Charter Cities Podcast Episode 41: Market Urbanism with Scott Beyer
Scott Beyer is the Founder and CEO of the Market Urbanism Report, a media company dedicated to advancing the free market’s classically liberal approach to urban issues. Tune in to hear Scott’s definition of market urbanism and how it relates to the traditional free market.
Key Points From This Episode:
• An introduction to today’s guest, Scott Beyer.
• What market urbanism is and what the Market Urbanism Report involves.
• The relationship between the market urbanist and the traditional free market communities.
• How Scott’s audience varies drastically from a partisan and ideological perspective.
• Why this happens: people who like the urbanism aspect tend to be on the left, and then the people who like the market aspect tend to be on the right.
• His opinion that no city in the US perfectly embodies market urbanism.
• Free market oriented transit in Mexico City: Peseros or Jitneys.
• The incentive that the Singaporean government has put in place to build housing.
• How private cities around the world implement liberalization, for example, Gurgaon, India.
• How market urbanism zoning differs from the kind of zoning we have now.
• The differentiation that the Euclidean model necessitates in comparison to the market urbanism model.
• Shoup-piling and how Scott would go about this as someone who writes for the public.
• MTRs relationship with zoning regulations.
• The history of transportation and how the railway began to really struggle.
• “Open Access” Competition Can Improve Intercity Rail, the article he recently co-authored.
• His views on what is possible in terms of creating open access competition for intercity rail.
• How the private sector creates a barrier to entry in terms of infrastructure.
• Why the smaller government spend on infrastructure is usually wiser than the federal government.
• What cross laminated timber is and how it is useful for the future of construction.
• Why he isn’t completely opposed to the idea of public or quasi-public housing.
• His predictions for the impact of cryptocurrency on how cities are operated in the future.
• What Municipal Utility Districts are and how they impact housing and urban development.
• Scott weighs in on what needs to be in place within a state for market urbanism to take off.
• The world tour he is doing for research purposes to assess the future of urbanization globally.
• We discuss the concept of cyperpunk, green punk and solar punk cities, with Tapei as an example.
Mark: Hello and welcome to the Charter Cities Podcast. I’m your host, Mark Lutter, the Founder and Executive Director of the Charter Cities Institute. On the Charter Cities Podcast, we illuminate the various aspects of building a charter city from governance to urban planning, politics to finance. We hope listeners to the Charter Cities Podcast will come away with a deep understanding of charter cities, as well as the steps necessary to build them. You can subscribe and learn more about charter cities at chartercitiesinstitute.org. Follow us on social media. @CCIdotCity on Twitter and Charter Cities Institute on Facebook. Thank you for listening.
Jeffrey: Hi. I'm Jeffrey Mason, Researcher at the Charter Cities Institute. Today on the podcast, we're joined by Scott Beyer. Scott is the Founder and CEO of the Market Urbanism Report, a media company dedicated to advancing the free market’s classically liberal approach to urban issues. He's a roving Urban Affairs journalist based in New York, who writes regular columns for Governing Magazine, The Independent Institute, housingonline.com, and other publications in addition to the Market Urbanism Report. He is also the author of the upcoming book Market Urbanism, a vision for free market cities. We hope you enjoy this episode.
Welcome to the show, Scott.
Scott: Thank you, Jeff.
Jeffrey: So to get started, can you tell us what is market urbanism and what is the Market Urbanism Report?
Scott: Okay, so market urbanism is an ideology that calls for crossing free market economic policy, rooted in the classical liberal tradition, into city issues specifically. Market Urbanism Report is a think tank that I own and operate that is dedicated to advancing the market urbanism idea. So I started a couple years ago, have several employees. I'd say it's a weekly blog, and we have a podcast, and I'm looking into launching a video series. We have several social media threads accounts that with a 50,000-person combined following. So the goal of the organization really is just to advance the market urbanism idea.
Jeffrey: Cool. As you mentioned, it's sort of rooted, the idea is rooted in this sort of classical liberal free market tradition. I sort of want to dig into a little bit the relationship between sort of the market urbanist community and sort of the traditional free market crowd. You recently shared on the Market Urbanism Facebook group and a blurb for your upcoming book, Randal O'Toole, a land use and transportation scholar at the Cato Institute, someone of a bogeyman, I think, within the urbanist community writes, and I quote, “Market urbanists claim to believe in free market outcomes that when the results of free market processes differ from what the market urbanists think they ought to be, they're as willing as any other central planners to use the power of government.”
Scott Beyer isn't as bad as some of the market urbanists, but he is overly enamored with increasing urban densities. That's sort of one view of the traditional free market crowd. But conversely, you also see this sort of pro-market urbanist crowd with folks like recent podcast guests, Ed Glaeser, institutions like the Mercatus Center, the Manhattan Institute, are kind of aligned with this market urbanist approach. Can you talk a little bit about the tensions between market urbanists and sort of the traditional sort of free market community, who's had a think stand and sort of the battle for ideas there?
