Saturday, October 31, 2009

Never easy being green

Everyone knows that social engineering is hard work. But look at this: "French Ideal of Bicycle-Sharing Meets Reality".

The thieves and opportunists are not moved by the plight of the polar bears or the shrinking ice caps.

But the good guys are not giving up. They are ready with their next move.

In an unsuccessful effort to stop vandalism, Paris began an advertising campaign this summer. Posters showed a cartoon Vélib’ being roughed up by a thug. The caption read: “It’s easy to beat up a Vélib’, it can’t defend itself. Vélib’ belongs to you, protect it!”

H/T Brad Hill

Thursday, October 29, 2009

More from the "You can't make this stuff up" dept.

From today's WSJ: "Politicians Butt In at Bailed-Out GM" Read more below. Setting the salaries of a few senior execs on Wall Street is nothing. Running one of the country's largest companies from Washington, now that's getting somewhere. Yes, a crisis is a terrible thing to waste if you are a politician looking for ways to expand influence and power.

The beauty of it is that GM will become another AMTRAK. Badly run, it will require ever more "support". GM will build "green" cars. It and AMTRAK will share the mission of reversing global warming.

Win-win unless you are just a taxpayer.

Montana Rep. Denny Rehberg was no fan of the $58 billion federal rescue of General Motors Co., saying he worried taxpayer money would be wasted and the restructuring process would be vulnerable to "political pressure." Now the lawmaker says it's his "patriotic duty" to wade into GM's affairs.

Along with Montana's two Democratic senators, the Republican congressman is battling to get GM to reinstate a contract with a Montana palladium mine nullified in bankruptcy court. "The simple fact is, when GM took federal dollars, they lost some of their autonomy," Mr. Rehberg says.

Montana Sen. Jon Tester, at a Stillwater Mine in Nye, Mont., is trying to protect the mine's GM contract.

Federal support for companies such as GM, Chrysler Group LLC and Bank of America Corp. has come with baggage: Companies in hock to Washington now have the equivalent of 535 new board members -- 100 U.S. senators and 435 House members.

Since the financial crisis broke, Congress has been acting like the board of USA Inc., invoking the infusion of taxpayer money to get banks to modify loans to constituents and to give more help to those in danger of foreclosure. Members have berated CEOs for their business practices and pushed for caps on executive pay. They have also pushed GM and Chrysler to reverse core decisions designed to cut costs, such as closing facilities and shuttering dealerships.

Richard Cummings Democratic Sen. Amy Klobuchar of Minnesota persuaded GM to rescind a closure order for a large dealership in Bloomington, Minn. In Tucson, Arizona Democratic Rep. Gabrielle Giffords did the same for Don Mackey, owner of a longstanding Cadillac dealership with 80 employees. Rep. Giffords argues it made sense, even for GM, to keep the Mackey dealership, which sold 750 cars last year. "All I did was to help get GM to focus on his case," she says.

Lawmakers say it's their obligation to guard the government's investments, ensure that bailed-out firms are working in the country's interests and protect their constituents.



Monday, October 26, 2009

I wonder

Were there serious policy errors that led to the current economic crisis? Or did people on Wall Street suddenly (ca 2004) become extraordinarily greedy? Listen to this.

Fun to read

The idea that "institutions matter" has been embraced by many economists and has garnered a bunch of Nobel prizes, including the most recent ones.

Does culture matter? Dumb question? Comparisons of the two Koreas, the two Germanies (until 1989), the various Chinas as well as Finland vs Estonia have been used to make the point that institutional differences are profound with respect to economic success even when culture is held constant.

Nevertheless, culture is a slippery idea. And it is not simple to isolate culture from institutions. But to think about this problem, look at Eric Jones' Cultures Merging: A Historical and Economic Critique of Culture. Then go back to see what Deepak Lal says about all this.

Clunkers and reformers

Last night's 60-minutes included a segment on Medicare fraud. The President's claim that Medicare has very low administrative costs had already been challenged, but last night's TV segment might get some "public option" fans to re-think this clunker.

One of the best analyses of where we are headed on health care "reform" was in yesterday's NY Times by Tyler Cowen ("How An Insurance Mandate Could Leave Many Worse Off").

The reformers are giving reform a bad name.

Friday, October 23, 2009

No joke

I always thought that Fox News' use of the "fair and balanced" moniker was a cute in-joke.

