Ed Glaeser writes:
Poor people come to cities because urban areas
offer economic opportunity, better social services, and the chance to get by
without an automobile. Yet the sheer numbers of urban poor make it more costly
to provide basic city services, like education and safety, and those costs are
borne by the city’s more prosperous residents. Taking care of America’s poor
should be the responsibility of all Americans. When we ask urban residents to
pick up the tab for educating the urban poor, then we are imposing an unfair
tax on those residents. That tax artificially restricts the growth of our
dynamic cities.
It is fair to say that urban dwellers receive higher positive and negative externalities from their neighbors, relative to suburbanites. I’m not sure why the bundle as a whole is unfair, least of all to the wealthier city residents (or why there is so much talk of unfairness to the wealthy in the first place), or for that matter why it is a significant marginal distortion. The net value of the externalities is surely positive for people who live in cities and pay the higher rents. All taxes involve some distortions but it seems like what is essentially a tax on city land does not involve a higher distortion than the average tax, if anything the contrary. What’s really the case for lower property taxes and higher federal income taxes, combined with a move against federalism?
If there is any unfairness, maybe it is toward the people can’t afford to live in desirable cities but would like to. If we lower the property tax burden in cities, rents will rise and this problem will become worse rather than better. The more general point is that urban land owners, not all residents, benefit disproportionately from good policy changes. Urban improvements have unfair distributional effects by the very nature of city land.
If there is a case for federalizing urban education and welfare, surely it refers to what will help the poor (if indeed that would), not what will help the urban non-poor. And are city residents even a meaningful class of people to which the concept of fairness applies in a significant way? Glaeser is very very smart but frankly I found most of this piece puzzling; perhaps I have misunderstood him.
“Taking care of America’s poor should be the responsibility of all Americans.”
More from the disease known as socialism. Does this guy even realize the garbage that he spews? This guy deep down must be craving an authoritarian One World Government. A need for massive wealth redistribution from OECD countries to Africa, developing Asia, etc.
“Taking care of the Earth’s poor should be the responsibility of all Earth dwellers.”
As long as we don’t invade Ubania, it’s OK.
The basic problem in Glaeser’s article is the word “should.” It is the conceit of economists that one can arrive at an answer to “should” by some simple logic without parsing through what Tyler refers to as the “bundle”–the horribly complex set of redistributions of costs and benefits that exist in every city–in order to accurately assess the change in social welfare.
Of course, Glaeser’s alternative to talking out of his ass is not a good one either. Any economist who proposes to parse that bundle to recommend a significantly different bundle, as if he could accurately account for the reactions of all those groups whose marginal costs and benefits would shift as a result of the change in policy, then pre-judge the change sufficient to be “fairer,” would have to have big kahunas–or more likely a total lack of common sense, or a God complex.
Ammianus, Tyler’s point is quite specific to urban property taxes. A significant portion of these falls directly on urban land rents, with no effect on residential choices. If anything, raising taxes on urban property lowers total costs by mitigating the distortionary effects of real-estate speculation – the problem is that it does so by “wiping out” part of the asset value.
Interesting how apt is Bastiat’s “service for service” observation.
The urban dwellers (and some suburban too) get services from the influx of the “poor” who get lower wages generally, but the wages, representing the services of the better off to those “poor” are “supplemented” by services derived as taxes through govt’s that serve the poor.
Thus, indirectly, the better off provide some reciprocal services by wages and some through gov’t services which the better off pay for as taxes instead of wages. Ain’t that the way it works Boss?
If the taxes are an unfair burden, raise the wages (pay that cleaner more) so the “poor” can use less services via gov’t; though don’t count on the political class to help in that kind of adjustment.
“Taking care of America’s poor should be the RESPONSIBILITY of all Americans.”
That view mistakes the office of “responsibility” as one of the forms of obligations.
Responsibility is an obligation (in human interactions) that comes into existence because of a specific relationship or contact (not contRact, which creates the obligation of commitments).
