Friday, December 31, 2010

Bigger than we think

It may have been Robert Nelson who wrote that private communities are where most Americans want more governance. This makes sense. Most Americans have most of their wealth tied up in their home. And there are all sorts of commons problems associated with neighborhood quality and neighborhood change. Hence the demand for rules. The rules amount to rights vs. protections trade offs that the market for homes in private communities is supposed to vet.

But the new layer of governance brings on a new layer of politics, which is never simple. Add to that the wave of foreclosures. And add to that a very slow foreclosure process. "You can get away with living for free for two years ..." The quote is from this WSJ piece re the extra difficulties at a Florida condo association with 15 percent of the owners behind on their association fees. The report describes all of the neighbor-vs-neighbor acrimony that results. The housing mess is bigger than we think.

Tuesday, December 28, 2010

No unmixed blessings

Maps that plot obesity levels by state circulate occasionally. Here is one that suggests it is the "red" states or even the more rural states that have the biggest problem.

Other investigators have been loooking for ways to link "urban sprawl" to levels of obesity. Here is a prominent example.

But the democratization of luxury has been widely noted, as has obesity among poorer Americans. Gorging oneself was once a sign of wealth proudly displayed. Bill Bryson offers detailed descriptions of the meals consumed by wealthy Victorians.

So what do we know? Wealth does not guarantee happiness -- but it beats being poor. Affluence does not guarantee long life or a slim and healthy appearance -- but it beats hunger. Who ever expected unmixed blessings?

UPDATE

I just found this.

Friday, December 24, 2010

Scrooges

"I gave at the office," was the punchline to many old jokes. It alluded to a quick way to respond to all of the "asks" that come our way, especially at holiday time.

But Arthur Brooks' research suggests that it may have a new meaning. Surveys show that the most outspoken redistributionists tend to be the stingiest when it comes to their own charitable giving. They do their "giving" via the taxes that they work hard to levy on the general population.

Brooks mentions all this in an op-ed in today's WSJ:
The most recent year that a large, nonpartisan survey asked people about both redistributive beliefs and charitable giving was 1996. That year, the General Social Survey (GSS) found that those who were against higher levels of government redistribution privately gave four times as much money, on average, as people who were in favor of redistribution. This is not all church-related giving; they also gave about 3.5 times as much to nonreligious causes. Anti-redistributionists gave more even after correcting for differences in income, age, religion and education.
There are surely generous and well-meaning people among all political and philosophical persuasions, but if you had to make a random draw you would get a more giving person from the group that is less likely to compel others to do the giving.

Arnold Kling has suggested using public moneys to prompt matches. There would be less "giving" via coercion and a greater opportunity for those with strong preferences for various causes to put their money where their mouth is. I can think of a few government programs that I would love to contribute less to.

Tuesday, December 21, 2010

In Sunday's post re "A Physicist Solves the City", I emphasized the parts that I liked (re Jane Jacobs complexity). But there are now about a half-million links to the article and some objections to this:

After two years of analysis, West and Bettencourt discovered that all of these urban variables could be described by a few exquisitely simple equations. For example, if they know the population of a metropolitan area in a given country, they can estimate, with approximately 85 percent accuracy, its average income and the dimensions of its sewer system. These are the laws, they say, that automatically emerge whenever people “agglomerate,” cramming themselves into apartment buildings and subway cars. It doesn’t matter if the place is Manhattan or Manhattan, Kan.: the urban patterns remain the same.
Yes, that kind of thing is jarring (and is hard to square with Jacobs complexity). I come back to this piece because I have just refereed a paper re urban densities which elaborates the importance of distinguishing between daytime and night time densities. The authors use population and employment densities (for areas in a major city abroad) to illustrate.

That's a fair point and I always worry that the areas chosen for analysis are small enough to be meaningful. Consider that average citywide densities for the top-ten U.S. cities in 2000 varied from 26,401 pop. per square mile (New York) to 2,808 (San Antonio).

But we can get smaller-area data (as in 100 PUMS areas for the Los Angeles metro area). We can then create population density deciles. The densest LA PUMAs had an average population density of 26,738 and an employment density of 9,425. The correlation among the densities of the PUMAs in the decile was 0.95. Areas that housed 10 percent of the population provided 9% of the region's jobs.

The next decile of densest population housed another 9% of the region's jobs. In fact, each of the ten population deciles housed near 10% of the region's jobs (the range was 8.6% to 11.1%). To be sure, the correlations between the densities within each decile varied considerably, from 0.06 to 0.98.

What does it mean? Within and between neighborhoods there is glorious Jacobs complexity. It is way beyond anyone's ability to predict with 85% accuracy.

Monday, December 20, 2010

New toy

Google's Ngram Viewer is the toy of the week. My first try came up this way.

"Urban sprawl" was trumped by "global warming" which was overtaken by "climate change" in the early 1990s. "Sustainability" beat both but could not keep up with "sustainable".

But where will they go? What's next? Ngram futures markets?

MORE

Here are five ways that have been used to describe cities and urban life.

Sunday, December 19, 2010

"Solving" the cities

The NY Times Magazine's "A Physicist Solves the City" ends on this high note: "Cities can't be managed, and that's what keeps them so vibrant. They're just these insane masses of people, bumping into each other and maybe sharing an idea or two. It's the freedom of the city that keeps it alive."

Earlier in the piece (by Jonah Lehrer and citing the work of Geoffrey West), Jane Jacobs' insights are approvingly noted, as is West's description of life at his Santa Fe Institute, where smart folks are encouraged to seek "chance encounters."

Yes, it is all about the exchange of ideas (within and among our brains) and letting it all happen. As at the Santa Fe Institute, this means that we must find a way to stand back and let people find each other. But this is the hard part that is not addressed.

Instead the piece cites Pres Obama's White House Office of Urban Affairs and it's mission to develop a "policy agenda for urban America." Guess where that one will end up?

Saturday, December 18, 2010

Tough hurdle

"Balance" and "imbalance" usually have no clear meaning, but are widely used. The same applies to "over" or "under" anything, as in "overcrowded", "overpopulated", etc. This is more rhetoric than anything else. The same applies to assertions of "too much choice" or "too many varieties".

This week's Economist includes "The tyranny of choice: You choose" which re-hashes research re the psychic costs of too many choices. "The average American supermarket now carries 48,750 items ... more than five times the number in 1975.

What is the proper number? Now one knows. Inventory size and composition (on the shelf) or in the warehouse are some of the toughest problems retailers face. So the proper number of anything can only be found via (drum roll) market competition. The Economist's coverage manages to include this:
Many of these options have improved life immeasurably in the rich world, and to a lesser extent in poorer parts. They are testimony to human ingenuity and innovation. Free choice is the basis on which markets work, driving competition and generating economic growth. It is the cornerstone of liberal democracy. The 20th century bears the scars of too many failed experiments in which people had no choice. But amid all the dizzying possibilities, a nagging question lurks: is so much extra choice unambiguously a good thing?
But "unambiguously a good thing" takes in very little of the known (modern) world.

Just in time for the holidays

I never knew about the Danish idea that soaking both feet in vodka can cause drunkeness. Scientists have now debunked this approach to merriment. Here is the LA Times' coverage --along with other science updates.

Thursday, December 16, 2010

"Energy efficiency" again

David Owen writes about "The Efficiency Dilemma: What's the best way to use less energy?" (only abstract is not gated) in the current New Yorker. He notes that Stanley Jevons figured out many years ago that commodity-specific "efficiency" gains result in lower prices which prompt increased consumption. Many people simply call it the Law of Demand.

This suggests once more that "energy efficiency" is a dumb idea. It may make sense to engineers and even have some intuitive appeal, but all resources are scarce and markets are there to mediate the uncountable trade-offs that are prompted. Sounds simple, but it isn't.

There are enough problems when we discuss plain old efficiency (as in Pareto), but it gets crazy when we focus on efficiency with respect to just one commodity.

As long as we are unable or unwilling to price a commodity with substantial unpriced attributes, we will face the conundrum. But the climate change discussion involves a global commons. Serious global agreements re carbon taxes or cap-and-trade are unlikely. Local efforts (by individual states or cities) are mainly feel-good and (as Jevons reminded his readers) not likely to amount to anything.

The Owen piece is worth reading because he recounts how much extra energy his family has consumed over the years in the way of how many refrigerators and air conditioners they acquired over the years -- as energy (and other) prices fell. He also takes a stab at a verbal explanation of the general equilibrium effects.

