Wednesday, August 30, 2006


A staple of 1980s hand-wringing was "manpower planning". That seems to have waned even though there are still occasional stories from the genre that make the news. This morning's WSJ includes: "Oil-Rich Calgary Finds Boomtimes have a Downside ... A Hot Real Estate Market Suffers Big Labor Shortage; Office Vacancies Near Zero." It makes good copy but most people understand that labor markets, if left alone, funnel labor to its highest and best uses.

Seeming "imbalances" in land use and transportation also get top billing. Yesterday's L.A. Times included: "L.A., O.C. Traffic Patterns to Switch ... Orange County has long had more outgoing commuters. Within 20 years, that's expected to reverse as jobs multiply ..."

The second article cites the concerns of local planners and politicians who have been chasing the "job-housing balance" chimera for years.

No human has an idea of what the proper "balance" would be (at what level of geography, at what skill level, how to balance against non-job draws, etc.); if they somehow did, what would they/could they do with the knowledge?

Our planners and politicians refuse to price road access. As a result there is road traffic ("gridlock") that they want to "solve" by somehow manipulating land and housing markets. It is pure nonsense but, again, no joke because their interventions stymie land and housing markets -- creating another "crisis" to "solve", the "housing affordability" problem.

Monday, August 28, 2006

PBS discovers Roger Rabbit

TV is a wasteland and the sanctimonious pledge breaks that PBS-affiliated stations like to run repeat the point endlessly to push the idea that their product is much better and worthy of support -- with donations as well as tax dollars. Compelling the unwashed to support "good causes" is, of course, the hat trick of the elites.

Tonight, on PBS' "History Detectives," the high-minded reached for Roger Rabbit to evoke the idea the we no longer use streetcars because of corporate conspiracies.

This is dumb (and weird) and has been shot down many times, first by economic historian George Hilton, (in 1976!) and many times since then.

It seems that the high-minded can be astonishingly closed-minded when venting their hatred for the automobile and its many fans. But cars are not just the staple of NASCAR-nation; BMWs and Volvos (and SUVs) and other fine cars can be found in the parking lots of better wine stores and organic food stores everywhere.

Saturday, August 26, 2006

Policy trades

Today's WSJ includes, "In Tony Monterey County, Slums and a Land War ... Environmentalists fight to preserve scenic beauty while immigrants cram into housing and garages ... Who will pick the vegetables? ... Monterey County is torn by competing priorities. On one side are farmers, developers and immigrant advocates who want to see more housing built. On the other are environmentalists and residents, including those in the upscale coastal towns who want to preserve open space and their quality of life. As the two camps fail to reach a middle gound, low-income immigrants have borne most of the fallout: limited housing with sky-high prices."

It is the old story. The high-minded hector Wal-Mart and others about low wages but, at the same time, work hard to block development if it threatens to infringe on their own life styles. In the bargain, they also get to feel good about themselves as the protectors of the environment.

At the time of the NAFTA debate, many Americans pressed for assurances that our labor and environmental standards would be extended south of the border. A quid pro quo might have been Mexican insistence that Americans do something about their land use practices.

Wednesday, August 23, 2006

Gloom fetish

Virginia Postrel writes about "The American Standard of Whining ... Supposedly only the rich are living better, while everybody else stagnates or falls behind. But if so, who is buying all those flat screens at Best Buy?"

She even quotes Adam Smith, who noted back in 1776, "A continued Series of Prosperity would not give us near so much pleasure in the recital as an epic poem or a tragedy which make but one continued Series of Unhappy Events."

At a time when the great middle class encompasses a larger proportion of the population than ever, we still hear all the talk about "the rich" and "the poor". Most of us are neither, but the romance of class struggle is just too good to put aside. Perhaps so many have most of their intellectual capital tied up in such thinking that they would they be muted without it.

Unheard of material wealth and longevity just don't cut it. They do not, after all, contribute to greater happiness.

Small wonder. We cherish our gloom.

Monday, August 21, 2006

Managed business cycles

The Economist of Aug. 19 includes "The uses of adversity: Why some people think that a recession is good for America."

It is the old story. There will be business cycles because investors and others are just human and will, on occasion, plan imperfectly. The good news is that markets correct and life goes on -- mostly to the good. If left alone.

But most economists and many others are so sure that they so thoroughly understand all of the forces involved that they seriously embrace the idea of managing the cycle. But is the cure worse than the disease? When has there ever been an engineered "soft landing?" Or how many have there been? The answers range from very few to none. Yes, Great Depression-type policy debacles have been avoided of late. But why are we so sure that the policy-facilitated business cycles that we now have are better than what we would have without the help?

Perhaps the only answer is that Congress is inevitable and the consequences of its actions can be costly. With luck, central bankers can lean the other way so that policy-induced cycles are not as disastrous as they otherwise might be.

Wednesday, August 16, 2006

With friends like these ...

Big-city leaders believe in industrial policies and have economic development departments and staff and budgets and policies to implement them. Sometimes they even have enough money (as in Chicago) to fund studies by academics wedded to the idea that new businesses must somehow be screened in terms of how much they might undermine existing sellers. (Others of us think that competition is a good thing.)

It gets even crazier when job-destruction policies are sponsored by the same well-meaning politicos. Today's WSJ includes a Chicago update.

