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- [00:08]
A
Hello and welcome to another episode of the City Journal podcast. I am your host, Raphael Mangual, and I am delighted to be joined by my favorite colleagues, Judge Glock and John Ketchum. Welcome back to the show, gentlemen.
- [00:18]
B
Very glad to be back.
- [00:19]
C
Wonderful being here.
- [00:20]
A
It's been a while since we've had a sort of panel style show, which I've always enjoyed because I feel like the conversation is just more dynamic, and we have a lot to talk about. Particularly today, I want to focus on the affordability discourse. So City Journal just put out this package of essays. I had one. Both of you had excellent ones on an affordability agenda. And of course, that term has kind of become more ubiquitous than almost anything in American political discourse today. Right. Everything's an affordability discourse. Right? You've got the. The abundance Bros. You've got, you know, the. The budget hawks. And then of course, you have the DSA types who see no limits on how much of our money they can spend. So I want to talk today just about some of the things that you both wrote about in your pieces. Judge, I want to start with you. You had an awesome piece about sales tax, and it just brought to mind this old meme that I've always found hysterical. It was kind of like a comic strip, and it's. But, you know, you have a bunch of people sitting around a boardroom table and they're talking about discussing how they can make life more affordable, and one guy just, you know, kind of opens his mouth and goes, well, how about we let them keep more of their money? And in the next frame, he's flying out the window that they just threw him out. So, you know, it's, It's. It's interesting because I think sales tax is one of these things that, as you point out, has never really generated the same kind of fervor and pushback as other taxes. And yet it can actually be an important way to reduce our cost of living by somewhere in the range of 9, 10%.
- [01:54]
C
Yeah, exactly. Throughout this whole affordability discourse, I have been mildly shocked that we have this one government policy whose explicit goal is raising the price of goods when you buy them. And almost nobody brings it up. That seemed like, if you're concerned about affordability, we actually have this very clear, uncomplicated lever to pull, which is stop charging people so much when they buy things. But as you point out, not only during this affordability period, but kind of throughout the sales tax history, it solicited remarkably little blowback. Income taxes, property taxes, have faced periodic Revolts. We've seen huge cuts in the rates at different times in American history in both income and property taxes. We've never seen anything similar on sales tax that ever since they started in the Great Depression, effectively state sales tax, they've kind of continuously marched upwards. Where originally they were offered 1 or 2% of sales. And now in places like New York, you get the 8.875. You can see it on the little receipt. And that's to convince you, of course, it's not a 9% sales tax. Don't worry. Ever.
- [03:09]
A
So it's like that box of cereal that's like 3.99 and you like, just say it's $4.
- [03:14]
C
Just say it's $4. Yeah, I know. It's. That same logic works for government taking your money as. As the serial manufacturers. So. And in New York, it's whacked up
- [03:22]
B
between the state and the city, too.
- [03:23]
C
Yeah, which. Which is not uncommon. And so a lot of states impose a pretty high sales tax. A lot of cities that impose a particularly high sales tax on top of that. And again, not all of you heard no discussion about reducing this during this affordability debate. As I pointed out in the piece, you've actually seen numerous cities in this period increase sales taxes, which to me is kind of doubly shocking.
- [03:47]
A
Why is that? I mean, what is it that's attractive about sales taxes to state and local governments? I mean, why that route?
- [03:54]
C
Yeah. So overall, right now, if you include the general sales tax, which is that big headline number you get on most of your purchases, and selective sales tax, which is most clearly your gasoline, your cigarettes and your alcohol. So all your fun stuff, those have a separate rate, and then there's a bunch of separate rates for car rental cars and hotel rooms and everything else. But, like, altogether, those rates are now the single largest source of revenue for state and local government. So it's a really big deal. And again, the absence of discussion about that does seem shocking.
- [04:25]
B
But you think Americans had a big backlash against the price of eggs a few years ago.
- [04:30]
A
That's right.
- [04:31]
B
They're very sensitive to the price of gasoline. And yet sales taxes seem to get a pass somehow, which is kind of incongruous, especially when you consider how sensitive they are to other forms of taxation, like property taxes.
- [04:43]
C
Yeah, and this kind of. This gradual ratchet seems to be the main reason it escapes attention. It's that you're adding an extra penny per dollar. And they usually talk about it. It's like, you know, $0.09 per dollar sales tax or you're, you're pushing it up to 10 or whatever it is. And most people barely knows the difference. They don't often know it's, it's coming straight from the state and local governments. They can barely distinguish it on the receipt, if it is on the receipt at all. And so that allows this kind of frog in the pot situation where we've gradually been ratcheting up the sales tax on consumers without most of them really paying attention to it, which is why state and local governments seem to like it so much.
- [05:22]
B
I mean it started out pretty trivial at 2%.
- [05:25]
C
Yeah.