In the deontic sense, of what “ought to be,” as the morals of the Social Order may with commonality recognize and accept, an obligation may arise with respect to the less fortunate, the disabled, the incompetent, the deficient and many other ranks within the Order. But, absent some specific relationship or contact those obligations do not equate to “responsibility.”
Glaeser (who is generally considered a conservative BTW) argues that on net, people in cities create positive externalities for those outside of cities and those outside of cities create negative externalities on those in cities. If this is true, then he is correct that, by not internalizing these externalities, we are unfairly burdening city dwellers. The word “should” is accurate insofar as Glaesers call for a relatively lower tax burden on city dwellers would get us closer to an economic optimum.
Arguably, the current situation in the US is actually tilted in the wrong direction. Residents in “flyover country” as Smarty above calls it, get large net government subsidies from residents who live in a “big craphole multicultural and divirse and liberal city” (sic). I think the money flows to rural residents in part because liberals and moderates feel an obligation to help their poorer fellow citizens, who are disproportionately in rural (and red) states. However, it sounds like both Glaeser and Smarty would support eliminating the transfers that currently go to rural residents, so perhaps there’s some common ground there.
Guys,
Ed Glaeser would be rather surprised by all this liberal-bashing, because he is very clearly a conservative. He even has a regular column in the NY Sun!
It seems to me, though, that cities could unilaterally lower their numbers of poor by reducing the benefits they give to the poor. Poor people respond to incentives, also. If you think your city is too generous to the poor vis-a-vis the suburbs, this seems the simplest solution.
One thing that I didn’t understand – Tyler says that if you lower property taxes, then rents will rise. How is that? If you lower the taxes, then renting becomes more profitable, causing more entrants, and more supply, thereby lowering prices? Could someone explain how this is wrong?
Glaeser’s argument seems to assume that all suburbs are wealthier than their adjacent cities. A close look at Detroit, Chicago, and LA–three cities I’m familiar with–shows that this is not always true. Some of those suburbs are much more impoverished, and without a good number of wealthy urbanites to pick up the tab, as the main cities have.
Smarty–you’re an ass. I grew up in the country, have lived in big cities, and now live in a town of 20,000 that is too big for my taste. So we’d probably choose about the same size place to live in (and I’m also from, and living in, flyover country). But your vitriol toward cities says a lot more about you than it does about cities.
I understand the efficiency questions, but they seem to be beside Glaeser’s fairness point. Also, in places like Boston, incentive for poor people to live in urban areas is increased by zoning laws in wealthy surrounding towns (e.g. two acre minimum lot sizes), putting them out of reach of all but the very rich and preventing development. I don’t see why we should allow these people to avoid the burden of providing for the poor like this. Glaeser has written on the effect of such local zoning laws, and argued for weakening them.
I don’t understand Tyler’s argument that the existence of some positive externalities argues against mitigating such an unfairness. But Alan Gunn is right on crime — if city-dwelling generates more crime, the cost of this should be generated by cities.
There is a way to help the poor in education: Federal school vouchers. Give vouchers to Federal taxpayers when they file their tax return. One voucher = $5,000. One voucher for each child. We can reform education without the states help. They can use it for their own public schools or they could go to private ones. Who cares as long as we see over improvement in education.
The poor are also subsidized through transportation through below cost fares. State governments usually pick up the capital expenditures for mass transit. In Chicago, seniors ride free.
Foobarista — ride a bus!!! That will answer your question.
No, not the nice one that runs to the suburban community college. Of course you’ll find the well-off (or children of the well-off) on that one. Ride one that goes to the central bus terminal. Then you’ll see who the majority of bus riders are.
It’s true that most laborers have cars in this country, and that’s a good thing to remember when talking about carbon taxes or gasoline taxes. It will hit the working poor who use cars to commute the hardest.
1) A problem arises in both Glaeser’s and Tyler’s argument about the negative externalities imposed on urban residents, especially the well-to-do. Namely? Historically, starting in the late 19th century and well on into post-WWII, the increasingly large middle classes of all ethnicities would move away from the center of cities and the manufacturing areas usually located there — think of ports and train depots — and so as they moved out, building new houses and apartment buildings and later condos along the sprawling periphries of the cities, the increasingly vacated neighborhoods they left would be available for the more prosperous immigrant workers and aspiring middle classes.
