Tag Archives: agglomeration

Updating the Reading List, August 2014: The New Geography of Jobs; Edge City; The Box; The Power Broker

CC image from carnagenyc.

The confluence of events in my life (new apartments, travel, wedding planning, etc) haven’t left time for much blogging recently. However, there’s always time to read. With that in mind, a few additions to the reading list (and correcting one egregious omission):

The New Geography of Jobs: Enrico Moretti (2012)

Berkeley economist Enrico Moretti delivers a concise and readable summary of the economic geography of innovative industries – the kinds of jobs that produce what Jane Jacobs referred to as “New Work” (Moretti cites Jacobs’ books on urban economics repeatedly). This transition to the ‘innovation sector’ means a profound shift in the economic geography of the US, just as past shifts from agriculture to manufacturing had large impacts on where and how we live. Moretti also explains how these innovative jobs tend to cluster together and the paradox of location and local interactions becoming more and more important in a world of globalization and ever-improving communication technologies.

Also, credit to Moretti for writing such an accessible book. In the acknowledgements, he notes that “serious economists are not supposed to write books – they are supposed to write technical papers.” Yet, such papers don’t easily spread outside of the academia bubble and into the hands of planners and policy-makers.

Edge City: Life on the New Frontier: Joel Garreau (1991)

First, a confession: despite Edge City‘s place in the urban planning canon, I had never read the entire thing (just a chapter here and there as a part of grad school assignments). With the opening of the Metro’s Silver Line through the quintessential Edge City, Tysons Corner, I wanted to correct my own reading list gap. It was also an opportunity to look at Garreau’s work nearly 25+ years after he wrote about these places.

Edge City describes the rise of the suburban office/retail node, usually located at a key transportation intersection, obtaining a critical mass of jobs and retail and pulling the business focus away from the traditional downtowns and business districts. Garreau’s description of the thought process behind development deals is insightful (as well as the impacts of unintended consequences, development following the path of least resistance, etc), but hardly limited to the suburban context of edge city.

Some statements from 1990 seem laughable now (“there is no petrochemical analyst around who thinks there is any supply-and-demand reason… that the price of oil should go higher than $30 a barrel in constant dollars in this generation.”), but others seem prescient: speaking of Tysons Corner, Garreau notes that parking lots alone represent a massive land bank, just waiting for a “higher and smarter and more economic use.”

The error, however, seems to be in thinking of places like Tysons as fundamentally decentralized, rather than strengthening centers in a polycentric metropolis. The future of an edge city like Tysons has more in common with urbanism than with the model Garreau describes. Nevertheless, his description of these places is an important element of the grand American suburban experiment.

The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger: Marc Levinson (2006)

Levinson’s history of the shipping container is a fascinating look behind the scenes of how we move goods around. Consequences for cities involve containers making old break bulk piers in Manhattan, San Francisco, and other ports obsolete; lower shipping costs enabling greater trade; intermodal shipping opportunities eventually enabling all sorts of new models for trade and distribution.

Levinson documents the challenges of overcoming proprietary interests to develop a series of standards that ensure interoperability, as well as the economic and institutional challenges (from port operators to unions to shipping companies to regulators) in embracing the new model. Levinson provides an insightful account of the difficulties in implementing new systems.

The Power Broker: Robert Moses and the Fall of New York: Robert Caro (1974)

I’m not sure how I missed including this in the reading list. It’s not a recent read for me, but reading Cap’n Transit’s post on the book and the reminder of Caro’s focus on the use of power rather than a personal, David v. Goliath struggle between the Moses and Jane Jacobs, I realized that I didn’t have it on the list. Here’s to correcting that omission.

More than just a documentation of Moses’s life and his use of the institutions to wield power, Caro’s book provides an excellent history of New York City and the background for so many of the institutions that shaped and continue to shape the city to this day. Caro’s focus on the institutional levers of power (a theme he carried through to his biographies of LBJ) gives the book applicability to any major city.

Are evolving suburbs really suburban anymore?

Leigh Gallagher is in the news with a provocatively titled book, The End of the Suburbs. Gallagher writes about the shifting geography of the American Dream from suburbia to growing cities and walkable places. In a summary for Time, Gallagher writes:

A major change is underway in where and how we are choosing to live. In 2011, for the first time in nearly a hundred years, the rate of urban population growth outpaced suburban growth, reversing a trend that held steady for every decade since the invention of the automobile. In several metropolitan areas, building activity that was once concentrated in the suburban fringe has now shifted to what planners call the “urban core,” while demand for large single-family homes that characterize our modern suburbs is dwindling. This isn’t just a result of the recession. Rather, the housing crisis of recent years has concealed something deeper and more profound happening to what we have come to know as American suburbia. Simply speaking, more and more Americans don’t want to live there anymore.

The American suburb used to evoke a certain way of life, one of tranquil, tree-lined streets, soccer leagues and center hall colonials. Today’s suburb is more likely to evoke endless sprawl, a punishing commute, and McMansions.

