, she can go stop and get some groceries. We were just in the city of Jerusalem, which has an unbelievable street life and the kind of mixed dwelling and stores on the lower level that you're talking about. The sidewalks are ample. It's a very vibrant, incredibly vibrant city. And yet, a lot of people don't want to live there. They want to have their yard and they are just different from my wife. I like both; I'm not particular about either one. But a lot of people like getting in their cars. They don't mind that landscape that you find sterile and unattractive. So, maybe this is just the fact that people are different: some people like one and some like the other. Guest: Yeah. I totally respect that. I think I'll even add to that. I grew up on a small farm in central Minnesota. We were way out in the middle of nowhere. Eighty acres, horses, cows, pigs, chickens. Loved it, absolutely thought it was great. Right now, out in front of the farm, which is the same size and the same place, there is a 40-foot-wide paved road, where, when I was a kid it used to be two tire-paths through the woods. We're really not talking about lifestyle choice here. I think we can make room for what everybody's preferences are. What we are talking about is the proportion of public investment to private investment. If you look at the farm where my parents still live today, they have about half a million dollars of public infrastructure out in front of their place. The whole farm is only worth a couple million dollars. So, you know, the public investment that was made because of the school district moving way out to the edge of town and demanding sewer water and a wide road is completely disproportionate to the private investment that is there on the farm. When you look at a lot of suburban parcels, a lot of suburban development, you see that same disproportion. We did--I looked at some numbers out of Omaha a couple of years ago. And in 1940, the average Omaha citizen had 6 feet of sidewalk and 6 feet of roadway per citizen. So, essentially, if you think of your taxes going to maintain this, everybody was responsible for about 6 feet. Today it's about 70 feet. And so you've got more than 10 times the amount of obligation and liability. A lot of this stuff, out on the edge, a lot of the suburban stuff where people do have, expressed, a preference to one degree or another of a large lot and the yard and what have you, is a preference being made with a huge subsidy attached to it. It's not a real true market preference. When people would be given a market preference, which they really are not in this country, I think that people would respond differently. If they actually had to pay the cost of the roadway; if the full cost of the infrastructure was felt today instead of in the future at some point. We'd be seeing different market signals. Russ: And of course, we're not even paying for it eventually. Someone else is paying for it, on the other side of the country, through a federal block grant or some other--it's a very distorted system. Guest: Right. That's what happens today. I think part of our premise or our understanding of strong towns is that the clock is ticking on that. And we're going to wind up with a lot of places where there's going to be no money to fix this stuff. We see cities across this countries right now in what we call a 'soft default.' You've got Detroit, Stockton, San Bernardino, that have done the hard default. But cities everywhere are putting off maintenance, are letting things go, are not doing things that are just really logical in terms of keeping roadways fixed so they don't completely fall apart. They are laying off firefighters and policemen. This is all kind of the soft default that we see all over the place. And it's a function of the fact that there's a real disproportion. The places are not financially productive. There's a huge gap between what the private sector tax base will support and what the public obligations that are in the ground are actually today.
28:19Russ: So, there are a couple of issues here. I want to home in on this to get a little better understanding of what you think is the problem. I'm actually less interested in the financial problem; I'm more interested in what I earlier called 'texture.' So, our quality of life. Again, I live in Montgomery County, which is an incredibly car-based and not particularly attractive part of the country. What's fascinating me, by the way, is that Germantown, Tennessee, the suburb of Memphis, is a much more aesthetically pleasing part of the country, a place to drive through and stop and get out of your car and go to the mall, than Montgomery County. Montgomery County is much wealthier than Memphis, and I think there's some zoning and other reasons that have made it harder for innovation to take place here in Montgomery County relative to Memphis. It's harder, I think, for private investment to take place here, I'm guessing, than in Memphis. Because in Memphis it looks a lot nicer. Just more aesthetically pleasing. So my question is: What could we do--'we' is the wrong word. What could someone do, what could change in a place like Montgomery County or Germantown that would make them more pleasant places to live? Let's not--I have no doubt we waste enormous sums of money on megaprojects and road expansions that don't pay for themselves, that aren't worth it in an economic sense. But would people live far apart from each other? There's a limit, it seems to me, to what we can do to make them more aesthetically pleasing. Or, are you just saying that phenomenon is artificial and we would live closer together in a world where we didn't have the distortion you're talking about. Guest: I think that your second point is true. I think that we would live differently. I'm not saying there wouldn't be suburbs. There certainly would be. They just wouldn't be--it's the hyper-extent. I mean, Memphis is still two beltways. You would never have that--you shouldn't have that today in a sane world. But you wouldn't have that in a place where we actually paid for the stuff. But let me get to--how do you make the stuff aesthetically pleasing? This isn't my area of expertise. But I've been around it long enough where I'll try to answer your question intelligently. I think it's important to kind of split things into two different boxes, in terms of aesthetics. One is the aesthetics at 45 miles an hour. The other is aesthetics when you are out of your car. They are two dramatically different standards. You can take a place like Germantown in Memphis; you can take your standard kind of Wal-Mart today, in which a lot of the time when they built those, they look okay. It's neat out front. They'll plant trees in the medians. They'll put decent siding on it. They've got the colors down. They know how to make these places look good when they build them. The parking lot will be all nice and fresh looking and not cracked. What happens is, though, over time, is that there just isn't--the economic sense isn't there. The incentives aren't there to maintain those places and keep them up. I was in a thing a couple of years ago where one of the executives from Walmart was there making a presentation to a bunch of assessors. It was the International Association of Assessing Officers. I was speaking at their conference. And I sat in on their session. And the Wal-Mart guy essentially got up and made the case that, look, we are building buildings that are designed to last for 12-15 years. And after that period of time, our business model is to step back and look and see, should we move to another location or should we put money into fixing up and maintaining this building? And his argument to these assessing officers was, Look, you are taxing us way too much because the buildings we are building are really cheap; and you are assessing them as if they are very expensive. For me, as the planner, I'm listening to this and it's confirming what I see over and over. Which is, in this pattern we tend to build things that are not throwaway, so they are not using the like tear-down and rebuild something valuable, but they are not quality enough to where they are actually going to endure more than a generation. And you see people build these things and then what happens after a generation? They abandon them and they move up the highway to the next place. And you get kind of a rolling light. That is the story of building post-WWII America. And, you know, I think a lot of the aesthetics that you see and the problems you have with aesthetics is actually more one of the underlying financial incentives. With those buildings, as opposed to something that we could actually do from a design standpoint. Does that make sense? Russ: Yeah, but a lot of people will claim that Wal-Mart gets all these subsidies; that's why they build all these buildings way out on the edge of town and they abandon them 12 years later because there is a better location, say. But in a lot of [?] you have them, sure. But it seems to me that there are problems on both the tax and the subsidy side. I don't know if it's true about "Wal-Mart" getting subsidies. They certainly get the subsidy of the implicit--of the road. They get people out to the big box and on the edge of town. And to some extent--you have to be careful--drivers are paying for that in the form of gas taxes and other things. Guest: Right. Russ: I think the real issue is the one we talked about earlier, which is: I am paying my gas here in Montgomery County, so that somebody in Brainerd, Minnesota can have a better road. Or in somewhere, a different part of Maryland. And the connection between what I pay for and what I get is broken. And that feedback loop being broken means--boy, anything goes. We are going to have a lot of bad investments that aren't going to pay for themselves. Guest: Well, the crazy thing, too--I live in a city of 13,500 people. If you were to go around and pull people over during their morning commute and ask them about their congestion levels, they would say they are horrendous. Right? They would say, Oh, we have horrible congestion. I lived down in Minneapolis/St. Paul in graduate school, where they actually do have congestion. And when you come up here it's almost laughable. But it's relative, right? Russ: Right. Guest: If you lived here 10 years ago, there's more cars today in a sense on the key roads than there were 10 years ago. And so, what are all of our local politicians clamoring for? We need more money to fight congestion. And, yeah. So, you do make a valid point that there's no feedback loop. There's no system that correlates supply and demand through price. We have infinite demands because we all want congestion-free roads. And we all believe we are paying a lot--because we are. Russ: Yep.
35:29Russ: Well, what about this argument that we need more infrastructure, that we need more spending, that eventually the roads are falling apart. Don't we need to take care of these things? Aren't they important? Guest: Yeah. It's really kind of maddening to me, too, when you see organizations like the American Society of Civil Engineers. Here in Minnesota we have this new coalition called Move MN, which is a bunch of engineering firms and paving contractors and alike, unions--it's a really broad coalition of people who are saying, We need more money for infrastructure. And they are right in a sense. If we are going to continue building this system in the way that we are building it, without any type of financial feedback loop, without any change in the design standards of anything we are doing, we need a lot more money. We need tons and tons of money. In Minnesota, we put out a report, our DOT (Department of Transportation) did, saying we are going to have--I want to say the number was like $15 or $18 billion in revenue over the next two decades--and we need an additional $50 billion. Well, that's not a small policy tweak. Right? That's an apocalyptic difference. This is a massive, massive swing. Russ: I guess it depends what you mean by the word 'need,' though. So, there's some marketing going on there. Guest: There's no question that there's a lot of propaganda involved in those numbers. But I think the base assumption is that everything we build is good; everything we build, we need to keep. And the future will include building a lot more. And from where I stand, we are making really, really, really low use of everything that we build. And, you know, I would focus on that, way, way, way more intensely than anything else. I actually think we need to contract our infrastructure by a large percentage in order to get back to something that would be financially productive. What would that world look like? When you say contract, you are talking about, presumably, not repaving roads, letting them go back to nature. Or digging them up, or whatever you would do in the meanwhile. You mean not building a new airport; you mean closing an airport? Do you mean--closing the light rail, which is a fad that has swept through a lot of American cities, I think with not much return and great cost? When you say, 'cut back,' what do you have in mind? Guest: I think all those things are viable things on the table. And I think all those things are likely to happen to one degree or another. As, I think the Federal government is forced more and more due to over-commitment, to essentially back off from their promises to cities. I think all those things will happen. There's a city outside of Chicago, and I can't remember the name, but just a couple of months ago went through and said, Look, we don't have anywhere near the money we need to maintain all these roads, so we're going to make every dead end cul-de-sac private. Congratulations! You have a new road. And so they've said, we can maintain, essentially the trunk system, the arterial system. But we can't maintain all of these little dead end cul-de-sacs that are 1200 feet with 8 homes on them. If you guys want those maintained, you have to do it yourself. I think that's a viable option. In North Dakota they've actually taken a lot of roads that were paved and just turned them back to gravel. I think that's a viable option. When you talk about light rail, the sad thing is a lot of our light rail systems have really good connections at some points. But then for political reasons they added a whole bunch of stops that just don't work. They are not financially productive. There is not anything going on there. They stop and nobody gets on and off. I think it's logical that some of those would be closed as well. I also think there's just a lot of sewer and water in the ground. We obsess about roadways. Roadways are a small fraction of cost, actually, of what sewer and water cost. And there's a lot of sewer and water pipe in the ground, a lot of pump stations, a lot of just kind of like deep infrastructure, where, when it goes bad, I think people are just going to look around and say, Look, it's going to be $50,000 a house to fix this; you can put your own well in for $5000. I think there is going to be just the practicality of not being able to do a lot of it, and we are just going to walk away from it.
40:15Russ: So, this is a very--I hate to use the word--apocalyptic vision of, say, the next 10, 20 years. The part that's strange for me, and I'm not suggesting it isn't possibly going to happen--it very well may happen, because it's consistent with this bizarre, seemingly bizarre, thing that's happening, where people say, Well, we're out of money, so we can't do this anymore. We can't do that anymore. We're going to have to make hard choices. And then I look at the data, and government is huge. What do you mean, 'we are out of money'? And I guess part of what we are talking about here, to the extent that this vision is not just a dark fantasy but maybe a real prediction, is that we've made these promises to workers in the form of pension funds, to maintaining infrastructure that aren't viable. Is that the right story? Guest: Yeah. That's exactly the right story. The thing is, a lot of those promises were made under the guise that this growth pattern would create just endless prosperity. In the 1980s--I've looked at the Detroit stuff--in the early 1980s we were negotiating--I wasn't there but whoever was there--with these unions and they'd say, Well, instead of taking a 5% increase in pay, we'll take a 3%; but then goose our pensions. And they'd look around and say, everything's growing and we're going to get 9%-plus from our pension fund return, so yeah, let's do it. Looking out in the future, they somehow could justify that. The growth from this system hasn't been there. And a lot of it is because there is so much drag at the local level from what we did a generation ago. If I could--people have a hard time getting their mind around this. And you use the word 'apocalyptic,' and I respect that. I think in some ways there is a tinge of that. Yet if you went to people in 1940, let's say, and went into a neighborhood where people live, largely in cities, and said: In 10 years this neighborhood is going to be in serious decline and you are going to pick up and move out to that cornfield out on the edge of town because that will make a lot of sense, they would have told you that sounded apocalyptic. Right? They would have said: Well, my job is in this neighborhood; my family has lived here for generations; my kids go to school here; my church is here; all my community bonds are here. Yet, in a decade, they all picked up and moved. Because it made logical sense. I think you are starting to see a trickle now of people moving the other way, where exurbs and suburbs are starting to lose population where center cities are starting to gain. And I think a very logical outcome to places that are financially not viable is for them to just, by apathy, [?] just go away. That happens many, many times around this country, and I don't think it would be apocalyptic for us. I think it would just be a shift in our development pattern. Russ: Well, I don't spend a lot of time in urban Detroit. I have been there, I think, in the last 10 years or so. I went to a high school there to give a talk. And it was pretty apocalyptic, urban Detroit. I