4 ms·

> Reducing land-use constraints in high-productivity New York, San Francisco and San Jose to the level of the median city would expand their labor forces, boost

> Reducing land-use constraints in high-productivity New York, San Francisco and San Jose to the level of the median city would expand their labor forces, boosting U.S. gross domestic product by 9.5 percent, according to estimates from a new study by the University of California at Berkeley's Enrico Moretti and the University of Chicago's Chang-Tai Hsieh. That seems so implausible. The combined population of NYC, SF, and SJ is merely 3% of the US population. I am sure that fraction bunches above its weight, and nearby residents surely contribute too. But how much more effective would NYC/SF/SJ be if they were cheaper to live in?

raldi 11y ago
It's not that the current residents of those cities would become more productive; it's that people currently living elsewhere are less productive in those other places than they would be if they moved to NY, SF, or SJ. So if those cities built lots more homes, people would rush in from elsewhere, and those newcomers would be more productive in their new locations than they were in their old ones, increasing US GDP 9.5%.
- adventured 11y ago
  It's the ~$1.7 trillion boost to GDP that is difficult to believe. The entire GDP of all of California combined is $2 trillion. It's blatantly obvious that 9.5% GDP boost is a fraudulent number.
  - raldi 11y ago
    It's possible that there are errors in the reasoning, but I think you're taking things a step too far with "blatantly obvious" and "fraudulent". Why not read the study and look for oversights?
    - adventured 11y ago
      It is blatantly obvious. When you're talking about a sum almost as large as California's entire economy, I don't believe it can be anything but obvious.
      - NhanH 11y ago
        Thought experiment: If alien landed on NYC and SF, then decided to abduct everyone in the two cities and wipe out the cities, how much of a reduction in US GDP it would be for the next year?
  - bane 11y ago
    GDP affects the entire country not just these localities and cities network into and recruit huge areas around them. NYC isn't Boulder, CO. It has global reach, and actions taken in New York can affect the movement of money all over the planet. An example, suppose somebody can suddenly afford to live in NYC, where they get a job moving commodities through an import/export business. Their contribution to NYC's GDP is minor: salary and profit on the deals they make. By getting this person into position to make these deals, American commodity producers suddenly get additional access to global markets they might not have had otherwise and suddenly corn from Stoy, Illinois is finding its way to China and Wheat from Russell, Kansas is ending up in Germany. Moving those commodities employs truckers, truck manufacturers, ship crews, cargo container companies, shipping companies, etc. and all of those additionally network and recruit other industries: fuel, navigation, refrigeration, packaging, etc. So while our NYC broker friend might only contribute a fraction of a fraction of a percent to NYC's economy (maybe not even a million dollars all told), his impact on the U.S. economy is vastly magnified. He may single-handedly connect enough sellers to enough buyers to keep hundreds of people fully employed and cause tens of millions of dollars of value to be created and distributed. The alternative to him not being in place? The crops go to waste, or the farmers are simply paid to not grow them.
    - adventured 11y ago
