Scientific Proof That Gentrification Will Hit Brownsville But Not Canarsie

Stephen Smith, writing in onion-esque form at the Observer, believes that gentrification in Brooklyn has finally reached its end game, and is calling Brownsville the last frontier (in Brooklyn at least.)

Well, if Brownsville truly is the end of the line, we should be able to compare interest in it to interest in Bushwick a few years ago. Those first steps: those pioneering hipster adventures out into wild urban frontiers, fueled by a burning question- "what's ACTUALLY out there?"- and a few PBRs, predate actual settlement. Lets check the Google trends:

This graph tells a very clear story! Bushwick has a very constant, if slightly increasing, rate of interest over the past 10 years. Which would make sense given what's happening on the ground. Until 2010 however, interest in Brownsville seems to remain flat. Isabella and Ferdinand holding court at Roberta's didn't authorize exploration until 2010, when it seems the fixie Nina, Pinta, and Santa Maria finally left for uncharted territory.

But Brownsville is over! It's obviously already been discovered. Lets compare this to the even more distant lands of East New York and Canarsie:

I'm not sure why there's such high variance screwing with the scale, but it seems like East New York and Canarsie are at least 3 years away from becoming as discovered as Brownsville is today. These are still magical lands, marked on maps as "there be dragons here."

The more interesting point in the article involves the South and East Asian immigrants filtering into these far flung neighborhood. The neighborhood I grew up in in the East Bronx, destined to forever be a boring backwater, is going through similar ethnic change. Ever since white flight in the 70s, city dynamics have been viewed as what's happening with white people vis-a-vis "undesirable" minorities. First the black people moved in and scared off the whites, and now the white people are displacing the blacks and hispanics. There are serious problems that are happening on both sides of this process, but focusing on just one process ignores everything else that's going on. Can you imagine hearing stories about what neighborhood the Asians are going to move to next? Flushing is so over, it's all about Bensonhurst now.

I think it's a good thing that we're not hearing things like this. Ethnic diversity is spreading through New York.  Recognize the negatives of gentrification and try to fight against them, but change your focus. Instead of focusing on how young white hipsters are expanding their sphere of influence in the city, focus on the more general trend that young people are more comfortable with living with people who are different than themselves, our formerly balkanized neighborhoods are starting to become less so, and this underlying trend has both positives and negative effects.

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What European Villages in China Really Mean

A friend of mine posted this photo series on his Facebook wall, and had an interesting comment on these Faux European villages that have been springing up across China:

You have to understand that there is little aesthetic education in China, especially the generation that grew up under communism that lacked charm (at least, the old type), so they have to look elsewhere to establish "charm". I wish they would just do what Asians are good at doing, minimalist, repetitive, modernist and futuristic glass and steal constructions. Maybe a bit colder, but at least a certain amount of authenticity!

Photos like these bring up interesting feelings when observed. On the one hand, they are very obviously large scale mass fabrications of successful European cities. They lack the soul and "authenticity" that the originals have, and therefore according to some pale in comparison.

On the other hand, good urbanism is good urbanism. I see amazing walkable city squares, dense city living, and cute townhouses that can serve as great templates for individuality to flourish as they age. It's aesthetically jarring to see classic European architecture look so brand new, but I also think the Chinese flora adds a unique touch to the landscapes. The Chinese brand of capitalism is one of top down organization; perhaps these kinds of pop up European villages are congruent with modern Chinese culture.

More importantly, if you believe that we should be focusing on building more densely and with more of an eye towards moving away from car-centric development, will "authentic" modern Chinese style be capable of achieving this? All modern style is influenced by car culture, and I'd argue we don't have a modern style that's truly pedestrian oriented.

This is why in American cities, urbanism is so tied to preservation. We have no modern model of what walkable space should look like, so the instinct is to preserve every single historic neighborhood because it's perceived as the best we have, even if development could increase supply, keep real estate prices under control, and divert environmentally unfriendly exurban development into cities with existing infrastructure.

An urban planner friend of mine addresses this concern at Republic of Austin when comparing development in Dallas to the lack of development in Austin:

I get it. Austin loves its neon signs, its vintage thrift shops in converted bungalows, and its trailer parks. Growth, however, is inevitable in this city and change is part of the process. Recognizing Austin’s morphology and transition from college town to major American city, Dallas may not be the poster child for what to avoid. In fact, Dallas may offer our city quite a few valuable lessons as we balance growth with quality of life. Both cities may find themselves in seas of suburban sprawl, but Dallas, quite honestly, has a head start on smart growth.

