And, of course, a colossal campaign of highway spending. Highway construction literally sucks value out of existing developed neighborhoods and transfers it to new, previously undeveloped areas (h/t Angie Schmitt of Streetsblog for tweeting this astute observation).

To understand why this is, think about a metropolitan region as a whole. What sets the limits on that region's physical growth? You've got a certain number of residents (plus new arrivals, and absentee property owners). They have a certain amount of disposable income, and they are willing to spend a certain share of it on real estate. Each variable in that equation is a bit stretchy, but like a rubber band, only to a point.

If I open a restaurant and I'm hugely successful, it's very unlikely that I'm increasing the total amount that my fellow citizens spend going out to eat by any appreciable amount. It's far more likely that they're going to my restaurant instead of another one.

If I'm a mayor and I throw tax incentives at a new mall, it's unlikely that I'm increasing the total amount spent on clothing and cosmetics and Auntie Anne's Pretzels by an appreciable amount. It's far more likely that the old mall down the road is going to suffer a rash of store closures.

If I'm the transportation commissioner and I build a highway, and that highway shortens the commute from Old MacDonald's farm to downtown Emerald City from 45 minutes to 30 minutes, and that difference makes Old MacDonald's land way more appealing to a developer, and Old MacDonald sells to the developer and retires to Arizona, and the developer names it MacDonald Glen and puts up 500 beige houses.... That chain of events didn't cause 500 brand new people to want to move to Emerald City.

What happened was that chain of events caused a certain number of people—probably less than 500, but certainly much greater than zero—who were already going to buy a house in Emerald City to buy one out in MacDonald Glen instead of elsewhere in town. And "elsewhere in town" missed out on that activity, like last year's toy sitting in a box under the bed.

A Practical Limit... But Not Enough of One to Keep Us Out of Trouble

There's an objection worth answering here. Building more homes and offices and strip malls doesn't work quite like the parent buying cheap toys for their kid. There's far more of a practical limit, because a house is a huge investment for the builder as well as the buyer, and if house prices start to fall and you can't sell new ones at a profit, builders are very quickly going to take the hint. (The toy analogy here, I suppose, would be that the kid literally hasn't even unwrapped the video game you bought her for her birthday in October, so you're definitely not buying her another one for Christmas.)