The New York Times recently argued that self-driving cars can’t cure traffic, but that economics can. Here is the key soundbite:
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The New York Times recently argued that self-driving cars can’t cure traffic, but that economics can. Here is the key soundbite:
The New York Times recently argued that self-driving cars can’t cure traffic, but that economics can. Here is the key soundbite:
The argument here is that capacity expansions – such as additional lanes – never solve the problem of gridlock. Yes lane widening projects increase capacity, but the latent demand is so strong that the problem never gets solved. Even in places like Houston.
We talked a lot about this phenomenon on the blog a few years ago when Toronto was embroiled in debate over the Gardiner Expressway East. But it’s interesting to think about self-driving cars as simply another incremental capacity expansion.
I have no doubt that this technology will make more efficient use of our roads. Carpooling will be a lot easier – as is already the case. Cars will be able to drive closer together. We’ll be able to stop abrupt breaking and swift land changes, which actually create systemic traffic problems for everybody else. And the list goes on.
But there will still be limits to how many people can be efficiently moved on a particular strip of road. Exactly how there are limits to how many people can be efficiently moved via a particular subway tunnel, streetcar line, and so on.
So if latent demand continues to outstrip available capacity, which has historically been the case, then we are once again back to the politically unpopular idea of pricing away congestion. As much as people criticize it as regressive, I believe that’s where we’re headed.
Earlier this week I was in an Uber heading up to Charles Street and the driver made a comment to me. He said that since he moved to Toronto in the 90′s, traffic has gotten progressively worse every single year. He continued on to say: and yet we continue to build, build, build.
My response won’t surprise anyone who reads this blog. I said that Toronto has become a far more exciting city since the 90′s because of intensification (though 1992 and 1993 were pretty awesome) and that the problem is our mental model. We haven’t moved beyond the car as the perceived solution to urban mobility.
A perfect example of this is what just happened with the province vetoing Toronto’s proposed road toll plan.
Firstly, I fully agree with Marcus Gee of the Globe and Mail that this is both an act of cowardice (the province gave every indication that they initially supported the plan) and an act of arrogance (we are talking about roads owned by the city, not the province).
I also find it incredibly frustrating that Toronto cannot control its own destiny. This is a mistake and it needs to change if we – and the rest of the cities in this great country – are to continue competing at a high level in this urban century.
But to my initial point, the problem with this move is that it signals a status quo mental model. It is a clear reluctance to make any sort of bold moves to move Toronto in a new direction. I guess we are happy with the current trend line. More traffic.
We shouldn’t be.
This afternoon I walked the High Line with a friend of mine who seemed to know everything there is to know about new residential development in Manhattan.
She recently purchased a place and so she had done her homework. She was pointing out every building and telling me the price per square foot range; whether the floor plans were well designed (or if they had misproportioned rooms and awkwardly placed columns); and who the architect was.
Takeaway: To be competitive in the luxury segment in New York, you really need to have a name brand architect on the project. That seems to be the price of entry.
As she was telling me about the “competitively priced” building in the low $2,000′s psf and the expensive penthouse that recently sold for $7,000+ psf, I started to wonder about historical pricing in New York. How has it trended?
I also told her that you could buy a really great condo in Toronto for $700 psf. She laughed at how affordable that was. It’s all about your point of reference.
In any case, I found a research report from 2004 called: Why is Manhattan So Expensive? The story is one that you’ve heard before. It’s about the impact of land use restrictions on home prices. But it does also include some historical data on average condo prices.
In 1984, the median price per square for a condo in Manhattan was $359 psf. It peaked in 1987 at $505 psf and then dropped back down to the $300′s in the early 90′s. That was not a great time for real estate. However, by 2002, the median price had rebounded to $606 psf. All USD figures.
From 2002 onwards, Manhattan saw a dramatic increase in home prices. Below are two charts from Corcoran (Q3 2016 data) and Castle Avenue, respectively:
Toronto is obviously not New York, but’s interesting to consider that the average price of a downtown Toronto condo, today, is probably in the low $600′s psf. That’s in Canadian dollars and that’s pricing that New York saw decades ago.
