As a sometimes reader of Free Exchange on the Economist website I have come to see Mr. Avent's take on things as ranging from pretty solid to very insightful. But after reading Matt Yglesias' very good "The Rent Is Too Damn High" i wanted another perspective and had seen this recommended in the econ blogosphere so I took the plunge on my Kindle.
In short, it is a great look at the effects of NIMBYism that are not only causing a resegregation of America's most productive and desirable cities but driving down national prosperity in the aggregate as well. Avent examines in detail the networking/clustering effect that cities have for highly innovative and productive industries and that this leads to high wages, not only for the highly skilled workers but also for all the service workers who support them as well. He then links the high rent in places like San Fran and other preeminent coastal cities to zoning restrictions that stifle dense development and thus lock out less than affluent workers who then loose the boost to their wages that the city would otherwise provide. He makes it clear that the NIMBY attitudes and movements are often explicitly exclusionary, sometimes for good reasons, most of the time not so good reasons but that without dynamism and density opportunity for millions is being removed.
Crucially he ties that phenomenon with the growth of Sunbelt cities like Phoenix, Vegas, Atlanta et. al. that having picked up the slack and provided lots of cheap housing for the millions of lower wage earners who can't afford rent in the cities and want to avoid long commutes. However, they are essentially going to poorer places that have lower productivity and in the long run are losing even more money than if they put up with high rent and/or long commutes and that nationally we are losing out big time, maybe even several tenths of percentage points of growth per year.
When looking at policy prescriptions for what ails us, you often hear about tax reform, lower regulatory burdens, better schools etc. But i think a powerful case has been made here that getting more people into our best cities may be some of the lowest economic fruit still hanging on the tree if we are only willing to remove NIMBY attitudes or at least limit them. Everyone will be better off in the long run.
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Iván Marcos
Ciudades americanas y relacioens con innovación, coste de vida etc
Reviewed in Spain on March 12, 2012