Wednesday, September 30, 2009

Sex in the suburbs

Today's WSJ includes "The Next Youth-Magnet Cities". The piece reports the views of six experts who agree that Washington DC, Seattle, New York, Portland, Austin are the now the "hot" places where "cool" young people go (not the reporter's cliche).

Interestingly, in 2000-2008, all but New York had suburbs that outgrew the central city. As a group, the five suburbs outgrew the five central cities by about 2:1. (H/T Wendell Cox).

This does not detract from the story. Attractive suburbs and central cities complement each other. But the return-to-the-cities stories get lots of attention and perspective is useful.

Saturday, September 26, 2009

Highest and best use

This LA Times story indicates that a strip club near LAX is being torn down to be replaced by an airport parking lot. And in the WSJ piece re transit in LA in my earlier blog today, the report mentioned that Michael Dukakis takes the bus to LAX. If only there were more like him, the strip club might have survived.

Tax all foreigners living abroad

Monty Python once suggested "we tax all foreigners living abroad." Bob Nelson notes that this is exactly what Delaware's Robber Barons are doing. The Turnpike has few alternatives and most of its customers are from other states.

Those of us who advocate peak-load tolling should put on our public choice hats once in a while and consider that the tolling and spending would not be by well meaning technocrats, but rather by you-know-who.

Old story

Los Angeles will never be a transit town. Obvious to some, but others want to find out for themselves. First-hand experience is a pretty good teacher. Trouble is that planners and politicians continue to waste resources (read other people's money) in the vain pursuit.

Thursday, September 24, 2009

Not exactly

In the Sep 28 New Yorker, James Surowiecki writes: "When Barack Obama went to Wall Street last week,to make the case for meaningful financial regulation, he took well deserved shots at some of the villains of the financial crisis ... But to that list he could have added the credit rating agencies." And "... we need a divorce: the rating agencies shouldn't be government-sanctioned and government-protected instiutions ..." And "... last summer the SEC seriously considered enacting a series of proposals that would have gone some way toward uncoupling the rating agencies from the regulatory system. The plan fizzled, however, thanks in part to pressure from a surpirisng source: big investors."

In a fix like this, go to William of Ockham. The friar might have noted that the only true regulation is competition. Otherwise, we could be chasing our tails, as in the cited column.

I usually read Surowiecki in the New Yorker and enjoy him. But, like many other smart people, he continues to dream of enlightened regulators and is unable to square experience with the dream.

Wednesday, September 23, 2009

Good reading and good news

I thoroughly enjoyed reading Guy Sorman's Economics Does Not Lie. It is very readable and very smart. The author brings us up to date on the state of development economics as well as the status of various developing economies. The book can be enjoyed by any intelligent layman. You can even try giving it to the intellectuals on your gift list.

Institutions matter and a growing body of research elaborates this important idea. But I did not know that World Bank researchers had been at work defining and measuring intangible capital for the various countries.

This index will surely be refined over the years, but the fact that it is out there was a nice find for me.

Tuesday, September 22, 2009

Laugh or cry?

And they say that you can't make this stuff up. From Cafe Hayek.

Nor this. From today's WSJ.

Nor this. From Aid Watch.

You're not in Guatamala City, Dorothy. From the LA Times.

Will annual federal borrowing in 2019 equal annual interest owed by the Treasury? From Forbes.

Sunday, September 20, 2009

Success indeed

Taking a cue from Tom Sowell, I try to disuade students from talking about "solutions". There are only trade-offs. Second on the list of offenders is the easy use of "success". Today's NY Times includes "In Phoenix, Weekend Users Make Light Rail a Success".

Well, no. Just use the data in the article. $1.4 billion of capital costs, 33,000 riders per day and fares of $1.75 suggest $109.5 million of annual losses. Use 365 days (the story cites the many weekend users), 5 percent opportunity cost of capital, depreciate over 30 years. Add lowest-in-the-U.S. operating costs, San Diego's $1.15 per boarding. Fiddle with any of these and "success" is still far fetched.

Boosters love to cite non-rider benefits. $109.5 million a year is a very high hurdle.

Friday, September 18, 2009

Curve-benders and footprinters

We depend on market prices to inform us. But market prices are not omniscient and there has been a lively discussion on how to get the prices right when they are not. This is where it gets messy. Carbon taxes, if we ever get them, will be politicized. Domestic politics are not simple and international politics enter when an international commons is involved.

So we get "footprint" math. Today's WSJ has a nice piece on the some of the math involved: "Hate Calculus? Try Counting Cow Carbon". Yesterday's Financial Times included "If you can't measure your footprint, you can't shrink it"

Let's dream for a minute and pretend that policy makers do nothing. Would unplanned change be more benign than what they have cooking? Research on the Environmental Kuznets Curve is suggestive. Trouble is that "curve-bending" is now the new sport among politicians.

Thursday, September 17, 2009

More on September 2008

Here is a close-up of the financial meltdown of 2008: the New Yorker's "Eight Days: The battle to save the American financial system." (subscription required) Well written and dramatic. Alfred Hitchcock supposedly said that drama is life with the boring parts removed. No boring parts here. But the same old bogeyman about Bush-era laissez-faire.

A more serious discussion of regulatory failures during the Bush years (and before) is this by Arnold Kling. Kling makes various policy recommendations, but none of them are on anyone's agenda. Russ Roberts also speaks and seemingly evokes the New Yorker discussion of events: Don't look at what we say; look at what we do.

The good news is that we get really good drama. The bad news is that bad times breed bad policies. It would be nice if it were the other way.

