Category Archives: economics

Can urban planning suck the life out of your city?

It can if done poorly

London is gloriously un-plannable and horribly unplanned. From the Romans to the Romanians, the immigrant tribes who now call themselves English have been drawn to our uniquely cosmopolitan capital. This heterogeneous cultural mixture may help to explain the lack of appetite for plan-led “improvements” or urban reshaping. There is no common cultural foundation upon which to create a formal grand plan.

On my bedroom wall hangs an artist’s perspective of the plan Wren touted for the City after the Great Fire of 1666, fleshed out with buildings of classical design, looking like a beaux arts continental city. It is the first thing I see when I wake every morning and provides a constant reminder of the dangers of “master-planning”. If Wren, or any other planner, had had their way London would have ended up like Paris, Bath or Milton Keynes – architecturally inspired, but difficult to adapt to changing and unforeseeable future needs. Paris is formally planned, lacking in cultural diversity and inward-looking – no one can become a Parisian. London is unplanned, culturally diverse and a world business centre – anyone can become a Londoner.

Of course un-planning only takes you so far as the author continues.  Without planning (more specifically, land use restrictions), your entire city will suffer.

But while gloriously un-plannable the capital needs to be loved if we want to avoid the phenomenon of “lights-out London”, with homes just used as boxes for spare cash. It cannot survive without careful management and subtle control. Left to untrammelled market forces it will become an unstoppable nuclear reaction. George Osborne has claimed our dizzying house price inflation as his miracle of “economic growth”. Long gone are the days when planning was the bag of a politician of intellectual calibre, such as Michael Heseltine.

He goes on

Workers and residents want comfortable accommodation near the ground, with attractive spaces and facilities close at hand. Manhattan, the City and Canary Wharf can justify building office towers because their land area is constrained and demand for commercial space high. Office towers can be built in tight, sustainable clusters. This minimises their environmental impact and maximises their economic advantage – if they are serviced by a high-capacity public transport system.

The same does not hold true for housing. The highest density residential neighbourhood in London is Chelsea, which is gloriously free of towers. In the 1970s, the Greater London Council created some of the highest density housing estates. These six- to eight-floor redbrick developments were built around the edges of their site, leaving attractive central gardens. Lillington Gardens, in Vauxhall Bridge Road, is a fine example, beautifully maintained and highly popular with its residents.

A residential development in Central London is now likely to make four to six times more profit than an office scheme. Without planning control, much-needed offices have given way to piles of “safe-deposit boxes” rising across the capital. These towers, many of dubious architectural quality, are sold off-plan to the world’s “uber-rich”, as a repository for their spare and suspect capital. The purchasers are attracted by London’s rocketing residential prices, born of our unusual fixation on home-ownership. But many chose not to live here.

Rented housing is a much more efficient use of scarce urban land, because people only rent what they need. London’s house price inflation is also being fuelled by that “buy-to-let” property boom, which has aggravated the situation by reducing the security of tenants. We need an expanded, professionally managed, residential rental sector with dependable tenant security if we are to have any chance of addressing London’s housing crisis. This would provide equal scope for development investors and the construction industry but also provide Londoners with what they need – not just a global financial laundry cum bank vault.

The Treasury now controls the policies, delighting in the destruction of the last tools of planning. The Use Classes Order has been neutered to let offices, and soon shops, be turned into homes without planning permission. Rather than stimulating the reuse of empty buildings, this measure has seen the rapid disappearance of much-needed office accommodation in prime locations. Without land-use control, planners are powerless.

Mayor of Glendale, host of the Super Bowl, doesn’t get a ticket to attend Super Bowl

From the New York Times

Jerry Weiers lives less than two miles from University of Phoenix Stadium, where the New England Patriots will play the Seattle Seahawks in the Super Bowl on Sunday. Weiers also happens to be the mayor of Glendale.

Yet as politicians, chief executives and tens of thousands of well-heeled fans rub shoulders that day in the stadium in Glendale, a western suburb of Phoenix, he plans to watch the game on television in his living room, because he has not been offered a ticket.

“It was on my bucket list, but it’s not going to happen,” Weiers said. “If I had my druthers, I’d rather be in the stadium. I’ve had people say that if I was a team player, I might have gone to the game. But I’m a team player for my city.”

Weiers is not shy about making that point, so he is not surprised that he was snubbed. Critics have called Weiers ungrateful because the Pro Bowl and the Super Bowl will draw thousands of visitors to his city, and some of them will visit restaurants and hotels there. Glendale will also receive lots of free advertising during game broadcasts, though a vast majority of people visiting Arizona for the Super Bowl will visit the city only on game day.

James Cassella, the mayor of East Rutherford, N.J., was also criticized after he complained last year that his borough had been overlooked even as the Super Bowl was played at MetLife Stadium there.

But the friction in Glendale is acute because the city has a reputation for betting big on sports — and paying a price for it. In the last decade, the city spent hundreds of millions of dollars to build a hockey arena for the Coyotes and a spring training complex for the Chicago White Sox and the Los Angeles Dodgers.

The hope was that the facilities would prompt residential and commercial development. But when the recession hit in 2008, the Coyotes went bankrupt, the mall next to the arena foundered, and the city was overwhelmed by its debt payments and was forced to slash public services.

