Building restrictions are increasing rental income as a share of national income. Intellectual property rights are barriers to entry that tend to create a winner-take-all situation (although other factors like network effects also play a role.) And other types of regulations (financial, human resources, etc.) are especially burdensome for small firms, and this favors the growth of inequality-intensive large firms.
Homeowners in low-density neighborhoods will fight like tigers to preserve what they have. We’ve given them the legal tools to frequently win that fight — and if you try to take those tools away, they’ll fight that, too.
In the Four Forces story, gentrification is driven by the New Commanding Heights and bifurcated family patterns. Universities and hospitals replace manufacturing firms as the leading enterprises in cities. They hire marshmallow-test winners, some of whom want to live near where they work. Other marshmallow-test winners, looking to marshmallow-test-winner mates, also move into cities. These gentrifiers like restaurants and trendy shops, but otherwise they want to try to re-create suburban living, with low-density housing and easy biking.
Yep, right on the mark!
I’m not seeing that desire for low-density housing here in Chicago. Most of the new arrivals (Marshmallow-test-winners) are strong advocates for the dense towers being built by the elevated train stations almost everywhere. The opposition seems to be old-time city folk.
You can’t have the restaurants, trendy shops, and marshmallow-test-winner mates without a certain density. The marshmallow-test-winners know that. I think the old-time city folk know that, too.
I think there’s a good bit of variability. I’ll bet a lot of these folks think lower Manhattan is just too dense, the outer boroughs are a little too suburban-like, but Brooklyn is juuuust right.
By the way, Arnold, the prize for passing the marshmallow test was a second marshmallow, so I nominate ‘Two Marshmallow’ and ‘One Marshmallow’ people as the phrases of choice to refer to the IQ/conscientiousness divide.
Universities and hospitals weakly predict gentrification. Somewhat plausible for Austin and Boston, not very plausible for Brooklyn or Portland. The relationship between housing regulation and prices is much tighter anecdotally and has pretty strong research backing it up.
Austin is an interesting case here which is also problematic for blaming universities and hospitals. It has gentrified incredibly. Housing prices have increased, but nothing like gentrification elsewhere… because it is in Texas.
Bifurcated marriage data points:
I guess the “img src” tag doesn’t work on this site. Here’s a link instead.
Arnold,
I agree with you about the New Commanding Heights, and I agree with your observations about patterns affecting gentrification.
However, I don’t put the EdMed economy at the center of those patterns the way you do. If anything I think bifurcated marriage patterns are more of a driving force.
I think if you look at the most gentrifying cities, it’s hard to paint the local hospital as the major agent of change.
Brooklyn, Portland, Seattle, DC, Austin, San Francisco (okay, maybe not San Fran since it has Stanford)…….I’m not sure any of these places have universities/hospitals as their focal points.
I agree it’s an important input to the process you’re describing, I just think your analysis suffer from over-attribution.