went to a baseball game--they had recently built a beautiful new stadium, Comerica Park, which is a great, great stadium. And I felt a little bit like I was in the movie Mad Max. I don't know if anyone out there still remembers that movie. It's literally an apocalyptic movie about the breakdown of civilization. Walking through, driving through, of course, mainly, the city streets of Detroit, I think at the time there was either 1 or no movie theater in the entire metropolitan area--not the metropolitan area--the city core. It was pretty dysfunctional. It was pretty depressing. We've been talking about infrastructure and road use and we haven't gotten to zoning, but that would be another area, I'm sure, where there's problems. But of course it's a much broader range of problems than just those mistakes: horrible school system, public school system; they have a lot of crime; they don't have a lot of jobs and economic development. So we are really talking about a much wider range of stuff. We've focused on a relatively narrow range. There's a lot more going on there, right? There's a lot of mistakes being made, not just the ones we are talking about. Guest: Yeah. This is going to sound--I've been to Detroit, too. And Detroit is as you describe it, in many places. I think there are two things that are really interesting with Detroit. And this one I tell people all the time. Detroit is looked at as this anomaly. And in my view, Detroit is not some anomaly, they are more the canary in the coal mine. They are more the logical destination for a civilization or a city that does ridiculous financial things. You've got all the different, you know, 5-mile, 6-, 7-, 8-mile where you've got the essence of the city kind of ripped out and spread out over this broad area. And there just isn't enough there to maintain everything. Detroit is in a state--and this is the other part of Detroit that I find fascinating--of essentially contracting back to something that would be manageable, or defensible, to use a military analogy. If you go right now, today, to the core of Detroit, it's actually one of the most exciting places in the world. And largely because of the absence of government. There's nobody there telling people: You can't open this business, or, You have to get a permit to do that or inspections to do this. There are very few barriers for young people to start a business and get things going. There aren't the large corporations that are competing and kind of raising up the initial cost of entry. So downtown--like the very core of Detroit--has some really fascinating things going on right now in terms of business startup and economics. But yeah, the rest of Detroit is kind of a scary place in ways. I think our challenge, really, if I had to define our challenge for this generation, is to make the transition to what the core of Detroit is today, this kind of vibrant place where a lot of great stuff is happening, without going through what the rest of Detroit has gone through. To me it's like the cities that can do that are going to be the ones that are going to be really successful places.
47:14Russ: Well, I have a quote from you here. You wrote the following: "Here's what is relevant: If Memphis wants to innovate,"--You were talking about Memphis at the time, but it's the same point.
Here's what is relevant: If Memphis wants to innovate, and if Memphis wants to make really high returning public investments, it isn't going to happen from the top/down. Successful innovation starts at the bottom and works its way up.
Most people like government in cities. In fact, we had an episode of EconTalk--I'm trying to understand why urban dwellers like big government. There's a lot of complicated and some straightforward reasons, but in general, I don't see Americans, America's cities, that the model of bottom up innovation--it's a harder sell. And I'm not sure--how do we get there from here? Guest: I think it's important to draw a distinction between the size and the scale of the government and the innovation part of it. Innovation for government looks like a stadium. It looks like: we are going to run public utilities out to here and generate some new growth. Those kind of things have to be happening in the private sector. The actual innovation side of it is not something that government does well. What can government do well? Well, maintain the pipe. Maintain the road. Fix the lift pumps. Keep the city running. Provide the police protection and the fire protection. I think those are essentially like services that the government can do really, really competently. They can also do them incompetently. But those are management issues, not like investment issues. When it comes to innovation, where should we be investing our money, where is the growth going, to me, government's role is to follow the private sector. And simultaneously to be long-term stewards of the public purse. So when you follow the private sector you are only doing it when it makes financial sense for the community as a whole. I think that getting the innovation out of government, where government is trying to be the king-maker, the deal-maker, the ones who come up with the big splashy project that's going to make a difference, that would be huge in turning our cities around. Russ: Isn't part of the problem, though, that the political structure of American cities is not very competitive? We have a lot of cities that are one-party rule, effectively. Again, Montgomery County, where I live--one party runs it, has run it, will run it for a long, long time. Now part of that is they are doing a good job, I think in some citizens' minds. But part of it is there is a lot of room for error there before they are going to get thrown out. What do you think of that part of the problem, the political governance issue? Guest: I've seen that in many places. Here, when you get up to our iron range in Minnesota, we have a pretty strong union presence, and it tends to kind of calcify things. But in those places, you are really talking about just the overall level of competence in doing basic systems. How do you go about crack-sealing roads? How do you go about maintaining your life pumps? I think that those things are not what's going to kill us. And if we have one-party rule where they favor a certain approach to that and another party where they are going to say, we are going to privatize some of that, I really feel like that's an apples-to-apples discussion at the end of the day. Russ: But both parties like the stadium. Guest: Yes. Russ: Whether it's a Democratic government in the inner city or a Republican government in the suburbs, which is the way it works in many cities, they all like the grand stuff. I guess the only thing that's going to stop that is the budget constraint, that bankruptcy issue. Guest: That's exactly what it is. And I would also add to that the state and Federal largesse as well. I look at the two big projects that my little town has done in recent years. The one was 90% funded with Federal stimulus money. The other one is going to be 90% funded with state bonding money. As soon as the state and Federal government run out of those sources of funds--which, I don't know, that's a macro issue; I'm not there. But I know that those governments are vastly overcommitted, too. As soon as those things dry up and the city has to do things on their own, the idea of these megaprojects goes out the window. Because it's not going to happen. Even a city like Minneapolis, where they are building a new stadium for the Vikings, that thing was paid for largely by the state. There was a local contribution but it's not the most significant part of it. So yeah, I think the whole thing changes, essentially when the Federal and state government don't have the money to do this any more. Russ: So we have to root for the apocalypse. It's a joke. By the way, I assume when you said, 'some local money' went to pay for the stadium, you meant the city of Minneapolis. Not the actual team, the Minnesota Vikings. Guest: Um, yeah. The team--it's funny because the team is kicking in a paltry sum that they are largely getting from the stadium naming rights and the seat licenses and stuff. But yeah, that's coming from the city.
