"Living in your own home shapes a free and responsible person"

What, in your view, is the main problem with high-rise suburbs? One of the main causes of the problems facing Russian cities is endless high-rise construction. For local authorities, “development” has come to mean industrialized housing construction, which results in suburban high-rise ghettos with no roads and no infrastructure. In Russia’s ongoing urbanization and suburbanization, the rights of homeowners and property owners are not truly in demand. If we listen to politicians in the West at any level, we constantly hear the word “community.” In Russia, that concept is absent; it remains something vague and poorly understood, because community simply does not exist here. A community is, for example, the residents of neighboring houses in a low-rise neighborhood. Their lives revolve around the home, the school, the local park, and also the tax they pay into the local budget. People living in a high-rise anthill do not really need property rights all that much; they have no reason to care about their land and property. That is one reason why it is so easy for the authorities to pull all powers into Moscow, why territories do not develop, and why cities decline. Former Finance Minister Alexei Kudrin, who is preparing a reform program for the government, believes Russia needs to focus on its 20 largest urban agglomerations in order to remain competitive. But Russia’s big cities are already growing. So what is the problem? When Alexei Kudrin says Russia needs to build up 20 agglomerations in order to become competitive, he is stating the obvious: cities are growing all over the world. People leave rural areas, where incomes are lower, for cities, where they can earn more and achieve a more comfortable standard of living. That is true. The issue is that we mean different things when we say “cities.” New economic geography and driver cities In the early 1990s, the economist Paul Krugman (Geography and Trade) introduced distance and the spatial location of production into economic models: urban agglomerations turned out to be far more productive than other types of space. By 2025, the world’s 600 largest cities are expected to account for 60% of global GDP, with the top 100 accounting for 35%. In Russia, supporters of agglomeration growth are essentially turning Krugman’s descriptive model—based on a world before the mass spread of the internet, mobile communications, and other breakthroughs of the past 30 years—into a prescription for state policy. People move to cities everywhere, but if we look at European and American cities, we notice that they are fairly low-rise. The reasons include a different approach to land use within existing built-up areas, the merging of cities, infrastructure development, and strong demand for single-family homes. Building density is high in the center of any city, but as you move toward the outskirts, both density and building height decrease rather than increase, unlike in Russia. When we say people are moving from villages to cities, that does not mean they are doomed to settle into a one-room apartment in a human anthill. They can live quite comfortably in a one-story house. But Russia seems almost deliberately determined to avoid that path. How does life in a detached house differ from life in an apartment building or a high-rise? The differences are absolutely fundamental. Let us look at this both from the residents’ point of view and from the state’s. The pattern of urban development in Russia and the way urban Russians live need to change: we should be striving to give people the option of moving into low-rise or single-story housing. I look at yet another enormous building going up in the Moscow suburbs: 25 stories, 10 entrances. I think that when the time comes for major repairs, it will be impossible to renovate. No matter how much money is collected from residents through the housing and utilities system, the repair costs for such a building will be enormous. I myself have lived all my life in a high-rise—a prefabricated panel building in Maryino, a Moscow district. It deteriorates extremely quickly and is extremely expensive to heat, to supply with hot water, and in every other respect. No group of residents will ever be able to repair it. Right now Sergei Sobyanin is trying to move everyone out of five-story buildings into, say, eight-story or twenty-story ones. But when the time comes to renovate those buildings, where will we move people then? That time will come. People cannot afford major repairs in their five-story buildings now, and the same will happen later with the new buildings. With our own hands, we are enlarging the black hole of the housing and utilities sector. The cost of social infrastructure for newly built high-rise districts is enormous. You need schools for thousands of pupils, large outpatient clinics, and so on. There will not be enough schools; there will be lines at the clinics. To eliminate those lines, extraordinary measures are needed in terms of the number of doctors, the number of offices, and the placement of clinics. And then there are everyday services, parking, shopping centers, and other commercial infrastructure, all of which new districts lack. As a public-minded person thinking about the long term, I make the