There was an old neighborhood called 'The Valley' on the West Side, bounded by Ashland on the East to Ogden on the West and from Roosevelt to about 15th street.
It has been wiped off the face of the earth by the UIC Medical District's ability to use eminent domain for expansion. It was once Chicago's most important Dutch neighborhood. There are only a couple of homes remaining, but here are two links, one to pictures of the area circa 1970s and the other an account of childhood in the neighborhood pre-1920. This is a fascinating account, and particularly interesting to me as it confirms my ideas about what environment is best to raise children in. I want them to be surrounded by things that are fascinating and make them think about the world. To my mind, there are few environments better for that purpose than an old urban neighborhood possessing Jane Jacob's ideals regarding urban cultural and commercial diversity.
Here are these fascinating web pages:
photos of The Valley
The Account of Childhood in The Valley during the Progressive Era
Here is another link detailing the neighborhood's last gasps in the 90s. It is easy to understand the anguish a family feels when forced to move from a home that many generations have grown up in. And it is instructive to note the destructive power of government, fully on display on that section of S Ashland. Drive down toward Pilsen and one will find to his West fields of nothingness supposedly waiting for Medical District development..
only, apparently Costco is going to build a store at 15th and Ashland. Seems the medical district wanted to seize private homes for income properties and corporate welfare.
What an ode to eminent domain this is!!! Corrupt? Chicago way? Naaahh. And neither was Maxwell Street's demise either, right?
Poor, poor obliterated West Side. Note that this shit doesn't happen in wealthy areas. Here's the article about the last families:
House on the Rocks
The standard argument for powerful government is the proclaimed need to help the poor and disenfranchised. Here, shamelessly displayed, is their propensity towards the opposite. Nearly every battered and struggling ghetto or "ghetto" (where the term is given by rich outsider NIMBY folks) can legitimately trace its struggles to large scale government acts.
One can go through the map and point to their destructive influence.
HUD
CHA
FHA
IDOT
Daley's vacant property policies
DEA
More on this later.
Showing posts with label midwest cities. Show all posts
Showing posts with label midwest cities. Show all posts
Friday, March 18, 2011
Saturday, May 8, 2010
Chicago: A Microcosm of Public Policy Failure pt 2. Like Ike's Turnpikes?
There are a few cities in North America that have been letting their expressways meet the wrecking ball. Toronto and Milwaukee are two such cities. Now, it is true that both of these expressways were less important -- Milwaukee's expressway had low traffic, and Toronto's was an unfinished stub that was previously the beginning of a larger project.
But, looking at inner city Toronto, it's clear that there's really only one expressway in the inner city. Yet Toronto is one of the richest cities on the continent.
Chicago doesn't need its expressways. Building them was a mistake. Here's why:
In Henry Hazlitt's "Economics In One Lesson," the lesson is as follows:
"The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."
America is a HUGE country. Even now our population density is merely 83 people per square mile, good for 178th. Germany is 55th, and has 594 people/mi sq. France is 96th with 295. United Kingdom? 51st with 660.
The famous Autobahn runs about 6,800 miles. The US Interstate system includes 46,837 miles. For every mile of Autobahn there are approximately 12,075 Germans. For every mile of interstate, there are only approximately 6,555 Americans. The numbers for France? 8,356 French people per mile.
Now, Russia and the Scandinavian countries are mostly less dense than America. But in Finland, for example, the highway miles comparable to the Interstate system are very low -- as seen here:
http://en.wikipedia.org/wiki/Highways_in_Finland
The point is that the number of miles of highway for each American taxpayer is wholly unsustainable. Before Eisenhower had the system built, many of the state highways he was in effect replacing were small roads with a single lane, or were unpaved altogether. America doesn't need the highway system we have today at the cost we're paying for it -- we're not getting as much benefit as more densely populated places.
In fact, America's infrastructure is crumbling in no uncertain terms. We're in bad shape, as seen here:
http://www.ritholtz.com/blog/2009/10/crumbling-of-americas-infrastructure/
The interstate system's planners failed to consider the longer term sustainability of the system (I mean the word sustainability in a wholly different way than the green lobby does). It cost a fortune to build, but it will also cost a fortune to prevent it from collapsing under itself. By forcing future generations to deal with this problem by either dismantling the system or continuing to pay for it each passing year, the present has taxed the future.
Further, such vast changes in the fundamental working of the national economy -- in terms of the movement of goods and people -- always benefits some at the expense of others. It was a huge government intervention which altered the basic assumptions upon which business is to be done.
But Cook County is dense. Even ignoring the foolhardiness of the system as a whole, or its legality at the Federal level for that matter, doesn't the system make sense for dense areas? Perhaps for transportation from Chicago to Milwaukee, and perhaps for transportation among Chicagoland suburban centers. But not for Chicago proper. And, in fact, Urban America would be just as well off without the system; better off, I dare say.
When Chicago was growing fastest around the turn of the 20th century, it was in no small part due to its strategic location in the center of the country -- and consequently its status as one of the nation's two main railroad hubs (the other being St Louis). Chicagoland railways also caused a substantial number of suburbs to develop around Chicago along the tracks. In the 1930s one could drive from one suburb to another, or drive in to the city. But a large portion of daily commuters walked or drove to the train station and rode in to the city. Rail fares were cheap and trains fast enough.