Saturday, September 12, 2009

More on tracking the smarties

In my Sep 4 post, I said something about using PUMS data to address the question of whether the "creative" people gravitate to "high density" locations. This is a favorite theme of urban economists and many others.

The PUMS data are attractive because they report the education level of the migrants and many of the PUMS areas (PUMAs) are smaller than metro areas or counties. Average densities computed for large areas can mislead.

But colleague Sung-ho Ryu corrected me by noting that the sending PUMAs are spatial aggregations, so stick with the large sample (N=2077) of receiving PUMAs. I did say that I was late to the party.

So here we go again. In the 2006 survey, 83 percent did not report having moved, 3.5 percent moved within the same PUMA, and 13 percent moved to another PUMA. For the latter group, the correlation between the number of arrivals and the population density of the receiving area was 0.07, but for movers with a bachelor's degree, the correlation was 0.16, and for movers with an advanced degree, the correlation was 0.21. I'll stick to my story. Just population density (even for sub-metropolitan units) tells us little.

Friday, September 11, 2009

Profit is overhead?

There has been a bit of comment and reaction to the President's health care speech to the joint session of Congress. This morning's WSJ editorialized re some of the gaffes.

But I have seen no reaction to this:

Despite all this, the insurance companies and their allies don't like this idea. They argue that these private companies can't fairly compete with the government. And they'd be right if taxpayers were subsidizing this public insurance option. But they won't be. I have insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects. But by avoiding some of the overhead that gets eaten up at private companies by profits, excessive administrative costs and executive salaries, it could provide a good deal for consumers. It would also keep pressure on private insurers to keep their policies affordable and treat their customers better, the same way public colleges and universities provide additional choice and competition to students without in any way inhibiting a vibrant system of private colleges and universities.

Is profit a part of overhead? Why was there no outburst by anyone who has had an inkling of econ 101 -- or just business common sense? Why does stuff like this pass the lips of one who is constantly praised for his IQ and Ivy League education?

Monday, September 07, 2009


Driving the Built Environment: Going Compact has just been issued by the Transportation Research Board. You don't have to be a weatherman to figure out which way the wind is blowing. Although the committee-written report is laced with hedged language, the authors expect that more compact development is the way to go.

In a 180-page report that dwells on recommended policy choices, trade-offs are mentioned four times, but public transit is mentioned over 300 times. But what I found most interesting was the comparison of Phoenix to Atlanta. At least, these authors are not comparing Atlanta to Boston.

The report's (carefully hedged) comparison suggests that modern cities can grow at comparatively higher densities; Phoenix's new development is denser than Atlanta's (p110-111).

But the two pages that make the case say nothing about transit. Both places have comparatively low transit use, but Atlanta's is two times that of Phoenix -- 1.1% share of passenger-miles over 0.5%.

And Atlanta has one of the six U.S. passenger-rail systems that quality as heavy-rail. Its MARTA has been operating for almost 20 years.

Having cited the promise of rail transit hundreds of times throughout this report, the authors apparently overlooked it's part in making Atlanta the place that they single out as the one not to emulate.

Sunday, September 06, 2009

Spare the "vision"

"Map of the city" translates as Stadtplan in German. But can one have maps even when there are no plans? While there are many grand designs for cities (Daniel Burnham's 1909 Plan of Chicago shows up in many textbooks), there is also much of the "urban fabric" which comes about bottom-up. The interplay of bottom-up and top-down forces is discussed in this review of Anthony Flint's Wrestling with Moses, by Ed Glaeser (HT to Sandy Ikeda).

As my previous post suggests, when it comess to cities, statements like "size matters" or "density matters" are much too vague to be useful. The International Council of Shopping Centers reports that there are 102,000 shopping centers in the U.S. But there are many more small agglomerations of shops that do not rise to the level of a shopping center. There are also many places that can qualify as activity centers without being a shopping center.

Statements about "density" are meaningless unless the area considered is specified. This is why the report that "Los Angeles is more dense than New York" (true since 1990for the census bureau's urbanized areas) is so maddening to so many people. As the lens zooms in on both places, the picture changes dramatically. But these two (and all the other) vast urban areas are punctuated by an almost uncountable number of "centers" that come into being for the simple reason that all of us find social and economic benefit from various clustering opportunities. This suggests once again that open-endedness is essential. There can be no one grand vision for cities to guide city growth and development.

Friday, September 04, 2009

Tracking the smarties

Enter "urban economics" density, creativity, innovation in Google Scholar and you get quite a few papers, many of which report a statistical link between local population density and some measure of creativity or success. Many of the authors admit that their measure of population (or employment) density (at the metropolitan area level) is crude and possibly problematic. Many of these areas are counties or combinations of counties and the average U.S. county is over 1,000 square kilometers. Even if just the urbanized portions of these counties are studied, an average over such a large area can be very misleading. The state of small-area data is the bane of urban economics.

I am late to the party and have just been introduced to the recent PUMS data. These are interesting because many of the PUMS areas are smaller than counties. The file provide information on in- and out-migrants by education level. For the 2006 PUMS data, the most educated migrants are coded as MA+ (Masters degree or higher). One can rank PUMS areas with the most arrivals and the most departures of these highly educated folks. A propos the expectations of Richard Florida and others, I calculated the population densities of the the 100-top sending and the 100-top receiving areas. The correlation of receiving area density and inflow of highly educated is 0.277. The correlation of sending area density and outflow of highly educated is 0.225.

Most of us have been to Manhattan as well as to Silicon Valley. Each attracts large numbers of smart and creative people. Beyond that, they have little in common, least of all population density. That would be way too simple.