Tag Archives: urban economics

America’s shoplifting panic

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Recently I purchased a small bottle of dishwashing liquid for less than $2 at a Walgreens in Center City Philadelphia, and I had to call a clerk to unlock it a Plexiglass case and get it for me. I also notice that shelves are oddly empty in many stores, and I have certainly seen and heard the stories about shoplifting and “flash mobs”.

As always, I like journalism that provides some data to back up storytelling and anecdotal evidence. So kudos to CNN here:

Shoplifting reports in 24 major cities where police have consistently published years of data — including New York City, Los Angeles, Dallas and San Francisco — were 16% higher during the first half of 2023 compared to 2019, according to the Council on Criminal Justice analysis.

However, excluding New York City, the number of incidents among the remaining cities was 7% lower.

CNN

The article also provides some interesting context on past “shoplifting panics”, including one in London when women first ventured into public in significant numbers. People believed they were stealing for the thrill of it. I would speculate that it may have been more a question of whether they had access to cash or what their husbands may have thought about them spending said cash. Then there was a hippie shoplifting panic in the 1960s. And now we have a “breakdown of law and order in cities” narrative fueling the current one.

The article also talks about the enormous pressure on brick and mortar retailers to compete with online sales. I suspect this narrative provides them some convenient leverage in negotiating with landlords, insurers, and local politicians. I also wonder if shoplifting has always gone on but modern surveillance technology means insurance companies are more easily aware to quantify it, and it is just more prevalent than they thought.

diversity and resilience

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Here is an example from economics and urban planning of how a diverse system can be a resilient system.

At its peak in 1950, the Coca-Cola bottling plant in Indianapolis employed 250 workers and turned out two million fizz-filled bottles of Coke a week. Now, it is home to the Bottleworks Hotel, the center of a mixed-use development that opened in late 2020 with the hopes of rejuvenating a neighborhood.

The developer of the site, Hendricks Commercial Properties, said the pandemic had shown the value of diversification as a bulwark against shorter building life spans. No one could have predicted that a havoc-wreaking pandemic would make gathering places so unappealing, at least in the short term. But by having a mix of offices, retail, hotel and other uses, the risk for Hendricks is spread out. The Bottleworks development has an eight-screen movie theater, for instance, but also a tech incubator.

New York Times

This is not really the main point of the article, but I think a useful lesson to learn from the pandemic is that mixed-use neighborhoods where people can live, work, shop, study, and recreate seem to have been more resilient. I don’t have data to back this up, and it should be studied, but it is pretty obvious that the central business district in my city has been hard hit. Very few people live there. The office towers normally fill up each morning with thousands (tens or hundreds of thousands?) of suburban train and car commuters. Restaurants and other services are full of these people on weekdays and often close early on weekday evenings and sometimes are closed on the weekend. Hotels and other businesses that are open in the evening serve business travelers, convention goers, and tourists. There is some shopping, but more luxury goods aimed at these tourists and convention goers rather than basic grocery and household goods. So take away the office workers, business travelers, convention goers, and tourists, and the place is empty. Businesses are devastated. Financially, the city depends on wage, sales, and business tax revenues from the central business district to fund its services throughout the rest of the city. So getting more people to live within walking distance of downtown, and having more “normal” businesses that serve normal people there, could make it more resilient.

The same principle applies to natural ecosystems and agricultural systems too. Diversity might make a system a bit less efficient in terms of production, but you have a variety of organisms waiting in the wings to step in and fill functions if a dominant species that used to fill those functions is lost due to disease, disaster or environmental change (or combinations of these.)

I am thinking about this as I read a book called What’s So Good About Biodiversity by Donald Maier. The author has some reasonable points about biologists using the term biodiversity as a sort of lazy shorthand for ecosystem function or specific benefits. But overall, I find the author to someone without an ounce of understanding of how systems function. He literally can’t see the forest for the trees. He also seems to be a person with zero emotional connection to nature, which I find sad and abnormal. I’m going to call him a biopath – like a psychopath, a person who does not have normal emotions toward other people and is not really aware of what those emotions would feel like. I think there is a normal range of strength of emotion people feel about nature, and I accept that for some people the feelings are not all that strong compared to their feelings about, say, constructed environments or manufactured goods. But to feel nothing is not normal, and the 500 pages of verbal diarrhea in Mr. Maier’s book do not make it any more normal. (I haven’t finished the book – perhaps it will get better towards the end, when Mr. Maier promises to explain what “better reasoning about nature’s value” would look like. If the book has a fantastic ending, I promise to come back and sing its praises in this blog.)

Richard Florida’s plan for Philadelphia

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Richard Florida and another dude I hadn’t heard of (but he’s local) have a plan for post-pandemic Philadelphia, and it goes something like this:

  • Focus heavily on medical and biotech R&D and startups, where we are a major center.
  • Upgrade workforce skills to participate in this industry.
  • Local procurement policies, especially from minority businesses.
  • Do something to fill vacant store fronts.
  • Do something about poverty.
  • Raise the minimum wage.
  • Develop “concrete actionable strategies” to do these things.

