Cock up you heels

One of my all time favourite books is Ron Chernow’s Titan, which chronicles the life of the great John D. Rockefeller.

Here’s one fun passage, an instruction that Rockefeller used to give to new Standard Oil recruits.

“Has anyone given you the law of these offices? No? It is this: nobody does anything if he can get anybody else to do it. . . . As soon as you can, get some one whom you can rely on, train him in the work, sit down, cock up your heels, and think out some way for the Standard Oil to make some money.”

As Standard Oil grew, Rockefeller himself mostly delegated away all administrative tasks to focus squarely on the firm’s broader strategy. He worked on the business rather than in the business. It paid off.

Inclusionary zoning and housing affordability

First, a few definitions.

Inclusionary zoning (IZ) is the framework through which a municipality might require that a certain number of units in a new housing development be priced below the market rate.

Housing affordability, as I think about it, is the ability to afford housing. That sounds simple enough but most people don’t think about it that way. They might, for example, describe a new condominium building as being unaffordable, even though every unit will house a household that can afford it.

By that definition, more housing = more affordable housing, as there is more housing available for people to afford. I might have to expand on this idea in a separate post.

In any case, I used to think that IZ mandates, if applied evenly across a whole city, would have a minimal effect on housing affordability as the incidence would fall primarily on land owners.

That is, a land owner who was able to command $200 per buildable square foot (pbsf) for their land pre-IZ might have to discount it to $190 pbsf post-IZ, or something like that. The purchasing developer would have landed on that discounted residual land value when running their pro forma with the new IZ requirement.

No big deal. Toronto land owners are not far removed from lottery winners.

I now understand that to not be the full picture.

Sticking with Toronto as an example, there are sites in large swathes of the city that are undevelopable even with free land. A big reason for that is that major construction cost categories are the ~same whether you’re building a condo in the inner suburbs that will trade for $800 psf or a condo in Yorkville that will trade for $1,400 psf.

Land can not be cheap enough to bridge that gap.

What IZ and other costly regulatory requirements do is act to expand that undevelopable area. And that means less development, and less housing supply, and worsened affordability.

Smarter public policy

I’ve been mulling over the idea of launching an event series that would bring politicians, policy wonks, and technologists together to discuss policy solutions to some of Canada’s most pressing problems.

A tweet I just came across did a good job of summarizing a number of focus areas, which I’ll list here for future recall: high-skilled immigration, science/r&d funding, agglomeration effects, and mega-projects.

That might not be a comprehensive list but it’s a great start. I’ll say more about this when I have more to say.

Ogilvy on Advertising

I just finished reading Ogilvy on Advertising by David Ogilvy, founder of the legendary Ogilvy & Mather.

This book was first published in 1985 and I didn’t expect to take as many notes while reading it as I did. I thought that it’s lessons might by now be well worn conventional wisdom, but they’re not. The book is packed with fresh insights.

I especially liked this passage on creativity by committee:

“Most campaigns are too complicated. They reflect a long list of objectives, and try to reconcile the divergent views of too many executives. By attempting to cover too many things, they achieve nothing.

Many commercials and many advertisements look like the minutes of a committee. In my experience, committees can criticize, but the cannot create.

‘Search the parks in all your cities,
You’ll find no statues of committees.'”

Last year I hosted a speaking event featuring Rory Sutherland, the Vice Chairman of Ogilvy & Mather. It was brilliant. I didn’t know then the storied history of his firm, but I do now.

I’ve now also ordered David Ogilvy’s Confessions of an Advertising Man to learn more about this remarkably creative, innovative, and productive man.

On brevity

I can count on two hands the non-fiction books I’ve read that I didn’t think could or should be shorter. Nassim Taleb is overrepresented as an author in this group.

Most books should have been long form articles, most long form articles should have been short form articles, and most short form articles should have been tweets. And most tweets of course should never have been tweeted.

A world in which that were the case would be one in which we could absorb radically more information in similar reading times. Brevity is extremely valuable.

In 1941, Winston Churchill sent this instruction to the First Lord of the admiralty:

“Pray state this day, on one side of a sheet of paper, how the Royal Navy is being adapted to meet the conditions of modern warfare.”

Go Bojo!

The Guardian’s Simon Jenkins has written a scathing critique of Boris Johnson’s planned overhaul of the UK’s planning system, which of course reads to me like a love letter.

