Understaffed, overworked, underfunded

The Cincinnati IRS office is understaffed, overworked and underfunded. So says this in the NY Times.

I suppose every agency of government likes to make such claims.  We have heard it from failing public schools for as long as I can recall.

But the unfolding IRS story suggests two entirely different thoughts.

First, in any two-party electoral contest, the strategic choice is between firing up the true believers or moving to the center.  Obama chose the former and it worked.  But a hyper-partisan White House will inspire hyper-partisans all the way down the line.

Second, some of us like the idea of a flat tax because the 60,000+ word IRS code we have is cumbersome, user-unfriendly to the extreme, and simply a way to accommodate thousands of politicized special deals.  The argument has been made many times. Here is a quick summary.

But the politicized administration of this rotten code only makes a bad deal worse.  This does bring the tax code problem home to almost everyone.  Most Americans fear the IRS.  To see the politicized misuse of its awesome powers exposed brings the flat tax argument home to those who had tolerated the tax code status quo.

Ain't seen nothing yet

Contracts beat conflicts.  And when it comes to stagnation or not, we ain't seen nothing yet. Here the NY Times reports on crowdfunding when it comes to real estate development. This may put a damper on NIMBY (h/t TMG). Contracting can replace a bunch of conflicts.

I have mentioned several times that when it comes to the way cities grow, it appears that preferences trump policies -- in spite of the thicket of politics we encounter everywhere.  The scales will tip more towards preferences as we give locals a chance to buy in to more local development possibilities.

Puzzles indeed

Today's WSJ includes "Beijing Puzzles Over Urban Growth ... Government Entertains Debate on How to Manage Population Gains as It Seeks Lift From Bigger Cities."  There are no "good" or "bad" city sizes, just as there are no "good" or "bad" city densities.  But many urban theorists and planners continue to chase these gross simplifications.

Cities contribute to productvity and economic development if they allow labor and capital to be productive.  The many agents that we aggregate into "labor" and "capital" can each be productive in urban settings if they manage to find the networking opportunities (conveying things as well as thoughts and ideas) that work best for them.  This describes the intricate locational puzzle that we call "urban structure" -- and that we cannot solve top-down.

Economic growth requires economic freedom, but some wonder about political freedom. In these discussions, there is always someone always who suggests China when trying to make the point that political freedom is not required.  But that means politicized meddling which inevitably gets things wrong ("Beijing Puzzles ...").  It surely gets cities wrong. Sandy Ikeda tells the story a bit more elegantly here.

What works?

Here is Wendell Cox's summary of 1920-2010 U.S. urbanization data. This stuff is indispensible because the Census' urbanized areas (UZAs) are periodically redefined to capture the boundaries of actual development. From 1950-2010, there are seven decennial observations.  How do the top-ten population rankings change over this period?  Without looking, everyone knows that the New York UZA was #1 in each year. So the number of rank changes for #1 was zero.  In the #2 slot, Chicago was #2 in 1950, but LA has been #2 ever since.  That means just one rank change for the title of second biggest UZA.

This is how the top ten rankings changed over the sixty years:

UZA rank    # of rank changes
1                 0
2                 1
3                 1
4                 1
5                 2
6                 2
7                 4
8                 4
9                 6
10               6

The greatest stability is at the top.  (Doing the same exercise for central cities would make no sense because they involve political boundaries that may or may not budge, depending on local laws and conditions.)

There are costs and benefits of UZA size. The trick is to exploit the benefits of size without being overhwelmed by the costs? I have mentioned often that flexible enough land markets are the only explanation. Allow for the propitious location and re-location of land uses. The propitious spatial arrangements are the ones that allow profitable interactions.  These are too complex to be knowable by policy makers.  Experimentation by risk takers is the only option.

Here is the Chatterji, Glaeser, Kerr study of "Clusters of Entrepreneurship and Innovation". Looking across their various cases and examples, the authors report a mixed record of success as well as a mixed set of policies.

LA is no Norway

Ray Fisman and Edward Miguel have garnered well deserved attention for their "Corruption, Norms, and Legal Enforcement: Evidence from Diplomatic Parking Tickets" in the 2007 Journal of Poltical Economy. For those who have not seen or heard of it, here is the abstract:

We study cultural norms and legal enforcement in controlling corruption by analyzing the parking behavior of United Nations officials in Manhattan. Until 2002, diplomatic immunity protected UN diplomats from parking enforcement actions, so diplomats’ actions were constrained by cultural norms alone. We find a strong effect of corruption norms: diplomats from high-corruption countries (on the basis of existing survey-based indices) accumulated significantly more unpaid parking violations. In 2002, enforcement authorities acquired the right to confiscate diplomatic license plates of violators. Unpaid violations dropped sharply in response. Cultural norms and (particularly in this context) legal enforcement are both important determinants of corruption.

