Austin Contrarian

Urban wildlife

My five-year old son spotted this high up in our (lone) back-yard tree:

 

I think it's an eastern screech owl.

My wife thought it was a hornet's nest at first, but then my son said he saw it move.   (I honestly don't know how he managed to spot it among the leaves and branches.  Or why he was even studying the crown of the tree that closely.  I wouldn't notice a puma in a tree.)

This is a bit more exotic than the raccoon I almost ran over yesterday.

The Gated City

If you generally agree with me that anti-density restrictions hurt cities, you should read The Gated City by The Economist's Ryan Avent. If you generally disagree with me that anti-density restrictions hurt cities, you should read The Gated City to see why you are wrong.

Ryan's central thesis is that tight growth restrictions in the highly-productive coastal markets have inflated housing prices there, driving people to less productive but cheaper parts of the country.  Local zoning decisions, when aggregated, reduce innovation, dampen productivity and sap our wealth.  Micro decisions have macro effects; there are trillion dollar bills on the sidewalk.

I've tried to make many of the same points here over the years, although with a particular focus on Austin:

• Wealthy cities are innovative cities.
• Density promotes innovation.
• Density increases productivity.
• Dense concentrations of people allow richer, deeper, more varied markets.
• Anti-density regulations pushed by NIMBYs drive up home prices in high-demand cities.
• Anti-density regulations pushed by NIMBYs are bad for the environment because they drive people from cities with mild climates to cities with hot climates, increasing average per capita energy use. 
• NIMBYism's root cause is homeowner risk aversion.

Ryan does not try to identify the one optimal density, or even claim that there is such a thing.  He doesn't argue that we all should live at New York or San Francisco densities.  Rather, he argues that cities benefit from rising density, whatever their baseline.  That's right. 

He's an eloquent writer who backs up his claims with academic studies.  I don't have any significant criticisms because I agree with him down the line.  I found a couple of nits to pick.  In the introduction, he states he has estimated that anti-density restrictions in the coastal markets have knocked 0.25 to 0.5% off GDP growth but didn't return to that point.  I would like to see more about this calculation.  Any discussion of rising demand for central cities should acknowledge the role of falling crime rates.  And he spends little space detailing the many ways cities restrict density.  Although it was not necessary to his argument, it would have been entertaining to read about some of San Francisco's more absurd regulations. 

The Gated City is a Kindle single but I understand it can be downloaded to your computer or phone even if you do not own a Kindle.  It is short.  It is half the price of a venti latte at Starbuck's.  Buy it.  Read it.

P.S.  When discussing density, Ryan usually used weighted density rather than standard density, and was kind enough to throw me a cite.

Career stuff

For years and years, I practiced products-liability and commercial litigation, for the last eleven years at Clark, Thomas & Winters, a large general-service firm here in Austin.   I recently decided to change jobs and practice area -- a decision made much easier by the fact that CTW dissolved this spring after 75 years of operation.  I'm now of counsel at Coats Rose, where I practice in the firm's Real Estate, Land Use, Government Affairs & Banking section.  More succinctly:  I now practice land-use law.  The lawyers in the section usually (but certainly not always) represent property owners and developers.

This is a happy change.  I've been interested in land-use and zoning since law school, when I took the course from Robert Ellickson, one of the first lawyers to push an economic analysis of the growth controls and other anti-density regulations proliferating in the 1970s.  I've kept my interest in land-use over the years.  I've even been known to venture my own opinion on local land-use controversies from time to time.  Sometimes I've ventured these in public.  Sometimes I've ventured them only to my wife (who tired of them long ago and accuses me of turning crotchety in my middle-age).  This blog isn't really like collecting stamps or gluing together models of fighter jets or whatever, but it's time-intensive, fun and unpaid, which qualifies it as a hobby in my book.

I wish I could say that I'm now being paid to engage in my hobby but, alas, that's not true -- my blogging is still unpaid work.  But I am now being paid to practice in an area of law I really enjoy, and that's close enough.

One consequence of this switch is that I will feel more comfortable discussing the legal angle of local zoning controversies.  In the past, I've shied away from the legal nitty-gritty of specific zoning disputes or affordable housing regulations or what have you, with rare exception. 

I usually will avoid writing about disputes involving one of my clients.   One reason is that there's no point:  some people would accuse me of shilling for my client and ignore my calm, articulate, well-reasoned opinion.  Another reason is that it's generally not in a client's interests for its lawyer to engage in amateur public relations.  A third is that I may not always like every detail of a client's project.  Strangely, they tend to insist that their projects match their tastes rather than those of their outside counsel.  But I don't want to thrust myself into a public debate that may require me to defend design choices that do not match my personal taste. 

Should I for some reason deviate from this rule, I will disclose my interest and my client's interest clearly and prominently.  You can assume that if there is no such disclosure, then neither I nor my client (nor, to my knowledge, any firm client) has a financial stake in the matter.

The opinions on this blog always have been and will remain my own.  They are not not necessarily shared by any of the firm's clients or its attorneys.  I and I alone deserve the blame.

Measuring livabiity

I've claimed before that the annual rankings that list this or that city as "most livable" are bunk.  Economist Ed Glaeser happens to agree.  In his recent book, Triumph of the City, Glaeser expounded on this point:  

Real wages -- incomes corrected for local prices -- are an effective tool for assessing urban amenities.  If places have unusually low real wages, then quality of life must be high.  If places have unusually high real wages, then something is wrong with those places.  Somewhat paradoxically, the decline in real wages in places like New York provides us with the best evidence that, all in al, big-city amenities have become more valuable.