“The city of Glendale is the poster child for what can go wrong” when a city invests heavily in sports, said Kevin McCarthy, the president of the Arizona Tax Research Association. “You don’t want to be building stadiums and not be able to hire police officers.”

Glendale is by no means the first city to have sports facilities turn into albatrosses. Cincinnati and Miami, to name just two, built stadiums for wealthy owners in deals that backfired.

But the scale of spending in the city of 230,000 residents is unique. According to Moody’s Investors Service, Glendale’s debt is equal to 4.9 percent of its tax base, nearly four times the national median and twice the average rate for cities in Arizona. More than 40 percent of the city’s debt is dedicated to paying off sports complexes.

What the NFL does to Super Bowl host cities is a crime.  NFL owners want to host a big party and the taxpayers pay for it.  It is insane.

As for his Super Bowl ticket?

Whether that attitude gets Weiers invited is another question. Cassella, the East Rutherford mayor, said that after stories surfaced that he, too, had been unable to get a Super Bowl ticket, Jim Irsay, the owner of the Indianapolis Colts, invited him as his guest. John Mara, an owner of the Giants, sent him a parking pass.

Will Saskatchewan Fall into Recession?

Will Saskatchewan experience a recession because of falling oil prices?

The Conference Board of Canada predicts this drop will cause Alberta to slip into a recession by the end of the year. Jeff Rubin, the author of “The End of Growth” and former chief economist of CIBC World Markets believes the dip in the sector could affect Saskatchewan as well, though not as seriously.

“I don’t expect Saskatchewan or Newfoundland to be as adversely affected as Alberta,” Rubin said.

“But it’s going to impact the economy, it’s going to impact tax revenues. Governments are going to be challenged in the sense that if they don’t challenge spending, they’ll see their deficits go off side.”

It could also affect property prices.

The Conference Board of Canada predicts that Alberta will slip into a recession before the end of the year. Rubin echoes that warning. He said Alberta could experience its worst recession since the late 1980s.

At the end of the day, Saskatchewan will be okay because we have what the world needs.  It may not be as great as it was in 2009 but we will be okay.  That being said, we are so reliant on commodity prices that these kind of dips are going to impact us forever with no way out.  In that way the new Saskatchewan under Brad Wall isn’t a lot different than the old Saskatchewan under Grant Devine or Roy Romanow.  Like the rest of the world, the global economy will always have a big impact on us for good or for bad.

Cam Broten has said before that he wants more eggs in more baskets.  I think we all do in Saskatchewan but man is it hard to do.  I posted before about Alberta’s struggles in diversifying their economy and the same thing has happened here.  I agree with diversification but we are a province of a million people and there are going to be times that the world economy conspires against us and makes it really hard.  This is one of those times.

What is Obama’s Legacy?

New York Magazine asked 53 historians what Barack Obama’s legacy will be

Almost every respondent wrote that the fact of his being the first black president will loom large in the historical narrative — though they disagreed in interesting ways. Many predict that what will last is the symbolism of a nonwhite First Family; others, the antagonism Obama’s blackness provoked; still others, the way his racial self-consciousness constrained him. A few suggested that we will care a great deal less about his race generations from now — just as John F. Kennedy’s Catholicism hardly matters to current students of history. Across the board, Obamacare was recognized as a historic triumph (though one historian predicted that, with its market exchanges, it may in retrospect be seen as illiberal and mark the beginning of the privatization of public health care). A surprising number of respondents argued that his rescue of the economy will be judged more significant than is presently acknowledged, however lackluster the recovery has felt. There was more attention paid to China than isis (Obama’s foreign policy received the most divergent assessments), and considerable credit was given to the absence of a major war or terrorist attack, along with a more negative assessment of its price — the expansion of the security state, drones and all. 

Alberta has already tried to diversify it’s economy. It failed

From the Calgary Herald

As for policy, the Alberta government tried to diversify the Alberta economy in a deliberate fashion back in the 1980s and early 1990s.

Starting under then Premier Peter Lougheed and also under his successor, Don Getty, the provincial government provided loans, loan guarantees and equity stakes to companies in the non-energy sector.

In one example, the provincial government backed “made in Alberta” banks, trust companies and investment firms. After the early 1980s recession and then a mid-decade collapse in oil prices (to $10.25 a barrel in April 1986, down from $26 in December 1985), Alberta’s real estate values also plummeted. That took down many of those same provincially guaranteed financial institutions, themselves heavily invested in real estate.

The price tag to the provincial government for that diversification effort was $1.8 billion, for everything from failed loan guarantees to partially covered consumer and investor deposits.
In another diversification attempt, the province also loaned, guaranteed and took equity partnerships in everything from a forestry company to a meat packing plant, a provincial bitumen upgrader, a waste treatment plant and a high-tech company. By the early 1990s, defaults and foregone capital investments from all of the above cost the province $2.2 billion — in addition to the $1.8-billion financial sector collapse.

These efforts didn’t help Albertans adjust to a new reality or diversify the economy. It was simply activist industrial policy, where governments pick winners and losers. The latter cropped up more regularly than the former.