"Big Box Rebellion," August 16, 2006; Page A10

"Well, that didn't take long. Just as Mayor Richard Daley and these columns predicted, the law recently passed by Chicago's City Council requiring a super-minimum wage is driving big retailers out of the city.

"Target was the first big chain to react, recently cancelling plans to open a new superstore in a run-down area on the city's North side. Only a few months ago the project was hailed by city leaders as an anchor for redeveloping that depressed neighborhood. Now it gets to stay depressed. Wal-Mart has also announced that its plans to build 20 new stores in the city over the next five years are "on hold" until the wage issue is resolved.

"This isn't what the politicians said would happen when they mandated that certain mostly non-union 'big-box' retailers pay a minimum of $13 in wage and health benefits by 2010, or more than two-and-a-half times the national minimum wage. 'This is a great day for working men and women of Chicago,' said Alderman Joseph Moore, who sponsored the ordinance but clearly doesn't think very far ahead, if he thinks at all. The Council was warned that stores would flee to the suburbs or not be built. But instead it heeded such activists as Annette Bernhardt, chief economist at New York University Law School, who claimed that 'We're very confident that retailers want and need to be in Chicago.' Whoops.

"This liberal red-lining may yet be overcome by common sense. Mayor Daley seems intent on vetoing the bill, which he says would result in higher property taxes to compensate for lost sales-tax revenue once stores leave. Alderman Shirley Coleman voted for the law but has since changed her mind now that a Wal-Mart in her district may never be built. At least three other aldermen who voted for the measure are also reportedly now open to giving Mr. Daley the votes he needs to sustain his veto.

"The entire 'living-wage' movement is the latest product of upper-income politicians who want to stick it to non-union companies in the name of helping the poor. But the working poor lose twice in Chicago: first, in lost retail jobs and then in less access to low-cost goods. Alderman Carrie Austin, who represents the area where the Target store was supposed to locate, puts it this way: 'My colleagues are saying, 'Don't worry they [the big box retailers] will come.' Well, mine just left.'"

Monday, August 14, 2006

Wine, status and babies

Most of us work hard for extra material gain but social scientists have now joined forces with those philosophers who have long been warning us that "money cannot buy happiness." Those of the male perusasion can argue (in their own defense) that females are attracted to the things that money can buy and, therefore, acquisition by males is simply part of the evolution-bred procreation dance. What, then, explains acquisition by hard-working females? I have no clue but and R-squared near 0.5 is not so bad (in some precincts).

Replace the idea of money (and baubles) with the idea of status (and baubles) and things get much more interesting. Consumption-based analysis is usually safer than income-based analysis because of all of the obvious measurement problems eased.

Last Sunday's NY Times included "In Vino Veritas? Wine Ratings Might Not Pass the Sobriety Test ... " It turns out that an 89 vs. a 90 (on a 50-100 rating by the Wine Spectator) works out to a huge difference in terms of sales. But, how many of us can tell an 89 from a 90?

Were there a five-point scale, many of us could tell the As from the Ds and Fs, and occasionally from the Bs and Cs. But why are we going nusto over a 90 over an 89?

It must be the status-thing. And procreation and all that.

Thursday, August 10, 2006

Costs of pieties

Political correctness rules and any hint of "profiling" is out of the question. But all choices (including liberal pieties) have costs. In this case, the screening all airline passengers for all personal belongings all the time will be very messy, to say the least. Bob Poole has been arguing this for some year.

But this time, the costs will not be hidden costs. We know that.

Tuesday, August 08, 2006

An idea whose time has come

Robert Nelson has documented the current migration into private communities which now house 55-million Americans. Governance is by homeowners associations (HOAs) and markets are vetting the trade-offs of property rights protections vs rights losses that most property owners look for. The fly-in-the-ointment is an oldie: the problems of democracy are well documented and are real at all levels of government, whether it be federal, state, local or private.

This is why Spencer MacCallum has predicted that HOAs are just a waystation and better forms of governance will replace them. He suggests the hotel as his model, where governance is by contract rather than by democracy.

This is now unfolding. The reports, "A High-Priced Sliver of Hotel Luxury ... NOT everyone can afford a posh second home in NY city, but an increasing number of people may soon be able to own at least part of one, thanks to the emergence of time-share properties in urban areas. Once found exclsively in resort areas, time shares are now steadily expanding into big cities. ..."

Thanks to Hardy Wronske for the pointer.

Sunday, August 06, 2006

Vertical sprawl

"Urban sprawl" is vague and used to score rhetorical points. Auto-oriented development is much clearer. So now the NY Times introduces "vertical sprawl" in "Cities Grow Up, And Some See Sprawl."

The trouble with the new discussion is that no one has a clue as to which settlement densities are either "too high" or "too low" at a multitude of sites -- for a multitude of time periods. There is no science here. This is why we have land markets.

Strangely, however, the idea of land markets is never acknowledged and industrial policy is presumed. This introduces politics and conflict and rhetoric. It provides fodder for oceans of (seemingly) learned discussion.
Progress would involve moving away from conflict and politics by expanding the opportunities for exchange. Even externalities management is now widely done via tradeable and marketable rights.

Markets are exotic (and vaguely sinister) in the mindset of the best and brightest. And it is much worse when it comes to land markets.