Put "energy efficiency" into Google scholar and over 400,000 citations pop up. My own small sample showed that most of them take it seriously. "Sex" has only just over four times as many searches (in Google scholar).

Tuesday, December 14, 2010

Perceived densities?

In the current issue of Access, Eric Eidlin writes about "What Density Doesn't Tell Us About Sprawl."

Urban planners love to talk about density and sprawl. Trouble is that both are hard to define. Eidlin cites recent work on "perceived" density. But this is really a weighted average of densities across a metro area's small spatial units (he likes census tracts).

I have previously blogged about problems with the density idea. Creative people are apparently comfortable in low-density Silicon Valley as well as in high-density Manhattan. How can that be? It is the whole package that matters. I am not sure that the whole package can be assessed via the cited "perceived" density measure, but if analysts insist on looking for simple ways to characterize whole metropolitan areas, then let them. In this case, I worry that calculating the weighted averages of Silicon Valley vs Manhattan densities will not provide much in the way of new insight.

Sunday, December 12, 2010

First stump of a rump system

Plans for high-speed rail are moving in the predictable direction: all pork and no tangible benefits. The Economist has this update which includes Pres Obama's model of travel demand.
“IMAGINE,” Barack Obama instructed Americans last year, “boarding a train in the centre of a city. No racing to an airport and across a terminal, no delays, no sitting on the tarmac, no lost luggage, no taking off your shoes. Imagine whisking through towns at speeds over 100 miles an hour, walking only a few steps to public transportation, and ending up just blocks from your destination. Imagine what a great project that would be, to rebuild America.”
This has always been the way large bets have been placed with other people's money.

Keynesian stimulus boosters either deny the public choice concern that negative NPV projects will be funded or they do not care as long as funds are spent.

Wendell Cox notes that we will probably end up with a useless rump system. The Corcoran-to-Borden stump will be first at a cost of unknown billions. Even boosters admit to just under $5 billion. Readers are welcome to look up these places and/or find them on a map.

A nearly useless rump rail transit system is what LA got. Pieces have been running for just over 20 years, but ridership is still miniscule and traffic impacts are zero.

The really interesting thing is that very few people know or care.

UPDATE

The Los Angeles MTA has just announced further bus service cutbacks. No reports of shutting down their high-cost rail lines.

Friday, December 10, 2010

Off topic

I rarely blog about movies, but I keep a list of my favorites here.

But Inheritance is special. Synopses and reviews are at the link. Suffice it to say that the documentary depicts the recent meeting between Amon Goeth's (the concentration camp commander portrayed by Ralph Fiennes in Schindler's List) daughter and one of the survivors, who was also a slave/servant in Goeth's household, and who was eventually rescued by Schindler himself.

Both women are unbelievably strong.

I had recently blogged about Bloodlands here. The book takes us through Europe's 20th-century killing fields and is profoundly jarring. The book involves millions and the movie is centered on the meeting of two people (actually three because the survivor brings her adult daughter along). In my view, the book is indispensible. But I now think that the film is too.

Wednesday, December 08, 2010

Help is on the way

"South LA Still Being Protected Against Fast Food". No, it's not The Onion.

This ordinance invokes land use planning which seemingly can be enlisted for a variety of politically correct efforts. Note that "Mixed-use developments are exempt from the ban." How about organic fast food?

In the imaginations of LA leaders, mixed-use fosters walking and bicycling and even transit use (it would add to density). But would they actually be adding to auto traffic by prompting longer drives for a fast-food fix? Social engineering is very hard work.

There is Nanny State stuff in the news almost every day. You can laugh or cry, but the statists can always line up a litany of grievances to get a majority.

Monday, December 06, 2010

"Laptopistan"

Some years ago, Ray Oldenburg published The Great Good Place and also Celebrating the Third Place. He was celebrating neighborhood hangouts (including general stores, bars. beauty parlors, etc.) where folks meet and entertain each other. Oldenburg was also worrying about the demise of these places.

Urban economists love to celebrate cities as places where ideas are exchanged and spawned. "City lights" are an important element in entrepreneurial discovery and economic development.

What to make of yesterday's NY Times report on "Destination Laptopistan"? The piece mentions entrepreneurial activity, but also notes that local etiquette limits the sort of chat that Oldenburg prized.

The internet changes everything -- we hear. We can retreat to cyberspace to work, to think, to be entertained and even communicate. And we can do this alone or in a public space. Is Laptopistan a Great Good Place? Does it suggest that we are Bowling Alone? Starbucks and many wannabees are great success stories because the founders and backers had sensed that most people do not want to be alone with their laptop. As I so often say, there are many manifestations of "density."

Friday, December 03, 2010

The other unemployment

Unemployment benefits are in the news, but we hear much less about other ways that people find to support themselves when not working. Here is a comparison (from this week's Economist) of various countries re how much they spend on disability, sickness and unemployment benefits. For the U.S., unemployment compensation is far smaller than the other two. There are similar patterns in most of the other countries. The comparisons of proportions allocated to the three programs between countries are a bit misleading because the U.S. has the largest defense budget. As a percent of total spending, we are tied with the UK and Australia (Denmark is close) in spite of our large defense budget.

Here (see Figure 1) are trend data for just the U.S. Unemployment compensation is cyclical, but disability payments are on a long-term upward trend.

Wednesday, December 01, 2010

What animates U.S. politics?

Here is a nice discussion by William Voegeli re whether class warfare animates U.S. politics. The author says "no". It did not fly in the recent election.

This morning's WSJ includes "In California, a Road to Recovery Stirs Unrest ... State Engineers Sue Over a Highway to Golden Gate Bridge, Protesting Foreign Investors." California's roads are in awful shape and the state's leaders have redirected highway funds to all the wrong projects. What to do? Attract private investors? Attract capital to California that otherwise would not come here? Not exactly.

What does animate politics? My students and I owe a lot to Bruce Yandle because Baptists and Bootleggers nicely illustrates public choice economics. But are either of these interest groups native or foreign? It seemingly makes a big difference.

Sunday, November 28, 2010

Another mandate? Another gadget?

I recently blogged re the reports of the Cameron government's interest in compiling data on the happiness of Brits. This week's Economist asks "Should governments pursue happiness rather than economic growth?"

But are they any good at either one?

I have never been convinced that the "happiness" or the "nudge" research were good ideas. Happiness will always be hard to define and a moving target. Even the non bi-polars have their mood swings. And when I picture the cast of characters that are busy trying to improve our lives, whether in Washington or Sacramento or Los Angeles (my case), I do not want them nudging me. In fact, I want them to not even entertain the thought.

But Bruno Frey and Alois Stutzer claim to square the circle here. Their wrap-up is copied below:
Happiness research and public choice can both benefit from taking each other’s key insights into account. Improvements in the measurement of individual welfare allow us to confront
public choice hypotheses in a new way with empirical evidence. This has been illustrated for basic assumptions on the partisan model of political business cycles, theories of government size and rents in the public bureaucracy.

The huge progress in the measurement of individual welfare makes it tempting to pursue the old dream of maximizing aggregate happiness as a social welfare function. Improvements in individual welfare are claimed to be directly measurable, and politics is seen as following advice and implementing it with suitable interventions in the political process.

Based on public choice analysis, we argue that the appropriate approach is not to maximize aggregate happiness directly by seeking to improve outcomes through direct interventions. Rather, we see the role of happiness research as seeking to improve the nature of the political processes. Individuals should have more opportunity of advancing what constitutes their idea of the good life, both individually and collectively. They should bemade aware that different issues require different measures and indicators of well-being. Happiness research should remain open to constructing a number of different indicators, reflecting well-being according to different aspects of life. Plurality is a necessary consequence of the procedural view outlined. This is in stark contrast to the maximization approach requiring one single objective. From a constitutional standpoint, we conclude that people are best served with comparative institutional analyses on subjective well-being.
I'm not sure I buy it. For better or worse, I walk around with mental images of the cast of characters. Do we want them to have yet another mandate and yet another research gadget?

Friday, November 26, 2010

Not so simple

There is the "creative" city, the "consumer" city, the "mega-city", and who knows how many others. Joel Kotkin writes about the "efficient" city in today's WSJ.

While Kotkin makes international comparisons, he singles out the "big gainers" for the U.S., places with 100,000-2.5 million residents. That's a wide range and whenever "cities" are discussed, many analysts refer to metropolitan areas. I prefer the "urbanized areas" (UZAs) when looking at the U.S. case. These do not follow political boundaries, but represent more functional units. Their data are, however, only reported for the census year.

