There’s recently been a lot of discussion in Canadian conservative political circles about setting an environmental agenda. Most of it has centred on whether or not conservatives should embrace a carbon tax.
The case for a carbon tax is clear, as is conservative opposition to any new tax.
For the sake of furthering the discussion, I’d like to introduce two ideas or policy proposals.
Let more people live closer to where they work. Shorter commutes mean less time in cars, and more time walking, scooting, cycling, and using public transit.
Let cities scale. Per L.M.A. Bettencourt, et al., A city of 10-million people requires ~15% less infrastructure than two cities of 5-million people each. This represents significant savings in materials and energy use.
These ideas can both be summed up as land use liberalization, and importantly, would cost the government less than nothing to implement– indeed, they would save and generate a lot of money.
Requiring that municipalities upzone (as a condition of transit funding, say) is a cost-efficient way to make the country greener and richer. Conservatives should talk more about that.
Tristin Hopper had a great piece in this past weekend’s National Post about our federal government’s inability to get big (and small) things done.
He provided some examples:
Clean water on reserves;
24 Sussex Drive renovations.
You should read the whole piece but the common theme between them all is that we’re either paying much too much for much too little or just not getting the thing done at all.
We have a problem of diminishing state capacity. And what’s worse is that it’s not being recognized as such.
If we pay much too much for much too little transit, for example, all focus appears to be on the latter, and we get journalistic think pieces and political speeches on the need for the new revenue streams or inter-governmental transfers. Diminishing state capacity is being misdiagnosed as something like austerity, despite record-breaking budgets.
That’s a mistake, and this problem can not be solved until it is understood.
I’m very interested in real estate and real estate development, as you know. I’m also very interested in bitcoin.
I’ve found that these two interests are complementary insofar as the permissionless innovation made possible with bitcoin contrasts starkly with the drastic overregulation and over-politicization of real estate development.
I’m pretty libertarian, and would probably have gone crazy by now if all my thoughts were consumed by housing regulation and politics. Spending some time tracking progress in bitcoin-land feels a bit like vacationing on a tropical island halfway through a Toronto winter. It’s refreshing.
In any case, I’ve recently been thinking a lot about where and how these interests might overlap.
As a starting point, my brothers and I own something like a holding co through which we do small real estate deals. We also have some bitcoin on our balance sheet. I wonder how long it will take for construction lenders to allow for loans to be collateralized with bitcoin.
Three good friends have recently launched daily business and tech newsletter modelled after Morning Brew, but for Canada. It’s called The Peak.
My team at August helped with the brand and some ui design.
There is so much news available online that I like having smart guys comb through it all and feed me the top five or so most important stories of the day, so that I can confidently ignore the rest.
There has also been so little innovation in news media, especially in Canada, that it’s cool to see some peaking through– even if it is a borrowed and proven model. It’s remarkable how bad newspapers companies are at even just copying good ideas.
In any case, it’s a great idea and a great product. You should definitely subscribe.
Peter Thiel, the person in the world who’s thoughts I’m most interested in, has shared some of his latest on a recent podcast episode.
The whole thing was good, and this mini-monologue on bitcoin was great.
“Probably the one asset that I most strongly believe in– you know, as an investor, you often want to find things that are so stupid that other investors are embarrassed to invest in them.
And so for example, the FANG stocks were an instance of a stupid asset. The really big tech stocks. Jim Cramer came up with the FANG acronym on Mad Money in 2014 and if you just followed his advice you would have made eight times your money in the last six years. You would have done better than any venture capitalist. It was too stupid, in a way.
My candidate for the investment that is so big and so stupid that professional money managers are embarrassed to do it, because it suggests they’re not doing enough work, is to just buy bitcoin. We have strange monetary experiment– maybe you should be long gold but gold is still the old economy asset, and probably it’s bitcoin more than gold. And nobody’s in that one. So that would be my bullish advice, although maybe it’s also bearish on a lot of stuff implicitly.“
Toronto is finally considering an end to minimum parking requirements established in the Zoning By-law. In their place, Planning staff are reviewing the desirability of establishing parking maximums.
At the risk of making the perfect the enemy of the good, it is very on-brand for the City’s Planning department to move from parking minimums to maximums without pausing at “this doesn’t need to be prescribed”.
I’ve noticed a deep anti-market bias among most planners that discounts the value of price signals and feedback loops in the process of efficient resource allocation. It’s a perspective that has mostly been abandoned in the late 80s in (as far as I can tell) all domains but this one, urban planning.
Alain Bertaud put it best in a podcast episode with Tyler Cowen: “Planners think in terms of norms and what they think people need. Economists think in terms of prices and the information they convey.”
I’ve been thinking about this idea some more. To the extent that knowledge of byzantine development procedures and processes is tacit within development firms, passed down from senior staff to junior staff, I think that acts as a barrier to new housing supply and to Toronto being bigger and better.
Not a major barrier, mind you, but a barrier nonetheless.
I think that the City’s procedures, processes, and requirements should be more readily accessible and legible to new entrants and seasoned developers alike.
To that end, I will be dumping my knowledge online, and hope that other knowledgeable people will be encouraged to reach out and add to it. Over time, we might have something like a comprehensive and centralized knowledge base covering everything you would need to know to build a new condo or rental building in Toronto.