The key point here is urban growth is going to happen. If NIMBY forces win out and freeze a city in time, the end result will be a luxury city surrounded by unhealthy middle and lower class car dependent sprawl as the city develops. The question becomes how to handle this inevitable growth.

People perceive new development to be soulless, and fight hard to prevent it whenever they see it. This chases out all but the most profit driven new development, since anyone with aesthetic motives will begin siding with the preservationists. The more profit driven development is, the more soulless it will be perceived to be. A vicious cycle is born that freezes cities in place, and guarantees that any new development will look atrocious.

This is why I always try to point to examples of new developments truly enacting positive change. Via Verde in the South Bronx is perhaps the best example I can think of that shows how cities can evolve in a community driven, aesthetically pleasing way. Michael Kimmelman's review of the complex runs through all of the points. In comparison to tower in the park projects built in the past, this development had input from its future residents starting with conception, ensuring that its residents will be completely in control of their environment from the minute they move in. Kimmelman counters a common argument about how it's hard to justify paying for aesthetics in public housing by estimating it was about 5% of the total cost. If it improves outcomes for the residents, which is the point of public housing, and provides positive externalities for the neighborhood, it's worth it.

If all new development looked like this, I think we'd see a sea change in public opinion. Former NIMBYs would embrace change, and see that a city's identity is not just coded in its past, but coded in how it evolves into the future. In the meantime, at least for China, maybe it's best to recreate European villages.

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Do Old Houses Behave More Like Classic Cars?

Matthew Yglesias has used analogies similar to this in the past to describe how, theoretically, looser development restrictions should be in the benefit of existing home owners. One would think that these existing homeowners would benefit from tight regulations. In actuality, unbundling the complex good of "housing" as a physical depreciating product located on a speculative land investment, one sees why being able to do more with that land would be more advantageous to someone who owns it.

This applies to the vast majority of housing stock in the United States, but things begin to fall apart when you look at the very urban areas that are most affected by high rents caused by supply restrictions. Maybe a suburban tract home built in 1994 is a depreciating asset, but a Brooklyn brownstone is a collector's item.

Discounting the location and condition of a house, a house with historical charm and "good bones" will be worth more than a similar sized modern house. At first brush, it would seem that a historical house may behave similarly to a collectible car: depreciating at first and then appreciating as it becomes more classic and rare. But, there are a few more effects going on here.

There are two countervailing effects I can think of that effect historic houses in a neighborhood. First, lets ignore the positive externalities dense construction provide (stick with me here...) and consider only the fact that new construction is valued less than historic construction. As a neighborhood gets more and more new construction, the neighborhood as a whole begins to decline in value, which in turn causes each of the house + land bundles to decline in value as well. On the flip side of this, imagine being the one leafy side street with handsome townhomes in a neighborhood of imposing apartment buildings. Your house is now a collector's item, and even before taking into account the positive externalities of densities, your townhome would have positive price pressures because it is now a rarity.

One thing that's clear from all of this is it's slightly incorrect to put off more aesthetic concerns like this as people not thinking about money, as Matthew ends his article with. The complexities explained in his last article are not only non-economic concerns such as condo laws, but real forces that can be accounted for along with the speculative qualities of land and the depreciating nature of many houses.

I still believe these effects are smaller than the broader ones Matthew describes, but the fact is they do exist. A NIMBY's fear is that these considerations are not being taken into account at all, and more economically minded people would rather bulldoze a neighborhood into sterile oblivion in the name of progress.

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Measuring the Paradigm Shift That is the Sharing Economy

There are several issues with economic measurements that exist today. It's a known loophole, for instance, that the flurry of rebuilding activity following a natural disaster positively affects GDP numbers. The situation on the ground is obviously different than what is being expressed in the numbers.

Emily Badger writes about the implications of the new sharing economy at the Atlantic Cities. :Looking at these through the lens of economic measurement highlights emerging errors that may make measures as they exist today more and more useless. Consider her assessment of what sorts of goods lend themselves to the "shared economy of stuff":

The shared economy of stuff works best with assets that are expensive to own and infrequently used, like camera and music accessories, or high-end home tools. SnapGoods sells itself with the slogan “own less, do more,” a nod to the idea that our culture increasingly values the accumulation of experiences over assets.