52:40Russ: You want to say anything about those two projects in your town of Brainerd, Minnesota, that were funded by the stimulus and the bond issue? How are they turning out? Are you glad to have them? Guest: No. In fact, they are maddening to me. And it's maddening to me because I actually care. The one is a shortcut from the poorest district in the city to the Wal-Mart in the neighboring city. People in the government here get mad when I describe it like that. But that's precisely what it is. There was a shortcut around the city; and during peak times, so for 10 minutes in the morning and 10 minutes in the evening there was some congestion because that's where the buses would go through. And the city got $9.2 million to take that 2-lane shortcut and make it into a 4-lane shortcut. And it largely was paid for by stimulus money. It actually won Engineering Project of the Year. I had gone in as part of putting this together and given them an alternative design that would have been around a million dollars. And my design was designed to actually create a platform where you would get private investment along this roadway. You've got the college on one side; you've got these really low-value apartments on the other. And the idea was: couldn't we get some of these college professors to want to live in this neighborhood? Make it easier for students to walk back and forth? Kind of leverage that investment from the college? That all went away, and now we just move cars back and forth. It's been 3 years without a dime of private investment anywhere in this area. Russ: We know it created dozens of jobs, because we know government spending has a multiplier effect; it doesn't matter what they spend the money on. They just should have actually--you know, my argument is, my tongue-in-cheek argument: They should have made an $18 million project, instead of $9. You wanted $1, so you were very unpopular. They had a $9 million dollar project. If they just doubled what they paid for everything, they could have had an $18 million dollar project, creating even more jobs. Guest: Here's the really insidious part of it. A couple of council members really liked my plan. But the $1 million dollars would have been all local money. With the way the project went down, the $9.2 million, only like $600,000 was actually paid locally. So it was actually a cheaper project for the local government to do the large, dumb project than it was to do something that actually benefited them. Russ: But, Chuck, that's probably the only project in the country. Of the $800-something billion dollars in stimulus that was spent, I'm sure yours was the only one that had that weird perverse incentive and built something that was actually a negative. Guest: I worked for years as an engineer. One of the reasons why I left and went back to graduate school was I just saw all these dumb projects that I was working on. And felt--there's got to be something that we could do ahead of all this from a planning standpoint that would keep us from having to do these stupid projects. And what I found after getting a planning degree was that no, it's not the lack of planning. In fact the planning is designed to bring this about. It's actually the underlying economic system that creates this. So, yeah, it's a mess. It's really really bad incentives.
56:16Russ: So, I like you. I like your vision of the world. And for those out there listening, sometimes I think of what we do here at EconTalk is we help each other understand how things actually work. We might not be happy with the fact that they work that way, but we're wiser even if we're not any better off. We understand it. Do you have anything more optimistic than that to tell me? Is anybody listening to SmartTowns.org [StrongTowns.org--Econlib Ed.] and Chuck Marohn and saying, hey, maybe we could do this differently? And are there any cities--besides maybe the ones that are doing it well, who aren't listening, but they just happen to be getting it right? Do you have any slightly more upbeat stories to end on? Guest: Yeah. Just to be clear, too; you said Smart Towns, and a lot of people do that because this field is inundated with the notion of smart growth-- Russ: Oh, yeah, it's Strong Towns. Sorry. Guest: StrongTowns. I don't dislike the Smart Growth people, but we are motivated by very different things and so things kind of work out differently at the end sometimes. But yeah, do I have any optimistic stories? About 2008 I started writing this blog, just as kind of a way to focus my thoughts. I actually wanted to write a book, and so I started writing just to discipline myself to write more. And after a year, a friend of mine said, You should start a nonprofit around these ideas. And I told him I hated nonprofits and thought they were worthless and I didn't want to be associated with one. And he said, Well, I'll start it, and you just keep writing. So, a year later, I had this non-profit organization, and we got our 501(c)3 status and met with the Board the first time. And my Board said: What do you want to do? I said: I have no idea, but this is the message I think is important. And they basically sent me out and said go give this message to whoever will hear it. When I first started out, I was getting 2, 3 people show up at a meeting. I would drive a couple of hours. We'd advertise, we'd tell people we were going to be there, and 2 people would show up. Five years later, I can't go anywhere without a hundred people showing up. There are communities across this country--I'm going to be in Ontario next week; the week after I'm going to be in San Antonio, and then Austin. My calendar is booked through the end of the year, with places that want to talk about this. Public officials, when I give this talk, I can see them nodding. It's like the nod of recognition, like, Yeah, okay, now you are explaining what I'm feeling; we're doing everything right, we're doing everything the professionals are telling us to do, everything that the playbook is telling us to do, and it's not working. Thank you for giving us an alternative narrative. I think the harder question becomes: What do we do now? And Memphis I think is a good example where this has caught on. I've been working with Memphis for about 3 years. And the Mayor made an announcement last week: there will be no more annexation. No more horizontal growth. We are done with that. And they are working to try-- Russ: Annexation being where you expand the reach of the metropolitan area? What is annexation? Guest: Yeah. Okay. Annexation is where you bring more land into the city. So, land that is in the county, is unincorporated, now becomes City of Memphis. And actually, it's kind of insidious in Memphis, because for years, when they'd get to the end of the year and the budget didn't work, they would go annex a bunch of land, bring a bunch of new land in, because you would get the tax revenue from that on this year's budget, but you wouldn't have to actually provide services till next year. So it created this like funding steroid boost at the end of the year. And they did that for a couple of decades. So, Memphis, geographically, is huge. So, we're done with that. And we actually are going to be doing things on a return-on-investment type basis. I think Memphis stands to be one of the success stories of the next couple of decades, if they really put what we've been doing there into practice. Which it feels like they want to, you know. Russ: How do your fellow--let's close with this. You confessed earlier that you were an engineer that was, the way I would have described it--you didn't use this word but you were a little bit ashamed of what you found yourself spending your day doing. Not clear you were actually making the world a better place. What kind of response have your efforts gotten from engineers and people with planning degrees--as I think I heard you say you have. Aren't you kind of taking the fun out of it for them? Guest: Yes and no. I put this video together about three years ago called "Conversation with an Engineer." And I did it after a week of just dealing with what I thought were brain-dead professionals on projects. It basically put three different conversations I'd had into one long conversation with these two digital bears talking back and forth. And it was more like therapy for me and a joke for a couple of my friends. And it's now been watched by about--like 240,000 times, something like that. It's been wildly popular. And I've had the chance to watch it with groups of engineers, essentially like stand in the back and watch these engineers watch this video. And I'm going to make a broad generalization, but I think it's fairly accurate. The older you tend to be, the more grouchy the look on their faces. And the younger you tended to be, the more they would laugh and chuckle and high-five each other and do that. And my experience has been it's really hard to look back on the body of work that you've done and see that it wasn't helpful. That was a big hang-up for me. I mean, I thought I was building a strong America when I was doing engineering work. It took me a long time to come to grips with that what I was doing wasn't the right thing. I think the younger people are seeing this with fresher eyes. And the cognitive dissonance is greater because it hasn't been something you've floated into, it's something you are just dropped into. So, you see it more clearly. And I think there's a hunger amongst younger people to do things differently. My inbox is full of young engineers, young planners, people getting started who say, Thank you, you are giving me a language to be able to speak to the management here in a different way. I do have some optimism that the profession is ultimately going to embrace some of these ideas--because financially they are going to have to. Russ: Nothing concentrates a man's mind more than knowing he'll be hung in a fortnight. Which I think is part of what we're talking about here. Guest: Right.

