Wednesday, July 29, 2009

Getting along in Washington DC

We have been taught that a crisis is a terrible thing to waste and we have seen large-scale special interest-pet-project-funding in the name of a all sorts of greater good.

Alan Pisarki now reports on the Urban Land Institute's just released "Moving Cooler" report. He wonders about the report's objectivity and sees it as just one more anti-auto and anti-suburban-development tome.

But that brings up the question of why the trade group that speaks for real estate developers has gone to these lenths to openly embrace the "green" agenda. Just plain Washington politics? The well known tactic of established suppliers using new regulations to keep out upstarts? Beltway kool-aid? A dash of each?

Some of us are too distant from crisis central to know the answer.

Tuesday, July 28, 2009

Another modest health care proposal

Congress' approval ratings are low but incumbents keep being re-elected. School voucher plans are often defeated because voters may find fault with how public schools are run, but they happen to like their local neighborhood school.

Now John Lott reports that most Americans like their own health care but have concerns over the U.S. health care "system". Read the paper for many other tidbits. Here is one:

... only 2.3 percent of Americans are both uninsured and very dissatisfied with the
health care they receive ...

The plot thickens.

Prof Charles Lave once calculated that giving all car-less Americans a small auto would cost less than what we spend subsidizing public transit. Would it also be cheapest to offer all of the uninsured-and-very-dissatisfied all-expense-paid travel to Canada for health care on a referral basis? The large number of Americans who like what they have get to keep it. Others would have the option of Canadian care straight from the source.

Monday, July 27, 2009

Let land markets function

This is not unintended self-parody, but it looks that way. There is now a fight over whether to "save" the 1960s era Century Plaza hotel in Century City in West LA. Why? Because Ronald Reagan was a regular? I have been there a few times and the place has very little going for it.

People here have organized to preserve a car wash, many oldie diners and all sorts of other marginally interesting "landmarks". Some people have time on their hands and pile on when they can.

But abridging owners' property rights has a huge downside. Consider the ramifications. Cities fulfill their key economic functions when land use arrangements are allowed to emerge bottom-up. When places cease being economically viable (for whatever reason), they generate huge costs for many years. We have all seen too many cities and neighborhoods that have ceased being lively and viable, but which have entered very long term decline. We already have too many of these.


Some correspondents take me to task for putting down a building that has considerable merit in their eyes. What to do? The only way out is for the fans to raise the funds to purchase and preserve the place. Place money near mouth?

Friday, July 24, 2009

The biggest black swan of them all

It's a truism that once we overcome one threat, we are simply lined up for the next one. Cure cancer and more will live to experience coronary problems -- and vice versa. Most humans have moved beyond subsistence living, but (we hear all the time) they are not happy. There is, of course, a vast collection of commentary and advice on how achieve peace, wisdom, perspective. And it's always easier said than done. If our wiring was achieved over millions of years of natural selection, when just staying alive required all of our capacities, it make sense that the post-subsistence life has challenges we are not so well equipped to handle.

Today's WSJ includes Michio Kaku's "Jupiter Gets a Black Eye ... We live in the middle of a cosmic shooting gallery." Kaku notes that Jupiter received a similar hit just 15 years ago, but scientists thought that events like this will occur "once every few thousand years." In other words, there is good reason to believe that at any second, there could be a smack(!) that ends it all.

Most of us will never walk on the Moon, but spending more time peering into space may be the next best thing.

Tuesday, July 21, 2009


In a better world, I would get $1 every time some well meaning people lecture us on the benefits of bike commuting. This (however) is never mentioned.

Pedagogical change in Econ 101

I have no idea whether there is a sub-genre within the history of economic thought that looks at the evolution of Readings supplements over the years. Teachers of economics (especially intro) get these in the mail all the time, but find ways to part with them as they clean office shelves every few years. I have held on to the earliest one I ever found, Arleigh Hess, et al. Outside Readings in Economics (1951).

The latest in my small collection is Craig Newmark's Readings in Applied Microeconomics: The power of the market, which I am thoroughly enjoying.

What changes over the years? Obviously, the questions that engage economists as well as the tools and approaches that they use.

There are many ways to track these changes. But following the evolution of the Readings collections involves a market test: Which selections are thought by editors and publishers to matter most to those who want to fashion the best possible introduction to economic thinking?

