CNU17 - Demographic Shifts and the Economics of New Urbanism

The session was billed as "New Urbanism and the Continuing Great Demographic Shift," but probably to no one's surprise to the hundred or so people packed into the room it turned into the Jim Kunstler show.

Laurie Volk, co-managing director of Zimmerman/Volk Associates Inc., presented some compelling information on the massive demographic transformation that recently got under way. She calls it "the pig in the python" effect: Seventy-six million baby boomers are slowly migrating from the suburbs into cities, seeking out the benefits of urban living. Meanwhile their children, roughly 75 million "Millennials," are coming of age and also seeking urban living. The result is expected to be a huge demand between 2004 and 2024 for urban housing and communities of the type in which New Urbanists specialize.

Married couples with children now account for less than 25% of American households. Fifty percent of all households in America contain one or two people. Last year, 9% of all homes were purchased by single men; 22% were purchased by single women; 32% were purchased by couples. Only 37% were purchased by traditional or non-traditional families.

At the same time 61% of the U.S. housing stock is of the single-family detached variety. There is a housing stock imbalance that will only grow more acute without new forms of development that create walkable urban neighborhoods with mixes of housing types and price points. "Until 2024, the majority of the market is going to be looking at urban, diverse, sustainable neighborhoods," Volk said.

I took about two pages of notes on Volk's presentation, and I think I pretty thoroughly captured her excellent points about what this demographic shift means for cities.

My notes under the heading "JHK" go on for eight pages. I wrote down as much as I could, but by no means got all of what he said. James Howard Kunstler's presentation started with a slide titled "Our Current Situation" that included a painting of the Titanic going down with the Hindenburg hovering overhead. That set the tone.

"A kind of pall is sort of settling on the CNU now, largely because of the financial fiasco that has been unfolding," Kunstler said.

The reality is that at the exact moment when New Urbanist thinking has been proven correct and its development principles should be guiding us out of the transitory suburban era and into a more permanent future, there is no money to pay for it. Well, that's not entirely correct. There IS money; it's being printed by the federal government at an alarming rate and thrown at just about any project that can be shown to provide jobs. Through their purchases of Treasuries, China and other nations are, in essence, funding our flailing attempts to claw our way out of the economic hole we've spent the past 60 years digging.

I say "flailing" because, as Kunstler pointed out, there is no real consensus on what exactly is wrong, let alone how to fix it. That has led to paralysis, he said.

Kunstler said the financial system was destroyed in the economic collapse last year and it's not coming back. Kunstler's point is simple and difficult to refute: The previous financial system relied on perpetual growth. Something worth X at the beginning of the year had to be worth X + something at the end of the year. Growth in value on paper has been proven to be a sham. Real growth is only possible through economic expansion, in other words producing and consuming more. And that's only possible with cheap and expanding supplies of energy.

The world's production wagon is firmly hitched to the petroleum horse, and that horse is old and tired. Discoveries of new oil reserves have been falling since the 1980s. The reasons oil hit $160 a barrel last year were largely because demand was outstripping supply and speculative investors poured into the market to exploit the price inefficiency, thereby driving prices up beyond what pure supply and demand would dictate.

Then two things happened: One, the global economy collapsed, changing the supply-demand relationship to a degree that speculators no longer saw worthwhile profits and exited the market. And two, the federal government began poking around in the commodities markets in an attempt to look like it was "doing something" about high oil prices. Any speculators not convinced that oil was a bad trade got out anyway to avoid federal scrutiny. Oil prices collapsed.

But the supply-demand imbalance persists. The United States imports two-thirds of the roughly 20 million barrels of oil it uses per day. Ninety-three percent of the world's proven oil reserves belong to nationalized oil companies in countries that don't like us very much, Kunstler said. But even a modest bear market rally has driven oil prices past $70 a barrel from the low $60-per-barrel range just a few months ago. It's not hard to imagine what will happen if real signs of economic recovery appear. Prices will rise and speculators, who have been sitting on piles of cash waiting for profit opportunities, will pile back into the oil market, sending prices soaring again. That will snuff out economic recovery.

Many of the predictions for how we will "come out of" the current economic crisis rest on some key assumptions, among them that social order will not fail, other countries will continue to loan the United States money and alternative fuels will save the day. But Kunstler said it's crucial going forward to check those assumptions about the future at the door.