- [05:25]
B
Now it's just ramped up, you know, quadruple the mid states. You know, it's interesting too that I guess the population that would be the most sensitive to it, right. Have, especially when cash was more ubiquitous, the ability to just get around it.
- [05:39]
A
That's right, that's right, Yeah. I mean you still see that some, you know, in some places today, especially, you know, in certain parts of New York City where it's like, you know, you pay in cash or credit, right.
- [05:48]
C
And you get a different charge. I think somebody once did a few years back, did a study where some of These bodegas claimed 100% credit card sales, which actually would indicate almost the opposite, that basically they were only reporting credit card sales. Any dollar that came in from cash was not happening. Which all of us who live in New York knows that's not the case.
- [06:10]
A
Well, one of the things that's always bothered me about the sales tax is the disparate uses of it. Right. I mean, so you know, sales tax is very clearly a way to generate revenue for the, for the state and local government. But state and local governments have also used sales taxes to discourage people from purchasing certain kinds of products. We see additional taxes on alcohol, on tobacco in some places right there, tacking on taxes to ammunition and firearms. Right. As a means of discouraging certain kinds of economic activity. But I mean the logic has to work sort of universally, Right. It can't be the case that a sales tax functions to discourage you from smoking, but doesn't discourage you from participating in any of the other, you know, realms of your daily life to which it's applicable. Right.
- [06:58]
C
So yeah, it's, it's has become a particularly kind of exemption ridden system which now the majority of sales in America actually are not taxed by the sales tax because that people have exempted, say female sanitary products, renewable energy, clothing, clothing, prescription drugs, renewable energy, flags, newspapers. There's a whole slew of different things that the government says, oh, this is good for you and this is bad for you. So yes, we'll raise the cigarette and ammunition tax, will reduce these other taxes. But that actually is your classic tax economist problem of you're forcing those things that are taxed, the remaining goods to bear a much higher rate.
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A
Right.
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B
Well, you see that in tariff policy
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A
all the time too.
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B
Clear analog there.
- [07:46]
A
Yeah. You know, I want to turn to your piece too, John, because you know, Judge makes, he starts this piece with some interesting anecdotes. Right. About malls in New Hampshire being situated right around the border. Great anecdote, which is, I thought, a perfect illustration of sort of the nature of the problem here. Right. Because to the extent that you impose additional costs on daily life in a particular jurisdiction, you are going to discourage people from either living in that jurisdiction or shopping in that jurisdiction. Right? Yeah. So, yeah, one option is to drive to the New Hampshire border and do
- [08:22]
C
all your shopping, tax free shopping. And people love it.
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A
Sure. But if you don't have a nearby option to lower your cost of living.
- [08:32]
C
Right.
- [08:32]
A
I mean, one of the things that you'll consider is just leaving that jurisdiction entirely. And one of the things that we've seen in America today is sort of de. Urbanization. You've had suburban populations increasing. A lot of people have made the decision to leave unaffordable cities altogether because it's just, you know, it's prohibitive, it's expensive. But one of the things that makes cities great is that density. Right. It's bringing so many people together, bringing that human capital together. And out of those interactions you can get these incredible byproducts that we don't even know, you know, what they're going to be yet. But we know that they're valuable and we know that they can carry economies and be very dynamic. And I thought you just put the nature of the problem so perfectly in your piece. I want to read you back a quote which is you write, whether greater density yields shared prosperity or urban dysfunction will depend on whether public and private institutions can channel the concentration of humanity into productivity rather than cacophony. And what that suggests to me is that there is an inherent challenge associated with the density that characterizes large American cities like New York. Talk to us a little bit about what those challenges are like and is, you know, the tax burden one of them?
- [09:46]
B
Sure. So we're not just seeing a move from dense urban cores to suburbs. We're also seeing a phenomenon of inter urbanization of folks from places like New York City going down to the Sun Belt, to Dallas, to Miami, to Nashville and to other places like that. Because they just offer a more compelling value proposition at this point.
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A
Right.
- [10:08]
B
The places like Texas and Florida do not have a state income tax.
- [10:11]
A
That's right.
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B
And their housing costs are substantially lower than New York City's. And oftentimes, as a young person who has, you know, made sacrifices to go to college and to delay gratification and to do all the right things, you want to feel like you're making it and you want to feel good about your progress. And, you know, your option is a 700 square foot apartment in New York
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A
City if you're lucky.
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B
If you're lucky. Right.
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C
With three roommates. Yeah, yeah.
- [10:38]
B
When you're first starting out too.
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C
Yeah, yeah, yeah.
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B
Or it could be a modest post war structure in the suburbs somewhere, or it could be a brand new gigantic house, 3,4000 square feet in a Texas suburb. And often your commutes are roughly equal, but you're taking home more at the end of each week when you move to the Sun Belt. And that simply means that New York City has to improve its value proposition because the competition is so much greater.