Some notable excerpts:

“The most extraordinary upheaval in modern British government is to be introduced this week by Boris Johnson. He is, in effect, to end planning permission. Local councils and those they represent are to be stripped of control over new buildings, to be replaced by central government ‘zoning’ commissions.”

“The proposed reform will release building rights anywhere outside existing national parks and areas of outstanding natural beauty.”

“Under new rules the ‘zoning’ commissioner will merely have to designate land as developable, whereupon owners can legal do what they like.”

“But this reform is of a new order. It cancels the democratic right of people to exercise some control over their immediate surroundings, over the character and appearance of their neighbourhood.”

Sounds too good to be true, right? I’m cautiously optimistic that it’s not.

If Boris Johnson can pull this off, he’ll set a major precedent for the western world, where the problem of nimbyism is most pronounced.

Overly restrictive land use rules harm lower income families through higher housing prices, damage the environment through exacerbated urban sprawl, and stifle economic growth by limiting the potential of cities and their economies of agglomeration.

I’m very pleased to see a high status politician — and a Tory no less! — address them directly.

Smart fiscal conservatism

“Since winning elections is overwhelmingly a matter of vote buying, and society’s informational organs (education and media) are no more resistant to bribery than the electorate, a thrifty politician is simply an incompetent politician, and the democratic variant of Darwinism quickly eliminates such misfits from the gene pool.”

Even fiscal conservatives don’t like fiscal conservatism pointed in their direction.

Doug Ford now finds himself riding a resurgent wave of popularity, largely due to the fact that a) he’s managed comms throughout this covid crisis remarkably well, and b) he’s given up on his austere rhetoric and policy agenda, emphasizing that now is not the time for major spending cuts.

The people like it when you spend money on them and their pet causes.

How then to solve the problem of reining in the size and cost of government while remaining electable?

I like the Boris Johnson approach: pair lavish promises with proposals for structural reform. In his case, “we’re going to fund the NHS” with “we’re going to get Brexit done”.

What really matters here is spending as a ratio to GDP. If cutting spending (materially) is off the table, we need to take a much harder look at boosting GDP.

Working outdoors

This week I’m working from my inlaws’ cottage in Greater Napanee.

I’m discovering that most of what I do, I can do remotely. My office presence is mostly beneficial for impromptu drop-ins, discussions, requests, etc., which all contribute to tighter feedback loops and faster decisions, but only marginally.

I’m also discovering that work is much more enjoyable when done outdoors. Maybe it’s the open space, or the breeze, or the sun, or all of the above.

Or maybe it’s just the change in scenery, and maybe it’s subject to some reversion to the mean over time.

In any case, for now, I like it. I should work outdoors more often

The Cicero Institute

I’ve just come across the Cicero Institute, a think tank that describes itself as providing entrepreneurial solutions to public problems.

It was founded by Joe Lonsdale, a Peter Thiel acolyte who also founded Palantir and a bunch of other big companies, and provides a right-of-centre (for lack of a better term) perspective on problems and solutions relating to criminal justice, housing, healthcare, regulation (generally), transportation, and education.

The content is really good, and I really like that it’s taken a Silicon Valley-esque approach to analyzing these problems. That is, one centred on creative, productive, positive-sum solution.

I highly recommend reading through its publications.

This piece on charter cities, written by Joe himself, is especially good.

Boring investments

I mentioned in a prior post that I wish that Boring Co were public, so that I could invest in it. Well , it turns out that there might be another way.

I’ve just come across Giga Fund, which seems to mostly back Elon Musk-founded companies– a smart bet. It was created by two ex-Founders Funders, including one made-member of the Paypal Mafia.

Pretty cool.

As an aside, I couldn’t help but notice that Giga Fund is based in Austin, Texas. This is interesting to me as I’ve noticed a trend among the sort of people I follow, read, or listen to that are moving from (mostly) San Francisco to Austin.

I love Toronto, but were I an American, I think I’d consider that move as well.

Cities are Lindy

Covid-19 has resurfaced a recurring debate on the future of cities.

Since the dawn of the internet, and probably well before then with the advent of the telegram and then telephone, some have predicted the decentralization of employment as more work could be completed remotely. This has mostly not happened. In fact, employment appears to have concentrated in superstar cities and central business districts.

