Beijing Gigacity to Cover Area of Cambodia or Oklahoma

Today, there are about 30 megacities in the world, where more than 10 million residents live. The largest is Tokyo, at about 38 million. Recent announcements by the government of China could lead to the worlds' first gigacity (for want of a better term, used here to denote a city of more than 100,000,000 population, see note). According to the Nanfang Insider, the economic integration of megacity Beijing, megacity Tianjin and eight cities (prefectures) in the province of Hebei would result in a city of 130 million. China Daily is a bit more circumspect, indicating that the Beijing supercity would have only 85 million.

The giga/super city would be tied together by new rapid transit lines and highways and surrounded by the 7th Ring Road, adding to the six that have already been built. The 7th Ring Road would consist of two roads, circling most of the area, and extending to a combined 850 miles (2,200 kilometers). By comparison, London's M-25 is 117 miles long (188 kilometers), the Moscow MKAD 68 miles long (109 kilometers) and the Washington beltway is 64 miles long (103 kilometers)

The giga or super city is not likely to really be a city, because it would be much larger than a labor market (this is why the near continuous urbanization from Boston to Washington or Tokyo to Osaka-Kobe-Kyoto is not a city). The estimated land area is 67,000 square miles (175,000 square kilometers). This is nearly as large as Cambodia or the state of Oklahoma. Providing the point to point daily commuting in such a large area is well beyond the capability of any affordable transportation system. Star Trek like teleportation could do the trick. Meanwhile, however, there is plenty to be gained from the economic integration of this large area.

Graphic of the new 7th ring road from

Note: Technically, a gigacity would need 1 billion people (10 to the 9th power). However, megacities, with their 10 million minimum are also wrongly named. A city with a mega city would have 1,000,000 people (10 to the 6th power). Artistic license justifies the gigacity term under the circumstances. Besides, with the slowing growth of world population, it seems unlikely than any city will achieve a population of 1 trillion.

Circling the Brain Drain

It seems that Destination LI, “a nonprofit community building and educational organization dedicated to helping people create and sustain vibrant centers” on Long Island, has been quietly busy in recent months.

Recently, the group released a survey, which, to nobody’s surprise, shows that millennials are not exactly thrilled with Long Island’s housing options.

The solution? Those “vibrant” walkable communities that have been pitched so many times before. The survey also touched upon Long Island’s need for jobs that match millennial skillsets and salary expectations, two critical issues that policymakers must address.

In a nutshell, “the survey, conducted on social media web forums between Feb. 27 and March 24, drew 413 respondents.” To solicit responses, the group used sites such as Facebook, Twitter, LinkedIn, Reddit and others. Seventy-five percent of those who participated said that they either “agree” or “strongly agree” that Long Island’s housing options limit their ability to stay, with 58.7 percent saying they currently live with parents or relatives.

For perspective, consider this: According to U.S. Census data from 2010, there were 478,988 millennials in the Nassau-Suffolk region. Destination LI’s survey of 413 represents 0.08 percent of the sample size – far from a representative sample of that segment of population. Given the large gap between population and those surveyed online (which, by surveying standards, is a poor solicitation method), it’s important to take the results for what they are – anecdotal, but still an important commentary. Long Island clearly has issues with providing housing, but we’re going about it the wrong way.

The survey brings to light significant questions concerning Long Island. Is regional housing availability holding millennials back, or is it Long Island’s stagnant economy? The survey infers that walkable apartments keep millennials here, but what about affordable single-family homes? Are apartments the only housing option for this age group? Is more development the answer to our regional woes? Are the survey’s findings legitimate given the methodology?

Finally, the big question remains: Should developers be driving the regional conversation on housing needs?

The answer to any of these questions is up for debate, but the last one should resonate. Have Long Islanders become so apathetic that they now are reliant upon stakeholders to conduct surveys that not only get ample press coverage, but are sure to influence policy decisions on the regional level? Shouldn’t planners be conducting these studies, with their recommendations being based off appropriate methodology and professionalism?

Our policy solutions are only as good as the data that informs them. With land-use, the cost of failure is too expensive and repercussions too severe and far reaching to rely on stakeholder-driven solutions. We all are leaders in that we have the power to collectively shape our community. Let’s take back the reins and give our problems the thoughtful analysis they deserve.

IMF's Lagarde: Build on Greenfield Land

Christine Lagarde, the Managing Director of the International Monetary Fund cited the need for housing market reform at the conclusion of discussions with the government of the United Kingdom on Friday, June 6.

The housing market in the United Kingdom has experienced a long and continuing escalation in prices relative to incomes, largely due to the nation's strict urban containment policies that date from the 1947 Town and Country Planning Act, and significant further restrictions put in place during the Blair government.