- [11:12]
A
That's right.
- [11:13]
B
And a lot of the discussions around affordability with Mayor Mamdani and throughout the campaign last year focused just on one small dimension of affordability, what things cost. But affordability is much more expansive than that. It not only is what things cost, it means what, what do you get for what you're spending? And then it's also what do you take home? What do you earn? What does the income side of the ledger look like? So a more holistic view of affordability has to incorporate that bigger picture, both for the individuals and then for the public sector.
- [11:53]
C
Yeah.
- [11:53]
A
I mean, I've always been. Not always, but recently I've been frustrated with the nature of the affordability discourse in cities like New York, Los Angeles, San Francisco. Right. The kind of, you know, top tier, upper echelon of cities that are super desirable, that have incredibly dynamic economies, interestingly, that are often dominated by a single industry. Right. So in New York you'd have finance. In San FRANCISCO it's tech, LA, it's Hollywood. But there's a sort of sense of entitlement that I think characterizes a lot of the people who are complaining about life in these cities that they can only live in one of these three major metropolises. Right. And I think back, you know, I'm, you know, a first generation American. Right. My mom is an immigrant. My grandfather was the first one to Come to this country on that side of the family.
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B
Same here.
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A
You know, what were they doing? They were pursuing opportunity, right. The opportunities in the Dominican Republic didn't exist. My grandfather left on his own, left his family behind, left his culture behind, left his language behind and started a new life in a place where he felt that things were going to be better. And yet we have so many people who are struggling in cities like New York, Louisiana, Los Angeles, who are living three to a 700 square foot apartment, you know, who are eating, you know, Velveeta and you know, chopped meat on the weekends. And that's like, you know, all they can afford, right? But it's like you can actually have a higher quality of life in some of these other places. Is, is there an element of the affordability problem that is self imposed?
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B
Well, people certainly have higher expectations about the type of lifestyle they ought to be having, right? And if you're earning a salary in the low six figures, you know, which
- [13:44]
A
would put you in the upper percentage percentage, or you move to Cleveland, you
- [13:48]
C
can buy mansions like Rockefeller esque mansions in Cleveland, you're on a six figure salary, right?
- [13:55]
B
But that goes real quick in New York City when you've got to pay your landlord and Uncle Sam and Kathy Hochul and Mayor Mamdani and your student loans in many cases too. So at the end of the year you say to yourself like, well, what do I have to show for it?
- [14:14]
A
Right?
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B
But that's also a function of the services that are available to people. I mean, a lot of people use things like doordash and grubhub as part of their ordinary way of life. Now it's understandable if you're working a really tough job, lots of hours, you know, the last thing you want to do is to go home and have to cook yourself a meal, right? You have a lot of two parent households that child care obligations and that's another strain, believe me, you know.
- [14:42]
C
Yeah, well, and can I, can I, can I get theoretical for just a hot second? Okay, everyone can punch me in the nose as soon as I'm done talking here, but this is one of my favorite. Yeah, yeah, get right. I know Ralph's always ready to punch me in the nose, but like for good reason. But like one of my favorite urban economics result, I'm actually going to now mangle the name. I think it's Rosen Roebach theory, which just to get a little bit in the weeds on that is basically your quality of life adjusted for your income should be the same pretty much in Every city in America. Now, what that effectively means is that one would expect an equilibrium. If you're paying too much for a poor quality of life in New York, you tend to move to a lower quality city.
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A
Right.
- [15:21]
C
The cost in that New York City would move down. The cost in the other city would move up as the demand went up, and then over the long run, they'd equalize. Now, it's a function of the Thiebaud model. Yeah, the Thiebaud model is the model that, you know, cities and places compete for residents like businesses compete for customers. But like the other side of this, this interesting Rosen Roebuck model is that once, if you have an area that costs much more than another area, that's actually a sign that it has other amenities that aren't priced in your headline income.
- [15:51]
A
Right?
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C
So insofar as New York has a lot of amenities that people value, they're willing to pay more for that and always will be willing to pay more for that as long as those amenities are there. As you can compare it to, to say, the 1960s and 70s, where some studies showed being New York, you kind of had to take the equivalent of combat pay.
- [16:09]
A
Right?
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C
Your pay, adjusted for your pay, adjusted for local cost of living, was actually pretty high in New York City. Cause people knew to live in New York when the city was on its knees, when the crime was terrible, when the garbage wasn't being picked up, you actually had to get a pretty good income to that.
- [16:24]
B
It's like hazard pay.
