Thursday, September 30, 2010


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.


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


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.