A few comments pop into mind:

This isn’t a new idea: Just googling some articles in recent years that I remember off the top of my head:

Chris Leinberger, 2008 – The Next Slum?
Alexis Madrigal, 2011 – The Beginning of the End for Suburban America
Chris Leinberger, 2011 – The Death of the Fringe Suburb
Hamilton Nolan, 2012 – The End of the Age of Suburbs

And I’m sure there are countless others, along with corroborating evidence from declining VMT, growing urban populations, and so on.

‘Suburb’ isn’t a descriptive term: Is Cambridge, MA suburban? Is all within the city limits of Houston, TX urban? The term could refer to the type of built environment, or to the nature of the political jurisdiction in relation to others in the region.

Suburbs are already evolving: Dan Reed highlights urbanizing suburban jurisdictions; Richard Layman describes potential paths for evolution; Josh Dzieza wonders if urbanizing suburbs might take some of the sting out of the culture wars and rhetorical battles between city-dwellers and suburbanites.

Suburban evolution isn’t a new thing: Alexis Madrigal offers a story about searching for the landmarks of Silicon Valley, finding that the center of a new industrial revolution is now a self-storage complex. Part of the myth of Silicon Valley is about a new industry emerging from agricultural landscapes; clean, new industry. But as Madrigal explains, the industry wasn’t that clean, and the pattern isn’t that new:

In our Internet-happy present, it’s easy to forget that up until the mid-1980s, Silicon Valley was an industrial landscape. Hundreds of manufacturers lined the streets of Sunnyvale, Palo Alto, Cupertino, Mountain View, and San Jose. This is the Silicon Valley when AMD, Apple, Applied Materials, Atari, Fairchild, Hewlett-Packard, Intel, National Semiconductor, Varian Associates, Xerox, and hundreds of other companies made their products right here in the Bay.

Now, with most of the production shifted overseas, the land uses have changed accordingly. Nonetheless, production of semiconductors and microchips is not without pollution, and leaking chemicals have littered the Valley with Superfund sites:

In contemporary descriptions of Silicon Valley as it was being built, every writer seems to note the absence of smoke stacks. A miracle! A clean industry! A better industrial capitalism!

The aesthetic was intentional. These factories of the future were designed to look like buildings on a college campus, which is to say, Stanford. The Stanford Industrial Park (later, the Stanford Research Park) set the visual standard from its founding in 1951 onward. There were rules governing which parts of the industrial apparatus could be visible, so as not to detract from the idea that these were locations for scholars, not laborers.

“Companies had to follow strict building codes, which included ‘complete concealment’ of things like smokestacks, generators, transformers, ducts, storage tanks, and air conditioning equipment,” environmental historian Aaron Sachs wrote in 1999.

Other municipalities wanted to encourage similar developments, and as Sachs concludes, “Stanford Industrial Park essentially replicated itself several times over–each time spurring the construction of new expressways and strip malls in neighboring areas.” What began as Stanford dean and Silicon Valley godfather Fred Terman’s dream to build “a community of technical scholars” in pleasant industrial parks became the architectural standard for the entire high-tech manufacturing world.

But the manicured look and feel had consequences. Storage tanks were placed underground, out of sight and out of mind. Until suddenly, in 1981, people in south San Jose living near Fairchild Semiconductor and IBM realized they were drinking water contaminated by the two firms’ manufacturing plants.

Several patterns of note: the influence of codes, unintended consequences, agglomeration economies, and the impacts of growth. And, hidden within the stereotypical suburbia is a more complex, evolved place:

What we see here is not simple suburbia. This is a landscape that industrialists, government regulators, and city planners sacrificed to create the computer industry that we know today. It has as much in common with a coal mine or the Port of Oakland as it does with Levittown or Google’s campus. All of which should lead us to a simple conclusion: the Silicon Valley of today is a post-industrial landscape, like the lofts near downtowns across the country, like Lansing, Michigan, like Williamsburg, like Portland’s Pearl District.

What we see now is a surreal imitation of the suburban industrial parks and commercial spaces of yesteryear. They’re built atop the past’s mistakes, erasing them from our maps and eyes.

The evolution of suburbia isn’t new. And Madrigal’s article is well worth the read.

On restaurants, retail, and clustering – agglomeration economies and urban retail trends

A few intersecting stories regarding retail and restaurants:

In DC, a group of activists are pushing a moratorium on new liquor licenses for 14th and U and environs. There has been substantial pushback to the idea of a moratorium, yet proponents insist the dominance of bars and restaurants are crowding out brick-and-mortar retail establishments. From Jessica Sidman’s summary in the Washington City Paper:

Joan Sterling of the Shaw Dupont Citizens Alliance, the group that proposed the moratorium, kicked things off by reading from a written statement in which she talked about the negative impact the proliferation of bars and restaurants has had on neighborhood noise, parking, and rat problems.

