The End of Suburbia and Economic Apocalypse

[Dilla]

That's a personal anecdote, actually.

I believe Matt was having a dig at Dichotomy's style of "proof".

 

[W. K. Lis]

James Howard Kunstler criticizes a recent New Yorker article that failed to consider the American pattern of suburban development as the cause of the banking crisis.

It was the worthlessness of the tradable securitized debt associated with all those overpriced (and overvalued) chipboard and vinyl houses, smeared recklessly over the American landscape, that started all the trouble in the first place. And it is our inability to come to grips with that underlying catastrophe that prolongs the resolution of the still-florid banking crisis -- since the federal government is doing everything possible to prop up the failed capital equation of terminal suburbia, and to deny the obsolescence of that version of the American Dream and all the mechanisms for delivering it.

Click on this link for the whole article.

 

[Whoaccio]

Ooh yea, 'cuz Kunstler is so clearly an expert on the financial industry.


Why does anyone take this hack seriously?

 

[doady]

Ooh yea, 'cuz Kunstler is so clearly an expert on the financial industry.


Why does anyone take this hack seriously?

Wow you are so convincing. You really know how to refute an argument, you should be a politician.

 

[salvius]

Wow you are so convincing. You really know how to refute an argument, you should be a politician.

Well, I for one agree, because Kunstler IS NOT an expert on the financial industry (we've discussed this on page 4 of this very thread). Obviously, an urban construction boom would have suffered just as much from lending practices, securitization, etc. etc. Last I checked, condos outside most prime markets in US are not doing any better than suburban housing.

 

[Whoaccio]

He's not an expert on anything he talks about. Just about every prediction he has made has been dead wrong on so many levels (look at his history of "predicting" stock market movements...) that it is amazing anybody still listens to his doom mongering at all. I'm surprised he hasn't got all riled up about Y-3K yet. His architectural commentary is asinine, his knowledge of global energy markets is below that of any 2nd year PolSci student, his understanding of financial markets is worse than what could be inferred from the Teletubbies and it just goes on. At least ass-hat conspiracy theorists like Alex Jones have the decency to admit what they are, but Kunstler keeps pretending as though he is somehow qualified to talk about things.

 

[PukeGreen]

Kunstler makes some valid points, but he takes them to extremes that I feel are not logical. There is a large middle ground between business as usual and the end of the world. The suburban way of life is wasteful, and we are slowly starting to comes to terms with the fact that a more dense and less car-dependent way of life has benefits. I think the rate of change will be slow, but steady.

There is also hope for the suburbs, but they will need to evolve to be more "city like" in some ways. This is not as impossible as some think. The current roads and layouts could be adapted to make it easier for cyclists and pedestrians, and zoning laws could be relaxed to allow small retail intermixed with housing. We just haven't reach the point financially or environmentally where enough people would be willing to make those changes.

I think the key thing Kunstler underestimates is people's willingness to adapt and change, even if it's reluctant.

Looking back a few pages in this thread, I saw some observations about suburban or rural homes being safer refuges if things really hit the fan. Sadly, I agree. It's one of those situations where, potentially, the people who are hastening the collapse (big rural homes with gas guzzlers in the driveway) will end up better off than those who are doing the more responsible thing (denser car-free city living). But I don't think society are going to come to that, anyway, and in the meantime I feel better living a non-suburban life and trying my best to be part of the solution, not the problem. So at least when I'm gunned down on a city street foraging for food after societal collapse I can be smug about it.

 

[Whoaccio]

In our history, the American nation committed obvious sins against select groups of people, and we've paid bitterly for some of that. But now it's our sins against the land itself that threaten to sink the USA as a viable enterprise.

That makes no sense. Financial markets don't care about some anthropomorphic "land." Regardless of whether or not suburban living is a "sin", financial markets wouldn't care. Most of the largest companies on Earth are Oil companies, which are by their nature "sins" against the environment. As far as investments though, they have historically had high yields, moderate betas and been popular with investors. The sub-prime mortgage collapse had absolutely zero relation with any "sins against the land itself."

It was the worthlessness of the tradable securitized debt associated with all those overpriced (and overvalued) chipboard and vinyl houses, smeared recklessly over the American landscape, that started all the trouble in the first place. And it is our inability to come to grips with that underlying catastrophe that prolongs the resolution of the still-florid banking crisis -- since the federal government is doing everything possible to prop up the failed capital equation of terminal suburbia, and to deny the obsolescence of that version of the American Dream and all the mechanisms for delivering it.