Israel (pop: 9M) is reportedly vaccinating ~150,000 people per day. Ontario (pop: 15M) is at ~9,000 per day.
I’m trying to understand why the enormous disparity, but it’s been hard finding answers online. The Feds are responsible for delivering vaccines to the Province, and the Province is responsible for administering them.
Ontario has received ~196,000 doses and administered ~122,000 of those (~62% usage). At our current rate, it will take 7-9 days to administer the rest.
I can’t find information on when the next delivery is due. One source claims +150,000 this week.
Still, it seems to me that we should be much closer to 100% usage by now and waiting for it to keep going.
Have we started vaccinating 24/7 yet? If not, why not?
If the answer to the above is a shortage of available nurses, have we started training other groups to vaccinate? If not, why not? This is not a complex procedure.
Have we started setting up drive-through vaccination centres? If not, why not? In Israel, you get vaccinated without even taking your seatbelt off.
“A vaccination center with 4 vaccination stations requiring 58 staff (only 16 of which seem to need medical training to prepare and administer vaccines and 1 EMT on hand for adverse reactions.
What boggles my mind is the number of staff they have allocated for paperwork.
If the US had been prepared, it could’ve set up a system of vaccination tickets with QR codes (much like tickets for air travel or going to a sporting event) that could be handed out by primary care physicians, hospitals, etc. (or just based on administrative records of age). Those would transfer the relevant data that would have been collected by the paperwork people. People would schedule a slot via some app (even doctors’ offices have online scheduling now), show up, provide ID verification, and get the shot. So you could open up a vaccination center with less staff. I get that not everyone has a smartphone, but seriously, this is not that hard.“
Governments are very bad at managing and launching digital products. To curb corruption and sweetheart deals, most have designed procurement processes that are so overprescribed it’s effectively impossible for them to select good vendors quickly.
It’s them impossible for them to manage rapid, iterative deployments as a competent startup might, as that process is burdened by countless political, bureaucratic, and regulatory obstacles.
When the stakes are high enough, like during a deadly pandemic, you’d hope that new approaches might be explored. It’s not at all obvious to me that any have been.
I’m buying $PLTR today. It’s my only individual stock pick other than $GPS so far. All my other public market activity has been limited to buying indices.
$PLTR has experienced a nice dip following the Democratic consolidation of power last night with the Georgia senate runoffs, which feels like a good time to buy. I like the business and think that it’s the best player in a market that will grow rapidly over the next few years.
I also like the Founders Fund ethos, and can think of a worse strategy than backing whatever the Peter Thiel Mafia (second generation Paypall Mafia) are doing.
A guy on twitter came across a tweet where I bragged a bit about the duplex my brothers and I built in Vancouver. He’s an anti-development type and made the following point:
“You bought detached … for $1.48M in 2018. You sold [half] duplex … for $1.58M. You’re trying to sell other half … for $1.35M.
His point is that, through this redevelopment process, we’ve exacerbated Vancouver’s affordability problem. His broader point is that new housing, by virtue of being new and therefore expensive, can not solve the affordability problem.
This is the primary objection levelled at yimbys and yimbyism, and betrays an inability to think through second order effects.
To illustrate the point, let’s say that there are three types of people who might buy our duplex units.
First, there are the upgraders. These are people who, as they progress through life, can afford more and better housing.
Second, there are the downsizers. These are people who, as they age and see their kids move out, need less housing than they once did.
Third, there’s the new money. These are people new to town who can afford nice housing.
What happens in each case if we don’t build new expensive housing?
First, the upgraders don’t upgrade. They stay put in downmarket housing that could have gone to a lower income household.
Second, the downsizers don’t downsize. They stay put in housing that is too big for their needs, that could have either gone to another set of upgraders or even been redeveloped for additional density (like our duplex).
Third, the new money bids up the existing inventory of housing, which is not what we want if we want improved affordability.
In each case, the cause of affordability is harmed by not building new expensive housing.
As a final point, my twitter antagonist is of course not making an apples-to-apples comparison. The detached house that we tore down was in terrible condition. I know, I slept in it for a few days when visiting my brother. And the duplex units we built are beautiful.
A fair comparison might be a beautiful new duplex unit vs. a beautiful detached house, which would go for well north of $2M in our neighbourhood.
We shouldn’t think that housing affordability can only be preserved by keeping houses and neighbourhoods in bad condition.
Over the past few months, I’ve started following more entrepreneurs and investors on twitter and listening to more podcasts by entrepreneurs. My favourite of the latter is easily My First Million. I’ll never miss an episode.
This is a bit of a change for me. I’ve followed entrepreneurs, particularly software entrepreneurs, very closely since I was very young, but almost as a secondary area of interest to economics, public policy, and that sort of thing. And I’ve found the change to be very energizing.
People who write about policy for a living, or debate it regularly for fun, are often angry. This is obvious to anybody who spends any time on twitter.
Entrepreneurs on the other hand, I’ve found, are much more happy and hopeful. They’re optimists. They’re also more helpful and eager to build communities of like-minded people rather than attack ideological opponents.