- [16:25]
C
Exactly. It's like hazard pay, combat pay or whatever. And so it's the reverse. Like to us, someone living in Cleveland right now kind of gets hazard pay. Like, you don't have the restaurants, you don't have the shops, you don't have the amenities. So, yes, your technical income is higher. Now, the real question is that the kind of Rosen Roebach model doesn't equilibriate or doesn't function second to second. So obviously you can have places like New York where even with this higher pay in the 60s and 70s, people started to flee. And you can have a citizen did flee, and people did flee the city, which was like actually doing pretty well. People forget, like, up until the end of the 1960s, was still gaining population, lost about a million folks in the 1970s. And so like, hey, it was all kind of in equilibrium. People were dealing with the kind of crime costs that you pointed out in your article, and they were making up for that by higher pay from their jobs and employers and elsewhere. But suddenly those things can Shift. And with a competition from other cities, that high cost of living can be really, really binding and make people flee outside. And so I think that to your point about the entitlement, to some extent, the people here, they do want New York level of amenities without the paying the extra cost for living in a city like that, where everyone wants to be around that. But are we actually in a point now where you can get a lot of those New York amenities elsewhere with that?
- [17:43]
A
Yeah, I think that's exactly the point. Because one of the things that I noticed after leaving the city for the suburbs was that the difference in the level and quality of amenities was not as stark as I expected. I was dreading the idea of not. And look, and this is still a problem, right? Like I can't get good sushi, you know what I mean, at ten o' clock at night.
- [18:07]
C
Pizza and bagel bagels in the Long Island.
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A
Maybe not by you.
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C
Yeah, maybe not in the D.C. pizza
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A
and bagels on Long island. You can.
- [18:14]
C
You're on top of that.
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A
Where we might actually compete.
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B
All right, well, I'm gonna have to go toe to toe now.
- [18:20]
C
You're gonna want to punch me.
- [18:22]
A
No, I will say the pizzerias in New York City, unquestionably better. But Long island does have a handful of incredibly good pizzerias that, you know, are on par with like, you know, Ruby Rosa, John Zonblicker.
- [18:34]
B
I'm familiar. Yeah, I make the rounds.
- [18:37]
A
But. But I was surprised that, like, I did not feel the difference in amenities as much as I expected to. Right. I mean, and you start to ask yourself questions, right? Like, how many nice restaurants do you really need to make life tolerable? Right? It's like if you have five, six restaurants of different cuisines that are high quality, you know, you can kind of make a nice life frequenting those places over and over again. The shopping, you know, has significantly improved. And I've noticed that in other cities. I was in Scottsdale, Arizona not too long ago and was blown away by the number of nice restaurants, the quality of the shopping experience. You know, I went to the gym off. Off the hotel campus and, you know, kind of walked around. It was beautiful. So I do think there are a lot of people who feel like, actually if they took that chance, would feel like they could get a comparable level of amenities. Which kind of gets at a question that I found kind of weaved, at least implicitly, if not explicitly, throughout your whole piece, John, which is like the question of what is it that I'm getting for my money for paying this premium. And there's two sides to that coin. There's the amenities, right? Like, what does the city offer that I can't get in Cleveland, that I can't get in Columbus or Phoenix or Fort Worth? But there's also a public service side to it, which, you know, we haven't talked about yet and which I think is really important. And Judge, you kind of mentioned, you know, the garbage getting picked up, the crime. Right. These are things that the government is expected to do with the incredible amount of money that it's taking from you, whether through sales tax or through income tax. And I think that is, that has been one of the sort of key pushes for people who are considering leaving cities like New York, like la, like Chicago. It's the sense, not that the amenities haven't lived up to what cities like that should offer, but rather that the government has not lived up to its obligation to match the amount of money that it's taking from its citizens with reciprocal service provision.
- [20:41]
B
Right. Well, a place like New York is always going to have the apex of, say, cultural amenities institutions like the Metropolitan Museum of Art, like the Met, Opera. So that's why there's a sense that it will always be a home to the very wealthiest, at least a large share of them. They will want the very best and they'll pay whatever it costs to have that very best. Well, at the same time, you have seen, as you say, Raoul, that other places have caught up to New York in its private sector offerings. Right. And that's also a function of the Internet. So people have learned how to make better pizza, how to make better bagels through YouTube. Right. I mean, it's an incredible.
- [21:34]
A
And I'll tell you what, just the e commerce aspect to this is very real. So I lived in Chicago for a few years, went to law school in Chicago. Now, Chicago pizza, New York pizza, two completely different categories of cuisine. Okay. It's more like lasagna than pizza, Right? But it's delicious. Like a deep dish pizza is like sometimes there's just nothing else that will satisfy. There is a online service that will deliver frozen Lou Malnati's deep dish pizzas from to anywhere in the world.
- [22:04]
B
Yeah, Sally's of New Haven.
- [22:06]
A
Exactly, yeah. Sally's New Haven. So you can get it like on ice, delivered to your front door and still have like what turns out to be an indistinguishable deep dish, Chicago style pizza.