And, in my view, it is much better to teach or learn the stuff in 2009 than in 1951.

Sunday, July 19, 2009

The mandates we have

In today's NY Times Magazine, Peter Singer argues "Why We Must Ration Health Care." Part of the article knocks down a straw man because "rationing" has been misunderstood and misapplied by some in the health care debates. In light of scarcity, ration we must. The only question is how. Singer recommends the Australian way. Adapting it to the US would include what he calls Medicare for All, but with the option of better coverage purchased on the open market by those who choose to opt out. Medicare for All would include rationing based on cost-benefit assessments using quality-adjusted life-years (QALY) as the guide.

Who can object? The National Conference of State Legislatures offers this tour of health care currently mandated among the 50 states. The mandates we have are a pretty good clue as to the mandates we will get with a Singer-type proposal. That's the problem.

Thursday, July 16, 2009

Over there

The way we do things in the U.S. gets a lot of attention (some grudging, some not) abroad and many Americans wonder why we can't be more like Europe. I suppose that a certain amount of cosmopolitanism is not bad.

Many Americans return from stays in Europe and wonder why our cities (and our public transport) cannot be more like theirs. Now we hear much the same sentiment when health care "reforms" are discussed.

But the comparisons have limited usefulness. Let's face it: our culture (which I like a lot) does not bring forth the same public sector as is found in many (not all) European countries.

This morning's LA Times includes

"Waxing philosophical on the London Underground ...
On the Piccadilly Line, drivers have been given manuals filled with authors' quotations from which they may recite, in hopes of breaking the monotony of riding the Tube ... On a sweltering summer's day, packed in with sweaty passengers indifferent to the merits of deodorant, does anyone on the London Underground really need reminding that 'Hell is other people, as Jean-Paul Sartre wrote?

Apparently so, according to a quirky new campaign to show that commuting and contemplation on the Tube don't have to be mutually exclusive activities.

Drivers and other staffers on the subway system's well-traveled Piccadilly Line have been given manuals of quotations from famous authors and philosophers that they can intone over their crackly intercoms whenever the mood strikes.

Instead of being instructed to "have a nice day" like their American counterparts, passengers here in the British capital may now hear gems like, "A throne is only a bench covered in velvet" (said Napoleon Bonaparte, who never had to fight for a seat on the Tube) and, "There is more to life than increasing its speed" (said Mohandas Gandhi, who was never stuck on a stalled train while trying to rush to a job interview).

The punchy proverbs aren't just food for thought, says Transport for London, the body that operates the Underground. They're also art.

For years, the transit agency has tried to broaden passengers' horizons on the Tube, which logs, on average, about 3 million customer journeys a day. The agency's Art on the Underground program installs artwork at various stations and commissions new drawings for the cover of its pocket subway map, which has a print run of 5 million every time the map is updated.

The idea of sprinkling people's journeys with pearls of wisdom sprang from the mind of Jeremy Deller, a prize-winning artist who generally avoids taking the Tube but felt it worth trying to enliven the experience of those who do. Londoners have an ardent love-hate relationship with the Underground, with the emphasis usually on the latter.

Deller despises the incessant stream of admonitions to "let passengers off the train first" and "please take your belongings with you."

"It's soul-destroying," he said. He initially proposed what might be called a piece of nonperformance art: a day of no Tube announcements at all.

I have no idea how long this London experiment will last. But I do know that this can never happen here. Some ways just simply belong over there.

Monday, July 13, 2009


The print version of this NY Times piece has a more descriptive headline. It is "8,000 Federal Forms, 10 Billion Hours, In Spite of Paperwork Reduction Efforts ... The federal bureaucracy is booming, especially in electronic form." Read it and go to the link to the OMB report.

We can be sure that to a man and to a woman, all politicians deplore this waste. But there is nothing they can do. Leviathan is like that.

Sunday, July 12, 2009

California dreams and IOUs

The LA Times' Patt Morrison recently interviewed Kevin Starr about his new book, Golden Dreams: California in an Age of Abundance, 1950-1963, which I have not yet read. I have read (and greatly enjoyed) Starr's other books.

In the interview, there is this exchange:

From a historian's viewpoint, is California manageable now?