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COMMENTS (32 to date)
Ajit writes:

As much as this podcast entertained me, it was also incredibly depressing. It just showed yet another side of society where spending is insidious, one I was only casually aware of.

Frank writes:

As I listened to this I was drawn to one of my ongoing questions. What are the decisions, political, private, economic, social, and such that make one city thrive and other cities prosper.

I see the contrast in two very different types of cities, one set of industrial cities, one set of small NJ beach towns.

First looking at cities that went through the recession and downturn in manufacturing that hit the US in the 70s and 80s.

Contrast and compare Detroit and Pittsburgh. Two cities tied strongly to the "old economy" of steel and cars, in fact in many ways intertwined. Detroit (many references in this podcast) is in many ways the poster child of a city gone wrong and making wrong decisions. Pittsburgh on the other hand has transformed, they've torn down many of the steel mills, some are still there, and replaced them
http://www.post-gazette.com/opinion/Op-Ed/2012/10/14/Turning-land-from-brown-to-green-Pittsburgh-s-reuse-of-industrial-sites-is-a-story-worth-telling/stories/201210140196
using brown to green reclamation . They've transformed from heavy industry to primarily lighter industry, from steel to high-tech and health-care.

I would be interested to hear more from econtalk on this topic, what could and should cities and towns be doing to be more economically successful.

Look also at two cities occupying nearly the same physical space. Asbury Park NJ and Ocean Grove NJ, these two towns separated by just a small body of water, have vastly different histories and trajectories. I've driven through both and they have a vastly different feel to them. I'm curious as to what are the historical choices that were made that caused this divergence.

[shortened url changed to full url. Please use full urls on EconLog. People like to see where they are going when they to to a link.--Econlib Ed.]

Kevin writes:

Probably some - okay quite a bit - of bias involved, but this podcast really spoke to me.

I lived in Smyrna, a NW suburb of Atlanta for about 10 years. The new Braves braves stadium is going in between my old neighborhood and my old office.

The taxpayers are funding it. The project will bring "jobs" for sure, but like this Politico article states, at what cost? The area which was the home of one of the first strip malls in the state is now deteriorating.

I am a cyclist. For one month back in 2004 I tried to give up my car. I was successful - sort of. I still had no way to get to the airport. If it wasn't for rails-to-trails type paths I would have had to ride the entire distance to work on 7 lane roads, that for most of the day are empty.

I tried to map out a route, but so many neighborhoods were built with 200 homes all with one entrance that there is no way to ride around.

When I tried to walk places, I found sidewalks that go to nowhere. I've seen Wal-mart move two miles away, and leave the old lot completely empty.

Now, for my experiment, this was a problem. Easy solution, right? Drive a car. But, the larger problem, that is in addition to what Mr. Marohn states, is that our children are trapped. They can't ride a bike or explore anywhere beyond their cul-de-sac. They can't cross a 7 lane road safely to get to a grocery store or to walk to buy an ice cream cone. They can't walk to the public pool 1/2 mile away. So, they are completely trapped.

I think cul-de-sacs (and specifically neighborhoods that lack through-streets) are representative of so much that is wrong with America.

I also wonder in 500 years if the period from 1950 to 2050 will be looked at as a failed experiment.

Arnold writes:

I think I'll forward this podcast to newly elected Mayor of San Diego, Kevin Faulconer, as he considers a new stadium for the San Diego Chargers. Yikes!!

Peter Gordon writes:

Giving up "horizontal" city expansion is not an option. Most cities are auto-oriented. Middle-class people, here and abroad, want their cars. Trying to link how U.S. cities grow to peculiar U.S. policies must address these facts.

Most U.S. transit use is in the New York metro area. But it has never stopped suburbanizing.

Without road pricing, there is inevitable waste and pockets of congestion. But Prof Alex Anas reports, "The data on the largest U.S. MSAs show that commute times increase only slightly with city size: the elasticity of the average commute time with respect to the number of workers was about 0.1 in 1990 and 2000" (Anas, in Brooks, Donaghy and Knaap, 2012, p.146). He refers to metro-area mean commute times. My own work shows that the travel time variances are also small.

I agree with the Marohn that there are occasional pockets of development that are attractive and people-friendly. It would be nice to have more of these. But the major cities have large swaths of R-1 (single-family residential) zoning. Exemptions and variances usually involve a costly "approvals" process, thick with cronyism. The latter also explains all the silly infrastructure projects mentioned in the podcast.

Steven writes:

Listening to the discussion made me want to read the book, but it's not available in any of the 11 libraries I belong to, nor is it in any bookstore. The only way to get it is online?

In the discussion, Mr. Marohn talked about transportation and infrastructure, but he didn't talk about jobs. Aren't jobs the most essential part of a thriving city or town?

Also, whenever someone says that the middle class hasn't been doing all that well over the decades (since the 1970s), Russ has always been quick to point out that they're actually much better off now than before. How does that reconcile with Mr. Marohn's premise that all that growth has been a failed experiment?

Steven writes:

Kevin, as a boy and teen I used to ride my bike all over the town I grew up in, and even for a few years as an adult, I gave up my car and walked, biked or took the bus everywhere. I was going through a 1970s "self-actualization" phase: I was a vegetarian, and I also gave up TV and radio. Of course, that was before I got married and had kids, and at that time I worked in the same town I lived in. I'm very nostalgic for those days. :-)

Steven writes:

"thick with cronyism. The latter also explains all the silly infrastructure projects mentioned in the podcast."

Yes, Peter, I agree.

taxpayer writes:

I should be embarrassed to admit that I'd never heard of Strong Towns, which seems to be a sensible approach to achieve sustainable development. As discussed, local projects funded by state or federal money are rarely cost-effective or useful infrastructure investments. But I am old enough to have been one of the transit advocates who complained that federal money was available for highways, but not for transit, and being willing to right the balance by addition rather than subtraction.

Some of the most informative Econ Talk episodes involve non-economists.

Mark Crankshaw writes:
A lot of this stuff, out on the edge, a lot of the suburban stuff where people do have, expressed, a preference to one degree or another of a large lot and the yard and what have you, is a preference being made with a huge subsidy attached to it.

I see this as a "pull" subsidy. There are indeed subsidies in place that pull people out of urban areas. But aren't there equally (if not larger) subsidies in place that "push" people out of urban areas?

I don't think it is a coincidence that when cities first attempted to promote "low income" housing and facilitate, through trillions in welfare and housing subsidies based on lack of income, that people started to want to vacate most of our urban centers. A decision was made to concentrate poverty, using massive subsidies, in the urban core. The results were predictably disastrous: failing schools, high crime, urban blight, racial tension, white flight.

This decision was not made other places, such as Paris. Paris, in contrast, concentrated their poor on the periphery of the city,"les banlieues", leaving the core urban center high income, highly desirable, and highly livable.

I don't really care much for high density housing, personally. I don't care for all the cars, people, clutter, the noise, and all that ugly concrete. I like trees, open spaces, quiet. But even if I did like urban life, the massive "push" subsidies and the destructive ugliness they have wrought in places like Detroit, the Bronx, Baltimore, and DC has inextricably and forever linked in me high density urban areas with a visceral revulsion. Although I work in DC, I spend 3 hours a day on a train precisely because I want to live as far away from there as possible.

The few livable places near urban cores are livable only because they are extremely expensive. But because they are so expensive, only the wealthy can buy there.

If the "push" subsidies continue to be made, and I don't see them being cut anytime soon, and the only areas within cities are unaffordable or overpriced, then the "pull" subsidies seem worth it to avoid living in or even near the dysfunctional and ugly places most US cities have to offer.

