Quality of Life, Human Settlement Patterns and $100 Oil

Now that the price of petroleum has hit an all-time high of $83 per barrel, the Wall Street Journal is anticipating the impact of $100-per-barrel oil. Many analysts believe that tight supplies, a weaker dollar and continued demand growth — China, India and other developing countries are reaching a stage where millions of people can afford automobiles — will conspire to push oil prices for Americans ever higher.

A front-page article in today’s Journal notes that the United States economy could probably survive record prices better than in the oil price shock of the 1970s because “U.S. households today spend less than 4% of their disposable income at the pump, vs. over 6% in 1980.”

I’m not one of those Jeremiahs who believe higher oil prices will spell untold disaster. The beauty of a market economy is that it is adaptable. As long as we don’t enact counterproductive, Jimmy Carter-era price controls and “excess profits” taxes on oil companies — something we cannot take for granted with our current Congress, alas — higher prices will create incentives for businesses and consumers to conserve energy use, spur the oil giants to extract oil in locations once considered uneconomical, and encourage entrepreneurs to develop renewable fuels and other alternatives.

But there is no gainsaying the fact that $100 oil will hurt. In 2004, the last year tracked by the Virginia Department of Motor Vehicles, Virginians consumed 5.2 billion gallons of gasoline. If the price of petroleum increases another 25 percent, that would translate into a roughly 50-cent hike in the price of gasoline and a $2.6 billion hit to Virginians’ pocketbooks. The impact on Virginia would be harder, I might add, than on the U.S. as a whole because Virginians consume more gasoline per capita.

There are two ways for Virginians to respond. One is to drive more fuel-efficient automobiles. The other is to drive less. But “driving less” is only a theoretical option when Virginians live and work in scattered, disconnected, low-density regions with limited shared-ridership services.

As I argued in “Measuring Prosperity,” the ultimate goal of public policy in Virginia should be to raise Virginians’ living standards and quality of life. Indeed, because of the progressive nature of the federal income tax code, lowering the cost of living can be a more cost efficient of boosting living standards than engineering higher incomes. If public policy helps raise incomes by $1, the federal government takes as much of $.40, depending on an individual’s tax bracket. By contrast, if public policy reduces living costs by $1, the savings is not counted as income, it’s not taxed, and the taxpayer enjoys the full benefit.

I find it remarkable that fiscal conservatives who berate the federal government for excessive taxation fail to make the connection to public policy on the state and local level. Business-As-Usual governance practices have given us auto-centric human settlement patterns that result in people driving greater distances, burning more gasoline, polluting more, adding more to congestion — and enriching Uncle Sam. Achieving Fundamental Change in human settlement patterns would seem to be in the best interest of everyone except those with a financial stake in maintaining the status quo. There’s no time like now to start enacting Fundamental Change!

(Ritual disclaimer: I do not, not, not, repeat NOT, support social engineering. I do NOT advocate forcing people to live in townhouses or ride the bus. I advocate (a) making people pay the full locational costs of where they live and work, (b) reforming zoning codes and comprehensive plans to allow developers more freedom to build the kinds of communities that people want to live in, (c) giving entrepreneurs more latitude to provide market-based transportation and energy solutions, and (d) maximizing the array of choices available to consumers. The result, I believe, will be more energy-efficient transportation systems and human settlement patterns.)

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36 responses to “Quality of Life, Human Settlement Patterns and $100 Oil”

  1. Anonymous Avatar

    Higher fuel costs will change the locatonal cost of where people live and work. It might do more than the environmental movement has ever done. But it might not. In my case, I burn a whole lot more fuel farming than I do commuting. Which one do you think will stop first?

    It will be a nice experiment to see if people elect more compact living arrangements in the face of higher oil prices. If they don’t, then the smart growth crowd will have some splainin to do.

    I don’t see that millions in China and India will be able to afford automobiles (as we know them) with $100 oil, or that the affects are for Americans alone.

    Driving greater distances, burning more gasoline, polluting more, adding more to congestion are not entirely mutually related. We can still drive greater distances, burn less gas, pollute less, and spend less time in congestion, if we choose to.

    If we can also drive less and still achieve the others, so much the better. But it is not clear that there is s settlemtn pattern that will allow it. It is not clear that if there is we would choose to live that way. It is not clear that if there is such a pattern that it would cause less damage or cost less than what we have.

    The best way to find out is to let the market worry about it, in which case there is no point in promoting fundamental change, all we have to do is wait for it.

    “If public policy reduces living costs by $1, the savings is not counted as income, it’s not taxed, and the taxpayer enjoys the full benefit.” Now you are talking. Let’s not have public policies that cost more than they are worth, and lets be honest about figuring out what that balance should be.

    While we are at it, lets admit that situations change, we sometimes make mistakes, and nothing is forever. Let’s be willing to re-evaluate the balance as we go along.


  2. Larry Gross Avatar
    Larry Gross

    Thoughtful and thought-provoking article.

    but …”There are two ways for Virginians to respond. One is to drive more fuel-efficient automobiles. The other is to drive less.”

    You failed to mention the most visible and obvious current strategy…. to get more people to use multi-passenger vehicles.

    I don’t know the percentage but I suspect strongly that a substantial amount of mileage and gasoline useage is by solo rush-hour drivers in urban regions – on a trip that they do.. day after day, 5 days a week, 50 weeks a year.

    This is what HOV and Congestion Pricing is all about and a question.

    Do you think that the EPA is engaging in “social engineering” when they do not allow and in fact mandate no new roads in urban regions unless they are HOV/HOT lanes?

    this is not a trick question – but it IS a tricky question…

    and.. the answer.. I would opine is related to the governments role or non-role in more efficient settlement patterns…

    Bonus Question what effect will HOT/HOV policies have on settlement patterns – if the goals of those HOV/HOT lane policies is to have more and more folks use multi-passenger vehicles for home-to-work-to-home trips?