Scott: Yes. Well, speaking about my audience specifically, it's very, very almost radically so diverse from a partisan perspective and an ideological perspective. It's actually amazing, really. Like I've run polls on my Facebook group about what do people on the group identify as politically, and it's all over the charts. You'll get like half of what you would say are right wing ideologies like libertarianism and conservatives. Then literally half of them will be like DSA progressive liberal. So what's going on there as a lot of people who like the urbanism aspect tend to be on the left, and then the people who like the market aspect tend to be on the right.
But at the end of the day, if I was to describe a core audience, it would be the types of organizations you just described like Mercatus, absolutely. A lot of self-identified Mercatus Center, and so that's kind of a groundswell there. Manhattan Institute, same deal. I would say a typical follower would be like a young libertarian who lives in a city and is very like frustrated and dejected about the state of their city and just the way that the government has botched certain things. So I think like the Randal O'Toole crowd – By the way, he is a friend. We've been friends for a while, and he was actually helpful to me very much when I was first getting started in my journalism career. But, yeah, I think the old school libertarian, like say the boomer generation libertarian, is probably more oriented to ruralism and suburbanism and sprawl and roads.
I'm not against any of that, necessarily, but I don't think it's a market outcome. Or I think things would be developed differently in the United States if we fall into markets. So he and I just have kind of like a generational divide there, even though we both call ourselves libertarian.
Jeffrey: Absolutely. Is there one city that you think best exemplifies the market urbanist approach? Or if there isn't sort of one go-to example, this could be anywhere in the world that you'd like to go to, what cities might be featured in sort of the market urbanist grab bag, transportation from city A, the zoning of city B, and so on?
Scott: Well, I could go in a lot of different directions, I mean, with that. I think in the US, there's not anything that's really all that close. You could find specific aspects of different cities like Houston is probably the most liberalized, and really Metro Houston is probably the most liberalized land use model, the closest thing. I view Houston as a success in some ways in that it's extremely fast growing, and yet it has managed to stabilize home prices. So they’re kind of that elastic. They've allowed themselves to have an elastic market that is kind of edging towards the marketer but as a model.
Other examples would be – I’m just kind of spitballing because they're very specific from place to place. But I look at like the private Jitney or Colectivo industries in various particularly developing world countries. By that I'm talking about like, for example, when I went to Mexico City, there's like this little private bus network of what we would call Jitneys and what they call Peseros that have really cheap fares, and they typically get the working class around, and they complement the public systems. So that sort of free market-oriented transit, you will find all over the world, and I think you would have them in the United States. But we have very protectionist regulations that prevent this sort of thing from happening. So on the transportation end, you've got that.
I think as far as like the housing aspect of it, I would have to travel the world more to know exactly who has done the free market version. But I would look at a place like Singapore, for example. It’s not a private sector system, but they have incentives in place too for the government to build a lot of housing and build at very high densities. They've managed to stabilize prices more than a lot of competing Asian cities. So it's kind of like little bits and pieces. You can look at different private cities around the world. Gurgaon, India, I hope I'm pronouncing that right, a private city on the outskirts of New Delhi that basically just allowed very liberalized land use and allowed a lot of corporations to come in and build whatever they wanted. So it's little specific examples like that, where you'll see liberalization in various aspects of city administration. Then what follows is a lot of private sector activity.
Jeffrey: Yeah, we actually have a – There's a post on our website about Gurgaon, India. So I encourage folks to go give that a look. In addition to sort of writing about market urbanism, generally, on the report, you also have specific proposal for what you call market urbanism zoning. Could you talk about that and sort of how that in practice would differ from the kind of zoning that we have now, and what are the problems that need to be fixed with zoning?
Scott: Well, yeah. Market urbanism zoning focuses less on regulating, like having set regulations for a specific land plot, and more on what the externalities from the land would be. So to contrast this from traditional zoning, with traditional zoning particularly, what they what we call Euclidean zoning here in the United States, is we separate land uses. We separate retail from residential and office and so forth. The idea is it's kind of the cost benefit of that thinking is kind of inexact. It's like we say, “Well, of course, we need to separate retail from residential because retail makes a lot of noise, and that brings a lot of traffic, and so on and so forth.” Market urbanism zoning would look at this specific externalities that are coming from a very specific land use and say we're going to allow this by rights. But if it creates certain externalities, you either need to address those externalities in some way. Or maybe it just won't be allowed.
