Appreciation Expectations

 My experience with the Great Recession in the US suggests that one of the things that makes unwinding a property boom difficult is that an expectation of appreciation (due to limited supply) has become baked into housing prices. So even if house prices don't fall, even a reduction in the rate of appreciation is hurtful a wide variety of owners, from long-term householders to brand new purchasers.

You just have to think about a house as a financial instrument, like a stock or a bond. It provides a dividend (in terms of rental income, or owners equivalent rent), is a security is costs money to acquire. But like a 'growth stock', there is an expectation that the value will increase over time. 

There used to be a lot of debate over whether housing was a good investment or not. That's died down, largely because I think the empirical data is clear--it's not. The difference is largely due to dividends--you can reinvest the dividends from money you put in the market in the market. But you cannot reinvest the  benefits of having been provided housing. 

Consulting & AI

An article in the Economist this week suggested AI a major threat to consultants, whose primary goal is the provision of expertise. I remain unworried. Consultants make their living providing specialized expertise to cover rare situations. However, most consultants are actually consultants, but contractors: you pay them to get a job done that you can't (or don't want) to do yourself. The name is simply a matter of prestige: more like BCG, less like the local plumber.

Of course, every contractor-consultant aspires to being a proper consultant, by providing "thought leadership", which is simply a way of saying "I have thought about this a great deal and have useful things to say", in the sense of having useful advice. Of course, the consultant-contractor dichotomy is blurred in the other direction--while some of the BCG folks do 'strategy' rather a lot more do 'implementation', where they build you a new organizational structure rather than a new bathroom. 

Working on something, I realized "You can only write what you know about" and so a great deal of consulting is knowing about things. Which requires rather a lot of learning about things, and doing research about them. Consultants get accused of "Let me Google that for you", but that sort of misses the point--you could Google it for yourself, but since your consultant is really a contractor, you really are paying for someone to Google it for you. 

An aside on that: Googling something requires ever more wading through an SEO optimized and enshittified web, but also the ability to extract content from our society's least enshittified corpus: publicly available PDFs. This category includes peer reviewed research, think tank reports, local government documents, for-profit and non-profit thinkpieces, etc. An advantage I strongly suspect will remain, because while much web-content is open for the scraping under a generous fair-use doctrine, a PDF has a much better (more litigable) claim to being 'published' and copy-righted than a blog post. 

So, in the context of AI, an increasingly valuable portion of the service a consultant provides (compared to an AI) is the able to discriminate between high-value and low-value content, in terms of quality and relevance. Of course, all consultants use AI, but I find arguments against AI use tediously familiar to childhood injunctions about using spell-check. My (unassisted) spelling is indubitably worse, but the productivity of my time is vastly greater. It should tell you something that we no longer employ whole armies of copy-editors in document production. The real question is if your consultant is making efficient use of AI (to produce analysis tools and draft documents) and scam artists (using AI to produce analysis and review documents). 

If it's something I could task a junior analyst with, it's suitable for AI. (To the very real peril of the entire class of junior analysts, who of all people should focus on using AI to become much more productive). Which raises the issue of the use of AI by junior analysts--if they give you something an AI could have produced, what is their value? But that only suggests a mis-use of analyst time and capacity, like paying someone to spellcheck a document. But that requires senior analysist to understand the capabilities of AI, and how to apply it well. And that capacity is sadly lacking. It's easier to spurn and disparage AI tools rather then learning to use them (and teach others to use them). But it's a hard time--AI is not widely adopted, and where it is widely adopted, it's not necessarily well used. Things are changing so fast that there really aren't best practices in the professional use of AI--merely cautionary tales about the mis-use of AI. But I expect that's also a source of competitive advantage: Everyone claims expertise in AI and AI use, but it will take rather a bit longer for consultant clients to be able assess actual facility with it. 

As an aside, if you can't afford to hire someone competent to assess and manage a consultant/contractors work, you have no business contracting something out. The risk of buying a 'pig in a poke' is simply too great, and fly-by-night consultants feeding on the credulity ignorant have been a risk since the days of court sorcerers. An interesting parable for AI--if you can't assess the quality of what your AI produces, you have no business using an AI. Which is perhaps the fundamental skill senior analysts should be teaching their juniors.

