Free Enterprise City

1. Joel Feagin 1988 Free Enterprise City

2. Ecological Model • Decentralizing suburbanization process in metropolitan areas is viewed as reflecting desires of individual American homeowners for affordable housing and better physical environment, as expressed within the free market system. Transport technologies are important in urban centralization and decentralization.

3. Favorable Free Market practices • “Good business climate” low tax , laissez faire free market approach; limit social service spending, including subsidized housing, limit zoning; weak regulation of real estate, anti-union laws, government officials sympathetic to business, • In 1963 Texas Hwy., Department. Sec. of commerce Hodges, said traffic problems solved by providing better roads for cars, not by restricting the number or caliber of cars: “We shout a here, here!' let's construct those better roads out of asphalt so they will cost less to build and thus be easy on taxes -- at same time providing more roads for more cars to travel more miles and use more petroleum products."

4. Houston and the Built City • There is a close relationship between character of capitalism in particular historical period and its urban form. Office buildings are at the heart of physical structure of modern capitalism, providing places where administrative, accounting, and other white-collar activities of dominant corporations and allied business service firms are located and interrelated;

5. Houston and the Built City • Larger corporations tend to build, or have built, tall skyscrapers. Why tall skyscrapers? Tall buildings are considerably more expensive to construct than are shorter and wider buildings with same amount for space. It is estimated that collar office towers cost at least 20% more per square foot than an equivalent building with fewer floors. The high price of land often justifies creation of super -- skyscraper in downtown areas; however savings on land costs do not offset of premium building cost for a high-rise building. Wittenberg has reported on a major office project in downtown Houston land cost $12.5 million about 10% of the total cost hundred $127 million of the building itself plan costs was no more than the cost of expensive elevator system for this high-rise structure.

6. Since World War II: Total Sq Footage of Office Space in Houston

7. Houston and the Built City • Reason for high-rise buildings does not seem to be high cost of land in downtown Houston area; instead, high-rise towers have been constructed to facilitate integration of large corporations, and symbolize corporate presence and dominance. To quote urban theorist Lamarche, "they are first and foremost physical expression of concentration of capital and have close ties linking headquarters of industry and financial world." Office buildings are not simply products of an architects imagination but rather a geographical solution to integration of modern capitalism;

8. Political Economy Model • Local residents have paid a heavy price for low tax, laissez-faire, free market approach of the city’s business leadership (3). While Houston is advertised as premier free enterprise city, in reality the city’s business leadership has regularly taken major governmental (handouts) for projects that support/create profit-making in city

9. PEM continued… • Federal intervention in form of subsidies of home mortgages, highways, oil production, and decentralized airports significantly encouraged urban de-concentration by reducing cost of decentralized suburban development. Urban processes such as suburbanization are not natural result of automobile technology and free-market forces but rather result of intentional actions by powerful economic and governmental actors seeking particular goals in specific socio--- historical settings

10. Houston’s Political Economic History • Houston’s political economic history is recurrent intervention of local and federal governments in Houston economy usually at behest of local business elites; • Houston began in the 1830s as speculative real estate venture by two northern capitalists , brothers JK Allen and A.C. Allen. • Lumber, grain, cotton commodities generated an important infrastructure of railroads, warehouses, cotton jeans, and banks servicing southeast Texas agricultural economy.

11. Houston’s Political Econ History • Cotton was sold to English buyers in return European goods bought by local merchants were sold to Texans. Some cotton merchants functioned as bankers, loaning large sums of money to local planters before there were organized banks in area. • Cotton society had great inequalities in income and wealth. From beginning Houston was class stratified, with a small wealthy elite, a large poverty-stricken population, and substantial middle income sector. In 1850s black slaves labored at worst jobs in city. Between 1815- 1860 a share of wealth held by richest 10% of population increased from just over half to more than two thirds.

12. Houston’s Political Econ History: Early 1900s • By early 1900s Houston was sheltered harbor closest to the ranches and cotton fields of Midwest and central south. By 1912 no less than 17 railroads use the city as a rail hub. Texas was producing two thirds of all cotton in the US, much shipped through Houston, which had six cotton seed processing mills;

13. Houston Oil and Autos • The developed infrastructure of port facilities, railroads, and banks actually creating the infrastructure foundation for Houston subsequent dominance as an oil center. Investment decisions made in Detroit spurred investment by oil companies and transformed Houston into an oil capital; Until auto production accelerated in 1904 – 1919, crude oil had been used for kerosene, fuel oil, lubricants. In 1899 only 3700 autos were built in US, but by 1909 figure had grown to 126,600, and by 1919 to 1.7 million. Coal had fueled rise in US industry and 19th century, but by 1910s and 1920s oil was beginning to replace coal as fuel choice;