A specific example, say you are a bar owner who wants to open in a residential neighborhood. Under a Euclidean model, that would just absolutely be outlawed. Under a market urbanism zoning model, it might actually be allowed under some circumstances. So if the bar is making a certain amount of noise or is expected to, like to break the laws for decibel limits, you could get in some sort of Pigouvian negotiating tactic, where you pay the people who are going to be impacted by the noise a certain fee on an annual basis. They can agree to accept that fee in exchange for allowing the bar. Or maybe the bar can build, can like add certain insulation or various other building code aspects to the building to prevent the noise from permeating out into the street. So it's rather than outlawing things on an as is basis. Actually, allow things on a by right basis and then address the externalities in a way that incorporates market-based payments or something else.
Jeffrey: We love a Coasian solution.
Scott: Yeah, absolutely.
Jeffrey: So while we're talking about land use and maybe suboptimal land use, I know something that market urbanists like to talk about a lot is parking. Or among market urbanists, I think the conventional wisdom essentially follows that too much space in American cities has been dedicated to parking, and that's caused considerable economic damage, and that that parking generally where it's provided should not be free. But at the same time, I would wager that majority of Americans would not be happy if their parking was no longer free.
How would you, as someone who sort of writes for the public, go about Shoup-piling, you might say? Thinking about the godfather of parking economics, Donald Shoup, how would you go about selling Americans on a sort of more market version of parking or other market-based mechanisms like congestion pricing, toll roads, and other sort of market urbanist favorite policies?
Scott: Well, yeah, that's a lot of different things, and I think it just depends on the situation. Probably the example where the parking issues become most dramatic is if you live in a single-family infill neighborhood, like close to an urban core, you're probably already having – Like if people don't have on-site parking for their homes or don't have a lot of it, and they're spilling over onto the curb side, you're probably going to have a lot of parking congestion. I know that in a lot of outlying neighborhoods of San Francisco, you actually have to like cruise for 5 to 10 minutes to find parking on a nightly basis. So that would be a very inconvenient thing to have to live with if you're a resident there.
What Shoup has proposed, and I agree entirely, is have a paid parking permit system for curb space. Because what ends up happening in a lot of these neighborhoods is people will own three to four cars, and they'll just use it as storage. Like they'll use the curbside as storage, and they seldom even use the cars because they don't want to lose their space. So I think if you had a paid market base permit system, you would buy the rights to a specific curb spot and you pay a little bit more per year, but you have the convenience of actually knowing you'll be able to park in front of your house, and it'll disincentivize you to own multiple cars that you never use. So I think it's a way to pay for the services that you use and prevents the tragedy of the common situation of having everybody use a space for free.
Jeffrey: But you also have the right to tow away the jerk that parks in front of your house and take your spot.
Scott: Right, exactly. Yeah, I mean, it – We do have – Like you'll see this in different cities like Washington, DC. I've seen it in various other cities where you will have curbside and residential areas that say it's for parker permit or neighborhood residents only. The problem with those programs is they're very, very underpriced. I don't know the specific situation with DC but I've read about examples where you pay like $25 a year for the right to have your car permitted. That's extremely undervalued. So I think the way a market urbanist looks at this is we want actual market economics to be in pricing to be applied to what really amounts to valuable real estate.
Think about if you're in a very wealthy neighborhood, say, in Brooklyn. People with disposable household income would pay potentially 10,000 to 15,000 per year, I could imagine, for the right to park right in front of their house. That's not only market economics at work, but it's also would be very good for the city from a revenue standpoint.
Jeffrey: Absolutely. So while we're talking about how to best utilize very valuable land, let's talk about Hong Kong's metro system. I think you probably know where I'm going with this. So Hong Kong’s public transportation company, MTR, is famous in part because it is one of the few major transit systems in the world that not only generates a profit but generates huge profits. Prior to the pandemic, it regularly generated annual net profits in excess of $2 billion. In the first half of this year alone, it's already generated profits of over 340 million. By comparison, every major transit operation in the United States is unprofitable and requires substantial subsidies to operate. Part of the Hong Kong system’s profitability has been attributed to what's called the Rail plus Property model, in which MTR, the company operating Hong Kong’s transit, also owns and develops property above and adjacent to its stations.
I can think of some pretty horrific land use intensity around metro stations here in DC and some of the surrounding suburbs, which could maybe be improved under this kind of model, although truthfully I would have my doubts about a model’s ability to execute on that. But why hasn't this model been more widely adopted in the United States, and would it work if you think it was tried here?