John writes:

As a consulting Civil Engineer, this is something I've been advocating for a few years. I'm glad that Econtalk helped me find StrongTowns.org. They will help my clients hear another independent voice saying the same thing.

Depressing, yes, in my geographic area, my efforts contradict others in my engineering industry, State and Federal funding agencies, State regulatory agencies, local Urban Renewal Districts, and government Economic Development Directors.

The glimmer of hope is that City Councils in small and medium communties have the ability to understand unsustainablity versus those listed above. They need more voices like Strongtowns in order to push back on government special interest groups and consulting engineers.

Thanks for this podcast!

Daniel Barkalow writes:

This podcast really reinforces my impression that Boston is the only civilized metropolitan area in the US. I think we've actually got pretty effective designs for each type of living: there are dense areas with lots of streets and few roads, suburban areas where the roads turn into streets in the center of town, big-box areas where the roads go to the parking lots and there's not supposed to be anything on the roads, and rural areas where the roads are a state thing that's not supposed to be of value to the towns they happen to pass through.

If anything, we've got the opposite problem: private infrastructure (in particular, the subway), which doesn't benefit from the tax revenue generated by serving areas, and therefore doesn't respond much to private sector business.

Charles Marohn writes:

Wow. I generally hate comments but EconTalk attracts some very intelligent people. Thanks so much for listening and taking an interest. To respond quickly to a couple of things.

Peter G. wrote:

Giving up "horizontal" city expansion is not an option.

Um...I would contend that it is happening whether we want it to or not. Exurbs are losing populations, some suburbs are experiencing the same and most urban areas are experiencing population growth. The momentum is clearly shifting from horizontal expansion (which has been dramatically overbuilt) to a different model. For the financial health of our cities, this can't happen quickly enough.

Steven wrote:

In the discussion, Mr. Marohn talked about transportation and infrastructure, but he didn't talk about jobs. Aren't jobs the most essential part of a thriving city or town?

I think you could make that case, but jobs are the result of productive investments, not a proxy for them. When cities focus on jobs, they very often make terrible investments. When they focus on making sound investments, it creates a platform for growth and job creation.

Mark, I like your push/pull conversation and maybe some "pull" subsidies would counteract the push. If there are pull subsidies put in place, I would argue that they should be very localized and temporary. I'm more in the Nassim Taleb school of via negativa....let's remove the push subsidies first and see where we are then. Of course, easier said than done in this political system.

I hope everyone wasn't too depressed at that conversation, something Russ Roberts said and a couple of you have repeated. I do think we have a lot of work ahead of us and that our cities are really, really fragile financially, but there is some relief and optimism that comes from identifying the problem and then starting to do things differently.

As our local governments are increasingly disconnected from state and federal affairs (because the latter don't have the money to do otherwise), it is opening up all kinds of opportunity for local innovation. I find that really exciting and quite invigorating.

And just so we're clear, that's the excitement of a creative mind, an entrepreneur, and not that of a pyromaniac. There is a huge difference that is sometimes lost. At Strong Towns we have a strong belief in humanity and so are firmly in the former category.

To quote Hayek in Keynes/Hayek 2, "Give us a chance so we can discover the most valuable ways to serve one another." My favorite line. Really powerful. For local governments -- where the theory gets real in a hurry -- we have that chance. Let's take it.

Steven writes:

Mark, the "suburbs" have been around for a long time. The idea that they have been hugely subsidized all along is new to me. I'd like to learn more about that. Can someone tell me if Mr. Marohn's book provides this kind of information?

Thanks.

Steven writes:

"I hope everyone wasn't too depressed at that conversation"

Mr. Marohn, at least you're trying to discuss solutions, rather than just pointing out the problems and challenges. That being said, I'd still like to know more about how "strong towns" can solve the problem of middle class jobs. Your points about ridiculous government "jobs" programs are well taken.

"the latter don't have the money to do otherwise"

This is another point I'm curious about. As I said in my first comment, Russ has always said that the average middle class American is better off now than several decades ago, and yet you seem to be saying that isn't the case at all, that despite all the "growth" we've reached the end of a rather tenuous rope. From my point of view, there needs to be some kind of reconciliation for those two views. I don't see how they can be compatible or complementary.

"Give us a chance so we can discover the most valuable ways to serve one another."

That's a nice line, but Hayek said it before globalization and technology began to decimate middle class jobs in the US. There are many ways I can best "serve" other people, but can I make a decent living doing it, or will I be forced to work at the so-called "China price"? (Or India price, or Mexican price, etc.)

Peter Gordon writes:

Re where the growth is, Wendell Cox at Newgeography.com keeps us informed. Suburbanization is durable and practically universal. Cities have grown outward -- from the pedestrian to the equestrian to the transit to the automobile city. "Smartphone" city is likely to give us even more outward growth.

Charles Marohn writes:

@Steven...I have some ideas on jobs, but I'm not going to pretend I have a "solution" to such a complex problem. My assertion would be that our cities are going broke, jobs or not. We need to change the financial approach of our local governments.

The incentives for jobs are heavily weighted to the federal and state governments (who collect income tax) and away from local governments (who generally do not). A rational local government should be obsessed with property values and sales transactions as those are the source of revenue, yet they generally obsess about jobs. Why? I surmise because we live in a world dominated by federal and state priorities with all the accompanying incentives.

I'd like to see local governments have a greater toolbox with the only real limitations being on debt. Today it is the opposite: lots of tax limitations, but few restrictions on debt. Local governments can leverage themselves into oblivion and the yield-starved bond market seems only too willing to let them.

As for the middle class being "better off", I think that really depends on how you measure it. If it is number of computers and televisions, then probably yes. If it is net worth and financial stability, then the data points the other way. Our local governments reflect a lot of this -- lots more debt and lots more stuff that is relatively new, but enormous long term liabilities with no reasonable way to pay them back even if one takes a pretty optimistic view of the future.

I quoted that line from the Kenyes/Hayek rap video that Russ worked on because what I'm really advocating for is a decentralization -- or localization -- of much more of our economy. If local governments were given more autonomy AND more responsibility, we would have a wider range of outcomes but more innovation and, over time, something closer to a real, stable economy that responded to what people actually need and desire.

@Peter...cities have always grown out, although it is important to note that the first three examples you cite (pedestrian, equestrian and transit) all had the core downtown as their economic base. There was also a proportional relationship between that core and the expanding periphery. It was all walkable and based on historical practices.

The last one -- the automobile -- is not like the others in some fundamental ways. The building types and styles are different. The individual incentives in relation to neighboring properties is different. The locational value of property is different. The nature of the investments there are different (now they are non-speculative). These are just four; there are many more.

In short, it is not really sufficient to say suburbs are suburbs, always have been and always will be. The American suburb of post WWII is vastly different in scale and economy to any of its predecessors. The underlying math of these places simply doesn't work.

David Zetland writes:

Excellent podcast and a good summary of why I've moved to Amsterdam (the city of bikes and people) from North America.

