Why conservatives should care about cities
Population density is taking a beating as a result of the COVID-19 pandemic. Urban centers from Wuhan to New York City are hot spots for the virus, and many people argue, based on plausible intuitions, that urban crowding is to blame for its spread. Not all the evidence is in yet, and reassurances that New York could have prepared like (for instance) Seoul are, especially in the heat of the present, less persuasive to many than the mobile mortuaries humming around the city or the ongoing official use of the transit system as a homeless shelter. But cities have always faced serious challenges, and the economic and other benefits of cities are such that they have persisted for 5,000 years—even in the face of serious biothreats ranging from measles and flu to smallpox and plague.
While it remains too soon to say how big a factor urban density (as opposed to urban crowding) has been, people eager to use the crisis as an excuse to reject density should think twice. Dense cities offer capitalism’s solution to many of today’s challenges, from stagnant productivity growth to environmental degradation, in a package that conservatives should rally around.
This will require some forbearance. In recent years, cities have become associated not only with standard Democratic politics but with a resurgence of socialist activism. America’s new socialists are clustered in cities, where blunt leftist “solutions” to the nation’s policy problems are taking root. These problems include slow middle-class wage growth after one accounts for the rising costs of health care, education, and housing near (increasingly urban) good jobs, along with climate change. The Left says “late” capitalism cannot adapt—and so transformation into the first phase of “democratic socialism” is nigh. Their remedy for stagnant wages and high living costs includes union empowerment, Medicare for All, free college, and bans on construction of private housing plus universal rent control. For climate change, the solution is a vaguely sketched yet massive Green New Deal. Seeing all this, conservatives may be tempted to leave cities to their own fate.
Yet it would be a huge mistake for the nation as a whole if conservatives abandoned America’s cities—its richest and most dynamic centers of capitalism—to the stagnating influence of anti-growth NIMBY socialism. Cities are vivid demonstrations to young people of the robust power of entrepreneurialism and the vigorous capitalist spirit, and they offer one of the only ways to address the problems associated with climate change while stimulating economic growth and boosting real wages.
America’s post-1973 economic sluggishness, interrupted only briefly by the 1990s-era information-technology boom, has received wide popular and academic attention, in such works as Tyler Cowen’s The Great Stagnation and Robert Gordon’s The Rise and Fall of American Growth. Peter Thiel has written and lectured about how digital innovation in “the world of bits” has distracted us from near-total economic and physical stagnation in “the world of atoms.” Real and nominal interest rates in the U.S. have been declining since 1980, as a “global savings glut” has butted against our refusal to allow abundant capital to change the real world of atoms, especially in our largest cities.
To restore American growth, we must first legalize it. Before the pandemic hit, increasingly abundant capital and low interest rates meant that home prices were on the rise, but we actually saw less new-home building than in the past, in both absolute and per capita terms—in large part because building new homes was and remains effectively illegal in many of the hottest pre-crisis labor markets. New York City’s watershed citywide “downzoning” in 1961 imposed stricter building-bulk and height limits, added parking requirements, and sought to cap the city’s population by limiting the total amount of residential floor area that could be built. This trend has spread nationwide. Indeed, the most fantastic part of this year’s Star Trek series may have been not the spaceships but the prospect of San Francisco’s allowing tall buildings outside downtown sometime within the next 400 years.
Coastal states such as New York and California, where building new houses is expensive and onerous, should become more like Texas, where it’s cheap and easy. Legalizing housing is the first step to restoring long-term growth across the country, and removing regulatory barriers to housing development can also assist in the nearer-term economic recovery from the pandemic. Our service-based “new economy” thrives in cities—the bigger, the better. High-wage service growth—professional, technical, financial, and medical—tends to concentrate in cities. But America’s richest “blue cities” have throttled housing growth where it is most needed.
The result is a nation where abundant and cheap housing is found mostly where there are few good jobs. We exhort workers to move to opportunity, but the urban wage premium disappears for workers without a college education once you account for the cost of housing. Texas, Arizona, and the Sun Belt are the exceptions to this trend, almost entirely because of their permissive land-use regulations. Indeed, in most years between 2000 and 2010, the Houston metro area issued more housing permits than the entire state of California.
Contemporary San Francisco has experienced one of the largest technological-productivity booms since the invention of electricity, so why aren’t people migrating to the city en masse? Because of San Francisco’s land-use regulations, which ensure that its population of 881,549 is barely more than half the 1.6 million people who have moved to Houston’s Harris County in the IT-industry boom times since Steve Jobs came back to Apple in 1996.
America at its best is a nation of growth. In the five decades from 1850 to 1900, technological innovation, prescient infrastructure investment, and favorable geography drove Chicago from a population of 30,000 to 1.7 million—making it one of the world’s largest cities. One would think San Francisco, not Houston, would be challenging Chicago’s mantle today, given where the world’s largest group of technology firms has emerged. Instead, land-use regulations have had a greater influence than productivity on urban population flows since 1980.
Reducing the regulations that restrict America’s physical growth fits with the core of some overlapping conservative ideas: the sovereignty of the property owner to employ his land as he sees fit; the conservationist urge to protect rural wilderness; the broad emphasis on economic growth and deregulation. Deregulating to achieve housing abundance will free people to move where they want, but it could also help create a broad coalition to promote growth and capitalism in general. Cities are the key to building a bipartisan growth agenda with appeal to greens and young people by decoupling economic growth from perceived environmental damage.
