Cato Op-Eds

Subscribe to Cato Op-Eds feed
Individual Liberty, Free Markets, and Peace
Updated: 31 min 3 sec ago

Smart Growth Facts vs. Ideology

Mon, 07/14/2014 - 08:46

Randal O'Toole

Debates over smart growth–sometimes known as new urbanism, compact cities, or sustainable urban planning, but always meaning higher urban densities and a higher share of people in multifamily housing–boil down to factual questions. But smart-growth supporters keep trying to twist the arguments into ideological issues.

The choice should be yours: suburbs, or …

For example, in response to my Minneapolis Star Tribune article about future housing demand, Thomas Fisher, the dean of the College of Design at the University of Minnesota, writes, “O’Toole, like many conservatives, equates low-density development with personal freedom.” In fact, I equate personal freedom with personal freedom.

Fisher adds, “we [meaning government] should promote density where it makes sense and prohibit it where it doesn’t”; in other words, restrict personal freedom whenever planners’ ideas of what “makes sense” differ from yours. Why? As long as people pay the costs of their choices, they should be allowed to choose high or low densities without interference from planners like Fisher.

… New Urbanism. Flickr photo by David Crummey.

Another writer who makes this ideological is Daily Caller contributor Matt Lewis, who believes that conservatives should endorse new urbanism. His weird logic is conservatives want people to love their country, high-density neighborhoods are prettier than low-density suburbs, and people who don’t have pretty places to live will stop loving their country. Nevermind that more than a century of suburbanization hasn’t caused people to stop loving their country; the truth is there are many beautiful suburbs and many ugly new urban developments.

Lewis adds, “Nobody I know is suggesting that big government–or the U.N.!–ought to mandate or impose these sorts of development policies.” He apparently doesn’t know many urban planners, and certainly none in Denver, Portland, San Francisco, Seattle, the Twin Cities, or other metropolitan areas where big government in the form of regional planning agencies (though not the U.N.) are doing just that. If new urbanism were simply a matter of personal choice, no one would criticize it.

The real issues are factual, not ideological.

Fact #1: Contrary to University of Utah planning professor Arthur Nelson, most people everywhere prefer low-density housing as soon as they have transport that is faster than walking. While a minority does prefer higher densities, the market will provide both as long as there is demand for them.

Fact #2: Contrary to Matt Lewis, American suburbanization did not result from a “post-World War II push for sprawl” coming from “the tax code, zoning, a federally financed highway system, and so on.” Suburbanization began before the Civil War when steam trains could move people faster than walking speed. Most American families abandoned transit and bought cars long before interstate highways–which, by the way, more than paid for themselves with the gas taxes collected from the people who drove on them. Nor did the tax code promote sprawl: Australians build bigger houses with higher homeownership rates in suburbs just as dispersed as America’s without a mortgage interest deduction.

Fact #3: Contrary to Thomas Fisher, low-density housing costs less, not more, than high-density. Without urban-growth boundaries or other artificial restraints, there is almost no urban area in America short of land for housing. Multifamily housing costs more to build, per square foot, than single-family, and compact development is expensive because the planners tend to locate it in areas with the highest land prices. The relative prices in my article–$375,000 for a 1,400-square-foot home in a New Urban neighborhood vs. $295,000 for a 2,400-square-foot home on a large suburban lot–are typical for many smart-growth cities: compare these eastside Portland condos with these single-family homes in a nearby Portland suburb.

Fact #4: Contrary to Fisher, the so-called costs of sprawl are nowhere near as high as the costs of density. Rutgers University’s Costs of Sprawl 2000 estimates that urban services to low-density development cost about $11,000 more per house than services to high-density development. This is trivial compared with the tens to hundreds of thousands of dollars added to home prices in regions whose policies promote compact development.

Fact #5: Contrary to University of Minnesota planning professor Richard Bolan, the best way to reduce externalities such as pollution and greenhouse gases is to treat the source, not try to change people’s lifestyles. For example, since 1970, pollution controls reduced total air pollution from cars by more than 80 percent, while efforts to entice people out of their cars and onto transit reduced pollution by 0 percent.

Fact #6: Contrary to Lewis, suburbs are not sterile, boring places. Suburbanites have a strong sense of community and are actually more likely to engage in community affairs than city dwellers.

Fact #7: Smart growth doesn’t even work. It doesn’t reduce driving: After taking self-selection into account, its effects on driving are “too small to be useful.” It doesn’t save money or energy: multifamily housing not only costs more, it uses more energy per square foot than single-family, while transit costs more and uses as much or more energy per passenger mile as driving. When planners say smart growth saves energy, what they mean is you’ll live in a smaller house and have less mobility.

Fact #8: If we end all subsidies and land-use regulation, I’ll happily accept whatever housing and transport outcomes result from people expressing their personal preferences. Too many planners want to control population densities and transport choices through prescriptive land-use regulation and huge subsidies to their preferred forms of transportation and housing.

These planners think only government can know what is truly right for other people. Even if you believe that, government failure is worse than market failure and results in subsidies to special interest groups for projects that produce negligible social or environmental benefits.

If urban planners have a role to play, it is to ensure people pay the costs of their choices. Instead, it is planners, rather than economists such as myself, who have become ideological, insisting density is the solution to all problems despite the preferences of 80 percent of Americans for low-density lifestyles.