14. Houston During Civil War • The 1860s brought devastation to many cities in south, most destructive effects of Civil War did not reach Houston; instead, war made Houston into significant Southern marketplace and brought new wealth to local elite. After war cotton became main product in trade. Cotton first put Houston on international economic map(49). By 1860s city Council increased efforts to provide infrastructure for development – grading and surfacing streets, building bridges, franchising private companies for gas-lighting and horse cars. Between 1860s and 1880s basic foundation for Houston business elites approach to government was laid down;

15. Local and Federal Govt Aid • Under pressure from local growth coalition, U.S. Congress in 1902 appropriated about 1 million in public investment capital for local port development; A few years later Houston capitalists met in the mayors office to work out a plan for further subsidization(55). In 1910 Congress approved 1.2 5 million for deepening Houston ship channel, reportedly largest grant for such developmental purposes made by the federal government up to that time;

16. Local and Federal Govt Aid cont… • Between 1918 and 1938 US government expended 56 million to dredge deep water ports at 12 Texas coastal cities, including Houston. Houston ranked fourth among US ports in total exports tonnage by 1930; • In 1933 Pres. Roosevelt issued an executive order banning interstate shipment of oil pumped in violation of Texas program pro- rationing laws; the agents were sent to Texas to enforce order. Governmental intervention and continuing federal support for pro-rationing among petroleum companies operated from 1930s to 1970s to protect industry.

17. Federal Subsidies: Dual Role • Federal subsidy had helped create oil industry. But this subsidization or not was not the only source of federal underwriting of petrochemical and oil refining sectors of American industry. Federal government purchase and consumption of products of these industries was crucial to long-run profitability and prosperity. “Big government” in US was not primarily created by the new deal social programs of the 1930s but rather by massive industrial and military buildups of World War II;

18. More State Aid: 1950s -1980s • Late 1950s to the 1980s – in 1959 Pres. Eisenhower set quotas for imported oil, limiting imports to 12% of domestic production, a decision justified in terms of national defense; this action helped to hold up domestic oil prices. The government engineered differential probably cost US consumers millions of dollars during the next decade;

19. Reorganization and Restructuring • In decade ending in early 1970s number of multinational oil companies shifted subsidiaries to Houston or buttressed existing operations there. Shell relocated its US administrative headquarters from New York to Houston. Exxon, golf, and Texaco consolidated domestic operations in Houston. As Anthony Sampson put it “it is in Texas, not New York, that Exxon feels more thoroughly at home; and it is Exxon skyscraper in Houston, the headquarters of Exxon USA, which seems to house the soul of the company.”

20. Reorganization and Restructuring cont…. • Oil and chemical companies were heavily subsidized by federal government energy policy; in 1970s and early 1980s, government kept price of gas artificially low and thus feedstock for petrochemical plants and very cheap, situation European manufacturers complained about.

21. History of Zoning Struggle • Houston is unique among major cities in US: it has no traditional zoning laws to control patterns of land use; • First they revealed depth of conservative laissez-faire philosophy among city’s leaders, even when that philosophy interferes with other interests of the leadership, such as protecting elite residential neighborhoods from commercial encroachment. Second, failure to implement zoning accents power of real estate and development capitalists in city, these interests have traditionally been most consistently opposed to zoning;

22. Zoning and Land Use Patterns • Lack of zoning has meant a larger than average number of oddly mixed land uses: massage parlors are built across street from churches, office towers are erected in backyards of wealthy suburbanites; At broadest level the city's land-use map is similar to the spread city pattern, and to many Sunbelt cities.

23. Zoning and Land Use Patterns • Lack of zoning means Houston developers generally face less red tape and shorter project development times. In a city with strict zoning and planning, such as Dallas, might take a year or two to get a plan for a mega structure project approved, but in Houston sometimes takes only six months. • 1959 budget was 176,785 there were 20 full-time employees; city population was just under 1 million. • 1980 budget was $920,000 with a staff of 60 in a city that exceeded 1.6 million. Inadequate staffing reflects weak commitment of city's elite to planning;

24. Houston’s Short Term Planning • In early 1980s Browning -- Ferris industries, a private disposal firm, was doing solid waste planning for city. Public decisions have often been delegated to private firms which, journalist Burke notes, "are really extensions of City Hall." In general city departments, such as public works, have been known for their operations with developers and other real estate interests (163). • If city cannot provide utility services, a developer can create, with governmental permission, a municipal utility District (MUD) with the authority to sell bonds for utility construction. In fact developers decide where water, sewer, and other utility systems will be extended next -- a type of privatized planning (164).