Between Idealism and Implementation

A Review of Samuel Stein's Capital City

Prologue

My first foray into urban planning was accompanied by an inherent distrust of capitalism or anything related to “the market.” Any argument that relied on developers—those so-called destroyers of neighborhoods—to solve a problem was not to be trusted. The analogy of housing as musical chairs, or the idea that supply could alleviate rising housing costs, was preposterous to me. I laughed at it in my undergraduate thesis.¹ How could developers, the front line soldiers of gentrification, be praised as allies in the fight for more affordable housing? I couldn’t see any value in development that only further changed a neighborhood with precious history. What I didn’t see then, and what I see now, is that any precious neighborhood was made through an act of creative destruction.

The beloved mom and pop store that gave way to a five-over-one apartment complex was not a native species in a natural environment we call the neighborhood. They likely replaced someone else, and that someone replaced someone who replaced the grass or trees or whatever natural habitat was there before. The continuing progression of change and process of creation through destruction is not inherently bad. This isn’t to say there aren’t any negative consequences to rapid change, gentrification, or corporate takeovers. Having less money circulating in a neighborhood is bad, for instance. But it’s those consequences that I believe we should be concerned with, not the matter of change itself.

I find at times that critiques of capitalism lead to broad generalizations about urban development, occasionally resulting in an anti-growth stance that opposes all development. In Capital City, Stein sets himself opposite of the “real estate state,” referring to the business and political coalitions that pursue economic return from the real estate market. Some YIMBY advocates do the opposite, unconditionally endorsing all growth regardless of design or community input. These are both quite polarizing positions that make compromise difficult: opposing all change or supporting it at all costs. I find this book illustrates how we can get lost in an “us vs. them” narrative.

Rather than serving as an indictment of the so-called “real estate state,” to me, this book was really about the excesses of capitalism. I came away from it not wanting to abolish change but to buttress it with supportive policies that help those most in need and preserve what’s important in cities.

The Planner’s Dilemma

Stein frames urban planning’s dilemma well. It’s a profession that aspires to improve cities for all yet it works within a system that doesn’t value everyone equally.

With a primary focus on New York City, he demonstrates the way in which planning’s goals become distorted when funneled through the requirements of capitalism and the levers of power. Take the goal of producing more housing, for instance. Because real estate has become such a central component of urban economies—he calls this the “real estate state”—cities are enticed to format zoning changes in ways that produce outsized returns for developers. And where those zoning changes take place are dictated by local power dynamics. If wealthy residents aren’t ready for towers in their backyard, development will be funneled into less wealthy neighborhoods with less political clout. Upzoning areas much lower in value also creates larger windfalls for developers.

Even when policies aren’t obviously inequitable, the mechanics of real estate mean that any well-intentioned improvements that planners make will be capitalized on by property owners and developers. A new bike lane in a low-income neighborhood with low rates of car ownership seems like the right move until the street redesign creates a blip in property values. Or maybe the new park that was desperately needed in a historically neglected neighborhood leads to a rebranding campaign. Developers become interested in capitalizing on the value created by this new amenity. Margaret Kohn refers to this process as “unearned increment:” the public sector adds value to public space, increasing the value of land, and private actors make money off the added value, or increment, without necessarily doing anything. While the money spent on improved infrastructure certainly benefits current residents, the land value it improves goes strictly to property owners. And over time, improved infrastructure leads to neighborhoods that are out of reach for low-income residents.

Planners are therefore caught in this web of incentives that are constantly working against affordability and equity. Quality infrastructure and access to a variety of amenities is what makes neighborhoods great, but it’s also what leads to pricing out low-income residents. When low-income residents can afford rent only when they are distant from the amenities that make cities livable, affordability only seems possible when it is divorced from equity. The duality of planning—idealism mixed with capitalistic pragmatism—ensures that “the beauty of planning is always accompanied by its horrors” (p. 14).

Is All Growth Bad?

While Stein is astute in this duality, his anti-growth rhetoric comes off as pessimistic. You might come away from reading this book thinking planners cannot do any good: so long as planners operate within capitalism, the profession is doomed, and that any and all development is bad and we shouldn’t support it.

For example, he treats tall buildings as innately despicable (p. 139) and claims the “more development everywhere” approach is the result of shady, neoliberal politics (p. 154). By creating a catch-all term, “the real estate state,” he turns any and all development into a symptom of a much larger plague that must be fought at all costs.