According to Ms. Lagarde:

"But rising house prices fundamentally reflect demand that greatly exceeds supply. Addressing imbalances in the housing market by alleviating supply-side constraints will require further measures to increase the availability of land for development and to remove unnecessary constraints on land use."

The Daily Mail further reported that Ms. Lagarde "called for ‘unnecessary’ restrictions on building on greenfield sites to be lifted, so the supply of houses can be increased. This, she said, would help stabilise prices.

The United Kingdom's restrictive land use regulations have been a model for restrictive land use regimes from Sydney to Vancouver, Auckland, Portland and California. They have been responsible for driving up house prices relative to incomes, which reduces household discretionary incomes. The result is lower standards of living and higher rates of poverty. London School of Economics professor Paul Cheshire has concluded that urban containment policy is irreconcilable with housing affordability.

Thrive 2040: Toward a Less Competitive Minneapolis-St. Paul

In a Wall Street Journal commentary entitled Turning the Twin Cities Into Sim City, Katherine Kersten of the Center of the American Experiment describes how "a handful of unelected bureaucrats are gearing up to impose their vision of the ideal society on the nearly three million residents of the Minneapolis-St. Paul metro region." She notes that the Metropolitan Council (the "handful of unelected bureaucrats") intend for "all future housing and economic development within "easy walking distance" (one-half mile) of major transit stops—primarily in the urban core and inner-ring suburbs.” This would lead to "tax dollars (mostly from people who live elsewhere) will be lavished on high-density housing, bike and pedestrian amenities and subsidized retail shops." She equates the plan with playing the computer game "Sim City with residents' lives."

Kersten also notes the all-too predictable distortion of future transportation funding to support transit, rather than highway congestion relief.  The ("Thrive 2040") "plan also will pour public funds into mass transit while virtually ignoring congestion relief on highways. The Twin Cities region is projected to have just $52 million available annually from 2014 to 2022 for highway congestion relief, according to the Minnesota Department of Transportation. Yet the Met Council intends to spend at least $1.7 billion on a single light-rail project, with more rail transit to follow."

This imbalance of funding is despite the fact that less than two percent of travel in the Twin Cities is by transit. In the longer run, Minneapolis-St. Paul, which has been by far the most successful metropolitan area in the Midwest since World War II, will become less competitive if it fails to take steps to improve traffic congestion (and it is nothing short of folly to expect that transit can substitute for driving in the modern metropolitan area, see The Transit-Density Disconnect).

Kersten also characterizes as the "most radical element," of the Metropolitan Council plan as its greenhouse gas emission reduction component, and for good reason. The urban containment policies of densification and transit are far more expensive than other strategies for reducing greenhouse gas emissions (see questioning the Messianic Conception of Smart Growth and Enough "Cowboy" Greenhouse Gas Emissions Reduction Policies). At the same time, there are a myriad of strategies that are more cost effective, such as improved fuel economy (see Obama Fuel Economy Rules Trump Smart Growth). Cost-effectiveness is important, because if more than necessary is spent to reach greenhouse gas emission goals, there will be an economic cost in fewer jobs created, a lower standard of living and greater poverty (see Toward More Prosperous Cities).

Thomas Sowell Explains the Economics of Urban Containment (Smart Growth)

Economist Thomas Sowell, who has taught at Cornell University and UCLA and has worked at the Urban Institute and the Hoover Institution at Stanford University summarizes the economics of the housing market in a recent article:

"Anyone who has taken Economics 1 knows that preventing the supply from rising to meet the demand means that prices are going to rise. Housing is no exception."

Sowell's cites the high prices houses for sale in the San Francisco Bay area suburb of Palo Alto. Three catch his eye:

About the first house, he says: “The house is for sale at $1,498,000. It is a 1,010 square foot (94 square meters, added by author) bungalow with two bedrooms, one bath and a garage. Although the announcement does not mention it, this bungalow is located near a commuter railroad line, with trains passing regularly throughout the day."

The second house has 1,200 square feet (111 square meters) and was listed for $1.3 million. Intense competition for the house drove the sale price to $1.7 million.

The third, with 1,292 square feet (120 square meters) and built in 1895 is on the market for $2.3 million.

Sowell continues: "There are people who claim that astronomical housing prices in places like Palo Alto and San Francisco are due to a scarcity of land. But there is enough vacant land ("open space") on the other side of the 280 Freeway that goes past Palo Alto to build another Palo Alto or two -- except for laws and policies that make that impossible. As in San Francisco and other parts of the country where housing prices skyrocketed after building homes was prohibited or severely restricted, this began in Palo Alto in the 1970s."

As in Palo Alto, outrageous price increases began in the San Francisco Bay Area in the 1970s, and were the predictable outcome of urban containment policies (smart growth policies) that rationed land for development.

