Tag Archives: Municipal reform

The rules for changing rules

Paul Romer presents his solution to the problem of underdevelopment in this TED video.

Stanford economist Paul Romer believes in the power of ideas. He first studied how to speed up the discovery and implementation of new technologies. But to address the big problems we’ll face this century — insecurity, harm to the environment, global poverty —  new technologies will not be enough. We must also speed up the discovery and implementation of new rules, of new ideas about how people interact.

Throughout human history, big improvements in systems of rules took place when new governments entered the scene. In today’s world, this process has been largely shut down. To bring it back to life, Romer proposes that we create new cities where people can go to escape from bad rules and opt in to new and better ones. With better rules, people can be safe, self-interest can protect the environment, and investment can bring families all the resources that the modern world has to offer.

Paul Romer profile

Another, much longer presentation was made at the Long Now foundation.

As he sees it the problem of urban and economic development is not the bad rules. Most people and leaders understand that they are bad rules. The problem is that the system of government, the application of the rules, traps us in them. And so for example, if the prime minister of some derelict African state attempts to fix rules on the electrical industry, he will have to fight opposition from the many different people whose interests are affected by this change. Unless he is an all-powerful man, he is set to fail. This is a well-known problem, and the British have even turned the practice of bureaucrats manipulating politicians into doing the opposite of what they wanted to do into high comedy.

Romer says that the solution to the problem of bad rules is not to go into government but to create new governments, implying that processes of government have their own life and result in good or bad rules. While some leaders and communities may not be able to beat the system of government, they can create new ones at the margins. Romer proposes to develop, in effect, city-states all over the world where there currently is nothing, and populate them with settlers looking to build a new life.

People criticize me for proposing changes that they believe to be impossible and unrealistic. This may be true if we consider preserving the planning system to be the most important objective. And perhaps some of these people simply consider anything but the established system to be inconceivable. Even in this otherwise positive article about slums, you find a quote such as this one:

There are reasonable objections to titling. Is it fair for those who seized government land—or, worse, someone else’s private property—to be rewarded with a property title? Nor is ownership easy to disentangle. “How do you allocate titles within the dense fabric of Rocinha or Kibera?” Neuwirth writes. “Who should get title to each parcel? The family that built the house? The woman who bought it from them? The tenants who rent there? The man who owns his two-story home but sold his roof rights to a friend, who built two stories and sold his roof rights to someone to build an additional two stories?”

After praising slums for their ability to generate economic opportunities, they are denounced for not fitting into the conventional model of property rights. Yet it is precisely the use of more natural methods of property allocation that gives slums their organic morphology. I observed the same narrow-sightedness when researching my thesis on La Défense. The one defining characteristic of the project was that it was exempt from the national planning system and its rules, creating a completely open-ended area. No one working on the project could tell me that this was the reason for its success, neither did the records they kept acknowledge it. The only man who had understood this and written about it was Rem Koolhaas.

Just like we can’t make the organic morphology of slums fit into the modern rules of property ownership, we can’t make traditionally emergent cities through the current planning system. (All efforts to produce traditional neighborhoods have so far produced only imitations of them.) Romer’s charter cities offer a way out of this system, but Romer’s proposal to try out new forms of government at the scale of the city does not recognize the fractality of urban scale. It is possible to build not simply a new city out in the open wild, but a city within an existing city, at the edge or some such, thus creating a fractal of nested cities all working on a different planning system, and in this way not just serving as a comparative experiment but also benefiting from each others’ existence into one global system. I wrote before about such a patchwork of planning systems solving problems at conflicting scales.

The most characteristic feature of an emergent urbanism is that it tries to solve problems at the smallest possible scale first (in opposition to sprawl which solves problems at the regional scale). This means that an emergent city can be created at the margin of an existing sprawling metropolis, or in any pocket available within it.

The challenge then is truly to figure out the rules for changing the rules. If a spontaneous community of people can be sufficiently organized to claim an available place and declare that it is run on a different system, then by democratic principle will it be accepted, or opposed? If the political leaders of a dying city are going to abandon a part of their territory, can they concede it to a new organization, with a form of ownership that defies conventional practice? In any case, the initiative for such a measure will have to come from outside the system.

