Even in France, this era is referred to as “Le Trentes Gloireuses”. But in the UK, the urban planning system introduced in 1947 perpetuated and indeed steadily worsened the level of “planning gain” in new developments, and cyclical volatility in urban land prices remained high, in contrast to the USA and other nations with vigorous automobile-based development.
The current “Great Recession” is very serious precisely because the role of urban land market cyclical volatility has once again returned with a vengeance in many nations and regions. This restoration of volatility was preceded by escalating “planning gain” in new developments (noteworthy in California, Ireland and Spain) – thanks to “save the planet” anti-automobile urban planning.
Rail-based development simply does not have the “planning gain elimination” and “economic rent minimisation” effect that automobile-based development has. This is because the land rendered accessible by the infrastructure “investment”, is in long ribbons and comparatively small in “square miles” quantity. Transfers and park-and-ride simply do not substitute for automobility, in the economic effects. And as Anthony Downs pointed out in his 1994 book “New Visions for Metropolitan America”, rail-based development ends up leaving large swathes of land “in between”, usually in wedge shapes, that would dramatically boost economic efficiency if developed with roads – but doing so immediately sounds the death knell of the viability of the commuter rail system.
“Location” is rationed by price, and rail based development is marked by longer and longer runs out into the surrounding countryside as lower income earners and the young are “priced out” of the more central locations. Because rail based “sprawl” is in ribbon patterns rather than “carpet”, the distances involved rapidly become so long that the economy is less efficient that an automobile based one. Look at the former USSR’s cities for a real life illustration of commuter transport based on rails. Apartments on rail routes dozens of miles out in the countryside were abandoned en mass after the fall of communism.

Just a comment: why urban land price bubbles have a far more severe and lingering effect on the economy, than share market bubbles. The price of urban land is a cost input into nearly all economic activity. Whatever “wealth creation” occurs through a volatile upside of a land price cycle, is zero-sum transfer. The people and businesses from whom the wealth is transferred, have lost some part of their ability to spend money on other things, including productive assets, and in general the higher cost of urban land makes everything that is “produced” more expensive due to this cost input (including via the workforce’s cost of housing).

Then on the downside of the bubble, large numbers of people are affected by negative equity, many of whom did not willingly engage in speculation, whether with savings or borrowing; in contrast to the share market where those who lose their shirts willingly took the risk in the first place. Shares are not a basic human necessity; housing is, and to some extent, land is an essential for any productive business.

The reason that the effects of an urban land price bubble linger long after the initial crash or decline, is that large numbers of ordinary people and “main street” businesses are affected, through far less deliberate adventurism on their part – and the total sums of money involved in the loss of equity, are actually far greater. Anyone who invested in shares in around 1935, would have made a lot greater return on income by 1955, than someone who invested in property. The share market had resumed “cycling”; property was still on a LONG decline/stagnation. The same can be said of Japan, 1992 to now.

Look, too, at the many share market crashes that have occurred during the era of stable property prices and high economic stability: how much lasting damage did any of them do, in comparison to the economic crashes in which urban land was heavily involved? I am arguing that this is why THIS current “great recession” will be BIG, especially for Spain and Ireland. (Cont....)

(Cont….) But there is hardly a country that does not have an unburst house price bubble right now, if it does not have an already-burst one. Canada. Australia. China. Sweden. France.

http://www.thebubblebubble.com/

http://www.thebubblebubble.com/european-housing-bubble/

The USA at least has an “anchor” bloc of States that did not have such a bubble, along with many other attributes that make these States what Germany is to the EU. But note that Germany appears to have the makings of a house price bubble now, as investor “flight to safety” overwhelms the German planning system which could be credited until now, with keeping urban fringe land supply sufficiently elastic to keep urban land prices stable. Switzerland is experiencing similar disturbing symptoms.
I also argue that China’s economic miracle will hit a massive glass ceiling, possibly even harder than Japan’s did, and for the same reasons. Insane levels of “planning gain” and capital gains on urban land. Urban land prices being high relative to incomes and GDP, is an economic disadvantage, not a sign of economic power. Then there is the volatility. The price of urban land in Chinese cities is crazy; it is becoming like the famous anecdote once upon a time about one block of Tokyo being “worth more than the entire state of California”. It makes no sense for Chinese real estate to cost more in absolute terms, than that in countries with much higher incomes.

It is perfectly logical for many international businesses doing their sums these days, to pick Southern USA for the location of their new factories etc, because it is just about the only part of the world that still has low cost urban land, and this does count as a cost input, believe it or not. The culture, regulations, taxes, workforce attitudes etc count too. The in-migration of willing workers is massive, and “new employment” rates have kept up remarkably well.

I recommend three articles: Joel Kotkin: “The Third Coast” in the Wall Street Journal recently; “Foreign Industrial Investment is Reshaping America” on New Geography.com; and Ryan Avent : “Too Hot for Jobs” in “The Economist”.

<Urban land prices being high relative to incomes and GDP, is an economic disadvantage, not a sign of economic power.>

Yes, but the process and its undesirable consequences are predicated upon population growth: In China's case the result of people moving to cities from rural areas. Would it be possible without the population growth? To nowhere near the same extent I would think.

Harking back a few days, this Phil bloke from Kiwiland wrote:

<< As for this Ludwig guy, what is his "final solution"? >> … followed the most extraordinarily over-the-top prattle!

Then in his next post he wrote:

<< Ross Elliott is right that an increase in population within a given area will involve an increase in traffic from most of the new people using cars >>

Well, der…. what was I saying??

I don’t think I’ve seen such a dumb contradiction in all my years on this forum!

Yes OF COURSE population growth is a major factor in congestion. So then, what on earth is he boring it up little old Ludwig for??

It would appear that Phil is another one of these extraordinarily unbalanced commentators, who knows a great deal about one side of the issue and is absolutely loathe to even broach any consideration of the other side. That is, he knows all about linear and non-linear relationships between the various factors and is apparently willing to consider anything…except any reduction in the population growth rate or final population size of a city!

What’s that you say?

‘The final size of a city!! No, our cities are just going to keep growing forever!’

Yeah, right!

And I thought Ross Elliott was presenting an unbalanced perspective!! ( :>|

Fester: urbanisation and population growth are both part of "development" of an economy. No society that stays rural can afford to pay for modern technology and healthcare.

Ludwig: you are wrenching my comment about congestion way out of context. I said: ".....an increase in population WITHIN A GIVEN AREA will involve an increase in traffic from most of the new people using cars....."

My whole argument has been in favour of decentralisation and low urban density and multi-nodal urban form and "new cities". Modern urban planning fetishes hold that all population increase must be squashed into existing built areas. This is what my whole argument is against. I am pointing out that the assumptions that these fetishes are based on, are false. My comment that you take out of context, is aimed at the absurd shallow belief that motivates large numbers of voters to support the policy of urban intensification and public transport "investments", which is that "almost everybody else will use public transport as a result and leave the roads clearer for MEEEEEEEEE."

I say there is very definitely limits on the relationship between the physical size and population density that can be accommodated in most cities, most of the time. To reiterate, there will only ever be about 10 "global cities" in the world, of the NYC - London - Hong Kong - Tokyo - Singapore class. The crucial factor that has to be present for a city to be both high density AND high-income, is a high proportion of employment in "industries" such as finance, that have very high incomes and very low requirement for space.

(Cont.....)