Do millennials have a future in Seattle? Do millennials have a future in any superstar cities?

Over in the Seattle section of Reddit someone asked, “Millennials of Seattle: Do you believe that you have a future in this city?”* My answer started small but grew until it became an essay in and of itself, since “Seattle” is really a stand-in for numerous other cities (like NYC, LA, Denver, and Boston) that combine strong economies with parochial housing policies that cause the high rents that hurt younger and poorer people. Seattle is, like many dense liberal cities, becoming much more of a superstar city of the sort Edward Glaeser defines in The Triumph of the City. It has a densely urbanized core, strong education facilities, and intense research, development, and intellectual industries—along with strict land-use controls that artificially raise the cost of housing.

Innovation, in the sense Peter Thiel describes in Zero to One, plus the ability to sell to global markets leads to extremely high earning potential for some people with highly valuable skills. But, for reasons still somewhat opaque to me and rooted in psychology, politics, and law, (they’re somewhat discussed by Glaeser and by Tyler Cowen in Average is Over), liberal and superficially progressive cities like Seattle also tend to generate the aforementioned intense land-use controls and opposition to development. This strangles housing supply.

The combination of high incomes generated by innovation and selling to global markets, along with viciously limited housing supply, tends to price non-superstars out of the market. Various subsidy schemes generate much more noise than practical assistance for people, and markets are at best exceedingly hard to alter through government fiat. So one gets periodic journalistic accounts of supposed housing price “crises.” By contrast to Seattle, New York, or L.A., Sun Belt cities are growing so fast and so consistently because of real affordable housing. People move to them because housing is cheap. Maybe the quality of life isn’t as high in other ways, but affordability is arguably the biggest component of quality of life. Issues with superstar cities and housing affordability are well-known in the research community but those issues haven’t translated much into voters voting for greater housing supply—probably because existing owners hate anything that they perceive will harm them or their economic self-interests in any way.

Enlightenment_heathSomewhat oddly, too, large parts of the progressive community seem to not believe in or accept supply and demand. Without understanding that basic economic principle it’s difficult to have an intelligent discussion about housing costs. It’s like trying to discuss biology with someone who neither understands nor accepts evolution. In newspaper articles and forum threads, one sees over and over again elementary errors in understanding supply and demand. I used to correct them but now mostly don’t bother because those threads and articles are ruled by feelings rather than knowledge, per Heath’s argument in Enlightenment 2.0, and it’s mentally easier to demonize evil “developers” than it is to understand how supply and demand work.

Ignore the many bogeymen named in the media and focus on market fundamentals. Seattle is increasingly great for economic superstars. Most of them probably aren’t wasting time posting to or reading Reddit. If you are not a superstar Seattle is going to be very difficult to build a future in. This is a generalized problem. As I said earlier, voters don’t understand basic economics, and neither do reporters who should know better. Existing property owners prefer to exclude rivalrous uses. So we get too little supply and increasing demand—across a broad range of cities. Courts have largely permitted economic takings in the form of extreme land-use control.

Seattle is the most salient city for this discussions, but Seattle is also growing because San Francisco’s land-use politics are even worse than Seattle’s. While Seattle has been bad, San Francisco has been (and is) far worse. By some measures San Francisco is now the most expensive place in the country to live. For many Silicon Valley tech workers who drive San Francisco housing prices, moving to Seattle immediately increases real income enormously through the one-two punch of (relatively) lower housing prices and no income tax. Seattle is still a steal relative to San Francisco and still has many of the amenities tech nerds like. So Seattle is catching much of San Francisco’s spillover, for good reason, and in turn places like Houston and Austin are catching much of Seattle’s spillover.

See also this discussion and my discussion of Jane Jacobs and urban land politics. Ignore  comments that don’t cite actual research.

Furthermore, as Matt Yglesias points out in The Rent Is Too Damn High: What To Do About It, And Why It Matters More Than You Think, nominally free-market conservatives also tend to oppose development and support extensive land-use controls. But urban cities like Seattle almost always tilt leftward relative to suburbs and rural areas. Why this happens isn’t well understood.

Overall, it’s telling that Seattlites generate a lot of rhetoric around affordable housing and being progressive while simultaneously attacking policies that would actually provide affordable housing and be actually progressive. Some of you may have heard the hot air around Piketty and his book Capital in the 21st Century. But it turns out that, if you properly account for housing and land-use controls, a surprisingly large amount of the supposed disparity between top earners and everyone else goes away. The somewhat dubious obsession that progressives have with wealth concentration is tied up with the other progressive policy of preventing normal housing development!