Sterling also talked about the need for a better balance of businesses. Who wouldn’t want grocery stores, hardware stores, movie theaters, galleries, and retailers like Urban Outfitters, Container Store, or an Apple store, she asked? “These are all businesses that will improve the daytime foot traffic and strengthen the neighborhood more than strip after strip of taverns,” she said. (The moratorium would not, of course, mandate that any of those other retailers come in, nor does the status quo ban them.)

Two obvious problems arise from Sterling’s desire for a greater diversity of retail offerings. Sure, who wouldn’t want more shopping? The problem is that there’s no such thing as a neighborhood Container Store. You might have a Container Store in your neighborhood, but retail of that nature requires a much larger audience to survive than just one neighborhood (The Container Store, for example, has only four locations in the entire Metro DC area – Tenleytown, Clarendon, Tysons Corner, and Rockville – with a fifth location in Reston on the way).

Richard Layman consistently comes back to this point in his blogging. Not only does retail require a wider area to draw from, it also likes to cluster together into districts: “with transportation costs being relatively equal, people choose to shop in the retail district with the greatest variety of stores and the most appealing choices.” Not every retail district will be full of the regionally significant stores. However, many of them can be filled with a cluster of neighborhood-based bars and restaurants.

The other problem is mistaking the symptom and the cause: the old adage holds that retail follows rooftops. The real-life decisions are obviously more complex, but additional stores are likely to feed off daytime traffic more than drive it.

Retail shops are but one form of aggolmeration. In last week’s City Paper, Jessica Sidman writes about the growing cluster of restaurants in part of the proposed moratorium zone. 14th Street, H St NE, 8th St SE, and others – in addition to the city’s already established dining zones. Payton Chung takes note of the trend – that retail is restaurants. Payton cites Terranomics: “There is only one segment of the market where we are seeing aggressive growth plans from inline users and that is the restaurant sector.” Payton adds:

Yes, we’d all love to be able to walk to the corner and buy some bolts from a corner hardware store, or socks from an apparel shop, but let’s face it: not enough of us do that often enough to sustain very many such businesses, particularly in areas that don’t have enough foot traffic to guarantee significant cross-shopping. Such uses will increasingly congregate within metropolitan subcenters — probably focused on today’s fortress malls or midtown destinations — so there will be winners and losers among retail nodes. At least everyone will have someplace to eat, though.

(BTW, connectivity to those subcenters will be necessary from ever-wider catchment areas. This will require rapid transit, not just walk accelerators like streetcars or bikeshare, in order to connect neighborhoods to retail focal points.)

Hard to fight the trend, particularly when additional restaurants can add value to neighborhoods – particularly when they cluster together. Payton’s point about the rising importance of regional transit to link these regionally significant centers together is a good one, as well – the pattern of transit-oriented development around transit stations can be a positive feedback loop for additional transit ridership and development. Regional significance can mean that a place achieves that critical mass where the retail draw is indeed pushing daytime traffic – but those kinds of centers will be limited to a few key parts of each region.

Shaping Silicon Valley

Roosevelt Island Tram - CC image from The Eyes of New York

A couple of items that came across the internet about technology, innovation, the economy, and urban form:

Tech & the City

Nancy Scola pens a long piece in Next American City about the future of the technology industry in the city. The piece looks at how policy can shape an industry cluster – or not. New York’s tech university on Roosevelt Island is a key piece of the puzzle in helping shape an industry within a city:

Fortunately, by the late 2000s, the tech sector was on an upswing. Venture capitalists were nosing around the city. Talk of a “Silicon Alley 2.0” was in the air. Start-ups were starting up in DUMBO. But, says Pinsky, when the city held hundreds of conversations on economic development with everyone from academics to business leaders to community groups, they came to the realization that while there was, in raw terms, a good amount of applied science activity afoot, New York City’s economy is a huge one. There simply wasn’t the critical mass needed to create the sort of idea sharing and hopping from company to company that helped spread innovation in Silicon Valley. They concluded that there was a dearth of trained technologists able to do the heavy lifting.

Now, far be it from me to dissuade an investment in education – but there’s a concern about focusing too closely on chasing a specific sector rather than setting the rules and conditions to be ripe for innovation:

So what worries her? It’s the way government is getting involved. Along with Stanford, Silicon Valley had a mess of government contracts in the 1950s, particularly in the fields of naval research and aerospace. “Silicon Valley was never a purpose-built science city,” says O’Mara. “Dwight Eisenhower didn’t say ‘We’re going to build a tech capital on the west coast.’” Sure, there was a ton of money injected into the region. But there were few strings attached. It was pure profit that went to building out iconic tech companies like Hewlett-Packard and Xerox PARC. “In a way, it was a happy accident,” says O’Mara. “Part of my skepticism about this whole enterprise is a belief that government can have this great market impact. In the case of technology, it’s just a little more slippery and unpredictable.”

One common theme is the rejection of the idea that the strip-mall office park of Silicon Valley is critical to the kind of technological innovation seen there – that linkage of form and innovation is spurious:

Cities have, of course, made a comeback in recent decades, and much modern thinking — O’Mara points to Steven Johnson’s Where Good Ideas Come From — “really emphasizes the urbanity of innovation,” with the accidental encounters and collision of ideas that are the product of density seen as creative fodder.