Scott: Yes. So why hasn't it – Well, first off, I will say that I am very familiar with MTR. In fact, I have a book on market urbanism coming out in a couple months. In one of the chapters, I used Hong Kong MTR versus New York MTA as a study in contrast because they cannot be more dissimilar in just how they're run. Okay, so the secret sauce to Hong Kong MTR I'd say, first and foremost, would be that it began as a fully public entity. Then once it proved profitable, they actually went public on the stock exchange and sold 75% of their shares to investors. So already, like I think that is key because basically what you're saying is that 75% of it is owned by private investors. That is going to change the entire incentive structure because once you have private investors who have like voting power within the corporation and obviously they're profit-minded and that's why they're buying the shares in the first place, it's going to change the entire just viewpoint of how you need to operate the system.
So moving on from there, now that it's a public private venture, yeah, you have a bus system and a subway system, and then you have a lot of landholdings around those transport spines that MTR also is. There is very much of an incentive to develop those as densely and as profitably as possible. The profits from the – It’s really a value capture strategy. Like the profits from the private development gets sunk back into the rail system. Then having a really good rail system that's well-funded restores and increases the financial viability of the developments. So it's kind of a feedback loop. Another aspect there would be if you build a bunch of housing and retail around transport lines, then you have a lot of people who then want to use the rail. So it's a constantly self-reinforcing feedback loop between the land use and the transit.
Why don't we do this in the United States? I'd say it just has to do with the fact that our MTAs and our receptors and our parks are not 75% privately owned. We do not have investors really pushing the line and saying, “Hey, let's get as much profit in the system as possible.” Government agencies, they don't have the incentive to be profitable or to be competent. So what we have is situations like New York MTA does actually own a lot of land around the system. So does New Jersey Transit. So does Bart. I mean, they have land plots around their system but they do not develop them densely and, again, because there's no incentive to. I think also to be fair, they have at times tried to, and there's just a lot of NIMBYism in those localities against building densely around transit.
Jeffrey: Do you know in the case of MTR, are they still subject to sort of the zoning regulations or whatever other kind of building regulations would apply elsewhere? Or do they have any kind of special exemption?
Scott: I don't know off the top of my head, but Hong Kong is actually a pretty tightly regulated place. I think they regulate more than they need to, and a lot of their land is subject to not being developed at all. So if anything, the fact that MTR is still a political actor and a government agency by some level of ownership, they probably have development rights that non government actors would not have. But I don't know the specifics.
Jeffrey: So let's stay with rail for a moment. You've previously written about how the American freight rail system is world class. Why are we so good at freight rail?
Scott: Well, I think a lot of it is just priority. Like we used to have – Obviously, we built a pretty robust rail system just from a track level. Dating back to the 1800s, we had land grants that that enabled private operators to build track all over the country. So that was a good smart early decision of just establishing the right of way to build the infrastructure. But as time went on and as the automobile started to dominate share through the 1900s, passenger rail began to really struggle. Freight rail, maybe not as much, but it was struggling as well, and we made political decisions really in the 1970s to give priority to freight rail over passenger rail.
Then another thing that we did was in the 1980s, or actually I want to say the late ‘70s under Jimmy Carter, we deregulated the industry. So it used to be there was talks of nationalization back in the ‘70s, and we actually went the opposite direction and deregulated and had certain anti-monopoly policies in place as well. So there's a relative diversity of freight rail operators around the country, and a lot of it is very regional. Well, in Texas, you get a lot of different operators. But on the East Coast, it's more of like a CSX and Norfolk Southern, I want to say. Then once you get out west, you've got more BNSF and Union Pacific. So there's a lot of diversity and competition within the industry. Yeah, that in my mind is why it has done so well.
Jeffrey: So it’s a sort of follow up on this. Others a recent post on Matt Yglesias’s newsletter, Slow Boring, by Eric Goldwyn and Jonathan English, that noted that 97% of the route miles operated by Amtrak are owned either by one of these freight companies or by a local commuter rail system. So how could this problem be overcome so that Amtrak or perhaps a truly private intercity passenger rail service, as I imagined you might favor, would attract riders and be profitable?
00:23:04 Scott: Yeah. Well, that is, in fact, the problem. I mean, I think they're spot on there, is that we decided to give priority to freight rail. In fact, they own a lot of the track. In some cases, state governments own the track, and they're giving priority to freight rail. I think there's a lot of bureaucracy about ever reversing that. But one exception to this is that Amtrak actually does own a lot of the track along the Northeast quarter, and the Northeast quarter in my mind is the main area for passenger rail to begin with. That’s where you look at Amtrak and you think, well, there's not a lot of excuses here because you do own the track, and you haven't really like produced a great service out of this.
Actually, just me and my staffer, Ethan Finlan, just coauthored an article about how that track ought to have what we call open access, which is the idea of multiple passenger rail services competing on the same track with the competitors being able to lease the track space from Amtrak like, “Let's open up the industry and see who wins.”
Jeffrey: Are you optimistic about this happening anywhere?