In fact, imagine if a company were to buy up all of the land, without eminent domain, and build an expressway through Chicago! Imagine how much they would have to charge in order to break even, considering maintenance costs as well. If those costs showed up in the price per mile of expressway use, people would never have paid it. Rail would have a HUGE competitive advantage. Even today, beyond a certain distance it is cheaper to ship an intermodal container on a train than a truck. For example, from Chicago to the twin cities. How much larger would this competitive advantage be if people had to directly pay the real cost for highway use??
Of course, the point here is that in real terms and without socialized costs due to taxes, the highway is still less efficient than trains, and by quite a large sum. Highways could be privatized now, but only because the cost to build them and to forcibly buy people's land from them was socialized.
Indeed, were passenger railroads still private and highways privately built, it would still be far cheaper to travel from Chicago to Milwaukee by train than by highway.
As it is, the Interstate Highway Act forced an economic reorganization that would never have happened naturally! That is, the forces that would have produced a private highway system did not exist until after the public system was already built. In fact, they existed BECAUSE of the economic reformation that had to occur in response. The system was not previously needed. And, in fact, were it not built there it would never have been needed in urban areas. The difference in time and mobility of cars over trains can not be denied, but the case for a highway increasing speed vs a large boulevard is more dubious when the consumer has to pay for the difference. Traveling on main roads in to town is just not burdensome enough to justify a large price difference.
And, in fact, the highways themselves create the traffic problems American society is supposed to be unable to solve without them. It's the socialized costs and the concentration of traffic, which would exist in some part anyway, along one route which cause the problem. Whereas prior to the new infrastructure cars and trucks would travel along any number of main roads in to the city, now all of them concentrate on one superhighway.
Think of the way you travel to work, in Chicagoland or elsewhere. In all likelihood, you travel to the freeway and then get on it. Then you find your exit and travel some distance away from it. You've got to travel to one route where traffic is concentrated.
But Chicago was set up by Burnham to afford any number of important and intelligently placed thoroughfares -- the city is relentless in its logic. It doesn't need highway infrastructure. If not for the expressways, Chicagoans would drive along any one of Chicago's endless straight streets. Or they would take a local train.
I've thus far made the case that the highway system's benefits to Chicago are not significant. After underscoring my point with pictures, I'll examine the system's costs for the city's people.
These are the routes that Chicago's expressways take through the city. The glaringly obvious point is that the routes were already covered by major thoroughfares! And in fact when the highways were built the roads they replaced needn't have been. The huge suburban populations only arose in response to the illusory low cost of highway travel.
This is the Stevenson Expressway in red, and Archer Ave in yellow.
Here is South Chicago Ave in yellow, and the Chicago Skyway in red.
The Kennedy essentially replaces Milwaukee Ave. Additionally, when I-94 turns North it essentially replaces Cicero Ave, and then Skokie Blvd after Cicero's transformation. The Kennedy is in Red, and the other streets are in yellow. Milwaukee Ave is the diagonal street
And of course, the Congress, and afterwards the Eisenhower is most glaringly useless. It's as if it's a poster child for the whole interstate system. The Ike replaces any number of East West streets which previously carried its traffic. Of course, there is Congress which is right next to or completely replaced by the Ike. Or Van Buren, or Madison, or Lake, or Roosevelt, or 5th St running SW from Madison. This highway has sapped much of the traffic from these previously busy streets.
The Eisenhower Expy/Congress Pkwy is in red, and all other noted streets are in yellow. These streets are, from North to South, Lake, Madison and 5th, Congress, and finally Roosevelt.
Additionally, the Dan Ryan replaces Halsted while it passes the Loop. After it is South of the loop, the Dan Ryan steals traffic from State, Wentworth, King, Halsted, and others.
Halsted and Roosevelt, before the city had the expressway built and then bulldozed the whole area for UIC, at one time had the highest land values of any intersection outside of the loop. (ref. Homer Hoyt "One Hundred Years of Land Values in Chicago..")
This one act, the Interstate Highway Act, completely changed America's economic structure. Yet people wonder about the Midwest's decay? The balance was swiftly shifted from water and rail traffic to truck traffic. Rail and nautical infrastructure remains important to this day. But the extent of the existing infrastructure is such as to meet a demand that no longer exists -- and largely as a result of the highways.
The rules of the economic game shifted so suddenly as to a provoke a near complete restructuring. It is no wonder cities are in trouble.
What the Interstate system has done is artificially and unsustainably lower the costs of living outside of the city. It benefits suburbanites, not Chicagoans. Chicagos entire land use structure was based around the railroads. Slow shifts allow adaptation, but sudden restructuring forces dramatic economic changes and extreme shifts in land values. Areas that were previously suitably developed are now overbuilt for example. Vacancies increase in areas as goods and people flow along other avenues (sometimes literally).
Cars that used to drive along Archer Ave now take the Stevenson. Archer, fifty some years later, is a shadow of its former glory and fading still. And this particular area is not overly poor. Yet buildings are falling apart, storefronts are empty, the street wall is pockmarked and incomplete where it used to be full and cohesive.
