Smart Growth: Surrendering the American Dream

Published February 1, 2005

We are facing in the United States today a very clear and present danger to our prosperity, and in particular to the prosperity of low-income groups in this society, who are disproportionately minority. The threat comes from the “smart growth” movement, which seeks to control urban sprawl.

Wealthiest Nation on Earth

Many people don’t realize it, but if you exclude countries smaller than Peoria, Illinois, the United States is by far the wealthiest nation in the world on a per-capita basis. Our per-capita income, adjusted for purchasing power, is higher than anyplace else, and our lead is growing. There are good reasons for that.

William Lewis of McKinsey Global Institute describes in his book, The Power of Productivity, the two principal reasons why the U.S. economy is so strong relative to our competitors: our relatively free home-building industry and our largely free retail industry.

What does this have to do with smart growth and sprawl?

When they try to implement their strategies, as they did in Portland, Oregon, the anti-sprawl activists immediately attempt to draw urban growth boundaries and do other things to restrict land development. Those efforts inevitably reduce the supply and raise the prices of homes. Or they try to restrict the development of big-block stores, like Wal-Mart, which epitomize the success of American retailing.

The two things that are anathema to the smart growth movement are the very secrets of our comparative advantage in the United States. We had better be very careful, then, about adopting policies that deliberately handicap and cripple these two sectors of our economy.

In Praise of Suburbia

The anti-sprawl movement is really damning in its indictment of suburbanization. James Howard Kunstler, in his 1993 book titled The Geography of Nowhere, deplored the suburbs as being “a trashy and preposterous human habitat” with no future–places simply not worth caring about. What a dreadful environment! You probably know some people in the suburbs of your area who live in such squalor.

Why, then, has all the growth in the United States, Canada, Western Europe, Japan, and Australia been in the suburbs, instead of in the central city, in the past few decades? In Europe, 115 percent of the growth in urban areas in the past 35 years has been in the suburbs–the central cities have lost population, just as they have in the United States. Suburbanization is everywhere. You want to talk about urban sprawl? It’s called urban growth. There is no difference.

At the core of suburbanization is home ownership. Data from the U.S. Federal Reserve Bank tell us that something like 50 percent of the household wealth or equity of middle-income people in this country is in their homes. That’s very important.

Think about what home ownership does, and what it can do if we can get as many people who once owned their homes into homes once again. It creates wealth to send the kids to school. It creates wealth to start new businesses.

If we adopt public policies that reduce home ownership by raising prices, driving low-income people out of the market, we are going to be a poorer country in the long run. Yet that is what virtually all of the urban planning strategies that are being proposed around the country, including in Chicago, are going to do.

Importance of Home Ownership

Minority home ownership in the United States is rising but still remains a full 25 percentage points behind white non-Hispanic home ownership. White non-Hispanic ownership is at 75 percent; Hispanic and African-American home ownership is at about 48 percent. We should not be satisfied until we get the minority home ownership rate up to the nonminority rate. Land rationing, urban growth boundaries, and similar policies would move us in just the opposite direction.

Portland, for example, which has the fabled urban growth boundary, saw its housing affordability drop more than any other metropolitan area in the country, by far, in the past 10 years. According to a Tufts University study, black home ownership is higher in more-sprawling communities than it is in less-sprawling communities. According to the Tomas Rivera Institute in Claremont, California, a Hispanic think tank, the biggest barriers to home ownership in the Hispanic community are things like urban growth boundaries, impact fees, and growth controls.

If we want a more fair society in the long run, with more Americans in the economic mainstream, we need to encourage home ownership, not get in its way. And governments are getting in the way, big time.

Joseph Glaser, the new head of the JFK School of Government at Harvard University, and a colleague have demonstrated that virtually all the difference in housing prices between communities–San Francisco versus Dallas, for example, where you have a $500,000 average house price versus $150,000–is due to land use restrictions, including zoning ordinances and restrictive building codes. It isn’t anything else; it’s regulations.

Wrong Way on Congestion

The smart growth people have many wonderful strategies for getting rid of sprawl. They tell us, for example, that making cities more compact, with more public transit and fewer highways, would ease traffic congestion. Really?

The densest urban area in the world is Hong Kong, and its congestion is much worse than anything I’ve ever seen in Chicago. If we consider all of the urban areas in the developed world of more than three million people, we find that as densities go up, traffic congestion goes up.

Is that surprising? You put more people and cars in a confined space and things get more congested–very strange. Maybe I just don’t understand.

Public transit is the smart growth movement’s answer to traffic congestion, but it is an absolutely impossible solution. Even extensive public transit systems can bring an urban population to within walking distance of only a tiny percentage of land within the urban region. Cars, on the other hand, make travel opportunities virtually ubiquitous.

Steven Rafael and Michael Stoll at the University of California have noted that if we gave a car to every African-American in the work force who doesn’t have a car, we would cut in half the gap in white versus black unemployment. And, in addition to that, University of Paris research finds that as you increase the amount of urban space that people can access in a particular period of time, you actually increase income. So there’s another dimension to this–it’s not just home ownership, it’s also mobility and getting people around the community to get jobs.

Many cities have attractive commuter trains, such as the double-deck commuter trains the Metra system uses here in Chicago. One wonders, “Why is it that all those people are in cars when a really great transit system is there?” Some people say if only we allow the congestion to get bad enough, people will get out of their cars and use trains instead. Why do they overlook the obvious answer to their question: that the trains are not going where most people want to go?

If you look at any transit route map, anywhere in the world, from Tokyo to Paris to Chicago to Phoenix, you will find transit lines converge on downtown. They don’t take you to the suburbs. It is possible to develop a transit system that serves the suburbs–I’ve done it on paper–but it would require elevated rail lines every half mile. Of course it would be very expensive, and that’s a problem.

Mass transit can work in some circumstances. Based upon an analysis I’ve done of urban areas around the world, at populations below 5,000 people per square mile, we can keep car traffic flowing without congestion problems and without mass transit. Above 55,000 or 60,000 per square mile, which is half the density of Hong Kong, we can substitute transit for cars for most trips. Between these two levels, we have congestion: not dense enough to justify transit, but too dense for cars alone to suffice. So you see places like Tokyo, Singapore, Los Angeles, and Paris, where traffic is terrible.

Dictating Choices

Since today’s transit systems don’t take people where they want to go, and it would be too expensive to build a train line to every possible destination, we are left with a third, interesting choice: Maybe we should force people to go to other destinations, destinations the planners want them to go, instead of where the people themselves want to go.

I got into a lot of trouble recently with an op-ed piece I wrote for The Heartland Institute in which I suggested that Nicolai Ceausescu, the communist dictator of Romania from 1965 to 1989, is the father of smart growth. Like today’s advocates of transit, Ceausescu wanted to make cities compact, and he started tearing down villages and suburbs to make his dream a reality. He was eventually thrown out of power, but not before he actually tore down villages and forced people to move into the city.

We need planners who don’t aspire to socially engineering our futures. We need planners who help us reach destinations we choose and live in homes of our choosing.

The American dream of home ownership, and frankly of suburban home ownership, has become the universal dream. I’ve heard it expressed and seen it in bricks and wood in housing developments around the world, from Tokyo to Paris and many points in between. Why should we surrender that dream?

Wendell Cox ([email protected]) is a senior fellow of The Heartland Institute; a consultant to public and private public policy, planning and transportation organizations; and a visiting professor at a French national university. This article is derived from remarks he delivered at The Heartland Institute’s Emerging Issues Forum, held September 23, 2004 in Chicago.