This is a problem that’s more serious than it looks because parochial land-use controls affect the environment (in the sense of global climate change and resource consumption), as well as the innovation environment (close proximity increases innovation). Let’s talk first about the environment. Sunbelt cities like Phoenix, Houston, Dallas, and Atlanta have minimal mass transit, few mid- and high-rise buildings, and lots and lots of far-flung sub-divisions with cars. This isn’t good for the amount of carbon in the atmosphere, or for the amount of driving that people have to do, but warped land-use controls have given them to us anyway, and the easiest way to get around those land-use controls is to move to the periphery of an urban area and build there. Instead of super energy efficient mid-rises in Seattle, we get fifty tract houses in Dallas.

Then there’s the innovation issue. The more general term for this is “economic geography,” and the striking thing is how industries seem to cluster more in the Internet age. It is not equally easy to start a startup anywhere; they seem to occur in major cities. It isn’t even equally easy to be, say, a rapper: Atlanta produces a way disproportionate number of rappers (See also here). California’s San Fernando Valley appears to be where anyone who does porn professional wants to go. New York still attracts writers, though now they’re exiled to distant parts of the boroughs. My own novels say, “Jake Seliger grew up near Seattle and lives in New York City” (though admittedly I haven’t found much of a literary community here, which is probably my own fault). And so on, for numerous industries, most of them too small to have made a blip on my radar.

These issues interest me both as an intellectual matter and because they play into my work as a grant writer. Many of the ills grant-funded programs are supposed to solve, like poverty and homelessness, are dramatically worsened by persistent, parochial local land-use policies. Few of the superficial progressives in places like Seattle connect land-use policies to larger progressive issues.

So we get large swaths of people priced out of those lucrative job markets altogether, which (most) progressives dislike in theory. Nominal progressives become extreme reactionaries in their own backyards, which ought to tell us something important about them. Still, grant-funded programs that are supposed to boost income and have other positive effects on people’s lives are fighting against the tide . Fighting the tide is at best exceedingly difficult and at worst impossible. I don’t like to think that I’m fighting futile battles or doing futile work, and I consider this post part of the education process.

Few readers have gotten this far, and if you have, congratulations! The essence of the issue is simple supply and demand, but one sees a lot of misunderstanding and misinformation in discussions of it.

In addition, I don’t expect to have much of an impact. Earlier in this essay I mentioned Joseph Heath’s Enlightenment 2.0: Restoring sanity to our politics, our economy, and our lives, and in that book he observes that rationalists tend to get drown out by immediate, emotional responses. In this essay I’m arguing from a position of deliberate reason, while emotional appeals tend to “win” most intuitive arguments.

By the way: In Seattle itself, as of 2015 about two-thirds of Seattle’s land mass is reserved for single-family, detached houses. That’s insane in almost any city, but it’s especially insane in a major global city. Much of Seattle’s affordability problem could be solved or ameliorated by something as simple as legalizing houses with adjoining walls and no setback requirements. The housing that many people would love is literally illegal to build.

Finally, one commonly hears some objections to any sort of change in cities:

* “It’s ugly / out of character for the neighborhood:” As “How Tasteless Suburbs Become Beloved Urban Neighborhoods” explains, it takes about 50 years for design trends to go from “ugly” or “tacky” to “historic.” It’s hard to rebut people saying “that is ugly!” except by saying “no it isn’t!”, but one can see that most new developments are initially seen as undesirable and are eventually seen as normal. “Character” arguments, when made by owners, are usually code for “Protect my property investment.” It’s also not possible to protect the “character” of neighborhoods.

* “Foreigners and their money are buying everything up and making them more expensive:” Actually, real estate is, properly considered, an incredible export:

The key is to let more development happen in the in-demand, centrally located areas where the economic benefits are largest and the ecological costs the smallest, not just “transitional” neighborhoods and the exurban fringe. Take the existing stacks of apartments for rich people and replace them with taller stacks. Then watch the money roll in.

* “Gentrification is unfair:” Oddly, cities began to freeze in earnest, via zoning laws, in the 1970s. One can see this both from the link and from Google’s Ngram viewer, which sees virtually no references to gentrification until the late 70s, and the term really takes off later than that.

If gentrification is unfair—and maybe it is—the only real solution is to build as much housing as people want to consume, which will lower real prices towards the cost of construction. Few contemporary cities pursue this strategy, though. No other strategy will work.

EDIT: See also “How Seattle Killed Micro-Housing: One bad policy at a time, Seattle outlawed a smart, affordable housing option for thousands of its residents.” The city’s devotion to exclusionary housing policies is amazing. It’s not as bad as San Francisco, but compared to Texas it’s quite terrible.