But of course, Archer is not the only business thoroughfare to suffer. The highway reroutes commuters around businesses all over the city. No longer does a resident of Cicero pass by a business on Madison Ave on his way to his job in Uptown. Now he gets on the Eisenhower and drives to his job. He spends his money in Cicero and patronizes businesses in Cicero. Far from benefiting from the highway system, Chicago suffers.
Businesses on South Chicago Ave, on Milwaukee, on Lake, and on any number of previously important streets like King Drive or Pulaski (formerly Crawford) have the same problem. Traffic has been completely rerouted such that the old urban land uses are not suited to the new economic model. The economic environment has been changed such as only coercion can do.
The benefits of the city are no longer unique to the city. Suburbanites can get the benefits by proxy. The main business advantage in locating in the city is the pool of skilled labor that it affords (more on how unions have further damaged the Midwest in a future article). But with highways, Chicago business can locate anywhere in the area and have access to the same labor force. Good for business, bad for Chicago.
Additionally, the highways split neighborhoods in half. Oftentimes the wealth differential between one side of a highway and the other is substantial. Eminent domain tore apart communities, rending them in two and displacing thousands of families that were firmly tied to their land, to their sense of place. The character of these communities -- blue collar neighborhoods and ethnic enclaves -- has been changed forever. Gas stations, convenience stores, and large big box retailers spring up around the highway, and Chicago loses its sense of place, its authenticity in context, its history -- that which makes it unique and different from anywhere else. This uniqueness is what makes people love their homes and neighborhoods, what makes them take pride in their communities and fight to protect them. Additionally, displacing tens of thousands of residents that grew up in the city or who've lived there thirty years devastates the nature of the place. It becomes less Chicago, more somewhere else. The highways irreparably damage the unique urban nature of this particular city.
It's time to end the highways. They do not benefit Chicagoans. They damage their communities, fundamentally and artificially alter the economic conditions that created the city (forcing swift and radical change on the urban environment), funnel money around the city to the suburbs instead of focusing it in the center, divert traffic around the city, dilute Chicago's sense of place, and weaken Chicago's economic advantages. Additionally, they are financially unsustainable for the public sector -- Illinoisans and Americans cannot afford them.
Chicago would do better without them. Traffic would fall back on its old routes, equilibrium would be reached as some move back in to the city to balance longer commutes, traffic problems would be less concentrated and extreme, local railroads could again become profitable and come off of the county's tax rolls, thousands of old buildings would be pulled from abandonment and reused as their reasons for being are restored in the present. Chicago should demolish all of them within city limits but Lake Shore Drive, which largely avoided eminent domain -- LSD should be privatized.
City leaders should realize that the city is suffering from the differential between the economic basis on which it was created and the radically transformed environment which the highways and other factors have forced upon it. It all could have been avoided with a little respect for the private property rights guaranteed in the Constitution -- highways are not one of the very limited things which Washington has authority to take land for.
But, looking at inner city Toronto, it's clear that there's really only one expressway in the inner city. Yet Toronto is one of the richest cities on the continent.
Chicago doesn't need its expressways. Building them was a mistake. Here's why:
In Henry Hazlitt's "Economics In One Lesson," the lesson is as follows:
"The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."
America is a HUGE country. Even now our population density is merely 83 people per square mile, good for 178th. Germany is 55th, and has 594 people/mi sq. France is 96th with 295. United Kingdom? 51st with 660.
The famous Autobahn runs about 6,800 miles. The US Interstate system includes 46,837 miles. For every mile of Autobahn there are approximately 12,075 Germans. For every mile of interstate, there are only approximately 6,555 Americans. The numbers for France? 8,356 French people per mile.
Now, Russia and the Scandinavian countries are mostly less dense than America. But in Finland, for example, the highway miles comparable to the Interstate system are very low -- as seen here:
http://en.wikipedia.org/wiki/Highways_in_Finland
The point is that the number of miles of highway for each American taxpayer is wholly unsustainable. Before Eisenhower had the system built, many of the state highways he was in effect replacing were small roads with a single lane, or were unpaved altogether. America doesn't need the highway system we have today at the cost we're paying for it -- we're not getting as much benefit as more densely populated places.
In fact, America's infrastructure is crumbling in no uncertain terms. We're in bad shape, as seen here:
http://www.ritholtz.com/blog/2009/10/crumbling-of-americas-infrastructure/
The interstate system's planners failed to consider the longer term sustainability of the system (I mean the word sustainability in a wholly different way than the green lobby does). It cost a fortune to build, but it will also cost a fortune to prevent it from collapsing under itself. By forcing future generations to deal with this problem by either dismantling the system or continuing to pay for it each passing year, the present has taxed the future.
Further, such vast changes in the fundamental working of the national economy -- in terms of the movement of goods and people -- always benefits some at the expense of others. It was a huge government intervention which altered the basic assumptions upon which business is to be done.
But Cook County is dense. Even ignoring the foolhardiness of the system as a whole, or its legality at the Federal level for that matter, doesn't the system make sense for dense areas? Perhaps for transportation from Chicago to Milwaukee, and perhaps for transportation among Chicagoland suburban centers. But not for Chicago proper. And, in fact, Urban America would be just as well off without the system; better off, I dare say.