    Imagine I-95 to Fredericksburg with twice as many buses on it and 1/3 less cars during normal rush hours… will this… encourage more “efficient” settlement patterns or merely sustain the status-quo of the suburbs?

  3. Larry Gross Avatar
    Larry Gross

    A Fredericksburg to NoVa solo daily commuter… can escape/evade higher gas prices by switching to a bus, van pool or VRE

    .. which is EXACTLY what the government gurus want them to do.

    yeah…yeah.. we’ll hear the complaints.. but when push comes to shove.. (and comes to a double shove – with both higher gasoline AND HOT lane tolls)…

    WILL …folks will alter their solo driving habits from Fredericksburg .. OR will they take a lower paying Fredericksburg job and/or move back to NoVa for a higher-priced house?

    Place your bets. I’m personally doubling-down on changes the commuting behaviors.

  4. Jim Bacon Avatar

    Larry, When I say that we have two choices and one of them is for people to drive less, I assume that the way most people will drive less is either through carpooling or using more multi-passenger vehicles. In other words, you and I agree.

    You and I also agree that congestion pricing is a market-based mechanism that encourages, while not requiring, people to make the switch. (So are the gas tax and Vehicle Mile Driven tax.)

    What policy makers have paid insufficient attention to, in my appraisal, is creating more shared ridership options. Right now, it’s all about plowing more money into big-bucks rail projects like Rail to Dulles and the Virginia Railway Express, always assuming that some government entity will be the operator. If we want innovation in the shared ridership space, I think we need to get government *out* of the mass transit business, and open up the field to private entrepreneurs. Why is it so outrageous to expect privately owned bus firms vying with one another to provide Bus Rapid Transit services, and van services, and jitney services?

  5. Anonymous Avatar

    Enact: to establish by legal and authoritative act; specifically : to make (as a bill) into law.


  6. Larry Gross Avatar
    Larry Gross

    Jim – we actually agree with respect to mass transit also.

    unfortunately.. the anticpated revenues from HOT lanes are already being pre-allocated to mass transit such as VRE and WAMTA.

  7. Anonymous Avatar

    “Place your bets. I’m personally doubling-down on changes the commuting behaviors.”

    My bet is that some businesses will move, some will allow more telecommuting, some will pay more to offset commuting costs, some people will carpool more, some people will move.

    VRE was costing me $6.30 each way. I still needed the car to get to VRE, so most of the car cost is sunk. The marginal cost of driving the car was $4.00 plus parking. Frankly, it was a toss up. There was no real benefit to riding VRE, other than I could sleep rather than drive. Metro is about to raise rates and VRE won’t be far behind.

    If travel costs and inconvenience go up across the board, Metro and VRE will still be in relatively the same spot: maxed out, rising expenses, and nowhere to go. If we get government out of the mass transit business, much of it will go away and more people will get what they pay for. What remains will be more efficient, and more customer friendly.

    I agree with Jim: there is a huge opportunity for really entrepreneurial mini-mass transit, and it will be based on new communications technologies.

    Recently a government organized carpool promoting agency had a booth in the lobby of my office. Basically they could offer me a best bound Vanpool, originating at West Falls Church. It would be great for the reverse commuters. When I told them where I live, I got a blank stare.

    Yeah, imagine I-95 with twice as many buses and one third the cars. A new hybrid bus costs $250,000. You still need a car to get to the bus stop, probably. You still need I-95, you still need the cars and now you need the buses, drivers, and maintenance staff. The buses go back to Fredericksburg empty twice or three times, wheras the cars they replaced occupied parking spaces in town. Where is the savings, really?

    I agree there is one, I just don’t think it is huge. Now fast forward twenty years when we will have this discussion again with even fewer options. I-95 won’t have room for more buses,and the one-third of cars will have doubled.

    Thirty years ago we thought Metro was the answer. Whatever we think the answer is going to be thirty years from now is the problem we should be working on. Let the market handle current problems.

    And it isn’t just the highways, we have an air traffic problem too. Nearly everyone concedes all the current “fixes” are just stopgaps and it is only going to be solved with new airports..

    Now go try and build an airport. Anywhere.


  8. Toomanytaxes Avatar

    Jim & Ray:

    This is Virginia, where transportation has little to do with moving people and goods efficiently and everything to do with enabling certain favored landowners (who make big campaign contributions) and union workers (who also make big bundled campaign contributions) and big contractors (who make big campaign contributions) profit.

    I suspect that both of you are quite correct. Van pooling, etc. could probably solve many more transportation issues than huge mass transit projects. But this is the state where we are spending at least $5 billion on the Silver Line (West Group, SAIC, Davis-Bacon for the labor unions, Bechtel). We do need more telecommuting and more good jobs in more places. Not everyone should be required to come to Fairfax County for a well-paid job.

    Ray’s right; things will get worse for the average person in Virginia.

  9. Larry Gross Avatar
    Larry Gross

    before folks get all a-twitter about the perception of private vanpools…

    …”In the 1980s, public transportation agencies began to contract with us [VPSI] to offer vanpooling to their constituents because of a vanpools unique ability to address a niche commuting market usually not well-served by conventional public transportation – people with commutes of 30 or more miles living in low density residential areas.

    With this evolution has come increased recognition of vanpooling as a smart, easy and efficient way to get to work. The federal government concurs by recognizing vanpooling as a public transportation mode, fully eligible for all financial assistance available to any other mode: rail, motor bus, or paratransit. Knowing how that funding is distributed will better help public agencies get a piece of the funding pie, and allow them a means of introducing new vanpool services with VPSI.”


    … I hope the part about the Feds supporting van pools to serve long-distance commutes to low-density residential areas

    … does not escape the eyes of JAB…

    so.. vanpools are subsidized.. by the same transit agencies that deal with Metro, Marta, VRE, etc.

    anybody’s opinion changed?

