Monday, February 27, 2012

The beat goes on (and on)

This morning's LA Times includes another story of bus service cut-backs necessitated by the Los Angeles MTA's diversion of funds to it's rail projects ("Cuts in MTA bus line serving Westside LA workers who live in south LA").  The story mentions that this is another chapter of an old problem for the MTA.

Just over a week ago, the LA Times helpfully editorialized ("What to do about $4 gas"). That piece included this gem:
A world of alternatives to the internal combustion engine is flowering, and complaining about the cost is pointless because there's something to fit every pocketbook: The very rich can buy high-performance electric sports cars made by new companies such as Tesla and Fisker, and those who can't or don't want to spend so much can ride public transportation, with Measure R-funded rail lines on the way in Los Angeles County.
I guess when people are in the grip of their own fantasy view of the world, they cannot be expected to spot the contradictions that pop up in their own newspaper.

But, far worse, many real people trying to get to work have to make do with the transit service made available to them.  Can one blame them for being just a little cynical about the quality of help they are getting from the folks who profess to represent them?

Saturday, February 25, 2012

Getting smarter all the time?

The Flynn effect is supposedly real  It says we are getting smarter.  Steven Pinker credits it with some of the decline in violence and nastiness that he documents.

But here is the Ngram for the use of the expression "green jobs".  The use of that phrase has been taking off in recent years.  Here Mark Perry shows that job growth has been via traditional energy in North Dakota but anemic in green energy in California.

I suspect that while many Californians congratulate themselves on their high-mindedness, North Dakotans congratulate themselves on a low unemployment rate.  Perhaps feeling good about oneself comes first in some quarters.

Friday, February 24, 2012

Modern world

The 84th Academy Awards ceremony this Sunday will be held at the Kodak Theatre in Hollywood -- which is no longer the Kodak Theater because Kodak is no longer in a position to pay for the naming rights.  I am not sure what they will be calling the place as events get underway.  The Theater at the corner of Hollywood and Highland? 

It was once fitting that the film company would host the film people, but whereas we still view "films," we no longer use film.

Affixing corporate names and logos once conveyed an impression of near-permanence.  But creative destruction keeps moving along smartly.

Wednesday, February 22, 2012


This morning's LA Times reports that "More Americans are waiting longer to replace their vehicles".  I think that most car owners know that their autos are better and more durable than ever.  All this reminded me that I had not heard of "planned obsolescence" for a while.  Sure enough, this Ngram shows use of that phrase had peaked shortly before 1975.

Planned obsolescence was always a silly idea, one which did not grasp the power of competition (including from abroad).  In fact, strange as it seems, competition is still an underrated and underappreciated phenomenon.

Yes, there are profit-seeking people and businesses among us.  And that's a wonderful thing -- as long as they are subject to competition.  And competition is powerful.  There are more "category busters" serving us than ever, with many more to come.  Just look at the smart phone in your pocket.

Whether it is "big oil" or big-you-name-it, the profits involved are usually cited as part of some sinister scenario.  Last Sunday's 60-Minutes did it again re the possible placebo effects of anti-depressants and all those profits reported by drug manufacturers.

Is there an investigative report in the works that shows how profits are beneficial and essential -- unless they are rents that result from government bail-outs or political favors or government prohibitions of competition? 

It is interesting that profits reported by the new General Motors are seen as a good thing because they were blessed and supported by politicians.


Re autos.  H/T Carpe Diem.

Tuesday, February 21, 2012


Economics has been called the "queen of the social sciences".  This can be bad news as well as good news.  On the bad news side, many of the elite in the profession mix and mingle at the centers of power and glitter; this can undermine any residual humility.

There is also the problem that erudition can be at the expense of useful knowledge and insights.  This week's Econtalk podcast (Russ Roberts interviews Adam Davidson on manufacturing) helps to make the point.  Davidson went to the trouble of learning what really goes on in a U.S. manufacturing plant -- and how and why it survives as well as how and why this is never simple.