The market for legal services in Texas nicely illustrates this point.  Austin attorneys receive relatively low pay compared to attorneys in other markets.  Austin attorneys earn an average of $57.65 per hour.   By contrast, Dallas and Houston lawyers earn an average of $71.15 and $68.96.  This isn't terribly surprising since I'm sure that Houston and Dallas lawyers are, on average, more productive than Austin attorneys.  But Austin attorney pay also lags pay in such places as Midland, Longview and El Paso.  And, of couse, Austin has the highest cost of living among these cities.  Travis County has the third highest median home prices in Texas, after Dallas's suburban Collins County and Hill Country's Kendall County.    Austin attorneys, in other words, have unusually low real wages for Texas, which implies that -- at least for attorneys -- the quality of life is high.  

This does not imply that every Houston attorney would prefer working in Austin if he were paid more.  People have different tastes.  But by aggregating the wages lawyers are willing to accept, we get the market valuation of the cities' relative amenities.   That's a much better guide than rankings based on an arbitrary weighting of an arbitrary set of factors.

 

Urban economics reading list

I got a few requests in response to this post for an introductory reading list in urban economics.  Here you go.

Bear in mind that I'm not an economist, just a lawyer; give this list whatever weight you think it deserves with that caveat.  But the subject has a fairly well-defined core.  I think this is a good introduction to that core. 

A basic (and I think standard) elementary textbook on urban economics is this by Arthur O'Sullivan.  However, I like Brendan O'Flaherty's City Economics better.  It covers the standard topics and is lively and entertaining while still presenting some of the basic mathematical models for those who want to see them.  There aren't many writers who can make the economics of water rationing interesting.  

William Fischel's The Economics of Zoning Laws is the standard on that subject and very good.   See also his Homevoter Hypothesis, which is an extended, informal essay on NIMBYism, public finance and Tiebout sorting.

Agglomeration economics and positive spillovers are central ideas in urban economics although the mechanics are still poorly understand, at least in a rigorous way.  Jane Jacobs' The Economy of Cities is an insightful stab at a theory.  Krugman develops a model of regional agglomerations in Development, Geography and Economic Theory, which is quite readable for something written by an economist.  Both the Jacobs and Krugman books have the additional virtue of being cheap.

Ed Glaeser is the best-known urban economist today.  Anyone who writes about this stuff should read The Triumph of the City, which, besides being a celebration of cities, is a popular introduction to the central ideas of urban economics.  He's posted his research papers spanning the last 20 years here.  They are heavily and rigorously empirical, which is a good thing.  They contain some technical stuff which might put off the mathematically unsophisticated but each has a narrative introduction that summarizes the key result.   They're definitely worth browsing.

For the mathematically sophisticated, Cities, Agglomeration and Spatial Equilibrium is Glaeser's systematic survey of urban economics models.  The math is technical.  I struggle with it, to be honest, and I know more math than the average American.  I'm torn over these formal models.  On the one hand, they often do a poor job of capturing the dynamic processes that shape cities.  On the other hand, they often do a good job of capturing the dynamic processes that shape cities.  They also force one to think clearly about the incentives property owners and cities face.

For real estate finance, which is arguably a subset of urban economics and worth knowing something about in any event, pick a random book at your local Barnes & Noble or wherever.

For blogs on urban economics, the pickings are slim.  I'm distinguishing here between blogs about urban economics specifically and urbanist or new urbanist or Streetsblog-type or demographics-oriented blogs.  There are oodles of the latter but they are rarely economics oriented.  Ryan Avent's is the best of the former, but he got a gig at Free Exchange and has wandered off into the macroeconomics wilderness.  He still occasionally puts up posts on his personal blog, though, and his archives are excellent reading.  Yglesias writes about urban economics too.  I share their policy preferences pretty much down the line.  They are progressives, which in the land-use context mostly means allowing the market to supply more housing and less parking in central cities and ending market-distorting subsidies for suburban development.  (Gratuitous editorial:  Many of their commenters are inegalitarian, statist, anti-supply types who fancy themselves progressive.  It is not progressive to oppose subsidies to suburban development while simultaneously ginning up pretexts to oppose vastly greater supply in the urban core.)

Matthew Kahn is a serious economist and the best writer on the intersection of environmental and urban economics.  Richard Green, Richard Florida and Aaron Renn are worth reading.  Market Urbanism is what you'd guess and also worth reading.

There are other bloggers who know a lot of urban economics and could be enlightening but in my view are too dogmatic to list here.

Streetsblog Capitol Hill

I have begun contributing to Streetsblog Capitol Hill.  My first piece is on the regressivity of our housing policy.  Check it out.

Break

I have been on break the last three weeks because I needed one.  I will post new stuff this weekend.

Reminder

Jeff Jack and I will appear in-studio on David Kobierowski's "A Neighborly Conversation" (KOOP 91.7FM)  tomorrow (September 2) from 12:00-12:45.   Live streaming available here.  We will discuss the Austin Neighborhoods Council, Austin planning, growth and development, and anything else David asks us about.

Urban Returns

If you follow both this blog and Urban Returns, you've probably noticed that I cross-post every entry here.  I intended to separate the content when I started Urban Returns -- the national stuff there, the Austin stuff here -- but several Austin readers told me they like the national stuff, or at least don't mind it.  And very few (maybe three or four) of my AC subscribers unsubscribed to switch to UR.  So I'll keep posting everything here.  Again, if you only care about national stuff, you can stick to Urban Returns, but my sense is that even readers from elsewhere find the Austin goings-on mildly interesting.

Mark your calendar

Jeff Jack and I will appear in-studio on David Kobierowski's "A Neighborly Conversation" (KOOP 91.7) on September 2 from 12:00-12:45.  We will discuss the Austin Neighborhoods Council, Austin development, and anything else David asks us about.