Categories: Policy Institutes

PolitiFact Oregon "False" Rating of Wehby Claim ... Is False

Mon, 07/14/2014 - 08:35

Jim Harper

I was pleased to get an inquiry from PolitiFact Oregon recently about a controversy I knew nothing about. Alas, I must deny credit to Politifact’s use of the information I provided.

Monica Wehby, the Portland pediatric neurosurgeon challenging Senator Jeff Merkley (D), recently fired on the senator for his support of the Rebuild America Jobs Act (S. 1769 in the 112th Congress).

According to the Politfact Oregon write-up, Wehby described Merkley’s vote for the act as “typical of a Washington insider like Senator Merkley,” saying, “I would have voted no because this legislation would have cost the average American family $1,000 a year while making no significant impact to fix our infrastructure and roads.”

Is the cost figure true? My site was the source of the number that the Wehby camp used (actually $958.40).

I described the source of the number to the Politifact reporter in some detail: does a net present value calculation on CBO scores, calculating as costs the amount that would have to be put in a bank account now to fund future taxes and spending, for example, and as savings the amount that would go into a bank account now based on expected tax reductions and spending cuts. We divide gross amounts by the number of people in the country (according to census figures) and then multiply by the size of the average U.S. family (3.14, if my memory serves). At the end of a Congress, we “freeze” the relevant figures, so the calculation for S. 1769 is based on a discount rate of 3.73%, a U.S. population of 315,085,045, and a national debt of $16,338,243,391,74.

The CBO score for S. 1769 (click “Read an analysis of the bill” on the bill’s page) shows revenues (taxes - a cost) of about $56.8 billion and outlays (spending - a cost) of $56.5 billion. That made S. 1769 a high-cost bill — it proposed increasing both taxes and spending — but it was fairly budget-neutral, increasing the average family’s share of the national debt by only about $40 per average family.

If Wehby claimed that the bill would have cost the average American family about $1,000 in new taxes, I think that is incorrect. It would have cost about $500 per family in new taxes and about $500 per family in new spending.

Wehby’s claim was not that it would cost $1,000 in new taxes, though, as the PolitiFact reporter said to me in his inquiry. It was that the bill “would have cost the average American family $1,000 a year.” That is a correct number, though the reporter did not catch or raise with me that the net present value calculation produces a one-time cost figure—not the cost per-year.

There are arguments against this methodology for calculating costs, which I noted to the reporter:

As the bulk of the revenues would have come from a surtax on people with a modified AGI above $1,000,000, I see an argument that this would not have come from “average families” in the “median” or “mode” sense. But our calculations are literal averages — the arithmetic mean — which is produced by dividing costs among all families in the U.S. That approach makes the most sense for outlays, as funds in the U.S. treasury can be thought of as “owned” by all the people, and expenses should be treated as falling on all of us. The average/arithmetic mean makes less sense when it comes to revenues because they often come from distinct sets of taxpayers, such as the relatively well off.

We use the method of calculating we do because there are upwards of 10,000 bills in every Congress and hundreds get CBO scores. We don’t know of a reliable or accurate way to calculate and report tax or spending incidence at scale — who actually pays and who actually receives tax dollars — in all these bills.

My conclusion: “The statement that the bill would have cost the average family $958.40 according to CBO figures is accurate because taxes and spending are each appropriately treated as costs and ‘average’ refers to the arithmetic mean.”

But that’s not what PolitiFact Oregon reported. To my surprise, I “faulted Wehby’s claim on two counts.”

The first involved the $958.40 figure itself. In reality, [Harper] said, only half of that would come in the form of new taxes. The remainder really doesn’t count since it’s in the form of new spending. And while it could be argued that new spending amounts to a long-term debit, the CBO’s own finding that the bill was budget-neutral negates that point.

I neither said nor implied that spending “really doesn’t count.” It counts. The methodology I use counts it. And, while I pointed out that the bill was relatively budget-neutral, candidate Wehby didn’t make any claim about the budgetary effects of the bill. A bill can cost a lot and be budget-neutral. This one did and was.

The second point that the Politifact report attributed to me “was that ‘average families’ would not have borne the burden of any new costs because language in the bill made clear that it would be financed by a 0.7 percent surtax on millionaires.”

That wasn’t my point at all. Here’s what I wrote to the reporter:

It’s important and relevant to many, though, that the incidence of the taxes would have been on relatively rich people. The $500 in taxes would not have hit the “typical” (median/mode) American or Oregonian family. It’s up to you whether you believe it’s expected in the context of Wehby’s statement to get into tax incidence. You can ding her for that omission if your judgment is that it’s something she should have included.

It’s not something I faulted Wehby for. I called the statement “accurate” and left the question of subtlety around tax incidence to the reporter (thinking to myself, “Yeah, right. A political campaign is supposed to get into ‘tax incidence’…”).

It turns out that what a bill “costs” is hard to figure out when the bill has both revenue and spending measures. I’ve given it a lot of thought over years and come up with a pretty good methodology (explained and caveated at’s “about” page.) It’s disappointing when this thinking, and the work you put in writing up an issue for a reporter, comes out this badly misunderstood, and your own views mischaracterized.

With regret, I rate Politifact Oregon’s rating of Wehby’s claim False.

Categories: Policy Institutes