Jane Jacobs - Death and Life of Great American Cities

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I was encouraged to read this book by Michael Gormly, and I finally took the plunge and gave it a read. It was indeed fascinating. I found it an interesting counterpoint to the Georgist sentiments I was aware of. This article is something of a follow up to my article on housing affordability and Georgism. I would have added it as a comment, but I've not figured out how to have html in comments ( one day I'll hopefully figure this damn confusing Drupal thing out ...).


In any case, you start to realise that a lot of bad things can happen in a city, which have to do with urban planning and governance and to some degree economics - and while Georgist ideas are broadly speaking "fairer", they do ignore some important interactions.

Jacobs focuses on "Great American Cities", but the lessons are still broadly relevant. For Jacobs effective city districts have an ability to cope with an influx of strangers. Cities have regional and governance issues - for a region to be effective, it must be able to draw on its own strength and lobby higher reaches of Government. It is important, for example, that city block be small to emphasise cross-fertilisation. These are important elements, ones whose utility seems independent of just how land is taxed, and the incentives that result. The market, left to itself, cannot be relied on to address these issues; "incentives" are what Georgists (amongst others) rely on.

Of course, it is an historical US experience. Our problems may be a bit different. Maybe we don't have slums which are problems in the same way, and we tend not to have long streets which isolate people. But still, housing *remains an issue*, and I think Jacobs' insights remain pertinent, helping us to figure out where and how we've lost our way.

Jacobs has a finessed view of capitalism, perhaps what you'd expect from a US writer. She endorses the contribution that individual business people and entrepreneurs, but does not endorse "the market" or ideas that left to itself prices and the market act to everyone's benefit.

According to Jacobs, business people can be not just people making a profit but rather also contributors to the community.Monitoring the streets, minding keys and special orders that are "not a problem" are some of the things she mentions. However, as the market becomes more vigorous and margins tighter, businesses can no longer afford to do this. They become sausage machines, churning out customers who have purchased standardised products and services. This is a consequence of the market, forever seeking greater "efficiencies" and we lose more than we gain into the bargain. But markets do not value these important and significant intangibles.

Now, no doubt there are the lazy business owners who do not contribute to the community, who kick up their heel and pocket the margin for themselves. But the fact remains that, the more vigorous the economy, the tighter the margins, the less able business people with a community conscience will be able to express that conscience.

Jacob celebrates the developers who think about the future, and think about the mix of tenants they have, trying to support less profitable businesses to ensure their development sustains diversity. Left to "the market", we would have a barren monoculture of businesses who can pay the highest rent. This the sting in the market's tail, and while Georgist taxes might moderate it a little, it would nevertheless persist. One of my clients tells me that shopping centres all try ( or at least pay lip service to ) to obtain a "mix" of tenants, including some who are less profitable and pay less rent, rather than maximising rents in the short term. Point is, this is not the idealised anonymous operation of the market - it is about individuals within the market acting with foresight, not as idealised naive market participants.

Yes, there are people whose "land banking" activity is pretty selfish and destructive - something I wrote about. But, equally, there are principled developers too. You need to appreciate both sides of the picture.

It is here that I see what you lose in making economic abstractions - of supply and demand curves, of rates of return and similar. Yes, these notions are powerful tools. But they abstract away the fact that participating in the world are real people, with values and their own decisions to make - they are not the idealised economic agents of theory.

And the market can destroy itself with its own success - as an area becomes more vigorous, the rents go up, which less profitable businesses can no longer; they drop out and the area becomes a barren monoculture which no longer attracts people. The market is like the Hindu God Shiva, which can both create - and destroy. "Market incentives" can be a destructive, rather than a positive force, in their way.

Jacobs embraces diversity - and rails against "precincts", much as many appreciate them. She sees this as a hold over of antiquated ideas of"people living neatly in their place" ( my expression ), while their are in fact business and social synergies resulting from a "mixture".

Government and other public buildings have a part to play, but in interaction with private initiatives. We need to walk past restaurants to go to a theatre or museum, which benefit the restaurant - but a range of possibilities around the building add to its status too.

Private money and development are important in improving areas. Much as we may worry about the impact of development, without development an area will never improve. But, just as private money is an enabler, it has three problems - one is the conservatism of developing where other businesses have taken the lead - so promoting a monoculture; another is that loans may be denied in areas where it would make a real and positive difference; a third is that too much money feeding dense development over an area can prompt a monoculture.

An important thing is the diversity of building types and rents - so that low margin businesses can operate nearby high end businesses.Naive ideas about land value and Georgist LVT might, however, prompt a high-end monoculture in pursuit of rents to cover the uniformly applied LVT. There's a balance between ensuring economic activity whose intensity matches the value of the land, as compared to the worth of diversity, which may not maximise rents.

There's some intriguing ideas in Jacob's book - definitely worth reading!