Entrepreneurship as a mood-affiliation (if I’m using that right) is very refreshing. It’s like a religion you can join where everybody wants to talk about smart ways to make money. And though it might sometimes veer into corniness (see LinkedIn inspirational posts for how it can go too far), I’d still much rather that than the cynicism of politics.
I’ve been absent from this blog for a couple of months. I’ve found that, though I enjoy the practice of writing, I often struggle with topic ideas. And that keeps me from logging in and writing my daily post.
Work has also kept me very busy throughout the fall, between my day job and a couple of fun projects, but more on that below.
In any case, I’m going to try and reset the habit today, and see how long I can keep it going in 2021.
My new goal is to stick to my weekday routine for the first half of the year and to then switch to either a weekly schedule or something more sporadic and inspiration-driven.
I’ll probably also start writing backdated posts to fill the days I’ve missed since October. I’d like the blog to at least look complete. I’m a bit OCD like that.
Despite *the ongoing situation*, 2020 has been a pretty good year for me. Some highlights:
I had a second kid in April, Noah Spoke, who’s awesome;
I took on an ambitious land assembly project, which, despite some interesting challenges (which I’ll write about in detail in due time), is going well;
I moved to a larger apartment with an additional room, a better kitchen, and a much better view; and
I quit my job.
Oh, and bitcoin is up ~345% YTD. Not bad!
I quit my job to pursue more of my own projects full time, including more land assemblies and other real estate investments. I’m very excited about that but the transition will still be somewhat bittersweet (I’m sticking around until the end of January).
I joined The Benvenuto Group in July 2018 for two reasons. First, I didn’t know much about real estate development beyond urban planning considerations and wanted to learn. Second, I wanted to learn from the best– and my boss, Mitch Abrahams, is the best.
Here’s a heuristic I got from MFM’s Shaan Puri: if you ever have the opportunity to work with and learn from a 12, take it.
You might think that the top talent in any field is a 10. But then you meet a 12 and it resets your expectations and your ambition. It shows you what is possible– what could get done when things are done very well.
My experience working with a 12 has been great. I’m eager to see how much of it sticks with me this year, when I’m making my own calls and taking my own risks.
I’m a big Patrik Schumacher fan. He was the late great Zaha Hadid’s partner and is a principal at the firm she left behind.
He thinks about cities like I think about cities, as large labour markets teeming with opportunities to collaborate, innovate, and build. He’s also very outspoken in his opinions, many of which go against the architecture and urban planning orthodoxy.
He just released a new essay on what he calls interior urbanism, the exploration of new typologies and philosophies to guide the design of highrise towers. I’ll post some excerpts below but you should really read the whole thing here.
“What is the point of agglomerating thousands of people within a headquarters tower, if not the facilitation of cooperation, planned and unplanned?”
“As workers become creative-knowledge workers they must become self-directed nodes in a continuous process of network self-organisation. There is no way that this can be planned from above. The leadership is busy building open platforms that might allow this self-organisation to flourish. Buildings are one important type of platform that can make a difference.”
“This too is in architecture’s power: delivering a stimulating affective charge that heightens our state of alertness and sense of curiosity, ie the architecture catalyses a state of mind that increases our receptiveness for new knowledge and allows for the intensification of our communicative interactions.”
We finally got our Kanye West Joe Rogan Experience episode.
It was more of a monologue than a dialogue, which is fine, and included this great passage.
“Let me show you what a school of the future looks like. Let me show you what a farm of the future looks like. Let me show you what a monastery of the future looks like. We’re 20 years past the future. It’s 2020. We were supposed to be in the future by 2000. It’s my job to pull the future into now.“
This sentiment echoes Peter Thiel, who speaks regularly about pulling the future into now. There’s an essay on the Founders Fund website titled, “What Happened to the Future?”
It is 2020, after all. We were supposed to be in the future by 2000.
I think about this idea a lot, especially as it relates to cities.
In many ways, our cities are less vibrant and dynamic than they were 100-years ago, now that the landed gentry has mostly completed its capture of the land use planning system. We can’t tinker on the built environment like we could back then, and as a result, we’ve become complacent.
What would pulling the future of cities into now look like? I think it would involve much more land zoned for mixed use (which is another way of saying much less zoning), much more height, and much more density.
Toronto’s Planning staff has released a report indicating that “there are approximately 148,000 units which are approved but not yet built in the Development Pipeline.”
Some journalists, planners, and politicians on Twitter have been using this figure as evidence that regulatory supply constraints are a myth, that the City approves more than enough housing, and that the cause of our housing deficit (for lack of a better term) is speculative landbanking by developers. Or something like that.
Reading the report carefully, it’s clear, again, that the quoted number refers to all units in projects that have received “one Planning approval and have not yet been build.”
That is, units in projects that have received their Zoning By-law Amendment but are working through Site Plan Approval are included. As are units in projects that have received their Site Plan Approval but are under construction. As are all units in projects just working their way through the system– or “Development pipeline”.
The longer it takes for the City to issue, say, a Zoning By-law Amendment or Site Plan Approval, the larger that number should be expected to grow.