Now, with remote work arrangements forced upon us by a global pandemic, a popular narrative is reemerging that it is no longer necessary to pay high urban housing prices for access to good jobs. Email, Slack, and Zoom should be enough.

I’m skeptical of this narrative.

I do think that cities are primarily labour markets, and that participation in these markets is still best done in person. I also think that cities are Lindy– that is, they’ve demonstrated their survivability through countless challenges over time, including other major pandemics and technical shifts.

I think that the attraction of superstar cities in particular persists, that this attraction will remain priced in to their real estate, and will be investing on that basis.

Not so boring

Elon Musk tweeted this rendering of what looks to be a Boring Co station in Las Vegas, where the company is working on “a Loop system for the Las Vegas Convention Center”.

Many urbanists (planners, mostly) have since responded by criticizing the project as appearing to be little more than a radically less efficient subway system.

I think they’re missing the promise.

The idea of moving some individualized transportation — which, let’s face it, people love — below grade seems like a good one, if it can be done cost-effectively. This would increase the amount of space available to pedestrians and cyclists at grade while still allowing for a massively scalable transportation network.

Whereas we’re mostly limited to the two dimensions of ground level space for roads, below grade, we’re provided with a whole new axis to work with.

You can imagine a city of the future with many levels of below grade tunnels well out of eyesight.

That seems to me to be the alternative to our current sub-optimal transportation options for large and growing cities moving into the future, which are:

  1. Decreased mobility generally, as a function of network capacity or, in a scenario with congestion pricing, individual budget constraints;
  2. Increased reliance on mass transit at the cost of individualized options (i.e., bus-only lanes); or
  3. This sort of thing:

Put differently, our current options are:

  1. Fewer people moving around, across shorter distances, and less frequently;
  2. Fewer people moving around in their own vehicles, with their own space, on their own routes; or
  3. Scaling the network along the z-axis above grade.

I like the idea of adding to that set, 4. Scaling the network along the z-axis below grade.

I just wish I could buy some Boring Co stock instead of arguing about this online.

Deep reading

I have a new cool thing that I want to do.

From Tyler Cowen on a recent podcast: “I actually put on a whole two day seminar to read through [Henry George’s] Progress and Poverty with a number of people, including Peter Thiel. This was just a phenomenal event. We had a small group, everyone was totally dedicated to the book. Just, like, sessions all day long. We had some Georgist specialists there, some historians. I had a blast. That was great.”

I had previously heard from someone at Founders Fund that Peter Thiel once locked himself in a boardroom with a small group of experts for a whole day to dissect and discuss just one chapter of Renee Girard’s Things Hidden Since the Foundation of the World.

The closest I’ve come to organizing something like this was inviting Garett Jones to talk about his latest book, 10% Less Democracy, for a small group of friends and employees in Toronto. It was really excellent, and spurred a tonne of interesting discussion and debate.

But that was just for a few hours. We could have gone much deeper. The thought hadn’t even occurred to me until I came across these two anecdotes.

Two big ideas

Shane Parrish shared some ideas on Twitter for what he thinks Canada should do to accelerate economic recovery following this COVID-19 fiasco. Most had to do with supporting tech entrepreneurs and workers, and most came with an implied price tag.

I’d like to add two ideas of my own, which I think would greatly improve our future outlook, and which would cost the relevant levels of government less than nothing to implement.

First, we should make it much easier to immigrate to Canada. This is especially true of so-called high skilled immigration.

Second, we should make it much easier to build housing in our major cities, including Toronto, Vancouver, and Montreal.

For both, we should set a target of 2-3x current levels. That is, something like 750,000 – 1,000,000 new immigrants per year and at least 75,000 new units completed in Toronto per year.

A month of blogging

This is the end of my fourth week writing this blog.

As you can tell, I’ve established a routine for myself of publishing one post per weekday. I try to use weekends to revisit the past week’s posts for quick edits.

I’ve set this schedule to help establish a writing habit. I like writing and want to write more, but find that I often feel unmotivated (or maybe just lazy). In that way, for me, writing is very similar to exercising.

I’d like to stick to this schedule for at least a year, at which point I might revisit it and decrease the frequency of posts and increase their length and quality. But first, the habit. The writing muscle needs to be developed. The skills need to be improved.

