Wednesday, June 28, 2006

Urban fantasies -- and facts

It is almost conventional wisdom these days that "people are moving back to the cities." Well, not exactly. Wendell Cox has assembled the 2000-2005 population growth data for the largest U.S. metros and most growth is overwhelmingly in the suburbs. And why not?

Garlic may do more to stop vampires in their tracks than the demographic facts do to stop the many commentators and journalists who are so easily confused by their own urban fantasies.

Monday, June 26, 2006

Thinking globally and acting locally

In today's WSJ, MIT's Richard S. Lindzen writes that "There is No 'Consensus' on Global Warming ... So what, then, is one to make of this alleged debate? I would suggest at least three points.

"First, nonscientists generally do not want to bother with understanding the science. Claims of consensus relieve policy types, environmental advocates and politicians of any need to do so. Such claims also serve to intimidate the public and even scientists - especially those outside the area of climate dynamics. Secondly, given that the question of human attribution largely cannot be resolved, its use in promoting visions of disaster constitutes nothing so much as a bait-and-switch scam. That is an inauspicious beginning to what Mr. Gore claims is not a political but a 'moral' crusade.

"Lastly, there is a clear attempt to establish truth not by scientific methods but by perpetual repetition. An earlier attempt at this was accompanied by tragedy. Perhaps Marx was right. This time around we have farce -- if we are lucky."

But we may not be so lucky. Today's LA Times reports that, "State lawmakers will consider a bill to address global warming with indstry mandates."

State mandates would have serious costs but no benefits. This is a classic Prisoner's Dilemma -- completely irrelevant in the world of posturing.

Friday, June 23, 2006

Best DVDs

In no particular order, here is my updated list of favorites from Netflix.
There is no accounting for taste and when I see my friends' list of favorites, I usually cannot believe my eyes.

De Tweeling (Holland)
Open Hearts (Denmark)
Cenizas del Paraiso (Spain)
Love Serenade (Australia)
Beg to Inform (U.S.)
To Live (China)
Walk on Water (Israel)
You can Count on Me (U.S.)
Divided We Fall (Czech Republic)
Under the Sun (Sweden)
Cinema Paradiso (Italy)
Il Postino (Italy)
Solas (Spain)
L'Auberge Espagnole (France)
Chaos (France)
Burnt by the Sun (Russia)
Lawless Heart (U.K.)
Mostly Martha (Germany)
In the Bedroom (U.S.)
Spellbound (U.S.)
Nowhere in Africa (Germany)
The Crime of Padre Amaro (Mexico)
The Housekeeper (France)
The Big Night (U.S.)
Shall We Dance? (Japan)
Jew-Boy Levi (Germany)
The Mystery of Rampo (Japan)
Together (China)
Dirty Pretty Things (U.K.)
East-West (France)
Russian Ark (Russia)
Man on the Train (France)
The Thief (Russia)
Swimming Pool (France)
Indochine (France)
Sex and Lucia (Spain)
The Barbarian Invasions (French Canada)
My Wife is an Actress (French)
Wannsee Konferenz (German)

Sunday, June 18, 2006

Sunday mystery

Today's NY Times Magazine includes "If It's Good For Philip Morris, Can It Be Good For Public Health?" It appears that big-tobacco execs want FDA regulation and the FDA's David Kessler, who badly wants to regulate, is suspicious.

The story notes, in passing, the recent rise "of about 100 small cigarette companies --with names like Liberty Brands and Virginia Brands -- that now undercut the big boys on price."

Could it be that writer Joe Nocera has missed the big story all through his very long cover story? No need to be suspicious; the big boys know a cartelization opportunity when they see one.

Heat islands

There was a global cooling consensus in the 1970s and there is now a global warming consensus. Available data for the last 12,000 years show that the Earth has gone through many of both as parts of continuous cycling.

The current controversy involves charges that the latest warming trend can be traced to our sins -- and that we had better reform. But most of the measurements are taken near cities. These are misleading beacuse cities are "heat islands".

And the heat islands are hottest in their centers and less so in their suburbs. One more reason to be wary of industrial policies that seek to reverse suburbanization and create strong city centers.

