Housing Policy

There is a large body of research that concentrated poverty is an important factor when it comes to persistent poverty. On the surface, this makes sense: if you live in an area where everyone is poor relative to the regional, state, or national economic milieu, then the incentives for economic attainment are a lot weaker (because you see everyone around you eking existences on the margins, and prosperous people — especially prosperous people who’ve attained their prosperity by legal and/or ethical means — are distant from your community, there are few positive role models, and in fact, few opportunities to see what a lifestyle of even average prosperity looks like). That is, the physical concentration of poverty leads to a poverty trap.

We can all agree, then, that deconcentrating poverty — that is, having the relative economic affluence within neighborhoods reflect (to a degree) the relative economic prosperity of the city or region — is a good thing. At least in theory. When natural experiments are conducted, this is borne out (see this recent City Observatory article). Refugees from areas of concentrated poverty, even when they relocate to only marginally-more-affluent areas, see increases in economic attainment. Similarly, several studies over the past decade indicate that, instead of causing the feared “displacement” boogeyman, gentrification in most areas results in little outmigration of existing residents, while simultaneously improving conventional educational metrics. That is, economic integration is absolutely critical in avoiding poverty traps.

Historically, American communities were segregated mainly along ethnic lines. This neighborhood was Irish, that one Italian, the one over there Jewish, down there was the Polish neighborhood, and so on. This is important because something we often fail to notice is that they were also internally economically integrated. Yes, different areas might’ve been more working-class or middle-class, but segregation by class was relatively unimportant in 1920’s America, and even then, confined mainly to the uppermost classes, the only ones who could afford houses and land in the picturesque suburbs. And segregation by ethnicity but not class, while socially bad in lots of ways we recognize today, also created lots and lots of small-scale social infrastructures, all operating in parallel. This, in turn, created an economic climate dominated by small- and medium-sized businesses, as most daily activities would have been carried out between people who lived and worked in the same neighborhood, and more importantly, people who owned within that neighborhood as well. Franchises were basically unknown then.

Congestion would have also abetted this. Essentially, most of the subclass that was wealthy enough to afford prewar suburbia either worked or attended to business exclusively downtown, and it would have been easier to get downtown from surrounding neighborhoods in most cities than it was to commute between those neighborhoods themselves.

Today, we’ve gone far in the other direction. Economic segregation is pervasive across our metroplexes. There are still a few examples of ethnic segregation, mainly centered around actively immigrating ethnicities (and African-Americans), but after a generation or two most immigrant children wind up entering the American milieu. However, housing choices are obsessively sorted — this subdivision is in this price range, which attracts people of this income, that one in that attracting that, and so on — across vast areas, yielding conformity in terms of early associations on a truly massive scale. And of course there’s the ghetto — the area where the most disenfranchised (usually African-Americans) live, and often also one of the oldest parts of town. As Cortright points out, there are now twice as many persistently poor people than there were in 1970.

Some would argue this is unintended. I disagree. Modern zoning, the main tool in American land-use planning, is called “Euclidean” zoning after Euclid, Ohio, a suburb of Cleveland. It’s called that because of Euclid v. Ambler, the landmark case establishing its legality: Euclidean zoning sought specifically to exclude — here, industrial uses in an attempt to prevent its annexation by Cleveland. (Ironically enough, the parcel in question is an industrial parcel to this day.) What has happened is that land-use zoning and the attendant legal climate is exclusionary by creating excessive barriers to development where development has already occurred, driving nearly all of every urban region’s development demand onto greenfield land. More exclusionary zones in turn make properties harder to develop, driving up the sale prices needed to make the subdivision profitable, resulting in higher developer’s fees (if the fees are progressively scaled) and, the municipality hopes, higher property taxes; nobody wants to be the one left to house the poor people.

The combination of highly prescriptive, localized, land-use regulations and high municipal fragmentation leads to greater economic segregation.

Anyway … where was I? Oh yes, trying to think through Cortright’s ramifications.

Cortright brought up the second major urban migration phenomenon, the return of the middle class to the cities, the one both boosters and detractors call gentrification. But that, too, is only part of the picture. If our goal is economic integration, then we have to bring a lot of policy prescriptions to bear.

(1) Realize that what gentrification does (provide a middle-class tax base for city services) is fundamentally a good thing,

(2) Decide land use on a regional level, taking the wheels off of the current driver of economic segregation,

(3) Allow enough housing units annually to satisfy demand (which, again, maximizes the tax base, as well as freeing up enough units to naturally downfilter), and

(4) Ensure that affordable units come online at a rate that maintains an economic balance. Where the demand mismatch is so great that this does not happen via downfiltering processes, rent control inclusive zoning will be called for.

The idea here is to essentially manage an economic profile such that a social infrastructure can be provided — both via public resources (enough wealthy and middle-class people want to live there that you’ve got a tax base as well as improved economic prospects for even the very poorest people in your jurisdiction) and commons ones (people of many economic backgrounds live in the same neighborhood).

However, as The Corner Side Yard often brings up, we’re still missing something in this picture. Urban redevelopment has yet to really pierce the regions of most concentrated poverty in many American cities — North Philadelphia, Chicago’s South Side, South Central Los Angeles — and in cities where it has, such as New York, Boston, and the Bay Area, development pressure is so strong that the entire metroplex has become unaffordable. Working classes make do, but the more mobile middle class (“hipsters” and “yuppies”) often move to more affordable cities, cities that offer the lifestyle they’re looking for at a budget they can afford.

This is downfiltering on a truly grand scale, and is, in fact, the engine powering revitalization in secondary cities all across the country. This has been happening, to some degree or another, for a long time; it’s perhaps more obvious right now because in many Northeastern and Midwestern beta cities, the longtime inhabitants eschew the old city —  St. Louis and Ohio’s major cities, Cleveland, Columbus, and Cincinnati, are perhaps the most extreme examples.

Is this a good thing? Well, that remains to be seen. Migration also means that skills can be propagated and localized. That is a good thing, because highly localized skill sets favor decreased economic centralization (New York solutions don’t work in a St. Louis legal climate, that sort of thing), and excessive economic centralization can stall out entire economies. But it can also be a bad thing, especially if migrant communities are all simply clones of one another. That drives a “city” culture vs. a “suburban” one, instead of a “Philadelphia” culture vs. a “Chicago” culture, and that’s definitely not a good thing.

Anyway. I’m so far off track I don’t even remember what I was planning to write when I started. But rambling is fun, and “fun” is something I haven’t had enough of lately!

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