This all sounds pretty good to me. It’s short on specifics of course. We need to grow the economy and create professional jobs somehow without alienating the anti-gentrification crowd. Then tax revenue could increase and just maybe you could do something about poverty. Poverty is the tough nut to crack because there may just not be enough money to go around within a single political jurisdiction, although there probably is plenty to go around in the metro area as a whole, and certainly in the state and country as a whole.

I think professional management of city services would also help. Philadelphia should be a first class international city, but in addition to the income and education inequities it is held back by a personality that is too accepting of amateurism and mediocrity, and too unwilling to look at what is working elsewhere and adapt it. This is not such a tough nut to crack, in my view. Government, businesses, educational institutions, and the public worker unions could get together and probably come up with a plan to upgrade services significantly while saving money, building skills, and creating jobs in the process. This would be a win-win-win for everyone.

what urban and rural voters have in common

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This article in Governing is mostly about what urban and rural voters do not have in common, why rural voters have a disproportionate share of politic power relative to their numbers, and why politicians therefore cater to them and tend to downplay urban issues, which are the issues that affect the vast majority of citizens. However, the article included a couple of paragraphs on what urban and rural voters have in common, which I thought were insightful.

Low-income residents of urban neighborhoods who know they’ll never be able to afford to live in the glitzy new apartment building that’s going up are, economically speaking, in a similar boat as rural residents who’ve seen the factory shut down and the area left behind by the global economy. “Urban neighborhoods that are dealing with population loss are dealing with the same issues of abandonment as low-income rural counties,” says Hill, the Ohio State professor. “The problems are the same: drug abuse, abandoned factories, losing kids to places with rising opportunity.”

Governing

I can actually attest to this, originally being from an Appalachian factory town, then from a former Pennsylvania coal town, and now living in central Philadelphia. The problems of poor people, and the problems of middle class working people, and the problems of working parents, and the problems of the disabled and the retired, etc. are pretty much the same everywhere. The difference is that urban areas are where most of the productive economic activity that can be taxed come from. And investments in infrastructure and programs in relatively dense population centers can just serve a lot more people for the money spent compared to less dense areas. And finally, denser areas with universities and startup companies and corporate R&D centers are where people come together to learn and solve problems.

Of course, one party in particular is good at playing to the emotions of rural voters and convincing them that they are the only real Americans, that people in the cities are not like them, are a threat to them and are draining resources away from them, when in fact the opposite is true. Sometimes they even convince suburban voters that their interests do not lie with other voters in the metropolitan areas they are a part of.

best performing urban economies

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Here are the world’s 10 best-performing urban economies according to Brookings.

  1. Dublin, Ireland
  2. San Jose, USA
  3. Chengdu, China
  4. San Francisco, USA
  5. Beijing, China
  6. Delhi, India
  7. Manila, Philippines
  8. Fuzhou, China
  9. Tianjin, China
  10. Xiamen, China

Here is a brief explanation of the methodology:

This Global Metro Monitor employs several key variables to assess the economic performance of metropolitan areas: gross domestic product (GDP), employment, population, and GDP per capita, all from 2000 to 2016. For static analysis and cross-border comparison, this study employs nominal GDP at purchasing power parity rates. For trends analysis, it uses GDP data at 2009 prices and expressed in U.S. dollars. Data availability and comparability at metropolitan level precluded expanding the economic analysis to other indicators of interest, such as housing prices, employment rates, unemployment rates, and income distributions.

Clearly, there is no consideration of health, ecosystem services, or sustainability here.

best practices in affordable housing

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Affordable housing has fairly simple solutions on the surface – build more housing to push down prices, and/or provide people with an income sufficient to afford market rate housing. But it’s so difficult in practice in the United States, and from what I have seen, around the world. Curbed has a round-up of things being tried in the U.S., but I feel like these are tinkering around the edges of a large problem. I am leaning more and more toward the idea of providing people with an income (preferably by providing them with job skills, but by redistributing tax revenue of necessary) so that they can afford to choose among the options available.

  • revolving loan funds to renovate vacant apartments
  • bonus equity paid to low-income renters, sort of like reward points they can use for a down-payment on a home (this assumes owning is better than renting, which it might not be if all the twisted tax incentives, zoning restrictions and homeowner covenants were removed. In other words, saving is great but converting those savings to home equity is not automatically the best financial move for every family. In other words, maybe helping lower-income families to build financial assets they can use for whatever they need ultimately would be the best policy.)
  • mixed use, green building and transit-friendly development – all great but I am not immediately clear how this helps create affordable housing, other than bumping up supply slowly and gradually
  • non-profits and governments just straight-up renting homes and putting homeless people in them
  • coordinated national housing policy (but this is in Canada, not the U.S.)

Richard Florida: The New Urban Crisis

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Richard Florida has a new(ish) book out called The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class—and What We Can Do About It. You can also get the general idea from this article he wrote in City Lab. He offers five policy prescriptions, which I summarize below.