Planning Permissions

Everything I read suggests that the British system of explicitly requiring Council-specific 'planning permission" for new development is something of a disaster. It has tremendously enriched the cohort able to purchase under Thatcher, to the general detriment to everyone after.

Nominally, as zoning provides 'build-by-right', things should be different in America. But due to aggressive downzoning to the degree that most new infill/redevelopment also requires a zoning change, it's hard to tell the difference. 

The modern 'Urbanization Problem'.

The problem*: how to add additional rentable space in the way last disruptive to existing 'social contracts'. In my bubble, there are two general schools of thought: 'Missing Middle' (incrementalism) and Transit-Oriented Development (bounded high density) development. The first holds that we should permit gradual intensification everywhere, and the latter that we should cluster new high-rise development near transit stations. 'Missing Middle' affects a large share of the metro environment, even partial wins (triplexes) yield big changes. On the flip side, transportation research pretty clear that modest density increases (especially at the low end) don't yield any benefits in things like changing frequency, length, or mode shifts.

The 'Missing Middle' approach aligns with the small or non-professional developer, creating ADUs by 'barnacling on' to existing housing units. Strong Towns' is emblematic of this approach. What I call the 'TOD approach' largely aligns with the interests of professional developers, and often of city planning departments, as they both represent the focus of a finite amount of expert/professional energy on a limited number of sites, typically focused on created value or reducing 'blight'. The two have a 'bottom-up' vs. 'top-down' dichotomy, as well as a 'muddling through' vs 'technocratic' rationality. 

While I love density, I do not love its modern implementation, which largely consists of replacing defunct and vacant strip-malls along high traffic arterials with elevator apartments. As a resident of one, the noise is a misery, the traffic a barrier. The most affordable ones are the modern reincarnation of the railroad apartment. 

In contrast, there is little to be said against the Missing Middle, apart that it is feral and pernicious (and hence successful). It is also the heir to the near-totality of the human urban tradition (the pre-automotive part). 

*The historic 'urbanization problem' was how to deal with the health and safety impacts of crowding unprecedented numbers of people into unprecedently enormous conurbations, as highly paid factory jobs induced the rural population to become city dwellers. These problems mainly related to water: sewerage, drinkable water, and the nexus between them: run-off. But it also required enormous advances in transportation, including the oft-forgotten canal age, the railway age, electric traction, and the automobile. And indeed, enormous advances in structures: steel frame construction and the elevator. That the preliminary limit on urban growth/agglomeration has been regulatory is an entirely new problem that emerged within living memory. 

What is Outlook Tower?

This blog was named in honor of  Sir Patrick Geddes 'Outlook Tower' in Edinburgh. 

Per Wikipedia:

In 1892, Patrick Geddes, a pioneering Scottish urban planner, sociologist, and ecologist, assumed management of the site, renamed it the "Outlook Tower," and organized it as a museum and urban study centre demonstrating his philosophy of planning, which was based on comprehensive surveys of the site, city, and region. 

He installed a series of exhibits on progressively broader geographic themes as one ascended the tower — first the world on the ground floor, then Europe, the English-speaking countries, Scotland, and Edinburgh — with the camera obscura itself continuing to project a real-time image of the city at the very top.[3] People from all walks of life were invited to come to the tower to study and learn about their city.[4]

Mission, monopoly, and your local transit agency

If your organization doesn't have a declared mission, then your default criteria becomes 'What is best for the organization?'. Which (ironically) is not necessarily what is best for the organization (or its members, employee, beneficiaries) long-term. There are organizations (public and private) that have been captured (or held hostage) by internal stakeholders. In a competitive market, it solves itself, but in a monopolistic context (Amazon, public transit agency) there can be no effective competition. Private companies subject to sufficient disfunction are preyed upon by private equity (Sears, Red Lobster, Joann's).

But for something supported by public subsidy, it would be the height of idiocy to support two competing organizations--especially so for public transit, where networks effects create natural monopolies.

So for a transit agency, it's critical to have governance (a board), representing the interests of the beneficiaries. Of course, for any labor intensive business (and operating transit is), the workforce becomes an important stakeholder. As are the transit dependent--people who don't have the resources (time, attention, human capital) to advocate for themselves. But a transit agency requires a board that can articulate a mission, vision, and goal for the agency and ensure management adheres to it.