My biggest challenge to date has been finding enough time to write thoughtfully, and not in a hurried manner just to stick to my schedule.

I have two kids at home, a toddler and an infant, and a pretty full work schedule. Ideally, I’d set a minimum of two hours aside per day to think and write undistracted.

My goal this year, beyond sticking to my posting schedule, will be to set that up for myself.

On negotiating

Three pieces of advice on negotiating from one of the best to do it.

  • Never match your counterparty’s energy. If they’re volatile, stay calm. If they’re calm, get a little volatile.
  • Say as little as possible, within reason.
  • If someone is acting as an obstacle to getting a deal done, find a way to neutralize or have them removed.

Baby bust

In 1950, the average woman had 4.7 children in her lifetime. In 2017, that number had dropped to 2.4. By 2100, according to a new study, it could fall further to 1.7, well below replacement.

I think that declining fertility is one of the most underrated problems in the world, made so in part by the idea held by man that this is a good thing.

In the medium run, a declining fertility rate is a disaster for our welfare state, which mostly shifts money from young to old (much more so than from rich to poor). In the long run, this is a disaster for our civilization.

Worst of all, it’s not at all clear what we can do reverse this trend. Singapore in particular, which has a fertility rate of 1.3, and which is a generally very well governed country, has tried various policy interventions including direct subsidies to parents to little effect.

Hi, Alex

There might be only one person in the world who reads this blog, and his name is Alex. I haven’t promoted this website at all beyond having the url in my twitter profile, which is criminally under-followed, and I haven’t yet set up Google Analytics to track visits.

In any case, Alex told me yesterday that he appreciates the brevity of my posts. Too many pieces are written to fit the 750 – 1,250 word standard that we’ve brought over to the internet from print publishing.

I like the idea of writing many short posts, getting to the point quickly, and the occasional longform post, when I really want to dive deeply into a topic. I haven’t done any of the latter yet but I’d like to soon.

We should buy a newspaper

The Toronto Star now looks like it will be sold to Nordstar for $60M, following a briefly competitive period when a second bid was made by brothers Matthew and Tyler Proud.

It’s unclear what impact this sale will have on the paper’s editorial content, though the buyers have made it clear that they intend on sticking to the so-called Atkinson Principles. Briefly, these are a commitment to the following.

  • A strong, united and independent Canada
  • Social justice
  • Individual and civil liberties
  • Community and civic engagement
  • The rights of working people
  • The necessary role of government

That aside, it’s hard to imagine that business-as-usual will prevail, or that it should.

Prior to this deal, I had publicly proposed that a syndicate of property owners and developers buy the Toronto Star.

I came to this idea from two premises.

First, journalists influence public policy, and often in a big way. The Toronto Star was a loud, driving force for OMB reform, which was ultimately enacted by the previous Provincial government via Bill 139. (Thankfully, it was also reversed by the current Provincial government via Bill 108.)

Second, over time, good public policy should be reflected in the aggregate land values of the jurisdiction in which it is enacted. Singapore has higher land values than Malaysia in no small part due to the fact that it is better governed, and therefore more attractive to labour and capital.

Property owners and developers might then have more to gain, as a whole, from good public policy than most stakeholders. They have more skin in the game.

I could imagine that a Toronto Star owned by property owners and developers would not be supportive of or even neutral to the very many examples of NIMBYism that pop up at a regular cadence in this city. It might even publish explicitly YIMBY content, and over time, shape public policy in a YIMBY direction.

That would be really great for the city.

Writing for business

I just finished watching this excellent discussion between David Perell and Sahil Lavingia, CEO of Gumroad, on how writing publicly can help you with your business.

In it, Sahil describes his writing process, and how it’s helped him with fundraising, recruitment, and business development.

On the latter, this approach struck me as especially insightful.

“We literally have zero growth focus at the company now. It’s just about: who can I be friends with? Who can I help? Who can I hang out with? Who can I build a relationship with that’s going to last a long time?

You don’t know who’s going to be a customer. They don’t even know they’re going to be a customer.”

Legislation passed to help build subways faster

Toronto has a severe transit infrastructure deficit. It’s obvious to anybody who lives here, particularly if they’re commuting downtown from the inner suburbs.

To resolve this deficit, the Provincial government has proposed and promised to fund a number of new subway lines. The most important of these is the Ontario Line, a relief line that would ease some of the overcrowding on the Bloor-Danforth and Yonge lines by providing an alternate route downtown.

