REVIEW | Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J Dubner by Dr. Mark David Major, AICP, CNU-A, The Outlaw Urbanist contributor
I really liked Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J Dubner; not so much for the answers it provides – some are compelling, others are extremely dubious – but for its effective demonstration via economist Stephen J Dubner’s methodology that the question asked (especially of statistical analysis) is often just as important – if not more so – than the answers uncovered. Dubner willingness to ask questions ‘outside of the box’ should be applauded and encouraged; as I do every day with my students. The analysis of house sales transactions of realtors is especially compelling and confirms what many savvy people would have already suspected about real estate agents. In the grand scheme of things, does it really make that big of a difference? No, not really. However, as Levitt and Dubner argue, it shines a light on the more dubious practices of some professionals who would like to publicly offer a false facade of objectivity.
The real selling point of Freakonomics – the link between drops in crime during the 1990s and the legalization of abortion in the USA with the 1972 Roe v. Wade decision – is much more dubious. As Levitt and Dubner seem willing to concede, it is a syllogism (deductive reasoning as distinct from induction, which does not necessarily follow, i.e., All men have brains. All humans have brains. Therefore, all humans are men.). I simply do not believe it. As I recall, Western European societies also experienced a crime drop during the 1990s and Dubner does not seem to control for population in his analysis outside of the United States. Maybe he does in one of the cited academic papers but I do not find the argument compelling enough to bother searching for the source material. More than this, there is ample evidence (Dubner himself cites some of it in arguing in his analysis that the hiring of more police does lead to less crime) that a zero tolerance policing policy does work. For example, many Middle Eastern societies have no abortion, a high birthrate (relative to the USA), zero tolerance policing (so much so that some might argue they are police states), and extremely low, almost non-existent crime. We do not even have to cite the historical precedent of low crime in early 20th century fascist police states in Germany and Italy to make the argument. Of course, the problem then becomes how does one define crime in the problem definition. In this, Dubner’s research seems to suffer from that particular and peculiar problem of American academia that nothing else exists outside of the borders of the United States. It is true that Levitt and Dubner are not making a moral argument but it is a very small, troubling step from their conclusion to state-mandated sterilization of poorer populations to control future crime. Of course, this is problematic in moral and ethical terms, especially since the counter-argument on the same terms is all-too-easy: how many would-be Mozarts, Einsteins, Steve Jobs, and Princes were aborted after 1972? Surely, the world is a lesser place than it would be otherwise? No doubt, Dubner would say it is statistically-insignificant but that is the very nature of such individuals: they are rare. However, in the end, there is no way to know for certain. It is only speculation.
Levitt’s nerd-rock star treatment of Dubner in the book is also a little off-putting, especially for an academic. I suspect Dubner is probably uncomfortable about it as well though it has made him a lot of money. However, do not allow these issues to become a deterrent. Freakonomics is a good and fun read, which is definitely worth your time.
Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J Dubner
English, 315 pages
William Morrow Paperbacks (2009)
You can purchase Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J Dubner here.
Every day brings another news article and/or more data about the affordable housing crisis in Western societies. The pungent perfume of Lotium Pour Homme drifts through the parks and streets of our most prosperous cities, which are crowded with men, women, and children in desperate need of human charity and/or physical shelter. These homeless and chronically poor, instead of being employed for their honest livelihood, are forced all the time to beg sustenance of family, friends, and strangers; or else queue long hours awaiting the welfare of the State; turn to thievery for want of work; re-enlist to fight for their dear, native country in Afghanistan and/or Iraq; or, egregiously sell their dignity to the Fourth Estate. All parties appear to agree about the deplorable conditions arising from the manifest lack of affordable choices in the housing markets of Western societies. Therefore, whoever could devise a fair, cheap, and easy method for readily available housing, thereby making more fair the socioeconomic conditions of our greatest cities, would deserve nothing less than his or her statue erected as the savior of Democratic Capitalism. However, our intention is far more than merely providing a fair solution to the housing crisis. The goal of our proposal is nothing less than the salvation of urbanism itself and the city as a physical artifact of our collective, human nature.