When Chicago was growing fastest around the turn of the 20th century, it was in no small part due to its strategic location in the center of the country -- and consequently its status as one of the nation's two main railroad hubs (the other being St Louis). Chicagoland railways also caused a substantial number of suburbs to develop around Chicago along the tracks. In the 1930s one could drive from one suburb to another, or drive in to the city. But a large portion of daily commuters walked or drove to the train station and rode in to the city. Rail fares were cheap and trains fast enough.
In fact, imagine if a company were to buy up all of the land, without eminent domain, and build an expressway through Chicago! Imagine how much they would have to charge in order to break even, considering maintenance costs as well. If those costs showed up in the price per mile of expressway use, people would never have paid it. Rail would have a HUGE competitive advantage. Even today, beyond a certain distance it is cheaper to ship an intermodal container on a train than a truck. For example, from Chicago to the twin cities. How much larger would this competitive advantage be if people had to directly pay the real cost for highway use??
Of course, the point here is that in real terms and without socialized costs due to taxes, the highway is still less efficient than trains, and by quite a large sum. Highways could be privatized now, but only because the cost to build them and to forcibly buy people's land from them was socialized.
Indeed, were passenger railroads still private and highways privately built, it would still be far cheaper to travel from Chicago to Milwaukee by train than by highway.
As it is, the Interstate Highway Act forced an economic reorganization that would never have happened naturally! That is, the forces that would have produced a private highway system did not exist until after the public system was already built. In fact, they existed BECAUSE of the economic reformation that had to occur in response. The system was not previously needed. And, in fact, were it not built there it would never have been needed in urban areas. The difference in time and mobility of cars over trains can not be denied, but the case for a highway increasing speed vs a large boulevard is more dubious when the consumer has to pay for the difference. Traveling on main roads in to town is just not burdensome enough to justify a large price difference.
And, in fact, the highways themselves create the traffic problems American society is supposed to be unable to solve without them. It's the socialized costs and the concentration of traffic, which would exist in some part anyway, along one route which cause the problem. Whereas prior to the new infrastructure cars and trucks would travel along any number of main roads in to the city, now all of them concentrate on one superhighway.
Think of the way you travel to work, in Chicagoland or elsewhere. In all likelihood, you travel to the freeway and then get on it. Then you find your exit and travel some distance away from it. You've got to travel to one route where traffic is concentrated.
But Chicago was set up by Burnham to afford any number of important and intelligently placed thoroughfares -- the city is relentless in its logic. It doesn't need highway infrastructure. If not for the expressways, Chicagoans would drive along any one of Chicago's endless straight streets. Or they would take a local train.
I've thus far made the case that the highway system's benefits to Chicago are not significant. After underscoring my point with pictures, I'll examine the system's costs for the city's people.
These are the routes that Chicago's expressways take through the city. The glaringly obvious point is that the routes were already covered by major thoroughfares! And in fact when the highways were built the roads they replaced needn't have been. The huge suburban populations only arose in response to the illusory low cost of highway travel.
This is the Stevenson Expressway in red, and Archer Ave in yellow.
Here is South Chicago Ave in yellow, and the Chicago Skyway in red.
The Kennedy essentially replaces Milwaukee Ave. Additionally, when I-94 turns North it essentially replaces Cicero Ave, and then Skokie Blvd after Cicero's transformation. The Kennedy is in Red, and the other streets are in yellow. Milwaukee Ave is the diagonal street
And of course, the Congress, and afterwards the Eisenhower is most glaringly useless. It's as if it's a poster child for the whole interstate system. The Ike replaces any number of East West streets which previously carried its traffic. Of course, there is Congress which is right next to or completely replaced by the Ike. Or Van Buren, or Madison, or Lake, or Roosevelt, or 5th St running SW from Madison. This highway has sapped much of the traffic from these previously busy streets.
The Eisenhower Expy/Congress Pkwy is in red, and all other noted streets are in yellow. These streets are, from North to South, Lake, Madison and 5th, Congress, and finally Roosevelt.
Additionally, the Dan Ryan replaces Halsted while it passes the Loop. After it is South of the loop, the Dan Ryan steals traffic from State, Wentworth, King, Halsted, and others.
Halsted and Roosevelt, before the city had the expressway built and then bulldozed the whole area for UIC, at one time had the highest land values of any intersection outside of the loop. (ref. Homer Hoyt "One Hundred Years of Land Values in Chicago..")
This one act, the Interstate Highway Act, completely changed America's economic structure. Yet people wonder about the Midwest's decay? The balance was swiftly shifted from water and rail traffic to truck traffic. Rail and nautical infrastructure remains important to this day. But the extent of the existing infrastructure is such as to meet a demand that no longer exists -- and largely as a result of the highways.
The rules of the economic game shifted so suddenly as to a provoke a near complete restructuring. It is no wonder cities are in trouble.
What the Interstate system has done is artificially and unsustainably lower the costs of living outside of the city. It benefits suburbanites, not Chicagoans. Chicagos entire land use structure was based around the railroads. Slow shifts allow adaptation, but sudden restructuring forces dramatic economic changes and extreme shifts in land values. Areas that were previously suitably developed are now overbuilt for example. Vacancies increase in areas as goods and people flow along other avenues (sometimes literally).