The challenge of course is that we take much too long and spend much too much to get civic infrastructure built. This is true of most North American cities, and certainly of Toronto.

We need a downtown relief line yesterday.

To assist in the speedy delivery of these projects, the Province has just passed new legislation that would help clear some of the obstacles. Specifically, Bill 171, the Building Transit Faster Act, 2020, would do the following.

  • Enable relocation of utilities more efficiently, while treating businesses fairly, and ensuring costs are not passed on to consumers;
  • Better enable the assembly of land required to construct stations, conduct tunneling and prepare sites, while treating property owners fairly;
  • Ensure timely access to municipal services and rights-of-way;
  • Allow the province to conduct due diligence work and remove physical barriers with appropriate notification to property owners; and
  • Ensure nearby developments or construction projects are coordinated so they do not cause delays.

$GPS

My $GPS trade closed, meaning that the stock price dipped below $12 USD. I wrote about that here.

I was worried that there might have been some after hour trading over the weekend pushing the price up when Kanye announced that he’s now running for president.

That doesn’t seem to have happened.

I mentioned earlier that I typically just buy indices. I’m mostly an EMHer, but it is fun with trades like these to convince myself that I know something the market doesn’t.

I’m now going to ignore the stock for a year before seeing how I’ve done.

Ode to engineers

I mentioned in an earlier post that I recently finished reading Ken Whyte’s Hoover. It’s a great book that reframes Herbert Hoover as an extremely competent and accomplished man, even before running for and winning the presidency.

One early passage that stuck out to me was Hoover’s description and celebration of the engineer, which he called the “new intellectual type”.

“To the engineer falls the work of creating from the dry bones of scientific fact the living body of industry. It is he whose intellect and direction bring to the world the comforts and necessities of daily need. Unlike the doctor, his is not the constant struggle to save the weak. Unlike the soldier, destruction is not his prime function. Unlike the lawyer, quarrels are not his daily bread. Engineering is the profession of creation and construction, of stimulation of human effort and accomplishment.”

Transit-Oriented Development

Doug Ford’s Progressive Conservative government is expected to introduce new legislation tomorrow that would make it easier to build housing on top of or adjacent to new subway and light-rail transit stations.

The Star broke that news today.

It’s been a long-running mystery to me why this wasn’t being done before. Over the past 10-15 years that I’ve been paying attention, subway stations along Bloor and Danforth in Toronto have been renovated to still be 1-storey single-use buildings.

That never made any sense to me.

Why wouldn’t you (the City) partner with developers to both introduce a tonne of new housing where it’s well served by transit, and offset some of your costs in the process? Win-win, no?

In any case, it looks like we’ll start doing that now. And not a moment too soon. Toronto’s rental vacancy rate is hovering around 1%. We need a lot more housing, and this is one good way to deliver it.

A graphic novel for YIMBYs

As soon as Bryan Caplan’s graphic novel on Open Borders went up for sale, I ordered it. I had been waiting for this book to be published for a couple of years, both because I’m a big fan of how Bryan thinks about and argues for open borders, and because I was curious about the use of graphic novels as a medium for advancing a set of policy proposals.

I now think that the medium works very well. So well, in fact, that I’ve been thinking about other issues or policy proposals that might benefit from the graphic novel treatment.

My pet cause of course is housing, and specifically how land use rules constrain the supply of new housing in cities.

I’ve found that most people could be made sympathetic to the YIMBY cause after a short conversation on the benefits of building more housing in big expensive cities. In my experience, most people haven’t thought about the issue much beyond their aesthetic preferences and status quote bias.

A graphic novel outlining the case for more housing in major cities could do a lot to convert the agnostic, and even some NIMBYs, to the YIMBY cause. As cultural change is a necessary (if insufficient) condition for policy change, it would also move us in the right direction toward land use rule reform.

It’s certainly worth a try.

Bring Hong Kong to Toronto

I came across a tweet yesterday that read, “Convincing Hong Kongers to become Chicagoans should be among the city’s top priorities for the next 5 years”.

This got me thinking.

I don’t think it would take much money to make Toronto top of mind for Hong Kong emigrants, given that we already have a large Cantonese speaking community both in the city and in Markham.

How much could the City do with $1M? Given the right agency partner, a lot.

