Tuesday, May 16, 2017

Housing: Part 228 - International and Domestic Migration

One reason we might excuse Closed Access cities for the large amount of migration outflows they produce is because they have long been entry points for international immigrants.  This is still true today.  But according to Census Bureau estimates, they are not much different than the other major cities.

Net international migration into Closed Access cities is about the same rate as the Contagion and Open Access cities.  What makes the Closed Access cities Closed Access cities is that they generally can't even manage to house their own offspring.


  1. Orthodox macroeconomists will scale the very pinnacles of moral righteousness and indignation if anyone suggests border controls.

    But a city can boot out millions of people through property zoning, without a whimper. And then allow only favored parties the right to retail in the city, while macroeconomists go mute.

    In fact, Boston Fed President Eric Rosengren says, "Look at real estate prices! We have to raise interest rates!"

    The whole framework for discussing macroeconomics and monetary policy is rigged.

    1. I think there's a modest conceptual justification for the hypocrisy: within a nation, labor is at least somewhat fluid, especially within a state or region, so it's not too unreasonable to expect people to 'opt out' of a bad local policy by changing localities. However, bad national policy is something most people are stuck with.

      For what it's worth, I think when arguing for less restrictive borders to conservatives, it makes most sense to frame it in terms of property rights just as one would when defending less restrictive land use policies: e.g., defending the right of to lease or rent property to/from foreigners or sell goods to foreigners, or purchase goods from foreigners.

  2. This may be more a demographic than economic question, but do you think cities like NY and SF are at risk of turning into Detroits and Clevelands? As the tech workforce becomes larger and more dispersed and Silicon Valley has more competition, or as costs of living and high taxes drive more businesses from NYC to Stamford, CT or other nearby cities, will they face the same economic and demographic collapse Detroit and Cleveland experienced?

    Will the Bay Area's dominance in tech prove to be more robust than Detroit and the auto industry or Cleveland and steel?

    The situations (the rust belt and some modern coastal cities) seem at least a little analogous to me. A major cities that is dominant in a high-paying industry and enjoys a near monopoly on employers and skilled labor alike takes its dominance for granted and enacts policies tailored to a high-earning population (or at least, relatively innocuous to the high-earning population, though harmful to the remaining poor). But once other cities become more competitive for employers and employees in that industry, wages in the originally dominant city either fall or (if regulations, unions, or high costs of living prevent this) or jobs start to disappear.

    1. Absolutely. I think, in the long term, this would be somewhat inevitable. On the other hand, solving the problem would itself cause Closed Access real estate to collapse in value by 50%+, which would be quite unpleasant itself. At this point, I don't know if there is any pleasant endgame.

    2. The best endgame here is probably a couple decades of 3-4% inflation that preserve or even increase nominal values at the expense of real ones.

  3. In the 1970s, I thought NYC was doomed. Manufacturing had left, crime was rising, the weather was bad. Finance, media, business services would move out I reasoned. Who wants to live in NY and get mugged? The subways were toilets, the police corrupt.

    Remember "Ford To New York: Drop Dead"?

    Well, I was wrong, NYX went through a renaissance. It is more than ever a financial-media capital, Brooklyn is booming etc.

    I think the West Coast cities are even more impervious to long-term decline, as they are much nicer places to live than the rest of the country. The perfect weather along the California coast vs. Atlanta, or, dare I say, Phoenix….

    Kevin Erdmann raises a fascinating point that complete unzoning of property might lead to a reduction in West Coast property values. Banks with loans extended on property might be at risk.

    Perhaps, but I doubt we will ever find out.

    The right-wing embraces property zoning as much as the left.

    We might hope for gradual loosening of property zoning, and "enlightened" city governments that develop housing production targets, etc. As for federal inducement to unzone property, or create "unzoned zones" in exchange for federal largesse, there is little hope.

    The Rust Belt is probably not instructive.