Welcome back to Sunday reading. The most interesting thing I’ve read this week is actually about macroeconomics, rather than urban issues. As it deals with trends in Asia, a region that we’re now economically intertwined with, it’s still worth thinking about. James Kynge and Jonathan Wheatley, “Emerging Asia: The ill wind of deflation“, Financial Times (possibly subscription-only):

Price shifts are often early harbingers of global change. The first inkling the British had of the 13th century Mongol invasions of Europe, for instance, was a spike in the price of fish at the east coast port of Harwich. Baltic fishing fleets had stopped sailing after their crews were redirected to fight the invaders, thus cutting the supply of fish to one of England’s biggest markets.

The current economic convulsions emanating from the east are very different, but they do signal changes that imperil global fortunes. Deflation, a prolonged decline in the price of products, is flowing like a draught of cold air from Asia’s powerhouse economies and casting a chill over Japan and Europe, while also endangering US efforts to sustain a recovery…

Evidence of a deepening deflationary spiral in Asia — sparked by manufacturing overcapacity, an evaporation of trade demand and anaemic productivity — is a major cause for concern. That anxiety is amplified because of the structural nature of the problem. That it is taking place just as the EU and Japan are slipping back into deflation while the US is struggling with weak corporate earnings, makes Asia’s falling prices a pivotal issue…

Key to Asia’s problem is the particular type of deflation that it is afflicted by. The issue is not with consumer prices; these are still buoyant in most of the region’s shops. Instead, it lies with producer prices — the amount that factories, mines, farms and other producers can charge for the commodities or manufactured products and components that they sell.

The producer price index is at its lowest average point for six years in the 10 largest economies in Asia (excluding Japan), according to Morgan Stanley. Only Indonesia among the 10 is experiencing any producer price inflation, while South Korea, Taiwan and Singapore have been in a deflationary funk for around three years.

China has notched up 42 straight months of falling producer prices, making it the only large economy other than Japan in the 1990s to show such a persistent deflationary trend, according to Chetan Ahya, chief Asia economist at Morgan Stanley.

The silver lining for New Zealand is that we largely export consumer products – i.e. agricultural goods – rather than coal and iron ore, like Australia. But any unwinding of growth in Asia will eventually put the damper on our own economic prospects. Watch this space.

Now back to the usual programming: parking! Eric Jaffe, “An unusual objection to less parking: It will make our city too nice“, CityLab:

Last week the college town of Champaign, Illinois, joined an increasing number of cities that have relaxed parking requirements on new residential development. The idea in Champaign, as elsewhere, is that removing these “parking minimums” will encourage affordable housing and discourage car-reliance. Developers who don’t have to build costly parking lots or garages can lower rents, and tenants who don’t have access to a free space will be more likely switch to mass transit or other alternatives.

Opponents of such moves usually say they worry that drivers who don’t have spots in their building will just compete for street spaces and increase traffic. It’s an understandable objection (if often misguided, since most cities have way more parking than they need, and proper pricing can keep the George Costanzas of the world from cruising for street spots). But it wasn’t the one Champaign planners got.

Instead, the University of Illinois at Urbana-Champaign “respectfully opposed” the measure on the grounds that sites around town would suddenly become more attractive to private developers. Such sites—current parking lots the clearest example—would never pencil out into profitable building projects under the old rules, but became instantly viable without parking requirements. That bothered the university, which hoped to buy the sites on the cheap as the campus expanded.

In other words, the university is opposing a policy change on the basis that it will benefit society by enabling more development. That’s certainly an … unconventional analysis.

Here’s a nice commentary on parks and green spaces from Andrew Alexander Price. I quite like his categorisation of green space in cities – if it has a name, it’s probably useful, but if it doesn’t, it’s probably just “useless filler” buffering an unpleasant built environment:

There is a critical difference between parks (usable recreational space) and greenspace (useless filler.) Greenspace is useless in that it is non-place, while parks are places. You can easily tell the difference – people are occupying parks and putting them to use, and a park usually has a name. Even if the park is tiny, someone loves it enough to give it a name (often even containing the word “Park”) like “Duane Park.”

Duane Park, Manhattan.

Nameless greenspace.

Greenspace exists as a buffer against the outside world. The public realm of autoburbia is pretty ugly. Most people do not want to see or hear a highway from their building, and so they set it back. Once you set your building back, you need to fill it with something.

This would look pretty ugly if it was just a flat gray surface from the road to the parking lot to the building.

Greenspace is unnecessary, because if your street is pleasant, property owners will get the most value by being located up against it. If your street is already beautiful, you do not need to add trees and other fillers to beautify it.

