The Economics Textbook Pricing Wars
1 day ago
For today's entry I am happy to return to Washington Post commentator Roger Lewis, whose April 23 column analyzed market forces now favoring walkable neighborhoods over the automobile-dependent, sprawling subdivisions that characterized most U.S. land development in the late 20th century. In particular, Lewis—sounding very much like the esteemed professor of architecture that he is—says that now-declining "suburban planning and zoning templates were predicated on four key assumptions":
- America had an unlimited supply of land;
- Automobiles and road building, thanks to inexpensive and presumably inexhaustible supplies of petroleum, would forever satisfy metropolitan transportation needs;
- Grouping homogeneous land uses, not intermixing them, would best protect property values, especially for residences; and
- The only way to realize the American dream was to own and inhabit a mortgaged house.
Today, all four of those assumptions have collapsed or are in the process of collapsing. We now know that much of our land, especially in and around metro areas, should not be developed, because of risk (flooding, wildfire, landslides); limited resources (water); or ecological value. There is considerable variation in these factors from one place to another, but the supply of land in regions experiencing growth can no longer be seen as "unlimited." Gasoline prices are back up to four bucks a gallon and, as global supply declines and demand for oil grows in developing countries, are surely going to continue to grow over the long term.