"Confessions of an 'Exx-Con'"
By ROBERT L. POLLOCK WSJ, June 17, 2006; Page A10

"Global-warming alarmists take it for granted that they have the 'scientific consensus' on their side. The truth is that their views can be as much an article of faith that avoids or elides basic facts.

"I was reminded of this recently after suggesting on our weekly television show -- The Journal Editorial Report on Fox News Channel -- that 'everyone agrees there has been some warming over the past century, but most of it happened before 1940.'

"'Not true,' declared a subsequent editorial in the New Republic magazine. 'The last three decades have seen the sharpest rise.' TNR suggested I was what they've dubbed an 'Exx-Con' -- that is, a conservative whose views on climate change are so unmoored from reality that they can only be explained by a slavish devotion to Exxon and other big oil firms.

"But it is TNR that's having trouble with the facts here. I'll grant that my off-the-cuff remarks could have been worded a bit more precisely. I probably should have said 'more than half' instead of 'most.' But that doesn't change the fact -- as the NASA charts nearby illustrate -- that the early 20th century saw a rise in global and U.S. temperature, followed by about three decades of declining or stable temperatures that global-warming alarmists have a hard time trying to explain. (Don't let the slope of the chart scare you either; we're looking at small variations here.)

"The relevant part of TNR's May 25 piece seems to be based on an innumerate May 16 attack on me at the far-left Web site Mediamatters said almost identically that 'the last three decades (1976-2005) have seen a sharper rise in global air temperature.' But rather than fess up to its source, TNR responded to my complaint with the pretense of assigning a fact-checker to the case before deciding there would be no correction.

"The Mediamatters attack suggests I'm wrong because the difference between the coldest early-20th-century year and the warmest mid-century year is very slightly smaller that the difference between 1976 and 2005. But if the issue is by what date 'most' of the warming occurred, there are three relevant data points, not four -- the 1970s trough doesn't matter. And the difference between 1907 (the coldest year) and 1944 (the warmest mid-century) is .59 degrees Celsius, while the difference between 1944 and 2005 is .42 degrees. "Most" of the warming that has taken place over the last century had indeed occurred by about 1940.

"One could leave it at that. But I want to avoid the other mistake my critics make, which is thinking that long-term temperature trends should be measured by the difference between single, and possibly anomalous, years. That's why the NASA graphs contain a line representing the five-year rolling average. Looking at things this way still supports my point, admittedly a bit less so.

"In any case, the graph at issue presents a challenge to those who claim that the recent warming trend is primarily caused by carbon dioxide and is not part of a natural rebound from a cool 19th century. The early 20th century saw a rise in temperature rise at least as great. And far, far more CO2 has been pumped into the atmosphere in the years following 1940 than the years before.

"What's more, there's a debate over whether recent global data is biased upward by the fact that many measuring stations are located in or near cities around the world that have grown rapidly over the past half-century. Anyone who's ever crossed the George Washington Bridge can understand the concept of the urban 'heat island' effect.

"In that regard, a recent study of Greenland -- where allegedly melting glaciers are allegedly threatening a catastrophic sea-level rise -- published in Geophysical Research Letters is fascinating. It finds that Greenland is no warmer today than it was in the 1920s, and that 'although there has been a considerable temperature increase during the last decade (1995-2005) a similar increase occurred during the early part of the 20th century (1920-1930) when carbon dioxide or other greenhouse gases could not be a cause.' The U.S. temperature graph shows much the same. The U.S. inarguably produces more reliable data than most other countries, or the sparsely sampled oceans that cover most of the globe, and we've seen very little warming since the 1930s.

"Finally, a word about motive. Why wouldn't I want to be on the safe side and embrace the Kyoto Protocol? Not because of an attachment to oil companies, but because meaningful CO2 cutbacks would entail drastic reductions in energy use by billions of people in places like China and India who are finally getting a chance at a better life. The New Republic doesn't seem to have addressed such consequences in any serious way. Attempting to wave someone out of the argument by calling them an Exx-con is much easier than confronting the difficult facts beneath the global warming debate."

Tuesday, June 13, 2006

No learning curve in sight

Americans like to hopscotch around European capitals to sample cozy city centers. That part of the continent is now our Disneyland-for-adults.

Some tourists return with the idea that we can reproduce such places here. And a few sign on to the idea that U.S. cities' traditional downtowns can and should be "revitalized."