rational choice in favor of low-rise housing. Now let us look at it from the individual’s point of view. We want families to have children. Whatever happens to economic growth over long periods of time, economic growth is people’s labor. Few people means no economic growth; many people means economic growth. It will be extremely difficult to persuade people to have a third child—or even a second—if their entire life horizon is an apartment in a high-rise building. With that kind of civilizational choice, having many children is impossible. If your family has two children and one wants a cat while the other wants a dog, how is everyone supposed to coexist? And what if there are three children? Even compared with some European countries, Russia has a low birth rate per woman. One of the most important reasons is the lack of any prospect of spacious housing. A person living in a house consumes differently, and that is both pleasurable and good for the economy. Someone living in a house has a shed, a garage, a cellar, a workshop. He buys a lawn mower, sets up a sports area, and gets a garden gnome. He simply has more things in everyday use than someone in a small city apartment. Residents of Paris, for example, mostly live in five- or six-story buildings, but most apartments come with part of an attic or basement, which helps free up living space. In modern mass housing, it is you, your wife, and two children—and if you want to buy each child a bicycle, the whole apartment turns into bicycle storage. If you live in a detached house, none of that is a problem. Everyone can have a bicycle, or even a motorcycle, doghouses, and a treehouse for the children. Older kids can put on concerts with their garage rock band right there; the next Steve Jobs could be born there... For that treehouse, you need to buy nails, boards, and a rope ladder. You put that money into the economy, you feel good about yourself, and the economy is happy with you. You are responsible for your own house; no one promises you major repairs, and you do not expect them. However you look at it, everyone wins. For 30 years now, we have been talking endlessly about a property-owning class. Yet for some reason that class is understood to mean entrepreneurs, oligarchs, and factory owners. But the true mass property-owning class consists of people who own land and their own homes. A connection to land is much stronger than a connection to a factory you did not build yourself. Homeowners live as owners and begin to relate differently both to the state and to their neighbors. That is how a real sense of community is born. You do not live in an anthill; you step out into the yard, your children are there, the neighbors’ children are just over the fence—it is a village in the best sense of the word. You retain all the advantages of urban life, you use a car or public transportation, but your community, your neighbors, become something completely real to you. As a property owner, you have an adult relationship with the state. You—not Rostekhnadzor (Russia’s federal technical oversight agency)—can get together and decide that all the roofs in your settlement should be made of red tile. You can decide that you want to live in a settlement where everyone keeps their lawn trimmed, and organize to help those who cannot mow their own lawn. Only such opportunities can help launch normal local self-government in Russia. In high-rise developments, as in Moscow, local self-government can largely be replaced by bureaucrats. Do you see any practical ways to achieve this? Yes, I do. Number one is mass, principled deregulation of this sphere. There are historic city centers that matter from a cultural point of view. Outside them, the construction of houses no taller than three stories should be radically deregulated. If you own the land, build whatever you want. Current regulation of individual home construction is simplified, but it still exists. My parents have a dacha in a fairly poor dacha settlement, where retired military officers all have little two-story houses. They constantly have to deal with the state and with architectural authorities because of that dacha. All paperwork should be on a notification basis. We need an idea opposite to the “dacha amnesty” (a Russian legal simplification for registering dachas and garden plots): there should be no laws that a person with privately owned land can violate in principle. Of course, basic rules concerning property boundaries must be observed—for example, red lines. In everything else, we should proceed from the assumption that people are rational. Second, there is the mortgage rate. It needs to be lowered across Russia in general, because the current minimum rate—10.5%—is insanely high. For individual home construction, the rate should be subsidized by the state altogether. This is not expensive. If inflation is now 2.2%, and over the year it may be 2.5–2.8%, then the state could quite painlessly start issuing mortgage loans at 3% per year tomorrow. But given how high the multiplier effect of construction is in the economy, we could subsidize mortgage rates for individual homebuilding. If a person wants to build a house, they should be able to borrow at 1% per year. Why is this so important—more important than a low mortgage rate for high-rise housing? When a