Cars that used to drive along Archer Ave now take the Stevenson. Archer, fifty some years later, is a shadow of its former glory and fading still. And this particular area is not overly poor. Yet buildings are falling apart, storefronts are empty, the street wall is pockmarked and incomplete where it used to be full and cohesive.
But of course, Archer is not the only business thoroughfare to suffer. The highway reroutes commuters around businesses all over the city. No longer does a resident of Cicero pass by a business on Madison Ave on his way to his job in Uptown. Now he gets on the Eisenhower and drives to his job. He spends his money in Cicero and patronizes businesses in Cicero. Far from benefiting from the highway system, Chicago suffers.
Businesses on South Chicago Ave, on Milwaukee, on Lake, and on any number of previously important streets like King Drive or Pulaski (formerly Crawford) have the same problem. Traffic has been completely rerouted such that the old urban land uses are not suited to the new economic model. The economic environment has been changed such as only coercion can do.
The benefits of the city are no longer unique to the city. Suburbanites can get the benefits by proxy. The main business advantage in locating in the city is the pool of skilled labor that it affords (more on how unions have further damaged the Midwest in a future article). But with highways, Chicago business can locate anywhere in the area and have access to the same labor force. Good for business, bad for Chicago.
Additionally, the highways split neighborhoods in half. Oftentimes the wealth differential between one side of a highway and the other is substantial. Eminent domain tore apart communities, rending them in two and displacing thousands of families that were firmly tied to their land, to their sense of place. The character of these communities -- blue collar neighborhoods and ethnic enclaves -- has been changed forever. Gas stations, convenience stores, and large big box retailers spring up around the highway, and Chicago loses its sense of place, its authenticity in context, its history -- that which makes it unique and different from anywhere else. This uniqueness is what makes people love their homes and neighborhoods, what makes them take pride in their communities and fight to protect them. Additionally, displacing tens of thousands of residents that grew up in the city or who've lived there thirty years devastates the nature of the place. It becomes less Chicago, more somewhere else. The highways irreparably damage the unique urban nature of this particular city.
It's time to end the highways. They do not benefit Chicagoans. They damage their communities, fundamentally and artificially alter the economic conditions that created the city (forcing swift and radical change on the urban environment), funnel money around the city to the suburbs instead of focusing it in the center, divert traffic around the city, dilute Chicago's sense of place, and weaken Chicago's economic advantages. Additionally, they are financially unsustainable for the public sector -- Illinoisans and Americans cannot afford them.
Chicago would do better without them. Traffic would fall back on its old routes, equilibrium would be reached as some move back in to the city to balance longer commutes, traffic problems would be less concentrated and extreme, local railroads could again become profitable and come off of the county's tax rolls, thousands of old buildings would be pulled from abandonment and reused as their reasons for being are restored in the present. Chicago should demolish all of them within city limits but Lake Shore Drive, which largely avoided eminent domain -- LSD should be privatized.
City leaders should realize that the city is suffering from the differential between the economic basis on which it was created and the radically transformed environment which the highways and other factors have forced upon it. It all could have been avoided with a little respect for the private property rights guaranteed in the Constitution -- highways are not one of the very limited things which Washington has authority to take land for.
Two Good Links
Although links are not the best way to engage the layman blog reader, I present two that are well worth visiting, but don't really fit the model demanded by a blog list roll at the end of the page.
Firstly, a free market look at how to fix Cleveland, and many other suffering midwest cities for that matter (like Buffalo, Detroit, and St Louis). With Drew Carey!
http://reason.tv/video/show/1046
Secondly, a collection of COLOR 1940s photographs by Charles W Cushman. They show Chicago and many other US cities as they were.
http://webapp1.dlib.indiana.edu/cushman/index.jsp
Firstly, a free market look at how to fix Cleveland, and many other suffering midwest cities for that matter (like Buffalo, Detroit, and St Louis). With Drew Carey!
http://reason.tv/video/show/1046
Secondly, a collection of COLOR 1940s photographs by Charles W Cushman. They show Chicago and many other US cities as they were.
http://webapp1.dlib.indiana.edu/cushman/index.jsp
Chicago: A Microcosm of Public Policy Failure. Treating the symptom.
If you're an auto mechanic, and you want to fix a problem, you need to diagnose the source of said problem. It doesn't make any sense to simply mask the symptom. But treating the symptom is an all too easy trap to fall in to.
Public policy is a great example of this, but this is so obvious at the federal level that it's not even worth discussing here. Nonetheless, this is where sound economics should ideally come in to help guide public policy. Except many modern economists, and especially those in politics, have unwisely fallen prey to fallacious enthusiasm for top down decisions. This by its very nature treats the symptom, because the true source of the problem is likely government 'problem solving' itself. But those in power have a god-like belief in their wisdom, and thus make the assumption that any problem with the economy must be private in nature. Wrong.
But less the general economics talk, the city of Chicago is a veritable microcosm of bad decisions and public policy disaster. The city is a living, breathing testament to the vitality of private activity and the life sapping drain of public power. .. if only bureaucrats would look past their overgrown noses.
I will soon order a book on a hundred years of land values in Chicago, ending in 1933 when it was published. It was exhaustively researched by a man called Homer Hoyt, who would soon be a successful real estate investor and urban economics academic. The maps and charts are hand drawn, and most of the data collected from the basement of the Cook County Recorder of Deeds, or the Assessor's Office.