      You're talking about a sum equal to the entire economy of New York City and SF combined. A boost to NYC and SF through some (even a lot of) population expansion, will not exceed the total existing GDP of all of NYC + SF. It's an absurd premise.
      - bane 11y ago
        No, I'm saying that the national GDP contributions of a city like NYC far exceed that city's local GDP contribution. In other words, NYC does not exist as a closed system. You don't seem to understand that.
        ThrustVectoring 11y ago
        Estimates for positive externalities per dollar of salary range from -0.5 to 2.0, depending on political assumptions on what the value of, say, banking and teaching is. Like, it helps, but it doesn't seem like the numbers still add up.
Cowen 11y ago
According to some napkin math with these figures[0], the three metro areas combined account for 11.7% of US GDP in 2012. So yeah, I'm not sure what estimate they're using for the growth multiple from liberalizing land-use constraints, but if they're predicting a near doubling of the combined metro economies, it's safe to assume it's pretty high. I do agree that land-use restrictions are currently holding all three cities back, my Friday night napkin math (read: probably wrong, way oversimplified math) just thinks their estimates are a little optimistic. EDIT: Another question would be what's the time frame for this addition to GDP? 9% growth in one year is insanely great. 9% growth over ten years is insanely bad. [0] http://en.wikipedia.org/wiki/List_of_cities_by_GDP http://en.wikipedia.org/wiki/List_of_cities_by_GDP
- eastbayjake 11y ago
  > Another question would be what's the time frame for this addition to GDP? The actual paper[1] simply says that "lowering regulatory constraints in New York, San Francisco, and San Jose cities to the level of the median city would expand their work force and increase U.S. GDP by 9.5%", so whatever timeframe it would take to reduce those regulatory constraints. (In SF that sounds like a project measured in decades, although maybe the imbalance in supply and demand will cause a breaking point that forces the city to engage with real solutions to the problem.) [1] http://eml.berkeley.edu//~moretti/growth.pdf http://eml.berkeley.edu//~moretti/growth.pdf
- raldi 11y ago
  Which part of this chain do you think is the weak link? 1. If SF had typical land-use policies, it could build enough homes to accommodate twice its current population 2. If they did that, they'd be able to fill those homes with people 3. Those people, upon arriving, would have approximately the same productivity as current San Franciscans 4. SF would thus double its contribution to the US GDP
  - robrenaud 11y ago
    It's not as though those contributions come for free though. If talent leaves other places to go to NYC/SF/SJ, those other places become less productive.
cstanley 11y ago
This reminded me of a cover page Economist article in early April called "Space and the City" http://www.economist.com/news/leaders/21647614-poor-land-use-worlds-greatest-cities-carries-huge-cost-space-and-city http://www.economist.com/news/leaders/21647614-poor-land-use... In the article: "The costs of this misfiring property market are huge, mainly because of their effects on individuals. High housing prices force workers towards cheaper but less productive places. According to one study, employment in the Bay Area around San Francisco would be about five times larger than it is but for tight limits on construction" ... "Lifting all the barriers to urban growth in America could raise the country’s GDP by between 6.5% and 13.5%, or by about $1 trillion-2 trillion." Conclusion... not completely implausible