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Producing land with nested markets

The Poundbury Grid, from Streets and Patterns by Stephen Marshall

The Poundbury Grid, from Streets and Patterns by Stephen Marshall

When the modernists unleashed their program for simplifying cities, they did not limit themselves to redirecting existing institutions. Within the modernist ideology was implied the idea that transportation, open space and buildings were separate, isolated things and could therefore be made in isolation. This lead them to create entirely new institutions that operated independently. One of these was the Department of Transportation, also called Ministry of Transportation, or Délégation Départementale de l’Équipement, or somesuch. Its mission was clear: build roads, make them fast, clear away all obstacles and let’s drive. While the collapse of the modernist program in architecture swept away the building typologies they had invented and would later make room for the creation of such architectural artifacts as Poundbury, the transportation system they had devised continues to operate unchallenged. This system, it must be realized, is sprawl. It is the engine of urbanisation throughout the world. It does this by taking rural land and upgrading it, without any conscious realization of what it is doing, into urban land. The very existence of Poundbury, or any other New Urbanist development, is owed to this urbanization. Without it, it could not have any economy. It is therefore incorrect to refer to it as only a transportation system. It is a land production system, creating markets for land where there were none before.

Writer Alex Marshall (not Stephen) correctly diagnosed what was occurring in How Cities Work. In it, he identified the architects and planners of economic powerhouse Silicon Valley as being the state and federal transportation agencies, and invited New Urbanists to work for these agencies if they wanted to have an effective impact on the design of cities. While his book is an illuminating exploration of the processes for building cities and even lays the groundwork for an emergent theory of urbanism, by the middle chapters Alex Marshall seems to lose his mind and lays the blame for the urban mess on market ideology, Republicans and the almighty Libertarians. If only government authority over land was unrestricted, and the voters (I presume) realized that an urban planning system is a choice and not an inevitability, then once again real cities could be made instead of sprawl.

I appreciate his arguments in favor of making better, more informed, richer choices in how cities are planned. But the fact that the tone of his book radically shifts from cool, rational analysis about systems for urbanisation to anger and blame over restrictions imposed on government authority shows that he has disentangled one layer of confusion about cities only to expose another, even more entangled layer: that of land ownership and market creation. To see through that layer requires traveling back in history to the very beginning of the industrial age and farther.

Our ancestors in America lived almost exclusively as homesteaders and independent land owners. The appeal of migrating to the new world was the abundance of homesteadable land. At the beginning of the 19th century, places such as New York City were shipping towns of little importance relative to the agrarian economy. This was not the case in Europe, where the land was owned in very large estates by a small number of aristocratic families. The rest of the population lived upon the land as tenants. Cities also were estates, with those not owned by the aristocracy being owned either by the clergy or by corporations of merchants chartered in the middle ages. (The City of London somehow miraculously continues to operate by this system.)

The fact that Europeans and Americans had a vastly different starting point in land ownership affects the way they conceive of municipal authority. Because land estates always regulated tenants and built improvements such as roads to collect rents, Europeans will see the city as a public service and consider zoning and regulation as completely normal and legitimate. In America every man was his own land owner. Land rents, roads and zoning were imposed through the force of government upon those small land owners. Because of this, Americans see the city as a government interference and resist zoning and regulation.

The suburban dream, to own one’s house, has come to replace the American dream, to own one’s land. But the economic reality of owning a parcel of land and being a landowner are completely different. Our ancestors lived from their land, not simply on it. Their wealth came from their land. A house owner simply resides on his property, he does not live from it. His living is made from his participation in the life of the city, and he needs the roads in order to do that. Should the road to his house be blocked off, either intentionally or by natural accident, the house would become useless but he would not lose his living. A house owner is as much a tenant as his European ancestor. He rents the streets he lives from.

The relationship between transportation and land rents has been known forever. In the late 19th century railroad developers created new neighborhoods of cities by buying up isolated land, extending the railroad to it and then parcellating it into lots. The people of this new neighborhood lived from the railroad commute. The development of Los Angeles is famous for having been driven by streetcar companies expanding to new areas and profiting from the land they improved. The ownership of the streets was then transferred back to city corporations. It was moved from private to communal ownership, with all the pitfalls this implied.

Seeking to increase the value of their developments by adding a more restrictive layer of controls over the subdivisions they produce, developers have for the last few decades been creating home owners’ associations to provide for the roads and control covenants upon the private parcels of home owners. In doing so they have chosen to take an alternative course to municipal incorporation, but unfortunately the organizations have shown themselves to be draconian in their application of rules as banal as the height of lawns and in so doing compounded the reputation of suburban subdivisions as zones of conformity. The HOA is a cooperative ownership model that transforms subdivisions into structures as rigid as a condominium tower, without the material rigidity of the tower itself. If one is an advocate of the suburban subdivision in the name of freedom, this model seems to miss the mark.