Matt Kahn comments on Kotkin's piece here. He also evokes "mellow" and "superstar" cities.

What do we know? "Cities" compete and must adapt to survive. They also specialize to varying degrees. They also include a complex mix of different spatial enclaves.

If we collect data for national aggregates, we expect that national economic growth benefits from a well-performing system of cities -- which can include many of the types listed above. And they cannot all be above average. They cannot all belong to the class of cities that performs best in some window of time. I have already commented on the amazing stability-at-the-top of city-size rankings.

As mentioned in my last post, UZA data are available for the census years, 1950-2000. No idea when we will get 2010.

For each of the decades, population size and subsequent population growth are negatively associated -- as expected. Looking at just the top 50 UZAs (in 1950), here are the five size-growth associations: 1950 size vs 50-60 growth, 1960 size vs 60-70 growth, etc.: -0.26, -0.27, -0.25, -0.14, -0.07. The effect of size on subsequent growth had been falling.

Using the 2.5 million cut-off, the sample gives us the top 15 (San Diego - New York; 2.67 to 17.8 million in 2000) and the smaller 35 (Birmingham - Minnesota; 0.66 to 2.39 million. The average 1990-2000 growth for the bigger group was 21% vs.19% for the smaller group. For that decade, bigness was not a handicap.

Tuesday, November 23, 2010

Prompts from near and far

Most U.S. data for urban areas locks us into "central city" vs. "suburbs" categories. Not great, but that's the way it is. Do these places perform as complements or substitutes? The central city "exploitation" by their suburbs was a staple of some of the early literature, but Richard Voith showed us in 1992 that complementarity dominated -- for 28 MSAs of the Northeast and North-central census regions. Though there were negative growth correlations for populations in the 1960s, they were positive for the 1970s and 1980s.

Robin Leichenko published an analysis for the 1970s, 1980s and 1990s and also found a complex pattern but leaned to complementarity.

I had previously mentioned that Wendell Cox pointed me to population data that go back to the 1950s. A sample of twenty-four areas across the U.S. is available if we want populations for the urbanized areas, their core cities and the remaining suburbs.

What were the inter-decadel population growth correlations?

The positives have it, but the associations get weaker over time. Growth prompts now come from far and wide.

Sunday, November 21, 2010

"Needs vs. wants"

Today's LA Times includes an op-ed by Milken Institute researchers James Barth, Tong Li and Rick Palacios Jr., titled "McMansion economics ... The typical American home has grown about 40% larger over the last 30 years. Downsizing houses would free up income for education and healthcare."

Some of this is well known. Tax and other policies have for years favored home ownership. But the authors do not mention this. Instead they discuss American's "love affair with McMansions." They want the love re-directed towards education, cultural enrichment, infrastructure, etc. They do not look for new policy measures. "It only involves individuals rethinking their needs versus their wants."

What a thin reed! Some of us have a tough time pinning down needs vs. wants -- especially when we consider all of the margins of consumption. We only want policy to be neutral so that we can enjoy the freedom to choose.

Saturday, November 20, 2010

Third way?

I was just going to call reader's attention to a nice Buttonwood (in this week's Economist) summary of Austrian business cycle theory, in contrast to the popular deference to either-or Keynesian vs monetarist explanations of the current crisis. In the nick of time, I noticed that David Theroux has already done this. So, best to look at Buttonwood via Theroux here.

Laugh or cry?

The 9/11 terrorists may have been stupid enough to think that disabling the Twin Towers would cripple American capitalism. But they were smart enough to realize that terror and the ensuing fears leavened with just enough bureaucratic-political stupidity would hand them a win. Our TSA and it's patrons provide pretty clear evidence.

Art Carden provides a lucid summary here.

Bob Poole has been arguing for saner measures for a long time here.

Reason.tv has chimed in with great commentary and video here and here.

Is our "cerebral" but recently "shellacked" President going to cede this one to the Tea Party too?

UPDATE

The WSJ's Eric Felten finishes his wonderful column on TSA nuttiness with this:

The old saw is that a conservative is a liberal who got mugged. Tom Wolfe riffed that "a liberal is a conservative who has been arrested." We might add one more variation: A libertarian is anyone whose wife and children have had their groins groped by the TSA.

Friday, November 19, 2010

Generosity

James Surowiecki notes that a majority of seniors voted Republican in the recent election. He finds some irony, but is not surprised, that seniors' attitude prompted by Obamacare was "I've got mine -- good luck getting yours." It's linked to today's economy. He cites Benjamin Friedman's The Moral Consequences of Economic Growth. People are less likely to be generous when times are bad. Yes, Social Security was enacted in bad times, but things were so bad then that social solidarity took over.

There is always more than one story. People not living in welfare states tend to be more generous. Here is a cross-country comparison of charitable giving. Daniel Hannan cites US-UK comparisons of giving that are even more stark.

I hope that the evolution of the US welfare state has not pushed us to the point where we are less generous with others.

Wednesday, November 17, 2010

Livability

Readers of this blog know my thoughts. Alan Pisarksi says it best. Read it and pass it on.

What would George Orwell say?

It appears that the Cameron government is about to launch a UK happiness survey.

Perhaps it might be the better to Nudge the Brits with.

Many people can lead long and perplexed lives in search of elsuive happiness. But what do they know? I can easily see that policy makers with a new toy will be able to argue for a host of new policies (or excuses for failed policies) with the survey results in their pockets.

Happy to see that the Brits are ahead of us on this one.

Monday, November 15, 2010

The long run

Bjorn Lomborg argues that the wise thing to do about global warming is to accelerate research on alternative energy sources.
World-wide public spending on research and development for clean energy technologies is a paltry $2 billion a year. Increasing this to $100 billion a year could be a game-changer. Not only would it be almost twice as cheap as the $180 billion a year cost of fully implementing Kyoto, but the effect of this kind of spending would be hundreds of times greater. But this should not be our only response to global warming. We should also invest considerably more in adaptation to global warming's effects, and research geo-engineering technologies as a potential backstop.
George Gilder suggests that market forces have been and are pushing us towards cleaner energy.

The irony is that a century-long trend of advance in conventional "non-renewable" energy—from wood to oil to natural gas and nuclear—has already wrought a roughly 60% drop in carbon emissions per watt. Thus the long-term California targets might well be achieved globally in the normal course of technological advance. The obvious next step is aggressive exploitation of the trillions of cubic feet of low-carbon natural gas discovered over the last two years, essentially ending the U.S. energy crisis.
But most people have fallen for the "green jobs" idea. We get economic recovery and environmental improvement as a two-fer. Californians just elected Jerry Brown on such a platfrom -- and approved the State's AB 32 by a wide margin.

But picking winners is a bad idea. (1) It is politicized; (2) it assumes that the we have knowledge we do not have; (3) it relies on impossible long run forecasts; (4) it embraces autarky.

Re the latter, 20 or so years ago, some smart people suggested that Los Angeles not only go with the switch to rail transit use, but that we also build the trains in Southern California!

Where are they now?

They now want us to produce green energy and "green jobs" in California. What the hell. It gets votes and contracts. Where will they be in 20 years? I have no idea. Long run forecasts are for the smart set.

A mountain to climb

For those of use not seeking political office, balancing the federal budget using this NY Times interactive site is quick and easy -- and fun.

Trouble is that there are not enough options at the site. But perhaps the Times' effort will spawn similar gadgets. I would add this: "no payments or credits to anyone above the poverty line." There are, of course, many other possibilities. But making a game out of it (even an app?) makes it slightly less abstract and may (perhaps) involve more people in serious thought about the mountain to climb.

UPDATE

Here is a better "modest proposal".

UPDATE

According to this writer (and many others), all of this deficit cutting is inappropriate in a weak economy. Yes, if you buy into the failure-of-aggregate-demand story. But what if radical deficit cutting restores confidence in the U.S. economy? In my view, to ask the question is practically to answer it.

Saturday, November 13, 2010

What will they do?

I have no idea how people who have shoehorned themselves into endorsing federal support for the Atlanta streetcar -- or a thousand similar proposals -- will live with the principles articulated by the fiscal commission. But they would not be where they are if they had not mastered the art of political rhetoric, whereby they are able get away with precisely this sort of sleight of hand.

It does take two to tango. The politician has to be flashy (charismatic?) and shameless. The electorate has to be disengaged to the point where they are not bothered by inconsistent positions. But these are the people we have.

So these are interesting times. We will do well if I am completely off base. I hope so.