Which is hard--there is a constant temptation to use public resources to 'do good'. Jarrett Walker talks a lot of about the coverage vs. frequency, which really gets to the core of the issue--what is a transit agency for? Who should it serve, who is it obligated to provide benefits for. Clarity is essential for agreement. It's not a black-and-white. But your agency should be clear how much resources it intends to dedicate to providing benefits to who.

Fixed guideway transit's intended user group

The intended user-group for fixed guideway transit is (and has always been) the relatively affluent exurban commuter from the peripheral suburb, able to afford the daily fare. This has been the truth since the first omnibus; if you were poor, you walked, and mechanical conveyance was either a treat or an urgent necessity. But urban transit was magical--it made it possible for many more people to afford to live beyond walking distance of their workplaces, away from industrial smoke, noise and pollution, with more space and better infrastructure (1).

But fixed guideway transit enjoys the special magic of the network effects. Adding node C to path AB not only makes journeys from B to C, but also A to C. So there is an inherent non-linear scaling (2) to adding links. That non-linear scaling is what has made is possible to serve people at lower costs--serving additional journeys on existing infrastructure makes it possible to offer a lower per rider cost than was initially feasible for the first link of your network alone. (In transit history, this surplus is largely supplied by keeping fares fixed when they would otherwise have risen in proportion to costs, rather than lowering them). 

But never lose sight of the fact that it is the middling-affluent that fixed guideway transit was designed to serve. Just as the fares from first class passengers make the flight feasible for everyone on the plane, the feasibility of serving the middling-affluent is what makes fixed guideway transit feasible. 

This has a number of implications for the necessary characteristics of fixed guideway transit. It has to be safer, more comfortable, or faster than the alternative. Historically, that meant things like enclosed carriages, smooth rails, and higher speeds. And in the modern era, that means being faster than the car. Which is something that is very very difficult to achieve, because for most transit trips, the access mode is not going to be a car--it's going to be walking, which is slower. So transit is faster primarily where either the access or egress journey is short--either you live (3)  a short walk away, or you work a short walk away. 

However, there is a special case where fixed guideway transit is faster than driving, and that's when parking is difficult to find. Then drivers face an egress journey (from vehicle to destination) that either requires a long walk, or a long search for parking. (The entire existence of on-site parking is predicated on reducing the parking search-time as a means of improving access). Of course, when demand exceeds supply, there is money to be made, and so paid parking naturally follows (4).

So when thinking about where to add fixed guideway transit, look to where parking is difficult and/or expensive. But even with Parkopedia, that's still difficult to do (especially given the heterogeneity of the terms of parking). But Google Earth easily furnishes a strong symbol of where parking is expensive--structured parking garages. Larger garages are more efficient than smaller ones, so garages tend to be sited where there is a lot of demand, and where they are located is within a short egress-walk to the ultimate destination. There is no need to analyze employment density--someone else has already done the analysis and made a multi-million dollar investment on that basis, when they built the parking garage. 

(1) Retrofitting an urban environment with underground sewerage always requires a megaproject, a cloaca maxima for a network capable of serving everywhere upstream. So moving to someplace provided with (mandated to have) underground sewerage is a win from go.  

(2) A broader topic, but in essence: each link adds more because of the network effect, but each link is less-good than the last, because you always build the best links first. So at some point, any network faces declining marginal returns on expansion. 

(3) 'Station cars' are a novel case where someone lives near transit, and then uses a low-end vehicle to make the post-egress journey for the last mile. Employment being more concentrated and more central than population, most park-and-ride lots serve the access-to-transit part of the journey.  

 (4) "Free Parking" merely shifts who pays - maybe it's the retailer, maybe its your employer, maybe it's the local polity. Urban space is valuable, and someone has to pay the piper. 

Equity and transit

From an equity standpoint, I know it sounds terrible, but--where we want to put new fixed guideway transit is not where underserved populations are, but rather where the parking garages are. Because the hard truth is that increasingly, the places where rising rents are displacing the poor and transit-dependent to aren't suitable for transit. They are ever more suburban and lower density, with sparse street networks and poor walkability. 