Many people have had different proposals – many discussed, some implemented, and others ignored – for solving this problem over the decades. Yet, the problem persists, even worsens to this day. This is because most solutions have been and are grossly mistaken in their approach to the problem. It is true, Keynesian economics does have some relevance to urban problems at the discrete scale; and what is Marxist economics but an extreme, all-encompassing version of Keynesian principles. However, our greatest cities, especially those in the United States such as Boston, New York, Philadelphia, Savannah, Chicago, and San Francisco, were the product of private industry, both individually and collectively, before the 20th century. What has the Keynesian-produced city become after the landmark period of 1926-1945 in Western societies? Milton Keynes, Orlando, Las Vegas, Atlanta, and Phoenix to name but a few. These are not places but are the haphazard accumulation of more locations. They are blasphemous to the goals of sustainable urbanism and synergy of place. Fairness in housing is choices. The most abundant housing supply offers the most diverse of affordable choices under normal market conditions. We must pursue normality in our housing markets, not their continual perversion under Keynesian principles. This means private industry aggressively increasing supply.
At the same time, I have been assured by the publicist of a knowing Canadian of everyone’s acquaintance in New York, that thousands of acres of public parks and lands in our cities have enormous, untapped potential as ‘greenfield’ sites for private development to construct more housing supply in Western societies. The computations available to us strongly indicate the possibilities of ‘greenfield’ development might truly be without limit in resolving the affordable housing crisis by the provision of supply.
Central Park lies in the heart of the most densely occupied, urban area of the United States: Manhattan Island in New York City. Central Park represents approximately 850 acres of raw land. It is readily available for the construction of affordable housing at the center of our greatest and most wealthy city, where there are an abundant quantity of enviable employment opportunities for our poorest citizens, while still leaving approximately 20% of that acreage (170 acres) untouched as ‘pocket parks’ in the newly created neighborhoods.
According to the U.S. Census Bureau, the number of housing units in the five boroughs of New York City was 798,144 in 2000 with an approximate average density of 54.3 dwelling units per acre (du/acre). Residential density in Manhattan appears slightly higher with about 72,033 people/square mile in Manhattan, which translates into approximately 112.6 people per acre. An average household size of 1.5 people indicates an approximate housing density of 75 du/acre. However, let us be conservative in our computations and proceed based on an average housing density of a mere 65 du/acre, approximately 15% above the average for the five boroughs but 15% below the greatest development potential for Central Park.
The City of New York could transfer 680 acres of Central Park into the ownership of private industry without cost, upon the condition that the construction of affordable housing within certain price point limits must commence within five years or else such lands will revert to public ownership in the future. This will represent a tremendous opportunity for private industry to profit on the land without having to bear the costs of its purchase. At an average housing density of 65 du/acre, this would provide for at least an additional 44,200 dwelling units in Manhattan.
With further implementation of this strategy on more ‘greenfield’ development sites of New York City, the number of additional, affordable housing units will, in fact, approach a doubling of the current housing stock of Manhattan. There are approximately 28,000 acres of municipal parks in the five boroughs of New York. There seems little doubt that some of this public land may already exist as ‘pocket parks.’ Let us proceed based on the idea that only 50% of this acreage (14,000 acres) truly constitutes potential ‘greenfield’ development sites to be turned over to private industry for the construction of affordable housing. At an average housing density of 54 du/acre, this would generate an additional 756,000 dwelling units in the bound of the City of New York, effectively doubling the capacity of existing housing stock associated with Manhattan and potentially reducing housing prices by a significant percentage across the entire metropolitan region.
Indeed, 130 square feet per person of recreation space for those living in the five boroughs seems redundant and excessive in a country where there are six acres of land for every single man, woman, and child. One might describe such space allocation as extravagant. It is akin to the false piety of persons who pray in public for the sake of demonstrating their piety for all to see and behold. Behold! We have so much space and money that we can willingly waste both in our cities and forsake affordable shelter for the neediest of fellow citizens!