The mere fact that the campaign would be officially sanctioned would propel it through media, including local Hong Kong media. The ads and other campaign materials would be secondary.

I think that this could materially impact many thousand destination decisions. With a $1M campaign budget, I’d consider anything north of 10,000 new immigrants over the next 24 months a success. And I think we could do much, much better than that.

This would ideally be paired with a federal announcement that Canada will welcome every Hongkongers now choosing to leave, but I’ll save that thought for a separate post.

More Canada

Today is Canada Day. I thought a lot about what it is that makes Canada great today, and what we should be working on to make it greater still.

As far as I can tell, the ability to attract smart foreigners from around the world is Canada’s greatest advantage, and may be the only one that really matters in the long run.

Though we do welcome record numbers of immigrants every year, it’s a bit surprising to me that we don’t welcome many more. More people typically means more ideas, which means more innovation and ultimately more economic growth.

There are few policy measures we could enact that would do as much to elevate our standard of living and our standing in the world as radically increasing our immigration targets. And thankfully, our federal politics have reached an equilibrium where all three major parties are extremely pro-immigration.

A country who’s politicians compete on who is more welcoming of immigrants is a country with a bright future. We just need to push them to compete harder.

Long Kanye

I’m going to buy some $GPS if and when it hits $12 USD next.

As you might have read last week, Gap is partnering with Kanye West to launch a new clothing line called Yeezy Gap in the first half of 2021. This will be a 10-year deal and comes in the midst of a steady decline in Gap’s fashion cachet and stock price.

Gap clothing hasn’t been cool in some time, and it’s an open question whether Kanye is cool enough to make it cool again.

I think he is.

I’m not much of an active trader — I typically just buy and hold the S&P500 — but I do have a loosely formed investment thesis to go long entrepreneurs I admire whenever I can.

At ~$4.6B, Gap Inc.’s market cap is small enough that this deal could have a material effect. And I want a piece of the upside.

On reading (more)

Charlie Munger wrote that, “in my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none. Zero. You’d be amazed at how much Warren reads — how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”

Herbert Hoover, arguably one of the most accomplished and impressive men in American history, read three to four hours every night. “At times it seems to me that I would exhaust all the books on earth,” he said. “But the supply still holds out.”

I love reading and don’t think that I read nearly enough. The backlog on my shelves and in my Amazon cart has gotten to the point where I would need to read one book per week for ~18 months to clear it. I currently average one book every three weeks.

I’d like to get to Hoover’s three to four hours every day. At that pace, averaging one book per week should be easy enough, even when accounting for the larger biographies that I like most.

Reading seems to be one of those activities with obvious returns that few people optimize for. I’m fairly confident that, among other things, reading more would provide me with more and better ideas for how to manage my career, business, and investments.

The disconnect between what I know to be good and true and what I do is very interesting to me. Keith Rabois proposed on a recent podcast episode that we all basically know what it takes to be successful (and healthy), we just don’t do it. I think that’s right, and reading more is a clear case in point.

Building rental housing

Most of what I do from day to day is work as a development manager for The Benvenuto Group.

I was offered this role through a series of serendipitous events that came out of advocating for more rental housing in Toronto. Though I was working as a project manager at a digital agency at the time, I had launched a YIMBY organization called Housing Matters that lead me to learn a lot about the mechanics urban planning and real estate development.

My thinking at the time was that I’d much rather help build rental housing than talk about how we need more rental housing, and the transition from activist to builder has been a good one. There are nuances to real estate development and construction that you can only fully appreciate when in the trenches.

In any case, I just received this cool drone shot of a purpose built rental building that we’re developing in midtown Toronto, and thought that I’d share it.

We’ve excavated to approximately a P3 level and will start pouring our foundations in the next week or two.

This building, when completed, will introduce 180 units of rental housing to the neighbourhood. In a City with a sub-1% rental vacancy rate, this is no small feat.

What is financialization

Some people think that we need to build a lot more housing to improve housing affordability in cities. Others think that that is an insufficient solution as housing has become “financialized”.

Last year, a Toronto City Councillor wrote about this for Spacing magazine.

“That’s financialization and it has nothing to do with the simple supply and demand curves taught in high school. It makes housing more expensive. It increases the concentration of wealth. It is an insanely risky way to run the biggest economic sector in the world.”