House prices are three times as high relative to incomes in the Bay Area than they were before urban containment regulation began in the early 1970s. Among New World (US, Canada, Australia and New Zealand) major metropolitan areas, only Vancouver has higher house prices relative to incomes.


The Monuments of Gentry Liberals in Chicago: White Students Dominate the Test-Admittance Public Schools

According to the U.S. Census Bureau, Chicago’s population peaked a long time ago.  In 1950, Chicago had 3. 6 million people. Recent estimates put Chicago’s population at 2.7 million. With the growth of American suburbs, many Chicago families have fled to public schools in the suburbs. Chicago’s horrible public schools have been an embarrassment for Chicago’s elite. A recent Chicago Tribune editorial estimated that only “only 8 of 100 freshmen who enter Chicago public high schools manage to get a college diploma.”  

In an attempt to keep white families from fleeing Chicago, the second Mayor Daley came up with a plan:  test-admittance-only public high schools. This was a reasonable solution for gentry liberals who pay high property taxes but didn’t want to leave the city or couldn’t afford to send their children to private schools. These select public high schools produce college bound students while “limiting” gentry liberal’s children from being exposed to children from “troubled backgrounds”. This is a sensitive subject because Chicago’s Public School System is only 9.2% white, while being 39.7% African-American.

Being admitted to these select magnet schools can often determine whether a family stays in Chicago or moves elsewhere. Recently, Daniel Hertz made news by graphically showing how Chicago’s middle class has being largely eliminated since 1970. The new Chicago is still a one-party town, but is now a coalition of rich and poor with a residual government worker middle class. White children have left Chicago’s Public School system leaving minorities as the majority. But, who gets into the selective public high schools?  The Chicago Sun-Times reports:

More white students are walking the halls at Chicago’s top four public high schools.

At Walter Payton College Prep on the Near North Side, more than 41 percent of freshmen admitted the past four years have been white, compared to 29 percent in 2009, a Chicago Sun-Times analysis of Chicago Public Schools data has found.

At Jones College Prep in the South Loop, 38 percent of this year’s freshman class is white, compared to 29 percent four years ago.

In 2010 — the first year race was no longer used to determine the makeup of Chicago schools — the percentage of white freshmen at Northside College Prep in North Park rose from 37 percent to 48 percent.

And at Whitney Young College Prep on the Near West Side, the percentage of black freshmen has steadily declined in the past three years, while the percentage of whites has risen.

As these schools attract white students, Mayor Rahm Emanuel had to shut down 50 public schools which according to Democracy Now affected” 30,000 students, around 90 percent of them African American.” While Chicago is closing public schools, it is getting ready to build a new school. Not just any public school, but an expensive test only admittance high school named after Chicago’s glorious leader who went far. The new high school will be named Barack Obama College Preparatory High School.

Gentry liberals leaders have told us with enormous conviction that public education is an “investment”. Yet, President Barack Obama and Mayor Rahm Emanuel send their children to elite private schools. What’s interesting in Rahm Emanuel’s case is he couldn’t find one public school in all of Chicago good enough to send his children. Mayor Rahm Emanuel is so committed to public education that he sends his children to a private school 15 miles away from where his children live.

Time Magazine Gets it Wrong on the Suburbs

Time Magazine's Sam Frizell imagines that the American Dream has changed, in an article entitled "The New American Dream is Living in a City, Not Owning a House in the Suburbs." Frizell further imagines that "Americans are abandoning their white-picket fences, two-car garages, and neighborhood cookouts in favor of a penthouse view downtown and shorter walk to work." The available population data shows no such trend.

Frizell's evidence is the weak showing in single family house building permits last month and a stronger showing in multi-family construction.

This is just the latest in the "flocking to the city" mantra that is routinely mouthed without any actual evidence (see: Flocking Elsewhere: The Downtown Growth Story). The latest Census Bureau estimates show that net domestic migration continues to be negative in the core counties (which include the core cities) of the major metropolitan areas (those with more than 1,000,000 residents). The county level is the lowest geographical level for which data is available.

At the same time, there is net domestic inward migration to the suburban counties. Moreover, much of the net domestic migration to metropolitan areas has been to the South and Mountain West, where core cities typically include considerable development that is suburban in nature (such as in Austin, Houston and Phoenix). As the tepid "recovery" has proceeded, net domestic migration to suburban counties has been strengthened (see: Special Report: 2013 Metropolitan Area Population Estimates), as is indicated in the Figure.

There is no question but that core cities are doing better than before. It helps that core city crime is down and that the South Bronx doesn't look like Berlin in 1945 anymore. For decades, many inclined toward a more urban core lifestyle were deterred by environments that were unsafe, to say the least. A principal driving force of this has been millennials in urban core areas. Yet, even this phenomenon is subject to over-hype. Two-thirds of people between the ages of 20 and 30 live in the suburbs, not the core cities, according to American Community Survey data.