This kind of stance ignores research that shows homelessness is a housing problem, and that building less of it means more people will stay or become unhoused. His take that more housing doesn’t alleviate costs comes from observations in New York City where housing demand is incredibly strong and not as responsive to increases in supply. Even still, he is able to admit that increased supply does affect demand: “Because they have encouraged such an oversupply, the luxury real estate market may be beginning to dip” (p. 115).

He paints zoning reform as deregulation, which to some liberals is a trigger word that initiates a defensive stance. Liberals have historically supported regulation for the benefit of things such as the environment and workers’ rights. But somehow zoning has become something worth defending, too. Take David Sirota’s post on X, as an example:

“Abundance Libs are insisting the big problem isn’t corporate power & oligarchs, it’s zoning laws & The Groups? Come on.”

Or read Nate Waterhouse’s now deleted post:

“Wild that half the Democratic Party wants to kill CEOs, and the other half wants CEOs to be able to demolish low-income communities to build luxury condos for DINKs.”

Deregulation of environmental and labor laws is not the same as deregulation of zoning laws. Environmental and labor laws protect us from destroying a common good and ensuring workers are entitled to live healthy lives; they are arguably good for everyone. Zoning laws, however, are far from being unconditionally good for everyone. Their history is tinged with racist and classist undertones: the original Supreme Court ruling that paved the way for widespread use of zoning literally called apartments parasites. And in a country where zoning is constantly argued to be a tool for maintaining property values—or wealth for the people lucky to own property—I find it strange that so-called liberals would equate zoning with “good” regulation.

Liberals seem to be very wrapped up in the imagery of capitalist cabals putting profit above all else. In this view, developers and the entire construction industry become equated with CEOs, so that bland apartment complex going up next door must only be to the benefit of the uber wealthy and should be fought at all costs. But the DINK palaces of today are the affordable apartments of tomorrow. This is how time works.

The beloved neighborhoods of today were likely opposed when it was their turn to change the neighborhood. The “bars, restaurants, coffee shops, supermarkets, hardware stores, and other everyday urban spots” that come to be “destroyed” all came into existence because of the market (p. 42). The local hardware store likely replaced another beloved store decades prior, coming into existence at a certain point and time to thrive in a then-emerging market for a certain pool of customers because, in all likelihood, the market had evolved to allow for higher prices and higher rents. The hardware store owner didn’t decide to change the market, they responded to market demand. The market in which gentrification is occurring is not a newly imposed force on neighborhoods, it’s just the latest iteration.

I find it interesting that the neighborhoods Stein is worried about are at times themselves products of gentrification. SoHo’s transformation from warehouses into artists studios serves as a textbook case of gentrification. But today people are worried about it gentrifying further. In fact, Stein says this explicitly about de Blasio’s scrapped plans to put a streetcar along the Brooklyn-Queens waterfront: “...the plan only works if the already transformed waterfront undergoes an even more severe gentrification” (p. 111). There seems to be no limit to what gentrification can “destroy.” It can apparently destroy already gentrified neighborhoods that were not too long ago decried as destructive of what came before. If the benchmark for what is worth preserving is constantly moving, how can we seriously say that the next iteration of growth is bad?

By focusing only on the downsides of growth, Stein misses some of the nuance involved in the role that real estate plays in equity. His narrative focuses so much on growth hungry developers pitted against vulnerable residents that he misses NIMBYism as a huge and influential contingent in planning politics. To the extent that he does recognize NIMBYism, he merely advocates for ensuring that marginalized neighborhoods have veto power, too.

The restrictive zoning that NIMBYs have been so successful at maintaining has led to two things liberals should find concerning. The first is governmental financial crises caused by unproductive land uses which make it harder to pay for vital social services. Stein fails to acknowledge that social programs are paid for via taxes, and increasing tax productivity is good for these things. By focusing on a few case studies where tax incentives were abused by big developers (e.g., Trump), the book might lead you to believe that pursuing tax revenue is a waste of time. The second is unnecessarily high housing and transportation costs. Neighborhoods that don’t build housing grow unaffordable and inaccessible, making services and jobs accessible only by car which is a financial burden unto itself.

If being against development leads to outcomes out of line with your political goals, then it might be time to re-evaluate your stance.

Policy Paths

Stein places planning squarely in a dilemma and outlines how real estate conspires against affordability and equity. What recourse he provides for this is a mixed bag. He supports explicitly socialist housing policies to the extent that he opposes market oriented policies. I believe, however, that we can have both policies that support development and policies that decommodify portions of the housing market.