* I’m reading “Millennials” as referring to people under age 30 who have no special status or insider connections. Few will have access to paid-off or rent-controlled housing in superstar cities. They’ll be clawing their way from the bottom without handouts. In cities like New York and San Francisco, a few older people have voted themselves into free stuff in the form of rent control. Most Millennials won’t have that.

Thoughts on New York life as seen through the lens of Britain

Megan McArdle’s “American Household Gadget Exceptionalism,” which is about the rapid dissemination of labor saving devices, but even in the U.S. that dissemination is not even. It seems to have missed much of New York, where a lot of apartments lack stuff that I’ve always taken for granted, like dish washers. In this respect New York is apparently like Britain:

The British housing stock was older and less easily adapted to the new electric wonderworld. Obviously, this is not a permanent obstacle–I live in a 1905 rowhouse with a very nice dishwasher. But such retrofitting is expensive–especially if your house never had electricity in the first place.

Much of Britain lagged behind the U.S. in adopting household gadgets. This data matches my own experience with the UK, which I wrote about in 2010. Since living in New York, however, I’ve noticed that New York also lags the rest of the U.S. Until moving here I don’t think I’ve ever known anyone without a dishwasher. Now most New Yorkers I know don’t have dishwashers.

On New York in general, Penelope Trunk is right: a lot of people fundamentally don’t belong here. Beyond the not-so-good apartments, I observe:

* The subway system is incredible if you happen to live near a major node, like the Barclays Center, the downtown hubs, or Union Square. But many of the major nodes are surprisingly under-built: to continue with the Union Square example, buildings on avenues from 4th to 1st are rarely more than four or five stories tall, when they should be forty.

* The heat in the summer and cold in the winter has a much greater effect on daily life because so many people walk. In addition, much of the housing stock lacks air conditioners and modern furnaces; many apartments are too hot or cold.

* Despite or perhaps because of the high rents, there is more interesting, more cheap, and more available food than anywhere else I’ve ever seen in the U.S.

* New Yorkers are stereotyped as rude, but that hasn’t been my experience at all, with the exception of various flavors of municipal workers, bureaucrats, and quasi-bureaucrats. People working in, at, and around airports are almost always awful but the New York seem worse than average.

* There is “something to do” every night if you’re the sort of person who has a broad definition of “something.”

* Most people acclimate to wherever they live.

* In Seattle many tourists and immigrants are Asian; in New York there are obviously many Asian tourists and immigrants, but they seem outnumbered by Europeans, perhaps due to the relative proximity of Seattle to Asia and New York to Europe.

* New York seems to collect people who hit the trifecta of smart / beautiful / successful. Most places specialize in at most two of those.

* Almost no one really “knows the city;” they know their own neighborhoods and maybe a few others very well, have sporadic knowledge of a couple others, and that’s it.

One other point, not by me but by Paul Graham:

People who like New York will pay a fortune for a small, dark, noisy apartment in order to live in a town where the cool people are really cool. A nerd looks at that deal and sees only: pay a fortune for a small, dark, noisy apartment.

That’s in an essay about how to be Silicon Valley, but paying a fortune for a small, dark, noisy apartment is still true and perhaps even more true than it was in 2006. NIMBYs are still shockingly powerful. People still love living in New York and we see evidence of this in the form of high rents. One interesting thing, however, is that Silicon Valley has become at least as expensive as New York, if not more so. Living there now costs a small fortune.

Let me return to the dishwasher problem for a moment: I hate washing dishes relative to the time it takes, so this may simply be a pet peeve. But it’s one of these notable things that probably isn’t obvious until one lives here. (I’m also not spending a lot of time with hedge fund titans who are presumably renting more expensive places. Still, the lack of what I consider normal appliances in Manhattan is startling, as is the number of noisy radiators that don’t quite work correctly.)

The reason for the lack of dishwashers (and power outlets, and non-claustrophobic kitchens, and so on) also comes from another shared Britain-New York feature: it’s hard to build stuff. It’s very, very hard to build new stuff in Britain, which means that buildings designed around modern life are pretty scarce—just as they are in NYC. And scarcity implies higher prices. New York, however, has a key advantage: it’s very easy to leave it and move to another state. In places that are gaining population (like Texas), building is pretty easy, so lots of people have dishwashers and AC that works and so on.

Hipsters haven’t ruined Paris; Parisian voters have

Last week’s New York Times has a somewhat dumb article by Thomas Chatterton Williams called “How Hipsters Ruined Paris,” which describes how Paris is changing:

Today, the neighborhood has been rechristened “South Pigalle” or, in a disheartening aping of New York, SoPi. Organic grocers, tasteful bistros and an influx of upscale American cocktail bars are quietly displacing the pharmacies, dry cleaners and scores of seedy bar à hôtesses that for decades have defined the neighborhood.

