Should Trump promote a third wave of American suburbanization?

Walter Russell Mead suggests Donald Trump could help usher in a new wave of suburbanization:

What President-elect Trump has the opportunity to do now is to launch a third great wave of suburbanization, one that can revive the American Dream for the Millennial generation, produce jobs and wealth that can power the American economy, and take advantage of changing technology to create a new wave of optimism and dynamism in American life.

There’s a confluence of trends that make this possible. In the first place, the Millennials, like the Boomers, are a large generation that needs both jobs and affordable homes. Second, the shale revolution means that energy in the United States will likely be relatively abundant and cheap for the foreseeable future. Third, both financial markets and the real economy have recovered from the shock of the financial crisis, and, whatever hiccups and upsets may come their way, are now ready for sustained expansion. Fourth, revolutions in technology (self-driving cars and the internet) make it possible for people to build a third ring of suburbs even farther out from the central cities, where land prices are still low and houses can be affordably built.

For national politicians, this is a huge opportunity. Creating the infrastructure for the third suburban wave—new highways, ring roads and the rest of it for another suburban expansion—will create enormous numbers of jobs. The opportunity for cheap housing in leafy places will allow millions of young people to get a piece of the American Dream. Funding the construction of this infrastructure and these homes gives Wall Street an opportunity to make a lot of money in ways that don’t drive the rest of the country crazy.

This approach meshes very well both with the President-elect’s economic instincts and with the economic interests of the people who voted for him. It also works for the Republican dominated states around the country. It capitalizes on one of America’s distinctive advantages: less densely-populated than other advanced countries, the United States has the elbow room for a new suburban wave.

There are all sorts of fascinating things going on with this argument. Let’s just pick out a few.

To start, this argument suggests Eisenhower and Reagan were great because they helped make the suburbs happen. How much did they do in this regard? By the early 1950s, suburbanization was well underway with a postwar housing shortage and lots of developers and local officials interested in building out. The Federal Highway Act of 1956 certainly helped the process and is often credited for helping urban residents flee cities (even though highways were already under construction in many places). This is a good example of presidents getting credit for things that don’t have much direct control over.

Second, this equates Republicans with suburbs. There are certainly patterns here: suburbanites have tended to vote Republican for a long time (particularly the further out one gets) and both Republicans and Democrats have argued more sprawl leads to more Republicans. At the same time, not every conservative loves suburbs nor does every Democrat love cities. If you had to summarize Republicanism since World War II, would suburbs come to mind or other things?

Third, it sounds like this argument is in favor of government spending to promote a certain way of life. In other words, the federal government should subsidize more suburban growth because it helps generate jobs and housing. While this may fit older images of moderate Republicans (Eisenhower was one, Reagan not so much), it doesn’t fit well with more libertarian/small government Republicans. Why should the government promote certain ways of life?

To conclude, it is clear that all of this requires an optimistic view of suburban life. It is the fulfillment of the American Dream. This is a common American image. Does it match all of reality? Are the suburbs open to all? Would the new spending even further from cities open new opportunities for non-whites, immigrants, and the lower class (who are increasingly in the suburbs) or would it allow whiter, wealthier residents to flee even further from urban problems? What are the environmental costs of another ring of suburbia? What does it do to civic life to continue to promote automobile driven culture (even if those self-driving cars are safer and more environmentally friendly)? These are not easy questions to answer even if many Americans would enjoy a third wave of suburbanization.

A sociologist goes to the Urban History Association meetings, Part Two

I posted several observations yesterday from my time at the Urban History Association meetings. I turn today to the three most interesting ideas or debates I heard when attending sessions and panels:

  1. On a session on public housing, the discussant made this observation: with all of these negative cases of big government involvement in public housing, perhaps we need to turn away from seeing this as the solution. The main issue is this: when the federal resources are earmarked for the poor and redevelopment, it always seems to end up in the hands of the wealthy and developers rather than with those who really need the assistance. (For another example of this that involves lots of government money but not public housing, see the book Crisis Cities about New York City after 9/11 and New Orleans after Hurricane Katrina.) He suggested then and in later conversation that doesn’t mean that government should be completely removed from public housing. However, more local efforts seem to allow more opportunity for success rather than a completely top-down approach.I’ve argued before that the private market can’t do much about affordable housing in the United States, let alone public housing. At the same time, I would agree that the record of the federal government regarding public housing is mediocre at best. Are there some middle-range solutions? (I’ll also acknowledge that sometimes it does seem to take the federal government to help local governments do the right thing. For example, the Chicago Housing Authority was a mess for decades and required some oversight.)
  1. On a panel on Jane Jacobs, one of the scholars highlighted her upbringing in Scranton, Pennsylvania as being particularly formative. While Jacobs is most associated with New York City and Toronto, she was shaped by this smaller big city, the third most populous Pennsylvania city at the time and a city that attracted a variety of residents to work in the coal mining industry. This made me think of two things: (1) Why don’t more scholars pay attention to smaller big cities that may not be as important on the global stage but still contain a large number of American residents and (2) how might Jacobs and fictional resident and booster Michael Scott of The Office get along?
  1. A later panel discussed the history of Silicon Valley. In a response to a question about the representativeness of Silicon Valley for understanding other places in the United States and around the world, at least one participant suggested the ideas, social life, and spatial dimensions of Silicon Valley were likely to spread elsewhere and become normal. Another participant pushed back, suggesting that many places have no interest in becoming like Silicon Valley or don’t have the knowledge or resources to follow such a path. Such a discussion highlights how a place devoted to creating things for the masses may be in its organization and daily life be very separate from the rest of the country.

A bonus nugget from a session: when the Illinois Tollways first opened, there were not enough customers/drivers. Thus, a marketing campaign kicked off and the commercials featured Mary MacToll. Enjoy.

“Federal Officials Push to Urbanize Suburbia”?

Conservatives are still worried the Obama administration is against suburbs:

In its final months, the Obama administration has set up a strategy to bring inner city living to the suburbs by deploying three federal agencies to dictate to states and local communities how to set up schools, housing and mass transit…

The Department of Housing and Urban Development (HUD) expanded the reach of its Affirmatively Furthering Fair Housing (AFFH) rule to two other federal agencies: the Department of Transportation and the Department of Education…

State and local educational agencies, for example, are urged to develop “boundary-free open enrollment or lottery schools when drawing school attendance boundaries, and selecting sites for such a programs like charter schools or magnet school.”

The three federal agencies also want their local and state education officials to “consult with transportation and housing authorities and housing development agencies” when planning a school site.

The federal authorities want local and state transportation officials to create mass transit plans and more public transportation routes, as well as include local school districts, housing authorities, Head Start programs, community colleges and similar entities in putting together the mass transit plan.

The first two thoughts that come to mind when seeing the specifics here:

  1. It sounds like this applies to communities that receive HUD block grants for redevelopment. So, if suburbs don’t apply for this, the guidelines may not apply.
  2. At the least, the guidelines would encourage more conversations between some important actors – like developers, local officials, school districts, transportation planners, and others – that could build upon and expand existing infrastructure. Instead of doing all of their work independently, a little collaboration could go a long ways.

In other words, wealthier suburbs will still have ways to resist lower-income residents. And isn’t what this is really about? Or, more broadly, suburbs want the ability to have complete local control over land use – which is all about quality of life, property values, and attracting the right kind of people. For example, see this statement from a Westchester County official:

“This document proves what I’ve been saying for six years: The federal government is planning to take control of the American suburb and forever change it in the false name of equality. If HUD gets its way, small town America will literally disappear. It will be forcibly urbanized by Washington social engineers.”

Suburbs are unlikely to disappear anytime soon. Plus, market forces may lead to denser suburbs anyway as there is plenty of demand for new housing in attractive suburbs. But, there could be more conflict in the future as wealthier communities want to retain control and regional and federal governments try to spread opportunities around.