It reminds me that “crazy pricing” can oftentimes be a psychological reaction to a pricing anchor that we previously set in our minds. It feels crazy. But is it?
Image: Me
The argument here is that capacity expansions – such as additional lanes – never solve the problem of gridlock. Yes lane widening projects increase capacity, but the latent demand is so strong that the problem never gets solved. Even in places like Houston.
We talked a lot about this phenomenon on the blog a few years ago when Toronto was embroiled in debate over the Gardiner Expressway East. But it’s interesting to think about self-driving cars as simply another incremental capacity expansion.
I have no doubt that this technology will make more efficient use of our roads. Carpooling will be a lot easier – as is already the case. Cars will be able to drive closer together. We’ll be able to stop abrupt breaking and swift land changes, which actually create systemic traffic problems for everybody else. And the list goes on.
But there will still be limits to how many people can be efficiently moved on a particular strip of road. Exactly how there are limits to how many people can be efficiently moved via a particular subway tunnel, streetcar line, and so on.
So if latent demand continues to outstrip available capacity, which has historically been the case, then we are once again back to the politically unpopular idea of pricing away congestion. As much as people criticize it as regressive, I believe that’s where we’re headed.
Earlier this week I was in an Uber heading up to Charles Street and the driver made a comment to me. He said that since he moved to Toronto in the 90′s, traffic has gotten progressively worse every single year. He continued on to say: and yet we continue to build, build, build.
My response won’t surprise anyone who reads this blog. I said that Toronto has become a far more exciting city since the 90′s because of intensification (though 1992 and 1993 were pretty awesome) and that the problem is our mental model. We haven’t moved beyond the car as the perceived solution to urban mobility.
A perfect example of this is what just happened with the province vetoing Toronto’s proposed road toll plan.
Firstly, I fully agree with Marcus Gee of the Globe and Mail that this is both an act of cowardice (the province gave every indication that they initially supported the plan) and an act of arrogance (we are talking about roads owned by the city, not the province).
I also find it incredibly frustrating that Toronto cannot control its own destiny. This is a mistake and it needs to change if we – and the rest of the cities in this great country – are to continue competing at a high level in this urban century.
But to my initial point, the problem with this move is that it signals a status quo mental model. It is a clear reluctance to make any sort of bold moves to move Toronto in a new direction. I guess we are happy with the current trend line. More traffic.
We shouldn’t be.
This afternoon I walked the High Line with a friend of mine who seemed to know everything there is to know about new residential development in Manhattan.
She recently purchased a place and so she had done her homework. She was pointing out every building and telling me the price per square foot range; whether the floor plans were well designed (or if they had misproportioned rooms and awkwardly placed columns); and who the architect was.
Takeaway: To be competitive in the luxury segment in New York, you really need to have a name brand architect on the project. That seems to be the price of entry.
As she was telling me about the “competitively priced” building in the low $2,000′s psf and the expensive penthouse that recently sold for $7,000+ psf, I started to wonder about historical pricing in New York. How has it trended?
I also told her that you could buy a really great condo in Toronto for $700 psf. She laughed at how affordable that was. It’s all about your point of reference.
In any case, I found a research report from 2004 called: Why is Manhattan So Expensive? The story is one that you’ve heard before. It’s about the impact of land use restrictions on home prices. But it does also include some historical data on average condo prices.
In 1984, the median price per square for a condo in Manhattan was $359 psf. It peaked in 1987 at $505 psf and then dropped back down to the $300′s in the early 90′s. That was not a great time for real estate. However, by 2002, the median price had rebounded to $606 psf. All USD figures.
From 2002 onwards, Manhattan saw a dramatic increase in home prices. Below are two charts from Corcoran (Q3 2016 data) and Castle Avenue, respectively:
Toronto is obviously not New York, but’s interesting to consider that the average price of a downtown Toronto condo, today, is probably in the low $600′s psf. That’s in Canadian dollars and that’s pricing that New York saw decades ago.
It reminds me that “crazy pricing” can oftentimes be a psychological reaction to a pricing anchor that we previously set in our minds. It feels crazy. But is it?
Image: Me
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