  10. Jim writes –
    “I advocate (a) making people pay the full locational costs of where they live and work”

    And as I’ve pointed out before, if ‘mass transit’ (be it rail, bus, whatever) paid it’s FULL weight; if riders were truly charged what it cost to build (in the case of rail), buy and run the thing, mass transit would come close to dying. If gas tax money was indeed spent to repair and build new roads, life would look different. As is, road money is usurped to fund mass transit, roads are left to decay and the cry goes out to raise taxes (gas taxes, registration fees, etc) on those nasty cars.

    I carpooled for a while (in a former life where I worked in an office – glad I don’t work in an office any more). In the end the disadvantages far out-weighed the advantages. The only two advantages were my monthly cost of driving decreased and I could sometimes sleep during the drive to or from. The disadvantages, I had to be a certain place to meet my ride at a certain time. If an emergency occurred, I had no way to get to it and take care of it (and it did happen), I could not leave when my work was done, had to wait for my partner. Those are a few of the major pains that carpooling was. It was just as a much a pain for the person I carpooled with. It lasted about 7 months and by then we were still friends but very tired of the carpooling (and work even kicked in extra money to try to make it more attractive – even the money didn’t make it worth it). They also had a way that we got free mass transit passes with service from the ‘light rail’ stop to the front door of the company – problem, my one hour commute took almost two and a half hours via ‘light rail’ – no way Jose.

    I dislike townhomes, I dislike condos, I dislike TOD (transit oriented districts, where to make it work you better still have LOTS of parking), I dislike my taxes being spent trying to make these things work. I’m with you Jim, make everyone pay their own way and lets see how long before condos and mass transit go down the drain.

    Remember, I work on this stuff (construction) everyday – I see the people using and living in it, I see the common man and hear his attitudes about it.

  11. Anonymous Avatar

    That’s an inaccurate comparison to say that VRE is subsidized and the highways aren’t. The roads are already paid for and publicly owned so they don’t require the same lease payment that VRE has to pay to CSX or NS just for access. Being that there is no alternative rail route in those corridors we can assume that VRE is in a poor negotiating position. If the opposite were true where I-95 was a privately owned cargo route and the rail line was publicly owned we’d be talking about a whole different cost structure where train rides would be cheap and highway tolls would be expensive.

    This is what will be happening in the agreement for HOT on the beltway (there’s a link that details the deal, but I can’t find it; think it’s tollroadnews) where VA is paying lease payments and guaranteed ROI to the private consortium to allow citizens usage of the road. If VA wants to get out of building and owning infrastructure, be prepared for non-stop subsidies to ensure citizen access to roads and rails at reasonable rates. HOT will get a non-stop subsidy out of transportation funds where non-users will subsidize users.

    Basically what looks to be a neverending subsidy is just the basic choice between buy and lease. You can choose to buy highways, Metro lines, BRT, Commuter Rail Lines or you can just lease space like we do with VRE, bus routes, and HOT and pay an eternal subsidy.

    Don’t automatically assume it makes financial sense for everyone to pay their own way. Individuals don’t have the negotiating power of large organizations and VA would be foolish to give up that power for the goal of political dogmatism. The best bet is for the state to look at itself as being in the transportation business and make capital and operating decisions as such to move the most goods and people in the most efficient manner.


  12. Ritual disclaimer: I do not know the full costs or full tax payments of any jurisdiction in Virginia. I do not know the full locational costs or full locational taxes paid by any jurisdiction in Virginia.

    Neither does anyone else posting on this board.

    This sad state of affairs is true despite the fact that the politicians in Richmond have all of the data required to perform these analyses.

    Virginia government is not transparent, it is not translucent, it is opaque.

    Until that changes, all of these debates on this blog site will be theoretical mental meanderings.

  13. Larry Gross Avatar
    Larry Gross

    the debate .. is not unique to this blog, to NoVa, to Wash Metro, to any other city or state in the US.

    the debate ranges wide and far in the US… but strangely.. not in most other countries where transit continues to be accepted as a valued service worthy of tax expenditures .. without a neverending debate about whether it “pays for itself” or not.

    the “debate” is really .. in my mind… not really about whether transit should pay for itself or not… but instead about… automobility.

    I sometimes always also wonder.. if “sprawl” is a uniquely American phenomenah also…


  14. Anonymous Avatar

    “The best bet is for the state to look at itself as being in the transportation business and make capital and operating decisions as such to move the most goods and people in the most efficient manner.”

    I don’t think anything else needs to be said.

    “in most other countries where transit continues to be accepted as a valued service worthy of tax expenditures”

    Being accepted as being worthy of tax expenditures and being worthy of tax expenditures are two different things.

    “government is not transparent, it is not translucent, it is opaque.”

    As long as that’s true, we will never find out what is worthy and what isn’t. Maybe those European cities are resigned to shooting themselves in the foot. And yes, sprawl happens everywhere. In some places it is even encouraged.

    What do we know? We have a world class Metro System, world class congestion, and world class CO2 emissions.

    Now go look at some places that don’t have all those things. Do the people who live there live better or longer? Do they have more left at the end of the month? Lower tax burdens? More capital gains?

    We need to set some benchmarks as to what the most efficient manner means in terms of health wealth and happiness.

    Anonymous is right. It is inaccurate to say that VRE is subsidised and highwyas aren’t. That one group pays its way and another doesn’t. Until we set some benchmarks. Those benchmarks need to include similar evaluations for externalities in both cost and benefit categories.

    Those European countries have apparently decided that it is more productive and efficient to throw the money in a box and let government spend it (on transit) than it is to endlessly wrangle over who pays what.

    I think Groveton has pointed out correctly before, that you can’t have it both ways.