Elsewhere, the usual complaints appear: “Our neighborhood, though safe and well on its way to gentrification…” But demand to live in Paris is rising while the supply of housing remains constant, or close to constant—which means prices rise, and richer people move into once-poorer neighborhoods, and bring with them their predilections for high-end coffee and fancy bars and all the similar stuff I and my ilk like. If you want more diverse neighborhoods, you have to get lower rents, and the only effective way to accomplish that is through taller buildings—which, quelle horreur, destroy the character of the neighborhood!

Matt Yglesias wrote about this basic problem in The Rent is Too Damn High, which continues to go unread and uncited by people writing about neighborhoods, whose work would be improved by knowledge.

Links: Denmark, Lost Girls, Human Rights, Houston Adventures, Austin, Biking, and more!

* Divorce, Custody, Child Support, and Alimony in Denmark, which arguably has better outcomes than the U.S.

* Usually I don’t care for graphic novels, but Alan Moore and Melinda Gebbie’s Lost Girls is an exception; this interview with the authors is also excellent and new to me.

* A Cruel and Unusual Record: The United States is abandoning its role as the global champion of human rights. (Endorsed.)

* Robert Nagle: “‘That Fish has been fried’–definition and explanation;” I would add that many disagreements end or should end not with agreement, but when both sides have run out of facts, evidence, or ideas.

* Strictly textual but possibly NSFW: “Houston Adventures.”

* Can Austin stay weird as it grows?

* Worse than Manhattan? Bike expert rattled by ride through Seattle.

* “Why the U.S. is being humiliated by the hunt for Snowden,” emphasis added, as the “why” has been largely neglected.

* Stop Attacking Male Writers for Being Sexist: Protagonists don’t have to be likable to be great.

* “Voyager 1 Discovers Bizarre and Baffling Region at Edge of Solar System.”

Connecting the dots between beliefs: an example from density and housing policy

In “New York City, NIMBY Paradise: New Yorkers genuinely believe that their housing restrictions are normal” Megan McArdle points out that “a combination of zoning ordinances, building permits, and local NIMBY opposition had made New York distinctly unfriendly to new development, and that it would be rational to build far more units than the city currently allows” but that “I am constantly surprised by the extent to which New Yorkers regard all this not only laudatory, but normal–even as they bemoan the high cost of housing.”

I too am surprised. It’s at least intellectual coherent to complain that prices are high or to argue that development should be limited, but the two together is bizarre. I’m living in Manhattan and occasionally lament to friends or people in bars or whatever that we don’t get more housing built,* which would reduce rents (or at least rent increases), and they inevitably look at me like I’m from Mars. Then they say, “But there’s construction all over the city!” Which is (sort of) true, in the sense that walking around the East Village and LES reveals a fair number of projects—but almost all of them are short. When I mention supply and demand, I get funnier looks, like I’ve just revealed I’m a community, Christian, libertarian, or some other suspicious outsider.

I just don’t think most people connect difficulty in building, or how supply affects demand.

IMG_2181The other day I was wasting time on Reddit and spent time responding to people in this thread about housing in Seattle, which is another place where it’s hard to build and rents are rising, and a lot of people on the thread manifest the kind of difficulty in connecting supply and demand you’re talking about in your post and that I’ve noticed out and about. If I were being mean / direct, I would posit that most people like to complain and don’t understand, or choose not to understand, simple economics.

If I’m being less mean, I’d argue that most people just lunge at a random opinion, hold it, and don’t really think anything more about it; that’s one of Jonathan Hadit’s important points in The Righteous Mind. Still, I never hear, “Extensive housing regulation leads to high prices and that’s a desirable trade-off,” or “We should accept high prices as a reasonable consequence of limiting construction.” Those are normative statements and closer to morality or philosophy, and they’re at least reasonable.

Most people, however, have only a vague sense of the link between public policy and their living arrangements. My Dad, when I told him about this, mentioned that he used to work for cities and had to listen to people express their opinions, most of which were incoherent. Apparently little has changed, except that the incoherent can organize through the Internet.

Anyway, Matt Yglesias has pointed out in many contexts that “Gentrification can’t be stopped by halting construction—to have a chance you need even more construction.” People with money will simply outbid people with less for scarce real estate resources, and various legislative efforts to prevent this basic dynamic have failed and always will fail because people are cleverer than legislatures and markets want to clear. It’s also common for people in hot urban areas like New York and Seattle to lament gentrification, high rents, and developer avariciousness.