More than anything else, we might want to use this report as evidence that it takes far too long for a project to get from its first planning approval to occupancy. And then maybe do something about that.
I run a real estate and technology conference called Skyline through my digital agency. In its inaugural year, it was called Proptech Toronto, but we’ve since re-branded to cover technologies that aren’t strictly “proptech” (which we think of as software + internet-connected devices.)
The fact is, the proptech space is a little boring. There aren’t that many cool startups doing really interesting work, though there are a few.
Today I came across this landing page for a pretty cool proptech product.
It’s called Delve, it’s coming out of sidewalk labs, and it looks like it automates the masterplanning process. In short, it generates building massings to accomplish stated goals (e.g., max residential GFA) within given constraints (e.g., tower separation, sunlight requirements, etc.).
I like it.
And more than that, I like what it promises.
Delve currently generates massings but how much longer until it can generate code-compliant floorplans and unit plans? How much longer until it can automate 80% of what architects do?
That would represent a lot of time and money saved, and a lot of added flexibility in terms of exploring alternative design options.
I’ve written before about Boris Johnson’s fantastic, unprecedented proposed land use rule reforms.
Well, here’s former Conservative PM Theresa May taking the other side of that issue.
Notice how she says that this proposal both “doesn’t guarantee a single extra home being built” and “forces more investment into London and the south”, presumably where many of the extra homes would be built.
Does she understand the contradiction? Does she care?
The yimby cause is fascinating in part because it doesn’t draw exclusively from either side of the political spectrum. It separates those who want to build for the future from those who don’t.
Over the past 12 months, my brothers and I have been working on our first family real estate project in Vancouver. It’s a duplex with a secondary suite.
Here’s a peek at the back half.
It’s now completed and listed forsale. The whole process has been energizing and educational. Although I work in real estate development (on much larger projects), there’s something to be said for doing your own thing.
We have a couple of other projects on the go that I’d like to talk about here when the time is right, and will now also be looking to build and own. Making money on a sale is cool but owning forever is much cooler.
I use two of Wealthsimple’s products. Weathsimple Invest, which I use for regular automated contributions to my RRSP, and Wealthsimple trade, which I use to play Mr. Stockpicker with my TFSA.
This is my mullet strategy of investing, by the way. Business in the front (RRSP, low-fee index funds, 80%), party in the back (TFSA, stockpicking, 20%).
But that’s not what this post is about.
I like the Wealthsimple products. They’re well-designed, easy to use, and get out of your way. They do what they’re supposed to do and do it well.
Wealthsimple has also recently launched a new product, Wealthsimple Cash, which provides you with (effectively) a bank account.
Also well-designed, also easy to use.
A couple of years ago, I was at an RBC event that featured panelists discussing innovation generally and fintech specifically. The RBC-employed moderator asked the panelists what the Big 5 banks should do to avoid disruption by fintech startups.
The answers were what you would expect: recommendations that investments be made in innovation, de-bureaucratization, and that sort of thing.
The right answer of course is: spend as much money as necessary to ensure that the feds never issue another bank charter.
Which brings me to the point of this post.
The feds should issue Wealthsimple a bank charter and see what they do with it.
Innovation only rarely happens through innovation budgets and old firms re-inventing themselves. More often, it happens through disruption: new firms displacing old firms with new and better ways of doing things and less legacy overhead (including technical debt).
Real spending per mile on insterstate construction has increased more than 3x from the 1960s to the 1980s;
This increase is not due to geographic cost determinants;
This increase is not due to increases in labour or materials prices; and
This increase is mostly due to the rise of “citizen voice” in government decision-making.
Further in the paper,
“We define ‘citizen voice’ as a set of institutional changes — a combination of social movements, legislation, and judicial doctrine — that significanlty expanded the opportunity for citizens to directly influence government behavior to reflect their concerns.”
Larry Summers calls this the “promiscuous distribution of veto powers”. Francis Fukuyama calls it vetocracy.
A $2.7-billion, 170-mile high-speed heavy rail route is shaving almost a year off of its construction schedule by making use of precast concrete boxes under roadway crossings, or box-jacking, rather than traditional tunneling
Here’s what that looks like:
An alternative title for this story could have been “standard European construction technique makes its way to America”, and I guess better late than never.
Given how meaningful (and profitable) land use rule changes could be to property owners, it’s surprising how little money they spend on lobbying.
This is not something people really talk about.
As an example, assume a neighbourhood commanding $150 per buildable square foot (PBSF) for land. You buy a site with the expectation that you could build 7-storeys’ worth of gross floor area (GFA) on it, and work backwards to a residual land value on that basis.
Then, a big policy change: a secondary plan is introduced that supports 27-storeys’ worth of GFA on your site. That’s an additional 160,000 sf of GFA, or $24-million in additional land value.
$24-million, for one site, thanks to a new secondary plan impacting hundreds of sites.
Now, this is not to say that property owners don’t spend any money on lobbying. They do, a lot. But it seems to me that they should be spending more, and ensuring that every dollar gets put to its highest and best use.
I think I’ve moved six times over the past ten years. Maybe more.
In any case, I’ve moved enough to know that moving is not fun. One of my least favourite parts of moving is having to update my mailing address for my taxes, banking, subscriptions, and everything else.