Thursday, November 11, 2010

Walter Isard

Walter Isard, who passed away the other day, was my mentor at U. of Penn. and an original. Like many others, I was smitten by his Location and Space-Economy book (the one published in the late 1940s, I believe; oops, see NY Times obit, below). He made the case that space, distance and location had been overlooked by most of economics and that this was no small matter. I had an interest in cities and urbanization and Isard's insights were an inspiration. This is why I applied to his program.

Oddly, urban economics was not emphasized -- even though Bill Alonso's book was based on the first dissertation out of Penn's Regional Science program. But Isard was an enthusiastic big-tent guy and would never exclude anything from his vision of Regional Science. It was the 1960s and most social scientists were optimistic. Isard was eager to develop tools of analysis that sophisticated regional planners and policy makers could utilize.

I do not know how long Walter held this view. But he was an enthusiast.

I now lean to the view that cities are spontaneous orders. The New Urbanist view that they are the purview of planners, it seems to me, is a Fatal Conceit. Sandy Ikeda and I have a paper (forthcoming) that speculates on how the insights of Jane Jacobs and F.A. Hayek mesh in this regard. But there are many loose ends. Randall Holcombe has an insightful paper on these problems wherein he suggests a division of labor between markets and planners. The latter do the best infrastructure planning they can and let land markets do what they do best.

The problem is that infrastructure planning is usually anchored to some view of what the land use arrangements are or will be. This is OK in a static world, but very difficult in a dynamic context. Urban designers can invoke a dozen cliches (put office high rise near transit station), but these fall way short. Real life complexity is another galaxy.

English speakers learn about a city by consulting a city map. In many other languages, these are referred to as the "city plan". People get a document that can be construed as a plan only in a static world.

UPDATE

Here is more abut Walter Isard. A full life.

Tuesday, November 09, 2010

Divided government

In "Divided we thrive", Jonathan Rauch notes that there has been divided government in Washington DC for 21 of the past 30 years. He develops an explanation that goes back to the realignment of the two parties. With the demise of the Southern Democrats, the parties became more ideological and less able to compromise. "... Democrats, when in total control, have little choice but to govern from the left." It can work the other way too and that's no way to govern the country and stay in office.

But there is also the old problem that power corrupts. And hubris is a turn-off. And overreach follows.

Just the other day, Allan Meltzer wrote about Fed policy and entered the fray on what Milton Friedman would say. He also made his case for the best alternative policy. Uncertainty is the biggest problem. "I want a moratorium on new regulations and on tax rates."

Is Rauch's story the way to Meltzer's policy? Does this explain 21 for 30? Perhaps.

Saturday, November 06, 2010

Poison

Is there good reason to be optimistic about moral progress? In Guns, Germs and Steel, Jared Diamond retells his conversation with a Guinean native who actually began life in the Stone Age. His companion tells Diamond that if he encountered anyone not from his tribe, the first decision he would have to make was whether to try and kill the stranger or not. Has tribalism receded in our day?

We are now in Germany and in this lifetime, it was policy to murder me an many like me for tribal reasons. Germany has seemingly changed (and to be fair, Germans, unlike many others, acknowledge their crimes). I mentioned Timothy Snyder's Bloodlands in my Oct 27 post. Bryan Caplan quotes one of many chilling passages from the book that shows how easily tribalism can trump normal civility. This echoes Daniel Goldhagen's work. Snyder recounts mass murder orchestrated by Stalin as well as by Hitler.

Snyder shows how class warfare as well as race warfare each provided a banner for under which mass murder could occur. While not in the same league, U.S. elites still toy with too much of each. I think that each is poison.

So is there moral progress? I do not know. I enjoyed Robert Wright's The Evolution of God. Kwame Anthony Appiah's The Honor Code is next on my list. It will take quite a bit to get over Bloodlands.

Friday, November 05, 2010

Tuesday and Paris

When Parisians hit the streets to protest working to age 62, it was noticeable that many of the protestors were young. One young man told the TV interviewer that if this change is allowed, there may be no retirement benefits when he reaches retirement. One would think that the opposite is true.

Traveling and speaking with the occasional European, it's easy to get the impression that when members of the middle class do not expect upward mobility in their lifetime, then a future via welfare state benefits is what is left. And as long as Americans do bet on upward mobility in their lifetime, they have less interest in welfare state benefits.

How to interpret the results of Tuesday's election? The welfare state promises of the 2008 majority were just not that attractive. Benefits via upward mobility is still idea favored by most Americans.

It is fashionable to scoff at upward mobility as a realistic prospect. But what do we know? Immigrants routinely place big bets on the prospect of personal advance via their own efforts. Tuesday's results suggest that a majority of voters feel the same way.

Tuesday, November 02, 2010

No surprise

Housing in the U.S. has been politicized for many years. The recent boom-bust were inevitably touched by politics. The question of exactly how much of the "perfect storm" (which and how many weather fronts) originated in Washington DC is a difficult question that will occupy researchers for many years. Here is new evidence of the political roots of subprime lending.

There are still many people who sincerely believe that the consequences of growing political involvement are benign -- or even progressive (as in progressive redistribution). Many of the same folks also bemoan increasing inequality. I have no idea how they square that circle. But when several trillion dollars of GDP are politicized, there will be consequences -- and it is not a good bet that the resulting consequences will be either benign or progressive.

Monday, November 01, 2010

Young and crazy

The question of whether striving and acquiring make us happy will probably always be a teaser and conversation starter. But Virginia Postrel suggests that the attractions of the trappings that go with success are worthy because they incite the actions that go with progress.

What about procreation? In past times, natural lust was thought to take care of that. But ever since that link has become an option, we can ask about the priors that would-be parents start with. Perhaps crazy optimism among the young is a good thing. Julian Simon would probably agree. Pessimism and caution in old age also seem to be useful adaptations. It is pessimism among the young that has no easy explanation -- and that is seemingly rare.

Thursday, October 28, 2010

Silence

Here is one of a very large number of essays that argue for the importance of public spaces. We are "balkanized" and an "archipelago nation."

Agreed that most public spaces in U.S. cities are not what they ought to be. I recently had early morning coffee in "tony" Westwood (in West L.A.) and a homeless person came in (as many do) and not to make a purchase. The staff tried to escort him out and he started spitting wherever he could. I asked the staff if calling the police was an option and they mentioned that the response rates are much too slow to make a difference.

A woman who helps us keep house is occasionally dependent on public transit, but reports that, aside from the serious time costs, there are some bus stations where she does not feel safe. Avoiding these makes her trip much longer.

All of the high-minded advocates of public spaces and public interaction are silent on the serious civility deficit in many of our public spaces. Perhaps they have nothing to say about a very serious problem.

Wednesday, October 27, 2010

Old questions

I'm reading Timothy Snyder's Bloodlands and it is not easy. One chapter a day is about all that I can handle. I've read a good bit of 20th-century European history, but the bottomless brutality-insanity is still dizzying. Which is worse the murderous sadists or the indifferent murderers? In any event, there were plenty of both.

And then there is this for much-needed uplift. (H/T Tom) Where would we be without people like Alice -- and her music? How do we get people like that (the ones who write the music and the ones who perform it)? Are they really from the same gene pool as the murderers Snyder writes about?

Tuesday, October 26, 2010

Successes

Here is Ed Glaeser describing the recent economic successes in Manhattan and in Santa Clara. He describes both as successful "cities". Glaeser has published many fine studies that call attention to the benefits of density and citihood.

I had already blogged here about research with Sandy Ikeda which pointed to success in the same two places as indicating that the simple consideration of population density tells us very little.

Clearly information networks matter a great deal. Such networks grow in a variety of urban settings. It's pretty clear that the future will bring many more Silicon Valleys than Manhattans -- and Manhattan is very likely to continue to adapt and hang on.

Sunday, October 24, 2010

Where do they get this stuff?

Matt Kahn is justifiably upset over a remarkably inept review of his Climatopolis.

The LA Times has chosen to print some amazingly wild material in recent weeks. Today, it's business columnist described GM as having "blood on its hands" for "murdering" the EV-1. The fact that the car was a money loser is beside the point. Perhaps it was just timing. A few years later and bail-outs could have kept the EV-1 rolling forever.

In the same Sunday edition, the paper's architecture critic writes that "The movement for a public, mass-transit served city is resisted by those still tied to a suburban, car-centric city." The author should know that the county's high-water transit year was 1985. Ridership then plummeted as bus service was trimmed to pay for rail. Now, in 2010, we may be edging back to 1985 ridership levels, but we have added millions to the population and have spent billions on rail transit.