The transition from the old petroleum-based, growth-driven economic model to whatever is next is not guaranteed to be orderly, he said. In what he called our "Zombie Economy," in which governments, corporations and individuals are all effectively bankrupt, other countries have little reason to keep loaning us money. And no combination of "alternative fuels" will be able to run the systems we have in place now at the scale we are currently running them.

"If we're not living in a stable society, with a stable currency, all assumptions about growth are out the window," Kunstler said.

This does not bode well for New Urbanism. "Capital is flying out of the system. Money to build the new economy is flying out the door," Kunstler said. Money to build New Urbanist, or any other kind of project, simply won't be there.

Regular readers of James Howard Kunstler's website, kunstler.com, know him as a persistent purveyor of uncomfortable observations and disquieting predictions. Half the people who've read or heard him think he's a crackpot; the rest think he's a genius.

It seems safe to assume Kunstler isn't staying up nights worrying about being seen as a crackpot. He sleeps the sleep of a man who has been proved right time and again. He said suburban sprawl would prove to be a living arrangement with no future and a huge misallocation of resources. Check. He said oil prices would skyrocket as soon as the supply-demand reality set in. Check. He said complex derivatives were nothing more than paper fantasy wealth and that the financial system they purported to support would collapse. Check.

So when Kunstler says, "Expect that there's going to be a certain amount of disorder in the system and prepare for it," the smart move seems to be to figure out what he means.

Kunstler said he expects cities and towns with good old building stock that are close to agriculture and built to a scale that will allow the population to be fed from the surrounding land to thrive – places like Troy, N.Y.; Paducah, Ky.; Dayton, Ohio; Macon, Ga.; Grand Rapids, Mich.; and Columbus, Ohio. Other places, the usual suspects – Las Vegas, Phoenix, much of the desert southwest and even the Rocky Mountain West – will fail. Cities like Chicago and Baltimore and Cleveland will contract to an area within about a quarter-mile of their waterfronts – which will have to be reconfigured to handle commerce – but beyond that boundary the future is a big question mark.

"If you think everyone is just going to be moving into lofts in the city, re-think that," Kunstler said.

We're going to have to learn how to grow things again, and produce food in a way that doesn't rely on large natural gas and petroleum inputs for fertilizer, pesticides and transportation, Kunstler said. When there's money available again, designing traditional towns will be important. The American agricultural village needs to be re-thought, Kunstler said. We don't know what it is.

New Urbanism, although it's the best alternative out there, faces major problems, the biggest of which is a lack of money available for development. "Many of you made yourselves hostage to the home builders," Kunstler said. "They're dead. REITs (real estate investment trusts) are dead. You can't partner with them."

Additionally, scale will need to be re-thought, Kunstler said. Rather than doing large-scale development, "start thinking that the new increment of development is the normal building lot."

Skyscraper cities are in for an unpleasant transition. Buildings on the skyscraper scale are dependent on cheap energy to operate. The crop of super-tall buildings that define the downtown skylines in large cities around the world won't be retrofitted once they reach the ends of their useful lives. For a clue about what might happen in them here, Kunstler looks to Johannesburg, where speculators have taken over the office skyscrapers and are renting the office cubes out as residences. The plan appears to be to collect rent until the buildings are no longer inhabitable and then leave them to an uncertain future.

Kunstler said rooftop gardens and community gardens in cities can work, but too many of them could blur the line between the rural and the urban, and he thinks that line must remain clear. And rooftop gardens are only viable so long as the building can support the weight.

Artistry, which Kunstler said has remained largely undefined in New Urbanism, will come to the fore again as we rediscover its importance in designing buildings that relate to people on the human scale.

Finally, he said, we need to distinguish between "solutions" and "intelligent responses." A solution to the depletion of oil supplies is to invest heavily in cars powered by electricity or hydrogen. An intelligent response would be to re-order the scale of our living arrangement, reducing the need for auto transportation. Time is running short to figure out the difference, Kunstler said.

"We don't have a moment to lose. There's too much to do. The list is too long. It's time to man up and take off the clown costumes. Turn your hat around and tell your kid to turn his fucking hat around, too."