It documents the land values, the real estate cycles, and the factors leading to what has to be one of the largest, swiftest urban population explosions in history. The growth of this city was remarkable. And what is amazing about this book is that it chronicles the reasons WHY the city grew in the particular ways it did, why certain areas came to certain uses.
Looking at his maps, at the Chicago of 1930, at the centers of high land value vs the city today, one is struck by the particular nature of the differences. In 1930 and before, intersections in Englewood and in Uptown had particularly high land values, being near major transportation networks and having grown in to satellite centers of business. The saddest thing is that in many, many places in the midwest it is the areas with the most important history and most magnificent architecture that are the most devastated.
In my view there isn't a lot of mystery as to the reasons for this devastation. If they're looking for answers, policy makers need only look in the mirror. It's hard to admit credit for the urban hell holes that are ghettos, for fields of empty grass that once held bustling business, brick apartment buildings, or mansions. Unintended consequences; one stubborn and universal economic law.
Major business centers were once connected via an extensive street car system. It seems to me that the major events leading to urban blight are:
1. The take over of the street car companies by the CTA, a public agency that cut service and dismantled the system under budget constraints. Less the public monopoly, the system would have responded to actual market demand more properly. Portions of the system would have gone down, but not in the same way.
2. The automobile.
3. The use of imminent domain for the federal highway system, which cut neighborhoods to pieces and made it possible to live outside the city while enjoying its benefits. It made owning a car more advantageous than mass transit because the latter still involves pay per use. The costs of owning a car are socialized, and unfairly levied upon those who were forced to sell property for 'public good.'
4. The use of imminent domain to clear out vast areas of 'blight,' or areas that white politicians did not like. The subsequent failure of public housing sent Chicago to some of the highest crime rates in the country. The city literally began rotting from within, with crime spreading to the areas around and essentially forced population shift out of and in to areas. With government indirectly manipulating land value so wantonly, creating huge problems, and conducting a huge racist social experiment at the expense of the 'benefactors' and everyone around them, a huge dis-incentive to city dwelling was created. The urban fabric created by private owners was ripped apart and rent in to ribbons, and the city barely resembled its former self. If the neighborhood is so sharply changed by political factors, families lose stock in the future of their area. By consolidating land ownership, those who care about the neighborhood are drawn down. History of ownership is powerful.
5. The exodus of manufacturing jobs. Truth be told, manufacturing in America is not endangered. But manufacturing jobs are constantly drawn down as more efficient methods of production are invented. This is exacerbated by the far higher taxes during the last century, during which the disinvestment in cities has occurred. Or rather regulations and price/wage controls, if you will. I particularly refer to programs affecting industrial jobs, the regulation of which grew at an unreasonable pace during the great depression. These programs, especially those strengthening labor, made hiring another employee less attractive. The corresponding and predictable loss of jobs hits especially hard for America's manufacturing and transportation capital.
Additionally, taxes on investment, which were up during the same time, hurt funds allowing these businesses to thrive and expand. Not hiring as many workers removes the main incentive for existing in a major population center -- that is, the availability of cheap and talented labor.
5. The war on drugs. With the exodus of manufacturing jobs, and the artificially increased marginal utility of mechanized solutions over human ones, jobs still existing in the city tended to stay in the hands of those who increasingly lived outside of the city. With little job creation, inner city areas held few jobs for residents.
The war on drugs incentivizes illegal business over legal. It makes it very profitable to break the law. Without prohibition (and wage/price controls), alternative jobs would have to, and then would, be created by those most in need of them, or by somebody who recognized the opportunity.
This illegal activity further destroys local commercial activity, communication with outside areas, and landlord building maintenance. Crime rises and the city festers in its own filth. Areas dependent on illegal drugs for their only income have few other options. But in a free market only legal establishments would exist because illegal options couldn't compete with a streamlined production process. Crime would be down and the city would begin to heal.
6. The compounding effect of job loss. The frenetic pace of construction was greatly slowed with much lower gross economic activity. After the fire construction and design talent was drawn from around the country to rebuild the city. With the loss of jobs in the great depression and ever after lower rates of recovery and job creation, the construction industry built cheaper buildings. Midcentury buildings stretch for miles upon miles, but they are small and cheap. Skilled labor was no longer in demand, and centerpiece corner buildings, urban and larger, were largely a thing of the past. Construction pace pushed out of stratospheric levels has a substantial effect on all other economic activity.
But more than that, as companies strove to make housing more and more affordable for the new middle class suburban resident, the average wealth of home owners continued to drop. And to provide for these people, land had to be cheap. Increases in purchasing power during midcentury were due not to increased average earnings, but rather to decreased price of middling quality goods better suited for a middle class. Cheap land and cheap materials are a big part of this.
7. Chicago's derelict property policies. The city under Washington and then Daley has a fast track demolition program which hastily demolishes buildings from which illegal activity comes or which are neglected by landlords or delinquent on taxes. The problems only spread to the next buildings, and this again treats a symptom not a root cause. Not to even mention the demolition company campaign contributions -- these neighborhoods are devastated beyond recovery. In many areas the prairie has returned. What was once a bustling neighborhood filled with stores, flats, and even mansions has only a few odd buildings per block anymore. And the policy continues... Areas cannot recover if their main resource -- their built environment -- doesn't even exist anymore.