person buys a high-rise apartment, they hand their money over to large housing construction combines. The combine buys building materials and equipment, also in a centralized way. In other words, we are financing big companies. When a person builds an individual home, they help demonopolize the economy, develop small and medium-sized businesses, and foster new regional businesses, because they look for the cheapest option, work much more directly with contractors and suppliers, and distribute money more efficiently. That money will work better in the economy. I am convinced that investment in this sector would be maximally productive. Third, there is infrastructure: roads, gas, water, and everything else. Right now this is a major obstacle to the development of low-rise homebuilding. It is one reason why everyone builds 25- to 35-story buildings. They want to hang an entire residential district off a single road. Special measures are needed here; these are long-term infrastructure investments. The state could issue special bond programs for them, with major state banks participating. Modern technologies can also be used here, because building a house today is nothing like building one 20 or 25 years ago. Individual heating systems, individual sewage systems, and independent power supply are all possible. This industry is developing rapidly now. There is no need to extend trunk gas pipelines to every settlement: new technologies make infrastructure construction cheaper and more accessible. We simply need to adopt these new technologies—though I would say people will adopt them on their own. People think rationally; they will use new technologies to lower their construction costs if we give them access to mortgage financing. I imagine it will also turn out that there are problems with the land market. Exactly. The answer is contained in the first point, when I spoke about full deregulation. Right now, if we say, “Let’s build up the entire Moscow region,” the response will be: “The state agency has not yet completed the land survey; without that it is impossible; the red lines have not been drawn.” Even in Moscow, the land immediately surrounding high-rise buildings has not been formally fixed because there has been no land surveying. This needs to be deregulated. If you have a document proving ownership, go build. The Moscow region is larger than Belgium; nevertheless, land here is outrageously expensive, everything is outrageously expensive, there is overregulation, and you are required to comply with formal, pointless requirements when registering land plots. All of this needs to be radically simplified, based on the presumption of the individual’s innocence. In other words, not a permit-based system but a notification-based one. Land in Russia—even in the Moscow suburbs—should not cost so much; it should not be treated as some kind of super-resource. In most cities, even those with over a million residents, once you go 20–30 km from the city boundary, you already find abandoned villages all around. There is plenty of that around Moscow too—abandoned settlements, failed development projects. And yet we still try to force people to process all this paperwork as if the land were a prize worth millions of dollars during the Gold Rush. We also need to think about making sure people who live far from the city have jobs. That will be a natural process. When new types of settlements appear, jobs will appear as well. Even now in Moscow there is such a trend: large office centers are starting to locate closer to the MKAD (Moscow Ring Road), beyond the Third Ring. That is convenient—you do not have to go into the center. In principle, a low-rise housing strategy is a strategy against overcentralization, including the overcentralization of jobs. Jobs should not exist only in the center. We need to give people the opportunity to build in the Moscow suburbs outside the zones of mass development as simply and cheaply as possible—and likewise around any city—and jobs will begin to appear. It is not a quick process, but if we do not start it, it will never begin. Population migration is connected to this, by the way. In the United States, a person changes residence on average five times in a lifetime. In Australia it is even more—almost eight times in a lifetime. In Russia, the average is 1.5 times in a lifetime. People do not move anywhere. A large stock of single-story and low-rise housing would greatly energize the housing market and encourage healthy population mobility. Without mobility and the ability to move around within the country, nothing will develop. You should be able to live in your own house in Yekaterinburg and move to the same living conditions in Nizhny Novgorod if you find a better job there. Our geographers say the main migration pattern is pendulum migration—that people spend their whole lives traveling back and forth between their small town and Moscow. They work for a few months and then go back. That is a direct consequence of extreme financial centralization. When all the money is in Moscow, everyone goes to Moscow and St. Petersburg to earn a living. Until we abolish this Putin-Kudrin system, in which all resources are taken away from the regions so that they have neither money nor authority, it will simply be impossible to overcome this.