To his credit, Frizell notes that the spurt in multi-family construction is "not aspirational," citing the role of the Great Recession in making it more difficult for people to buy houses. As I pointed out in No Fundamental Shift to Transit: Not Even a Shift, 2013 is the sixth year in a row that total employment, as reported by the Bureau of Labor Statistics was below the peak year of 2007. This is an ignominious development seen only once before in the last 100 years (during the Great Depression).

In short, urban cores are in recovery. But that does not mean (or require) that suburbs are in decline.

The Economist Indicts Urban Containment "Fat Cats"

"Free Exchange" in The Economist has come down strongly on the side of economics in a review of housing affordability.

According to The Economist, the unusually high cost of housing in San Francisco (and other places) is principally the result of tight land use regulation, which makes it expensive or impossible to build. If "local regulations did not do much to discourage creation of new housing supply, then the market for San Francisco would be pretty competitive." Add to that Vancouver, Sydney, Melbourne, Toronto, Portland and a host of additional metropolitan areas, where urban containment policy has driven house prices well above the 3.0 median multiple indicated by historic market fundamentals.

The Economist explains the issue in greater detail: "We therefore get highly restrictive building regulations. Tight supply limits mean that the gap between the marginal cost of a unit of San Francisco and the value to the marginal resident of San Francisco (and the market price of the unit) is enormous. That difference is pocketed by the rent-seeking NIMBYs of San Francisco. However altruistic they perceive their mission to be, the result is similar to what you'd get if fat cat industrialists lobbied the government to drive their competition out of business." (Our emphasis).

Of course urban planning interests have long denied that that rationing land is associated with higher housing prices (read greater poverty and a lower standard of living). Nonetheless urban containment policies not only drive up the price of land, but do so even as they reduce the amount of land used for each new residence, driving prices per square foot of land up as well.

The Economist notes that unless the direction is changed, housing policy will continue to be "an instrument of oligarchy. Who knows. But however one imagines this playing out, we should be clear about what is happening, and what its effects have been."


Rio Among the Most Dangerous Cities?

The travel website has published an article with a list of the world's "10 most dangerous cities to travel." I was obviously interested, but was soon deterred by advertisements that kept popping up and a web architecture intended to ensure that for every city viewed another ad would be placed in the way.

At the same time, this could be important information, and is especially untimely for Rio de Janeiro, which will soon host World Cup and Olympics events. So I put up with the inconvenience, with the intention of making the information more readily available (the explanations were very short).

Here is the list, according to, in order of dangerousness.

1. San Pedro Sula, Honduras

2. Karachi

3. Kabul

4. Baghdad

5. Acapulco

6. Guatemala City

7. Rio de Janiero

8. Cape Town

9. Ciudad Juarez

10. Caracas

I was pleased to see that two places I would like to visit, Lagos and Kinshasa were not on the list, two places I have been avoiding. I hope the report is an indication that things have gotten better. As for Rio, to be on a list with Baghdad and Juarez is a real "downer."

I can attest to having encountered no difficulty during my two week visit to Rio about 10 years ago and I would recommend any to visit.

Photo: Rocinha Favela, Rio de Janiero (by author)

Urban Containment: Land Price Up 5 Times Income & Smaller

The shocking extent to which urban containment policy (urban consolidation policy) is associated with higher land (and house) prices is illustrated by a recent press release from RP Data in Australia. The analysis examined the vacant building lot prices for the period of 1993 to 2013.
During the period, the median price of a vacant lot rose 168 percent after adjustment for inflation. This is nearly 5 times the increase in the median household incomes of the seven largest capital cities (Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra and Sydney).
But it gets worse. The median lot size was reduced nearly 30 percent. This should put paid to the myth that urban containment reduces lot prices as it reduces their sizes (Figure). The same dynamic has been indicated in the United States.

Australia has been plagued by huge house cost increases relative to incomes in association with urban containment policy. Before the adoption of urban containment policy, it was typical for house prices to average three times or less than that of household income. Now, Sydney has the highest median multiple (median house price divided by median household income) of any major metropolitan area in the New World, with the exceptions of Vancouver and San Francisco. Melbourne, the second largest metropolitan area in Australia, has a median multiple of 8.4, making it fifth most costly in the New World, behind San Jose. All of Australia's major metropolitan areas "severely unaffordable," including slow-growing Adelaide (6.3), as well as most smaller areas.
For a complete listing of median multiples by major metropolitan area, see the 10th Annual Demographia International Housing Affordability Survey.
Additional information on the RP Data research is available at Australian Property Through Foreign Eyes