It's not only the reviwer of Kahn's book that is in no position to opine. Others in high positions on the same paper are equally uninformed.

Saturday, October 23, 2010

Outrage?

This Washington Post report re the Justice Department's recation to the Black Panther voter intimidation episode is very troubling. (1) Armed thugs openly hang out at the entrance of a voting station; (2) the Justice Department is paralyzed; (3) the Justice Department is shown to vacillate because the thugs are the wrong ethnic group; and (4) this is on the watch of Obama Administration which was elected (in part) because of the appeal of a post-racial-politics position.

And where is the outrage?

Thursday, October 21, 2010

What would Coase say?

The Oct 25 New Yorker includes Tad Friend's "Blowback: The great suburban leaf war". Without markets, there is politics and conflict. All politics are local and the most lively of these are the parts that involve home and neighborhood. Leaf blowers than have a special notoriety. They create noise, dust and the various gasoline engine emissions. All of these are hard to price so we are where we are.

What are the alternatives? Labor using rake and broom (and immigrant gardeners) is expensive. Pre-leaf blower, it was water via the right garden hose nozzle (or thumb). The author does note that "Blowers were hailed as an environmental boon: when Los Angeles was suffering from a water shortage in 1976 and 1977, the city instructed municipal workers to use them, rather than the traditional thumb stream from a hose, to clean sidewalks and driveways."

Just as perpetual "famines" in the old USSR and the current North Korea explain their starvation, we have had long-standing "droughts" in California. We actually have politicized water allocation and pricing. So the politics of water pricing brought forth the leaf blowers which brought forth all the politics described in the story.

The "law of unintended consequences"? Only when we ignore basic economics?

Tuesday, October 19, 2010

Housing recalculation

At econlog.org, Arnold Kling often writes about the Great Recalculation that is underway (and essential) as we get out of the Great Recession. Recalculation is, of course, routine in market economies and explains their success. But the crunch comes when large-scale shocks require large-scale recalculation -- and when the politicians ride to the rescue with their own surprises and shocks.

Here is the story of one such recalculation (H/T Planetizen). It's the story of how home builder Toll Brothers is working to cope with new realities of the housing market and looking for the new sweet spot in it's market: what sort of new homes can builders like this put on the market that their customers will buy as they are less optimistic, less willing to throw caution to the winds and more conservative in their approach and expectations re living space and living amenities?

All this is distinct from the point made in my post yesterday: the rethinking is not in response to the smart-growth ideas from the smart set. The bottom-up rethinking is essential -- and always more usful than what is proposed top-down.

Monday, October 18, 2010

Uncooperative consumers

I had previously blogged about Witold Rybzcynski's Last Harvest which I use as a case study in one of my classes. It is (among other things) all about the mysteries of demand seen through sellers' eyes. In this case, putting a new flavor of residential development (New Urbanist) on the market is a tough gamble. Finding the sweet spot where product quality (with all of its dimensions) and the price it will fetch cover all of the costs involved (including investor expectations) is shown to be very hard work. And the sweet spot is a moving target. This is much more interesting and more useful for the students than just throwing demand curves up onto blackboards or powerpoints.

Yesterday's NY Times Magazine included "The Elusive Small-House Utopia" which covers some of the same ground (with comments from Rybczyinski). The article does acknowledge demand uncertainties, but veers into old cliche land: peculiar U.S. policies explain Americans' demand for living space. But there are plenty of places abroad with higher home ownership rates than here. Persons-per-room is the same as the U.S. (average of 0.5) in Canada, the U.K., Germandy, Sweden, New Zealand. With six others at 0.6.

It's just like the automobile story. The cliche that the U.S. is different may have been true twenty and more years ago, but it's high time to drop it. Regardless of policy differences, consumers know what they want -- even if their betters don't approve.

Saturday, October 16, 2010

Ideas and innovations

If you like lists, Steven Johnson's Where Good Ideas Come From (a splendid read) includes an appendix that lists key innovations, 1400-2000. Double-entry accounting is the first entry. Whereas economists and social scientists have come up with some good ideas too, they do not make the list. When does an idea become an innovation?

In this week's New Yorker, Adam Gopnik does a fine job of discussing Adam Smith ("Market man: What Adam Smith really believed"; gated) and does a fine job.

Today's LA Times has a front-page story about Don Shoup and his thoughts on prices (and the neglect thereof) and parking. Don is getting the recognition he deserves and, the piece notes, even beginning to change the world. Smith and Shoup can even be seen as innovators insofar as they have a hand in making the world better.

Friday, October 15, 2010

Words and labels again

Edward Lopez makes the point that what the FTC may see as a "market failure" (e.g., the decline of newspapers and the success of online news sources) is simply another example of creative destruction at work. But one cannot be too wary of market failure peddlers. Often they have an agenda and/or they just don't get it. It's a dynamic market, after all.

In this week's New Yorker, James Surowiecki describes how Netflix won and how Blockbuster lost. They each did their part. Netflix was inovative and Blockbuster was more like the famous dinosaur that tried to don roller skates.

Surowiecki does not call it creative destruction. Instead he refers to "category killers". "These stores killed off all the competition in a category by stocking a near-endless variety of products at prices that small retailers couldn't match." He names the usual big-box suspects.

But I have always thought that the category killers (category busters?) are those who offer a new combination of goods or services -- so that the conventional market share definitions used by anti-trust lawyers become meaningless. I can now get back rubs at the local Whole Foods.

Killing off all the local competition is the opposite. It's the kind of thing that keeps the "trust-busters" engaged.

Wednesday, October 13, 2010

For the ever expanding you-can't-make-this-stuff-up file

Detroit light rail.

Big question

When Vaclav Havel speaks, we should listen. And here he is speaking his mind about the modern world and also modern cities. (H/T FeedBurner)

But what is he saying? He does not like modern urban "sprawl." He seemingly blames architects, economists, modernists and others. Is he Prince Charles? I cannot be sure.

But in my previous post, I said some good things about modern cities and land markets. I fear that modern metro areas are too big and too complex for human design. They evolve from human action rather than from human design. But designers do come up with some wonderful things. Almost everything I can see or feel in my immediate surroundings represents some triumph of human design and engineering. So what is the proper division of labor? New Urbanists have great faith in their ability to craft almost the entire built environment. But that has Fatal Conceit written all over it.

When smart people like Havel speak up about cities, I wish they would address the division of labor question.

Monday, October 11, 2010

Explain that!

Readers of this blog know that I worry about aggregate measures used to describe large metropolitan areas. Here is a discussion that highlight's "L.A.'s traffic" and cites the latest Texas Transportation Institute congestion rankings. There is also a link to this report that criticizes the TTI approach.

TTI relies on the ratio of the metro area's lane-miles to its vehicle miles traveled (with minor tweaks). But is way too simple; it says nothing about sub-metropolitan variations -- and opportunities.

How is it that metropolitan areas have grown and yet survived and even lived to grow further? The biggest metros, after all, have managed to stay on top. Why is this key fact overlooked in all of the hand-wringing?

I do not know the answer to the second question, but the answer to the first question is fairly simple. It has two parts: (i) these metro areas provide offsetting advantages ("agglomeration economies"); and (ii) these places manage to grow in ways that mitigate the associated growth in congestion. Subcentering and suburbanization are not random "sprawl", but rather facilitate survival and competitiveness by offering agglomeration benefits outside the traditional center while also taking congestion pressures off the traditional center. Land markets do this. Nothing else can.

If, on the other hand, growth were accompanied by random sprawl, the stability of metro area rankings at the top could not be explained.

Friday, October 08, 2010

Spend more, get less

Here is a post by Wendell Cox that calls attention to the rise of working-at-home, as reported by the 2009 American Community Survey.

Alan Pisarski reviews the Census commuting data back to 1980. Commuting-at-home was 2.3 percent of the U.S. workforce in 1980 and 3 percent in 1990. We now know that it was 4.3 percent in 2009. This probably understates the impact of telecommuting, whereby many of us are neither strictly work-at-home, nor just work-at-workplace.

The Cox post compares transit use to work-at-home 2000-2009 trends for 52 of the nation's largest metro areas. In 37 of these, the work-at-home proportion exceeded the proportion using transit. The differences were negligible in six metro areas. Guess which way the wind is blowing?