Summarizing “How the Federal Government Built White Suburbia”

Richard Rothstein discusses how white suburbia was promoted by the federal government. Here are some of the ways in which white neighborhoods were promoted:

  • Federally funded public housing got its start in the New Deal. From the very beginning, public housing was segregated by race. Harold L. Ickes, the U.S. Secretary of the Interior and the most liberal member of President Franklin D. Roosevelt’s brain trust, proposed the “neighborhood composition rule,” which said that segregated public housing would preserve the segregated character of neighborhoods. (This was the liberal position. Conservatives preferred to build no public housing for black people at all.)
  • After World War II, the Federal Housing Administration (a precursor to HUD) and the Veterans Administration hired builders to mass-produce American suburbs—from Levittown near New York to Daly City in the Bay Area—in order to ease the post-war housing shortage. Builders received federal loans on the explicit condition that homes would not be sold to black homebuyers.
  • The Housing Act of 1949, a tentpole of President Harry Truman’s Fair Deal, greatly expanded the reach of the public housing program, which was then producing the most popular form of housing (!) in the country. In an effort to kill the bill, conservatives tried to tack on a “poison pill” to the legislation: an amendment that would have required public housing to be integrated.

Read on for more of the influential policies and decisions. In other words, that the American suburbs were dominated by whites was not a mistake or accident; it was the intent. And even though suburbs today are increasingly diverse, these earlier government actions still have significant consequences that can’t be ignored simply because they occurred in the past.

Using behavioral science to improve interaction with government

President Obama signed an executive order yesterday that promotes using behavioral science to make the government more user-friendly and efficient:

The report features the Social and Behavioral Sciences Team’s first year of projects, which have made government programs easier to access and more user-friendly, and have boosted program efficiency and integrity. As a result of these projects, more Servicemembers are saving for retirement, more students are going to college, more Veterans are accessing their benefits, more farmers are obtaining credit, and more families are gaining healthcare coverage.

The Federal Government administers a wide array of programs on behalf of the American people, such as financial aid to assist with college access and workplace savings plans to promote retirement security. Americans are best served when these programs are easy to access and when program choices and information are presented clearly. When programs are designed without these considerations in mind, Americans can incur real consequences. One behavioral science study found, for example, that a complex application process for college financial aid not only decreased applications for aid, but also led some students to delay or forgo going to college altogether.

Behavioral science insights—research insights about how people make decisions—not only identify aspects of programs that can act as barriers to engagement, but also provide policymakers with insight into how those barriers can be removed through commonsense steps, such as simplifying communications and making choices more clear. That same study on financial aid found that streamlining the process of applying—by providing families with assistance and enabling families to automatically fill parts of the application using information from their tax return—increased the rates of both aid applications and college enrollment.

On one hand, the administration suggests this improves efficiency and helps people make use of the help available to them. On the other hand, there are predictable responses from the other side: “Obama issues Orwellian executive order.”

These are not new ideas. Richard Thaler and Cass Sunstein (who tweeted the news of the executive order) wrote the 2008 book titled Nudge that makes policy recommendations based on such science. For example, instead of having people opt-in to programs like setting aside matched retirement savings or organ donor programs, change the default to opting out rather than opting in and see participation rates rise.

I imagine both parties might want to use this to their advantage (though it might might rile up the conservative base a bit more if it was made public) when promoting their own policies.

New Federal website shows complaints about mortgage lenders

Thanks to the Consumer Financial Protection Bureau, there is a new website for narratives of consumer complaints regarding mortgage lenders:

The bureau logs each complaint by category in a publicly viewable database and gives the company that is the subject of a complaint time to respond via a nonpublic online portal connecting it with the consumer through a bureau intermediary. In the past three years, according to the bureau, it has received and worked on more than 627,000 complaints. They range from alleged harassment by debt-collection attorneys, to foreclosures, student loan defaults and poor treatment of customers by loan servicers. Roughly 28 percent of all complaints filed to date have been about mortgage issues — the largest single category. What’s been missing, though, has been any real detail about the troubling circumstances that triggered the complaint in the first place expressed in the customer’s own words.

Starting in late June, that all changed. The bureau began posting what it calls “narratives” that name the bank or company involved and go into sometimes excruciating detail. Allegations get pretty serious — charges of lending fraud, violations of federal regulations and illegal overcharges. Some are heartfelt, such as one from a Virginia homebuyer whose closing was repeatedly delayed by the bank: “Who compensates us for the loss of income for the days taken off from work (to attend closings)? For the movers that have been scheduled? For the pre-move-in renovations that cannot now be done because the contractors are fully scheduled for the rest of the summer?” (To see the narratives, go to http://tinyurl.com/phnkq99)

The first batch of 7,700-plus narratives was posted June 25, including hundreds of mortgage complaints. The consumer’s name and address — other than state of residence — are redacted, as are all details the bureau or the consumer considers ?private.