If Kunstler had actually bothered to do research, he would have seen that many of the USA's biggest price bubbles weren't located in some stereotypical example of "terminal suburbia" but in prototypically "New Urbanist" cities like Boston, Portland, LA or Miami's condo-boom while super-sprawly Houston and Dallas were almost totally bypassed by the sub-prime boom/crash. Or that real-estate bubbles swept over many European cities recently, and aren't exactly unheard of in Asia (uhh, Tokyo? Hello?).

The suburban project was not a conspiracy by the likes of Robert Moses, Walt Disney, Frank Lloyd Wright, and President Eisenhower to produce a living arrangement with no future. It was the emergent, self-organizing result of special circumstances in a particular time and place: post World War Two America, with an immense supply of cheap oil, cheap land, and the industrial capacity to churn out all the necessary components for a car-dependent development pattern. Suburbia was spawned out of a couple of persistent themes in American cultural history: 1.) that cities and city life were no good; 2.) and that the romance of settling the wilderness could be reenacted, at great profit, in all that space beyond the towns and cities. It would be silly to deny the appeal of this arrangement at its inception. By the end of WW II, city life in the popular imagination was reduced to one potently awful image: Ralph Kramden's apartment in "The Honeymooners" TV show.

The first part of this statement is borderline neanderthalish. Yea, a society with great wealth will typically build bigger houses and buy more cars. That isn't unsusual, or a "special circumstance." Using a sitcom to proove a point here is just stupid. Even prior to WWII, everybody with the means to do so tried to leave central cities. The only difference is that people eventually weren't racked by poverty, which Kunstler for some reason seems upset about.

There had to be something better than that. Suburbia was engineered as the antidote to the Kramden's apartment: country-living-for-everybody. The evacuation of the cities to the new outlands proceeded as relentlessly as the landings at Normandy. It wasn't until the program was well underway that the self-destructive essence of it became obvious -- that every new housing subdivision killed the original rural character of the land, with the result that suburban life quickly became a cartoon of country living in a cartoon of a country house in a cartoon of the country. With additional layer-on-layer of, first, the shopping in the form of highway strips, then malls, along with the office "parks," these places elaborated themselves into a kind of cancer-of-the-landscape, a chronic and expensive condition that Americans had no choice but to live with, because of the monumental investments they had already made in it. The discontents it produced lent it to psychological depression and dark humor, just as chronic illness does. But we were stuck with it.

Landings at Normandy? What kind of idiot would compare suburbanization to the largest amphibious assault in history? This is why people don't take Kunstler seriously. There is little evidence that people at the time regarded suburbia as a 'cartoon of country living," indeed there is no shortage of documents which suggest the majority of Americans were happy to own their own houses and the general suburban experience. Not everyone agrees, but just calling something a "cancer" because you don't personally like it is ridiculous and the incidence of a few TV shoes with critiques of the status quo isn't proof of anything beyond people like to laugh at themselves.

This mode of behavior persisted through the first, short-lived oil scarcity tremors of the 1970s. It was so completely embedded in the popular imagination that it had become the baseline American identity. The suburban project caught a second wind in the 1990s, when the last great non-OPEC oil fields of the North Sea, Alaska, and Siberia nullified the grip of the Islamic cartel for while, and sent the price of oil down to $11-a-barrel. Ironically, it was during those years that the warnings of "peak oil" first circulated beyond the geology offices, and it was clear to anyone who reflected on the connections that the project of suburbia was doomed.

That's a bold statement for Kunstler, considering he probably has never been anywhere near a geology office of any sort. If he did he wouldn't issue such, at the very least, extreme predictions. Peak oil's main proponents aren't, and have never been, petroleum geologists or petroleum economists but rather the Kunstlers of the world who have zero experience, practical or theoretical with any part of the entire energy industry. Not to say there aren't legitimate crude oil supply concerns, just that making Malthusian predictions about it are ridiculous. Especially given the volume of substitutes for conventional oil rendered practical following even minor price hikes.

It was also ironic, tragically so, that during this same period Wall Street began to seek some new way to make real money beyond stock and bond markets, which didn't seem to produce wealth at all for more than a decade when inflation was factored in. By a fortuitous coincidence, the revolution in computers enabled Wall Street bankers to concoct abstruse new species of tradable paper securities based on bundles of debt that seemed to produce miraculous earnings. It had the added advantage of being inscrutable to both investors and financial regulators. Due diligence became impossible and moral hazard spread like ringworm in a dormitory. The bulk of the securitized debt originated in home mortgages and the larger result was a gigantic racket ramped up between Wall Street and the US government to conceal all the structural weaknesses of a de-industrialized US economy behind a hyperbolic commerce in the very thing that the American public cherished most: their houses, which, understandably, everybody had come to call "homes." Wall Street might as easily have commoditized mother and apple pie - if you could sell each one for half a million dollars.