Scott: It's tough to say. I mean, I think Amtrak has been very protectionist. So, no, not really. But you'd be surprised. In the theoretical sense, there's a lot of private industry that does want to serve the Northeast quarter with rail. I mean, Elon Musk has been talking about it with his tunnels and the company Virgin, which does all kinds of transportation in the UK and elsewhere in Europe. They want to operate on the Northeast quarter as well and they even have a testing site in West Virginia to try to test out the Maglev concept. So it's like in a theoretical market-based system, private operators would absolutely already be serving in this area. But in the political system that we have, you've got a one-trick pony in Amtrak, and I don't see them wanting to give up that power.
Jeffrey: Was there a turning point for Amtrak that was found I believe in the early ‘70s, where it may have been on the right track but then sort of ended up in its current state? Or have we kind of always been on this path to where Amtrak isn't really good at its core mission?
Scott: Well, I mean, passenger rail itself was on heavy decline really after post World War Two America, when we were subsidizing something else, interstates obviously and automobility. That's when passenger rail really began to struggle, and Amtrak was created out of those struggles as being like, “This is our last grasp to do passenger rail in the United States on an intercity level.” I don't know that it was ever really that good. I wasn't living back then, so I can't use a frame of reference. But as long as I've been studying the issue, it seems like Amtrak has always been a political battle between how much it should get funded, and it's never really solvent. So that's part of the problem. It’s always relied on political funding. Then obviously, the service itself is not exactly pleasant, compared to intercity rail in other parts of the world.
Jeffrey: So speaking of Amtrak gaining support, Congress just passed a $1.2 trillion infrastructure package, some of which of that is for rail, which I believe you've written critically about. So without reforms to control costs for infrastructure like reining in NEPA and some of the other sort of major tools of what might be called vetocracy, do you actually expect this spending to have much of an actual impact? Is there anything in the bill that you're positive about, looking through a quick list of what's in there? Lead pipe replacement seems like a big but maybe underappreciated part of it. Carbon capture sport seems good. But a lot of the money going to these kinds of things is dwarfed by what's going to what you might call big ticket or traditional infrastructure, roads, bridges, rail, broadband, etc. So what's your assessments of the infrastructure package?
Scott: Well, the thing that makes me against all this kind of stuff is I guess I see the private sector. If there wasn't a huge government subsidy in place, I think the private sector would step up and serve a lot of these needs. I mean, rural broadband would be an example. We have entrepreneurs who are trying to accelerate a race in the space. A lot of that, the reason for that is not necessarily just to hang out on the moon. They actually want to create a satellite system Internet that can potentially traverse the whole globe.
Then the other thing, it’s like high speed rail. I don't know if that's really a smart investment when you have, like I said earlier, private operators who are actually looking ahead of the curve and want super high speed rail like Maglev technology. It seems like a lot of this stuff could potentially be obsoletes by the time it gets built. Then I think the other, and this is more of like a political economy point, when you federalize infrastructure policy, the way our representation works in the country, a lot of it gets redistributed to rural areas, which, in my mind, don't have – I don't think the bang for your buck on infrastructure spending is going to be strong if you're building roads in rural parts of flyover country, when you could be building infrastructure and cities that were the population and the GDP are actually focused.
Part of the hostility to federal infrastructure spending on my part is kind of like a libertarian perspective of just I think that smaller governments are going to spend more wisely than the federal government. But a lot of it is urbanist. It's just the idea that we should be doing infrastructure investment. If we do it at all, it should take place in big cities. Instead it's getting redistributed to what I see as being projects that have a low cost benefit ratio in relatively remote parts of the country.
Jeffrey: Yeah, absolutely. On a different thread, what is cross laminated timber and why is that such a big deal for the future of construction?
Scott: So cross laminated timber is where they make extremely solid beams out of out of wood, which really wood in of itself is not that condensed of a material. But if you use machinery to condense it, then it becomes apparently as structurally stable as concrete and steel. Different builders are using the cross lamination process to get lumber that has the structural sturdiness of concrete and steel. So therefore, they are using it to build high rises. So we're seeing different timber towers popping up around the country.
As usual, the regulations are behind on this. A lot of cities won't allow timber frame buildings that are above four stories or six stories, when in reality timber towers can be built as high as steel towers are. I even read about a Tokyo project where they're going to be building something like a 1,000-foot super tall using timber. So we'll look forward to that.
Jeffrey: That's very cool. So other places have kind of been doing this for a while already?
Scott: They have. It’s more of an Asian thing. I think they're more ahead of us than that. But it does happen from place to place. I've heard about ones in Portland and Minneapolis, and I think Cleveland is building one. Then even in my hometown of Charlottesville, literally a block away from where I was living, we are building, I want to say, either eight or nine-story timber office tower.