The 800-lb. gorrilla in the story is the city-backed industrial policy that feeds on jobs programs and other hand-outs to favored groups.

The front page of today's LA Times includes "L.A. Convention Center to Get Major Hotel Tower ... The complex would give dowtown the magnet for business conferences it has lacked for year ..."

One has to get 90% of the way through about forty inches of breathless prose to find that, "[t]he project has attracted controversy because nearly half the cost will be financed by city subsidies and loans."

This is all standard. L.A.'s downtown has been trembling on the brink of revitalization for half a century and taxpayers have regularly been asked to shell out mega-bucks to redeem the long list of previous mega-project fiascos.

Even when we visit the new downtown Disney Concert Hall, most of us scurry home at the end of the performance rather than stick around to sample the charms of downtown L.A.

Among offialdom and its booster club, there is no learning curve to speak of.

Sunday, June 11, 2006

How bad things are

I thought that I had reason to worry when the NY Times Magazine's "Money Issue" arrived this morning, including Niall Ferguson's "Reasons to Worry ... Why You Could Be Excused for Feeling a Little Uneasy About the Collapse of Household Savings, the Rise in Home-Mortgage Debt, a Large and Growing Trade Deficit and the Fact that Asian Countries Hold So Many Treasuries"

The popular discourse thrives on unnormalized comparisons. that sensationalize -- and in the process obscure. Ferguson tries to have it both ways in his piece.

This is why The Skeptical Economist runs, as a regular feature, its debt-to-GDP ratio -- which has been trending down of late.

And, yes, it moves much too slowly to be on any electronic billboard's "debt clock."

Thursday, June 08, 2006

Timely op-ed

In the June 19 Forbes, Frederic Sautet of GMU's Mercatus Center writes "Don't Tempt Me ... States and cities lure businesses with promises of tax abatements and other goodies. They'd do better with broad-based tax cuts." This is common sense. Yet, it is like being serious about a simplified tax code: in the event, what would politicians do all day?

Mine is a serious comment. The Genie is out of the bottle. They have tasted the heroin.
Bad policy choices bite but in the long run which few politicians care about. In the short term, they spread the goodies and reap the personal rewards. In that context, essays like Sautet's are a step forward.

Teach economics to journalists and teach op-ed writing to economists.

Tuesday, June 06, 2006

Holy grail postponed

As I write this, financial markets are in a deep funck because "stagflationary" (the worst kind) of expectations are in the air.

How convenient, then that The Economist writes about James Tetlock's upcoming "Giving Content to Investor Sentment", forthcoming in the Journal of Finance. See Economic Focus: In a sentimental mood ... What bulls and bears can learn from the hacks. (Link includes link to PDF version of the paper.)

Will this cause us to re-think random walks? Tetlock reports the extent to which we measure market sentiment by word-counts (and the use of taxonomies) with columns like the daily "Abreast of the Market" in the WSJ.

But "[t]he power of the financial press, whatever, its source is fleeting. The pall that a column can cast over the stockmarket soon lifts ... the damage is reversed within five days. Prices rebound, and cool-headed arbitrageurs earn their just reward for taking shares off skittish investors' hands."

Getting ahead of the random walk is investors' holy grail. My reading of Tetlock's paper is that he has not actually found the holy grail. Stay tuned. Buy and hold.

Sunday, June 04, 2006

"Bigger social concerns"

What causes countries to prosper and grow? What causes cities to prosper and grow?

With respect to nations, we know that better institutions poise human capital to be productive. With respect to cities, we know that institutions as well as the spatial arrangement of human capital matter most.

The latter prompts agglomeration economies but their best spatial expression is not simple and depends on history. There are agglomeration economies in Manhattan as well as in Silicon Valley -- although no one would seriously advocate building the former from scratch today.

Today's NY Times includes Nicolai Ourousoff's "Skyline For Sale ... Frank Gehry and Bruce Ratner are proving how much influence architects have with developers and how troublingly little."

The piece concerns the proposed Atlantic Yards project for Brooklyn and allows Ourousoff to indulge in stale ruminations about art vs. Mammon. The author worries about the architect making a "pact with the Devil" by helping the developer to maximize profits(!). Ourousoff also worries that the powers that be in NYC are seemingly marginalized -- or their high-minded "bigger social concerns" have been marginalized.