- [22:18]
B
Say it's like 90% of the real thing that's still like really good. Better than a lot of the other local offerings.
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A
100%. So we, I mean, we have like a standing order for Deep Dish and the Garrett's Popcorn.
- [22:29]
B
It's the amazonification of the economy, in a sense. Yeah. That you can get, like, what other cities offer at almost the same level of quality, but for a reasonable price, no matter where you live.
- [22:42]
A
But I want to talk more about this challenge of managing the density from a governance perspective, because again, to make the most of having millions of people come together in a small geographical area, which New York in particular has told us can be immensely beneficial. But not just New York. There are other global cities, you know, Tokyo, Toronto, Paris, that, you know, over the course of history have, you know, London have have shown that bringing density can produce amazing outcomes. Right. But getting that right requires managing the downside of that. And I think there's a growing sense that New York is struggling on that front, that other major cities like la, Chicago, San Francisco have been struggling on that front. Although I will say San Francisco seems to be on the upswing, which is, you know, it's a story that more people should be telling, I think. But. But talk to us a little bit about, like, what that side of the coin involves.
- [23:40]
B
Local governments can do a couple of things traditionally and what I say they should still focus on today, they have focused on things like public sector essential services, your police, your fire, your ems, water and sewer provision, things like that, and doing those things well. In recent decades, however, we've certainly seen a huge shift towards social services provision. So where the city government is growing, it's not just in the public education budget, which is an essential service that delivers, I would argue, quite poor value for public dollars. But then we've also seen this big upswing in the welfare state. We've seen a lot of people get added to the welfare rolls during the de Blasio and Adams mayoralties and the HRA DSS budgets, which are the two, the administrative agencies responsible for administering the welfare state of New York City. It's grown dramatically. So this local government has effectively served as a social services provider, a welfare provider. And I think that that has caused some real challenges because it does not necessarily equate to a better quality of life for the public as a whole.
- [25:07]
A
Yeah, right.
- [25:08]
B
And instead, if you focused on the real core public services that would accrue to the benefit of all residents, indeed, including professionals who earn high salaries and support the tax base. What we're seeing now is a lot of churn in the labor market, where Higher paid jobs are leaving the city or not being created in the city. And the jobs that are being created are government dependent jobs very often in the health care sector, things like personal care assistance that are dependent on Medicaid.
- [25:48]
C
And I mean, one of the interesting things to me is that there is this old long standing argument about local government is that it is precisely the layer of government that should not do redistribution. There's an old book by Professor Peterson, I believe, City Limits about, hey, a higher level of government can do redistribution because you can't escape it easily. It allows people to, who get that redistribution to exercise mobility between different areas, including cheaper areas of the country that may not cost as much as a subsidized.
- [26:17]
A
Which is interesting, is actually one of the, you know, interesting legal disputes that have that arose some years ago. Case called Shapiro vs. Thompson is actually right around this very concept. Right. You had someone who was on the welfare rules, I believe in the state of California and then wanted to move, was it?
- [26:31]
C
Or maybe move to California or maybe.
- [26:34]
A
Yeah, one of those.
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B
To obtain the welfare benefits.
- [26:37]
A
Right. Couldn't obtain the welfare benefits in the state that she moved to without having established residency for some, you know, a preset duration. And you know, it was ultimately ruled unconstitutional precisely because it imposed this undue burden on the right to travel.
- [26:54]
C
And the end result though, of course, is that a lot of these local and state governments then had to subsidize effectively anyone who wanted to come in at any time. And this sets up a very bad, not only precedent, but kind of cycle for a lot of these cities in that you're subsidizing one part of the population that is not particularly productive, taking resources for another part of the population. And so you're bringing more of that, the subsidized population to the city. At the same time, you're relying on taxes from the more productive part that is mobile and can move away from that. And so the fact that cities like New York, San Francisco and elsewhere have doubled down on local redistribution is particularly surprising in recent years. But as I was saying to the sales tax piece too, just again, since 2020, you have had places like Los Angeles, Seattle, Charlotte impose taxes for homelessness, housing, transit subsidies and so forth. And this is going to drive more people away. It's going to be a real problem for things. And it's doubly ironic too, because the sales tax for a lot of progressives was a classic example of something that was a regressive system that was, hey, you're taxing poor people who only consume goods and not the rich people who can save money. But when these local governments can do that to fund progressive priorities, they've been very eager to jump on that possibility. We can subsidize local homelessness. But again, that poses a problem both for people who have money from earned jobs and might want to shop in those cities and the people that you're pulling in from elsewhere who want to get those free services. That's not a good system.
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B
Right. And that's why you see your sun belt cities and states out competing with a value proposition that is lower taxes but for less in the way of social services. Right.
- [28:37]
A
Which they don't need.