No trees or lawn, yet still beautiful and pleasant. Taxco, Mexico.

Now, three things related to cities and politics. From the right, the Economist’s Bagehot reports on the UK Conservative Party’s annual conference: “George Osborne’s plan to let boomtowns boom and failing towns fail“:

…what struck me most was not the battle to succeed David Cameron, but Mr Osborne’s policy announcements in two areas: infrastructure and devolution. Both were in-part reheated versions of previously unveiled policies. The government, the chancellor explained, would relax planning restrictions on brownfield sites, let housing associations borrow to build, speed up progress on infrastructure and let councils keep business rates (a business tax). But he also went farther: announcing that Andrew Adonis, one of New Labour’s most dynamic ministers, would head a new commission overseeing improvements to roads, railways and the like; that local government pension funds would be consolidated into larger beasts capable of underwriting investments in infrastructure; and that the government’s housing budget would be directed “towards new homes for sale” (more details to come, I am told). Most notably he said that the Treasury would no longer set a single, uniform business rate and that cities with mayors would have the freedom to hypothecate rates rises for infrastructure improvements.

These annoucements came in different parts of the speech but they belonged together; as a whole, they comprise a theory of how Britain is changing and what the state should do about it. This is revealed by a glance at the counter-arguments. Those who want planning rules to stay tight and infrastructure developments to proceed slowly claim that Britain should do more to use its existing stock of housing and infrastructure. Young people are forced out of the London housing market? Let them move to Hull. Trains between Manchester and Liverpool overcrowded? Cornwall is quiet at this time of year. Meanwhile the argument against liberalising business rates rests on (not invalid) concerns about equality. Letting councils capture local private-sector growth is a boon for thriving places like Leeds, Milton Keynes and Cambridge; much less so for struggling, post-industrial towns where businesses are closing and the young and entrepreneurial are leaving: Wolverhampton, Blackpool, Great Yarmouth.

What Mr Osborne is saying, then, is: allow the failing places to fail, but help people move to the boomtowns. Mothball Wolverhampton, Blackpool and Great Yarmouth and make it easier for Leeds, Milton Keynes and Cambridge (not to mention London and Manchester) to build bypasses, new railway stations, housing estates, tramlinks and cycle lanes. Why? Britain’s strength lies in city-based clusters of service industries, many employing university graduates; such places, in other words, possess the alchemical mix that allows them to capture the advantages of globalisation.

And from the left, the NZ Greens’ finance and transport spokesperson Julie Anne Genter discusses the difficulties of implementing a “Bright Line Test” to tax gains from short-term housing speculation:

The Bright Line Test will not be a proper CGT. It only applies to investment properties bought and sold within two years, although the official advice from Treasury originally recommended five years and certainly the majority of OECD countries with similar holding period tests are at least five years.

Source: Michelle Harding (2013), Taxation of Dividend, Interest, and Capital Gain Income, OECD Taxation Working Papers, No. 19, OECD Publishing, p33. Retrieved from: http://dx.doi.org/10.1787/5k3wh96w246k-en

The two year period is too easy to game because it is too short. Smart speculators will simply hold on to the title until just after the two year date has passed. Five years would be an improvement, but why have a threshold at all? If someone is making a profit from purchasing and selling property, why shouldn’t they pay tax on that income – just like all the teachers, nurses, engineers, and retail workers who pay tax on their income? It’s bizarre that people should argue they would be unfairly disadvantaged by having to pay tax on income earned from property. The tax is nowhere near 100%, so by definition, those taxed will still be making money on the sale of their properties.

Another problem with the bill as drafted is that it only applies to “residential” land. The legislation has to go to some lengths to try and define exactly what is and isn’t residential land. The principles of sound law-making and tax policy include simplicity, coherence and comprehensiveness. Making exemptions for non-residential land introduces added complexity and an effective loophole, which could have unintended consequences. The intention test for speculation applies to all land, so why should the Bright Line Test that buttresses that rule only apply to residential? If there is not a problem with farmland or commercial land speculation, then there is no cost to including it in the Bright Line test.

The saga of this Bright Line Test legislation shows the difficulty of making good policy in a political environment. A number of individuals perceive themselves to better off without a capital gains tax, because it means more tax-free income for them. That doesn’t mean the policy isn’t better overall for the economy and society.

While Genter’s article is largely focused on demand-side policies to cool off the housing market, she also briefly discusses the supply-side impact of planning policies. Interestingly, she seems to be hitting some of the same points as Finance Minister Bill English did in his recent speech on housing affordability. It’s worth reading in full, not least because English is taking a more nuanced and detailed view on the topic than I’ve heard from him in the past.