In our public life, we're on the verge of being a failed state, and no state has failed in the history of this country. In Sacramento, this dysfunction, this end of politics -- the people in my book, the good old boys and girls, they may have stayed up late at the Hotel Senator and drunk Maker's Mark, and some of them may have consorted with loose women occasionally, but when it came down to it, they understood the art of the deal, they understood politics as the art of the possible.

I am just appalled by [what's going on now]. I think we're playing a game of brinkmanship that's very dangerous. Why is it 50 or 60 years ago we had the capacity to lay down the physical, psychological, cultural, public infrastructure of a global mega-state, and today we are on the verge of being Honduras?

This discussion is now standard. What is different now, in comparison to the good old days when politics worked better? (To be sure, today's LA Times includes a review of A Bright and Guilty Place: Murder, Corruption, and L.A.'s Scandalous Coming of Age.)

The political economy that I keep coming back to is Albert Hirschman's Exit, Voice and Loyalty discussion. Low voter turnout is now a fact of life. It's sybling is low levels of interest or due diligence. It is safe to say that most Californians pay more attention to their choice of next refrigerator (or fill in the blank) than to what their political representatives are up to. We call it "rational ignorance", which sums it up nicely.

Affluence is wonderful, but it has this problem. Unless we happen to be policy wonks (or interest group members), we pay ever less attention. Politicians have more wealth to play with as well as more freedom to mess up.

Is there a fix? No one knows whether the current crisis (or recurrent crises) can provide any sort of antidote.

Thursday, July 09, 2009

Beyond these borders

Today's WSJ contains this interesting piece about a hut glut in Guinea.

There are business cycles everywhere and we cannot imagine a world without them. Not all plans are fulfilled in this world. This is nothing new. What is new is the question over whether the cycles that result can be managed or ameliorated via politics. This is also where the arguments begin.

There is now a mountain of commentary on the recent housing boom, the ensuing hard landing and how that spread via the impact on credit markets. And much of this commentary is decidedly U.S.-centric. But there was a housing boom in many countries. I can imagine that U.S. policies and cycles have international impacts. But the most useful "unscrambling of the eggs" will be the one that looks at concurrent developments here and abroad.

Tuesday, July 07, 2009

Lofty and wrong

Today's NY Times includes "Pope Urges New World Economic Order" (hat tip to Michael T.). A lot of it is the standard fare that one gets from pulpits and other lofty platforms.

In the choice between profit-seeking with arms-length rules-of-the-game enforcement vs. profit-seeking with bear-hug-close regulation and supervision, anyone ought to be able to see the contrasts. But the choices are usually framed in other ways. In the popular discourse (including much of what passes for "business" news), we are confronted with choices between "pro-business" vs. "pro-labor" or vs. "pro-environment" or vs. "pro-consumer", etc. interests. "Pro-market" is too abstract and beyond the ken of many.

We get the predictable conclusion that high-minded regulators and "elected officials" (politicians) are needed (and available) to keep an eye on shady (or much worse) business people.

And where was the SEC when Madoff was doing business?

Monday, July 06, 2009

Increasing returns revolution requires land markets

The June, 2009, American Economic Review includes Paul Krugman's "The Increasing Returns Revolution in Trade and Geography". He recalls the jibe that (without the explicit modeling of increasing returns) "economists believed that agglomeration takes place because of agglomeration economies."

Once increasing returns can be modeled, all pecuniary externalities can be included. But urban land markets also internalize what we used to call "technological externalities", those that ocurred without any transacting.

But these too are internalized via the land market (if there is one). There are no unrealized externalities inside a shopping mall because the owner maximizes rents by arranging (and leasing) spaces such that externalities are realized in ways that maximize total rents. Well functioning land markets can realize the same outcome.

In other words, the "new" geography only works in the presence of well functioning land markets.

Wednesday, July 01, 2009

Uh-oh, bad news for stimulus optimists

Yestreday's WSJ included "Only the Employed Need Apply ... With unemployment at 9.4% and rising, it's a buyer's market for employers that are hiring. But many employers are bypassing the jobless to target those who are still working, reasoning that these survivors are the top performers."

Near the top of the disingenuous sweepstakes have been the stimulus advocates who live in a world where only the unemployed are hired when new government programs and projects swing into action. In other words, opportunity costs are zero -- as are any wage inflation effects.

Just as it costs government more than a dollar to spend a dollar, many of those dollars have less than a dollar's worth of impact on the demand side.