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B
Which they don't need. But you see, and many of the sunbelt cities and states don't even require the same degree of intensity on the essential services. So for example, if you're on a crowded bus or subway, you need robust policing in order to prevent people from, you know, making you feel uncomfortable or even worse, being, you know, endangering your health and safety. In the sundelt. It's an auto dependent place. So you're not. Far, far fewer people take public transit.
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A
Right.
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B
Most people take personal automobiles. So you don't need as intense of a police presence.
- [29:16]
A
Right.
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B
To maintain general public order.
- [29:20]
A
Right.
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B
In those places.
- [29:22]
C
And you don't need as much taxes and so forth. So like to get, obviously I'm obsessive on the sales tax thing, but like to get to the bigger of taxes. I mean, isn't it somewhat surprising you not even just the progressives, but the conservatives have not really leaned into the reduced taxes message on affordability. I know at the federal level there's the mess with the debt and all of these other things.
- [29:40]
A
They don't want to get thrown out the window.
- [29:42]
C
Yeah, like, exactly. But like we have all these complicated, everyone's got all these complicated ideas to like reduce we to reduce cost of living. There is this one really clear thing, not just sales tax, but the income tax everywhere, which in places like New York and California can like, you know, you could have a six whatever percent bracket at $80,000 a year. Like this can be a huge imposition on local consumers and local workers. And again, nobody just brings, nobody seems to bring it up. Let's just take less of your money nowhere.
- [30:14]
A
And there is a population of people who are kind of on the margins. Right. Of living within a jurisdiction or without it. And one of the things that's, you know, I think a real challenge for urban density now is the fact that a lot of people don't need to physically be present in cities to pursue their careers as much anymore because of the work from home revolution. Right. And so if you have a choice to live in midtown Manhattan or keep your same job and income and live, you know, in Westchester or Nassau county or, you know, depending on how often you can work from home, Atlanta, Georgia. Right. And you save at the very least that three and a half percent income tax that the city imposes. Right. How do you, what is the. How else can you get the city to keep these people if not by reducing that financial burden associated with just the choice of living here, which is becoming less necessary?
- [31:15]
B
Well, dense urbanism is attractive to a lot of people. Right. And it's also an under supplied good in America. Right. So you just have to make that attractive enough for people to pay for it. And that means making sure that the streets are safe and that.
- [31:33]
A
I was just saying give us a list of what's our checklist?
- [31:36]
B
Well, I mean, it's getting the basics done well and efficiently.
- [31:41]
A
Okay.
- [31:41]
B
You have public safety.
- [31:43]
A
Yep.
- [31:44]
B
You have public education. Right. You have things like fire, ambulance and so forth. And if those types of things go well for most people, most of the time they can enjoy their walkable urbanism. Right. In a way that they're not going to be able to if they're in a suburb anywhere else. So the issue is that we in New York City and other cities, but in particular New York, we simply make it very difficult and costly to live in that kind of arrangement.
- [32:17]
A
Right.
- [32:18]
C
And yeah, and let's be, I mean, clear to that, like there has been now a century plus of predictions about the quote, death of distance that, hey look, I remember reading something in the 1990s, they say, well, now that we have 1, 800 numbers, you know, effectively there's no distance because you can call wherever and you don't have to worry about the long distance charges totaling it up. And this has been going on.
- [32:39]
A
The satellite was supposed to reduce the globe to a pin.
- [32:42]
C
Yeah, yeah, we're global to a pinhead and all of that. And like, obviously some aspects of that are true and that we can communicate very broadly. We can get goods from very far afield. And yet the value of density and of urban living has continued to stay high throughout most of that period. Now people have spread out in those kind of metropolises. There's lots more people in the suburbs. But the value of urban housing has not gone down in general for the past 40 plus years. It's gone up because those.
- [33:09]
A
Well, in part because the demand has gone because we artificially constrained the supply in a lot of different ways.
- [33:14]
C
So. Yeah, but the very fact that we have the supply constraint wouldn't be a problem. Right. If the demand wasn't still high. You didn't have people say there's benefits of density. Now I think one of the great underappreciated benefits that doesn't usually get factored into those sort of like the amenity benefits of New York or San Francisco that are showing up in lower paychecks is education.
- [33:34]
A
Yes.
- [33:34]
C
Is the effective education you can get in a city. I was talking nice anecdotes, don't we? Let's get. But I was talking to a bunch of the 20 signs in D.C. who were all talking about like they had a nice cushy email, work from home job, but they left it because they were driving, they were going nuts and they wanted to meet in an office and talk to people like that. Not just because there's a social aspect of that that we all appreciate, but because there was an educational benefit. They were not learning in their office like they were, sorry, their home office, like they were learning in the city. And so there's a famous quote from this 19th century economist, Alfred Marshall, who talks about, you know, in a city, the mysteries of a trade become no longer mysteries, they become as if part of the air. There's something that everyone breathes in. And so when you had these kind of industrial clusters, your, your garment district, most famously in New York City, which was the largest group of a single industry anywhere in the country at the time. It wasn't just because you're sharing textiles and, and workers. It's cause they could all talk to each other.