Paul Krugman has a series of recent blogs that try to make the case for more rail transit spending. He mentions that auto use is subsidized, so why not transit? In fact, the highway trust fund subsidizes transit use and has for many years. Ron Utt documents all this here.Krugman also writes that public transit is a good investment because it takes cars of the roads.

But here is a post that mentions recent research by Paige Elise Kolisar and myself that does rail transit cost-benefit which accounts for the externality benefits of new-to-transit riders. Even then, losses per round-trip were in the range of $17 (weighted average of six post-WW-II heavy rail systems) to $40 (weighted average of eight post-WW-II commuter rail systems).

U.S. transit subsidies in 2006 exceeded $35 billion in 2006, up from $10 billion in 1978. In that period, transit market share (passenger-miles) fell, from about 3 percent to about just over 1.5 percent. Correlations do not denote causation, we all know. So we have to dismiss the thought that all that spending caused the decline.

Thursday, October 07, 2010

Nice places to write or read about

Here is Paul Goldberger writing about the CityCenter of Las Vegas. And here is his punchline:

Even though there is more density to CityCenter than there is to anything else in Las Vegas, and more sophistication to its architecture, it doesn’t feel urban. Its planners have crammed more square footage into a tighter space than anyone else has managed in Las Vegas, and that may make this place seem like an antidote to sprawl. But it still isn’t much of a center, or much of a city. Indeed, as you drive around the site, you suddenly wonder if CityCenter only appears to be different from the rest of the Strip. After all, cutting-edge contemporary architecture by the likes of Libeskind and Foster has been migrating steadily into the cultural mainstream for years. Now, perhaps, it has reached the point where it is familiar enough, and likable enough, to be just another style available for imitation, like the Pyramids or Renaissance Venice. CityCenter is the Las Vegas you already know, but in modernist drag.
He could have said Y-A-W-N. Las Vegas fascinates, but it does so for some of us at a distance. There are the cities one likes to live in (but not visit as tourist) vs. the ones one likes to visit (but not live in) and we can also list the places we like to write or read about but not visit. Perhaps Dubai comes next. The most attractive urban places are the ones the offer the possibility of (pleasant) surprise. Designers have a devil of a time coming up with such venues and when they try (Disneyland, some shopping malls, Las Vegas, new towns, etc.) the results may be worth seeing. But for many people, once is enough. The real draws (who doesn't like the classics of old Europe?) are the ones we try to return to as often as possible.

Tuesday, October 05, 2010

Are we there yet?

Forbes' regular stock-picker David Dreman writes, "When it comes to popular investing gospel, the Capital Asset Pricing Model (CAPM) ranks right up there with its elder cousing the Efficient Market Hypothesis. As a value investor I don't think much of either of these. I make my living investing in market inefficiencies." Of course. The model depends on active arbitrageurs.

And this is why we love teaser stock market performance charts. Here is one of my favorites from Visualizing Economics. Is it a random walk? Are we there yet?

Lots of modeling depends on the equilibrium idea. And this is often misunderstood as a place that we are either at or not at.

Yesterday's WSJ headlined this: "Americans Sour on Trade ... Majority Say Free-Trade Pacts Have Hurt U.S. ..." When it comes to teaching the basics, we certainly aren't there yet.

Saturday, October 02, 2010

Happiness

Michael Norton reports on his happiness research here. Here is his summary:

Does money buy happiness? We certainly behave as though it does, spending most of our waking hours pursuing it. If only we got that raise, owned that second home, third car or 3G iPad, things would be better, we tell ourselves. We would finally be happy.

Truth be told, people drastically overestimate the impact of changes in income on their well-being. In a survey I conducted with my colleagues Elizabeth Dunn and Lara Aknin at the University of British Columbia, we asked 315 Americans to rank their happiness on a 100-point scale and predict how happy they would be if they made ten different incomes, ranging from $5,000 up to $1,000,000. Those who reported earning $25,000 a year predicted that their happiness would double if they made $55,000. But when we measured the actual happiness of these two groups, the change was only 7%. Beyond that, our data showed that once people reach the median income in the U.S. (about $60,000), the happiness return on additional income is very small.

Hapless lotto winners, take heart. We did discover at least one way to buy happiness with your money: Give it away.

... To test our idea, we approached strangers on the street and gave them different sums of money ($5 or $20) and told them to spend it by 5 p.m. that day. Half were told to spend the money on themselves, while the other half were told to spend it on others. When reached that evening, those who spent the money on themselves bought things like coffee and food, while those who gave money to others reported spending it on things like gifts for their siblings or donations to the homeless.

The result? Those who had spent their money on others reported feeling much happier at the end of the day than those who had spent their money as they usually did, on themselves. There was no difference in happiness between those who spent $5 or $20, suggesting that it is not how much money you spend, but how you spend it, that boosts the spirits. When we asked people to choose what would make them happiest, most people predicted that spending money on themselves would make them happier than giving it away, suggesting that people overestimate the buzz they get from a new purchase and underestimate the warm-and-fuzzy benefit to social spending.

We've heard this before. So what is going on? Most of us are self-regarding as well as other-regarding. We have also evolved through eons when death by starvation was a serious threat and have learned to accumulate. And we have also been hard-wired to extend love and care to those close to us. Extending it to those less close is the challenge. We can extend the circle of care measure by measure beyond immediate family to close friends and even to less close friends. And many of them can do little things to antagonize us along the way (they are only human). But the rewards from seeing a smile on those who we can be good to are serious. We may still have a bit of trouble extending this to anonymous and distant candidates for our love and charity, but Norton and others are surely right. There are great rewards from from flexing our other-regarding muscles. There is even some happiness to be found.

The Arthur Brooks research on philanthropic giving adds another wrinkle. Those describing themselves as conservatives are more charitable. Those on the left (he finds) are generally stingier. That makes sense too. If you busy yourself with coercing society at-large to transfer wealth, your other-regarding juices might be spent.

But is there any happiness for the stingy coercers?

Thursday, September 30, 2010

Words

Here are the "20 Top Urban Planning Successes of All Time" (H/T OnStreetLevel). One can quibble with almost every word in the title, including "urban planning". These places are all emerging (unplanned) orders that have have managed to be an amalgam that coordinates many plans by many participants. So if we stipulate a dose of bottom-up planning, then OK.

But a heavy dose of top-down planning can be seen in our own Portland, Oregon, which Wendell Cox examines here and sees as growing in all the "wrong" places -- in its most outlying Clark county. And that is not the way it was supposed to work out. So not only is "planning" not a simple concept, but neither is "success".

Monday, September 27, 2010

Progressivity in our future?

Over at Econlog, Bryan Caplan asked "Does the U.S. Government Increase or Decrease Income Inequality". Last I looked, there were 21 comments. It is not a simple question.

Conventionally measured inequality has grown while the role of the state has grown. The role of "the state" should include the actions of all levels of government because federal prompts state and local to spend via matching and all sorts of other devices.

Let's also add that it is much more than taxation because the distribution of expenditures can move the overall distribution.

So what do we have? (1) A progressive income tax schedule, but thousands of pages that describe special tax breaks and treatments; (2) many taxes and levels of taxation, including the large and growing and regressive FICA; (3) expenditure programs that involve large projects (defense and infrastructure to name two); (4) armies of expensive rent-seekers incited by the first three; and (5) this morning's WSJ includes "The Regulation Tax Keeps Growing". Whereas the federal budgets is 21% of GDP, the regulatory cost adds another 14%. Does anyone believe that this is a force for progressivity?

I will never know why those on the left believe that a larger role for the state will augur a push for progressivity.

Saturday, September 25, 2010

More "curse of oil"

Brazil is apparently doing quite well. I wanted to compare to the basket cases and the folks at the Economist Intelligence Unit let me look at their Venezuela Country Report. The consequences of Hugo Chavez rule have been much worse than I had expected. Start with 3 years of negative GDP growth. And we call two negative growth quarters a "recession". There is also crime, inflation, press censorship, devaluation and on it goes. It is easily the region's disaster. Just when Brazil is taking off.

So sad. I did some work there in the 1980s and saw reasons to be optimistic. Upended by the "curse of oil"?

The EIU also forecasts declining 2011 GDP growth for the world, the OECD, the EU27 as well as the U.S. Not good.

Wednesday, September 22, 2010

Where "crises" are made

We are all taught that trust is hard to gain and easy to squander. So it is with credibility. We all know the liar who has to keep inventing new lies to cover the previous ones.

"Trust funds" attached to government programs have become anything but. It is by now well known that the Social Security Trust Fund has been raided by Congress. (Poor Al Gore was ridiculed in 2000 for his "lock box" talk.)