The hard truth about being poor is that: a) you are a renter, and b) you live where you can afford to live. Which requires making the classic trade-off between space and rent. If you need more space, you are going to wind up with longer journeys. And classically, if you can't afford the journey, you face an ugly choice between  substandard dwelling (often of questionable legality) or of overcrowding.  So you go where you can. And as always, rents are lower with the nuisances are worse, the safety less, and the accessibility more limited. 

So improving to low-rent places is a bit of a mugs game, as it's also where the nuisance is most extreme, safety an issue, and the needle hardest to thread. And once you've improved the access, you'll see the poorest, least-resourced again displaced to someplace worse. Of course, over time, the nuisance and the safety will improve, as better resourced newcomers agitate against the nuisance, public safety campaigns are enacted, and 'blighted' (low-rent) structures are replaced by new development. But all of things only ratchet up the asking rents, displacing every more of those in poverty, even as they remove the cheap and run-down buildings that businesses and their customers rely on. (This cycle is not new--Jane Jacobs inveighed against it happening in NYC generation ago). 

So if we actually want to do something on the basis of equity, what to do? First, transit should serve low-income jobs. Jobs are much more highly concentrated than population is, and the job remains low income, even if the population they serve becomes more affluent over time.  Second, the transit network needs to be flexible. the location of the low-rent district (and hence low-income households) is going to shift over time. This is especially true with low-income owners--they buy in while it's cheap, but over time become more affluent, which is strongly linked to additional vehicle ownership and thence to lower transit ridership. So if you need to serve a low income population, fixed guideway transit simply isn't the way to do it. Third, transit needs to be a network (a frequent network) so as low-income renters shift location, they can still use or re-use part of their existing trip-pattern for getting to work, rather than being forced to dissolve a whole series of arrangements to make a single shift in housing or employment.  

On Displacement

All renters move, and often. Partially it's a response to changing conditions (employment, family size) but also in response to being able to take advantage of a better deal (better rent, better quality, better location) elsewhere. So renters (per se) aren't displaced. When people talk about displacement, they are talking about the displacement of an ethnic community--when a traditionally Black / Mexican / Jewish / Chinese / Irish / Italian / Greek / Korean / Hmong / Ethiopian community ceases to have a majority of that ethnicity, typically because a wealthier, whiter, less immigrant population is moving in.  

If the housing stock is is fixed, newcomers inevitably displace incumbents, in a zero sum game that always sees the incumbents outbid. And over time, the decline in the size of the ethnic community population can no longer support 'specialty' services, markets, grocers, and (eventually) churches. And that is a loss. As strands are pulled away, the fabric of a community dissolves. And it's not something that can be casually recreated, because it's an both: a) an emergent property of a density of recurring interactions with a single spatial & temporal locus; and also b) the product of the purposeful effort by past community leaders (even if you've got dry tinder, it still takes someone to strike a match).   

There is a disjunction in community norms about acceptable behavior - newcomers vs incumbents. And the newcomers are of the hegemonic in-group, they have the law on their side (de facto or de jure), endangering incumbents through exposure to the police. 

So when people talk about displacement, we should be clear on what that means and what that requires: Enough NIMBY* to prevent new rising rents from being matched with new development, and a zero-sum game reducing the ethnic population below the threshold necessary to support specialty stores and services.  

*There is nothing more NIMBY than a parking requirement--people fighting the addition of new people or businesses, excluding them simply to prevent competition for a limited resource that they have no legal claim or right to exclude. 

Urban ecology of Walmart

If you live in a growing suburb, there are four phases: periphery, blossoming, prime, and decline. Periphery is when you must drive a long ways to get to Walmart. Blossoming is when the Walmart comes to town. Prime is when the Walmart has no competing Walmarts nearby, and is super-nice. And decline is when another Walmart moves in at the periphery, and your Walmart gets ever dingier. 

Eventually, when your store is run down, Walmart will buy a new parcel for a bigger store. And then there will be a derelict store with a vacant parking lot for a decade or so. At which point, it will be time for neighbors to make quasi-racist statements about newcomers when a developer tries to redevelop the shell of a parking lot into new multi-family housing. 

Building Community in a Suburb

Car dependence is actually less an issue that population density. Each retail space needs a certain number of rooftops, and until an area hits that threshold, retail will be limited. (More affluent places get more, poorer places get less). Abandon hope of that changing. The only escape lies in converting old buildings to new uses, or in the use of substandard buildings. The first 'community' space to emerge in the suburb I grew up in was a non-profit coffee house run by a local church out of a disused restaurant. And they were only able to do that (after much struggle) because they were issued a variance to local parking requirements.

