May 5, 2009 City Council packet - Laserfiche WebLink

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But that was then; the economy is different now. It no longer revolves around simply making and moving things. Instead, it depends on generating and transporting ideas. The places that thrive today are those with the highest velocity of ideas, the highest density of talented and creative people, the highest rate of metabolism. Velocity and density are not words that many people use when describing the suburbs. The economy is driven by key urban areas; a different geography is required. THE NEXT ECONOMIC LANDSCAPE The housing bubble was the ultimate expression, and perhaps the last gasp, of an economic system some So years in the making, and now well past its "sell -by' date. The bubble encouraged massive, unsustainable growth in places where land was cheap and the real- estate economy dominant. It encouraged low -density sprawl, which is ill -fitted to a creative, postindustrial economy. And not least, it created a workforce too often stuck in place, anchored by houses that cannot be profitably sold, at a time when flexibility and mobility are of great importance. So how do we move past the bubble, the crash, and an aging, obsolescent model of economic life? What's the right spatial fix for the economy today, and how do we achieve it? The solution begins with the removal of homeownership from its long -privileged place at the center of the U.S. economy. Substantial incentives for homeownership (from tax breaks to artificially low mortgage -interest rates} distort demand, encouraging people to buy bigger houses than they otherwise would. That means less spending on medical technology; or software, or alternative energy —the sectors and products that could drive U.S. growth and exports in the coming years. Artificial demand for bigger houses also skews residential patterns, leading to excessive low -density suburban growth. The measures that prop up this demand should be eliminated. If anything, our government policies should encourage renting, not buying. Homeownership occupies a central place in the American Dream primarily because decades of policy have put it there. A recent study by Grace Wong, an economist at the Wharton School of Business, shows that, controlling for income and demographics, homeowners are no happier than renters, nor do they report lower levels of stress or higher levels of self-esteem. And while homeownership has some social benefits —a higher level of civic engagement is one —it is costly to the economy. The economist Andrew Oswald has demonstrated that in both the United States and Europe, those places with higher homeownership rates also suffer 16