    Or maybe you can. As I understand it, in addition to being heavily subsidized, the subway in Stockholm is also quite expensive to use.


  15. Groveton Avatar


    The western European countries, in my opinion, use a lot of government pressure to get their citizens to do what the government wants. Now, they are democracies – so, the people are electing the officials who make the laws. However, over time, things settle into a status quo where the intrusive government approach is viewed as the only thing that makes sense.

    For example, if you tax gasoline a lot people will use less gas. They will drive more fuel efficient cars. They will take mass transit. You can even charge a lot for mass transit and it will still be cheaper than heavily taxed gas. Americans might say that heavy taxation is the wrong approach. Americans might say that private enterprise should solve economic problems – not government. The Europeans would respond that the US government taxes its citizens a lot – it just taxes the wrong things. Why tax income when you want to decrease your dependence on foreign fuel? Why not tax the fuel?

    The western Europeans also, in my opinion, have a more activist land use policy. Government specifically dictates density. The Green Belt around London –

    The building laws in Germany.

    Fundamentally, the European mentality is that societal good is often more important than individual freedoms. While the western Europeans certainly have individual rights they are more open to trading some of those rights for the greater good. Americans generally believe that the individual rights are more important than a general sense of societal well being.

    The European approach works given the European perspective.

    The American approach works given the American perspective.

    The approach generally espoused on this site is the European approach without the requisite trade-offs.

    There should be high density development but nobody should lose any of their nearly infinite property rights.

    There should be serious energy conservation but not at the expense of unbridled economic development.

    Uneconomic small scale agriculture should be protected but the protection should come from free markets.

    Small areas of the state should generate vast tax surpluses but nobody should be forced to allow electric lines to run through their property to power the tax surplus areas.

    The list goes on.

    It’s been said that insanity is definied as continually doing the same thing while expecting different results.

    Our current approach to free enterprise (such that it is practiced in Virginia) has gotten us the #1 state for business and suburban sprawl. It has gotten us rising median incomes and a transportation crisis. It has gotten us several counties that are among the most wealthy in the US and many counties mired in economic stagnation.

    Our current approach has pros and cons.

    However, without dramatic change, our current approach will get us more of what we already have – good and bad.

    The Europeans have an answer – more government, more taxes, more functional settlement, a more sustainable life style (at least, accoring to them).

    We have no real answers. We just keep doing the same things.

    Maybe the Europeans are crazy. Maybe they made the wrong choices about government vs. individual liberty. However, they have addressed the issue and made choices. Which is more than I can say for Virginia.

  16. Anonymous Avatar

    Well said.

    The trade off for not being allowed to develop land as in the greenbelt is that the land is subsidized, either directly or through agricultural subsidies.

    Development rights were nationalized in England after the war, and have been so since. However, the greenbelt is under attack today as wealthier Britons demand more spacious homes with better amenities.

    It takes a long time to change government. Maybe the Europeans have decided that what they have makes sense, or maybe they got tired of trying to fight city hall. Eventually dogma and platitudes get so entrenched they are seen as true, when it might or might not be.

    Around here, we have No New Taxes, User Pays, and Conservation is Always Good, Developers are Evil, Sprawl is Bad, etc. etc. I think you were right when yousaid government has most of the numbers that can let us figure it out.

    I have claimed the the societal good is nothing more than the sum of all the individual goods, but based onyour comments maybe it shoud be the sum of the individual goods AND the sum of the societal goods.

    Either way, you comment shows that there are multiple possible solutions.

    You first need goals, then priorities, then plans, then schedule, and finally budget. We worry so much about the money, that we mostly have it backwards.


  17. Larry Gross Avatar
    Larry Gross

    I would say again – Fairfax and NoVa’s situation, including wasteful government spending and scummy politics is .. not unique.

    and so I have a hard time believing that the issues of sprawl, settlement patterns, etc boils down to this.

    and I don’t think Americans are THAT different from Europeans on some issues – like transit and rail which most Americans support building more of – with tax dollars and don’t necessarily see it as an issue where it must pay for itself but rather like other basic services required by civilization.

    Now, each of us, from a personal philosophy point of view – can agree or disagree with this mindset – but the point is – that a good number of Americans (even the ones who drive solo at rush hour) … do believe that we need more transit and more intercity and regional, national rail – like Europe and Japan have.

    There are some things that people believe should be paid for by taxes and not “pay for themselves”.

    Where you come out on this – IS a personal view – but the political realities are – where society as a whole comes out on this.

    It does little good, in my view, to insist that something needs to “pay for itself”, if a majority of your fellow citizens – simply believes that it does not.

    because.. then your argument to convince the rest of society is not the simple job of showing them the ROI – it’s a much bigger hurdle – because they don’t care about ROI.. if they feel that it is a necessary taxpayer-funded service to everyone.

    aka – national health care…, et al

  18. Larry Gross Avatar
    Larry Gross

    re: “The trade off for not being allowed to develop land as in the greenbelt is that the land is subsidized, either directly or through agricultural subsidies.”

    what is the point?

    do you agree that restricting greenfield land development IS or IS NOT truly about affordable housing – completely aside from your views on “property rights”?

    My view is that it has absolutely nothing to do with affordability with respect to a place you can afford to live in – in an urban or urbanizing area…

    .. and EVERYTHING to do with selling a particular kind of housing to a particular demographic market.

    .. and eveything to do with the zoning policies of ANY jurisdiction, including Fairfax/NoVa with respect to enabling/incentivizing private market building of affordable housing in those jurisdictions.

    For instance – proffers and water/sewer fees could be waived for housing that has a cost within a certain range of median salaries….

    the reason there is a lack of affordable housing is due to urban policies – not suburban policies.

  19. Anonymous Avatar

    “The trade off for not being allowed to develop land as in the greenbelt is that the land is subsidized, either directly or through agricultural subsidies.”

    what is the point?”