8. Continuing unintended consequences.
The CTA loses lots of taxpayer money every year. The public transportation get progressively worse. And yet city leaders are unwilling to make people pay for living in the city. If you want to drive a car to work in downtown, you should logically pay for the infrastructure getting you there and housing your car -- as directly as possible. Right now there is little trade off between car and mass transit. The city has a new zoning code providing provisions for developers requiring parking. But they don't realize that it is this code itself that removes the incentive which would keep CTA viable, and therefore provide the advantage of city over suburbs -- that is, good and cheap transportation. Cars that do make it to the city would pay more at city parking facilities as well. Supply and demand. But the city is currently artificially forcing supply up above equilibrium, which is where developers would keep it were they given the option. Parking should be as expensive as it needs to be for it to be viable to build parking instead of units or commercial space.
The current policy destroys the urban character of prospective development and the viability and attractiveness of inner city neighborhoods. Further, it deprives the city of income as well as a profitable and viable public transportation system.
Drivers should have to pay for highways directly as well. Were imminent domain not used, then highways would be expensive to build through areas of high population where land values are high. But a private company could buy air rights, or rights underground, or progressively and strategically buy land on the market. Eventually one highway would be built, and fees would be high. Cost to users would be direct. Highways would cut a path through the least private land possible. In Chicago, this would probably be lake shore drive, as it is built on a lot of former rail yards.
Were this policy adopted, mass transit would again be in what is closer to fair competition as highways would directly cost money. Right now a driver has little incentive to switch to mass transit when he is already paying tax dollars for the highways.
Privatize highways! They are losing money. Privately maintained highways charging per use would use price as a means of finding traffic equilibrium. Highly maintained highways, and more reasonable levels of auto use, would result. Further, mass transit would become more viable and service would increase. The inner city would regain what was one of its crucial advantages.
One can see how public policy gaffes together create a logical and even likely set of diagnoses of various problems leading to the seen symptoms in Chicago. It is sad that they are purposely overlooked. It is even more sad that many of these gaffes would have been avoided had our federal government respected its charter.
Public policy is a great example of this, but this is so obvious at the federal level that it's not even worth discussing here. Nonetheless, this is where sound economics should ideally come in to help guide public policy. Except many modern economists, and especially those in politics, have unwisely fallen prey to fallacious enthusiasm for top down decisions. This by its very nature treats the symptom, because the true source of the problem is likely government 'problem solving' itself. But those in power have a god-like belief in their wisdom, and thus make the assumption that any problem with the economy must be private in nature. Wrong.
But less the general economics talk, the city of Chicago is a veritable microcosm of bad decisions and public policy disaster. The city is a living, breathing testament to the vitality of private activity and the life sapping drain of public power. .. if only bureaucrats would look past their overgrown noses.
I will soon order a book on a hundred years of land values in Chicago, ending in 1933 when it was published. It was exhaustively researched by a man called Homer Hoyt, who would soon be a successful real estate investor and urban economics academic. The maps and charts are hand drawn, and most of the data collected from the basement of the Cook County Recorder of Deeds, or the Assessor's Office.
It documents the land values, the real estate cycles, and the factors leading to what has to be one of the largest, swiftest urban population explosions in history. The growth of this city was remarkable. And what is amazing about this book is that it chronicles the reasons WHY the city grew in the particular ways it did, why certain areas came to certain uses.
Looking at his maps, at the Chicago of 1930, at the centers of high land value vs the city today, one is struck by the particular nature of the differences. In 1930 and before, intersections in Englewood and in Uptown had particularly high land values, being near major transportation networks and having grown in to satellite centers of business. The saddest thing is that in many, many places in the midwest it is the areas with the most important history and most magnificent architecture that are the most devastated.
In my view there isn't a lot of mystery as to the reasons for this devastation. If they're looking for answers, policy makers need only look in the mirror. It's hard to admit credit for the urban hell holes that are ghettos, for fields of empty grass that once held bustling business, brick apartment buildings, or mansions. Unintended consequences; one stubborn and universal economic law.
Major business centers were once connected via an extensive street car system. It seems to me that the major events leading to urban blight are:
1. The take over of the street car companies by the CTA, a public agency that cut service and dismantled the system under budget constraints. Less the public monopoly, the system would have responded to actual market demand more properly. Portions of the system would have gone down, but not in the same way.
2. The automobile.
3. The use of imminent domain for the federal highway system, which cut neighborhoods to pieces and made it possible to live outside the city while enjoying its benefits. It made owning a car more advantageous than mass transit because the latter still involves pay per use. The costs of owning a car are socialized, and unfairly levied upon those who were forced to sell property for 'public good.'
4. The use of imminent domain to clear out vast areas of 'blight,' or areas that white politicians did not like. The subsequent failure of public housing sent Chicago to some of the highest crime rates in the country. The city literally began rotting from within, with crime spreading to the areas around and essentially forced population shift out of and in to areas. With government indirectly manipulating land value so wantonly, creating huge problems, and conducting a huge racist social experiment at the expense of the 'benefactors' and everyone around them, a huge dis-incentive to city dwelling was created. The urban fabric created by private owners was ripped apart and rent in to ribbons, and the city barely resembled its former self. If the neighborhood is so sharply changed by political factors, families lose stock in the future of their area. By consolidating land ownership, those who care about the neighborhood are drawn down. History of ownership is powerful.