Jeffrey: In terms of the advantage of doing this, is it just a cost thing? Or are there other benefits of building with this material over concrete and steel?
Scott: I would say the main benefit is environmental, just in multiple ways. I mean, some of it is that wood captures carbon. I mean, a lot of it is, whereas steel and concrete actually emit carbon, and they attract heat, and they turn cities into heat islands that make everything hotter. But also the extraction process, like you can – When you're getting – For example, steel is made from coal. To get coal, you have to extract from the ground and basically dismantle mountain tops to get the product to create coal, whereas with timber you are planting trees. Then once you cut those trees, you can replace them. So it's a less extractive and environmentally harmful way to produce building materials.
Then I think beyond the environmental benefits, what I understand, it's easier to assemble timber because with a lot of – When you're assembling a steel structure, you're having to use a lot of very specialized skill, like welders and everything. So it takes a lot of labor to build a steel tower, whereas with wood it's basically just shavings and having to use machinery to develop, to shape the wood the way you want to with the lengths you want to. But after that, it's sort of like just assembly. It's like almost pre-manufacturing assembly. So it's a much easier way to build a building than using steel.
Jeffrey: That's very cool. I'm looking forward to there being more, what, skyscrapers. So let's talk about public housing for a moment because it says this is something that you've written about a bit as well. Public housing in the US I think has largely been a failure. I think that's pretty common view. But yet in addition to the traditional EMB, NIMBY divide, we've also seen the rise of the PHIMBYs, Public Housing in My Backyard. These folks insists that public housing can be done successfully, not just on sort of a need basis but on sort of a wider use for the general public basis, and often point to Vienna, Austria as one case study of saying this can be done and it can be done well.
As you mentioned earlier, although it's not quite the same as Vienna, Singapore has been widely lauded for its sort of quasi-public housing model. Is there a role for sort of general public housing in America, and could it be done well, or are there better alternatives?
Scott: Well, I think it could be. I mean, the is kind of like, “Well, we just need more housing in general.” So I'm not completely opposed to the idea of public housing. If you were to do that, I think the best way to do it, we're already seeing it to some degree, is for the local government to buy land and put some sort of deed in place that establishes it as land that is supposed to be used for affordable housing. So there will always be an affordability component to this land, and it has to remain a certain percentage affordable, etc., etc., etc. That you could get some public housing out of that.
I happen to think that there are any number of affordable housing programs that would work better than public housing because, again, you're dealing with that incentive problem, and sort of the public choice falls of having a government bureaucracy run your housing. The thing about Singapore, for example, is, yes, the government does build and manage the units, but the actual ownership structure is the households themselves own and sell units when they want to. So you're getting – Once you put private ownership into the process, there is more of an incentive in place to actually keep the units nice.
Another option, alternative that I think would be better than public housing is something like LIHTC, where you use low income housing tax credit. That's a tax credit that private developers leverage to build new affordable housing. Then the stipulations of receiving the credit then are that you have to keep the units affordable. I've written about and studied a lot of LIHTC projects. I think they're typically very good quality units that far exceed what you will find in public housing. Then, of course, like I think the main market urbanism message is just build a lot of housing everywhere, and it'll be cheaper, and you won't have as much need for government subsidy.
I guess the challenge I would have for the pro-public housing people is would you rather live in a government run housing complex over, say, a LIHTC project or having a Section 8 voucher where you can choose what development you want to live in? Or generally just having cheaper private sector housing?
Jeffrey: Bill, baby bill.
Jeffrey: So let's talk about a topic that, given your audience's background, I think they probably have some interest, and I know some of our audience is interested in as well, and that's crypto. So mayor elect of New York, Eric Adams, has said he's going to take his first three paychecks in Bitcoin, joining Miami Mayor Francis Suarez as sort of a booster for the crypto and broader tech industries to locate in their respective cities. But looking beyond just where tech startups are going to locate and where this kind of activity is going to be clustered, do you expect crypto and blockchain and these kind of technologies to actually have a tangible impact on how cities are operated in the near future? Or would you basically just sort of chalk this up to hype for now?
Scott: I think it's way more than hype. I mean, I'm very positive about these technologies and I think the more that cities try to like not only incorporate this but brand themselves as tech hubs, I think the more positive direction that is. The thing is, is that it seems like this is getting more traction in the private city space, which I know is very much your wheelhouse. But, I mean, like the – I want to say his name is MarC Lore, the former Walmart billionaire who wants to build a city out in the Nevada desert.
Jeffrey: Telosa, yeah, I think it's called.
Scott: Yeah, Telosa. He's talking about that running on the blockchain and having its own currency. I hear about a lot of different like SEZs. What's the other one? Is that Wittenstein that has all of its entire government operation is on the blockchain?