    Greenfield preservation is not about affordable housing. It is about making previously existing housing more valuable without extra cost. It is about cost avoidance, it is about subsidizing developed areas, at the expense of others, and it is about getting valuable environmental services for free. Somewhere on the fringe, it also makes new housing less affordable.

    In England, as I understand it, the average person can pretty much forget about owning a home: best you can hope for is that your grandchildren will inherit a smaller mortgage. In fact, long term restrictions have driven up home prices so much that some English are selling out and retiring to France.

    We often see the complaint here that one of the effects of controlling development or providing infrastructure to one place and not another is that some landowners or developers get huge benefits.

    With greenspace, the government is doing two things. They are renting the land they choose to hold in reserve, (ie they make savings on providing services to a limited area, holding the remainder in reserve) and gaining valuable green infrastructure services needed for the developed areas.

    In the U.S. we assume this is a matter of right, part of the police powers, and the result has been considerable strife, as in Oregon. In other countries, there is much more of an effort to provide some kind of balance between the benefits provided to a few landowners where development is permitted and those that otherwise get nothing, or even less than nothing.

    This is done in a number of ways, including truly preferential tax rates, strong and well distributed agricultural subsidies, and direct payments for environmental services, plus real technical and marketing agricultural asistance. Some countries fund international agricultural internships wherein foreign students come and live and work for the summer. etc. etc.

    I don’t know all the details of all these programs, but my observation from agricutural and travel magazines is theat there are some small farmers in other countries doing things that I could not possibly afford to do, so I assume they have other money somewhere. Also, some are doing things, with the governments blessing, that I would not be allowed to do.

    Apparently, part of the different view of things that Groveton mentions is that things other than transit need help if we wish to keep them around. Therefore they have made some accomdations a little more balanced than we have. Like Groveton says: if the farms keep disappearing then you might need to do something different.

    Like not punishing the owners.


    Recently in Warrenton there was a case in which an operator, in a rural agricultural area has made a commercial success of his operation. Now he has on site packaging and shipping operations, and this has disturbed his more residential neighbors.

    After a contentious hearing, his operating permit was extended for a year, on a number of conditions, none of which are inexpensive. Among them was a demand to plant considerable screening. Now, what happens if he spends all this money and next year there is an even more contentious hearing, resulting in him being shut down?

    At the very least, I think the board shooud have required planting on both sides of the property line, with both sides contributing equally.

    So here is a guy who is a rare success, doing what he is zoned and permitted for, and he is being treated like crap by a large number of people who would like to see him do less, or who want him to provide additional, new amenities that they don’t help pay for.

    Certainly there is another side to the story, and the other neighbors have real concerns, but they knew the rules when they moved in. They may even have worked changed the rules after they moved in, and not gotten what they expected. I suspect that Groveton is right: this would have played out a lot differently in Europe, because of our differing views.


  20. Larry Gross Avatar
    Larry Gross

    …”It is about making previously existing housing more valuable without extra cost.”

    huh? are you saying that building the infrastructure to serve new development is “without extra cost”?

    isn’t that THE primary reason that there are restrictions?

    don’t you even admit this but claim that other landowners should pay for it?

    I’ve said it before. Any developer can make any proposal and if he/she proposed to build something that did not require publically-provisioned infrastructure, it would be approved – and has been.

    The reason greenfield land has development restrictions on it – is because of the cost of providing infrastructure..

    the argument that it makes previously built housing more valuable… as a rationale..is novel… though. 🙂

  21. Anonymous Avatar

    I just don’t think that you can demand “User pays” for autos and then concede that transit needs subsidies, or vice versa.

    I believe we are pursuing the user pays philosophy beyond the point where it makes more sense to just split the check.

    I believe that transit does offer real benefits to other than those who ride it, and they should expect topay a reasonable amount. But I also think those benefits have been way oversold and we are paying too much for them.

    Part of the reason for this is a deliberate political misinformation campaign, or maybe it is just genuine ignorance. Whatever the reason, as Groveton points out, there is little real clarity coming from government. And jsut as there are those that support rail, there are those that wish to shut dwon Amtrak.

    Maybe, if the facts were presented dispassionately, people would not be so keen to support it. If they are, fine: at least they know what it costs.

    I also think that the problems with autos have also been way oversold, and we would do a lot better if we looked at autos and transit as a system instead of as competitors for funds and ideology.

    If we know the ROI on a Cadillac or Mercedes is not as great as the ROI on a Kia, and we still want a Mercedes, well OK. I just hate to see society as a whole come out on it based on bad, slanted, or partial info.

    If you have a true user pays system, then you’d better have good info, and you can expect to get it because if someone really feels he is paying too much, you will hear about it, or competition will step in.

    If you don’t, and you just throw money in a big box, then it doesn’t matter quite so much because a lot of stuff gets averaged out. There is still a question of gross disparities of who is throwing how much in the box, and where and when it comes out.

    Just don’t complain about government inefficiency if you go that way, because you know going in that you won’t get the fine grain detail that individual transactions provide.

    The other thing I see is that we are schizophrenic: we demand user pays for things we don;t like, and want government subsidies for things we do like. The reason is exatly as anonymous pointed out: the individual has a lot less bargaining power.

    As in the example above. Or another case, where 1300 people signed a petition to prevent a certain development. The owner publicly offered to sell the lot for $330,000, which works out to just $250 apiece, just for those who bothered to sign the petition. But why should they pay even that small amount, if they can get what they want for free (at least they think it is free)?

    So, there is a difference between reasonable majoritarian rule and gang rape.


  22. Larry Gross Avatar
    Larry Gross

    devil’s advocate question.

    If a clear people prefer tolls 2-1 over higher taxes and they also don’t mind sales taxes and tolls used ALSO for transit… then where is the problem?

