NewGeography.com blogs

One of the big myths of the twentieth century is that large American cities are necessary and inevitable. Yet in reality growth has been dispersing to suburbs and smaller cities for the last two decades. As the decline of Detroit, once the country’s fourth largest city, reveals in all too harsh terms, being bigger is not always better.

Yet the big city myth remains virtually unchallenged. A biased print media and a subsidized academic cartel are constantly singing the praises of big city life (as opposed to suburban or rural life). While American cities exhibited strong population growth in the early part of the twentieth century, recent Census numbers show America’s mega cities are growing below the national growth rate. According to the 2010 Census, San Antonio was the only city with a population of over 1 million people that grew above the national growth rate of 9.7%.   

Years ago, scholar Milton Kotler wrote an important but much forgotten book on local government. Kotler showed what was behind the amazing growth numbers of the some big cities:

Statistics show New York's population increase from 1890-1900 to have been 2,096,370. This seems amazing, except that most of the increase came about with the annexation of Brooklyn, population 1,166,582. In short, its population grew at a rate far less than the increase by annexation.

Municipalities are creations of the state legislature. In many cities, the boundaries changed to expand the power of cities along with their political class and related business rent-seekers. While some would argue about New York city’s population numbers, which has recovered from their lows, few would question Detroit’s long-term decline. As Detroit takes center stage line, the entire municipal bond market is about to take notice. Much is at stake here.

Not only the economic foundation of a large American city but the concept that a creditor will get back its principal back.  The Detroit Free Press explains:

Borrowing for Michigan cities could get more expensive in the future, if Detroit emergency manager Kevyn Orr’s restructuring plan is accepted by creditors and Chapter 9 bankruptcy is avoided, some bond experts caution.

That’s because Orr’s plan would set a major precedent by treating all unsecured debt the same way — instead of giving a better payout or greater deference to general obligation bonds, sold for generations as safer investments backed by a city’s taxing authority.

In Detroit, both the lack of checks and balances, and the maintenance of an engaged, informed public undermined the city’s fiscal health. Many Detroit citizens voted with their feet by exiting the corrupt system. With the middle class of all races deserting, the city of Detroit was ripe for looting of the taxpayers.

In conclusion, it’s time for the informed public to realize many of our big cities are expensive, corrupt, and not redeemable. The Michigan Legislature should cut Detroit down to size. Perhaps they should consider de-annexation. It’s better to have Detroit become ten smaller municipalities. Of course there would be major political resistance for those who have made big money from Detroit’s decline. But without de-annexation, Detroit seems likely to remain on the brink of insolvency for a long-term since its political boundaries are too large for responsive governance and the crafting of unique solutions to its problems.

Atlantic Cities reports on research indicating an association between suicide and lower density, in an article entitled “The Unsettling Link Between Sprawl and Suicide.” Actually, there’s no reason to be unsettled, at least with respect to urban areas and their densities. The conclusions apply to rural areas, not urban areas.

Above the 300 persons per square kilometer, or 780 persons per square mile, the authors found no association. The authors of the study note, “above this threshold … the suicide rate remains fairly constant."

The US Census Bureau standard for urbanization is 1000 people per square mile or more, which is similar to the international standard of 400 persons per square kilometer. Even the suburbs of extremely low-density Atlanta and Charlotte have to reach the 1,000 persons per square mile threshold to be in the urban areas.

This research, while interesting, has nothing whatever to do with the urban form.

In an article entitled, “The People Moving to Austin and ‘Ruining It’ are from Texas,” the Austinist notes that more people are moving to Austin from neighboring Williamson County than from Los Angeles County.

The article has the potential to mislead in two ways.

The lesser of the problems is that it confuses Austin with Travis County. The cited data is for Travis County, not the city of Austin. The source of the data, the American Community Survey does not report on municipal migration. (Austin is most of Travis County’s population, but itself has sections in Williamson and Hayes counties).

The bigger problem is that the article tells only half the story. Yes, 10,500 people moved from Williamson to Travis over the 2006-2010 period, but 14,200 moved from Travis to Williamson. Thus, there was a net outflow of 3,700 people from Travis to Williamson. Meanwhile, there was a net gain of residents in Travis County from Los Angeles County of approximately 800.

Thus, while there is net migration from Los Angeles County to Travis County, the net migration from Travis County to Williamson County is 4.5 times as large.

In a Daily Telegraph commentary, London Mayor Boris Johnson expects the proposed high-speed rail line from London to Birmingham (HS2) to cost £70 billion (approximately $105 billion). This is two thirds more than the most recent estimate of £42 billion (approximately $63 billion), which includes a recent increase in costs from £32 billion (approximately $48 billion) for the 140 mile long first segment. Johnson wrote:

“This thing isn’t going to cost £42 billion, my friends. The real cost is going to be way north of that (keep going till you reach £70 billion, and then keep going). 