The Boston area’s high-tech corridor that grew along Route 128 pioneered what became known as the East Coast model: Giant firms that did everything in-house. But in New York, real estate costs alone might encourage that tech firms stay small, says O’Mara, in keeping with “the other industries that have been in New York for so long that have a similar small-scale communitarian [culture] — the creative industries, fashion, media…” In that way, even a tiny start-up can be part of something bigger: An industry, an economy, a city.

Speaking of the building that will house your enterprise…

A couple of items on Facebook’s planned Frank Gehry HQ. First, from Allison Arieff in the NYT:

The choice of Gehry might have been “game-changing” — to use the parlance of the start-up community — two decades ago. Today, it’s a safe bet, representing Facebook’s true transition from rogue start-up to the establishment (no matter how strenuously they might dispute that designation).

Writing at the New Republic, Lydia DePillis (she’s back) sounds off similarly:

That’s a frustrating response. As shrouded in moss as it might be, the 10-acre campus is fundamentally no different from the tech parks of old: Single-use, completely isolated, and shamefully wasteful of the kind of space that commands such a premium on the other end of the Bay. The designs highlight the accommodations they’ve made for pedestrian and bike access—like an underground tunnel to its other campus across the highway!—but only glancingly mention the subterranean lake of parking, with 1504 spots for a projected 2800 employees (that’s a really high ratio, even for a suburban office). The horizontal layout might comport with Mark Zuckerberg’s conception of a social universe in which relationships exist independently of any physical reality. But from a practical standpoint, it ignores one of the most important qualities of a creative place: Density, activity, and exposure to the ferment of ideas.

Arieff notes that the designer and the client both want to foster the kind of interaction and proximity that comes naturally in cities – taking note of the fact that Facebook has no offices for anyone, regardless of rank – but something is still missing:

But so very unlike a city, the New Urban-ish campus is populated not by folks from different walks of life but solely by Facebook employees. For all the talk in startup circles of “serendipitous interaction,” it’s not the sort celebrated by Jane Jacobs. There may be a place to get a latte there but there is no Third Place, those accessible anchors of community life like bars, farmer’s markets or barber shops that help foster civic engagement and interaction with both regulars and new faces. Yes, it’s stating the obvious, but Facebook workers interact with other Facebook workers. There’s next to nil outside influence to be found on a corporate campus. Indeed, many tech employees (Facebook’s and others) have observed that many of their most meaningful encounters occur not at work but while waiting on city streets for the now-ubiquitous corporate shuttles from San Francisco that take them south to Silicon Valley.

Now, it’s tricky to separate some of the urban planning issues (transportation access, urban design) from the interior design ones (office layouts, use of internal space) from the economic geography issues (Silicon Valley is dense, even if filled with stereotypical office parks). That said, the themes are interesting to track. Add in the region-wide issues of housing costs and other drags on the local economy, and things can get murky quickly.

It’s not like the denizens of Silicon Valley are happy with the built environment…

Two pieces in San Jose’s MetroActive (the intro, the full piece) lament the lack of urbanism and the impact it has on innovation in San Jose. The author, Michael Malone, talks about San Jose’s inability to embrace the values of Silicon Valley while similarly stumbling in creating a big, authentic city:

And there is one more thing I would expect our elected leaders to know something about: Entrepreneurship. Entrepreneurship built Silicon Valley; entrepreneurship is the source of this valley’s economic power; entrepreneurship is this valley’s only hope of a prosperous future. San Jose claims to be the capital of Silicon Valley—and Silicon Valley is the world’s capital of entrepreneurship . . . so why is it that the leaders of this city appear to have no real understanding of entrepreneurship?: Who does it. How it happens. And what it needs to survive.

I know they don’t understand because their actions tell me so. Here are three truths about Silicon Valley entrepreneurs:

1. The big fancy buildings and famous company names don’t matter. The future is in the hands of men and women working on business plans in Denny’s and Starbucks.

2. Entrepreneurs don’t need support. They need benign neglect.

3. You can’t pick winners in advance. There are too many variables. Winners pick themselves.

Compare that with the approaches debated in New York.

Instead, you give the start-ups cheap office or warehouse space, tax breaks and the fastest broadband you can deliver. Then you get the hell out of the way and trust them to do the rest. Ninety percent of them will fail, but that last 10 percent will change the world—and the fortunes of the city of San Jose.

“Giving” cheap office space might not need an actual subsidy – and it likely speaks to a broader policy change that follows on the work of the Econourbanists.

Cities and the constructal law

CC image from Other Think

Several months ago, I picked up a copy of Design in Nature as an impulse buy at the bookstore. I was purchasing a gift and the cover caught my eye. A quick perusal of the jacket and a few pages of the introduction was enough for me to fork over the cash. I didn’t get around to reading it until I had several airline flights this summer (with the accompanying missed connections) to dig into the book.