It is true the property values of all existing homes in Manhattan and across the five boroughs would experience significant declines in price. As other municipalities pursue this strategy of ‘greenfield’ development for more affordable housing in Western societies, properties in such cities will similarly experience a significant decline in the face of a rapid and dramatic increase in the housing supply. It is likely such decreases in property values will prove only temporary as market forces slowly re-assert themselves over time in the absence of the previous restrictions on housing supply. Such a period might last two decades, and perhaps as little as one for our most attractive cities, e.g. New York, San Francisco, Los Angeles, London, Berlin, Toronto, and so on.
This very knowing Canadian of everyone’s acquaintance in New York argues our most prosperous cities are populated by the most educated, politically progressive, high-minded, and enlightened of our citizens. Surely, such estimable citizens would be willing to temporarily sacrifice some amount of personal worth in the value of their homes/properties for the sake of a fair solution to our affordable housing problem. I am assured by numerous public proclamations about their most charitable nature on this matter and many others issues of similar nature.
It is also true that these new dwelling units in the heart of our most prosperous cities would only be affordable, in relative terms to nearby existing housing process, during the initial offering in sales to the general public. Eventually, the dynamics of the real estate market would reassert itself. This represents a tremendous wealth-generating opportunity for our most needy citizens through the mechanism of land appreciation. However, the initial injection of 44,200 additional dwelling units in Manhattan – and the potential increase of an additional 756,000 dwelling units in the five boroughs – would have a systematic effect across the housing market for the entire New York metropolitan region, effectively reducing the cost of housing in neighborhoods more peripheral to the five boroughs.
Nonetheless, the creation of affordable housing neighborhoods in the vacant lands of Central Park will perform a public good in another regard. It will finally end the suffering of the Upper East Side and Upper West Side residents in Manhattan, who have been long segregated from one another in social terms by physical barrier of Central Park itself. The new neighborhoods of the ‘Upper Central Side’ will forever bind residents of the Upper East and West Sides together in a new interconnectedness of brotherhood and charity.
It is also true that a ‘greenfield’ development strategy for some cities (e.g. unsuccessful ones such as St. Louis and Detroit) would be a fruitless gesture due to the number of public-owned lots arising from the wholesale demolition of historic housing stock over the previous seven decades. However, such municipalities may pursue a strategy founded on the same principles by the wholesale release of these public-owned lots to private industry with the same restriction imposed on the land in a ‘greenfield’ development strategy. Nonetheless, a ‘greenfield’ development strategy will also afford our most prosperous cities, especially those in North America, with an opportunity to further densify their housing and neighborhoods, thereby making public transportation alternatives such as rail transit more economically viable options in such cities over the long term.
Other municipalities of our most prosperous and expensive cities could elect to pursue this supply-side strategy for more affordable housing. For example, Golden Gate Park in San Francisco, California represents another potential ‘greenfield’ site of 810 acres (less 20% retained for ‘pocket parks’ of the total 1,013 acres). At a mere 50 du/acre, this could represent another 40,500 dwelling units introduced in short order to the San Francisco housing market. According to the San Francisco Recreation and Parks Department, they manage approximately 3,400 acres of parkland in San Francisco alone. Again, using conservative computations, this potentially translates into an additional 85,000 dwelling units with approximately half of that situated in the former Golden Gate Park.
In central London, the potential of ‘greenfield’ development sites for more affordable housing is significant in such places as Hyde Park/Kensington Gardens, Regent’s Park, Lee Valley Park, Richmond Park, and Hampstead Health, which alone could conservatively account for an additional 350,000 dwelling units in the London housing market.
Simultaneously, if every national bank and even all Federal, state, and local government agencies released all of the properties and housing units they owned on to the market, this would have an immediate effect of reducing cost by dramatically increasing the supply of housing and/or sites for housing. Indeed, for at least a decade now, perhaps even longer, our national banks, many headquartered in the Wall Street ‘heart’ of Manhattan, have desperately sought a means to make a more honest profit. Releasing all of the properties on their books will be an important step along their way to redemption in the eyes of our fellow citizens.