I never have to change my email address or phone number, naturally, and have long wished that mailing addresses could be maintained in a similar way.
So, here’s the idea, which is almost wholly inspired by this great MFM episode.
Canada Post should introduce a new subscription service where, for $10 per year, or whatever, you get assigned a virtual mailing address. Something like:
Chris Spoke MFLS-1564
That address could then be used for all services that require a mailing address and, crucially, be updated on the backend to reflect whichever actual address your mail should be forwarded to. When moving, you would only have to update your address once on your Canada Post dashboard.
This sounds to me to be relatively straightforward to implement, and would provide Canada Post with a meaningful new revenue stream.
I regret to inform you that Josh Gordon is at it again.
Josh, you might remember, is the geographer from Simon Fraser University who disagrees with the idea that housing in Toronto and Vancouver is expensive because there’s not enough it. The last version of his argument tracked new housing supply against population growth and concluded that they were basically inline.
Of course, population growth is a dependent variable. If we don’t build enough new housing in Toronto, our population will grow at a lower rate than it otherwise would, and low income households will be the ones left (or priced) out.
In any case, Josh has now returned to the pages of the Globe & Mail with some new evidence demonstrating that the “supply narrative” is false. His four main points:
There have been no major land use rules enacted since 2010, yet housing is much more expensive today than it was then;
There is a lot of housing being built in Toronto and Vancouver;
Toronto and Vancouver’s suburbs are also seeing rising prices, despite fewer geographic or regulatory housing supply constraints; and
YIMBYs tend to point to detached housing zoning as an example of a land use rule that constrains housing supply, placing upward pressure on prices, yet Abbotsford-Mission, BC (plenty of detached housing) is much more affordable than Manhattan (no detached housing).
He concludes: “The commonality between these expensive cities is very strong demand pressure, not housing form or zoning – and that’s the best indication of what’s driving prices up.”
This response is hard to write because Josh Gordon is not so much wrong (though he is very much that) as he is economically confused.
Prices are a function of supply and demand. They can be driven downward by increased supply or reduced demand. The question is: which leads to the most desirable outcome?
This week I told my 2-year old daughter that her shoes were too small and that we’d have to buy her a bigger pair. She replied, “my shoes aren’t too small; my feet are too big.”
Like Josh Gordon, she’s not exactly wrong. Her shoes could fit if I were to chop her toes off; that’s just… not a good idea.
Josh Gordon points to the following drivers of increased demand: “cheap credit, foreign ownership, speculation, and high rental demand emanating from a previously strong labour market.”
Three of these sound scary, maybe, but let’s focus on the fourth. Housing prices in Toronto and Vancouver could be lower if we worked to crush their local labour markets and swell the ranks of the unemployed; that’s just… not a good idea.
I’ve written just last week that I’m very excited about Matt Yglesias’ new book, One Billion Americans. It’s about supporting families, welcoming immigrants, and building housing. All things I support enthusiastically.
It was interesting to therefore see how people who don’t think like I do feel about it. This critique, published today in The New Republic, is pretty brutal.
It includes this excerpt:
“Yglesias is an enthusiastic proponent of Yimbyism (“Yes In My Back Yard”), a technocratic school of thought that says the housing crisis is primarily one of scarcity, not price, and that if we (who? developers?) could build more apartments and condos, housing prices would fall. The hypothesis is easily falsified by a city like Pittsburgh, my own, where apartment and condo units are going up by the hundreds—and so are average monthly rents.“
There’s so much to focus in on here, not least the interesting contrast drawn between scarcity and prices.
More generally, it reminds me of the most common objection I hear from friends and acquaintances when I explain to them that housing is expensive because we’re not building enough of it. It generally sounds something like: “well, there’s a crane right there. We are building housing! And it’s still very expensive.”
Last year in Pittsburgh, the city cited by the author, a total of 660 housing units were permitted. That’s 2.2 units per 1,000 residents, a vanishingly low number. (Credit.)
Housing isn’t increasingly unaffordable because we’re not building any in high demand cities, but rather because we’re not building enough.
I’ll skip the biographical details (which you’ll get from the book) and just mention that Robert Moses is a very controversial figure. Among other things, he raised slums in NYC, displacing thousands of mostly low income families, to replace them with highways, parks, and social housing.
He was also an extremely competent and effective operator. For better or worse, he got shit done.
Canadian governments (at all levels) are not very good at getting shit done. This is especially true in the digital realm, whether when trying to develop electronic health records or centralize payroll systems.
Part of the problem, in my view, is that we’ve developed a vetocracy. To avoid the sort of harm caused by some of Robert Moses’ projects, we’ve designed systems that ensure there is not enough power vested in any one person to cut through political, bureaucratic, and regulatory interference.
This was Robert Moses’ specialty.
I think that a Robert Moses for digital service delivery is on balance a good idea. The worst of their excesses would be confined to the digital space, and we might just get good at getting shit done.
In October 2000, the operator of Hong Kong’s Mass Transit Railway (MTR) network, MTR Corporation (MTRCL), was listed on the Hong Kong Stock Exchange and privatized. It had initially been wholly owned by the Hong Kong government.