 

Network Expansion Limits

The special magic of the network effect: Adding node C to path AB not only makes journeys from B to C, but also A to C. So there is an inherent non-linear scaling to adding links. However, while each link adds more because of the network effect, but each link is less-good than the last, because you always build the best links first. So at some point, any network faces declining marginal returns on expansion. 

Further, in any infrastructure network, expansion is perilous, because infrastructure has non-linear maintenance, and those maintenance costs are end-loaded--cheap initially, but with a ruinously expensive (and unavoidable) balloon payment for reconstruction at the end of their useful life*.

*Rail miles, like road miles, are more discrete than things like bridges, so the necessary 'balloon payment' is much smaller, and it's possible to make a lot of low-quality 'patches' that neither work well nor are cost efficient. (If the patches were either, you'd have built the how system out of 'patches' from the beginning).

Railroads aren't quite State-Owned-Enterprises.

If you weren't previously aware, the US railroad network consists of a series of regional duopolies: (PDF here). Two of the railroads shown on the 2021 map merged in 2023, and two more on the edge of merging. 

Which begs the question: given the benefits of network effects (one combined network is more efficient than two networks of the same size) that  in transportation infrastructure, why do we have more than one railroad company? Why don't we just have the Interstate Railway System the way we have the Interstate Highway System? 

Partially, it's a legacy issue. Prior to World War 2, the Federal government simply didn't have the state capacity to achieve anything of that magnitude. (The U.S. had to develop it to facilitate war production, and then we used it to do things like win the space race). So railroads were developed by massive public corporations. Before highways, railroads were the only way to get anything anywhere overland, so a railroad could basically charge whatever they felt like. And as a local monopoly, they did. (Like charging $2000 for the equivalent of a plane ticket). So there is a lot of railroad hate in U.S. history.  

The only competitor to a railroad is another railroad, and since railroads were highly profitable, it attracted competitors. But railroading is a brutal business, because it requires huge amounts of capital to build. And until it's done, built and operating, it returns very little money. So there was a lot of BitCoin level speculative building, and a whole lot of partially build railroads that went bust. That other railroads then bought up, plugged into their network, and brought to completion. Competition being bad for business, railroads owners of course conspired to restrict competition and split things up 'fairly' in a way beneficial to both (but detrimental to purchasers of railroad services). 

Anyway, all the railways started out as profitable monopolies, then stabilized as profitable semi-monopolies. And the whole concept of splitting the operation (of vehicles) from the ownership and maintenance of the right of way didn't exist--the operations make money, the right-of-way doesn't. And it took the advent of the gas tax (1954?) to join those two together. 

There are of course, a limited number of exceptions, most notably turnpikes and tollways. But the US had a system of turnpikes (still present in name all over Maryland) which collapsed upon the advent of the railways. (The railways themselves collapse upon the advent of the interstate). 

So nowadays, there is no reason for us not to have an Interstate Rail Network. It would be remarkably simple per mile charge for any railroads using the track, and adding capacity where things are congested. But first we'd have to buy the railroad right of way from the railroad corporations. (Or just buy the corporations outright, and spin off the operating companies while keeping the track). 

But would it work? Amtrak owns very little of the railways over which it travels--basically just the NEC (North East Corridor). And Amtrak is an absolute punching bag. Part of the reason the Interstate Highway System worked is a whole series of political dodges. The gas tax is federal, but the Federal government returns all the gas tax money collected to the states (albeit with some conditions attached). And the way the Feds return that gas is by providing an 80-90% match on building highways. 

Quirks in American constitutional history: The Federal government is not allowed to build roads. They can fund them, plan them, etc.... but they can't own/operate them. Best guess is that it was a deliberate effort to protect the (private) turnpike trusts from (public) competition. 

Other issue is that railroads aren't exactly profitable these days. Competition from the publicly subsidized interstate highway system (combined with over-regulation), drove most of them into bankruptcy in the 1970's. So in some cases, the railroads can't even pay to maintain their own right of way. But when a railroad closes, so do railroad dependent industries. And so we have a variety of programs to subsidize them. Railroads bonds are tax free, railroads are eligible for special zero-interest loans from the federal government, etc. 