The basic premise of the book is that the similarities we see in nature (why trees and lightning bolts and river deltas share the same branch-like architecture) isn’t a coincidence, and it certainly isn’t the result of divine inspiration. Rather, these similarities are explained via thermodynamics and the ‘constructal law‘ as coined by the author, Adrian Bejan. The law states: “For a finite-size system to persist in time (to live), it must evolve in such a way that it provides easier access to the imposed currents that flow through it.”

In short, the flow systems and the laws of physics that govern them influence those similarities in design. From the wiki summary:

The constructal law represents three steps toward making “design in nature” a concept and law-based domain in science:

Life is flow: all flow systems are live systems, the animate and the inanimate.

Design generation and evolution is a phenomenon of physics.

Designs have the universal tendency to evolve in a certain direction in time.^[2]

The constructal law is a first principle of physics that accounts for all design and evolution in nature. It holds that shape and structure arises to facilitate flow. The designs that arise spontaneously in nature reflect this tendency: they allow entities to flow more easily – to measurably move more current farther and faster for less unit of useful energy consumed.^[3] Rain drops, for example, coalesce and move together, generating rivulets, streams and the mighty river basins of the world because this design allows them to move more easily. The constructal law asks the question: Why does this design arise at all? Why can’t the water just seep through the ground? The constructal law provides this answer: Because the water flows better with design. The constructal law covers the tendency of nature to generate designs to facilitate flow.

Reading the book, I thought back to previous examples of similar observations of cities:

The similarities of subway networks across multiple cities (linked previously here)
The work of Geoffrey West on a universal theory of cities (also here), economies of scale and the benefits of agglomeration
Jarrett Walker’s analogies of transit systems as rivers (both here and here), particularly with the usefulness of drawing out key principles (e.g. ‘branching divides frequency’).
Any number of urban economic studies of agglomeration, innovation, and human capital – studying the flows of information in cities (examples here, here, and here, among many others)

Jarrett Walker’s recent Email of the Month post sparked me to write this. Walker’s emailer, Kenny Easwaran, notes:

At the time, I was thinking of the various transportation systems we know of that aren’t designed by humans. The main examples I could think of were things within the human body, and I noticed that things like the circulatory systems of animals and plants, and the digestive system of animals, seem to follow somewhat different trajectories from grids. In particular, they either have a branching tree structure, or something more like an extended linear structure.

Having recently finished Adrian Bejan’s book on constructal theory, the analogy to tree-like systems immediately caught my eye. For me, Bejan’s description of all of these phenomena as flow systems ruled by common principles of physics helps shape my thinking, even if it is a bit vague. Walker’s analogies of transit networks to rivers is a similar case.

The difficulty of unintended consequences – airlines, HSR, and deregulation

Pittsburgh International Airport - CC image from Fred

Philip Longman and Lina Khan make the case for re-regulating America’s airlines, claiming that deregulation is killing air travel and taking de-hubbed cities like St. Louis with it (hat tip to Matt Yglesias). The authors do indeed present compelling evidence that airline deregulation has indeed shifted the economic geography of many cities in the US – but as Matt Yglesias notes (channeling the aerotropolis thesis), in many cases this is merely an example of the air travel network’s ability to emphasize agglomeration economies:

They observe that… once the imposition of market competition caused some medium-sized midwestern cities to lose flights, the per flight cost of the remaining ones went up. That tends to produce a death spiral. Eventually the market reaches a new equilibrium with fewer, but more expensive flights. Except that equilibrium tends to drive businesses out of town. And once Chiquita leaves town, Cincinnati will have even fewer aviation opportunities which will further impair the business climate for the remaining large companies in the city.

This is a great concrete and usefully non-mystical illustration of agglomeration externalities.

Yglesias argues that fighting these agglomeration economies is counter-productive, but that’s not the only flaw in Longman and Khan’s thinking. Using the example of Pittsburgh, where the America West-US Air merger meant PIT losing hub status, they cite examples of the problems this represents for business travel:

K&L Gates, one of the country’s largest law firms, used to hold its firm-wide management meeting near its Pittsburgh headquarters, but after flying in and out of the city became too much trouble, the firm began hosting its meetings outside of New York City and Washington, D.C. The University of Pittsburgh Medical Center, the biggest employer in the region, reports that its researchers and physicians are increasingly choosing to drive to professional conferences whenever they can. Flying between Pittsburgh and New York or Washington can now easily take a whole day, since most flights have to route through Philadelphia or Charlotte. A recent check on Travelocity showed just two direct flights from Pittsburgh to D.C., each leaving shortly before six in the morning and costing (one week in advance) $498 each way, or approximately $2.62 per mile.

The problem is that Pittsburgh to New York and Pittsburgh to DC aren’t all that long as the crow flies. Longman and Khan explain why that’s problematic, thanks to those pesky laws of physics:

One reason this business model doesn’t work is that it’s at odds with the basic physics of flying. It requires a tremendous amount of energy just to get a plane in the air. If the plane lands just a short time later, it’s hard to earn the fares necessary to cover the cost. This means the per-mile cost to the airlines of short-haul service is always going to be much higher than that of long-haul service, regardless of how the industry is organized.