Perhaps less well known is the state of the Highway Trust Fund. Here is a recent analysis by Ron Utt. Here is a punch-line:
The largest diversion from the $52.7 billion in total spending authorized for fiscal year 2009 from the highway trust fund (including $2.0 billion in general revenues) is the $10.3 billion in direct spending for transit programs (trolleys, buses, commuter rail, etc). Transit riders are also the greatest beneficiary of the Congestion Mitigation and Air Quality program, which absorbs $1.8 billion of the trust fund. Although transit riders account for only 1.8 percent of surface travel passengers and 5 percent of commuters, they receive a subsidy from the fuel-tax-paying motorists amounting to approximately 20 percent of transportation spending.

We got potholed highways and underutilized public transit. Here is more on the state of the highways from a recent Reason report.

The nation's "infrastructure crisis" was made guess where?

Monday, September 20, 2010

Where we are

Here is a NY Times columnist writing about "The Angry Rich". I suppose that most of them do not want to pay their "fair" share, whatever that is. And many of them are that way, of course, because they are "greedy". And they are insensitive to the many "needs" of the federal government. No need to make this up. Another member of the smart set (writing about the estate tax) notes "It's Fair, and We Need the Revenue" (in today's WSJ).

I do not suppose that these commentators consider that there may be another view. Targeted tax rates are the problem because they feed class warfare attitudes and emotions -- as the language used in the debate so powerfully illustrates. Perhaps putting human envy aside is impossible, but making it the centerpiece of politics can be dangerous. And that is exactly where we now seem to be. Trust politicians (and their acolytes) to lock this bone firmly in their jaws.

UPDATE

Richard Epstein covers all this and much more in this outstanding podcast.

Saturday, September 18, 2010

The churn survival option for cities involves their outward expansion

The Economist (Sep. 18, 2010) has this interesting piece re Chinese cities which includes this sub-head: "Policymakers should embrace mega-cities. Businessmen should escape them." What does that mean?

The piece alludes to city rankings that generally display "stability at the top" of the rankings but "churn further down." Wendell Cox has assembled U.S. decennial population data going back to 1950 at Demographia. These are for urbanized areas and their core cities. Just considering the 1950 top ten and over the six census years, the urbanized areas show 22 changes in rankings (of 50 possible), but the core cities show 27 changes. But for the 1950 top five, the urbanized areas show just three rank changes while the core cities show seven; for the next five it is 19 vs. 20.

More stability at the top and more stability for the larger spatial units. Metro areas survive by churning industries and by decentralizing. The suburbanization safety valve is vital and facilitates the churn.

It is well known that Number One did not budge. The New York urbanized area has long stayed on top and the New York core city has stayed on top. Both places have strong and durable advantages. As the world changes and new technologies displace old, the area is able to "churn" industries.

Yesterday's WSJ has a piece on Detroit "Motown Becomes Movietown ...Hollywood has a new favorite location. The Motor City is luring films and TV shows ..." Industrial churn may even bring back Detroit.

Thursday, September 16, 2010

In the long run

Matt Kahn's Climatopolis is a good read. It acknowledges that doomsters are usually wrong because they don't understand market forces, that long run climate forecasts evoke a dire picture, that the world's poor are (alas) most at risk in case of any turn for the worse, that our policy makers are not good at getting the prices right (water, floodplain insurance, farm subsidies, etc).

He seems to accept many 70-100 year warming forecasts, but admits that long run forecasts can be bunk, but we don't really know. He compares the fix that we may find ourselves in with that of a 55-year old who buys life insurance, but lives to be 95.

In yesterday's WSJ, Bjorn Lomborg reiterated his view that knowing more in this situation is a good thing and that is within our grasp with more R&D funding. "The smart middle path means making green energy so cheap everyone wants it. There's nothing confusing about it."

Tuesday, September 14, 2010

Poor odds

Ken Orski's latest Innovation News Brief (Sep 8, 2010) discusses the recent Obama $50 billion "Plan to Renew and Expand America's Roads, Railways and Runways".

Ken takes the proposal seriously and addresses the politics of getting it passed. I took a pessimistic view of the whole idea in my September 7 post. There are four possibile outcomes via two binary variables: will any multiplier be positive? will most projects' NPV be positive? Pretty good if both are true. But what are the odds?

In today's LA Times, there is this:
How to keep jobs in L.A. (and in the U.S.)... Los Angeles is behind the curve in adopting a local preference ordinance, which would give local businesses an edge in landing city contracts. Washington should also act to keep jobs onshore.
Read the whole thing.

Monday, September 13, 2010

More benefits from Paris Metro

Heat exchange is a wonderful thing, often seen as a windfall by engineers. In this story on a Paris Metro station, we see that the heat generated by milling bodies waiting on a subway platform can be tapped to heat 17 apartment buildings.

One more reason to get that ridership up. But don't pick them up to soon. But don't let them wait too long either.

H/T Planetizen

Sunday, September 12, 2010

The barricades

David Brooks wrote about "The Genteel Nation" and "gentility shift" last Friday. He was addressing long-term labor market problems that have nothing to do with aggregate demand or any lack of "stimulus," but rather with the tastes of young people making career choices. He cited the example of Michelle Obama, telling an audience of young women, "Don't go into corporate America ... become teachers. Work for the community. Be social workers. Be a nurse ... Make that choice, as we did, to move out of the money-making industry into the helping industry."

It's an old theme and many people think of the choices before them as between being self-serving and "helping people". I am not sure what sacrifices the First Lady has had to make in her personal life in order to get on the high road, but given a platform, we hold forth -- and also tell ourselves all sorts of stories about ourselves. There is always the lovely conceit that some of us are all about "helping people" and, thereby, so much better than the rest.

Labor markets provide their own signals (in terms of compensation packages as well as employment and unemployment prospects), but the problem with rhetoric such as the First Lady's in the Brooks cite is that it nourishes the idea that we see repeated on so often that our own pay is "unfair" in light of the job's assumed social worth.

Many public sector unions have managed to extract promises from their politician employers that these employers cannot keep. There is naturally unhappiness and resentment, but not at the employers. Rather, at the "stingy" taxpayers who just don't get it: those who have chosen to "help people" simply "deserve" more.

Labor markets signal facts of life that challenge the "gentility" view of the world. But the gentility view fortifies the idea that market signals are "unfair" and further politicization is the way. This is the way we get street demonstrations such as the ones we saw in Paris last week. We'll always have the barricades.

Thursday, September 09, 2010

"It's all about jobs"

I could not pass this up. Here is the punchline:

Report: Investing in Transit Could Create 180,000 Jobs, for Free

by Noah Kazis on September 3, 2010

Between calls for renewed stimulus on the one hand and for deficit reduction on the other, Washington, D.C. is stuck. A new report by the Transportation Equity Network, however, shows one easy way out of that political stalemate: shifting our transportation spending to transit.

According to the report, written by University of Missouri-St. Louis researchers Todd Swanstrom, Will Winter, and Laura Wiedlocher, every dollar spent on funding transit creates more jobs than spending on roads. Specifically, each billion dollars spent on transit creates 36,108 jobs while the same figure can only buy 30,319 jobs. That means that by reassigning some federal spending from roads to transit, Congress could boost employment without adding a cent to the deficit.

On the positive side, these stories are gifts to teachers of economics. But on the other side, this thinking is taken seriously by large numbers of serious (and, alas, powerful) people. How many times have we heard that it's "all about jobs"?

H/T Planetizen

Tuesday, September 07, 2010

Infrastructure!

Whenever poor public school performance is highlighted, there is a chorus that brings up funding shortfalls as the explanation. But there is now considerable evidence that it's not so simple. When we do spend more, we still get poor outcomes because of (among other things) poor management. I suspect, however, that the academic research has worked its way into popular discourse and the "underfunded" mantra is now seen by increasing numbers of voters as special pleading by teacher's unions and their allies.

But we are not yet there where when it comes to infrastructure. The second nature presumption among many is still that we have lousy highways (among other things) because we do not spend enough. The problem of mismanagement of the spending that we do have is seldom brought to light. This is why President Obama can still gain political points by promising another $50 billion to be spent on "infrastructure". Baptists and bootleggers, anyone?

A timely new book by Clifford Winston presents the evidence that (as with the public schools) it is more a case of misspending than underfunding. Winston makes that case that this amounts to a $100-billion-a-year loss. Well conceived and carefully targeted deregulation and privatization, he shows, could help us re-coup some of that.