Lenders are not permitted to post their own narratives, but instead must use one of several stock responses, such as “company can’t verify or dispute the facts in the complaint” or “company believes it acted appropriately as authorized by contract or law.” Lenders can also decline to participate in the narratives process by saying, “Company chooses not to provide a public response.”

The article suggests two large threads emerge from the complaints: dislike of being placed in customer service hell without getting answers from anyone and problems with escrow accounts.

Not surprisingly, lenders are not happy with this information on the website. The issue is similar to that which plagues many online reviews: how can businesses or readers be sure that the story or review is credible? Yet, this certainly puts more information on the side of consumers and this is needed in an industry that holds so much debt for so many people.

These narratives posted online would make for some good coding opportunities for social scientists…

When government policy reinforced and added to residential segregation

The federal government may today be viewed as a party that wants to end residential segregation (see a recent argument by conservatives) but this was not always the case:

On how the New Deal’s Public Works Administration led to the creation of segregated ghettos

Its policy was that public housing could be used only to house people of the same race as the neighborhood in which it was located, but, in fact, most of the public housing that was built in the early years was built in integrated neighborhoods, which they razed and then built segregated public housing in those neighborhoods. So public housing created racial segregation where none existed before. That was one of the chief policies.

On the Federal Housing Administration’s overtly racist policies in the 1930s, ’40s and ’50s

The second policy, which was probably even more effective in segregating metropolitan areas, was the Federal Housing Administration, which financed mass production builders of subdivisions starting in the ’30s and then going on to the ’40s and ’50s in which those mass production builders, places like Levittown [New York] for example, and Nassau County in New York and in every metropolitan area in the country, the Federal Housing Administration gave builders like Levitt concessionary loans through banks because they guaranteed loans at lower interest rates for banks that the developers could use to build these subdivisions on the condition that no homes in those subdivisions be sold to African-Americans.

Both of these policies had long-term effects that helped lead to poor urban neighborhoods and whites moving to the suburbs. The federal government had enforcement power and resources to do things that other parties could not.

But, the federal government wasn’t the only force at work. Take Chicago, for example. Local government units, such as the city or the Chicago Housing Authority, made decisions about segregated public housing projects (a few projects were initially all white while the majority were non-white) and where they were to be located (largely in existing poor areas and as a burden to punish certain aldermen). Realtors weren’t exactly open to showing housing to blacks outside of the Black Belt. Residents tended to react angrily for decades when blacks moved in with little interference from police or local officials; see cases from the late 1910s to the 1951 case in Cicero where white mobs made their voices known. This all happened even until the late 1960s where Martin Luther King Jr. was opposed in fighting for open housing during the summer of 1966 and Wheaton was the first Illinois community with an open housing law (passed July 3, 1967 – as a point of comparison, this was nearly one year before Oak Park in May 1968).

It wasn’t just a tyrannical or misguided federal government that promoted residential segregation or that still continues to promote similar ideas today…

Obama administration proposal to limit tax-free government bonds for stadiums

Federal policy might change how sports teams and municipalities negotiate stadium deals:

That’s what the Obama administration proposed in its budget last month: to end the issuance of tax-free government bonds for professional sports facilities, a practice that has, according to research by Bloomberg, siphoned $17 billion of public money into arenas for NFL, MLB, NBA, and NHL franchises over the last 30 years and cost Americans $4 billion in forgone federal taxes on top of that. It’s too late for residents of Cobb County, but Congress might yet save the rest of us some dough…

So how did we wind up in this situation? Local authorities have long used tax-exempt bonds to raise money for certain private uses—whether factories, train stations, or home mortgage loans—in addition to schools, sewers, and other infrastructure projects. In most cases, the ensuing economic growth was at least intended to pay back the municipal investment. Sports stadiums were no different: Governments could raise money in exchange for a share of future revenue…

Much of the rest of the article summarizes the research that shows cities and taxpayers tend not to come out ahead in these deals. So, this new policy might solve the problem?

