Monday, February 18, 2013

Putting Pieces Together

This emerged as a comment to this Old Urbanist post, but was rejected because of its length:
So the conventional theory is dead wrong; the data show the actual catalyst occurred during WWII. (Interestingly, there seems to be a strong correlation with home ownership and car ownership between the 1920s and 1950s; secondly, car ownership rises abruptly after WWII and surpasses the home-ownership rate.)

This, of course, begs the second question which the automotive theory "solved": the postwar collapse of the American city. My guess is that it was a combination of factors--some still at work--including a desire to emulate lifestyles portrayed in entertainment media, race, inefficient/incompetent/oversized city government, and even the ability to "cash out".

Think about it for a moment: the initial homeownership boom occurred BEFORE the Levitt brothers started their tract community, BEFORE detached housing became regulated as the dominant and standard housing type in zoning codes. If the initial catalyst for the homeownership surge was owners taking their properties off the rental market to avoid wartime rent controls, then it also stands to reason that the following sequence of events could have taken place:

1. Some owners, owning a property that was converted from apartments to a family property, would add supplementary income by renting out unused portions of the property.

2. For other reasons, some of them related to the ease of acquiring FHA mortgages, households engaged in this activity would buy a new (suburban) property, while continuing to rent out the existing property for supplementary income.

3. The Great Migration's second wave began in force after WWII. While urban families were enjoying unprecedented prosperity, the Migration would begin to control the demographics of the rental market.

(By the way, the first major wave of the Great Migration, in the 1920s, was probably catalytic in the imposition of zoning codes in the first place.)

4. Urban neighborhoods at this stage are composed of an even interspersion of homeowned and rental properties. However, a knock-on effect of the Great Migration is an intense demographic change in the rental market. Demographic mixing begins to take place, due to the ownership matrix, in a wide variety of neighborhoods.

5. Sociological norms take over. This was the nadir of American race relations, after all. Owners who had previously primarily invested in the city purchase elsewhere; some may convert their existing property to rentals; others panic-sell, driving the total stock into the hands of a few larger landlords aiming to make money off of the rental market.

6. The Great Migration creates an intense rental demand. Sociologists analyze the patterns occurring in existing neighborhoods as another example of invasion and succession (which it is.)

At this point, we can see why the demographic changeover occurred, but not the urban collapse. But the major collapse didn't happen until twenty years after WWII, which implies a delayed effect. It also happened concomitant with an (generally unremarked) failure in the financial system at large--the stagflationary period--which was remedied not by any great change in structure, but by increasing leverage (i.e. debt). This, in turn, would be the ultimate causor of the 2007-8 meltdown, as the scope of leverage grew to a level too great to bear.

This financial system was rearranged, by the way, beginning in the late 1920s. It shifted from a bipolar system that largely existed in the form of B&Ls and other small institutions that funded small-scale improvements in local neighborhoods, with a handful of large investment banks whose financial structures had been built to proffer vast streams of capital to the likes of the Goulds, Rockefellers, Vanderbilts, at the other end...The Great Depression was catastrophic on the smaller end of this market, and eventually produced regional- and national-tier institutions. Neighborhood finance had died by the end of the Great Depression. These new regional investors (a combination of larger neighborhood banks, smaller investment banks, and a few regional banks which had existed before), out for profit, in turn practiced a targeted investment strategy (which we today know as redlining).

The targeted investment strategy targeted investments which were focused around certain types of investments the Federal government heavily favored--FHA mortgages and the ancillary infrastructure--to the exclusion of all others. The system became efficient but fragile. The system failed--stagflation occurred--when Mother Nature presented Uncle Sam with the bill for maintaining that ancillary infrastructure (per Strong Towns).

But, because there were no local investment vehicles--the role traditionally performed by neighborhood banks, B&Ls, small-scale S&Ls, etc.--there was no capital available for areas disfavored by banks' targeted investment strategies. What had happened, if you think about Jane Jacobs' The Economy of Cities\, was that capital had become amazingly efficient, but it had ceased to be productive at developing a new middle class. With a dearth of capital, and an inability (due to Federal regulations) to develop neighborhood capital vehicles, the middle class that should have developed under traditional invasion and succession theory did not; urban tax bases began to erode, and cities found themselves in financial crisis. Collapse happened.

To recap: American race relations had created a demographic turnover structure called "invasion and succession" by sociologists. Like lived with like. Invasion and succession, by itself, explains why American cities became majority African-American during the Second Great Migration.

The Economy of Cities takes it from there, both by explaining how productive economic development happens within and without the invasion & succession framework, and how finance can be productive OR efficient (but not both): an economy can develop, adding new goods and new work, or it can stagnate, replicating existing work unendingly. After the Crash of 1929, the financial system shifted in favor of efficiency over productivity, which over time deprived the African American community of the ability to develop an internal middle class, which, by the 1970s, undermined cities' tax systems to the point of collapse. It is no accident that the highest level of population flight from cities was during those decades.

Wednesday, February 13, 2013

Quick Note about the Daily Pennsylvanian

So PennDOT and Amtrak are engaged in a chicken game for the question: Whose responsibility is it to fund the Daily Pennsylvanian? Neither side is stepping up; each is looking for the other to take on the responsibility of funding it. In all this, naturally, the train--and the service it provides--loses; the worst-case scenario is the loss of a daily train between Philadelphia and Pittsburgh.

Think about that for a second. No train around Horseshoe Curve. No service to Altoona or Lewistown, Johnstown or Tyrone, Greensburg or Latrobe. Several of these towns--principally east of Horseshoe Curve--have growing ridership. Yet ridership in Pittsburgh is flat, even declining.

Why is this? It's a matter of convenience. The train leaves Philly around noon and reaches Pittsburgh in the evening; it leaves Pittsburgh early in the morning and reaches Philly in the early afternoon. It takes 5.5 hours to traverse the Appalachians, from Harrisburg to Pittsburgh. The Turnpike takes the same time to get you all the way there.

So--inconvenient arrivals and departures from Pittsburgh, coupled with a convenient alternative; convenient arrivals and departures from Altoona, Tyrone, and Huntingdon, with a relatively inconvenient alternative. That explains the odd ridership pattern we see on the train.

Now, the next element is something lots of people tend to forget: the Turnpike ain't free. In fact, although it's a five-hour trip from Philly to Pittsburgh, it's also $26.50, usually plus overpriced gas at Sideling Hill. Try it for yourself. It's not like the Turnpike has a lock on the market purely because we're subsidizing the road, the way it is for, say, the Buffalo-Pittsburgh market. In fact, the Amtrak fare, $54.00, is price-competitive with the Turnpike. (Think about it: a $30 Turnpike toll plus $30 for gas at Sideling Hill is about the same as a one-way Amtrak fare.) It's not time-competitive, but it doesn't really need to be to begin building ridership; it can appeal to time-rich demographics, like students and weekenders, and start worrying about time-sensitive travelers later. In fact, this is the very way its ridership is growing where the service is convenient.

What it needs to be is as convenient out of Pittsburgh as it is out of Philadelphia and central Applachia. In other words, what it needs is another daily service that leaves and arrives in Pittsburgh around noon, to complement the section that leaves and arrives in Philadelphia around noon. This would better tap the Pittsburgh element of the market, and build a ridership base to make improvements like, say, hourly service to Johnstown or line improvements to 110 mph running speed.

There's a market there. The will to tap it is what's lacking.