Indeed, part of the economic logic of the airline hub was to ferry passengers to the hub via loss leader (or, hopefully, less profitable) short-haul routes so that they can then use the more profitable long-haul services – transcontinental and international flights, and the like. The problem is that Longman and Khan can’t see beyond the end of the runway. We have a transportation technology that has a different economic calculus, one that works well for those shorter trips up to about 500 miles – high speed rail.

This isn’t to counteract Matt’s first point – just because HSR can make travel time competitive with air travel over such distances does not mean building it will be cost-effective, but the broader point is about the need to think beyond the modal silos. Current rail service from Pittsburgh to DC and New York isn’t time-competitive with flying, even with those connecting flights. But HSR could be. Indeed, given the current economics of the aviation industry, HSR ought to have a larger role in key corridors.

Indeed, Longman and Khan do consider rail in their article, but they pick out the history of railroad regulation instead:

By the 1880s, the fortunes of such major cities as Philadelphia, Baltimore, St. Louis, and Cincinnati rose and fell according to how various railroad financiers or “robber barons” combined and conspired to fix rates. Just as Americans scream today about the high cost of flying to a city like Cincinnati, where service is dominated by a single carrier, Americans of yesteryear faced impossible price discrimination when traveling or shipping to places dominated by a single railroad “trust” or “pool.”

This, more than any other factor, is what led previous generations of Americans to let go of the idea that government should have no role in regulating railroads and other emerging networked industries that were essential to the working of the economy as whole.

The problem with applying this logic to the current airline situation is that the railroads of the turn of the century didn’t just have a monopoly over a given town as the sole operator of service along the line, but they had a monopoly on the very technology that could offer such increases in mobility.

That technological mobility is no longer the case. The excellent Mark Reutter article The Lost Promise of the American Railroad (now behind a paywall) documents the many reasons for the decline of American rail, including new competing technologies (both air travel and cars taking away long distance travelers as well as commuters), outdated regulations (such as WWII era taxes meant to reduce unnecessary travel during the war – and were quite successful at doing so – that remained in place until the mid 1960s), direct subsidization of competitors by the government (see taxpayer funded highways and airports, in the face of largely privately financed and taxed rail assets), and differing regulatory regimes.

The regulations present a compelling story. The original regulations, as noted by Longman and Khan, were devised in an era before heavier-than-air human flight had even occurred – yet alone before the rise of commercial aviation. Yet, the regulations devised by the Interstate Commerce Commission (formed in 1887) were the basis for a portion of the blame for the decline of American rail less than a century later. Longman and Khan defend the need to regulate, despite these shortcomings:

To be sure, any regulatory regime can degenerate and wind up stifling competition, and the CAB of the late 1970s did become too procedure bound, ruled, as it came to be, by contending private lawyers rather than technocrats. It would have helped, too, if the country had not largely abandoned antitrust action after the Reagan administration. But even strong antitrust enforcement wouldn’t have helped that much, because airlines— just like railroads, waterworks, electrical utilities, and most other networked systems—require concentration both to achieve economies of scale and to enable the cross-subsidization between low- and high-cost service necessary to preserve their value as networks. And when it comes to such natural monopolies that are essential to the public, there is no equitable or efficient alternative to having the government regulate or coordinate entry, prices, and service levels—no matter how messy the process may be.

While this can be a compelling case for the need for regulation in the abstract, it doesn’t present a compelling case for the content of those regulations. How can these regulations possibly change to reflect changing economic realities, such as the rise of new technology?

Chris Bradford put forth an interesting idea regarding land use regulation: give all zoning codes an expiration date (a similar idea to the zoning budget). If the anti-trust and equity concerns are so great as to require this kind of regulation, requiring some sort of periodic review is an interesting idea for simulating some of the innovation and competition that a freer market might provide.

The extreme positions aren’t that illuminating. Likewise, merely promoting the idea of regulation in the abstract (without speaking to the content and effects of those regulations) isn’t helpful, either. The specifics matter. Regulation for the sake of regulation is pointless, and we must have mechanisms for continual re-evaluation of the regulations we do have to ensure they actually work towards our stated policy goals. All too often, this re-evaluation falls short.

This isn’t meant to be a broadside against regulation – far from it. There’s clearly a role for it. Instead, I ask for periodic review to ensure the regulations are helping achieve our objectives rather than hindering them. Likewise, the inevitable reality is that whatever regulations we impose now will have unforseen, unintended consequences.

Links: iPhones and airports

CC image from Yutaka Tsutano

Rail to Dulles: MWAA Board member Robert Brown suggests eliminating the Dulles Airport rail station and replacing it with a people mover to connect to the Route 28 station as a means to save costs. Yonah Freemark finds the concept intriguing, offering some operational considerations that could make it work.

