Graham Hallett

The Property Market

A social psychologist once chided an economist: You say that prices are determined by supply and demand, but I know they are determined by people.1

Windfalls and Wipeouts

The relation between land values and public policy is a field in which strong passions have been aroused. On the one hand, critics of ‘unearned increment’ have demanded state intervention to prevent speculators making what they consider to be gains at the expense of the community; on the other hand, the ‘speculators’ often turn out to be ordinary households, and the policies adopted in the UK have caused hardship, desperation and at least one suicide. They have also had consequences in blocking development (e.g. the redevelopment of Victoria Station) which their framers never envisaged. The issues are therefore of considerable importance, although they have tended to be ignored by economists and smothered in detail by lawyers. One must begin by wielding Occam’s razor. Many influential ideas are demonstrably based on logical confusion or untrue factual assumptions, which must be untangled before one can start to establish a workable basis for policy.

The Communications Media

The first thing to realise about the West German press is that the Germans are not great newspaper readers, and in particular, not great readers of national newspapers. Most papers are regional and local. They are largely concerned with local affairs, but they also include news and editorials on national and international questions; the papers serving the big centres of population — such as Hamburg, the Ruhr or Stuttgart — are of a high standard. Thus the circulations given in table 32 are very small by comparison with those of the British popular papers. (However the readership per copy is high, because many cafes provide papers for their patrons.)

Two Cheers for Economics

‘Urban land economics deals with the processes and patterns of land utilisation’, according to an older textbook,1 which points out that it is part of land economics, which is in turn part of economics as a whole. However, land economics as a subject covering all forms of land use has not (probably unfortunately) developed in the way envisaged by the inter-War pioneers in the USA, so that ‘urban economics’ may be considered a preferable term to ‘urban land economics’. The latter term is certainly misleading if it implies a merely two dimensional approach: the economics of buildings are an integral part of its subject matter. However, ‘urban land economics’ has come to indicate a certain type of emphasis. It is primarily concerned with the way in which buildings are developed, managed and used, and is associated with the institutional inclinations of the ‘Wisconsin School’.2 This approach does not disparage economic theory. But it tries to combine simple theory with an analysis of institutional factors; it does not, for example, regard as particularly useful the ‘new urban economics’ which constructs an elaborate but purely theoretical edifice, with no discussion of the laws or institutions of the. ‘real world’ (Chap. 6). We will therefore retain the term ‘urban land economics’.

Urban Problems and Economic Theory

The problems of allocating urban land uses are basically the same as those of allocating food, clothes, cars or anything else. Economic textbooks begin by pointing out that all societies, whatever their political and social organisation, have to answer three economic questions. What is to be produced? How is it to be produced? For whom is it to be produced?1 In the urban field, this means such questions as: How many houses, shops, offices are to be built? Where and how are they to be built? Who is to obtain the use of the houses, shops and offices?

Booms, Slumps and Trends

One of the recent failings in the analysis of urban economic problems has been an excessively short-term outlook. As in all other types of economic activity, there are cyclical movements, in the supply, demand and price of urban land and buildings. Politicians and journalists, and even economists from J. S. Mill onwards, have regularly extrapolated recent cyclical movements indefinitely into the future, and based policy prescriptions on this prognosis. The few available studies of long-term movements — of land prices, rents, housing supply, etc. — have usually been undertaken by chartered surveyors and geographers, rather than economists, and have remained largely unknown. Let us summarise some of the evidence available.

Marxist Land Economics

In recent years Marxism has gained a substantial following in Western Universities, and several books on urban economics have been pub lished which are Marxist in approach. Moreover, much of the discussion of urban problems by ‘community groups’ and journalists uses im plicitly Marxist concepts. One must begin any examination of Marxist urban economics with Marx himself.

Problems of the Inner City

In many cities of Western Europe and the Eastern USA, the central districts (outside the often renovated central business district) were built during the period of rapid city growth before 1914. These districts, once young and vigorous, have in recent years begun to exhibit the debility of old age. Housing has often deteriorated and, even if physically sound, is often unsuitable for modern living. Arrangements for access and parking are ill-suited to the age of the motor vehicle; new industries have preferred to settle in the suburbs where there is more space and better facilities. At the same time there has been an exodus of younger and more vigorous people to the suburbs.

Public Land Acquisition

In all countries, the state participates in the urban land market, either at the minimal level necessary to purchase land for roads and other public works, or more extensively. A radically different system is one in which the state undertakes all development, or (in some sense) owns all land. We will first examine public participation in the land market before examining ‘nationalisation’ and the rather untypical British post-War experience.

Urban Spatial Structure

A great deal of urban economics is not geographical; it is concerned with the production and allocation of urban ‘goods’, such as housing, without being primarily concerned with their location. But some of the most acute problems of cities are concentrated in particular areas or are linked with the location of residences and workplaces. A study of urban spatial structure is therefore a necessary background to the examination of certain aspects of public policy. This is a field which overlaps with urban geography, and much of the best recent work has been done by geographers, although the founding fathers of the subject were a sociologist and two practising land valuers.