Economic measurement is built around discrete transactions. GDP is a stand in for personal utility because it's assumed that if I buy something, I (or perhaps my household if analyzing from that unit) receives the value. If I buy a lawn mower, my household receives all of the benefit from that lawn mower.

The utility of having a mowed lawn is approximated by the cost of the lawn mower. In a traditional ownership economy, this makes sense. As sharing becomes a part of the mainstream economy, it will become clearer that the core concept behind the new sharing economy is in complete opposition to this assumption. A lawn mower doesn't intrinsically provide utility. If my lawn can be cut by sharing a lawn mower with neighbors, or even a service, I get the exact same amount of utility that I would have gotten if that mower were sitting in my garage. As Emily further articulates in the article:

All of these models – alongside bikesharing, coworking spaces, shared nannies – are really at the end of the day about efficiency, even if the shared economy simultaneously speaks to our more altruistic motivations to do right by each other and the environment. Ownership, by definition, implies idleness. Whatever you own that you’re not using right this second may be going to waste. Or worse, you’re wasting scarce money on it.

I'd take Emily's insight further to say that introducing formalized sharing into an economy completely decouples ownership from utility. To say that another way, assume that an economy is measured purely by the amount of lawn mowers sold. As people begin to share more, less lawn mowers will be bought. According to economic statistics, the economy is tanking, but in reality people are receiving the exact same utility as they were previously.

Discussions about the merits of economic measures have been around forever; Bhutan makes headlines when it bases its well being on Gross National Happiness instead of Gross National Product. This particular societal evolution however could lead to one of the most egregious errors in economic data ever seen, and perhaps could lead to a complete rethinking of capitalism as a whole.

To be clear, just because we're sharing doesn't mean we're becoming communist, but the transition from an economy based on ownership to one based on experience represents a paradigm shift that has no comparison. Even the Industrial Revolution, which changed our economy in countless ways, left this basic assumption unchanged.

One would probably have to go all the way back to the transition from a hunter gatherer society to an agricultural one to find a comparison. The trade off of technological advancement was a loss of the traditional ad-hoc social organization that existed in tribal societies. In order to act in the larger units of settlements, we needed formal organization, strict division of labor, and in most cases, a concept of private ownership.

With the advent of social networking, technology has finally caught up with us. We can see the beginnings of a more natural form of interaction within larger units. Within dense cities, social networking allows us to interact with each other in a "tribal" way. Humans naturally want to interact this way, and it's exciting to see technology finally approaching a point that brings us back to our roots.

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More on What is Scarce in an Abundant Society: MOOCs and the Future of Higher Education

My last post touched on the disruption of our current economy that 3D printing will cause, and how it's not entirely correct to say that we're entering a totally abundant world. The potential of MOOCs to disrupt higher education shows another side to what internet caused abundance really means.

Maria Bustillos at The Awl had a relatively damning analysis of MOOCs, comparing the positions of Aaron Bady and Clay Shirky.

She correctly identifies the tendency to simplify industries when trying to disrupt them. Making industries wildly efficient involves using hard measurements to drive production. For education, this results in high stakes testing, and evaluating teaching methods solely based off of those numbers. For non-personal industries this sort of cold approach makes sense, but it feels wrong when applied to education.

Maria correctly portrays higher education today as a bundle of services. "College" in America today includes not only a series of lectures, but the forming of a social network of like-minded intelligent people, interacting with professors during office hours, taking advantage of the academic community available to you in college, and the signaling that going to an elite institution provides. She also describes what makes higher education different from other sectors by invoking Baumol's cost disease, but misses an important connection between these two concepts. It's not accurate to simply say higher education suffers from Baumol's cost disease. Parts of the bundle of services that we currently define as higher education suffer from Baumol's cost disease.

Looked at this way, you can see why she mentioned that Shirky and Bady had more agreements than disagreements. they're talking about two different things, and both are neglecting to look at the whole picture. Lectures are very easily adapted to an abundant online format, but the community and professor interactions are not. The comment below is wiser than its snark would suggest:

Touring office hours seems like a fun idea! You have the beginnings of this with the current "celebrity professors." Some professors blog, others have podcasts (and these innovative professors seem to cluster in George Mason University's economics department.) I could imagine this sort of idea expanding in a more local way. A community college professor could become an expert in his or her field, and have periodic talks relating to lectures a group of students is going to.

This line of thinking leads to the problem of incentives and motivation. The hidden benefit of having educational services bundled is to force students to take advantage of the entire bundle. The positive aspects of community, social networks, and professor office hours are not explicitly stated as benefits of college, and cannot be commoditized in the same was as lectures can be.