    Both the user pays tolls and the subsidy for transit seem to satisfy the expectations of a majority.

    what _practical_ alternative would one suggest that the public would accept?

    I’m not an advocate of majority-rules no matter what – but on the other hand – those that think that … say McDonalds sells the “wrong” products… would do what? have McDonalds sell stuff that few would buy.. and the company would go broke by trying to see what the public did NOT want?

    For those that hate the idea of the government taking their money and spending it on something they vehemently disagree with – wouldn’t “user pays” be the antidote where the government gets out of it – and people make their own choices?

    so.. if folks AGREE to pay tolls and AGREE to have some of those tolls pay for transit AND people have the option of NOT paying the tolls.. that they disagree with.. then where again..is the problem?

    Is your alternative to have the government back into the equation collecting higher gas taxes to be spent on things that people do not agree with?

  23. Anonymous Avatar

    It doesn’t matter what people agree with.

    If the facts prove that a given action is not cost effective, then government is wasting their money and thier wealth.

    In the process, government is limiting it’s own options for capturing greater revenue on greater investment and cash flow – without raising tax rates.

    If the majority agrees with that, then they can’t very well complain about government inefficiency, or rising tax rates.

    So the problem is that a waste is a waste, whether you “choose” to be wasteful or not. Wasted money translates into wasted energy and wasted resources, which we, as environmentalists should expose and oppose, even if it is our own waste.

    It is good for the environment, and good for our pocketbook.

    The way you do that is with clear, accurate, unbiased information.

  24. Anonymous Avatar

    Let’s say we accept the idea that metro reduces congestion, and pollution. We ought to be able to devise a way to show by how much and where.

    Let’s assume that those who ride Metro and pay the fares are satisfied with the price: they think it is good deal for them, even if they don’t get a seat.

    Let’s assume that those who operate businesses supported by metro also have businesses that are valued higher and generate more cash flow. That our tax structure is such that they pay a reasonable amount for the extra benefit they get, and the extra payments mean that they don’t also get an unfair advantage over those not served by Metro.

    So the riders and landowners are happy with their service and the money they pay. But, the fares and extra taxes collected still don’t cover the costs.

    Who should pay the remainder, and on what basis? I’d say the people that don’t ride Metro yet enjoy less congestion and pollution as a result. But I don’t think they should have to pay for more than the value of what they get.

    How far in the hole do you think we should allow them to go, before government is no longer doing its job, which is protecting the people (and the environment)? How far in the hole do they go, and how far aaway from the metro operating area do you have to take money, before you conclude that the whole thing is a real net social, economic, and therefore an environmental loss?

    Even if the people don’t seem to mind?

    Eventually, someone will write the transit equivalent of “Silent Spring” and we will wake up in horror at what our predecessors have done.


  25. Anonymous Avatar

    huh? are you saying that building the infrastructure to serve new development is “without extra cost”?

    No. I’m claiming that creating new green infrastructure (through new restrictions), which was never previously planned, effectively amounts to a way to increase the value of existing homes, without paying the price that would have come had the current planning been done up front. The cost of that new planning is backloaded on the late arrivers, and the early adopters get the benefit.

    This is pretty well documented, by the way.

  26. Larry Gross Avatar
    Larry Gross

    How many transit systems are there in the world?

    How many of them make money?

    How many have been shut down because they are economic failures?

    I rest my case.


  27. Anonymous Avatar

    “I sometimes always also wonder.. if “sprawl” is a uniquely American phenomenah also…


    Sprawl in a form does exist throughout the world but is in a more pod transit based rather than a spread out form (you can actually see this if you fly at night in Europe). They do commute long distance like Americans but usually on commuter rail or BRT. The major reason for this is that unlike the US, other countries didn’t build urban freeway systems. They have beltways and highways between cities, but they didn’t tear up their cities to put in highways. Basically every city looks like SF, Manhattan, and to a lesser extant DC minus 395 and 66.

    For a commuter there it just doesn’t make sense to put up with the ridiculous city congestion to drive to work when a rail line is so much faster. Gas taxes discourage driving a little, but most Europeans compensate by buying more fuel efficient vehicles (gas $3, 20mpg = $6 gas, 40mpg), this is why VMT doesn’t change much with higher gas prices.

    Looking at the historical decision to build the interstate system in the US, there were arguments to stop the highways at the outside of the cities from some planners. That one historical decision basically put us on a path of highway based development, whereas if you took out those spurs and inner beltways, the people would most likely be demanding better rail lines and bus routes and that would make sense in that environment.


  28. Anonymous Avatar

    “For a commuter there it just doesn’t make sense to put up with the ridiculous city congestion to drive to work when a rail line is so much faster”

    Well yes. But faster than what? nothing? the reason it doesn’t work as well in DC is that we DO have 66. when I was using VRE I would occasionally miss my train and have to drive.

    Driving was always faster, but, I had to drive instead of sleep.

    Net net, that was the entire difference. If they put more comfortable recliners on the trains they would sell out at twice the price. Instead we have rehabbed 1940’s era historical reconstructions to sit on.

    It matters what you have to compare with, otherwise a baldheaded statement means nothing.

    Otherwise, this is one of the best posts I’ve seen. It really made me think, until I saw the flaw. It could very well bee that Europeans have an excellent train system, but it is still costing them their shorts compared to some other alternative.

    I’m not saying that alternative is worth tearing up their old central areas for. They may have done the best they could under the circumstances, and still have found a solution that is not applicable here.


  29. Anonymous Avatar

    “How many have been shut down because they are economic failures?….I rest my case.”

    If the facts prove that a given action is not cost effective, then government is wasting their people’s money and their wealth.

    The fact that these systems have not been shut down does not mean they are the best expenditure possible.

    AS ZS points out, they might be the best solution in Europe, and still be a terrible choice here, as suggested by Winston.

    You are resting your case on exactly nothing.