If this were limited only to random idiots in bars and coffeeshops, that would be okay, but many reporters are economically illiterate too. One recent random but representative example is Lynn Thompson’s Seattle Times story “Would new rules leave loopholes for big houses on small lots?,” which spends 900 words discussing housing issues but doesn’t include supply or demand.

I sent a letter to the editor of the Seattle Times and to Thompson pointing this out, and I got a nice note back from Thompson saying that “I did another story about a month ago that found that we have enough growth through 2040 under current zoning [. . . .]” But what does “enough” mean? It too is a basically incoherent concept, at least in economic terms, because particular individuals don’t know what “enough” means. That’s why we have markets. Moreover, she didn’t mention price, or the pricing issues

Her colleague Sanjay Bhatt, however, reported that Single-family home prices rose by 20% from 2012 – 2013, and rents in Seattle and environs have been rising faster than inflation for a decade or more.

Why don’t reporters working in this field understand econ 101? And why do editors let them get away with it? The omission is glaring, and it works to undermine the confidence of anyone with any reasonable amount of knowledge in the Seattle Times (and other papers, which routinely make the same kinds of errors). I don’t mean to pick on Thompson or the Seattle Times in particular, since they just happen to be salient examples and the general problems I’m describing here are widespread.


* Are or sex chat are more fun and was the norm is college, but not everyone is ready for the latter five minutes after meeting. A shame, really, but I learned many things from Martha McPhee’s wonderful novel Dear Money, and one is that people above the age of 30 often regard real estate and wealth as a sort of sexual sport.

A.S. Byatt and Tracy K. Smith speaking in New York

A.S. Byatt and poet Tracy K. Smith spoke in New York last night, and my favorite moment may have been Byatt’s comment on influence: she said, “I learn from dead people. I read books.” Which is accurate, simple, and too seldom mentioned. She also said, “If there is one thing I shall never do it is write a memoir.” But Byatt does watch viral YouTube videos, though I won’t offer the context. No word on whether she’s seen “Gangnam Style.” I wanted to listen to her indefinitely; she seemed low bullshit and subtly, Britishly funny in a way not conveyed by these quotes and perhaps not conveyed by any quotes. I would take her seminar despite the danger of being assigned Henry James and Melville.

IMG_2029Byatt also said that at some point “I got sick of realism. . . and I realized realism is only one way of putting prose together.” That remark—”putting prose together” was deliberate. English’s promiscuous borrowing also delights her (as it does pretty much anyone who really writes), and to that I would add that English has a sophisticated technical vocabulary offering a rich lode of metaphors not always available, or easily available, in other languages, unless they’ve borrowed from English (often in turn borrowing from other languages).

One senses that literature for her is urgent, as it is for Roland Mitchell in Possession (in one of my favorite moments in the novel, Roland Mitchell explains that he stole letters from the British Library “Because they were alive. They seemed urgent,” implying that much of what happens in the British Library and academia is so not urgent that one must wonder if and why it should happen at all) and many characters in The Children’s Book. She makes me want to be a better writer.

Smith said, in the context of mentorship, that having someone ask different kinds of questions of your work can be useful. She’s right, though I’d never conceptualized the issue in those terms, and it’s difficult to find people who will ask questions different but still useful than those you ask yourself.

Does she like Billy Collins?

The future of the city: the L.A. and New York models

Matt Yglesias wrote an implausible-sounding story about “How Los Angeles—Yes, Los Angeles—Is Becoming America’s Next Great Mass-Transit City.” It sounds like L.A. is (slowly) becoming a more palatable place to live, and the city’s mass-transit strategy makes sense to me because driving pretty much anywhere in L.A. right now is a hellacious, grinding experience, and that experience is only getting worse over time. Which means L.A. and its residents only really have two choices: accept the hellacious driving experience and accept that it’s going to get continually worse, or attempt to build some kind of alternative system, presumably modeled on New York.

At the moment, we only really have two “models” of cities: the New York-style, walking and public transit version, or the L.A. style of car-based transport. Most cities over the last 75 years have followed the L.A. model, but L.A. is now demonstrating the limits of that very model.* When Southern California first began growing in earnest in the 1920s, cars were just getting started, and for each marginal driver getting behind the wheel made a lot of sense. But we’re now at the point where each marginal driver makes the situation that much worse, and the net effect of all that driving is an awful lot of misery. The only real alternative is allowing much denser construction patterns and building mass-transit around those very dense developments. I just didn’t expect that L.A.’s politicians and bureaucrats—and, by extension, its voters—would actually embrace, or at least tolerate, this solution.


* I’ve written a little bit about this topic before, most notably in Cars and generational shift.

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