How planning turns cities into luxury goods

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“Since 1990, the San Francisco Bay Area has grown more slowly than the nation as a whole. Strict housing regulations make it difficult to expand the housing stock. So rather than creating a tide that lifts all boats, Silicon Valley’s millions have pushed housing prices up and non-wealthy San Franciscans out.” Matthew Yglesias

Planning was meant to be a progressive project which ensured that land was harnessed for the best use of the community but instead it’s excluding all but the the richest from successful cities.

For better or worse, much of what the Clement Attlee’s great reforming Labour government did has not endured. The NHS does of course but the ‘commanding heights of industry’, the utilities and much else beside are back in private ownership.

Of what is left one of the most significant components is the Town and Country Planning Act 1947. It is this Act that required private landowners to get planning permission for developments on their own property. It also allowed local authorities to create ‘Green Belts’ that limited the spread of cities outwards.

This had the progressive intention of constraining the power of landowners. Despite this it is turning into a social disaster.

Research by Economists Ed Glaeser and Joseph Gyourko has shown that by tougher ‘zoning laws’ (what the Americans call planning laws) inhibit the building of extra homes and that creates a scarcity which pushes the price of homes up.

To see the damage this does Matthew Yglesias invites us to:

compare San Francisco today to Detroit a century ago. San Francisco is in the midst of a boom driven by information technology, just as Detroit was in the midst of an automobile-driven boom in the early 20th Century. Yet these booms have had dramatically different effects on the cities where they occurred.

In 1900, a few years before Henry Ford founded his auto company, the Detroit metropolitan area had around half a million people. By 1920, the population had almost tripled to 1.4 million, and it grew to 2.5 million people by 1940. Thanks to the booming auto industry, Detroit grew a lot faster than the nation as a whole. Those extra 2 million people weren’t just workers on Henry Ford’s assembly lines — they included barbers, schoolteachers, doctors, janitors, waitresses, and others providing services to the growing population of middle-class auto workers.

Since 1990, the San Francisco Bay Area has been experiencing a similar economic boom. Google, Facebook, and hundreds of other new technology companies are creating thousands of new jobs. Increasingly affluent engineers want haircuts, restaurant meals, remodeled kitchens, medical care, schools for their children, and so forth, just as auto workers did a century ago. Ordinarily, you’d expect workers across the income distribution would flock to the Bay Area to provide these kinds of services. The population of the Bay Area should be swelling.

But that mostly hasn’t happened. Since 1990, the San Francisco Bay Area has grown more slowly than the nation as a whole. Strict housing regulations make it difficult to expand the housing stock. So rather than creating a tide that lifts all boats, Silicon Valley’s millions have pushed housing prices up and non-wealthy San Franciscans out. Over the last two decades, a lot of them have left the area for fast-growing places like Phoenix and Las Vegas. The job opportunities there aren’t as good, but you can afford to buy a house on a middle-class salary.

Creating a situation where the only people who can afford to live near well paying jobs are those who already have them is a terrible break on social and boost for inequality. Nor is it just an American problem as concerns about ‘Shordification‘ and ‘supergentrification‘ show. The price per square foot for housing in San Francisco is actually lower than in most London Boroughs.

When a typical resident of Barnet has to pay 12 and a half years salary to buy a house we really need to start wondering if we are putting too high a price on protecting views, rare bat colonies and the like and not enough on actually giving people places to live.

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One thought on “How planning turns cities into luxury goods

  1. Pingback: Five big reasons NOT to vote Green | Matter Of Facts

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