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Spring 1999
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America’s Trillion-Dollar Housing Mistake: The Failure of American Housing Policy
by Howard Husock
America's Trillion-Dollar Housing Mistake.
 
  S oundings

Appalled by Sprawl?
Howard Husock
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Happily, critics haven't given a free ride to Vice President Al Gore's campaign to limit "suburban sprawl." Gregg Easterbrook in The New Republic and Michael Kelley in the Washington Post have jeered that Gore's desire to snuff out suburban development looks suspiciously like a way to protect the property values and privileges of the upper middle- class at the expense of the unwashed who would come to live in the tract houses or shop at the discount stores that suburbanization spawns.

What critics haven't pointed out, though, is that the urban policies that Gore and his boss, Bill Clinton, support—the vast, 30-year, government-led effort to steer capital to older city neighborhoods—helped drive development to the suburbs and create the putative problem the V.P. now warns us about. The Community Reinvestment Act, for example—which the Clinton administration enthusiastically backs—strong-armed lenders to cough up $681 million in loans in older urban neighborhoods last year. Many loans predictably went to nonprofit community development groups to fix up run-down apartment buildings and renew blighted inner-city commercial areas. Direct public investment through today's HUD "empowerment zones" or through such earlier federal programs as the Urban Development Action Grant also aimed at propping up economically impoverished city neighborhoods.

These interventionist policies have interrupted the market processes through which cities renew themselves. If regulators let the market work, land in these neighborhoods would become less expensive as old and no longer profitable uses for property were abandoned. Over time, developers and new immigrants would rediscover vacant lots and forsaken properties and put them to productive new uses. Instead, government interference has created a false market of "public-private partnerships" that props up failing apartment buildings and commercial areas. The interventions—together with high city taxes, labor costs, and environmental regulations—have stood in the way of recycling older urban areas for new development.

Confronted with these obstacles, developers seek the course of least resistance: the outer suburbs. At that point a shocked Al Gore cries "sprawl" and struggles to control development through public planning—a sure way to stifle the dynamism of cities. (Just visit Brasilia.) Far better to find means to boost real private investment in older urban areas and wait for the "sprawl" problem to correct itself.

 

 


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