So why don't we have an Interstate Railway Network? It's because it's entirely a legacy issue--existing legacy providers protected by existing legislation, as once the Constitution protected the turnpike trusts.

We may yet see. Pennsylvania made a massive investment in the "Main Line" of public works, building railroads and canals. So while it can't be done at a Federal level, there is no reason a state couldn't do it. But because of the scale (railroads work best at abut 500 mile distances), the network effects, and the sheer cost, it would take a big state to do it: NY, CA, TX, FL, OH. 

Cities exist for the agglomeration economies--to enjoy jointly what we cannot enjoy independently. In a modern context, that means highly specialized services. (Between Amazon and Walmart, most specialty goods can be enjoyed largely independent of location). For most Americans, their intersection with specialty services is the medical field (if you are old) or college (if you are young). So if you are looking for something to center a town (or small city) around, it's the same thing existing towns have already centered themselves around--a hospital or a college.

Every other place is grasping to find a place for itself in the 'space of flows', where it adds value to the things being produced. Anyplace that can't manage that is just left with transportation and warehousing, being a link in the larger network. Traditional extractive industries (mining, fishing, forestry, farming) are subsistence at best, vulnerable to global fluctuations to commodity prices (in inputs and outputs), and threatened by every greater mechanization and industry concentration.

Cities revived by leveraging human capital--people adding flows by connecting to people. And that's true of finance or technology. There are a lot of places hoping that 'information' is a new form of capital. (It is, but not the local economic developers want it to be.) A data center isn't a factory--the inputs and outputs of the data center aren't consumed or produced locally. Local power and water are consumed, but the outputs are immediately transported elsewhere for consumption. So there is no chance for a local value add. A data center will never catalyze a local supplier to scale up, nor induce a new local consumer of its outputs.

NYC Transit Fares

At some point, you have to ask if benefit from fares is really exceeding the cost of fares. Time has value. Fifty people on a bus waiting fifteen seconds while someone fumbles for a quarter is a grotesque waste of time. Simple Benefit cost analysis says that even if every person on that bus is only making $10/hour, that's over two bucks wasted, to obtain a quarter. It's a a calculation every transit agency should be making, but for NYC it's especially pertinent.

You may ask "But it is worth forgoing the revenue from the 50 fifty people?". Say it's $2.50/persons, so that's $125 in revenue, and we can assume not everyone is taking 15 seconds. Say everyone is taking five seconds to pay when boarding (on average--most people take 2 seconds, Spiders George takes 30), so every rider is imposing about 66 cents in lost time on every other rider. Then add in the cost of the fareboxes. And the cost of the man who comes to empty the fareboxes. And the armored truck that comes to collect the coins. And the person who sorts the coins and takes them to the bank. And the machine that smooths out all the bills.

Then add the opportunity costs of slowing down your bus. A bus is a $600,000 vehicle, and a bus driver runs about $100k a year (with benefits). Quick google says it costs $215/hour to operate a bus in NYC. Now, as a though experiment, lets say I can double the speed of my bus if I stop collecting fares. Suddenly, I need half as many buses and driver to provide the same service, and my cost per hour drops to $110/hour.

And you start to wonder "How much money are we actually making by collecting this money, once we subtract out our costs?". And then consider the benefits to riders--people where they are going, twice as far or twice as fast. A 20 minute bus trip becomes a 10 minute bus trip, for 50 people. That's 83 dollars of benefits, right there.

Actual math for non-fare collecting might only be ten percent faster, but the principle applies: 66 cents less in time cost per rider ($33), $21 dollars less in operations costs, a couple dollars less in fixed costs, $8.30 in benefits provided to riders, and the seemingly impressive $125 you've collected in fares looks a lot less impressive.

Now consider the imposed congestion costs. Everyone not in a bus is in a car, and every car is adding to congestion, imposing delay on all the other drivers, all of whom are very likely making much more than $10/hour.

A final note to the status quo folks, who claim "but we already have the fare collection equipment": overhead walks on two legs. Everything bought needs maintained, needs cleaned, needs repaired, and (eventually) needs replaced. And those replacement costs all need financed, all of it with debt. And all of that needs done by people who need paid, and who need paid enough to afford NYC rents.