His recommendations fall into three categories: irrelevant, useful, and controversial. He discusses minimum wages, pro-union policies, and worker-owned cooperatives. I find these to be very important policies that planners have nothing to do with (p. 168). And this is a telling moment that reflects Stein’s own duality with planning: he criticizes planning’s idealism as a false hope, or at least misleading advertising, but in blaming planners for so much he inadvertently reinforces this idealism by putting so much hope on the profession’s shoulders.

Some of his recommendations I find useful. Several are comprised of tax reform in a few different ways:

Extra taxes on vacant and underutilized land to encourage development. I’m a fan of this proposal, but this is not allowed everywhere and San Francisco’s empty home tax is currently being challenged in court.

Tax banks on foreclosures to prevent predatory lending and generate public revenue while banks profit from someone’s misfortunes. I like this idea but am not under any illusion as to the costs of a policy like this, such as increased borrowing costs or decreased likelihood of banks lending to low-income borrowers.

Luxury real estate transaction fees—because, well, why not?

Taxes on non-primary residences, but most jurisdictions already accomplish this using homestead exemptions. If you don’t live in the home you owe, you pay more.

Land value tax, an increasingly popular idea that has proved difficult to get going in practice.

He also makes a great point about the Mortgage Interest Deduction, which infamously benefits mostly wealthy homeowners—even the Cato Institute agrees on this. Recent estimates show it costs taxpayers around $32 billion, or $85 billion if the Tax Cuts and Jobs Act provisions expire. Why shouldn’t we spend that money on affordable housing instead? It’s not a question of fiddling with the market, but a question of for whom: the rich, or ordinary folks?

He supports acquiring land for Community Land Trusts, even taking ownership of tax foreclosed properties. I find this interesting given that acquiring tax foreclosed properties might lead to displacing someone in great financial need, since the foreclosure could stem from someone’s inability to pay taxes. I say this not to nitpick but to point out the complexity of some of his seemingly progressive proposals. That said, I would love to see cities utilize eminent domain for good, such as turning parking lots into affordable housing.

Stein’s anti-development bias is most clear, however, in his more controversial proposals. He supports rent control, which is the subject of much rigorous debate. Opponents claim that it disincentives maintenance and discourages new development, leading to higher housing costs. His support for right-to-stay and anti-eviction policies is also accompanied by concerns for increased rent or loss of rental units.

He is supportive of inclusionary zoning (IZ), but not outright. He only wants to see it in wealthy neighborhoods. While I agree that wealthy neighborhoods need to pull their weight, I see IZ developments being able to accommodate much fewer affordable units and leading to the market rate units being much more expensive. Developers already increase the rents of market rate units to account for the cost of lost revenue for affordable units. And new research shows that, if not properly calibrated, IZ might discourage new development.

His most controversial proposal rests with what he calls public stewardship but what I fear would lead to NIMBYism. His suggestion is to “institute direct election of community boards with veto power over development decisions” (p. 184). I like the idea of community involvement in theory but I can’t help but see how this would be disastrous in practice. Community veto power is basically at play whenever a developer needs a rezoning. Getting council approval typically requires community endorsement of some sort. And this can be a long, arduous process, which of course makes building more housing difficult. A recent proposal for a mixed-use, mixed-income development in Asheville was scrapped due to community backlash since it required a rezoning, and now developers will be building $1 million condos by right instead. I have no doubts about the extent to which NIMBYs will trash a good thing. Making this process standard sounds like a loss for an affordable housing agenda.

I often find that idealistic policy proposals don’t work as well in practice. Free transit fare has come under fire recently since reduced fares can lead to declines in service quality and reduced revenue—outcomes at odds with the goals of serving transit riders well. Without taking into account the realities of putting policy into practice, I don’t think we can fully appreciate the qualities important in policy making and urban planning.

Finding Balance

I see two main flaws in Capital City that illustrate important aspects of urban planning and policy implementation. One is that Stein’s critical stance leaves little room for trade offs.

Throughout the book he implicitly argues for planners to be political advocates, to not accept politics as they are but to campaign for higher ideals and better policies. He goes so far as to criticize planners for working with what they’ve got. Take this quote from Alicia Glen, which Stein includes in the book:

“We have certain tools in our municipal tool box. We can’t change the entire history of capitalism and we’re not Trotsky. You try to redistribute some of that growth to the people that need it” (p. 100).