This is silly. NYC government is nothing but a collection of interest groups who are very much involved in the process -- for better or worse.

The question unasked remains how the project impacts what matters, local institutions and the spatial arrangements of human capital. Nothing that we know compels optimism. Politicized mega-projects usually pull us in the wrong directions.

Saturday, June 03, 2006

Unintended self-parody, NYC chapter

It's easy to be a lazy blogger when stuff like this comes along.

From today's NYT:

"Delusions of the Rich and Rent-Controlled"


"Who knows what evil lurks in the soul of a New York tenant? Nora Ephron knows — sort of."

"She has broken the code of silence of Manhattan's most exclusive aristocracy. She became the crème de la crème of the city's rent-regulated tenants by bribing her way into an eight-room apartment for $1,500 a month at the Apthorp, the palatial building at Broadway and West 79th Street.

"Her expulsion from rent-control paradise, told in the current New Yorker, isn't exactly a heartbreaking story. But it gives a rare inside look at the rentocracy, the system allowing affluent New Yorkers to pay below-market rents and pass along the apartments to their children.

"Ephron is a smart, funny writer who now acknowledges the injustice of the system. But during her days in the Apthorp she was indignant when a new law stripped away her rent protection because her household income was more than $250,000 per year. She couldn't imagine anyone would dare charge her what the apartment became worth: $10,000 per month.

"'I was a character in a story about mass delusion and the madness of crowds,' she writes. 'I was, in short, completely nuts.'

"She was also, in short, utterly typical of her class. I can't claim to have reached her social heights, but I did live in regulated apartments for 17 years, and I'm still amazed at the self-delusion that prevailed.

"I spent long dinners hearing rentocrats earnestly explain that while the free market may work for the rest of apartments in America, rents must be regulated in Manhattan because it is an island with a limited supply of housing. (If an out-of-towner suggested to these Manhattan theorists that the rent they charged for their vacation homes in Nantucket should also be regulated, they would explain that Nantucket is a different kind of island.)

"In her article, Ephron complains that the law deregulating her apartment allowed landlords to be 'utterly capricious' in charging her 'fair-market value' for her eight rooms.

"This sounds odd coming from a Hollywood director — was Ephron any less capricious in charging whatever she could get for 'Sleepless in Seattle'? — but it's the rentocrat, not the director, talking here.

"Like European nobles in crumbling castles, rentocrats are above money grubbing. They deserve their homes because of their longevity and their virtues. They compare rent control to Fulbright scholarships — a stipend wisely provided to worthy intellectuals and artists. They will announce, with a straight face, that they're entitled to keep their apartments because of the extensive "emotional investment" they have made in the buildings.

"They scorn tacky landlords obsessed with getting higher rents so they can pay for nonemotional investments like furnaces. Ephron writes witheringly about the beehive hairdo and pink silk suits of the building manager, a "frightening" woman — and a resident of New Jersey. The Apthorp tenants were appalled at the landlords' efforts to renovate the property — how bourgeois! — so they could get permission to charge higher rents.

"The Apthorp tenants did consent to some profiteering of their own by charging illicit "key money," like the $24,000 that Ephron paid to the previous tenant in order to get her apartment. But what was acceptable for tenants became a "crime," as Ephron tells it, when one of the landlords started taking a cut of the action. Why should he get anything? It's only his building.

"Now that she's left the Apthorp and become the happy owner of her own apartment, Ephron ascribes her former madness to being so deliriously in love with her old home that she couldn't imagine leaving it. But I can't buy the love diagnosis. As a recovering rentocrat, I think our madness has more to do with guilt.

"No matter how much you love your rent-stabilized apartment, no matter how smug you feel bragging to your friends about your deal, in your heart you know it's not fair you're paying so little. It's like buying stolen goods: you can revel in the low price, but you know it comes at someone else's expense.

"And you know exactly who that someone is. You're living on his property. You're a squatter, but you don't want to admit it. So you tell yourself it's not really his property anyway, and you're more worthy of it than he is, and you couldn't survive anywhere else, and anyway this is all about something far more profound than money. But it's not."