The conservative tradition of environmental protection is rooted in stewardship and preservation of pristine wilderness in state and national parks, dating back to Theodore Roosevelt. But the flip side of preserving wilderness is permitting intensive growth where a lot of people already live. New York City’s new Hudson Yards skyscraper mall, which is being built on top of an old Manhattan rail yard, will have as much office space as the entire city of Portland, Ore. The new skyscrapers will be LEED Gold- and Platinum-certified, using highly efficient “trigeneration” microgrid technology for on-site electricity production, and will have a centralized underground vacuum-based waste-disposal system instead of urban dumpsters, rats, and noisy garbage trucks. But even an old-fashioned urban skyscraper would mean one less New Jersey wetland drained for a new strip mall and office park.
Transit-oriented urban growth is economic freedom’s ready answer to Greta Thunberg. Doomsday environmental socialism fuels the “degrowth” movement, which insists that capitalism and Western civilization as we know it must end in order to save humanity. But climate change is not inherently bad news for an adaptive and dynamic capitalism. France decarbonized its electrical grid between 1978 and 1988 using nuclear power, without harming its economy or making electricity expensive. It’s a strategy many conservative energy-policy pundits note with envy, and electricity is just one part of our energy system.
As a result of our incremental decarbonizing of electricity production, transportation in 2017 became the largest U.S. source of carbon emissions. Yet urban growth in the American Main Street tradition—“four floors and corner stores”—reduces driving by enabling walking and biking for local trips, even when most households still own a car. Transit-oriented central cities, including New York and Washington, D.C., reduce gas consumption for personal transportation the most, but even famously car-loving metros such as Los Angeles have impressively low rates of gas consumption per resident thanks to lower average driving distances and the presence of at least some functioning transit.
The best economic models of the negative impact of land-use regulations suggest that tens of millions of Americans would move to cities if we reduced housing costs (and thereby made the urban wage premium count for something again). Such an urban migration would automatically reduce carbon emissions. New York City is home to half of New York State’s population, but its pedestrian- and bike-friendly streets and extensive transit system send the whole state’s per capita gas consumption to the second-lowest level in the nation, after D.C.’s If the whole nation resembled New York State’s urban-suburban-rural mix, America’s gas consumption would drop by 34 percent with no other changes in technology, yet GDP would rise.
It’s not just about transportation, either. Multifamily and attached single-family housing (basically duplexes, attached townhouses, or row houses) is more energy-efficient than detached single-family homes. Multifamily homes tend to be more compact and more efficiently laid out, while shared walls provide natural insulation without any advanced technology. In every region of the U.S., the average large multifamily unit consumes between a third and a half of the energy of neighboring single-family units, on both a per-household and a per-resident basis. If every U.S. home consumed as little energy as the average home in a U.S. apartment building, total U.S. residential energy consumption would fall by 64 percent, according to the 2015 Residential Energy Consumption Survey. Less radically, if every detached single-family home consumed energy at the rate of the average, total U.S. residential energy consumption would fall by 20 percent.
Multifamily homes also allow more people to live in already built-up cities with mild climates where heating and cooling are seldom necessary, but where the land zoned for single-family use is already nearly full. The San Diego metropolitan area, for example, makes up for its car-oriented layout with a stable and mild year-round climate. San Diego’s weather is so good, in fact, that it manages to match the energy-saving effect of the NYC metro area’s reduced driving and significant multifamily housing (with some additional help from California’s relatively decarbonized electrical grid).
Yet today, most of California’s single-family urban land in the most attractive climates and labor markets is fully built out, and the bidding war for what’s left has driven prices out of control. Ultimately, the cap on housing units means a cap on the number of families that are allowed to live in good weather—and, by extension, a cap on their ability to consume less energy. One way or another, much more population is coming: The Census Bureau projects America’s population will add almost ten New York Cities worth of people, exceeding 400 million by 2060 (with most of that growth among the native-born). Where and how will those 80 million new Americans live? It might help if new apartment buildings were not illegal on most urban land.
Most families in America probably want to live in a single-family home, but our planning regulations don’t allow a free choice of other options. Most U.S. cities, with the partial exception of Houston, tightly cap the amount of land where multifamily housing is legal. Tall buildings, mixed-use developments, semi-attached duplexes, and “missing middle” (intermediate-size) apartment buildings are widely prohibited, even if they are what the market demands. Nobody should be ordered by government to live in an apartment building, or even a duplex—but it also shouldn’t be illegal for those who want to. With these restrictions relaxed, we might even be surprised at how many families prefer urban life, as part of an urban capitalism, when apartments are Texas-style affordable.
This is a vision for how capitalism can fend off stagnation, respecting the climate concerns of today’s youth while avoiding a socialist future that would endanger America’s prosperity. Younger Americans tend to like cities more than their Baby Boomer forebears did—certainly in popular culture, and probably in reality. The “Millennial return to cities” has been debated widely for 20 years now, but it’s not a debate to be settled ex ante by policymakers. To vote with one’s feet, one must have a dwelling in which to set foot. Planners should not be dictating to anyone how to live: Eliminate the regulations that prevent people from buying or renting where they want to, and let the chips fall where they may. In the process, we will restore the dynamism of American capitalism and take the wind out of the sails of the nascent socialist movement, which recruits young people caught on the fork between the crushing costs of living and reduced job prospects.
This piece first appeared in the June 2020 edition of National Review