Let a Thousand Skyscrapers Bloom
Let a Thousand Skyscrapers Bloom
Solving the "housing theory of everything"
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Density is Destiny
When it comes to human progress, scale matters, at least according to physicist Geoffrey West. In his book, Scale, he describes scaling laws that underlie everything from individual organisms and corporations to the very cities that we inhabit. I have already discussed one of the more well-known scaling laws; how the square cube law dictates the maximum feasible size of an individual cell and why this forced life to evolve to become multicellular.
But scaling effects are everywhere. Kleiber’s Law, for example, holds that as organisms double in size, their metabolic rate increases by only 75%, not double as logic would normally hold. Metabolic rates, in other words, grow sublinearly to body mass, in what may be thought of as a kind of “economies of scale” in biology. Similar scaling patterns have been found between life spans and heartbeats. All mammals appear to live for an average of 1.5 billion heartbeats. Lifespans, therefore, at largely dictated by how fast a mammal’s heart beats. A shrew’s heart, for example, can beat 1000 times a minute, thus limiting them to a 2-3 year life.
Humans are the exception here, living for an average of 2.5 billion beats. It wasn’t always this way, however, we too were bound by our biological limitations until about the time of the Second Industrial Revolution. It took immense technological advances, which saw a rapid drop off in infant mortality and a corresponding increase in life expectancies, to break free of mammalian limitations. Progress, in other words, can literally bend the laws of nature. But it can also work the other way around, scaling laws can give rise to progress itself.
Human cities also obey predictable scaling patterns. Here, two exponents tend to reign supreme, 0.85 and 1.15. Infrastructure as measured by the length of roads, piping, electric lines, fiber optic cables, or even the number of gas stations in a city, scales sublinearly with population size to the exponent of 0.85. This means that the population grows faster than the total amount of infrastructure required to support it. In other words, per person, cities require less material infrastructure inputs as their population expands.
On the other hand, socioeconomic output, such as the number of patents produced, GDP, and even average incomes for its inhabitants, scale superlinearly to the exponent of 1.15. That is, the more people a city has, the more innovative and wealthier it will tend to be. Dense cities, it can therefore be argued, make better use of our economic, technological, and human capital. Thus, limitations on city size and density also limit the frontiers of human destiny.
To get a sense of how profound this is, compare a small city of 100,000 inhabitants with a city of 1 million. Certeris paribus, the latter will be about 17 times more innovative than the former. A city of 5 million, on the other hand, will be 130 times more innovative, despite having only 50 times the total population. Cities are idea factories, furnaces of innovation, where wealth and human capability are forged.
The High Cost of Housing
Earlier I discussed the negative effects of high housing costs, which run broad and deep. The cause, as many have identified, is a mismatch between the supply of available housing and the demand for it. I fingered Euclidean zoning as the primary cause of this misalignment, which restricts land to exclusive uses and often limits the density of housing allowed on zoning tracts. This begs the question, short of abandoning zoning laws altogether, is it possible to develop reasonable regulations that balance urban habitability with demand? I think the answer is yes.
As a general rule of thumb, the goal should be to restrain the median housing price in a particular jurisdiction to about three times the median household income within that same area. In 1969, almost every metropolitan district in the United States had a median cost-to-income ratio under 3.0, and the average was just 1.8. This is no longer true today. If we can design a zoning policy that can react more flexibly in the face of demand, the cost of housing would gradually converge closer to construction cost.
There is one alternative to Euclidean zoning that has been gaining traction since the 1990s: “Form-Based Codes” or FBC. FBC attempts, as Euclidean Zoning attempts, to prevent negative externalities and make our citing more livable but does so in a more flexible and nuanced fashion. FBC de-emphasizes the use of land, focusing instead on the physical form of the structure built upon the land and its interaction with the surrounding city.
FBC-based neighborhoods are more attractive, more inviting, and walkable than those based on Euclidean zoning. More importantly, because they do not restrict housing density nor mandate a single exclusive use, it is possible to build apartments/condos with convenient businesses and shops on the ground level. While perhaps not a perfect solution, Form-Based Codes offer an attractive alternative to the traditional approach to zoning used in North America.
Another model can be found in Japan, where uniquely, zoning laws are standardized at the national level with cities and local governments’ power limited to rule implementation. This is crucial because it limits the ability of zoning boards and local governments to design the rules so as to inflate their own property prices. As I have noted, this kind of mini-regulatory capture is not socially, economically, or morally optimal.
Additionally, in Japan, there are only 12 zone types, greatly simplifying administration when compared to the hundreds of variants and subvariants of zones found in the United States and many other countries. The Japanese order these zones in terms of maximum potential “nuisance,” and like FBC, Japanese zones are not limited to a single exclusive use. The zones might be thought of then as “inclusive” rather than “exclusive.” See a representation of the difference below.
Within these zones, buildings’ shape is determined by the maximum or minimum Floor-to-Area ratio and height. Height restrictions are designed to ensure proper sunlight and ventilation while providing flexibility in building design. For example, unlike North American height restrictions that tend to be absolute and arbitrary, Japanese zones determine the maximum allowable height using a formula that takes into account the setback from the road and road width. There is no reason, for example, to set a two-story height limit on a building that is set back 50 meters from everything else.
Residential zones, further, do not differentiate between residence types. Residential is residential, whether that may be a single-family home, duplex, or condominium. All residential building types can coexist within the same zone, allowing the supply of housing to meet demand in that area. Consumers of housing are more likely to find a home that fits their needs and price point, rather than having to shoehorn themselves into the existing housing stock. As a consequence of Japan’s flexible zoning regime, cities like Tokyo have remained relatively affordable compared to other major metropolitan areas, even as the population grew. That said, we can do better.
Land and Prosperity
Ideally, the adoption of flexible zoning would be paired with an effort to replace property taxes with a Land Value Tax (LVT). As we will soon see, an LVT levies a tax on the unimproved rental value of land, instead of the property built upon it. By taxing only the land, we could discourage wasteful land speculation and simultaneously eliminate the de-facto punishment that a property tax levies on development. With LVT, land use would be allocated much more efficiently, and land prices would fall dramatically. Parking lots, vacant lots, and other suboptimal uses would be replaced with housing, offices, and shops. When further enabled by flexible zoning rules, housing prices would ease as well, driven by falling land prices and greater housing supply. This is great for individuals and families, but it is even better for our cities and humanity as a whole.
As people relocate to prosperous, affordable cities, the aforementioned scaling laws kick into high gear. Per capita infrastructure inputs fall, while socioeconomic outputs rise. The total quickly becomes larger than the sum of constituent parts. Cities are human jungles, crucibles where ideas compete and combine for survival in Darwinian fashion. From there, we get wealthier, more innovative, and more prosperous as the fires of innovation churn out ever more opportunities and new human capabilities.
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A great article. I really enjoyed reading it, especially the first part about the scaling laws. That's something new that I have learned.
It also has good suggestions for policies. What specifically we should do to stimulate more optimal and innovative growth.
I love your ideas and your grasp of policy. But what is the pathway to implement these ideas? How do you defeat the elderly NIMBYs who have already captured the regulatory apparatus?