It is indisputable that HOAs provide a good, environmental control, that home buyers wish to have. They are willing to give up control over their house in exchange for part control over the neighborhood. The developers are creating neighborhood value by tying their product into a system of rules, and in doing so increasing the demand for the individual homes. Developers are creating rules-constrained markets within the framework of the HOA, a cooperative of home owners who pay a rent to have the right to be part of this market. The HOA market itself exists within the market created by the road that integrates it to the productive economy, road which has almost certainly been created by a municipality or county administration. It is a market within a market, and both have their specific rules as to how land may be utilized.

Alex Marshall claims that market creation is the exclusive domain of government. I believe this is dangerously incorrect, not out of anti-government bias but because the organization of government places strict limits on the complexity of the markets that will be created, something that we both appear to agree is a major flaw of our urbanism. To show this, I will explain the history of one of the weirdest cities of Paris, the business district La Défense.

almost-utopia gare-grande-arche noeud-gordien-ii

The most peculiar aspect of the city is its organization of land. It was founded in the late 1950’s and planned in the early 60’s in the model of utopian modernism, which meant strict separation of pedestrian and vehicular traffic and rows of identical tower blocks. The master plan rapidly fell apart and was abandoned when it was realized that the companies for whom the towers were meant had no use for them in their planned shape. From that moment they were free to define what kind of tower they wanted to build, however the system of traffic separation remained. The developer proceeded to build an enormous structure (about three stories tall) over the natural ground called, roughly translated, The Slab. The Slab is the main pedestrian space that integrates all the towers into the mass transit network of metropolitan Paris and the commercial activity of the district. The centre of The Slab (seen left) turns out to be the ceiling of the gigantic mass transit station (seen middle) that distributes 150,000 people to and from their offices morning and night. The buildings at La Défense do not have any connection to land or streets, they float upon The Slab.

This project is said to be one of the flagships of the French state, but the interesting thing about this is that the state had to go around its own system of land administration in order to create it. Municipalities in France are organized around 36,600 communes whose statutes regarding urban planning and land use are strictly defined in the legislation of the administration. La Défense does not have an administration in the same sense that communes do. It was created as a national interest operation, meaning that the state, realizing that its own territorial administration system could not deal with a project of such complexity, declared a zone of territorial exception where the legislation was suspended. Instead, the land inside the zone was purchased by a developer, the EPAD, whose statutes are defined by private business law but whose majority shareholder is the state. In other words, the state had to go through the market to avoid flaws in the system of government in order to create a market unlike anything the country had seen before.

The EPAD has since operated profitably by investing in land improvements, most importantly paying to bring regional rail and metro links to the district, and selling development rights for towers that are limited by contract to certain open-ended morphologies. No one owns land there except EPAD, but private companies do own their buildings. Those buildings never could have been built had EPAD not created a market for them through the expansion of the mass transit network it paid for, and of course by building The Slab.

EPAD, an organization who was meant to last at most 20 years, celebrated its 50th anniversary this year while many people struggled with the “outlaw” nature of its existence. Proposals for reform all crash against the challenge of The Slab and how it could continue to function as a form of urbanism within the framework of standard territorial law. This territorial law is itself being questioned and most likely headed for reform, although there is no guarantee that reformed law will be competent to handle a structure of this nature. The way things are going, it’s possible that EPAD could have a longevity comparable to the City of London.

The lesson of La Défense is that for-profit enterprises can create urbanism, markets for land supported by large capital structures, provided that the law allow them to. In other economic sectors this arrangement is nothing unusual. To persuade Republicans and Libertarians of the benefit of urbanism, it suffices to make a comparison with the New York Stock Exchange company, an icon of capitalism. While the service the company provides is a means to trade stocks efficiently, this service does not come free. The NYSE occupies some valuable real estate in downtown Manhattan, and provides sophisticated computer equipment and trading services to participants. You must pay for your right to take part in the NYSE, and then obviously must pay again to buy shares. Your ability to trade shares may not be possible without the supporting capital investments of the NYSE company. The NYSE, although it creates a market, is itself competing in a bigger market, that of stock exchanges. It must be better at enabling stock trading than other stock exchanges in order to attract traders and companies, and it can itself be bought, sold, merged or spun-off as a company. The stock trades are a market that is nested within the market for stock exchanges.