Along the way, he makes the economic case for cities:

Cities are one of the extraordinary inventions of the human race.

Studies have shown that cities are an engine room of growth. Incomes in cities are higher than elsewhere. That is one explanation for high rates of urbanisation.

Research indicates that when planning rules prevent workers shifting to higher-productivity locations, then there is a cost in terms of foregone GDP.

It’s only relatively recently that economists and politicians have understood the scale of those effects.

So when we’re talking about something as apparently dry as the Auckland Unitary Plan, we’re talking about a set of rules that will have a major impact on the city, on current and future residents – but also on the wider economy.

Calls out some specific regulations that have driven up prices:

Some progress has been made. A study examining minimum car parking requirements in Auckland showed the costs of that planning rule exceeded benefits by a factor of at least six.

That’s a rule that should never have been made. It has probably cost the economy millions of dollars.

Fortunately, now that we’re digging in to these issues, that rule has been mostly scrapped – and credit is due to Auckland Council for doing so.

And highlights the difficulty and complexity of writing a comprehensive urban plan:

Planners and councils have a very difficult job in planning our urban areas.

Cities are incredibly complex systems. They are the product of millions of individual choices.

The idea that a small group of people could understand what choices we’re making is asking too much of them.

Not because they are in any way incapable. But because the task is overwhelming.

The Auckland Unitary Plan is 3,000 pages long.

It’s trying to regulate everything from the size of bedrooms to biodiversity in the Waitakere Ranges. No one person could possibly understand all the trade-offs in that plan.

Which means many of its effects will be certainly be unintended.

Planners can’t know everything – so of course they can’t be perfect in making trade-offs on our behalf.

Successful planning requires an understanding of its own limitations.

Lastly, Wonkblog’s Emily Badger reviews a recent effort to codify “the 27 patterns that make up the world’s cities and suburbs“:

Stephen Wheeler, a professor in the Department of Human Ecology at the University of California at Davis, has spent many hours parsing Google Satellite images, inspecting from above the suburbs just outside Boston, or the maze of streets at the center of Cairo, or the complex that is the Kremlin in Moscow. And there are, he has determined, 27 basic patterns in how we’ve built the world around us.

Of course, there’s the traditional urban grid, that pattern of compact blocks and right angles you’d recognize in central Philadelphia or the heart of Paris. Then there are the rectangular blocks of Manhattan, the superblocks of public housing projects, the curlicues of subdivisions, and the lonely lines of country roads. There is “rural sprawl,” distinct from country roads. And there are the particular shapes that mark, on a map, how we parcel land for factories or malls or cemeteries (“land of dead,” Wheeler calls this last typology.)

Here’s a pattern that is echoed by the world’s airports and the land around them:

Your typical office park:

And a factory:

This one Wheeler calls “loops and lollipops”:

What’s interesting about these 27 categories that Wheeler has defined, covering the full range of development patterns in two dozen metropolitan regions he has studied worldwide, is that most of them are new. Relatively speaking.”We have had an explosion of different types of built landscapes in the last century,” says Wheeler, who is working on a book about these patterns.

If you read on, you can see his maps of spatial variations in cities’ street networks.

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  1. Interesting thoughts on green space from A.A. Price. To me it really does reinforce the old adage “beauty is in the eye of the beholder”.

  2. Completely agree on greenspace. It simply squanders land. But expect a lot more of this useless space in the future. The way the PAUP has been developed a few planners have said we need to intensify and then each department of the Council has been free to add as many rules as they want which will all prevent intensification. No one has looked at the whole thing and said the rules cant achieve the objective. We do greenspace at the front of commercial buildings because the rules require it, just as they require a landscape plan.

    1. +1.

      The City Centre and Mixed Use zones have come out OK, but most of the city is zoned for “greenspace”-ridden sprawl. Just maybe a bit taller than before. Apartment blocks surrounded by charmless, unusable landscaping. Big-box “business park” zones with massive strips of mown grass no-man’s-land on all sides. And minimum lot sizes everywhere – oh, the minimum lot sizes.

      Andrew Price and Nathan Lewis (who has some very similar things to say) I think have it all figured out with the “place vs no-place” theory. If your street is so crappy the buildings need to be buffered from it – or vice-versa – I think the problem is with the street and the building, and simply adding a buffer doesn’t fix the fundamental problem. Every square inch of space in a city should have *some* inherent purpose if it’s not built on, from an unspoiled nature reserve, to a park, to a playground, to a private yard. The only point of this landscaping is to make things further away from each other (and sometimes from the ridiculous view that stormwater treatment is a good use of central urban land).