I find this quote to be an astute, pragmatic observation—but Stein paints it as an apologist take for capitalism, an indefensible stance in his opinion. Whether or not we can agree on Glen’s intentions—I assume she was doing her best to support progressive policy—I think it’s important that we recognize planning’s limits. Glen, along with any other practicing planner, has to contend with federal, state, and local regulations that constrain what kinds of policies are even possible, not to mention figuring out what is even feasible in the local political environment.² Stein’s main critique of Glen in this context is the implementation of NYC’s Mandatory Inclusionary Housing program, which only applies to areas after a rezoning, allowing wealthy neighborhoods to oppose rezoning and therefore affordable housing. This isn’t to say that letting wealthy neighborhoods avoid affordable housing isn’t a shame—I agree it is—but it’s worth recognizing the step in the right direction. Those units will be permanently affordable, quite unheard of in affordable housing policy that typically allows affordability requirements to sunset after around 30 years.

Stein seems to be expecting planners to be at the forefront of political change. It’s not that I take issue with having a political agenda or being an activist planner. What I take issue with is painting compromise as a failure. You can argue that planners should be more emphatic about prioritizing equity over profit while also appreciating the kind of negotiating and compromising that comes now, before more widespread political change takes place.

In the context of unchanging politics, what are planners to do other than use what tools they have? At the end of the day they must manage trade offs. I’m less interested in judging planners against their own admittedly high-minded ideals and more interested in whether they are properly managing trade offs for the best outcomes. What any planner needs to be good at is making tough decisions.

The second flaw I see is that by enforcing such a high standard, incremental progress is framed as a failure. Stein’s vision for urban planning is nothing short of a radical reinvention of public policy. Consider Lars Doucet’s critique of these kinds of proposals:

What makes proposals on either side of the aisle as ridiculous as “abolishing gravity” is not that they are inherently ridiculous but that they require a political reality that doesn’t quite exist yet. Either of those strategies could make sense if they were paired with policies that account for their cost. The cost of rent control is that new development is discouraged and the buildings that do exist have no reason to be maintained or improved in a high-demand market. Aggressive rent control could work—if land was publicly owned and developers were already leasing it at a discount. The cost of abolishing property taxes is that jurisdictions would lose a ton of money for vital social services. Getting rid of property taxes could work—if cities and counties taxed income more heavily, which most don’t do at all.

Honestly, I think we would be better off with more publicly owned land that offered affordable ways to develop affordable housing. I also think we’d be better off taxing income more—after all, it’s more equitable. Having ambitious policy goals is a good thing—we shouldn’t be afraid of proposals that are likened to abolishing gravity—but we can be more pragmatic about how we make progress.

Consider the slow but steady rollback of minimum parking mandates. Some jurisdictions begin by lowering the rate or making exceptions for affordable housing, maybe even removing them from downtown districts or near transit, before going citywide. Elected officials test the water to make sure nothing breaks before proceeding slowly to more substantial changes. And the more cities that do eliminate parking mandates, the more it catches on across the country. I would personally argue for maximum parking limits, and prefer them now, no goofing around, but I’m okay knowing that we are steadily marching in that direction. Proposing a reversal of existing policy–changing minimum to maximum—would likely make a city councillor’s head explode. And planners are smart enough to know that—ambitious enough to want more, of course—but smart enough to know not to ask for the moon.

Policy is often an iterative process. It’s not a jump from A to B—hell, it’s not even a steady march from A to B. In reality it looks more like those realistic paths to success memes: an erratic line of curves, reversals, and detours. The truth is that I agree with Stein on most of his criticisms and many of his proposals, but I find the stance he takes incompatible with the inclination for cities to constantly change and reinvent themselves. In response to David Sirota’s post asking why liberals were placing blame on zoning laws and NIMBYs over CEOs, some asked, “why can’t it be both?” I wonder why we can’t have policies that support the working class on the one hand, and allow for vibrant, dynamic cities on the other.

The truth is that planners do have a lot to accomplish—especially in the US. We are not only dealing with the effects of capitalism on the need for shelter but also must contend with decades of anti-urban policies making our cities more unhealthy and expensive than they need to be. Planners have lots of work to do. And thankfully, it’s becoming more and more common for ordinary folks to be aware of urban planning issues. From Strong Towns to YIMBY Action, planning topics are increasingly front of mind for everyday Americans and elected officials alike. If awareness is any indication that people are taking planning seriously, I think that’s a good sign. I don’t know that we can see the light at the end of the tunnel yet, but I know we’re headed in the right direction.

1. I will NOT be linking that.

2. For instance, inclusionary zoning is not even allowed in some states, such as North Carolina and Florida.