I'll add that (1) gasoline taxes do not even cover the cost of roads in the US, so other taxes are subsidizing driving and sprawl. (2) Cities (and streets) should be built around people, not cars, if we want them to have a vibrant life (pace Jane Jacobs). People who want suburban life and commuting should have their way OUTSIDE of cities...

Trent writes:

As I listened to this excellent discussion regarding Strong Towns, I couldn't help juxtoposing it with the podcast regarding GDP two weeks ago.

GDP is unfortunately regarded as the benchmark for our economy in the conventional wisdom - the higher GDP, the better the economy supposedly is. How does that translate to this discussion on America's towns and cities?

GDP increases when:

* Towns and cities build more new stuff, whether footbal stadiums, opera houses, roads, etc.

* New subdivisions are built and sold (more so than when an older house is renovated, or when the space above a street-front store is converted back into housing).

* Cities buy more durable goods, such as tanks (there have been myriad news reports of late of police departments in towns like Iowa City buying their own tanks (or otherwise receiving them from the federal government)).

And I think it's safe to argue that incentives are in place (e.g. federal/state subsidies) to make these GDP-friendly actions happen that the city/town governments are responding to.

On a completely different subject, I found the discussion of Detroit fascinating. The idea that portions of the city are considered 'the place to be' because no government officials are around to tell people/businesses that they aren't allowed to do something hadn't occured to me. Of course, the media are ignoring it, too, so I guess I shouldn't be surprised that I hadn't heard about it.

Bogwood writes:

An all time favorite, but may mean looking for another contrarian blog( to counter my usual peak resources view).

Even this may not be quite pessimistic enough. When he speaks of return on investment it may be actually "less loss on investment." It would be interesting to see what Tom Murphy of Do The Math Blog thinks of the energy flows. He has done about all he can do with his house and his bike. What are the net energy implications?

Or Mary Odum, trying to maximize the free services of nature obtained by leaving at least half the area undeveloped.

The future is already here--it's just not very evenly distributed(Gibson). There are worldwide cities under more stress than Detroit with clearly ecological problems,say Aleppo and the Syrian drought.

John writes:

Russ or Charles,

I found this weeks podcast to be facinating especially as I have recently moved from a suburb of St. Paul to a small town in rural Minnesota. The podcast really had me wondering about how these small towns can become strong again when there are so many empty shops.

But my biggest question I did not hear asked when Professor Mahon was talking about shrinking roads to streets (I think I got that right, or was it streets to roads). My question was how can cities that have previously expanded roads shrink them? Or what can they do to make them more foot traffic friendly?

Shawn Barnhart writes:

I was surprised not to hear James Howard Kunstler mentioned during this podcast. His book, "The Geography of Nowhere" (written in 1994) touches on many of the topics mentioned here and he generally excoriates the kind of relentless horizontal suburban development with its overdependence on driving and overextended development. Kunstler remains a vocal supporter of the kind of productive, working mainstreet kind of development advocated by Mahon.

Kunstler's politics and economics otherwise might give Russ heartburn, but since Russ seemed pretty open to Mahon's ideas he might be a good follow-on guest to expand these ideas further.

Dmitry writes:

Russ and Charles, thank you for a really interesting conversation.

Most of the things Charles talked about I experience during my living in Moscow and visiting Sochi where my relatives live.

Moscow continues to expand road networks; I and most of my friends live alongside roads with 6-8 lanes. Such situation almost forces you to own a car. And yes, the government cannot stop building roads exactly because they are easy to market: you can always proudly say that you have built N kilometers of new roads; it is much harder to justify investment in playgrounds and planting trees, people just assume that such investments cannot cost the amounts of money being spent.

Sochi just held the Olympic Games; in preparation the federal government invested huge amounts of money into a couple of monstrous stadiums and hundreds of kilometers of new roads; I was there a week ago - the place looks like a scene from an apocalyptic science fiction novel - huge buildings and infrastructure and almost no people!

Charles sees the solution in giving "a greater toolbox" to the local government. I totally agree with this "solution", however I don't deem the transition to the desired federal/local balance possible in current political arrangement. Too much financial interest is in stake so it would require a new French-like revolution to break down existing financial and power patterns. So in that regard I think the future is a bit apocalyptic.

Peter Gordon writes:

Re Mahron's comment, "In short, it is not really sufficient to say suburbs are suburbs, always have been and always will be. The American suburb of post WWII is vastly different in scale and economy to any of its predecessors. The underlying math of these places simply doesn't work." Not sure what this means.

Yes, "the suburbs" are always changing. That's a good thing. That's where most of the jobs are. It is where most of the new jobs will be. That means further decentralization -- away from the traditional core. That us not a bad thing. The key fact is the remarkable stability of commuting times (see my earlier cite of Anas; there are many others). That denotes significant co-location and by employees and employers keen not to put too much distance between them. I like that "underlying math".

Mort Dubois writes:

Did I miss someone, anyone, giving an example of an actual strong town? Do any large cities qualify? Any small cities? What's the correclation with places that have a high walk score? My own area, Lower Merion Township outside of Philadelphia, seems to check all of the boxes, but it's one of those reviled suburbs. Even so, we have very nicely laid out, walkable towns, with a mix of houses and retail, and access to public transport (bus and rail). And a healthy tax base, a good mix of ages, and a solvent government. So there's one.

If there's a list of strong towns on the StrongTown.org website, I missed it. Did anyone else see one?

SaveyourSelf writes:

Charles Marohn’s background is really interesting and his understanding of economics was surprisingly sophisticated for a non-economist.

His observation/assertion that populations in financial decline contract towards their center is supported by a story I read--if memory serves me correctly--in Milton Friedman’s book, Free to Choose. Friedman’s told a story where, during WWII, all the apartments in New York City were occupied. There was a concern among planners and economists that when the soldiers returned from overseas their need for housing would increase the demand for apartments and push up rent prices. They worried that those who could not afford the higher rent prices would be forced out on the street or out of the city. After the war ended and the soldiers returned home rent prices did, indeed, increase substantially, but there was no corresponding increase in the city’s homeless population nor was there a massive flight of poor people from the city. Economists, curious about their poor predictive ability, investigated. They found that there had been a contraction.

It turns out that during the war when prices for apartments were low many of the 2 and 3 bedroom apartments in the city had been rented by single occupants. When the war ended and rent prices went up, those individuals took on roommates or abandoned their apartment and moved in with friends or family. Thus—as the story goes—the rise in prices—which is the equivalent of a reduction in standard of living—was associated with by a literal contraction in the amount of space occupied by each person—on average—in the city.

I have often thought that this phenomenon explains the “breakdown of the nuclear family” which has occurred in wealthy countries. In the past, extended families living under one roof was common. As standard of living increased the grandparents and cousins moved out. My expectation, therefore, is that during the unavoidable downturn in standard of living we will face when cheap credit dries up, there will be a significant increase in the number of extended families living together again. Grandparents will move back in with their kids or, more likely, the kids will move back in with their grandparents. I think this also explains, in part, why so many children are raising themselves and why divorce is so common in America. Simply put, we are wealthy. Wealthy people spread out...because they can.