Virtually every city in the US with large immigrant working-class neighborhoods in the central areas benefited from this outward exodus of the ever larger pool of relatively prosperous middle class Americans — including, please note, 2nd generation immigrant families.
2) The outcome?
A huge positive benefit (externality) for the poor, who now found more and more abundant housing of various kinds beyond the slum-areas where the immigrants — including an influx of African-Americans into northern cities after 1914 — were originally packed. That desirable spill-over has to then be subtracted from the growing infra-structure costs of subsidizing mushrooming tract-built suburbs that only began in the 1950s and really only boomed as the quality of urban life deteriorated in almost all cities by the 1960s . . . growing crime, frightening street violence, increasingly unsafe schools, deteriorating educational levels and so on — almost always the result of dysfunctional patterns of single-mother headed families and improperly and even pathologically socialized children who, when they became teen-agers, joined violent gangs, increased the illegitimacy rates, and were in large part the cause of soaring discipline problems in public schools.
3) Enter, from the mid-60s on, the growing costs imposed by the increasingly dysfunctional and violent inner cities and immediate surrounding areas . . . booming in size and numbers after 1965 thanks to a huge influx of poorly educated Hispanic immigrants. Themselves hard-working and peaceful residents , the large numbers of their children and grand-children have turned out in way too many cases to have quickly assimilated to the pathological gangsta culture that infected more and more native-born African-American and Hispanic-American teen-agers and young adults from the late 1960s on.
4) It has been a disastrous social change. No need to spell it out in detail.
Note only that the kind of “welfare subsidies† for the poor that Glaeser advocates now on both efficiency and equitable grounds had a decidedly aggravating impact in the surging social and psychological pathologies of the poor native and immigrant inner cities neighborhoods: huge federally subsidized encouragement, denied by liberal scholars for two decades, to bursting illegitimacy. The origins of that welfare-disaster go back to the Lyndon Johnson’s Great Society programs, especially welfare for families with dependent children.
The outcome here?
From a level of two-parent families in the black American population in 1950 or that was virtually indistinguishable from the white level — roughly 87% vs. 89% — illegitimacy in the African-American population soared in a little more than 25-30 years to over 69%. A major if not only cause? As established by a talented group of statisticians, economists, sociologists, political scientists, and social psychologists appointed by the American Academy of Sciences in the mid-1990s, the statistical evidence clearly showed that every 10% increase in welfare payments entailed an 11% increase in illegitimacy.
5) All these disastrous social changes from the mid-1960s on then led more and more middle class families who once lived in stable, peaceful urban neighborhoods beyond the original boundaries of the inner cities to flee to the suburbs. Yes, their flight has been subsidized by government at all levels for infra-structural reasons. Similarly, that flight has lowered the tax revenue of city government. But then these negative externalities have to be set against the costly causal thrusts emerging out of the huge negative spillovers with roots in the expanding populations of the decaying, pathologically marked inner city areas.
6) If, then — beginning essentially in the 1980s in most urban areas — the younger, more adventurous middle class adults grew tired of suburban ennui and were attracted to try city-life, it’s in part not simply because of the flight-from-boredom, but also because of better, more costly policing methods, a bursting scale of imprisonment that keeps violent offenders under lock, and of course urban governments strenuous efforts to try rebuilding decayed neighborhoods, tout lower costs of housing in the areas in and around downtowns, and seek to attract businesses (including tony restaurants, cafes, movie houses, concert halls, art galleries and the rest) that added to the enticement.
So what is the balance here of who owes whom for various positive and negative externalities? Suburbs are losing good citizens who would pay taxes to improved urban city neighborhood that have been populated mainly by ex-suburbanites or in a city like Los Angeles from the far-peripheral areas of the urban center. The tax base of Los Angeles has grown noticeably, and though I can’t give you figures whether that has offset the costs of subsidies to central-LA redevelopment, note that the returned middle classes have to pay for their own private schooling and private security guards or security drive-by and doormen. And yet thanks to their taxes, they support a largely dysfunctional public school system in which only about 20-25% of the student population is white (and mainly in the more peripherally located neighborhoods) while the middle-classes in L.A. — whether white or black or Hispanic or Asian — subsidize not just unsafe schools in large numbers that educate less and less well (despite claims to the contrary by bureaucrats), but an increasingly costly school bureaucracy that pays its staff very nicely, thank you.