He concludes:

“So there is one really critical question, and that is why on earth do these schemes cost so much?”

A possible answer comes from Oxford University, 60 miles from London. Oxford professor Bent Flyvbjerg, along with Nils Bruzelius (a Swedish transport consultant) and Werner Rottenberg (University of Karlsruhe and former president of the World Conference on Transport Research) reviewed 80 years of infrastructure projects found and low-balling of cost estimates routine (Megaprojects and Risk: An Anatomy of Ambition). They characterize the process as "strategic misrepresentation," which they shorten to "lying," in unusually frank language.

It is not just the apparent dishonesty of the process --- it is that unreasonably low cost estimates entice governments into approving projects that have been marketed on false pretences. Once committed to such a project, public officials, find it nearly impossible to “jump off the train,” as it were. The loss of face could well be followed by a loss at the next election. Flyvbjerg, et al characterize “strategic misrepresentation” as “lying.”

There could be other difficulties. The government claims that trains will peak at 225 miles per hour (360 kilometers per hour), considerably higher than the 199 mile per hour (320 kilometer per hour) maximum speed. High speed rail in China, Spain, France and Korea also promised faster operation, but not delivered. Safety may be a reason, as suggested in a Wall Street Journal article:

“An executive at a non-Chinese high-speed train manufacturer said running trains above speeds of 330 kilometers an hour poses safety concerns and higher costs. At that speed threshold, wheels slip so much that you need bigger motors and significantly more electricity to operate. There is also so much wear on the tracks that costs for daily inspections, maintenance and repairs go up sharply. That's why in Europe, Japan and Korea no operators run trains above 320 kilometers an hour, the executive said…”

HS2 seems to be on track to follow California in its unprecedented high speed rail cost escalation. The last cost estimate for the 400 mile plus high-speed line from Los Angeles to San Francisco was three times the cost (inflation adjusted) projected in 1999 (midpoint, see the Reason Foundation’s California High Speed Rail: An Updated Due Diligence Report, by Joseph Vranich and Wendell Cox). Public outcry over the escalating costs forced approval of an alternative “blended” system that would use conventional tracks and non-high speed rail speeds at the northern and southern ends. Even so, the scaled back version is estimated to cost $60 billion, inflation adjusted (£40 billion), 150 percent more than the 1999 projection for a genuine high speed rail line.

Mayor Johnson may be optimistic in his £70 billion prediction. Procurement expert Stephen Ashcroft, of Brian Farringdon, Ltd. says: “We confidently predict that the final project outturn actual cost will exceed £80 billion” (emphasis in original). There is, of course risk in such projections. Joseph Vranich and I found that out when our maximum cost escalation prediction in The California High Speed Rail Project: A Due Diligence Report, (2008) turned out to be way low. It was exceeded by more than one-half and in just four years.

Also see: The High Speed Rail Battle of Britain

The great North Dakota boom, driven by oil development and strong agricultural markets, has continued to put the state at the top of economic growth rankings. The state can now add "housing growth" to the list.

As the region's oil industry expands and matures, the market for more permanent housing solutions has heated up. According to recently released Census data, North Dakota led the nation in housing growth in 2012, increasing its supply of housing by 2.3% in just one year. Overall national growth was 0.3%.

While much of this growth has been focused on the oil patch, the entire state has seen strong economic growth, job creation, and accompanying strength in the housing market. Cities located hours outside the oilfield are reporting shortages of housing and tight markets for existing housing. Shortages of housing have also been reported in small towns throughout the state, as job-seekers move to the region looking to find work in the state's growing oil and ag industries. A review of the new Census data bears out such reports. North Dakota is home to 8 of the top 100 counties nationwide for housing growth, including 4 of the top 10. Williams and McKenzie County, in the heart of the Bakken development, placed number one and two nationally, respectively, but counties far outside the oil patch also showed strong rates of growth.

The new shift towards more permanent housing construction will probably come as a relief to communities and officials throughout the state, who have been scrambling to find solutions to shortages. While temporary housing for oil workers has boomed throughout the oilfield, local officials have begun to explore limits on such "man camps", citing their negative effects on local communities, impact on permanent development, strain on infrastructure, and safety concerns. The state has also seen rising rates of homelessness, and faced challenges finding enough workers to fill job openings- often due to lack of places for those interested in moving to the region to work. As estimates of the amount of recoverable oil in the Bakken continue to climb, larger, out of state developers have begun to enter the region, looking to take advantage of what may be a longer, more sustained expansion. With 21,000 job openings currently unfilled statewide and the potential for tens of thousands of wells remaining to be drilled over the next three decades, the pressure for more housing growth to meet the needs of expanding businesses is likely to continue.