Civic Data

Data-oriented thinking about where and how people live.

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Review: “Zoned in the USA: The Origins and Implications of American Land-Use Regulation” (Sonia Hirt)

tl;dr: highly worthwhile book on the international uniqueness of American zoning codes and their cultural underpinnings. 4 out of 5 stars.

This book is an attempt to demonstrate and explain the features of modern zoning codes (and cities) that are almost unique to the United States: the very broad use of exclusively residential zones and exclusively single-family house zones. It combines an extended history of zoning, both internationally and in America, with a comparative study of modern zoning codes and legal regimes surrounding new construction in several countries, most notably England and Germany.

The book is fascinating overall, and highly recommended to any students of cities and/or American history. It is richly detailed and sourced. The perspective is that of an urban planning student from Bulgaria who moved to the US for career reasons and was baffled by the apparent contradictions between the narrative of American individualism and freedom and the very restrictive codes surrounding the built environments in which they lived (which is baffling to this native US citizen as well).

There are many hypotheses that attempt to explain American zoning codes. To name a few: the availability of plenty of cheap land in the US, the predominance of local as opposed to national control over planning and development, the protection of private property values, etc.

However, Hirt feels that these arguments are insufficiently unique to explain the genuine uniqueness of American zoning. The principal thesis of the book is that they are largely the result of a strong cultural undercurrent of agrarian and “frontier” values in the US. As a result, the single-family house on a generous plot was seen as the morally correct dwelling arrangement, and our zoning and legal codes responded to that desire.

The apparent contradiction described above results from the explosion of US cities in the 19th century, and the resulting collision between our preferences for different sorts of “freedoms”: political freedom (in particular the right to use private property without governmental interference) and what she calls “spatial freedom,” which is something like the desire to claim, explore, and patrol the boundaries of a sizable piece of land. It’s not exactly a spoiler to observe that spatial freedom won this rhetorical battle. However, political freedom was appeased in that the new legal structures were simple, scientific, rules-based systems that would treat each property the same and give each property owner the right to development without asking permission within the constraints of the rules, or were advertised as such anyway. And “economic” freedom was appealed to by the universal emphasis on stabilizing and increasing property values.

I did feel that the international comparisons beyond those to Germany and England were a bit overpromised and underdelivered. The sections on each of the other nations discussed (France, Russia, Sweden, Australia, Canada, Japan) amount to capsule histories of a page or two and are not the subject of extended comparisons throughout the rest of the book.

More information about the book is available at Cornell Press.


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The United States of Europe

The European Union has been hit by serial debt crises over the past several years. At various times and for various reasons, Ireland, Portugal, and (most notably) Greece have required hefty bailouts from the rest of the EU, mostly in the form of cheaper debt.

One standard reason given for this messy state of affairs is that the EU is a monetary union but not a fiscal union. That is to say, the EU shares a currency (the Euro) but not the ability to enforce fiscal discipline or consistent taxation and spending policies across member states. This has lead to the problem of peripheral countries “free-riding” on the strength of the Euro — interest rates for sovereign debt in the peripheral countries were substantially lower than they would have been without the implied guarantee of the Eurozone behind them, encouraging over-spending in Greece and Portugal. However, central economic engines like Germany experience a countervailing benefit: their exports are cheaper than they would have otherwise been, due to the peripheral states holding down the strength of the Euro. All parties seem to benefit, but in a way that encourages imbalanced economies. (Note: see a comprehensive and fascinating discussion of the current state of affairs in an analysis by Deutsche Bank — pdf format.)

These imbalances have led to calls for greater unification of governmental policies: a United States of Europe.

How Big Were the Greek Bailouts?

A first question might be: how much money actually went to Greece?

I can find various sources estimating the total bailouts provided to Greece at a bottom line figure of €300 to €400 billion, at interest rates of 3.5% to 5%. The various interests rates were for different phases of the bailouts, and are at a steep discount relative to the rates Greece is paying for debt on the open market. Note that this is very different from a cash transfer of €400 billion — because Greece has to pay it back. So how can we estimate the equivalent cash transfer?

For simplicity, let’s consider some round figures: €400 billion in loans at 5% interest rates. One way of getting a ballpark estimate of the total subsidy is to compare this to the interest rates Greek debt can get on the international bond market: at the time of the initial bailouts, this was 10%, and has briefly gone as high as almost 30% — so figure an average at 15%. If we assume that the typical repayment period on these loans is one year, the total Greek bailout is on the order of €40 billion (~$50 billion), or 15%-5%=10% of €400b, and was handed out over approximately a two-year period.

If we want to be slightly fancier, we can use a mortgage calculator to estimate the difference between a 5% and 15% interest rate over a five-year payback period (five years being pulled out of thin air as an example of relatively long-term government debt). Doing the calculation this way gives a subsidy of around €75 billion (~$90b).

So we can roughly estimate the total value of the Greek bailouts at $50b to $100b.

Federal Wealth Transfers Between U.S. States

If the EU becomes the USE, and enacts unified fiscal, monetary, and social policies, richer regions like Germany will be required to subsidize poorer regions for the foreseeable future. A similar dynamic exists between US states: richer states like California and New York subsidize many poorer states. The main reason is that progressive federal income taxes as well as a (tenuous) federal safety net are uniform across the nation, while economic productivity and wealth are wildly uneven, and tend to be focused in large cities. There are many other minor reasons, such as highway spending and the general pro-rural bias enshrined in the Senate.

As an analogy to Greece, consider a country I’ve just invented called Alabarkansippi. As you may have guessed, I’ve formed Alabarkansippi from the civil and fiscal union of Arkansas, Mississippi, and Alabama. (I’ll use AMA for short, as Alabarkansippi is a bit tedious.) Greece has a population of 11.3 million (out of ~500m in the EU), while AMA has a total population of 10.7m (vs. ~300m in the US), so the regions are similar in size. They are also similar in terms of economic productivity relative to their region: Greece had a per-capita GDP of $20.7k in 2011 (vs. $31.6k for the entire Eurozone). Similarly, AMA has a per-capita GDP of $35.4k vs $47.4k for the United States as a whole.

So fundamentally AMA is pretty similar to Greece, in being a poor region surrounded by richer neighbors. Greece is a bit more poor than its neighbors, relatively speaking, but much of that is because of the fact that they’re right in the middle of a debt- and austerity-induced Depression.

Fortunately for us, the Tax Foundation has put together data on federal taxation and spending by state. Unluckily, the data only exist for the years of 1981 to 2005, but we can use them to get a general feel. In particular, from 2002-2005, transfers from other states into AMA averaged… $42 billion a year! (Over the years from 1990-2001, transfers to AMA bounced around between $15b and $30b. These figures are all inflation-adjusted to 2012 dollars.)

According to that Deutsche Bank report at the top, standing EU transfers to Greece — as a result of taxes and spending which do not perfectly even up among member nations — have been €3-4b a year. I think it’s safe to conclude that if the EU really wants to become the USE, it has to be prepared to make much bigger transfers than it already is.

And A Fun Final Note

Red staters who despise federal wealth redistribution should think twice about their voting habits. Below, I’m showing the vote spread for the 2004 Bush-Kerry election against the deficit-neutral per-capita federal wealth transfers to states (this data comes again from the Tax Foundation report above). The trend isn’t particularly significant, but it’s definitely there. The current wealth transfer scheme disproportionally benefits poor and rural states, who nevertheless tend to vote Republican.

2004 Bush-Kerry spread vs. per-capita wealth transfers