The study marries a natural experiment (gold in the social sciences) with a profound question (the link between culture and trust). This matters greatly for private as well as public sector performance -- and economic growth.

I have long suspected that Los Angeles (not a country and not in the study) is no Norway.

The NY Times recently included "For Los Angeles, an End to the ‘Free’ Subway Ride" (H/T Brad Hill).  After our own twenty-year experiment, we see that the honor system has not fared well here. 

Station platforms will look even more lonely once the free riders stay away. But that is not yet certain because it appears that installing and making the turnstiles work is presenting its own challenges.

Transit dreams have long been a fixture among LA elites (most of whom never use transit).  But there are these realities. 

Recent past?

Everyone knows that everything has speeded up. Forget the obligatory "almost".  Here is a great 1993 v 2003 visual of how our personal electronics have changed in twenty years (H/T Craig Newmark). There is nothing like a crisp visual, but even that understates the drama. Prices and quality are not shown and we know that both have improved.

Today's WSJ includes "Poles Apart: Today's Kids Line Up to Learn About Communist Past in Poland ... Best Soviet-Era Shopping Strategy Wins This Board Game ... Shopping in communist Poland was a dreary gantlet of shortages, rationing lines and—if you managed to buy something—Soviet-Bloc dreck. So Karol Madaj has turned it all into a board game called Queue. The challenge: Buy everything on your shopping list. Players wait outside empty government stores, fend off line-jumpers and haggle with black marketeers. The 40-page instruction manual warns the game may inspire 'tears of exasperation' and 'the gnashing of teeth.' Queue, introduced in 2011, paradoxically proved to be so popular that buyers had to stand in line for hours for one and a black market emerged."

This is also about a (near) twenty-year change. Polish young people have no idea of how it used to be and the older generation wants them to know. Games are better than stories from grandpa.

Time marches on and history becomes more extended, but it also becomes more crowded as the pace picks up.

The news story ends with this wonderful irony:  "Unintentionally, the game is a living example of that world because it is produced by the Polish government. The Institute of National Remembrance, a state body created in 1998 to preserve memories of Poles' struggles against Nazism and communism, gets money to produce Queue from the national budget. Overwhelming demand hasn't induced bureaucrats to fund a production increase. 'It's like under socialism,' quips Andrzej Zawistowski, the institute's director of public education, who is pushing for a market-based approach. One queue for Queue formed roughly four days before sales began, he said. The shortage of the game about shortages has even prompted angry letters from consumers for whom it brought back bad memories, says Mr. Madaj. 'Some people didn't appreciate the irony.'"

Engaged but not detached.

David Brooks writes about fellow pundits in today's NY Times ("Engaged or Detached?"). It's a great question. Who among us is "objective"?  Start by looking for those who make the loudest claims that they are objective.  It is a great goal, but is it ever really met? I do not know. I have great respect for many writers and thinkers. I am now reading Steven Pinker's How the Mind Works and am dazzled. The author is a truth-seeker but only human.  No reader should accept anyone's work as gospel.

My students have an easy time telling which of Arnold Kling's three axes I emphasize. I do not try to mask it and doubt that I could if I tried.

But I do not demean those who disagree -- as one lecturer on my campus was recently seen doing.  There are many more like this man.  Administrators who were put on the spot came up with the lame defense that the lecturer is a practitioner and has views that students should hear.  In reality, students at most major universities get a steady diet of "sustainability" and "social justice" and the like as if it were the one true faith.

In the non-Brooks world I operate in, the students who enjoy my classes (where the good that markets do is emphasized and where the cronyism behind the many train wrecks in our lives is highlighted) report that they hear things that they have never heard before.  Matt Ridley recently complained that he will not forgive his teachers for never telling him about the gains from trade and comparative advantage. "What were my school teachers doing not teaching me about this"?

A hope

The Economist discusses auto industry "Gloom and Boom" and ends up very optimistic about driverless cars.  At Reason (June 2013 gated), Greg Beato writes about "Google's Driverless Future ... Will self-piloting vehicles rob us of the last of our privacy and autonomy? ... Buckle up, America! We're in for a safe, efficient and oppressively intrusive ride."  And one might say that our privacy is already a thing of the past. Most people have embraced smart phones and connectivity.

But as one who misses his stick-shift, I am reminded of Loren Lomasky's indispensible "Autonomy and Automobility."  Being in charge of our own mobility offers a very special and deeply appealing independence, unmatched at the price.

Is this where people will draw the line? Will not even Google and friends cross it?  One can hope.

ADDED

But there are also some privacy surprises.  H/T Volokh Conspiracy

Ngram lessons

Dan Klein sent me "Ngrams of the Great Transformations" where he shows Ngram viewer put to good use.  I seem to have posted four Ngram posts (use search box at left if interested) in recent years.  Only four because once you start, you cannot stop. Here is "market failure" vs. "governement failure".  No real surprises.