- [34:34]
B
It's exciting.
- [34:34]
C
Yeah, it was exciting. You could talk. You know, this is the classic Silicon Valley thing. You can learn a lot from other people in a way you clearly can't entirely online. And like the mystery of especially now with people are supposedly learning from us right now. Who knows if they are or not. People can do all this stuff at home. And yet that face to face interaction, that low latency of being able, you and I, I'm learning more right now than I usually am. You know, just listening to the podcast as much as I do listening to it, because there's something special about that and people are still willing to pay for that. And that education therefore gets factored in effectively your higher cost of living. You're paying for your education like you're paying if you went to a college.
- [35:12]
B
Right. And I'll certainly second that. I'm learning a lot right now. If I could put my Burkian hat on top of my urbanist hat.
- [35:19]
C
The guy with the tie is always a Burkian. Of course he's got a tie. He's a Birkin, so can't help it. Yeah, yeah, you had Robbie George.
- [35:27]
B
I'm the young fogey around here. Every place is unique, so you can't really say that, you know, Atlanta is fungible with New York or with even a neighborhood of Atlanta is fungible with the neighborhood in Williamsburg or Astoria or wherever. Every place has its own character because every place has its own history, tradition, people, customs, and so forth. So people are willing to pay more or less to be able to partake of that lived experience in a particular place. Which goes to show the value of creating strong neighborhoods, strong community. People who are rooted in place and feel a sense of stewardship and belonging and concern for it, and then also welcoming newcomers and having that dynamism. And I've often thought about getting that balance right. How do you ensure a sense of continuity and a sense of belonging with dynamism as well, Right?
- [36:26]
C
And, Ralph, for this. To this purpose, can we talk about your crime? The cause of crime, I'll admit. Well, I opened it up. I saw the City Journal. Looks nice as always. See Ralph's name? I'm curious about this piece. The cost of crime in the affordability section. Like, okay, Ralph, I know everything's gotta be about crime, but I was totally prepared to be unconvinced by this, and I left 100% convinced.
- [36:47]
A
Oh, well, good.
- [36:48]
C
That this is a clear. Not just like. Not just a cost on people's lives, but you can put dollar signs on the cost of crime.
- [36:54]
A
I mean, crime is. It's an expensive proposition, right? We're talking about somewhere in the range of $200 billion a year that it costs American citizens. But it's more than that, right? I mean, within the localities, crime has real impacts on everyday life. And what really bugged me and why I wrote the piece, which I know kind of maybe didn't seem like a logical fit on affordability, was that, like so many politicians who have positioned themselves as champions of affordability, namely Zoram Mamdani, was the person I had in mind. Mostly they have at the same time pushed criminal justice and policing policies that will absolutely make the streets less safe, and that actually has concrete impacts on how affordable our everyday life is. Right?
- [37:41]
C
Like, if you like the burglar alarms that you have to buy gates for
- [37:45]
A
the small business, the medical Costs associated with injuries sustained during an armed robbery, for example, or a shooting or a rape, the trauma associated with it. But just the ripple effects of crime go well beyond the victim. I mean, everyone, when we talk about crime, we always think of, like, perpetrator, victim, right? This is all that really matters. But the reality is, even just being a witness to a crime will affect how you live your life. Being a witness to a very serious crime can have real impacts. I mean, there are studies showing, for example, that kids who live within a certain radius of a shooting or a homicide will perform statistically significantly worse on a test, on a standardized test, than their similarly situated colleagues who live outside that radius. And it makes sense, right? It's like, how am I supposed to consider my future if I don't expect to live to be that old?
- [38:46]
B
Because the prosecutor does not act solely for the victim.
- [38:52]
A
That's right.
- [38:52]
B
The acts where she acts on behalf of the.
- [38:55]
A
They represent the state, they represent the people.
- [38:56]
C
Right.
- [38:57]
B
Transgressions of the criminal law are of an offense against the body politics.
- [39:02]
A
That's right. That's right. I mean, you know, my living in a neighborhood with an extremely high level of crime, that's going to affect my cortisol levels. That's going to affect how I, you know, whether I go out at night.
- [39:13]
B
Right.