Only in the world of politics would anyone argue for stimulus "multipliers" (whatever these may be) attached to negative-NPV projects.

Sunday, September 05, 2010

Glass half-full

The NY Times Magazine featured "What Is It About 20-Somethings?" about two weeks ago. Getting started is never simple. But not mentioned in the article is the simple fact that adolescence (whatever one calls it) has been getting longer for many years. That comes with increasing prosperity.

But today's Letters include the predictable explanations that invoke new job insecurities, outsourcing, etc. Unemployment levels have been much too high for too long, but the WSJ's Numbers Guy cites BLS data which shows remarkable 20-year stability in the job tenure distribution.

Saturday, September 04, 2010

Frightening analogies

Having a graphologist analyze my handwriting was not pleasant. Who likes to be that exposed?

I got a similar feeling reading The Economist's Schumpeter column about American universities (September 4). "Will America's universities go the way of its car companies?" Here is how it begins:

FIFTY years ago, in the glorious age of three-martini lunches and all-smoking offices, America’s car companies were universally admired. Everybody wanted to know the secrets of their success. How did they churn out dazzling new models every year? How did they manage so many people so successfully (General Motors was then the biggest private-sector employer in the world)? And how did they keep their customers so happy?

Today the world is equally in awe of American universities.
The ensuing description of U.S. universities makes the case for the analogy to old Detroit. All analogies have their problems and, whereas Detroit received most of its bail-outs in recent years, the federal role in propping up universities via research as well as student funding has been steadily growing for many years.

Nevertheless, the story as it is presented in the column reminded me of the visit with the graphologist.

Thursday, September 02, 2010

Makes me cringe

In this morning's WSJ, columnist David Wessel wonders ("Parsing Ascendant GOP's Economic Prescriptions") what Republicans might actually do if/when they score victories this November. At the Heartland Institute,
Joseph Bast has a 10-item to-do list for economic recovery ("Attracting Businesses During the Great Recession").

Both discussions mention lower tax proposals. Wessel thinks that what Republicans have articulated so far is either too vague or too unlikely to be broadly popular. Bast (who is apparently not running for office) is not at all vague and does not address the question of politics and broad support. He likes lower taxes, less corporate welfare, less powerful labor unions, lower minimum wages, reduced worker compensation costs, affordable housing (but via not the Chris Dodd approach), fewer regulations, less lawsuit abuse and also "attract members of the creative class."

The latter is from the Richard Florida playbook and now makes an appearance on a libertarian's wish list. But if one is going to be skeptical of industrial policy-crony capitalism, how can one take seriously the idea that governments anywhere can pick winners when it comes to people? There are the same old realities: (i) how would they/could they know? and (ii) how could they/would they keep the whole project from being politicized?

I have spent many years involved with university admissions. It is no secret that this is a highly imperfect process. If there ever was a "fatal conceit", it is surely the idea that politicians can do an adequate job of singling out potentially creative people.

And the appellation "creative class" makes me cringe.

Monday, August 30, 2010

Recognition

It's great to be included on this list of 50 Top Civil Engineering Blogs.

Never a simple story

Human settlement densities get a lot of attention for two reasons. First, the data are usually easy to get; we know the areas and the populations of many places. Second, we rightly suspect that most people do their best work when they are near (but not too near) others who have worthy ideas and are doing good work.

Trouble is that most of the places for which we have data (countries, states, metro areas, even large cities) are too big. Human settlement densities vary considerably and averages are misleading.

Recently Sandy Ikeda and I considered densities for PUMAs (Public Use Micro-Sample Areas). Their average size is 100,000 and they approximate large neighborhoods.

Here are some of the fun facts:

For 2005 and for the top-25 PUMAs in terms of in-migrants with a Master's degree or higher, we found that these people migrated to parts of Manhattan as well as to areas such as Silicon Valley. These people were attracted to opportunities found in “low density” as well as in “high density” places. Four of these top 25 PUMAs were in Manhattan; four of the top 25 were in Silicon Valley; the other top-25 destinations were in West Los Angeles or suburban Washington DC, suburban Seattle, Austin or San Diego. The densest receiving area (in Manhattan) was thirty-eight times as dense as the most spread out (in Silicon Valley), yet each one succeeded in attracting many highly educated people. The areal sizes varied from below ten square km (Manhattan) to just over 300 square km(Washington DC suburbs) and one just over 250 square km (Silicon Valley).

There is no simple story even when the areas are relatively mall.

Saturday, August 28, 2010

Neurotic? So what?

Dan Neil writes about the new all-electric Nissan Leaf in today's WSJ and gives it a thumbs-up. He mentions the 100-mile range and "range anxiety", but dismisses that as "neurotic."

Perhaps, but that is no reason to bet that range anxiety will not get in the way of sales. Behavioral economists and Dan Neil and the entire mental health field may shudder at the neuroses of the buying public, but to dismiss them lightly is another matter.

Speaking of looking back on one's forecasts, Megan McArdle has this very nice "I Wuz Wrong" post. In the Internet age, it's best to get out in front and admit to one's forecasting errors before the rest of the world does it for you.

I'll have to give it more than one year, but if I'm still blogging in (say) three years, I will return to the range-anxiety story and fess up to whether "I wuz wrong" or not.

Thursday, August 26, 2010

Almost lost to history

The Nazi death camps of Europe are, for the most part, preserved and visited. The same cannot be said for the gulag. The Aug. 30 New Yorker includes the haunting "On the prison highway: the gulag's silent remains" by Ian Frazier. It's stunningly eerie because the author had to work hard and hire a guide to discover and stumble over remote and snowed in prisoner-built roads to discover the out-of-the-way remains of just one of the gulag's slave labor camps. One can only wonder, and in no way really fathom, all of the misery undergone in that place -- one of so many that are also lost to obscurity. The piece is actually the conclusion of a series abstracted here.

The author notes, "What struck me and then still strikes me now was the place's overwhelming aura of absence. The deserted prison camp just sat there -- unexcused, untorn-down, unexplained ... The world more or less knows what it thinks of Hitler. Stalin, though, is still beyond us. As time passes, he seems to be sidling into history as one of those old-timey, soft-focus monsters -- like Ivan the Terrible, like Peter the Great ... Hitler killed millions, and we have a rough idea how many, but the millions of victims of Stalin are still difficult to count ..."

There is much more. Buy, find the magazine. Read and share the article.

Tuesday, August 24, 2010

"Law of unintended consequences"

It often takes a policy to fix the consequences of the last policy. In polite company, it's called "the law of unintended consequences". We know that employer-provided health insurance in the U.S. can be traced back to World War II price controls. Employers compete on many margins and controlling any one of them is never the end of the story. The health care cost curve that policy makers are now struggling to "bend" is the legacy.

Likewise with the new rules to police credit card penalty fees. Yesterday's WSJ led with "Credit-Card Rates Climb ... Levels Hit Nine-Year High as New Rules Limiting Penalty Fees Help Fuel Rise." The new rules, of course, are part of the new financial market "reforms" and "consumer protections" that politicians will take credit for through the coming election season.

Monday, August 23, 2010

Public transit in Santiago, Chile

Great podcast re pros and cos of public vs private transit in Santiago Chile, by Mike Munger and Russ Roberts

Buy them a health club membership

Freakonomics points us to yet another study that shows how the design of neighborhoods can contribute to weight loss. I am, of course, skeptical. Weight loss, I am told is not so easy.

But lets' accept these results (reported in the American Journal of Preventive Medicine) and ask "at what cost"? The case study involves the Lynx light-rail operating in Charlotte NC. In earlier posts I had written that these systems are likely to be cost-ineffective. The data that Paige Elise Kolesar and I recently assembled show that Lynx runs an annual operating deficit of almost $8 million. Account for capital costs (which transit agencies often ignore) and the annual deficit is almost $46 million. Add non-user benefits (as per Ian Parry and Ken Small's calculations; American Economic Review of June 2009) and the deficit goes down to $45 million per year.

Lynx only attracts about 2.26 million boardings per year. If these are round-trips and users board Lynx 300 times a year, we only have 3,750 weight loss beneficiaries. If society loses $45 million a year even after non-user benefits are taken into account, the estimated weight losses cost us $12,000 per beneficiary per year.

Cynics started doing the math many years ago and found that buying rail transit users a car would be far cheaper. But that would never fly with the smart set. So consider the 2010 update which suggests that buying them a bus pass plus health club membership is the way to go. The various "cash-strapped" governments would save money.