Thrive and the Scarcity Mindset

Scarcity harms minorities and the poor, abundance benefits them.

Many of the issues facing Montgomery County today are the result of self imposed scarcity on the kinds of places people want to live. Younger people want to live near transit in walk-able mixed-used neighborhoods with trails and safe streets, but since these kinds of places are so scarce and in demand around the country, they become expensive. The key reason for the scarcity is County imposed anti-growth regulations which disproportionately hurt minorities. On page 20 of the Thrive 2050 Draft, the scarcity mindset is already present.

Thrive 2050 already limits the amount of mixed use urban centers and states that it will “Concentrate growth in centers of activity and along corridors through compact, infill development and redevelopment to maximize efficient use of land”. At the beginning of the process, exclusive wealthy enclaves such as Potomac are excluded from the conversation. All of the growth with will forced into a small amount of land. What the OLO RESJ Review of Thrive 2050 got correct was that it will be expensive “to reside and/or work in in mixed-use, transit-oriented towncenters”, but reason is simple, there aren’t enough of them. The Planning Board’s response was also correct that the answer is to increase the supply of these types of places. If mixed-use development was abundant and ubiquitous, then there would be no gold rush to fill the few areas where it is legalized. This rush causes high prices because the land is still scarce and developers have to charge high rents to justify the cost of land. Thrive 2050 correctly attempts to increase the supply of mixed-use walk-able neighborhoods, but it’s fault is that it doesn’t go nearly far enough, causing growth to be inequtiable. That vast majority of single family exclusive land is left untouched causing all demand to flood into the areas development is legalized, often areas with large minority populations.

Changing a scarcity mindset requires a paradigm shift in a way of thinking. Instead of stuffing all growth into small urban centers, the County could simply legalize small commercial shops everywhere county wide. Instead of everyone fighting to live within walking distance of shops, everyone in the county suddenly lives within walking distance of shops. Taco Fresco in Bethesda, MD could seamlessly blend into any neighborhood in the county.

Minority entrepreneurs looking to open a new venture can start out of a garage or a small plot in their local neighborhood with low capital requirements, they wouldn’t have to rent out the large newly developed commercial shops only available in growth centers. Instead of citizens all clamoring to live within walking distance of a growth center, every neighborhood would have a taco shop in it allowing it to become mixed-use and pedestrian friendly. Scarcity will be replaced by abundance and growth will be spread equitably across the entire county. Abundant shops with lower square footage on cheaper, suburban land without the need to construct parking lots would lower the barrier of entry disproportionately benefiting minority communities.

A new paper by Shane Phillips at the UCLA Lewis Center for Regional Policy Studies lays out why this happens.

To combat this, many cities and states are now reversing course and upzoning to allow higher-density housing, usually in targeted locations such as individual neighborhoods or corridors. While these targeted upzones have increased housing production in some cases, they have also led to higher land prices that erode the affordability of new homes. I argue that improved housing affordability at a city-, metro-, or region-wide scale can only be achieved through “broad upzoning,” defined here as zoning changes that allow at least moderate density (roughly 6-10 units) on a large share of parcels (at least 25%-50%).

The reason broad, County wide liberalization of development restrictions don’t result in higher prices is because no parcel has a premium over any other parcel. Lower land prices mean lower rents. The way land use planning in the County work now, when denser housing or commercial structures are legalized on a parcel, usually via narrow sector plans, suddenly the value of the land goes up because all of the demand for mixed use dense housing begins to compete over the scarce newly liberalized parcel, driving up the cost. But if regulations in the entire county were liberalized at once, no parcel of land would have a premium value over another parcel, the market for land would stay relatively stable. Mixed-use dense neighborhoods would no longer be scarce, they would become abundant and affordable.

In its current form Thrive 2050 is a huge improvement over the status quo and will go a long way in reducing emissions and reducing the scarcity of nice places. But if it truly wants to be a transformative it needs to think past specific corridors and focus on county wide broad measures. Scarcity harms minorities and the poor, abundance benefits them. Scarcity makes lots of people compete over a small amount of land, with the wealthiest winning and profiting. Abundance gives every one the opportunity to develop housing or open a business at low cost.

We already know why Montgomery County is segregated and expensive, it’s because of exclusionary zoning and scarcity focused development measures. The Council should pass Thrive 2050 as is because it contains enough language to support an inclusive abundance agenda. The Council doesn’t spend time analyzing and debating the cost of putting off action. The cost of doing nothing increases as time is spent on analysis rather than action. Pass Thrive and then pass an abundance agenda for real equity & social justice.