Commoditizing lectures will be an amazing boon. Students who could previously not afford it will have access to college level and quality information. But, there needs to be a corresponding change in culture. Instead of automatically being placed in an educational environment, students will have to actively make the decision to seek out an educated community of like minded intelligent people.

On the professor's side, there will be less of an incentive to provide open office hours without a tenured university position. While I believe opportunities for students to form their own intellectual communities to accompany lectures will abound once this paradigm matures, professors do not have an incentive to add their expertise to these communities. With lectures largely free or minimally priced, I could see the role of government funding moving towards forming these networks of experts available for students.

Traditional college in America is a luxury. I don't believe there will be a world where everyone will be able to afford to take four productive years out of their lives to live in a dorm, meet new people, and occasionally go to lectures. With MOOCs and targeted government investment in an academic culture however, I believe everyone will be able to have a high quality university level education that we today equate to "the college experience."

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What is Scarce With 3D Printing

I ended up on an interesting line of thought tonight about what exactly the world will look like with ubiquitous 3D printing. 3D printing will bring in an age of abundance, but in a very specific way.

Once the manufacturing process is made costless, the only physical costs in any object will be raw materials. These materials will still be subject to the same laws of supply and demand as they always have.

Ideas will matter more. For designed objects, the design knowhow will be in demand, while for practical objects the technical knowledge will be more important. In both cases, the actual knowledge of 3D design techniques will be needed at some stage, and in either case, they will face the exact same pressures faced by media companies today. These ideas will be easily copied, and a system will have to be arranged to allow designers, engineers, and 3D artists to be properly compensated for their efforts.

For the first time however, this model will be applied to something completely new. Media companies had established business lines, and obviously tried to preserve those in the face of the unique pressures of the digital age. The ability to completely bypass the manufacturing industry has never existed before, and therefore the incentive structure surrounding it will necessarily be entirely new.

The economics of the future will be completely built around this fact. When "copy and paste" is applied to the real world, ideas, skills, and raw materials will have to interact in an entirely new way. We'll still have physical limits, but these will be expressed as raw material limits that will be immediately apparent to everyone. Ideas are no longer tied to physical objects, and can therefore no longer be priced as a "value add" to goods as they are today. Looking at it from this angle, it seems arbitrary that ideas were ever tied to physical goods, but in the future, we will need to come up with a way to properly incentivize people to create. The dystopian version of real world copy and paste is a world where creativity dies, society finds a way to function in a sustainable way, and continues eternally in a static world of no change.

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The Past and Future of Philadelphia

Aaron Renn's recent post on Philadelphia made me think of a few of the qualities that make it so unique. The other large Northeastern cities, New York, Boston, and Washington DC, have all followed similar tragectories: seemingly permanent urban decline followed by a drastic recovery. These trends apply to Philly as well, but it would seem they have taken a different form.

Aaron explains the fabric of Philly as being a collection of small towns without a real city identity. Steve W, in one of the comments, further explains the relationship between the University of Pennsylvania and West Philadelphia. One could see this in stark contrast to the relationship Columbia and NYU have with their surrounding neighborhoods.

Alan Ehrenhalt devotes one of the chapters of The Great Inversion to Philadelphia, and explains another unique character of Philadelphia: its concentration of row house homeowners. Moreso than any other comparable city, Philadelphia is a city of families who own their own row houses. Alan describes how in our new reality of demographic inversion, this hinders large scale developers which are more successful in other cities. In Philly, a single holdout is more likely to impede the development of a large scale modern apartment building in an improving neighborhood.

Taken together these yield some interesting conclusions about Philadelphia. The established low-rise community-oriented character of Philadelphia act as a moderating force for the city. The community will serve as a stabilizing force during decades of decay, but will also prevent it from feeling the current wave of gentrification (for better or for worse.)

While I wouldn't argue that Philadelphia was a safer place to be in the 70s than New York, Boston, or DC, I'd say its trough could be more compared to Detroit. In terms of the positive change, Philadelphia is still an anomaly on the east coast. It remains the cheap option to those who want the large city urban east coast experience. Even the most expensive neighborhoods in center city are extremely affordable when you're comparing them to other large cities in the Bos-Wash corridor. Of course this also means the poorer neighborhoods of Philly are more destitute than comparable neighborhoods in other cities, so while displacement hasn't happened to the degree it has in other cities, there isn't as much in city opportunity available to people from these marginal places.

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