Still, it wouldn’t stop cities from paying for stadiums. The last time Congress made public financing more onerous, in 1986, the result was a disaster: Cities jumped to meet the new, harsher terms, opening a three-decade stadium construction spree.

In other words, the policy might close the loophole for this particular financial instrument but there are other ways to make such deals. As I’ve said repeatedly, few politicians are willing to let the big team get away. Of course, the historical record suggests that everything does not necessarily fall apart when teams move. Many of the cities since the 1950s that saw teams move away later saw new teams take their place. Sports teams only have limited numbers of places they can move to make the kind of money they want; this is the reason Los Angeles looms so large right now in the NFL’s urban landscape because the next options are not very good.

The bigger question may be whether cities and suburbs can stop themselves from making bad deals, even with federal policies that take away some of their options.

Federal move toward making more credit available for homeownership

New actions announced this week are intended to help more Americans own homes:

On Tuesday, Mel Watt, the newly installed overseer of Fannie Mae and Freddie Mac, said the mortgage giants should direct their focus toward making more credit available to homeowners, a U-turn from previous directives to pull back from the mortgage market.

In coming weeks, six agencies, including Mr. Watt’s, are expected to finalize new rules for mortgages that are packaged into securities by private investors. Those rules largely abandon earlier proposals requiring larger down payments on mortgages in certain types of mortgage-backed securities.

The steps mark a sharp shift from just a few years ago, when Washington, scarred by the 2008 crisis, pushed to restrict the flow of easy money that fueled the housing bubble and its subsequent bust. Critics of the move to loosen the reins now, including some economists and lenders, worry that regulators could be opening the way for another boom and bust.

For the past year, top policy makers at the White House and at Federal Reserve have expressed worries that the housing sector, traditionally a key engine of an economic recovery, is struggling to shift into higher gear as mortgage- dependent borrowers remain on the sidelines.

Both Treasury Secretary Jacob Lew and Federal Reserve Chairwoman Janet Yellen last week noted the housing market as a factor holding back the economic recovery.

Two thoughts:

1. It is not surprising that the federal government would want to support homeownership: pretty much every President since the 1920s has extolled the virtues of owning a home. Additionally, since the late 1800s homeownership has been a key marker of the American Dream.

2. The comments made earlier this week make it sound like the government sees housing as a sector that should help lead the economy. In other words, housing is an industry with a wide impact from developers to the construction industry to real estate agents to individuals looking for a home. Housing doesn’t necessarily have to be viewed this way; the article also hints that housing is lagging behind other parts of the economy. Put differently, housing improves after other parts of the economy improve.

A $3 billion funding shortage for relieving Chicago area railroad gridlock

A House hearing suggested there is a major funding shortage for the construction necessary to relieve railroad traffic in the Chicago region:

A potential drop of more than 60 percent in Metra delays.

That number alone makes an ambitious $3.2 billion fix for rail congestion in the Chicago region attractive in the eyes of area commuters. And railroads, with the backing of the business community, also support the Chicago Region Environmental and Transportation Efficiency Program, or CREATE.

But where funding for the $2 billion worth of work remaining will come from is a question both U.S. congressmen and industry officials pondered at a Monday hearing of the House Subcommittee on Railroads, Pipelines and Hazardous Materials.

The Chicago region hosts about 1,300 trains a day — 800 Amtrak and Metra trains and 500 freights. But the outdated infrastructure and numerous street level crossings make it a major chokepoint for freight trains, not to mention the delays caused for drivers.

State dollars for the project run out this year and there’s nothing forthcoming in the federal government’s latest transportation plan.

Funding is hard to come by these days. Yet, these are infrastructure improvements that affect not only the Chicago area but perhaps the entire United States railroad system. A large amount of freight traffic in the United States moves through the Chicago region. The railroads as well as local, state, and federal government have been chipping away at this for years including moving intermodal facilities and switching yards further from the city and making at-grade crossings safer and rarer.

Another question that could be asked: should money be spent on high-speed rail if there are still significant problems in the regular railroad system?