This word seems to be relatively new to the debate, and I think that I’m now just starting to understand what it means. Specifically, I understand financialization to mean three things.

First, the increased legibility of housing by global capital markets. Thanks in large part to the internet, the housing market has become more efficient as information asymmetries have eroded. It’s now much easier for an analyst in New York to get a good understanding of distant housing markets and allocate capital accordingly.

Second, predictable scarcity leading to housing as a store of value. Housing in most major North American cities is predictably scarce because a series of land use and other rules have made it hard to build. As a consequence, housing values in these cities typically increase at a higher rate than inflation. This makes housing attractive as a store of value.

Finally, an inflating money supply that contributes to and exacerbates the increased demand brought about by both of the points above.

To restate the point, these are all demand-side factors impacting housing prices and affordability. They do directly have to do with the simple supply and demand curves taught in high school.

Which is not to say that this couldn’t be a problem, or that we shouldn’t explore relevant solutions. Predictable scarcity for instance could become predictable abundance given the right land use policy reforms.

Abolishing parking minimums

Yesterday, Edmonton became the first major Canadian city to eliminate minimum parking requirements for any new development.

In Toronto, developers are required to provide one parking spot per unit for any new residential or mixed use building. These are rarely provided however, as the City is typically amenable to a lower parking count if requested through a Zoning By-law Amendment (rezoning) application or Committee of Adjustment hearing. This is especially true for any site that is well-served by transit. It’s not uncommon to see a ratio of 0.2 parking spots per unit downtown and 0.3 parking spots per unit in midtown.

Still, the requirement is on the books, and any variance requires City approval, at a cost of time, money, and predictability.

The case for eliminating these requirements has been building for some time, and many American cities, including Buffalo, Houston, Minneapolis, and San Francisco, have already made the change. Putting the economic, environmental, and health concerns to the side, it’s simply the case that developers are better positioned to determine demand for parking than the City.

It’s time for Toronto to get with the program.

One cool thing about this deregulatory proposal is that it’s one that finally has a critical mass of support behind it. There’s a broad coalition of interest and pressure groups that would welcome the change, including cyclists, environmentalists, and urbanists. You just need somebody to organize them all to get this done.

With a competent operator building public support and lobbying City Council and Planning, I believe that we could see a successful vote to eliminate parking requirements from our Zoning By-law within 2-3 years.

A bit about this website

I haven’t yet decided how I plan on distinguishing between content that should be blogged about and content that should exist on its own page.

For now, I think that new pages on this website will be used to collect and categorize content for easy reference.

I often get asked for book recommendations and often get dragged into debates over the best way to improve the affordability of housing in cities (and in Toronto in particular). That’s why I have a page on this website listing the books I’ve enjoyed over the past few years and another listing good academic studies on issues relating to housing affordability, including on the impact of land use constraints and rent controls on prices.

If you haven’t yet, you should check them both out.

As I think through the best way to organize a personal website, I take inspiration from these below, which you should also check out.

(Of course, now that I list these references, this looks like content that should exist on its own page. I’ll think about it some more.)

Hello world

This is my new blog, which I’d like to use to, among other things, explore issues relating to state capacity in handling megaprojects, both physical and digital. It seems to me that we don’t know how to build big things in a timely and cost effective way anymore, though we did 100-years ago.

In Toronto, we’re moving forward with plans for a much-needed downtown relief subway line, the Ontario Line, at a of cost over $700-million per km. In contrast, the median urban subway around the world costs less than $300-million per km.

There are many reasons why big infrastructure projects cost more and take longer to complete than they should, including but in no way limited to political interference. The Ontario Line is itself a reconfiguring of the older proposed Downtown Relief Line by a new Provincial government.

I think that it’s important to first understand that this is in fact the case, as most political debate seems to be centred on how to pay for these projects rather than how to pay less for them.

This extends to digital projects as well, evidenced most infamously by the Phoenix pay system, which could end up costing the federal government $2.2-billion (for software!) to complete.

If we could agree that we should be getting a lot more bang for our buck out of these projects, and start to identify and address the reasons why that isn’t happening, we could build ourselves a much better city, province, and country.

Given the potential benefits of competent state lead megaproject management, I think that much more attention should be focused on this problem than there currently is. And to that end, I’ll try to contribute in my own little way.