Jeffrey: I know Estonia is very big on ego.
Scott: Yeah. It seems like the future of this would be more in those special economic zones or charter cities or various experimental communities that it wouldn't be in the bigger cities. But I'd say the more the better.
Jeffrey: Yeah. So speaking of private cities and charter cities and SEZs, you compare what are called municipal utility districts or MUDs, which are seen common in Texas than charter cities. So what is a MUD, and what's been their impact on housing and urban development in Texas?
Scott: Yes. So a MUD is certainly not a charter city in the fullest sense. But I would say it's the closest thing that we have in the United States, and I just gave a talk at the at a Private Cities conference called ArchAgenda that basically encouraged anyone who was watching to come open a private city in America. I think the Texas MUD would be the best place to do that. First off, I think the reason for that is Texas itself is a very hot economy right now. It's far more liberalized than much of the rest of America. So a lot of corporations and people are already flooding into Texas, and it's growing faster than almost every other state. So it's like that's kind of the main fundamental right there. It's just that there's demands for living in Texas.
But I think also there is a utility model or a special district model that is particularly inductive to like private city formation and, yeah, that's called the MUD. So basically, the way it works is developers form, like they assemble land and unincorporated lands, and they float bonds to private investors, and then they're able to incorporate as a brand new city, and they just pay off their bonds by – They use the bond money to build infrastructure, and then they pay those bonds off by building homes and just paying the debt. But the beauty of being able to incorporate your own city in Texas under the MUD model is that counties do not have zoning power, so you can – That already would like get me worked up, is that you can go and you don't have to have a zoning code if you don't want. Or you can zone it however you want for as much density.
Then there's just more autonomy from like as far as what kind of transportation system you can run. So it's sort of like if you're one of these whiz bang tech type people who is hyper, forward thinking, and all into the charter cities and SEZ thing, and say you want autonomous vehicle testing, or you want to test out blockchain or the metaverse or whatever it is that you're interested in, I think you could go into Texas and kind of have autonomy from the larger state and federal government more than you would elsewhere. They'll just kind of let you do what you want, and I think that's really what we're all trying to get for there.
Now, grants and most MUDS in Texas, and there's several hundred throughout the state, most of them are around Metro Houston, and a vast majority of them are not used that way. They're just suburban communities, basically. They have really tight HOA rules, so they look like anywhere in America. But I think the MUD, if you do want to think beyond that model and you do want to have the more like, I guess, libertarian approach to city building, the MUD would probably be the best model to use in the United States.
Jeffrey: Is the MUD model, would you say that similar to kind of what Disney had when they were first setting up Disney World?
Scott: It is, yeah. I mean, and there's multiple examples around the country. I think every state in the US has a special district model, and the extent to which those special districts are loose or not loose in grant autonomy and are just easy to build or not just depends on the state. Some states are more regulated. California, believe it or not, was able to have a private city. Irvine, California, at some point, that has been wildly successful. The owner of the company that built that city now says that this would be impossible to replicate in California because of all the regulations.
I think kind of the same thing with what you're talking about in Florida. Celebration, Florida was the city built by Disney. Since then, Florida has really cracked down and actually become more NIMBY against the sort of thing. Arizona is very pro special district and pro incorporating new cities. Georgia is very good on this. A lot of the city's north – The little towns north of Atlanta are private communities that are newly incorporated and have outsourced a lot of their government. So it can be done in other parts of the country.
Jeffrey: Cool. So there are these little different little examples, both here and also of major examples that you mentioned earlier abroad, of places where market urbanism or at least some elements of sort of market urbanist principles are playing out well. These are all in sort of high-income developed countries. Do you think market urbanism can work or work effectively in places where there's more limited state capacity that the state can't provide sort of a baseline level of dispute resolution of some public goods? In Sub-Saharan Africa, for instance, most cities are sort of sprawling outwards in slums because neither the state, nor the private sector has the sort of either capacity or the incentives to deploy the infrastructure, public services, electricity, etc. to support more density and more orderly settlement. So do you think there's sort of a baseline functionality of the state that is sort of a prerequisite for market urbanism? Or is this wrong? Can market urbanism work in these kinds of settings?
Scott: Well, I will have a much better answer for you in a couple years because I'm actually starting in early 2020. I'm embarking on a two-and-a-half-year world tour, yeah. I did something in the United States a couple years ago, where I lived in 30 different cities for a month each over a couple years of timespan. I'm going to be doing a trip around the globe, living in 100 different cities for about a week each, starting in Latin America and going through Africa. Then Asia will be the final year. So obviously, like more emerging or developing world economies because I want to be able to answer that question of what is the future of urbanization because I think it's happening in those places more than it is in the US and Europe. Those are the places that are really growing quickly, so I want to get a better sense of what is the future of urbanism in those places, how can market urbanism help, how do those principles apply to what's happening.