raldi 11y ago

It's not that the current residents of those cities would become more productive; it's that people currently living elsewhere are less productive in those other places than they would be if they moved to NY, SF, or SJ. So if those cities built lots more homes, people would rush in from elsewhere, and those newcomers would be more productive in their new locations than they were in their old ones, increasing US GDP 9.5%.

adventured 11y ago
It's the ~$1.7 trillion boost to GDP that is difficult to believe. The entire GDP of all of California combined is $2 trillion. It's blatantly obvious that 9.5% GDP boost is a fraudulent number.
- raldi 11y ago
  It's possible that there are errors in the reasoning, but I think you're taking things a step too far with "blatantly obvious" and "fraudulent". Why not read the study and look for oversights?
  - adventured 11y ago
    It is blatantly obvious. When you're talking about a sum almost as large as California's entire economy, I don't believe it can be anything but obvious.
    - NhanH 11y ago
      Thought experiment: If alien landed on NYC and SF, then decided to abduct everyone in the two cities and wipe out the cities, how much of a reduction in US GDP it would be for the next year?
- bane 11y ago
  GDP affects the entire country not just these localities and cities network into and recruit huge areas around them. NYC isn't Boulder, CO. It has global reach, and actions taken in New York can affect the movement of money all over the planet. An example, suppose somebody can suddenly afford to live in NYC, where they get a job moving commodities through an import/export business. Their contribution to NYC's GDP is minor: salary and profit on the deals they make. By getting this person into position to make these deals, American commodity producers suddenly get additional access to global markets they might not have had otherwise and suddenly corn from Stoy, Illinois is finding its way to China and Wheat from Russell, Kansas is ending up in Germany. Moving those commodities employs truckers, truck manufacturers, ship crews, cargo container companies, shipping companies, etc. and all of those additionally network and recruit other industries: fuel, navigation, refrigeration, packaging, etc. So while our NYC broker friend might only contribute a fraction of a fraction of a percent to NYC's economy (maybe not even a million dollars all told), his impact on the U.S. economy is vastly magnified. He may single-handedly connect enough sellers to enough buyers to keep hundreds of people fully employed and cause tens of millions of dollars of value to be created and distributed. The alternative to him not being in place? The crops go to waste, or the farmers are simply paid to not grow them.
  - adventured 11y ago
    You're talking about a sum equal to the entire economy of New York City and SF combined. A boost to NYC and SF through some (even a lot of) population expansion, will not exceed the total existing GDP of all of NYC + SF. It's an absurd premise.
    - bane 11y ago
      No, I'm saying that the national GDP contributions of a city like NYC far exceed that city's local GDP contribution. In other words, NYC does not exist as a closed system. You don't seem to understand that.
      - ThrustVectoring 11y ago
        Estimates for positive externalities per dollar of salary range from -0.5 to 2.0, depending on political assumptions on what the value of, say, banking and teaching is. Like, it helps, but it doesn't seem like the numbers still add up.

Cowen 11y ago

According to some napkin math with these figures[0], the three metro areas combined account for 11.7% of US GDP in 2012. So yeah, I'm not sure what estimate they're using for the growth multiple from liberalizing land-use constraints, but if they're predicting a near doubling of the combined metro economies, it's safe to assume it's pretty high. I do agree that land-use restrictions are currently holding all three cities back, my Friday night napkin math (read: probably wrong, way oversimplified math) just thinks their estimates are a little optimistic. EDIT: Another question would be what's the time frame for this addition to GDP? 9% growth in one year is insanely great. 9% growth over ten years is insanely bad. [0] http://en.wikipedia.org/wiki/List_of_cities_by_GDP http://en.wikipedia.org/wiki/List_of_cities_by_GDP

eastbayjake 11y ago
> Another question would be what's the time frame for this addition to GDP? The actual paper[1] simply says that "lowering regulatory constraints in New York, San Francisco, and San Jose cities to the level of the median city would expand their work force and increase U.S. GDP by 9.5%", so whatever timeframe it would take to reduce those regulatory constraints. (In SF that sounds like a project measured in decades, although maybe the imbalance in supply and demand will cause a breaking point that forces the city to engage with real solutions to the problem.) [1] http://eml.berkeley.edu//~moretti/growth.pdf http://eml.berkeley.edu//~moretti/growth.pdf
raldi 11y ago
Which part of this chain do you think is the weak link? 1. If SF had typical land-use policies, it could build enough homes to accommodate twice its current population 2. If they did that, they'd be able to fill those homes with people 3. Those people, upon arriving, would have approximately the same productivity as current San Franciscans 4. SF would thus double its contribution to the US GDP
- robrenaud 11y ago
  It's not as though those contributions come for free though. If talent leaves other places to go to NYC/SF/SJ, those other places become less productive.

cstanley 11y ago

This reminded me of a cover page Economist article in early April called "Space and the City" http://www.economist.com/news/leaders/21647614-poor-land-use-worlds-greatest-cities-carries-huge-cost-space-and-city http://www.economist.com/news/leaders/21647614-poor-land-use... In the article: "The costs of this misfiring property market are huge, mainly because of their effects on individuals. High housing prices force workers towards cheaper but less productive places. According to one study, employment in the Bay Area around San Francisco would be about five times larger than it is but for tight limits on construction" ... "Lifting all the barriers to urban growth in America could raise the country’s GDP by between 6.5% and 13.5%, or by about $1 trillion-2 trillion." Conclusion... not completely implausible