Recap

Structuring

• Street plan– Pattern– Expanse– Intersection with natural features

• Demography– Mobility– Family households

Structuring (cont’d)

• Buildings – Individual family houses– Skyscrapers

• Technologically enabled– Skyscrapers– Transport

• Race– Exclusion (more on this later)

Structuring (cont’d)

• Ideals– Baroque ideals– Grid

• The Grid– Free and tolerant society– Allows for easy expansion– And easy allocation

• Which leads us to…

Political Economy

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” – John Maynard Keynes, British economist (1936).

Economy

• From Greek:– Oikos -- “Household”– Nomos – “managing” or “management”

Economy

• From Greek:– Oikos -- “Household”– Nomos – “managing” or “management”

• Production of food/clothing/shelter• Political Economy– Extend the household metaphor to the state

• Shortened to ‘Economy’ or ‘Economics’

Factors of Production

• Labor

Factors of Production

• Labor (Payment: Wages)

Factors of Production

• Labor (Payment: Wages)• Capital

Factors of Production

• Labor (Payment: Wages)• Capital (Payment: Interest)

Factors of Production

• Labor (Payment: Wages)• Capital (Payment: Interest)• Land

Factors of Production

• Labor (Payment: Wages)• Capital (Payment: Interest)• Land (Payment: Rent)

Factors of Production

• Labor (Payment: Wages)• Capital (Payment: Interest)• Land (Payment: Rent)

What value does the owner of land create?

Economic Rent

• Ricardo:– The payment to a factor of production in excess of

what is required to keep that factor in its present use

• Rent for your apartment

Economic Rent

• Ricardo:– The payment to a factor of production in excess of

what is required to keep that factor in its present use

• Rent for your apartment– Use of building, facilities

Economic Rent

• Ricardo:– The payment to a factor of production in excess of

what is required to keep that factor in its present use

• Rent for your apartment– Use of building, facilities• Interest

Economic Rent

• Ricardo:– The payment to a factor of production in excess of

what is required to keep that factor in its present use

• Rent for your apartment– Use of building, facilities• Interest

– Use of the land (Capitol Hill or Lake City?)

Economic Rent

• Ricardo:– The payment to a factor of production in excess of

what is required to keep that factor in its present use

• Rent for your apartment– Use of building, facilities• Interest

– Use of the land (Capitol Hill or Lake City?)• Economic Rent

Rent derives from a Positional Advantage

Bid-rent theory

Land Rent

"As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the laborer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them. He must then pay for the license to gather them; and must give up to the landlord a portion of what his labor either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land ....” –Adam Smith

Location, location, location…

Too simple

• Competition over space– Called “determinism”

• City structure is overdetermined– Social– Cultural– Historical– Technical– Political/Economic

CHICAGO

Growth Machine

Growth Machine

• Maximize land value

Growth Machine

• Maximize land value– Economic Rent– Ideology of competition

Growth Machine

• Maximize land value– Economic Rent– Ideology of competition

• Politics of favorable business climate

Growth Machine

• Maximize land value– Economic Rent– Ideology of competition

• Politics of favorable business climate– Favorable Taxation

Growth Machine

• Maximize land value– Economic Rent– Ideology of competition

• Politics of favorable business climate– Favorable Taxation– Law enforcement

Growth Machine

• Maximize land value– Economic Rent– Ideology of competition

• Politics of favorable business climate– Favorable Taxation– Law enforcement– Good labor relations

Growth Machine

• Maximize land value– Economic Rent– Ideology of competition

• Politics of favorable business climate– Favorable Taxation– Law enforcement– Good labor relations– Vocational training

Growth Machine

• Maximize land value– Economic Rent– Ideology of competition

• Politics of favorable business climate– Favorable Taxation– Law enforcement– Good labor relations– Vocational training– Costs borne by public at large

Problems with Growth Machine

Problems with Growth Machine

• Benefits only the local elite

Problems with Growth Machine

• Benefits only the local elite• Environmental damage– ‘Smart’ Growth

Problems with Growth Machine

• Benefits only the local elite• Environmental damage– ‘Smart’ Growth

• Pathologies of city life more difficult

Problems with Growth Machine

• Benefits only the local elite• Environmental damage– ‘Smart’ Growth

• Pathologies of city life more difficult • Cost of running a city increases with size!

Problems with Growth Machine

• Benefits only the local elite• Environmental damage– ‘Smart’ Growth

• Pathologies of city life more difficult • Cost of running a city increases with size!

• Does not bring more jobs