What will we do once Google expands Ngram past 2008?  When did "liquidity trap" peak? How about "stimulus"? "Too big to fail"? "Stress test"? "Crony capitalism?" "Ninety-nine percent"? "Debt and growth"? The list goes on.

We have more facts more easily accessible than ever. Will all this good stuff prompt more good ideas? Dan's paper suggests that the answer is "yes."

Signals

Ross Selvidge sent me this delightful photo.  Economists love to talk about "signaling."  Trouble is that almost everything we do can be said to be part of our signaling routine. 

There is considerable debate about how much of the value of our college degrees is due to learning and how much is due to the signal the degree sends that we got into (and graduated from) a good place.  So signaling is easy to spot (the brassy guys pictured may be at the extreme), but how can we know it when we are engaged in behavior that is not signaling? Are there situations when there is no one around to impress?

Surveillance from mounted cameras (put there by private or public security people) as well as from an uncountable number of smart phones are here to stay.  Forget about figuring out a way not to signal.   

You know who you are

There has been considerable research on how commuting travel times respond to metropolitan area size.  Alex Anas concluded that, “The data on the largest U.S. MSAs show that commute times increase only slightly with city size: the elasticity of the average commute with respect to the number of workers is about 0.1 in 1990 and 2000” (p. 146 of Brooks, Donaghy, Knaap). This means that a large city with 2-million workers and an average commute time of 25 minutes (one-way), can add 200,000 workers and the average trip time goes up by 15 seconds.

This is good evidence for the co-location of employers and employees.  No "traffic doomsday".  Of all the data sources on journey to work, NHTS provides disaggregate data so that metro area means as well as variances can be computed.  In 2009, across the set of large U.S. MSAs, the correlation between area mean and variance was 0.82.  This means that variances, likewise, are only moderately sensitive to MSA population.  But variances are more sensitive to outlier values than means.  This one simple finding adds to the strength of the co-location hypothesis.

People are not stupid. They (employers and employees) do what they can to accommodate to the challenges of big-city life.  But traffic doomsday has constituents.  You know who you are.  Hint.

Truth-seekers?

"Why can't we all get along?" Arnold Kling has an interesting response via his three-axis (ones favored by progressives, conservatives, libertarians) model which he has cited at various times on his blog.  He elaborates in his e-book, which strikes me as including an amazingly high ratio of insights per dollar (or reading time) spent.  He adds that life would be better if we understood where adversaries are coming from?  Give them a break by trying to understand their favored axis.  He admits that this is a tall order because confirmation bias runs deep; we are more likely to be status-seekers within our respective tribes than truth-seekers.

Stalin, Che, Mao, the Castro brothers, Hugo Chavez and others (Kim Jong-un?) have had their defenders among affluent and intelligent Westerners.  Fellow travelers seemingly emphasize the oppressor-oppressed axis (the progressives; the other two axes are civilization-barbarism, favored by conservatives and freedom-coercion emphasized by libertarians).

Taking sides is the easy part.  Thinking about what those we disagree with are up to is the harder part.

Be more like Europe?

Big Data certainly changes our lives; it is a triviality that "we ain't seen nothin' yet." Auto use around the world grows every year. As it does, so does the use of the various "apps" that track and record traffic conditions.  The likes of Tomtom are on the rise with data gathered from 80 million probes in 31 countries. Those of us who are trying to learn about cities around the world get a new data source. Tomtom's recent report includes road congestion information for 133 major cities on four continents.

For each city, we get the percent of traffic flowing at less than free-flow speeds, reported five ways (overall, AM peak, PM peak, highways and non-highways).  Here are the five proportions for the average of the 59 European cities: 24, 48, 50, 17, 31.  Here are the five comparables for the 59 North American cities (53 U.S. and 6 Canadian): 18, 30, 45, 11, 27.  Traffic conditions are better in the auto-oriented cities.  That's where there are fewer congestion externalities.

"Balance"

Readers of this blog know that I have been flogging certain ideas for many years. There is no "traffic doomsday" because people are not stupid lemmings.  In spite of the policy failure of too few road pricing projects (and pockets of congestion), overall traffic in U.S. cities is not that bad.  The 2009 NHTS big-city 24-hour averages for solo auto one way journey-to-work were 28 minutes (New York metro area), 26 minutes (Los Angeles area), 27 minutes (Chicago area), etc.  The Atlanta metro area was the worst at 31 minutes.  The co-location of workers and their employers is in each sides' interest.

Wendell Cox pounces on urban data faster than any man alive and reports that U.S. Suburbs Approach Jobs-Housing Balance.  "Balance" is one of those unfortunate terms but it has made its way into the short list of urban planner's policy ambitions.  I understand that policies that get in the way of location choice can extend trip lengths, but short of challenging these, we can expect workers and employers to look after the commute. To be sure, both sides make complex trade-offs along the way; they have other worries and priorities. These can only be attended to by the individuals involved. The only policy worth considering is one that assures that policies do not get in the way.