- [39:14]
A
Whether I can shop, where I shop, whether I shop. Right. How much money I spend, where I spend it. For example, I mean, you know, I lived in East Harlem for a few years when I first joined the Manhattan Institute after coming back from Chicago, and we lived in a beautiful building, but it was in a not so great neighborhood. Now we had supermarkets that were in walking distance of our apartment, and we could shop there. And every once in a while we did if we needed something really fast and, you know, it was just more convenient. But, like, by and large, we would take an uber down to 1 16th and, you know, shop at the Costco or the Target and then take an Uber back because it was like, it's just not worth the risk of, you know, being robbed on the way to or from or being caught in the crossfire or, you know, whatever it is. And I think a lot of people, when they make choices like that, in the aggregate, that really does actually impact, you know, the economy. The cost of living, real estate prices is a great example of this. Right? Like, you know, there are really good, strong causal econometric analyses that will find consistently that a 1% increase in crime will or 1% decrease in crime will either raise or lower the cost of of, of real estate.
- [40:23]
C
There's a weird aspect of it. It's almost like this, despite the kind of mondami sort of rhetoric against privatization, there's a privatization of security costs and then we're not going to handle it by the public to the public sphere and policing. You're going to have to hire your own private security police. You're going to have to hire. You're going to have to make the new steel gate, the locks on your door, you're going to have the Uber to save her thing, all of that. That is a real concrete dollars and cents cost. But you, the private citizen, going to have to pay that because we're not going to do it through the figure of a policeman.
- [40:57]
B
And it all adds up into a mentality of lower trust too.
- [41:01]
A
Right.
- [41:01]
B
And that is also harmful for our ability to engage with one another as citizens and indeed in commerce as well.
- [41:09]
A
When I was in law school, my property law professor, the first day of class, he would say, you know, he asked us, you know, why is it that we have property law in America or really just in Western society?
- [41:19]
B
Right.
- [41:19]
A
And he's like, the answer is to avoid the 12 gauge solution. What's the 12 gauge solution? Well, if we don't have confidence that the law will protect our property, then we'll never leave our belongings unattended, Right. We will just sit on our porches with the 12 gauge and guard our things that our people. But there's truth to that, right? I mean, you need to facilitate the kind of interactions that produces the economic dynamism that characterizes American cities. And you can't do that. If people don't feel safe, if they don't trust in one another enough to interact, if they don't trust the system to get on the subway, I mean, that's a risk, right? I'm going to get on the subway with 10,000 strangers, stop, and stand shoulder to shoulder with someone who could be a maniac or a serial killer. But, you know, we do that because we're secure enough that the system is going to work. Right. That law and order will prevail. But there are a lot of parts of this country that have failed on that front, you know, and, you know, to lesser degrees than others. But New York has certainly not been on the right side of the trend line, you know, for the last 10 years. And what I really wanted to get at was that like, hey there, you know, for the people who are struggling, getting public safety right can make a material difference.
- [42:30]
C
Yeah. And not only in those, those Individual costs they have to bear. But there can be a sort of weird route to affordability through making cities uninhabitable.
- [42:39]
A
That's right.
- [42:40]
C
As I always used to tell my students, like, there's two ways to make your city affordable. You can build more housing and allow more people to move there, or you can make it a very unpleasant place to live, in which case people will leave and the cost of living will go down, but not for the reason you want, which is maybe getting to a lot of, you know, Ralph's and John points about, like, what kind of affordability we're talking about, for what sort of package of goods in which city and for which cities. And cities like New York just have to be extra careful about stuff.
- [43:08]
B
The left is often quick to say that crime is a consequence of poverty,
- [43:13]
A
but crime is a cause of poverty. That's exactly right. In fact, I end my piece, you know, but by making this point that, like, affordability has kind of become a buzzword. But affordability doesn't always mean good. Right? I mean, I've seen you while apartment hunting, some very affordable apartments that I would never live in could be cheap, low quality. Exactly, exactly right. And you know, so. So, you know, the best kind of affordability, right, is being able to offer high quality and attainable price. And that's really what public policy should be aimed at. You know, you can't do that if you are unnecessarily imposing additional costs on consumption through sales tax. You can't do that if you are not properly managing the downsides associated with urban density. And one of the ways that you have to manage those downsides is through managing the level of safety, managing the level of crime, and keeping it at bay. If you don't do those things, you're not going to have a functioning city, you're not going to have an affordable city, you're not going to have a pleasant city, and you're not, more importantly, going to have all of the amazing things that we know come from urban dynamism, which is really what, you know, this. This whole package is about. So I wish we could talk for another hour. It's always great to have you guys on. I appreciate it. For those of you who are watching and listening, we are going to have another roundtable episode on affordability with two of our other contributors to the package. So be sure to catch that. Of course. Do not forget to, like, comment, subscribe, ring the bell, do all the things for the algorithm. Let us know how we're doing. We're super excited to see the show growing over the last few weeks again. New episodes coming out every week. Thank you once more, Judge Glock, John Ketchum. Hope to see you guys soon.
- [44:55]
B
Thank you.
- [44:56]
C
Absolutely awesome.