Of course, this is a deeply NYC-centric argument--most places can't manage to put 50 people on a bus. But it's still a good thought experiment on the trade-offs that come from collecting fares, and especially for onboard fare collection. It was painful to ride Pittsburgh's light rail--in an era BRT has definitively proved the benefits of off-board fare collection, a light rail was still stopping to collect fares. 

Transportation Mad Libs

Hat tip to Russel King's post on LinkedIn

Everyone praises The U.S.'s freeway network. It is actually a financial, environmental and transport disaster.

One of The U.S.'s top urban planners has reviewed his country's freeway network.

The findings are sobering.

What he discovered should worry every transport planner on Earth.

The U.S. has built many fast highways.

But they have built far too many.

In the wrong places.

For routes that don't need them.

The claims are shocking:

• 40,000 km of routes didn't make sense
• Some lanes carry almost no passengers
• Interchanges are built far from city centres

Government officials love cutting ribbons on big transport projects. 🚄

But they forgot to ask simple questions first.

Do people actually want to travel here?

Is there a better way?

The U.S.'s regular roads are profitable.

They carry both people and goods.

And there are not enough of them.

The U.S. has spent a fortune on freeways but has neglected its intra-city transport.

That means more cars, more congestion and more pollution.

This matters for every country looking at freeways.

Freeways is brilliant when it connects large cities.

But The U.S. keeps building freeways to smaller places.

They want the fastest speeds even when conventional roads would be better.

The U.S. shows us what happens when you chase the shiny object. ⚠️

Instead of proper options analysis.

My blog post this Thursday will dive deeper into freeways.

And what other countries can learn from The U.S.'s and others' expensive mistakes.

Does your country have a sensible freeways strategy, or is it chasing the shiny object?

Accessibility and Nodes

Urban theory pretty clear that you have the highest land prices in the most central place. (Actual distances largely irrelevant to to what is most central, as access depends on transportation). So 'crossroads' inevitably have the highest local access anywhere you go. Empirical research pretty clear that trip frequency is inversely proportional--if something is half as far, you make 4x as many trips; if something is twice as far, you make 1/4 as many trips. How 'far' that trip is is a function of the 'cost' of at trip (in terms of cost + time). If something lowers transportation costs less (in time or money), you don't make more trips, but you tend to make longer trips. Lower transportation costs means you can do things like skip over the local market to go to the supermarket (which has better selection) or go to Walmart and get both groceries and household supplies. Lower transport costs also mean you are willing to have your house be further away from things. Further away means lower rent or--for the same money, more space (property or square footage). 

Urban land prices tend to decline as you get further from a central point. For any distance (d), the he coefficient (c) in the 1/d^c equation is set by transportation costs. The bigger that value gets, the easier it is to travel. Now, the equation suggests a smooth (if non-linear) decline from the central place. Which any realtor can tell you is crank--it's being next to a freeway that matters. Which brings up an important point--access points. A network defined by node access points (freeway exits, stations) doesn't spread access equally. It declines as you get further away, just as from the main central point. So in any urban environment, land values have a central 'peak' that declines, interrupted by smaller peaks around sub-centers, located near the point access points of the network. 

In urban land use, different uses are willing to pay more for access. For roads, it can generally be thought of as office, retail, housing, industrial, farms. Office uses will snaffle the locations near the most accessible freeway exits, retail will take the next tier down. Industrial needs big lots, so they'll typically snaffle the next tier before residential (subdivisions) have a chance. 

Mode choices & transit pricing

I make a regular trip to a yoga studio. It's about a mile and change from my house. I can drive, bike or take the train--all will get me there in 17-23 minutes. I drive more often than I'd like, because the parking AT THE METRO STATION PNR is free (unenforced), while the Metro ride will cost me $5.  This is despite the fact that I know (intellectually) that driving is costing me 62 cents a mile--but I also know that most of that is a marginal cost--my car will depreciate regardless, and I'll still need to pay insurance (regardless of how many miles I drive). Most people don't even consider the marginal cost of driving, especially beyond gasoline. (Everyone I've ever talked to 'budgets' by curtailing trips by pay-period.) 