    Yes, the systems exist. Yes, they have not been shut down. Maybe becasue the (mistaken) capital expenditure was so high we wouldn’t dare.

    The fact reamains that a waste is a waste, and it damages the economy, the government and the environment.


  30. Fascinating discussion.

    I would love to see an opportunity cost analysis for different stretches of transportation infrastructure. It may be that some of the urban highways we carved through our cities are taking up valuable real estate that would better serve the public in the private sector.

    As I understand it, Robert Moses (inventor of highways, designed or consulted on most urban highways anywhere) developed the urban highway more as a way of leveraging park and housing funds, building political capital with unions and builders, and increasing demand for his toll bridges than for any actual public ROI. It made political sense at the time, but questioning that system now could provide huge benefits now and in the future.

    Is self-funding infrastructure possible? Absolutely, we’re doing it every day. When government builds infrastructure, two kinds of benefits are created with two different revenue streams. The first is the actual service of the infrastructure, like better schools or fast transit. We can put a user fee on that and get some revenue, but collecting it is often expensive and with deadweight loss can actively erode the benefits sought by the project in the first place. Still, user fees like congestion pricing can create enormous value by regulating supply and demand for services, creating a double benefit.
    The second source of value created by infrastructure is improved productivity of nearby land. A piece of farmland is a much better place to live after the school and transit station go up next door. That land becomes much more valuable, regardless of whether the owner or lessees actually use the services or not. We can put a user fee on that land and harness some of that increase in value. Just like other user fees, the land fee can create enormous value by regulating supply and demand for land, creating a double benefit. Affordable housing and a clear edge are part of that created value.
    By putting smart fees on government services, we can pay our fair share for what we need, what we want, have some extra left over if we apply ROI, and don’t need taxes, meaning no deadweight loss on consumption and employment.
    How’s that for self-funding infrastructure?


  31. Anonymous Avatar

    You had me going for a minute.

    It may be that some of the urban highways we carved through our cities are taking up valuable real estate that would better serve the public in the private sector. How do you mean? As private sector highways, or private secor business locations? Would we say the same thing about urban parks we carved though our cities?

    I suspect that there are some optimum combinations of residential density, street and transportation density, employment density, and open space. Any time you get away from one optimum mix, you may be on your way to converting to another. Think of the SIM City game.

    What that would mean is that the optimum investment for one location in transit to the next optimum mix might not be the same as another location: TMT, Larry, and I all face distinctly different challenges in our respective neighborhoods.

    Where you lost me was “We can put a user fee on that land and harness some of that increase in value.” That assumes the land produces enough income to pay the user fee. Otherwise you are demanding that the owner take a loan against his imputed gains (which he has no way to capitalize) just to pay the user fee.

    You don’t make the farmland more valuable by building a school or fire station nearby. That is going to take a different kind of investment. You might make the farmhouse more valuable, but again, you can’t expect to take in more money unless the money is available.

    Basically, taxing property and investments is a bad idea, especially if you have already taxed the income to buy the property and the transaction of buying it.

    What we forget is that land has often pre-payed its infrastructure costs, often for decades. Farmland is said to pay more than twice as much in taxes as it uses in services, but we conveniently forget that when the farmer wants out. In fact, we’ll charge him five years of additional back taxes at an even higher rate, for services he never used! And then we want proffers on top of that.

    It seems to me that a smart and fair user fee structure would immediately stop the overcharging to farms that occurs now. Or else, it would use the excess money paid by farms to support agricultural services, rather than siphoning them off to subsidise the residential areas.

    Basically, I agree that a reasonable use based fee structure makes sense – up to a point. When the transaction costs, deadweight loss, and unknowables intrude, then it is time to shift the remainder of costs to a more broad based system. But, I have a hard time understanding, for example, why I have to pay a registration fee to keep the farm in land use, since that is a primary goal of the county anyway. Given that I have to pay some fee, I have a hard time understanding why it is $550, on top of my already overpaid taxes.

    Go figure.

    That doesn’t mean that we can’t work on whittling down the unknowables and reducing transaction costs, over time.

    Now explain to me how affordable housing and a clear edge have anything to do with value created by infrastructure. That, I just don’t get.

    I would maintain that by creating a clear edge we are creating two classes of citizens: inside and outside. Those inside get the infrastructure benefits and the increases in value you talk about. And they get (allegedly, though I’m not sure I believe it) the cost savings that comes from more compact development.

    What do those outside get? Right now they get to pay for more than they recieve, and they get to have their values limited by land restrictions. Who does the land fee create value for? Not the guy who’s got the land, at least not if we want to keep the clear edge.



  32. Larry Gross Avatar
    Larry Gross

    First … taxes on farmland – especially farmland in “land use” I strongly suspect is NOT the model that is claimed to pay twice as much in taxes as it consumes but if RH wants to come back with an example.. then wouldn’t that mean that other farmland that is NOT in land-use would be paying MORE than twice as much.. perhaps 5 times as much?

    numbers please…

    But let’s also be clear. In many cases (perhaps not in RH case), we’re not talking about farmland that is destined to never be developed and always remain as farmland in most/many cases.

    What we’re talking about is really VACANT land .. that USED to be farmed .. and at some point in the next 10 years or so – it will be subdivided into lots.. that will easily consume more in services than they pay in taxes – even though RH claims that even less that full proffers and impact fees for these lots is still “unfair”…to the landowners.

    In RH.. world… Fairfax is portrayed as an unltra-dense core surrounded by bucolic farms that have not been allowed to be developed so the folks who farm the land are doomed to a subsidence existance .. that forces them to commute at rush hour in their tractors to outside jobs to help pay for the operating loss.

    and .. all this terrible state of affairs is due to evil and restrictive land-development policies..

    Geeze.. you’d think we’d have thousands/millions of folks who can’t afford a house and so they go put up a tent on farmland that has not been allowed to develop.