Yet, the current round of salary-setting by the administration is routinely explained with the same rhetoric.

Hubristic actions on Wall Street and in Washington DC combined in ways that ended up being a witches brew (tired of "perfect storm") which ended up being a financial crisis which ended up prompting an economic recession which ended up eliciting panicky bail-outs which ended up with third-party pay-setting which ended up with mock-serious "fair and balanced" explanations all around. But this time no tongue-in-cheek.


It's nice to be on this list. It's even nicer to stay on. So, remaining for a while is the project.

Wednesday, October 21, 2009


Here is one discussion of multipliers and what we know as the current experiment reveals itself.

There are two principles that are often skipped in these discussions. First, there are hypothetical multipliers that come out of macro-models and that require a ceteris paribus assumption. But the ex post evaluations of multiplier effects must relax the assumption and, therefore, require careful econometric work. The ex post findings can never match the theoretical multipliers. In fact, any expectation that they should suggests that someone ignored ceteris paribus.

Second, multiplier analyses ignore market adjustments and are only useful in the very short run. Suggesting that multiplier results hold over any longer period ignores markets. That would be a major omission.

These are two simple points and I wish they were made explicit in all of the current discussions (pre- and post-stimulus).

Monday, October 19, 2009


This morning's WSJ includes "5 Technologies That Could Change Everything." Yesterday;s LA Times included "He's light-years away from EU's bright idea ... Taking a dim view of the incandescent ban, a German scrambles to snag a lifetime bulb supply. He's not alone."

It's quite plausible that we will soon look back at today's Doomsday forecasts with the same bemusement that we attach to all the previous ones that now look so silly. But it's an old story. There is a steady demand for hand-wringing and a ready supply of policies that will soon be obsolete. The "green" policies that will be put in place in the developed countries will marginal (except on the cost side) and probably redundant and unnecessary. The developing countries will burn most of the coal. And for some years, they will use the power to fuel the cheap bulbs.

Julian Simon, wherever you are, are you laughing or crying?

Friday, October 16, 2009

Sin in the suburbs

Ken Orski nicely summarizes the debate over the Obama Administration's efforts to make the federal government a player in local "livability" land use-transportation planning. It is worth reading (below).

Sin taxes are supposed to raise revenues and reduce sin. Trouble is that it's very hard to get both results. Mostly, we get higher prices.

Most people like their cars and their single-family home lifestyle. This has irked planners and many other for years, but to no avail. So we get higher prices (the policy-induced "housing affordability crisis") and that's about it.

Politicians love junkets and they should take a very long one to inspect suburbanization and auto use in Europe. The policies they dream of implementing here have been in force there for years, but preferences usually trump policies. Most Europeans no longer live in the charming old city centers that tourists visit. As Bastiat keeps reminding us, some very important things are not immediately seen.

So what will come of the Administration's livability initiative? Think sin taxes.

The National Journal’s Transportation blog — a pretty accurate reflection of the concerns and preoccupations du jour of the transportation community— has recently featured a debate about "livability." "The Obama administration and leading congressional Democrats appear to be making the creation of ‘livable communities’... a central transportation policy goal," stated the introduction to the weekly blog. "Given this increasing focus on promoting livability, what role, if any, is appropriate for the federal government to play?"

Similar questions were framed at an October 13 seminar at the Brookings Institution on "Metropolitan Planning for Sustainable Growth" featuring the well-known urbanist Peter Calthorpe and a panel of local officials from around the country. The event announcement referred to the Obama Administration’s proposed new urban policy agenda that links transportation, housing and land use and asked "What is the federal role in this effort?"

Both events have focused attention on the Administration’s intent to increase the federal role in shaping local development patterns and influencing travel behavior. "Smart growth" planning and shifting more automobile travel to public transportation have been long-standing goals of progressive planners and assorted anti-sprawl activists, but these goals may now become a matter of federal policy under the Administration’s "livability" initiative. That initiative, whose full name is the "HUD-DOT-EPA Interagency Partnership for Sustainable Communities" is designed, in the words of the official announcement, "to help improve access to affordable housing, provide more transportation options, and lower transportation costs while protecting the environment in communities nationwide." The interagency partnership will coordinate federal housing, transportation and other infrastructure investments through a set of guiding "livability principles" and interagency agreements.