Their railway business is one of the most profitable in the world, with the highest farebox recovery ratio in the world, which is very interesting. Even more interesting (to me) is that MTRCL often develops properties next to its stations, capturing some the value created by proximate access, for additional revenue.
In that way, MTRCL can be thought of as a real estate developer with a unique and highly desirable amenity offering.
This came up in conversation with a friend from Hong Kong over the weekend and is new to me. I want to learn more about the MTR and similarly operated networks around the world. If you have any recommended readings, please let me know on twitter.
I’m very excited about Matt Yglesias’ upcoming book, One Billion Americans: The Case for Thinking Bigger.
As far as I can tell, having not read it yet, it’s the closest a book has come to encapsulating my ideology: pro-natal, pro-immigration, pro-building. Which is interesting because I consider myself mostly a political conservative whereas Matt would surely not.
It reminds me that labels are kind of silly and don’t really matter.
What matters are ideas. And word for word, Matt Yglesias might be my favourite contemporary writer exploring big ideas– or top five, at least.
I like this topic so much that I hosted an event featuring Doug Saunders on 100 Million Canadians. His book, Maximum Canada, is also a must-read.
More people means more ideas and more solutions to problems. That is, more innovation, more entrepreneurship, more growth. As I understand it, this is the core of Paul Romer’s endogenous growth theory.
I’ve preordered the book — you should too! — and will review it here once I’ve read it.
When looking for a culprit for rising housing prices in Toronto, many people eventually land on speculators. Speculation, they say, should be curbed, to maintain affordability.
But what is speculation?
Speculation is when somebody buys something in a time of relative abundance to then sell it in a time of relative scarcity. That’s how they make money in the process. In effect, you can think of speculators as transferring inventory from the present to the future.
Joseph from the Bible was a speculator. Remember? He advised Egypt’s pharaoh to store grain inventories during the upcoming “seven years of plenty” to then unload them during the subsequent “seven years of famine”.
Speculation performs an important market function. It signals that, as bad as things might be, they’re about to get much worse (where bad = expensive).
The proper response to speculation is to understand that signal, and respond accordingly.
If speculators are telling us that, though housing is scarce and expensive today, it will become moreso in the future, we should take them seriously. We should look to the policy levers available to curb that outcome.
Radical land use liberalization would be the right place to start.
I like futuristic cityscapes. I have this image as my twitter profile header:
I think images like these help us envision potential futures, futures that look different than the present, which is no small thing, and to maybe then work backwards and will them into being.
Before an idea becomes a real thing, of course, it has to be an idea. These images are ideas for how are cities could look and feel.
I think you could do worse things with your philanthropic dollars than host a competition among designers for the best cityscape featuring Toronto in, say, 2100. And to then put the winning image on a giant billboard somewhere.
How much would that cost? $25,000 for the competition prize and another $25,000 for the billboard? $50,000? Worth it.
Here’s how the Province of Ontario plans for growth.
First, they engage Hemson Consulting Ltd. to forecast population and employment growth. Hemson’s latest projections see Toronto’s population increasing from 2.9-million people in 2019 to 3.6-million people in 2051.
Second, they require that municipalities complete Land Needs Assessments (LNA) to estimate how much new land they need to start eyeing for new infrastructure and services.
Third, they require that municipalities then update their official plans to accommodate that growth.
All things flow from the population growth forecast.
Here’s the problem: population growth is not an independent variable. If we build no housing in Toronto between now and 2051, our population growth will be much lower than it is if we build 50,000 units per year. (We currently average ~20,000 units per year.)
The process is both backwards and circular, and an attempt at economic planning without the use of price signals. It’s economically illiterate.
(And obviously very frustrating to me.)
This is the same logic, by the way, that geographer Josh Gordon uses to claim that housing in Toronto and Vancouver is not supply-constrained, because it generally tracks population growth.
Here’s how the Province should plan for growth:
Radically liberalize land use rules for greater supply elasticity. Developers know where the housing is needed, and how much. Let them build it.
That’s my pinned tweet on twitter. You should watch the video.
Some people like Toronto as it was in the 1970s, and would like it to remain as close to how it was then as possible. They implement land use rules and design guidelines to assist in that effort. They have a longstanding status quo bias and oppose new development. They dislike builders.
Others want Toronto to be truly great, a global city alongside New York City, London, Hong Kong, Singapore, and Tokyo. They build.
I’m in that latter group. And not for its own sake: being a global city means more opportunity and prosperity for Torontonians and Canadians. I’d like more people to want that for our city and country, and I’d like to find and connect with them to work on it together.
A friend asked me which stocks I’ve sold too early. Given that public markets are now on a tear, I wasn’t short of answers.
I told him that I bought $TSLA at ~$300 and sold at ~$900 (USD), over a four month period, so naturally thought I was genius.
The stock is now trading over $2,200, and is about to split.
I sold way too early, against my general thesis to bet on entrepreneurs I like and stick with them.
That said, the conversation reminded me of a J.P. Morgan quote: “I made my money by selling too soon and never buying at the bottom.” Other investment greats from Baron von Rothschild to Bernard Baruch have reportedly made similar comments.