Charles Marohn writes:

@John asked:

My question was how can cities that have previously expanded roads shrink them? Or what can they do to make them more foot traffic friendly?

I put together a video on stroads that hopefully answers your question. You can also do a Google search for “road diet” and see a lot of examples.

@Peter Gordon said:

"In short, it is not really sufficient to say suburbs are suburbs, always have been and always will be. The American suburb of post WWII is vastly different in scale and economy to any of its predecessors. The underlying math of these places simply doesn't work." Not sure what this means.

The pre-automobile suburbs were built around streetcar lines. Node to node transportation with walkable neighborhoods centered around the neighborhood node. This is the traditional pattern of development that humans have used for thousands with the transportation between nodes (places) now by rail instead of by boat, horse or foot.

After WWII, we shifted from a node to node form of building to a corridor pattern. We didn’t do this for a small area to see how it worked. We did it all over, at a grand scale, completely dwarfing our historic approach with this new experiment. The economic incentives in such a system are very different because there is no real scarcity of land and no real locational advantage – at least not long term – for most developed land.

The incentives for the individual are also different. In the node pattern the individual incentive was to fit within the neighborhood structure. That is how individual value was maximized. It also happened to maximize the common value as well. In our new system, the individual incentive is not dependent on fitting into a pattern or even what a neighboring property does.

For commercial properties, for example, a big parking lot and a big sign don’t add to your neighbor’s value (and might degrade it) but benefit you. Different incentives in a completely different approach.

@Peter Gordon also said:

Yes, "the suburbs" are always changing. That's a good thing. That's where most of the jobs are. It is where most of the new jobs will be. That means further decentralization -- away from the traditional core.

This is either wishful thinking or simply an erroneous understanding of where jobs are and where growth is happening in our economy. Any growth that is happening today in distant suburbs and exurbs is the result of massive subsidy of that development pattern, not market forces. Despite this, more people are moving to urban areas, they are growing way faster than suburbs and not only are more jobs in urban areas, job growth there is also faster. Let’s stop kidding ourselves.

@Mort Dubois asked:

If there's a list of strong towns on the StrongTown.org website, I missed it. Did anyone else see one?

We have been asked to do this but it hasn’t been a high priority for us. We lay out what the criteria would be here. Basically, most cities have parts of their communities that are financially productive and then large amounts that are not. A city like New York or San Francisco has a healthy proportion than a place like Dallas or Minneapolis. Small towns and suburbs generally have an inordinate amount of unproductive area.

And by productive, I’m referring to the ability of the private investment to sustain (through taxation of various types) the essential public investments it requires. Go beyond one life cycle and almost all of what we have built since WWII fails that simple measurement.

@SaveyourSelf wrote:

My expectation, therefore, is that during the unavoidable downturn in standard of living we will face when cheap credit dries up, there will be a significant increase in the number of extended families living together again. Grandparents will move back in with their kids or, more likely, the kids will move back in with their grandparents. I think this also explains, in part, why so many children are raising themselves and why divorce is so common in America. Simply put, we are wealthy. Wealthy people spread out...because they can.

I believe this as well, another reason why the Fed’s manipulation of the housing market and all our hand wringing over “affordable housing” is so misplaced.

anonman writes:

To Saveyourself:

I think that there are many reasons for the disintegration of the nuclear family.
One is that the nuclear family was never the perfect ideal in the first place. Families come in different flavors.
Secondly, capitalism is constantly in motion, which upends families which used to have a stable connection to the local company. It's the grow or die imperative that uproots community ties.
Thirdly, financial instability is also a factor, in any society.
And lastly, for me, it's just part of our individualistic culture, which doesn't necessarily have much to do with capitalism, per se, but is pushed on people by plutocrats who think they know how people should live. And heaven knows individualism makes them a lot of money but is bad for relationships in a civil society.

J. Warren writes:

Hi Dr. Roberts,
Thanks for all the great things you had to say about Germantown. It was also encouraging to hear that our neighbors in Memphis are using Mr. Marohn as a consultant.
Sincerely,
-A loyal podcast listener in Germantown

Gene writes:

anonman,

So "plutocrats" are FORCING us into an individualistic culture? Interesting. I think I know what you are trying to say but I'd suggest that any individualism worthy of the name--which must include a culture that encourages individuals to take responsibility for how they live in the world--would be the greatest antidote to any nefarious schemes plutocrats (whatever that means) are "pushing on us." And, BTW, I'm a strong individualist and do not take kindly to such blanket put-downs. Let's be clear about who it is that thinks he knows "how people should live."

anonman writes:

To Gene,
Well, I think it's important to understand the ramifications of what kind of mindset people are pushing onto society. Individualism sounds great when you're talking about personal responsibility, but is a certain kind of poison for segments of society that care about living with some kind of purpose. This purpose includes having meaning within community and collectively shooting for certain societal goals. This is not the same thing at all as communism, by the way.
The reason that I find American individualism so toxic is that it makes us feel alone and like we're justified in living in a personal bubble. This affects relationships and families and community life.
I don't think I know how people should live, BTW. I just don't think that people who are in positions of influence should be telling us how to live either.
It was interesting to watch Russel Brand in his recent comedy performance, 'The Messiah Complex,' to hear him express what kind of perverted culture capitalism has wrought on America. Rampant individualism is a useful tool for the corporate sector, and yields them immense profits, dividing us and segmenting us into brand-classes, while also convincing us that taxation is evil, absolving them of any responsibility to give back.
Take your individualism and use it for you, but don't push that on other people and please know that your mindset has consequences FAR beyond personal responsibility. I have experienced this in my former less-than-social past.
As you may know, or don't, I don't know, America is one of the most sterile, hostile countries in the world to social life. We have a crisis of public space, adequate public programs, and please don't forget that individualism is an environmental and resource catastrophe.
No one touches America in consumerism, and wasteful transportation, which causes our country to consume about seventeen million barrels of oil per day. This is one of the results of your precious individualism.
Americans want to live their own lives, but that does NOT mean hyper-individualism, which is why Americans think libertarianism is such anathema.
It sounds cute to you, I'm sure, for people such as myself to put the 'plutocrats' on the spot for some of this, causing you to not take me seriously. But can you deny what the Koch brothers are trying to do?
Furthermore, I think you misunderestimate, (Bushism), how profits look to corporations when they push ideologies, and they have no further to look than raw numbers. People in charge of advertising are destructive, and they know what happens when they push certain cultural buttons.
This is one of the reasons that so many coal companies are named with some variant of the word, 'freedom,' in the title.
Be careful with what you let other people get away with in this country. This isn't a joke.
Ideas have consequences.

I happened to listen to this EconTalk podcast the day after hearing Tony Hsieh's Long Now talk. He has interesting ideas on how they're revitalizing downtown Las Vegas:

http://longnow.org/seminars/02014/apr/22/helping-revitalize-city/

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