  • land value tax – Tax the value of land rather than the value of the developed property on it, so that land owners have a disincentive to sit on property and an incentive to develop it to the most economically valuable use a particular neighborhood will support. (My take – I like this idea. I wouldn’t get rid of zoning and building codes, but these can focus on the “look and feel” of the neighborhood rather than restricting height or density, requiring or prohibiting a certain amount of parking, etc. There also needs to be a strategy to preserve a certain amount of public open space under a system like this, whether it is public or held by some sort of land trust.)
  • invest heavily in public transportation – This decreases commute times, allowing people to live in more affordable locations and work in higher wage ones. (My take: makes sense, although we should rethink whether the same old 20th or even 19th-century ideas of public transportation and transportation agencies are going to serve us well in the 21st. I think we need flexible routes, flexible vehicles, and flexible modes that can adapt to changes in the economy, landscape and technology as they come.)
  • end the mortgage interest deduction so single-family homes are not unfairly subsidized relative to multi-family rental housing. (My take: makes perfect economic sense, but this would need to be phased in over a long period of time to not be a slap in the face to today’s middle class and working class homeowners who have made their decisions under the current system.)
  • Set minimum wage at 50% of median wage on a city-by-city basis – his argument is that this is essentially how the high-wage manufacturing jobs of the U.S. postwar period were created. He brings up Henry Ford and the idea that even if prices go up somewhat, a newly broadened middle class is able to afford them. (My take – I’ve always been a little skeptical of minimum wage as a policy prescription because it only redivides the pie rather than growing the pie, at least in the short term.)
  • Better fund public education, including early childhood development programs. What is there really left to say about this, except it is shameful we haven’t been doing it all along?
  • Guaranteed minimum income, or negative income tax. The idea is to replace the hodgepodge of housing, food and other assistance programs we have now with cash outlays to the poor, which they can then decide how to spend on market price goods. (My take – it could be done in a revenue neutral way, and should appeal to rational, logical parties of all political stripes. Of course, politics and human nature are not particularly rational or logical, especially lately.)

Toronto shoppers arriving by bike

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Toronto has done a study of preferences and spending by shoppers in one of its neighborhoods, and the results show that merchants have an inaccurate picture of the demand for driving and parking.

A summary of the findings:

  • 72% of the visitors to the Study Area usually arrive by active transportation (by bicycle or walking). Only 4% report that driving is their usual mode of transportation.
  • Merchants overestimated the number of their customers who arrived by car. 42% of merchants estimated that more than 25% of their customers usually arrived by car.
  • Visitors who reported using active transportation to visit the Study Area visited more often and spent more money per month than those who usually drove or relied on public transit.
  • Visitors to the Study Area were much more likely to prefer a bike lane or widened sidewalks over no change, even if this resulted in the loss of on-street parking.
  • Merchants prefer the current layout of Queen Street more than a configuration where on-street parking is reduced to accommodate expanded sidewalks or a bike lane.
  • A majority of visitors (53%) and merchants (64%) stated that there was not enough bicycle parking within the Study Area.
  • Merchants were more likely than visitors to perceive the amount of car parking as inadequate: 52% of merchants stated there was not enough car parking in comparison with 19% of visitors.

This area must already be pretty safe and accessible by foot and bicycle. In most U.S. cities, I doubt we would find results like these. But if not, the lack of shopping by bicyclists could easily be a self-fulfilling prophecy if there are no bike lanes to begin with. The other critical factor, I am pretty sure, is whether people actually live in or near the shopping district. There are examples of U.S. cities that tried downtown pedestrian concourses that ultimately failed, but in the case of Philadelphia at least I am pretty sure they failed because nobody lived nearby.

more Donald Shoup!

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Like I keep saying, you can never get too much Donald Shoup. Urban policy can get so complicated, but getting rid of minimum parking requirements would just be such a simple and easy thing to do, and have so many benefits.

Minimum parking requirements create especially severe problems. In The High Cost of Free Parking, I argued that parking requirements subsidize cars, increase traffic congestion and carbon emissions, pollute the air and water, encourage sprawl, raise housing costs, degrade urban design, reduce walkability, damage the economy, and exclude poor people. To my knowledge, no city planner has argued that parking requirements do not have these harmful effects. Instead, a flood of recent research has shown they do have these effects. We are poisoning our cities with too much parking…

Parking requirements reduce the cost of owning a car but raise the cost of everything else. Recently, I estimated that the parking spaces required for shopping centers in Los Angeles increase the cost of building a shopping center by 67 percent if the parking is in an aboveground structure and by 93 percent if the parking is underground.

Developers would provide some parking even if cities did not require it, but parking requirements would be superfluous if they did not increase the parking supply. This increased cost is then passed on to all shoppers. For example, parking requirements raise the price of food at a grocery store for everyone, regardless of how they travel. People who are too poor to own a car pay more for their groceries to ensure that richer people can park free when they drive to the store.

It’s one of those issues where the evidence is clear, but it may take a generation for professionals, bureaucrats, and politicians to pay attention to the evidence, reach the right conclusions, and act on them. Why is this so hard?