However, the notion that building an entirely new landside people mover system will save money is ludicrous (IAD’s AeroTrain just clocked in at $1.4 billion). Likewise, while the concept would be an interesting solution to connecting an existing airport to an existing rail link (such as between BWI and the BWI rail station), the fact that the rail line has not yet built is a perfect opportunity to ensure that the airport itself is ‘on the way,’ to borrow Jarrett Walker’s terminology.

Freemark notes that one benefit of this concept would be to reduce travel time to the core and/or Tysons, but several other concepts considered by Metro would probably provide more utility to larger areas of service.

Meanwhile, Dulles offers a connection to the world via it’s ‘accidental aerotropolis.’

iPhones and agglomerations: When I last touched on the Aerotropolis, I noted Aaron Renn’s observation that the book isn’t so much about airports and cities as it is about globalization. One such element is the extensive description of the extraordinary agglomeration of manufacturing infrastructure and firms in Shenzhen.

This weekend’s New York Times contains a lengthy article on why the iPhone and other similar devices are not manufactured in the United States. In his blog, Paul Krugman sums up that article in one word: agglomeration. Some key snippets from the article:

But by 2004, Apple had largely turned to foreign manufacturing. Guiding that decision was Apple’s operations expert, Timothy D. Cook, who replaced Mr. Jobs as chief executive last August, six weeks before Mr. Jobs’s death. Most other American electronics companies had already gone abroad, and Apple, which at the time was struggling, felt it had to grasp every advantage.

In part, Asia was attractive because the semiskilled workers there were cheaper. But that wasn’t driving Apple. For technology companies, the cost of labor is minimal compared with the expense of buying parts and managing supply chains that bring together components and services from hundreds of companies.

For Mr. Cook, the focus on Asia “came down to two things,” said one former high-ranking Apple executive. Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.” The result is that “we can’t compete at this point,” the executive said.

Since we’re talking about iPhones and not cheap Christmas ornaments, the availability of materials and the skill of the labor is more important than the cost of that labor – all benefits of the large agglomeration of technology firms in Shenzhen.

For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely difficult to achieve. Apple had already selected an American company, Corning Inc., to manufacture large panes of strengthened glass. But figuring out how to cut those panes into millions of iPhone screens required finding an empty cutting plant, hundreds of pieces of glass to use in experiments and an army of midlevel engineers. It would cost a fortune simply to prepare.

Then a bid for the work arrived from a Chinese factory.

When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in China now,” said another former high-ranking Apple executive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”

More thoughts on iPhones, agglomerations, and jobs from Matt Yglesias and Tyler Cowen.

Likewise, an interesting set of charts looking at market share for various computing platforms – starting from more traditional personal computers, but eventually adding in smartphones and tablets. While smartphones and tablets aren’t yet substitutes for a personal computer, they’re getting closer.

Station Domination: via Tyler Cowen, an interesting post from Matt Glassman on the cost of Metro station advertising and the linkages between national politics and the local transit system.

In need of a good decongestant: Housing Complex takes a look at slight optimism from COG staffers on de-congestion pricing, and makes note of a lengthy Washingtonian piece on the subject.

Density, productivity, and housing prices

Ryan Avent recently spoke at the Kauffman Foundation‘s conference for economic bloggers. His short presentation touches on a number of economic issues as they relate to urban economies and their role in our national economy.

The presentation tackles Tyler Cowen’s Great Stagnation thesis. Avent specifically looks at the benefits of density on productivity and innovation, and how the dispersal of the American population has had a disparate impact on American productivity.

The implications for cities are clear – the dense areas (owing to the benefits of agglomeration and economies of scale) are extremely productive, but they’ve not been the areas seeing growth in recent decades. Instead, the less-dense places in the sun belt have grown. Avent attributes this to the sun belt’s ability to expand supply and keep housing costs low (citing Ed Glaeser). The implication is that the low cost of living is attracting people to areas that are less productive than the dense but hard-to-expand coastal cities.

A universal theory of cities

CC Image from lopolis

Last week, the New York Times Magazine featured a lengthy piece from Jonah Lehrer about two physicists who have formulated a sort of universal law for urban living. The single biggest determinant of urban performance is size – increasingly large agglomerations offer economies of scale – people who live and work there are more productive, more creative, etc. The physicists (Geoffrey West and Luis Bettencourt) summarize their main conclusions:

Three main characteristics vary systematically with population. One, the space required per capita shrinks, thanks to denser settlement and a more intense use of infrastructure. Two, the pace of all socioeconomic activity accelerates, leading to higher productivity. And three, economic and social activities diversify and become more interdependent, resulting in new forms of economic specialization and cultural expression.

We have recently shown that these general trends can be expressed as simple mathematical ‘laws’. For example, doubling the population of any city requires only about an 85% increase in infrastructure, whether that be total road surface, length of electrical cables, water pipes or number of petrol stations. This systematic 15% savings happens because, in general, creating and operating the same infrastructure at higher densities is more efficient, more economically viable, and often leads to higher-quality services and solutions that are impossible in smaller places.