5. The exodus of manufacturing jobs. Truth be told, manufacturing in America is not endangered. But manufacturing jobs are constantly drawn down as more efficient methods of production are invented. This is exacerbated by the far higher taxes during the last century, during which the disinvestment in cities has occurred. Or rather regulations and price/wage controls, if you will. I particularly refer to programs affecting industrial jobs, the regulation of which grew at an unreasonable pace during the great depression. These programs, especially those strengthening labor, made hiring another employee less attractive. The corresponding and predictable loss of jobs hits especially hard for America's manufacturing and transportation capital.
Additionally, taxes on investment, which were up during the same time, hurt funds allowing these businesses to thrive and expand. Not hiring as many workers removes the main incentive for existing in a major population center -- that is, the availability of cheap and talented labor.
5. The war on drugs. With the exodus of manufacturing jobs, and the artificially increased marginal utility of mechanized solutions over human ones, jobs still existing in the city tended to stay in the hands of those who increasingly lived outside of the city. With little job creation, inner city areas held few jobs for residents.
The war on drugs incentivizes illegal business over legal. It makes it very profitable to break the law. Without prohibition (and wage/price controls), alternative jobs would have to, and then would, be created by those most in need of them, or by somebody who recognized the opportunity.
This illegal activity further destroys local commercial activity, communication with outside areas, and landlord building maintenance. Crime rises and the city festers in its own filth. Areas dependent on illegal drugs for their only income have few other options. But in a free market only legal establishments would exist because illegal options couldn't compete with a streamlined production process. Crime would be down and the city would begin to heal.
6. The compounding effect of job loss. The frenetic pace of construction was greatly slowed with much lower gross economic activity. After the fire construction and design talent was drawn from around the country to rebuild the city. With the loss of jobs in the great depression and ever after lower rates of recovery and job creation, the construction industry built cheaper buildings. Midcentury buildings stretch for miles upon miles, but they are small and cheap. Skilled labor was no longer in demand, and centerpiece corner buildings, urban and larger, were largely a thing of the past. Construction pace pushed out of stratospheric levels has a substantial effect on all other economic activity.
But more than that, as companies strove to make housing more and more affordable for the new middle class suburban resident, the average wealth of home owners continued to drop. And to provide for these people, land had to be cheap. Increases in purchasing power during midcentury were due not to increased average earnings, but rather to decreased price of middling quality goods better suited for a middle class. Cheap land and cheap materials are a big part of this.
7. Chicago's derelict property policies. The city under Washington and then Daley has a fast track demolition program which hastily demolishes buildings from which illegal activity comes or which are neglected by landlords or delinquent on taxes. The problems only spread to the next buildings, and this again treats a symptom not a root cause. Not to even mention the demolition company campaign contributions -- these neighborhoods are devastated beyond recovery. In many areas the prairie has returned. What was once a bustling neighborhood filled with stores, flats, and even mansions has only a few odd buildings per block anymore. And the policy continues... Areas cannot recover if their main resource -- their built environment -- doesn't even exist anymore.
8. Continuing unintended consequences.
The CTA loses lots of taxpayer money every year. The public transportation get progressively worse. And yet city leaders are unwilling to make people pay for living in the city. If you want to drive a car to work in downtown, you should logically pay for the infrastructure getting you there and housing your car -- as directly as possible. Right now there is little trade off between car and mass transit. The city has a new zoning code providing provisions for developers requiring parking. But they don't realize that it is this code itself that removes the incentive which would keep CTA viable, and therefore provide the advantage of city over suburbs -- that is, good and cheap transportation. Cars that do make it to the city would pay more at city parking facilities as well. Supply and demand. But the city is currently artificially forcing supply up above equilibrium, which is where developers would keep it were they given the option. Parking should be as expensive as it needs to be for it to be viable to build parking instead of units or commercial space.
The current policy destroys the urban character of prospective development and the viability and attractiveness of inner city neighborhoods. Further, it deprives the city of income as well as a profitable and viable public transportation system.
Drivers should have to pay for highways directly as well. Were imminent domain not used, then highways would be expensive to build through areas of high population where land values are high. But a private company could buy air rights, or rights underground, or progressively and strategically buy land on the market. Eventually one highway would be built, and fees would be high. Cost to users would be direct. Highways would cut a path through the least private land possible. In Chicago, this would probably be lake shore drive, as it is built on a lot of former rail yards.
Were this policy adopted, mass transit would again be in what is closer to fair competition as highways would directly cost money. Right now a driver has little incentive to switch to mass transit when he is already paying tax dollars for the highways.
Privatize highways! They are losing money. Privately maintained highways charging per use would use price as a means of finding traffic equilibrium. Highly maintained highways, and more reasonable levels of auto use, would result. Further, mass transit would become more viable and service would increase. The inner city would regain what was one of its crucial advantages.
One can see how public policy gaffes together create a logical and even likely set of diagnoses of various problems leading to the seen symptoms in Chicago. It is sad that they are purposely overlooked. It is even more sad that many of these gaffes would have been avoided had our federal government respected its charter.
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