Predictably, opinion has split along familiar fault lines. Planners, environmentalists, champions of New Urbanism and smart growth advocates have welcomed the Administration initiative as a sign of its willingness to tackle the problem of sprawl, promote a wider range of transportation and housing choices, and encourage people to curb automobile use. The federal government must use the tools it has, coordinate its efforts and lead by example," wrote National Journal transportation blogger, Rep. Earl Blumenauer (D-OR).

Critics have focused on the "social engineering" and central planning nature of the "livability" initiative and its intrusiveness into people’s lives. Leading that charge have been three well-known and respected conservatives: columnist George Will; author and urban scholar Joel Kotkin; and Heritage Foundation’s Senior Research Fellow, Ron Utt.

In a May 18 Newsweek column, George Will mocked Transportation Secretary Ray LaHood as "Secretary of Behavior Modification." For many generations," Will wrote, "Americans by the scores of millions have been happily trading distance for space, living farther from their jobs in order to enjoy ample backyards and other aspects of low-density living. And long before climate change became another excuse for disparaging America’s ‘automobile culture,’ many liberal intellectuals were bothered by the automobile. It subverted their agenda of expanding government— meaning their supervision of other people’s lives. ... Today’s far-seeing and fastidious government, not content with designing the cars Americans drive and the light bulbs they use in their homes,...wants to say where their homes can be."

Joel Kotkin echoed these sentiments in an editorial in Politico: "Traditions governing land use that have existed since the beginning of the republic would be overturned," he warned, referring to the Livability initiative’s emphasis on denser housing patterns. "The preferred lifestyles of most Americans would come under siege." ("Smart Growth Must Not Ignore Drivers," September 14, 2009).

Ron Utt was equally suspicious of the Administration’s motives. "Recognizing that their efforts to demonize suburban living have failed to deter the millions of American families that still flock to the suburbs, Smart Growth advocates have now enlisted the federal government in their war against the suburbs, and the HUD-DOT-EPA partnership is the beginning of that effort," he wrote in a Heritage Foundation commentary (April 14, 2009).

Many aspects of the Livability initiative are commendable. Encouraging housing and retail activity in suburban communities to be more accessible on foot is certainly desirable, as is safe biking access to local schools. Promoting equitable, affordable housing in suburban communities is a worthy goal that has been widely accepted throughout the country. Expanding paratransit services in local communities for elderly residents is likewise a commendable and non-controversial objective. Reducing traffic congestion that prolongs commutes and chokes even smaller communities is an imperative that everybody can agree on.

But the debate has been needlessly polarized by some malapropos uttered by Transportation Secretary Ray LaHood. At a May 21 event at the National Press Club, LaHood was asked if the Administration’s Livability initiative might not be construed as an effort to "coerce" people out of their cars. The Secretary agreed with that interpretation, adding that "about everything we do around here is government intrusion in people’s lives." "I think we can change people’s behavior" he argued in the same forum. Those are not exactly words that would soothe the already aroused sensitivities of those who believe that government already intrudes too much into people’s lives

Another point of contention is the Administration’s efforts to couch its worthy intentions to revitalize depressed communities, facilitate access to jobs and offer more transportation options as a "Livability" initiative. To most people a "livable community" conjures up an image of a leafy neighborhood, good schools, low crime rates, a private back yard and the comfort and flexibility of personal transportation. It has little to do with "affordable housing," "infill development," or "densification." Nor does "livability" mean going the entire day "without having to get into your car," as the Secretary is alleged to have said.

Lately, there have been some efforts to tone down the government rhetoric. Administration sources we have talked to, concede that decisions about "quality growth" should not be centrally imposed but should be left in the hands of local officials, as speakers at the Brookings seminar and several National Journal transportation bloggers have urged. "Livability" principles, those officials agree, mean different things to different people and cannot be centrally defined or imposed. Other actions appear as mere internally-oriented bureaucratic initiatives. The HUD-DOT-EPA Partnership Agreement with its dense prose is, upon closer reading, a toothless instrument that even White House officials have trouble explaining. HUD’s proposed Office of Sustainable Communities, with its vague charter to "advance affordable, livable and sustainable living environments," has trouble getting congressionally authorized.

Above all, as Joel Kotkin points out, the majority of Americans live in a patchwork of towns and small suburban communities within large metropolitan regions. There are well over 65,000 general-purpose governments, many of them small enough to allow citizens to have a say in their governance. Overall, less than six percent of Americans use public transit, a percentage that has barely changed for decades, and almost 95 percent of Americans get around by car. To assume that the federal government, despite the growing concentration of power in Washington, could "coerce," "lure" or otherwise persuade people in these myriad communities that they should change how they choose to live and travel is a notion that thoughtful Administration officials we have talked to reject as both unreasonable and impractical.