Bibliography and References Population density and land area data compiled based on U.S. Census Bureau, Wikipedia, City of New York, City of San Francisco Recreation and Parks Department, and Greater London Authority.
Florida, Richard. 2016. “Mapping How America’s Metro Areas Voted.” CityLab, December 1, 2016, retrievable at http://www.citylab.com/politics/2016/12/mapping-how-americas-metro-areas-voted/508313/.
Major, M.D. 2017. The Syntax of City Space: American Urban Grids. New York: Routledge Books/Taylor & Francis Group, forthcoming in Fall 2017.
Swift, Jonathan. 1729. A Modest Proposal For preventing the Children of Poor People From being a Burthen to Their Parents or Country, and For making them Beneficial to the Publick.
Central Park, Manhattan: Friends of the Upper East Side Historic Districts, retrievable here.
Golden Gate Park, San Francisco: Photograph by Rich Prillinger, retrievable here.
New York, New York with Building Footprints: Originally available from schwarzplan.eu, retrievable here.
San Francisco, California with Building Footprints: Originally available from schwarzplan.eu, retrievable here.
London, United Kingdom with Building Footprints: Originally available from schwarzplan.eu, retrievable here.
REVIEW How to Speak Money: What the money people say… and what they really mean
by John Lanchester
John Lanchester’s How to Speak Money: What the money people say… and what they really mean is a worthwhile read though the whole adds up to somewhat of a mixed bag. The first chapter, “The Language of Money” is a fabulous, broad-based read, mostly focused on telling the story of economics as a field and topic of study. The middle definition section, “The Lexicon of Money” is mostly thorough and informative but a lot of readers (for example, architects, urban designers, urban planners) will find some definitions more useful than others based on their own interests and life experience. This really isn’t Lanchester’s fault; it’s just the ‘nature of the beast,’ as some might say. The “Afterword” is really problematic as Lanchester tries to pull it all together into a more widespread, sweeping view of where we have been and where we are going after the Great Recession. In doing so, he strains to debunk what he describes as the Neo-liberalism economic policies of the last 30 years (what most people know as supply-side economics or Reaganomics) on the basis of inequality (i.e. gap between rich and poor). At the same time, Lanchester heralds the remarkable progress of developing and emerging markets over the same time period, especially in improving child mortality and education rates, lifting people out of poverty, etc. (i.e. reducing inequality). However, to accept Lanchester’s argument, the reader has to assume that these simultaneous events over the last 30 years are utterly disconnected, occurring in a vacuum independently of each other. It seems far more plausible that Reagan and Margaret Thatcher’s promises to the middle/lower classes of a ‘trickle down effect’ that lifts all boats has not been realized in the developed Western societies such as the United States and United Kingdom but, through the mechanism of globalization, manifested on a worldwide scale in these emergent markets. This means Lanchester’s proposed solution, a return to the democratic socialist policies of the 60s/70s that is inevitably the default position of most Baby Boomers, is incorrect (and very old news). As I recall, Reagan/Thatcher never supported the concept of near-monopolies as part of their broader economic strategy, which has, in fact, emerged in modern corporatism of the Western societies over the last 2-3 decades. This suggests that economic model we should be looking towards for a correction in the obvious abuses of the Neo-Liberal economic model (see bank fraud/credit crunch of the Great Recession) lies in the early 20th century ‘trust-busting’ model of Teddy Roosevelt. In this sense, the “Afterwood” serves its purpose by forcing anyone with a basic understanding of history and economics to draw to their own, more rational conclusions in order to reconcile the inherent contradictions of Lanchester’s argument. How to Speak Money: What the money people say… and what they really mean is worth the read but it should be read thoughtfully, not blindly. Grade: 3 1/2 stars
How to Speak Money: What the money people say… and what they really mean
by John Lanchester
W. W. Norton & Company, 2014
You can purchase How to Speak Money: What the money people say… and what they really mean on Amazon here.
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