Urban Planners Ignore City Labor Markets

Published January 20, 2020

Who should run cities: economists or urban planners? This is a trick question. Neither group knows how to run such complex systems alone. But if urban planner Alain Bertaud had to choose, he’d vote against his own profession.

In Order Without Design: How Markets Shape Cities, Bertaud writes urban planners have largely botched urban growth worldwide and should approach it using more insights from economics. For decades, Bertaud has traveled the world to study and help plan cities. He worked for the United Nations, then the World Bank, then as a private consultant. He is a research scholar at New York University, where he has learned from that school’s renowned economists.

Urban Planning Fads

Economics would be useful to planners, Bertaud writes, because it is scientific. It uses real-world data to create models of how cities behave and how they would behave if given variables changed. This means economists can better understand markets, predict outcomes, and determine best practices based on a defined set of goals.

Planners, by contrast, are “normative,” meaning they shape their premises not through empiricism but on norms and fads from their microculture. Their use of terms like “quality of life,” “neighborhood character,” “livability,” and “sustainability” is not technical but derives from how they and their peers subjectively define these words. This means planners depend on truisms and pseudoscience to shape policy.

Growth Without Limits

Bertaud describes an example from Port-au-Prince, Haiti, which was exploding in population in the 1970s as rural Haitians migrated there to escape poverty. Bertaud was part of a team of United Nations bureaucrats who visited the city to advise on its growth. Many of his colleagues thought the growth should be dispersed nationwide rather than concentrating in Port-au-Prince.

“At the time,” Bertaud wrote, “planners were debating about the optimum size of cities, usually advocating for a size between half a million and a million people.”

Yet economics literature had already debunked this notion. Economists back then were saying (as they do now) cities get more productive the more they grow, thanks to agglomeration benefits, and there was no reason to cap population at one million people. Bertaud didn’t understand these benefits until he met an economist for the first time in Haiti. From then on, he was convinced economists should have a bigger role in educating planners.

Bertraud says if that happened, planners would be less prone to view cities as tabulae rasae that should be designed based on their own cultural tastes, and more prone to view cities as what they actually are: labor markets. This “cities as labor markets” theory is the second big premise of Bertaud’s book.

Places for Work Opportunities

A city’s fundamental raison d’être is that it’s where people seek out jobs. Cities grow based on their ability to provide economic opportunity, and they decline if that opportunity vanishes. The key role of planners should not be to choose which industries bolster these labor markets but to set the conditions for growth by allowing the development of housing and transportation that lets people access and expand these labor markets.

Housing and transportation are where Bertaud thinks planners could better apply economic thinking. For example, instead of  mandating zoning laws that are arbitrary and fixed, planners should observe the price signals in their markets and use them as feedback to adjust the zoning. Every few years, zoning regulations should be subjected to cost-benefit analyses to ensure they’re accomplishing their stated goal, not just inflicting financial hardship and high home prices.

Regarding transportation, planners should ignore their preconceived biases about the “right” transport modes and layouts and instead focus on what will actually shorten commutes and improve mobility. This too can be done through price signals—namely tolls and congestion charging—that more efficiently delineate road space and ease traffic flow. Whether this leads to the overwhelming use of rails, buses, carpools, or single-occupancy vehicles will vary by city and depend on how those respective modes are priced.

Political Planning Decisions

One flaw of Order Without Design is that Bertaud never really defines “planner,” which causes him to isolate planners for unfair blame. Globally speaking, planners from the U.N. or federal governments may have power over land-use decisions. In the United States, however, policy is made less by professional planners—who graduated from planning schools and have American Institute of Certified Planners certification—than by politicians. The anti-economic thinking that drives our land-use policy is really more a reflection of the American people and who they vote for than of urban planners, who are largely powerless (if still misguided) advisors.

Nonetheless, the basic message of Bertaud’s book holds. Cities are often viewed and treated like aesthetic or cultural objects instead of labor markets where people go to work. Their housing and transport grids are planned as such, ignoring this functional role of cities. As Bertaud notes, introducing economics to the urbanization process would help solve the problems now common in cities worldwide.

Scott Beyer ([email protected]) is owner of the Market Urbanism Report. This article was originally published by the Independent Institute and is reprinted by permission.