Tuesday, October 13, 2009


Some weeks ago, the WSJ's wine critics wrote about all the bad stuff being shipped from Australia to the U.S.

These past days, we have been in Australia and tasted wines that are (here goes) divine. And I find that many of my favorites are not available at the web sites of U.S. retailers that I am familiar with.

Tyler Cowen cites the Alchian-Allen theorem in his wonderful new book. The theorem says that regions will export their best stuff first and over the longest distances. Apparently not true. I guess it's that ceteris paribus thing. Some partial equilibrium stories work badly in a general equilibrium world where competing wines from hundreds of regions compete for limited shelf space -- even in the age of internet shopping. That's life.

If you can get anything from Cape Mentelle, grab some.

Sunday, October 11, 2009

Contracts hung out to dry

Statists feast on the "market failure" idea. Trouble is that too few bother to be critical. "Externalities" are everywhere and allegations are sufficient to extend the police (or other) power of local (or other) government. "The environment" and "climate change" are special because they can be used to add sanctimony to the discussion.

Blame the teachers of economics? Note to self: Check popular textbook discussions of externalities and see if any nuance is included. Is there any discussion of thresholds that negative externalities must meet before voluntary contracts are trashed?

Today's NY Times includes this about private community clothesline bans voided -- in the name of you-guessed-it preventing some carbon emissions. Commercial dryers are becoming more energy efficient almost every year. But that's not the main point. Rather, rules adopted close to home should not be overridden by higher-level-government rules except when he case is clearly made. Otherwise, in the name of "saving energy", any contract can be voided by any legislature.

Wednesday, October 07, 2009

Another 800-pounder

All governments grow. But the details are always fascinating. In this piece, Fred Siegel and Dan Di Salvo write about the rise of public sector unions and their contribution to the problem. In all of the hand-wringing over state and local government budget problems, this part of the story has not gotten the attention it deserves.

Just as in yesterday's post, we keep bumping into 800-lb gorillas.

Tuesday, October 06, 2009

800-lb Fact

Becker-Posner blog about the Swiss health care system, its advantages and disadvantages as well as why it may not be a good fit in the U.S. They actually mention that the U.S. has a large underclass while Switzerland does not. Well, yes. But you're not supposed to mention that.

The historian Kenneth T. Jackson recently wrote: "Since World War II, America's northeastern and midwestern cities have been in both relative and absolute decline. Their once proud central business districts have typically slipped into retail and business irrelevance; their neighborhoods have lost their once dense networks of bakeries, shoe stores and pharmacies; and their streets have too often become dispiriting collections of broken, broken windows and broken lives. After dark, pedestrians retreat from the empty sidewalks, public housing projects come under the sway of gangs and drug dealers, and merchants lower graffiti-covered metal gates. Too often, no one is home." (Ballon and Jackson, 2007, p. 67).

We are in Perth where I will be talking to the AIUS. Perth is lovely. Why do we so much like exploring cities in (most) other countries? The carefree exploration of new cities is one of life's great pleasures. But you cannot do that in most American cities. You have to make damn sure of where you can and cannot go. As in walk or use public transit.

It's not just about health care. The 800-lb gorilla in the room is America's underclass problem and the welfare state's failure in doing anything meaningful about it . Job #1 is to admit it exists. Thank you, Becker-Posner.

Friday, October 02, 2009

Olympic interludes

The New Yorker's Jon Lee Anderson ("Gangland: Who controls the streets of Rio de Janeiro?") reports that Rio is "the top-ranked in the world for 'violent intentional deaths.'"

How will that work for the 2016 Olympics? Beijing got mixed results with efforts to dampen air quality problems. Los Angeles got better results with auto traffic in 1984. But in the first days of the '84 Olympics, an unexpected boost came from the locals staying away or staying home.

It's doubtful that Rio's gangs will also stay home. But the real point is that Olympic games are interludes. LA's road conditions are now about the same as in 1984, no better and no worse. Whatever LA or Beijing authorities did for the two weeks of the games, they could not duplicate it after the closing ceremonies.

But we all grasp for interludes. Look at the footage of cheering Brazilians.