The point, I think, is to not think you’re so clever as to be able to time the market. It’s much better to sell a month early than a day late.
I work in real estate development, which means that I spend a lot of my time chasing down various consultants, lawyers, and City workers to determine the process or rules for a given thing– where the thing could include anything from “how do I convey parkland to the City, specifically” to “what interest rate will the City charge on deferred Development Charges for rental housing, and how and when”.
For many of these things, it feels like we’re all figuring it out for the first time. Including the City workers.
There’s got to be a better way!
With so many lessons being learned (apparently for the first time), I got the idea that these should be documented for future internal reference. A central repository of processes, best practices, policy considerations, etc. sounds like a good idea.
So I started building one with Notion. Here’s a sneak peak.
I think that more companies across more (heavily regulated) industries should do this sort of thing. And maybe they already do, and I’m just the one now learning something else for the first time.
I’ll listen to any interview featuring Balaji Srinivasan. I’ve been a huge fan of his since I first came across this video that merged my interest in political philosophy and technology. I couldn’t imagine at the time that a Silicon Valley tech guy would be referencing Albert Hirschman at a Y Combinator event. But there he was.
In any case, he gave another great interview that was released this week on David Perell’s podcast.
He had many interesting insights throughout, as he always does, and one that stood out to me in particular was a prediction that the future of news would be skewed to a greater extent in favour of “news you can use”. That is, actionable information that levels you up as a person.
He didn’t use the words but this sounds to me like self-help, a genre that is often disparaged but which, as Balaji points out, is far more valuable to readers than stories covering either celebrities or foreign wars.
I like the idea of elevating the status of self-help, and look forward to a future where the median media company looks more like a productivity blog than a political twitter feed.
I stayed up until about 2:00AM last night waiting to see the results of the Conservative Party of Canada’s (CPC) leadership election. Erin O’Toole won. He then gave a great speech.
He was my preferred candidate, due in some part to having two very good friends on his campaign team. But also because he seemed to me to be the most compelling of the four candidates running.
My thing, as you know, is housing. And infrastructure. This is what Erin’s campaign platform had to say about the former.
“Housing prices in Canada have skyrocketed in recent years. While much of this is due to provincial and municipal policies that make it too hard and too expensive to build more housing, the federal government has a role to play.
The federal government can make it easier to build rental housing. Since the 1970s, we have not been building enough housing — particularly rental housing — to keep up with our growing population. One of the key reasons is that Pierre Trudeau changed tax rules in a way that discouraged the development of rental apartment housing and encouraged condo development.
An O’Toole government will fix this, by allowing owners of rental housing to defer the capital gain when selling if the money is re-invested in rental housing.”
I like that he acknowledges that this is a supply issue, that “we have not been building enough housing”. This is already better than many politicians who think that housing can be made affordable by simply declaring that it be affordable (i.e., rent control).
I also like that he acknowledges the role played by provincial and municipal policies in constraining the supply of housing. He doesn’t reference land use rules specifically, but that’s obviously a big part of what he’s talking about.
I think that this sort of rhetoric helps shift the debate at all levels of government, on an issue that is very much top of mind for many (most?) Canadians.
I also like the proposal to allow for deferral of capital gains taxes provided gains are re-invested in rental housing. I don’t like capital gains taxes at all and think that this will lead to more rental housing, so: good on both fronts.
All of that said, I would have liked to see a more robust proposal addressing the “provincial and municipal policies” he references more directly. Land use rules do fall within provincial and municipal jurisdiction but there’s still a lot that the federal government can do.
For example, it can require that any municipality receiving transit funding materially upzone land along transit corridors. Or something like that. Basically, strings attached to federal money.
We’ll see if this becomes a more prominent issue in the general election, where the electorate is much more urban than it is in a CPC leadership election.
And then take a look at these tweets, that went somewhat viral this week.
If the widespread process of gentrification can be reduced to an architectural style, surely it’s detached houses being renovated to the latest fashion.
Gentrification is often thought of as an exclusionary and unfair process. To the extent that that’s true, neighbourhoods zoned for detached housing only, which will naturally be far more expensive than multifamily, are far more exclusionary and unfair.
We should celebrate dense infill development that provides more housing for more people, and aim our attacks at land use rules that make that impossible in large swathes of our cities.
Gentrification occurs when a neighbourhood becomes (more) desirable and attracts new residents, who then work in aggregate to place upward pressure on housing prices.
These higher prices then lead to (more) interest from developers, who propose new housing to sell and rent to the new residents.
Because this new housing is more expensive than the old housing found in the neighbourhood, there’s a tendency to think that the new housing causes the high prices. Not that it’s built in response to them.
This often leads to opposition to new housing, or nimbyism, which of course constrains the supply of new housing, placing even greater upward pressure on prices. It’s a vicious cycle that’s hard to break out of, as first order effects are more immediately obvious than what comes next.
The only way to maintain affordability in a gentrifying neighbourhood (other than implementing absurdly rigid and harmful controls that we’ll save for another post) is to build enough new housing to accommodate the new demand.
Bill Morneau is out and Chrystia Freeland is in as our new federal finance minister. I don’t have strong opinions about Freeland other than that I enjoyed her cameo in Bill Browder’s Red Notice.
