Sunday, April 16, 2017

In most of America it is illegal to construct the attached rowhouses and small-scale duplex and triplex apartments that historically provided the bulk of America’s cheap housing stock

The American economy isn’t actually becoming more concentrated: Opportunity is clustering, but people and growth aren’t by Matthew Yglesias.  Excerpts:
"Economic opportunity is becoming more concentrated, but Americans’ ability to move to take advantage of that opportunity is declining. Consequently, the rising average incomes in big coastal cities are being offset by those cities’ declining share of the population."

"America’s metropolitan areas are becoming more unequal, with per capita income rising faster in a small number of already affluent metro areas. This accords with the basic intuition that the growth sectors of the American economy — high tech, finance, biomedical devices — are largely concentrated in a few large coastal areas, while the plethora of manufacturing centers that dotted much of the country decades ago have declined."

"this has not led aggregate economic activity to be more concentrated in those affluent cities."

"How can New York get richer without growing its share of the overall national economy? The answer is that these same affluent metro areas contain a shrinking share of the country’s overall population."

"Today, instead of heading to the metro areas that offer the highest wages, Americans are generally moving to places like Atlanta, Dallas, and Nashville, where economic opportunities are mediocre at best.

The reason for this is not too mysterious. 

The price of a house — especially one in a neighborhood that’s considered to have good public schools — in the suburbs of Boston, Washington, or San Francisco is prohibitive. Young people of all kinds move to the central cities of the great coastal metropolises despite the rent squeezing, making do with roommates and cramped apartments. But middle-class grown-ups face vicious trade-offs between space, commuting time, and money. 

If you happen to earn a good living with specialized skills in a locally dominant industry, the math generally works out. New York bankers and Silicon Valley engineers pay exorbitant housing costs but make commensurate salaries. 

A mere dental hygienist, high school math teacher, chef, hairstylist, or physical therapist would also earn a higher average wage in the Seattle area than in the Sunbelt. But in most cases, the difference isn’t enough to compensate for the higher cost of living. The result is that Americans as a whole are “moving to stagnation,” voluntarily accepting lower pay in lower-productivity places in order to avoid the bite of housing costs. 

The problem in a literal sense is that high-wage coastal cities are adjacent to oceans and thus have fewer dimensions of freedom in which to sprawl without creating untenable commuting conditions. 

America does, however, possess the technological capacity to construct large numbers of dwellings on relatively small parcels of land. It happens to be the case that across most of the land in America’s suburbs — and even in America’s central cities — it is illegal to construct the attached rowhouses and small-scale duplex and triplex apartments that historically provided the bulk of America’s cheap housing stock. And where rowhouse neighborhoods exist and have become inordinately expensive, it is almost universally illegal to knock them down and replace them with large apartment buildings."

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