  33. Anonymous Avatar

    I think that is an unfiar description, but I can see how you would see it that way.

    Go look up American Farmland trust.
    According to them all farmland nearly anywhwere meets that test. Even if it is vacant or fallow farmland.

    How can we know if it is destined to always be farmland, if no other option is allowed?

    And lets be clear, I’m happy to do what I’m doing, which is a good thing since I don’t have any choice. All I’m saying is that other entities (not me) say over and over what a good deal having all these farms is, and why we need to keep them. If they think it is such a good deal, then they ought to be willing to shell out a percentage of that, direct to the farms to help insure that good deal continues. They are effectively renting money that comes as a result of my activities, for which they pay nothing. On top of that, I pay extra, plus provide economic support to the community, which ordinary residential housing does relatively little of.

    And, I have the opportunity cost of having previously legal development rights removed without compensation. You buy into the idea developed lots will easily consume more in services than they pay in taxes, but you are unwilling to concede that if someone has paid more in taxes than he consumed for a few decades, that this might be considered when setting the proffers.

    (I don’t think it is true that they consume more in services than they pay, or that I pay more in taxes than I use, but since it is your argument and one that is widely believed by thousands of others, who am I not to use it?)

    “Geeze.. you’d think we’d have thousands/millions of folks who can’t afford a house and so they go put up a tent on farmland that has not been allowed to develop.”

    Don’t kid yourself. If I was alolowed to, I personally know a dozen people who would live in trailers or campers here.

    And 95% of farms everywhere, not just in NOVA are supported by off farm jobs.

    Ask yourself why it is vacant land that used to be farmed. The short answer is that it is no longer a fair deal for the farmer.

  34. RThorntonAIA Avatar

    Economic theory vs. political reality…

    Our founding fathers were really quite brilliant. They knew that neither governments nor entrepreneurs could be trusted. Thus, they created a society regulated by checks and balances, which were intended to keep our society in equilibrum.

    Proselityzing a “free market” solution to the complex issues of dysfunctional land development pattern and rising energy prices is no more likely to solve the problems of the majority of citizens than socialistic solutions.

    The reality of human nature is that socialism only works in a political environment of inequality. Disproportionate power is held by a few so that they can divide up the remaining resources for the many.

    The free market only works in an egalitarian political environment. Once some individuals (or corporations) gain disportionate political power, then they can manipulate the economy for their own benefit to increase their own wealth. With this disproportionate wealth and power, they can manipulate laws, lawmakers and law enforcers to insure that their offspring inherent the same disproportionate wealth and power. Thus, a market economy without political checks and balances quickly devolves into feudalism.

    That is essentially what the USA is today, a feudal society masked by the pretenses of representative government. The choices given to consumers are controlled by three major oil companies, two major political parties, a handful of international auto manufacturers, and a corporate elite, which in the past seven years that has gobbled up a increasingly disproportionate share of the national wealth.

    Perhaps because many of the readers live in a New Urban Fringe region, they tend to view real estate development as a dynamic commodity, which could respond quickly to changing market conditions in a “free market.” It is not. Once built, it is quite inflexible.

    As I proved many years ago in my Masters Thesis, blight is caused by the inability of urban corridors and neighborhoods to physically transform themselves to new technologies and economic conditions. Once a certain point of obsolescence is reached, then a negative externality takes control in the form of an unwillingness to invest time or wealth into maintenance.

    So – in plainspeak terms – if you remove all communal involvement from land development and transporation decision-making, then you are placing your future in the hands a few self-centered economic interests, not the economic votes a theoretical mass of educated consumers. It would accelerate the difference between the “have” minority and the “have-not” majority. The wealthy will be able to afford to live near convenient transporation. The less affluent will be required to spend a disproportionate amount of their dwindling incomes on energy costs. Their fall into poverty will be accelerated.

    By the way, look back at history, and you will see that feudal societies always had violents ends. The current powers-that-be in the USA need to read more history and less Dow Jones averages.

  35. Larry Gross Avatar
    Larry Gross

    “Ask yourself why it is vacant land that used to be farmed. The short answer is that it is no longer a fair deal for the farmer.”

    Farming is a business and always was and still is.

    Food has not become unavailable as a result of farmers no longer “getting a fair deal”.

    We should no more subsidize farmers than we should those that want to run a pizza place…or a corner mom/pop store.

    And in fact, if you as an individual want to make money as an entreprenur… don’t buy/own fallow land.. and then try to convince others that you are being penalized, victimized.. because taxpayers will not subsidize you to farm it.. nor to provide you with the infrastructure necessary to develop it.

    Instead, find a business activity that you CAN make money at vice walking around and crying about how mom/pop stores have been delt with “unfairly”.

    Both sides in the growth issue play this “farmer victim” game and it really is a canard… that misleads anyone whose world is governed by sound bites.

    and my view is that is exactly what the “farmer vicitm” mantra is designed to do – influence those who don’t think much… about these kinds of issues…

  36. Jim Bacon Avatar
    Jim Bacon

    RThorntonAIA (Richard), I don’t think I would call our current system “feudalism,” in which power and class are based on ownership/control of agricultural land, but I do agree with your prognosis that the wealthy manipulate the political system to their own ends. (That is counter-balanced to some degree by the pandering of politicians to the masses.)

    But, given the fact that the rich are not only richer than everyone else, they also have more access to political power than everyone else, it stands to reason that the more power you put in the hands of overnment, the more you enable the rich to manipulate the system to their own ends. What we then do is create a new class of rich: those who gained their wealth not by creeating something of value, but through rent-seeking.

    Translated into the politics of land use: Wealthy, powerful people enriched themselves by manipulating the system to their advantage. But the rest of us gave them the power to do so by aceding to zoning laws, subsidized transportation and all the other marketplace distortions enabled by government.

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