Placemaking

I wish I could read this paper from Ed Glaeser and Joshua Gottlieb, but here’s an extract:

Should the national government undertake policies aimed at strengthening the economies of particular localities or regions? Agglomeration economies and human capital spillovers suggest that such policies could enhance welfare. However, the mere existence of agglomeration externalities does not indicate which places should be subsidized. Without a better understanding of nonlinearities in these externalities, any government spatial policy is as likely to reduce as to increase welfare. Transportation spending has historically done much to make or break particular places, but current transportation spending subsidizes low-income, low-density places where agglomeration effects are likely to be weakest. Most large-scale place-oriented policies have had little discernable impact. Some targeted policies such as Empowerment Zones seem to have an effect but are expensive relative to their achievements. The greatest promise for a national place-based policy lies in impeding the tendency of highly productive areas to restrict their own growth through restrictions on land use.

Ryan Avent observes that one implication of this is that we ought to rebalance our transportation funding priorities away from roads and toward more transit. “Transportation spending has historically done much to make or break particular places,” they write “but current transportation spending subsidizes low-income, low-density places where agglomeration effects are likely to be weakest.” That means we should look at places that are already relatively dense (and therefore have agglomeration effects) and work on letting them grow denser to take advantage of those effects. That means rolling back restrictions on land use, and upgrading the kind of transit services that support a high-density neighborhood.