For the liberal-democrat wary of such fine capitalist institutions, the work of market creation can also be done by a non-profit organization. This is what one of my favorite examples, the Wikimedia Foundation, does with its different wikis. Although the trades are free, the foundation does provide the framework for people to rapidly and easily share and structure information. A foundation which owns land could in the same way create a market for buildings by enabling its inhabitants. It is exactly such a process that Christopher Alexander described in The Oregon Experiment. By his proposal, the University of Oregon was required to provide design assistance to faculty and students who wanted to initiate building projects. This form of market would obviously put enormous power in the hands of the users and less so in those of big developers, which is the opposite of what municipal planning systems have done.

Municipal planning systems, as we have known them for the last two centuries in America, have been held up by two pillars. The grid of streets and later on the supergrid of arterials have urbanized land in a manner that favored land speculators and developers, and then the large land speculators and developers. The second pillar has been the zoning ordinance and building code, a system of bureaucratic regulations that has grown in size to the point where consultants must be hired to navigate the process. The non-professional who wants to build something in this market, if he has been lucky enough to benefit from the grid, must first understand a stack of regulations that will take him enormous effort to master. This cost evidently favors developers who have a lot to invest in building and discourages the creation of the small events, quirky house, shops and businesses, that make a city so pleasurable. Bureaucratic regulations also have the nasty side-effect of being unable to translate qualitative standards into rules, the result being a long list of quantitative regulations that produce big subdivisions, big malls and big business. The SmartCode, 60 pages long, does not improve upon this process. It makes the big subdivisions take a different shape.

Paris' 16th borough (front) and La Defense (back)

The 16th borough of Paris (front) and La Défense (back). Two different markets creating two different emergent morphologies, and different environmental qualities as well. Those are choices.

The creation of the municipal system in Europe was an act of land reform, breaking down land estates that had their origins in feudal privilege. The French communes were the product of the revolution, and the municipal corporations acts of Great Britain in the 19th century put an end to quite a few “rotten boroughs.” The end of the feudal tenure system could be justly seen as progress by Europeans, and the new powers wielded by municipalities did not exceed those wielded by the previous landlords. In America the incorporation of land into municipalities, and the transfer of ever greater powers to county governments, took place at the expense of small land owners who considered themselves independent and resisted the limitations imposed upon them by new municipal regulations, while profiting at the same time from the new markets created for their land by investment in structural improvements, most of all roads. Both processes for creating municipalities have since been the monopoly of governments, and the slow action in creating, dissolving, merging and splitting cities has caused crisis in all areas. Alex Marshall points out that state governments have the authority to create and merge municipal corporations, and should make use of this authority more often, but governments only have limited attention to devote to these issues. In the early 19th century it required an act of government to charter any business corporation. The regularization of this system allowed businesses to incorporate without going through the legislative process, and the dynamic market economy we have enjoyed since has this process as one of its foundations. For some reason it was never thought of to extend the same rights to city corporations.

In their pleas to “leave things to the market” Americans severely restricted what kind of operations municipalities could undertake, and limited their authority to take action against public problems. In doing so they did not realize what kind of market was being created, and who would benefit most from it. A municipality that does more is no less of a market than one that does less. A municipality that builds a hierarchical grid of differently-scaled streets and helps non-professionals to create their own buildings would be creating a market, and ultimately an emergent urban morphology, vastly different from what limited municipalities have been allowed to create. More restrictive rules could also create environmental quality that would raise the value of the market as a whole. The municipality could be creating a better market than it currently is if it had more freedom to act.

Inventing and organizing such a municipality will itself require a process that systems of government cannot handle. This is where things truly ought to be left to the market. Independently owned and operated cities could adapt and reorganize themselves to experiment with new forms of markets. They could merge and spin-off to meet the challenges of metropolitan scale. They could buy the land that they intend to urbanize. They could regulate the land to preserve the quality of the environment and create greater neighborhood value. They could make the immense capital investments in roads, mass transit, public squares, parks and utilities that would earn them a profit in increased rents from their markets. Finally, the disintegrated land creation institutions brought about by the modernist program could be reintegrated in cities with enough authority to employ them efficiently and productively.

Sprawl would soon after be a footnote of history, along with many other urban ills.

References

How Cities Work by Alex Marshall

Streets and Patterns by Stephen Marshall

The Oregon Experiment by Christopher Alexander