Well, that and this awesome tweet:
My expectations of politicians are low enough that I don’t imagine many of them to know who Henry George was, let alone have any familiarity with his work.
Chrystia Freeland does though, and she appears to be a fan. I love that.
The progressive movement owes its name to Henry George’s Progress and Poverty, first published in 1879, in which he proposes a single tax on land values. This might be the most underrated book and idea in economics.
I’ll dig deeper into the benefits of a land value tax in a follow up post. For now, buy the book and read it. You’ll be in good company.
Ontario’s provincial government announced today that it will be releasing the RFPs for the Scarborough Subway Extension and Eglinton Crosstown West Extension this week.
Combined, these two projects represent 17km of new subway and LRT rail infrastructure in Toronto, most of it underground.
At the announcement, Associate Transportation Minister Kinga Surma noted that her government “continue[s] to jointly call on the federal government to provide its fair share– funding at least 40 per cent of our four nationally significant subway projects. Formalizing this funding partnership with the federal government remains a top priority.”
I’ll be following this closely. As I’ve written before, more than just discussing how to pay for these projects, we should be thinking very deeply about how to pay less for these projects.
I read Conrad Black’s The Canadian Manifesto this week, a small book in which he proposes some ideas to improve Canada’s policy framework and standing in the world.
A section on military spending included this passage:
“We need at least 100,000 more people in the armed forces. Canada cannot be taken seriously with a minuscule air force, almost no ocean-worthy vessels, and an army of three brigades. We need at least two divisions, a hundred first-class fixed-wing aircraft, new equipment for everyone, especially helicopters, a navy of at least twenty serious vessels, including an aircraft carrier, and a heavy infusion of strength into the Canadian aerospace and shipbuilding industries into the bargain.”
I’m not an expert, but I’ve read and heard that Canada’s military aircraft and ships are very old. Conrad Black is proposing that we build and buy new ones.
What if we skipped the next generation of both and went directly to autonomous options? A military comprised primarily of drones + drone ships. We might then also reduce that “100,000 more people” by an order of magnitude or greater, without any meaningful loss to our warfaring capacity.
Again, I’m not an expert and don’t know if this makes sense, but it seems to me like it should, and I do know that there are some very cool companies like Anduril working on it.
Given the blanket of protection provided by the United States and our NATO membership (same thing), we could probably afford to take a little risk in this file and reinvent the modern military for a small, peaceful country like ours at a fraction of the cost.
A recent episode of TVO’s The Agenda featured a panel discussion on “Ontario’s Broadband Problem”.
“Better broadband has been promised by both the federal and Ontario government, but it is still a long way away from being equitable and available across the province. The Agenda looks at the challenges and path forward.”
I have a few thoughts of my own on the path forward, none of which were discussed in this episode.
We should make it easier for Ontarians to move to Toronto.
Toronto has more and better paying jobs, more and better cultural and entertainment amenities, and of course, much better broadband internet.
Many people from Ontario’s smaller communities would like to move to Toronto but can’t because of our insane housing prices. As discussed previously on this blog, these high prices are a direct consequence of restrictive land use rules that constrain housing supply.
By building more housing in Toronto, we make it possible for more people to live here, and to participate in all the awesome things that the city has to offer– including broadband internet.
We should address cell tower NIMBYism.
One of the show’s panelists was Caledon mayor Allan Thompson, who mentioned that access to broadband was the number one issue mentioned the last time he was out door-knocking.
According to a friend who knows this beat better than anyone, Caledon has one of the most onerous telecommunication tower protocols that make it very hard to get new towers built.
Among other things, the City of Caledon has set a very large notification radius within which residents must be notified of the new tower proposal. This notification provide opportunities for (often successful) organized opposition.
The City of Caledon is now circulating a petition to declare broadband internet an essential service. They might want to start by allowing for more of the required infrastructure to be built quickly.
We should let foreign-owned telcos operate in Canada.
CRTC rules currently prohibit any foreign-owned telecommunication company from obtaining a domestic market share of greater than 10%. This protectionist regulation limits participation by the larger American and global firms, who might otherwise jump at the opportunity to invest and compete in our regional markets.
We should issue Elon Musk his BITS license for Starlink.
On May 20th, an application for a Basic International Telecommunications Services (BITS) from Elon Musk’s SpaceX was posted on the CRTC website. This license would permit SpaceX to provide satellite internet across the country.
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 (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.
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.
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 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.”
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.
“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.
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
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.
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.
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.
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.
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:
Decreased mobility generally, as a function of network capacity or, in a scenario with congestion pricing, individual budget constraints;
Increased reliance on mass transit at the cost of individualized options (i.e., bus-only lanes); or
This sort of thing:
Put differently, our current options are:
Fewer people moving around, across shorter distances, and less frequently;
Fewer people moving around in their own vehicles, with their own space, on their own routes; or
Scaling the network along the y-axis above grade.
I like the idea of adding to that set, 4. Scaling the network along the y-axis below grade.
I just wish I could buy some Boring Co stock instead of arguing about this online.
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.
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.
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.
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.
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.
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
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.
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.”
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.
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.”
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.