That's not untrue (it is oversimplified), but whats the point? That various original securities can be overpriced isn't exactly a historical precedent. When railways were invented in Britain in the 19th century, there was a massive speculative bubble as the novelty of the technology defied conventional valuation methods, promotional claims were made about railway's capability and the government did everything it could to promote railways. By Kunstler's logic, the end of Railway Mania would imply railways were inferior to horse drawn carriages or the collapse of the dot-com bubble meant the end of the internet. Synthetic securities were new, and poorly understood, which contributed to over-valuations. That doesn't somehow mean we are all going to start living in some condo (which, i have to add, could have their mortgages just as easily as securitized as any suburban house's.)

The banking fiasco still underway is at once a proxy for the larger failure of the American economy and the greatest fissure in it. Put as simply possible: we can't service our debt, we can't generate more debt, and the notional "capital" we thought we possessed is dissolving into nothingness. The federal government and Wall Street remain committed to supporting all the rackets associated with a suburban sprawl economy that has entered its own zone of remorseless failure. It is failing as a capital investment first, and is secondarily failing as a practical living arrangement. The two failures will continue in a close race toward terminal entropy.

This is logical chlamydia. Yes, it is true that a society can't habitually spend more than it earns and that debt levels can't rise indefinitely. Yes, it is also true that many Americans have taken on potentially ruinous debt levels to buy their homes. What isn't true, or at least visible from Kunstler's "evidence", is that suburbia caused Americans to take on ruinous debt levels. As mentioned earlier, home price bubbles were equally, if not more, pronounced in cities not typically associated with sprawl (like Boston) and could easily exist for any asset, "new urban" flats included. As far as I know, the biggest individual bubble remains the Tokyo bubble, not exactly an example of "cartoonish country living" by any standard.

 

[Admiral Beez]

Exurban office parks could become decreasingly attractive, but most 905 companies would move or close before they get to the point that employers have trouble luring good workers out to the hinterland.!

My office in Markham has a large factory attached. Most of our workers live in Markham, several take transit and many more car pool or to clarify many do not have drivers licenses and instead pool with family members who all work in the plant. It makes no sense to put our office/plant in the city, since the highways and railways are right next to our plant. As for being lured to the hinterland, I don't mind at all my commute to the office from Cabbagetown each day, it takes about 35-40 minutes, I drink my tea and listen to the radio, at the current rate gas each week costs me about $38 each 7-8 business days.

 

[scarberiankhatru]

My office in Markham has a large factory attached. Most of our workers live in Markham, several take transit and many more car pool or to clarify many do not have drivers licenses and instead pool with family members who all work in the plant. It makes no sense to put our office/plant in the city, since the highways and railways are right next to our plant. As for being lured to the hinterland, I don't mind at all my commute to the office from Cabbagetown each day, it takes about 35-40 minutes, I drink my tea and listen to the radio, at the current rate gas each week costs me about $38 each 7-8 business days.

Since my post was about a theoretical peak-oil suburban apocalypse scenario and not current conditions, you're reinforcing my point by talking about a suburban plant that relies on highways, and the fact that most drive there.

 

[Admiral Beez]

Since my post was about a theoretical peak-oil suburban apocalypse scenario

I just can't agree on the apocalypse of peak-oil. When oil runs out, western countries will adapt, find new ways to get around, get to work, move goods internationally, etc. The majority of Canadians have only been using cars as primary transport since the 1950s. I am confident that we'll sort it out.

 

[urbandreamer]

EESTOR to the rescue!

http://theeestory.com/

Peak oil theories are nonsense.

 

[lordmandeep]

Considering Peak Oil will not happen overnight, it will lead to a massive economic shock but not the end of western Civilization.

 

[afransen]

Given how quickly we can swap out for more fuel efficient vehicles, carpooling, etc. I don't think transportation is our problem per se. 'Peak oil' means declining standard of living, more than anything else. Of course, it doesn't take much for other sources of energy to begin displacing fossil fuels.

 

[scarberiankhatru]

I just can't agree on the apocalypse of peak-oil. When oil runs out, western countries will adapt, find new ways to get around, get to work, move goods internationally, etc. The majority of Canadians have only been using cars as primary transport since the 1950s. I am confident that we'll sort it out.

That's why I said "theoretical" scenario, not inevitable or impending or something like that.

It wouldn't even take peak oil to drastically change a city or its suburbs and affect the viability of regions and neighbourhoods, as we're seeing in places like Detroit, which is undergoing a fairly significant suburbapocalypse.