These core economies of scale, positive feedback loops, and benefits of agglomeration are what lets cities be cities. Now, we have some math behind it.

Some more quotes from the NYT Mag piece.

On urban systems:

There is something deeply strange about thinking of the metropolis in such abstract terms. We usually describe cities, after all, as local entities defined by geography and history. New Orleans isn’t a generic place of 336,644 people. It’s the bayou and Katrina and Cajun cuisine. New York isn’t just another city. It’s a former Dutch fur-trading settlement, the center of the finance industry and home to the Yankees. And yet, West insists, those facts are mere details, interesting anecdotes that don’t explain very much. The only way to really understand the city, West says, is to understand its deep structure, its defining patterns, which will show us whether a metropolis will flourish or fall apart. We can’t make our cities work better until we know how they work. And, West says, he knows how they work.

On similarities and dissimilarities to natural systems:

[T]he real purpose of cities, and the reason cities keep on growing, is their ability to create massive economies of scale, just as big animals do. After analyzing the first sets of city data — the physicists began with infrastructure and consumption statistics — they concluded that cities looked a lot like elephants. In city after city, the indicators of urban “metabolism,” like the number of gas stations or the total surface area of roads, showed that when a city doubles in size, it requires an increase in resources of only 85 percent.

…

What Bettencourt and West failed to appreciate, at least at first, was that the value of modern cities has little to do with energy efficiency. […] In essence, they arrive at the sensible conclusion that cities are valuable because they facilitate human interactions, as people crammed into a few square miles exchange ideas and start collaborations. “If you ask people why they move to the city, they always give the same reasons,” West says. “They’ve come to get a job or follow their friends or to be at the center of a scene. That’s why we pay the high rent. Cities are all about the people, not the infrastructure.”

On positive feedback loops:

West and Bettencourt refer to this phenomenon as “superlinear scaling,” which is a fancy way of describing the increased output of people living in big cities. When a superlinear equation is graphed, it looks like the start of a roller coaster, climbing into the sky. The steep slope emerges from the positive feedback loop of urban life — a growing city makes everyone in that city more productive, which encourages more people to move to the city, and so on. According to West, these superlinear patterns demonstrate why cities are one of the single most important inventions in human history. They are the idea, he says, that enabled our economic potential and unleashed our ingenuity. “When we started living in cities, we did something that had never happened before in the history of life,” West says. “We broke away from the equations of biology, all of which are sublinear. Every other creature gets slower as it gets bigger. That’s why the elephant plods along. But in cities, the opposite happens. As cities get bigger, everything starts accelerating. There is no equivalent for this in nature. It would be like finding an elephant that’s proportionally faster than a mouse.”

Scarcity is the check on this superlinear growth, and innovation is what breaks that check.

On counterpoints to these universal laws: Lehrer quotes suburbanist Joel Kotkin in his piece, with Kotkin arguing against this logic of density and economies of scale, citing Silicon Valley and the Research Triangle. Kotkin is too focused on the traditional narrative of cities and suburbs, however. Both of those examples are still agglomeration economies, just comprised in a different physical form. A ‘city’ here is also the total urban area, not the arbitrary political boundaries that Kotkin often hangs his hat on.

It’s also important to note that this kind of universal law sets the baseline for what’s to be expected of a city – certain places will under or over-perform. That’s where the quality of a place comes in, in my estimation.

On qualitative measures: West and Bettencourt specifically avoid the qualitative, since they can’t measure it well with data. It’s important to not set qualitative and quantitative measurements in opposition, however. WNYC’s RadioLab delved into the qualitative aspects of what makes cities into cities back in October. These different explanations of cities are not mutually exclusive. Indeed, they are complimentary.

This discussion, both the qualitative and quantitative aspects of it, seem to further embrace the Three D’s of density, diversity, and design. The question is then about how to assess each of those factors. Given that each one of those factors can be defined expansively (diversity of people, of skills, of land use, of incomes, of languages, of cultures, etc) and not all of those varied elements can be effectively quantified, this only reinforces the co-dependence of both analytical methods.

On planning: Lehrer closes his piece with a note about the inherent messiness of cities – the “energized crowding”, to steal a phrase from Spiro Kostof.

Unlike companies, which are managed in a top-down fashion by a team of highly paid executives, cities are unruly places, largely immune to the desires of politicians and planners. “Think about how powerless a mayor is,” West says. “They can’t tell people where to live or what to do or who to talk to. Cities can’t be managed, and that’s what keeps them so vibrant. They’re just these insane masses of people, bumping into each other and maybe sharing an idea or two. It’s the freedom of the city that keeps it alive.”

One common misconception about planners and planning is that we seek to control everything. Instead, I am more interested in this kind of messy interaction. Planning is about facilitating those interactions, not about controlling them. For that reason, I find this kind of research fascinating.

The entire piece is fantastic. Read the whole thing.

City Block

a work in progress…