Where and what the obligations then of suburban areas of middle class people of all ethnicities or races in the greater L.A. area to all this complexity are supposed to be seem absent from the Glaeser article and like-minded pieces.
7) Economists, to just drive this point home, seem particularly ill-suited to calculate theses externalities and obligations that supposedly follow.
The reasons are no doubt complex — assumptions about human behavior and motivation that assume that they apply to all people, irrespective of local social and cultural conditions; a lack of understanding, then, about why just changing incentive-systems might not work for, say, the remaining poor blacks and Hispanics in inner cities . . . especially those who have grown up in gangsta, bourgeois-hating cultures;. a failure to recognize that no social scientists have a very good understanding of deep-rooted social problems that can’t then be easily manipulated by a tax here, a subsidy there, a redistribution of income here-there-and-everywhere; and an ability to foresee the unanticipated long-term consequences of such government interventions inspired by this statistical study or that.
Whether the error value is so insignificant it can hardly be seen except by microscope. (Actually R2 in virtually all policy-oriented studies put out by social scientists, including economists, are below .5 †¦ and that figure rests on often dubious assumptions that enter the regression models. If they are logistic regression models, moreover, the interaction variables are extremely difficult to manipulate even technically.
Michael Gordon, http://www.thebuggyprofessor.org
Part of the problem seems to be social services. City dwellers want them, suburbanites don’t. Why should the latter pay for them.
A great many suburbanites commute to the cities and so benefit from them. Others don’t. Why should all of them pay for it? I propose urban apartheid: foreigners from outside the cities who wish to come and work cannot just go as they please but must be charged to prevent them from free-riding.
Schweitzer, not all the poor are working class. There are also the underclass. Many of those that do have jobs work for the government. If those public services were eliminated, it is highly doubtful that the rise in wages would match it. Even assuming that all of the public services to the poor were substituting for wages, the demand would still go down if the consumers had to pay for it.
TV wrote: “Central city residents pay: High rents of urban land + High property taxes
“Suburban residents pay: High rents of urban land + Lower property taxes
“But both central city and suburban residents enjoy the same positive externalities that cities provide.”
Correct me if I’m wrong, but wealthy central city residents are free to move to the suburbs, are they not? That they do not suggests that perhaps suburbanites DON’T “enjoy the same positive externalities that cities provide.” It’s one thing to live in New Jersey, quite another to live in Manhattan. It’s one thing to sit in your car for an hour in traffic on a bridge or in a tunnel, and quite another to walk outside and have all the amenities of the city at your doorstep. Would you agree? If so, allow me to reformulate your expression thusly:
Central city residents pay: High rents of urban land + High property taxes
Suburban residents pay: High rents of urban land + Lower property taxes
But central city residents are able to enjoy the positive externalities that cities provide to a much greater extent than suburbanites. Therefore let them bear the cost of their decisions.
By the way, the sheer nonsense of all this is really painfully obvious when you look at the “central cities” of most of the south and west; indeed most of the country apart from a handful of cities. Does any of this make any sense in Phoenix or Los Angeles or San Jose? Ridiculous.
I commute to New York several times a year by plane. Should I pay for all those negative externalities to? (And I’m not convinced I don’t.) Should New York tax the residents of my state? Where does it end? Perhaps the whole world should pay for them?
anonymous at Mar 3, 2008 4:45:40,
If you want to argue against subsidizing flyover country, you’ll get no argument from me. “But you do it too!” isn’t an argument. Two wrongs don’t make a right, just an additional mistake.
Our “defense” expenditures have very little to do with actual “homeland defense”–our military exists to project power to foreign lands, not protect our own lands. To see this, just compare our military expenditures to those of other developed countries (with quite large cities).
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