But I think the early answer, like the hypothesis going into this trip, is looking to places like say Prospera in Honduras, where they do want to build I guess what they call that a ZEDE that is separated from the Honduran government and is basically just a more experimental and new way of running the city government. So I'm going to be going to places like that. I'm hearing about 3d printed villages being built in places like Africa, in Haiti, and places like that. So I'd like to go and look and see how that's working and maybe get a better sense of can we have a new way of living that is divorced from what you described as a very dysfunctional, large state government.
Jeffrey: I'm looking forward to hearing the results of your journey. That sounds very cool. So while you were traveling to the 30 different cities in the US, was Milwaukee one of your cities that you stopped in?
Scott: I went there for a weekend during my Chicago stop.
Jeffrey: I was going to ask. I'm sure you saw Nolan Gray recently had a Best City in America bracket tournament. Milwaukee, somewhat surprisingly, beat out Austin, Miami, San Francisco, Minneapolis, Chicago, and New York to claim the title of Best City in America in this bracket. But what's your explanation? Why is Milwaukee the reigning champ for Best City in America? Let’s make the best case you can.
Scott: I have no idea. I have no idea because I've been to all those other cities you mentioned. That's a tough one. I wonder if they like did some sort of marketing or like hijack the poll in some way.
Jeffrey: I think it made the Milwaukee newspapers before the tournament was over.
Scott: Yeah. I mean, I guess the best thing I can say about Milwaukee and various other Midwestern cities, because I actually just went to Cleveland this weekend for a family wedding and was able to see a lot of Cleveland, is that we don't have a lot of that kind of urbanism left. What I mean by that kind of urbanism is like the old school Midwestern urbanism of a lot of brick warehouses, very specific vernacular, like Midwestern Foursquare vernacular, and so forth. I guess what I also think of Midwestern cities is being as like they're not row homes, the way you would find in Philly or New York, but they're very small lot, single-family, detached housing that was built in the late 1800s, early 1900s, and has a very specific architectural style.
So we have a shortage of that. To me, that's good urbanism, and we have a shortage of it around the country. It's not getting built in any way today. Even though cities like that are declining now, I think at some point in time, they will refill because they've got good bones, and it's just a matter of as our population itself increased, continues to increase through the decades, I would have to think that people want to reclaim those areas.
Jeffrey: Especially when the sort of superstar cities, so to speak, are not building enough to keep up with demand.
Scott: Yeah, and they're so expensive. Yeah. So, I mean, if you can – Especially in the era of remote work, like you're hearing about the rise now of zoom towns, where people get a good tech salary, but they just work remotely and they live in cheaper places than the San Franciscos and New Yorks, like you can't help but to think that places like Milwaukee and Cleveland and St. Louis would be highly competitive in that market.
Jeffrey: Yeah, absolutely. So last question, is the United States ever going to get cool East Asia-esque neon, cyberpunk cities like Shenzhen, Seoul, Tokyo? Will we ever get sort of the beautiful green solar punk cities? Noah Smith sort of recently nominated Taipei as a real example of a solar punk city. Are any American cities going to look sort of substantially different than they do now and, say, 20, 50 years? Where in the world most excites you about the future of urban design?
Scott: Yeah. I follow Noah Smith and have seen posts of that nature. They're such cool photos. Well, I mean, if we were to really decouple and unpack like real zoning dorks the way why it is that those cities look that way, well, I think you can start with the fact that they allow retail. They don't have hyper rigid use zoning. They allow retail to go at multiple stories. That's not allowed in US cities. They allow a lot of signage and colors. That's often not allowed in US cities. Maybe we've got Time Square. But like generally speaking, you really have to go through a lot of bureaucratic hassle to put signage up in a lot of places.
If you were to unpack it further, like they have much more narrow streets in those cities. So it seems like more of an urban Canyon, whereas in our cities the state DOTs force roads to be really wide, even going through major city neighborhoods. So it’s sort of like the whole urban model in the US is so regulated and sanitized that you can never imagine it happening here.
Jeffrey: Well, fingers crossed, a MUD in Texas tries to recreate Tokyo.
Scott: Hey, I'm all for it. That's the future of the market urbanist one.
Jeffrey: I think it's a good place to wrap up. Scott, thank you for joining us.
Scott: Thank you so much.
Mark: Thank you for listening to the Charter Cities Podcast. For more information about this episode and our guests, to subscribe to the show, or to connect with the Charter Cities Institute, please visit chartercitiesinstitute.org. Follow us on social media, @CCIdotCity on Twitter and Charter Cities Institute on Facebook. I'm your host, Mark Lutter, and thank you for listening to the Charter Cities Podcast.