      A city should be designed for people, people are going to be on foot if they’re to enjoy or use any of that city, and wasting space just makes it harder to walk.

    2. Julie-Anne’s comments on issues with the brightline test for property are interesting; I had no idea the proposal had so many loopholes and am surprised by the lack of attention this has been given in the media – given how much attention was given to the announcement in the first instance.

      And didn’t National criticize CGT policy for exactly the same reasons? If so, then it seems strange for National to now propose an alternative tax which suffered from similar issues (albeit with different loopholes).

    1. Yeah, something is weird with your webpage after the item about George Osborne’s plan. Lots of refs to the same Google maps URL in between each article quote, and the Stephen Wheeler images are all about 3x as big as the screen. I’ve tried IE, Firefox and Chrome (all on Win 7) – want to look into this?

    2. Yikes. Not sure why this happened. I’ve been away this weekend and had to put together the post on someone else’s computer. Perhaps that explains it. I’m fixing it now.

  3. The several-football-fields-worth of dull, empty green space in the middle of Brasilia, which you posted on 9 October, is a classic example of useless green space.

    I live in Canberra, which has an inordinate amount of useless, unloved green space (except it’s brown for three quarters of the year). But if you try to repurpose the slightest bit of it (the abandoned, weed-strewn former playing field of the closed public school, for example), the local residents’ action group will always protest vigorously. I think it must be something about people who’ve spent their whole live in low density, car-dependent suburbia and can’t imagine anything different.

    1. I lived in Canberra several years, and even in the inner suburbs it was a terrible pain to get around. It’s an example of how not to do things – and attempts to fix it have centred around building higher density clusters all at great distance from each other.

      And yet people love it. There’s a strong selection bias for people who live there. It’s sure to have negative effects on the ability of the Commonwealth to attract and retain the best talent, and thus provide the best services to Australians.

      1. Gordon Price, the very experienced Canadian urbanist answered with ‘Canberra’ his own question; ‘which is the most successful city built on a totally auto-dependant pattern’. Most successful in terms of function.

        I note they are planning to build a Light Rail line there now, so I guess it will soon no longer qualify. But it has always been the case that the argument against this assertion is that there is a significant place quality deficit in that city which rather undermines the answer. Or rather was his very point: If you want auto-dependency and functionality you get Canberra. Meh.

    2. I can understand that to some point. For many people experience tells without a car it’s not possible to get to a place 10 km away in less than an hour (or some other ridiculous amount of time). They have never seen that happening.

      The fact that you need a car to go somewhere is as obvious as the fact that you need a bridge to cross a river. Questioning that is considered ridiculous. I read a while ago about that “rite of passage of getting your driver’s license, and then you don’t have to ask mummy or daddy to ferry you around every time you wanted to go somewhere”. So sad. There must still be people who remember when that moment came when you learned to ride a bicycle.

      So what about my own experience? Well I live on Hobson Street now and:

      I can “drive” (that’s walk to my car, drive, find parking, and walk) to Newmarket in half an hour. If I would take a bus, half an hour will barely get me across the Grafton Bridge. The outer link is the best option, if one happens to be scheduled soon and it shows up on time. And yes, I know Google Maps tells me I can take eg. the 299 on Queen Street. I don’t care. I have since long learned that those buses often just don’t show up.

      I found this out the hard way, a couple of times. One time I parked my car in a wrong place so it got towed to the tow yard in Newton. No problem, I’ll get there on a bus, right? Wrong. I waited for a few different buses on Wellesley Street and Queen Street. No luck. I had to let that idea of taking the bus go and walk all the way.

      And to the other direction, if I want to go to Wynyard quarter, that’s a 20 minutes walk. There is not even the option to take a bus.

      I can’t understand how AT can fail so miserably to provide an useful PT service in a densely populated and central area like this.

      But what about bicycling? Well, in apartments you usually don’t have any room where you can put your bike (even though there usually are car parks), and when riding, some of the drivers around you have zero intention of keeping you alive. Most people can never be convinced to ride a bike here.

      And then if people are threatened by the suggestion of redirecting investment away from roads, I’m not surprised.

  4. As households have the proportion of their income spent on housing grow, the political pressure goes on governments to fill the gaps.

    Today we spend $2 billion each year on accommodation subsidies. 60 per cent of all rentals in New Zealand are subsidised by the Government.

    Wow. That’s a statistic to throw around. Talk about a failure of the market.

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