We want more people to choose transit. If you want people to do more of an activity, you can make it cheaper. But you can also make it seem cheaper by hiding the cost from them: 1) reduce the marginal cost of a journey to zero, 2) put a lump-sum payment on auto-renewal (with unlimited use), 3) make someone else pay for it.

Transit agencies should also get rid of 'monthly' passes, and start selling '31 day' passes, so someone who can't buy the whole loaf on the first of each month isn't screwed, and so there is never a reason anyone should delay buying a bundle. Which also enables households to budget to all the main expenses (rent+ & transportation) aren't falling due on the same day an in the same paycheck. 

And for every transit agency with space capacity (and that's every agency, some time of the day), there should be dynamic pricing. (Once you're running a vehicle-trip, there's almost no marginal cost to letting more people on the bus). An economist will tell you to charge a premium for the peak, but an advertiser will tell you to offer a discount for the off-peak--when prices change unexpectedly, people should get a pleasant surprise.  

Polycentricity

The term 'polycentricity' is widely abused to suggest a uniform repeating tessellation, which ignores the hierarchy of centers. People accept the hierarchy of C-store, strip mall, mall, but get uncomfortable with the fact that the hierarchy also implies the emergence of a regional uber-mall. Likewise, downtowns get uncomfortable that the fact that any sufficiently large downtown will see the emergence of regional office sub-centers. Place hierarchy is an emergent property of the trade-offs between transportation costs and rents.

Has remote work permanently damaged cities?

Remote work has loosened the tie between home and work. But the COVID premium people were able to enjoy by shifting central-city salaries to peripheral locations won't last. Prime age working folks shifted to low density because they needed more space for home offices. The 'gray wave' of retirees is also location independent. Remote work has been hard on offices, but it takes a while for companies to recognize the costs of peripheral locations and negotiate RTO terms. I'd also like to point out that even people who work remote still live in Manhattan, thanks to an unbeatable quality of urban amenities.

Birth Rate

Let's play a facts game: Half the birth rate decline is the elimination of teen pregnancy. The other half is the decline in women under 30 having kids. Generally agreed, the first is a good thing, the second a bad thing. Increasing age of first natality is tied to housing. Adding a kid requires adding a bedroom. If you can't afford the bedroom, you don't add the kid. So until houses with 2+ bedrooms are affordable to single-income households ages 20-30, the birth rate will continue to decline. As evidence, I adduce the fact that Provo, Utah (crazy natality) is also stacked with two bedroom apartments. It's the densest part of Utah, because people are totally clear that married studies have kids, and that requires appropriate housing.  Other interesting sub-populations with high birth rates (military families, the church-going) enjoy subsidies--either directly for housing, and indirectly, through care-taking.  

Population Decline

As any left-behind community or shrinking city can tell you, population decline is terrible. People leave, population levels fall below the limit to support essential services (doctors offices, grocery stores), quality of life falls for those who remain, inducing more to leave. 

 But people often miss the financial half of this--when people leave, the debt doesn't. (And every municipality is loaded with debt, because city infrastructure is a massive capital investment that can't be funded through equity).  So when people leave, that debt burdens fewer people. So tax rates go up, so more people leave. And in desperation, the city start preying on those who remain for revenue--fees and fines. 

Stage three is abandonment--when you've got more houses than households, and more shops than businesses. That's when's truly go to bits, because that kind of blight attracts crime. Squatters and arson at best, and at worst, a malignant criminal underworld that exists as a society apart, sheltered among the downtrodden and wretched.   

On gentrification

 Gentrification exists anywhere where it becomes viable for one household to buy out and combine two units. It's a normal process of urban regeneration. But it's hugely controversial because we've supressed the other half of the cycle--the conversion of depreciated single family residential into multi-family.

On Vancouver

Vancouver costs aren't too high--they are just too high for missing middle. (Sen̓áḵw suggests the 'market density' is 600 units per acre). As one of the excluded, I'm actively hostile to the interests of long-term residents--it's always in the interest of the incumbent to exclude both competitors (for amenities or parking). I think the examples of both Japan and California clearly show that major cities can't be trusted with the power of zoning--the potential for abuse is simply too great, and that state/provincial pre-emption is going to be the rule going forward. On an equity basis, I am actively hostile to allowing the limited supply of buildable land in proximity to quality urbanism to be squatted by an inheritor/oligarch/elite worker class.