This is where competition on many margins actually happens.  Comparative advantage (vis a vis Chinese competitors in this discussion) is much more subtle than what we teach our students.  Labor markets, on-the-job-training and the nature of our K-12 education system are also analyzed.  How do we get these three to interact more productively?   Will the folks we elect to office ever make room for enough freedom and flexibility for there to be progress on this front?

Economic aggregates have their place.  Theorizing is important, but it has to be grounded in some reality.   I do not know how much on-site time Davidson spent at the plant that he discussed.  But it sounds like a perfect internship for prospective PhDs in economics and related fields.


Here is a sample of some of the reflection by economists.

Saturday, February 18, 2012

Assortative mating for the good

I accept the fact that our ancestors had good reason to become social and tribal in the hunter-gatherer days.  But tribalism does much more harm than good in the modern world.  And many of us have finally learned to place trust in people beyond the family, clan and tribe.  I expect that the positive trend will continue.  I only hope it accelerates.

I have just read Robert Guest's Borderless Economics which I enjoyed a lot.  Guest's book illustrates the points on tribalism and trust better than anything I have seen in a while.  When I have the time, I may write a longer review.

Yesterday's WSJ included "More Marriages Cross Race, Ethnicity Lines."  I like reports like this.  The trend may one day put opportunists who obsess over race and racial quotas out of business. 

And look at this:  "Interracial Couples Who Make the Most Money".  Yes, the cause and effect are complex -- as is assortative mating.

Thursday, February 16, 2012

Polycentrism (the spatial kind) in Moscow.

Moscow goes capitalist (their version), and what do they get?  Central city parking conflicts -- and flight from the urban center.  Here is a summary.  Here is U.S. planner (and one-time USC dean) Ed Blakely endorsing a polycentric Moscow.

Subcenters are real and recognizing them has been an overdue antidote to urban economists' old time religion re the canonical "monocentric" model.  No one outside the field could take this seriously as a description of modern cities.

But Bumsoo Lee and I had made the point some years ago (and I have never stopped talking about the fact) that (1) subcenters are hard to define; there are many approaches; and (2) most people in large U.S. cities do not work in either the centers nor the subcenters. 

Using one approach to the definition of subcenters, Bumsoo found that for the fourteen largest U.S. metro areas (3-million and above in 2000), the traditional cores acounted for 11% of the jobs; the subcenters 7%; and 82% were dispersed.

Of these, the longest commutes (in minutes) were to the core; the shortest average duration trips to the dispersed locations, with the sub-centers in between.

What does this show?  Two things:  (1) "Sprawl" is not a transportation problem; this part of anti-sprawl critique does not hold up; and (2) Economic logic prevails; the longest commutes are compensated by the highest wages, which are available where there are the most agglomeration economies, in the CBDs.

A third point is that there are many lesser paying job opportunities and lesser agglomeration opportunies available in very many low-job-density settings.  The shortest commutes are most likely where there are lesser wage premia.

Monocentrism is way out of date.  But Muscovite polycentrism also misses. 

Wednesday, February 15, 2012


What are the internet and modern communications doing to/for our lifestyles?  It's a big question that's now some years old.  And there are no simple answers because the relevant technologies change so fast.  This morning's WSJ includes "Where Have All the Fans Gone? ... The ACC, Long a College Hotbed, Is Seeing Empty Seats ..."  Towards the end of the story, there is this:

The 14-Step Commute ... In a conference call this week, North Carolina coach Roy Williams put forth an interesting notion—one that is certainly not limited to college basketball: He said that with the proliferation of televised games, even the best man at his wedding has turned down an offer of game tickets in favor of his big screen.

This friend, Williams said, told him the crucial number in his mind was 14: the exact number of steps from his recliner to his bedroom. Chris Bevilacqua, the founder of a media-consulting group and architect of the Pac-12's nearly $3 billion TV-rights deal, pointed to another general culprit: the affordability of clearer, larger televisions. The at-home TV experience, he said, is better than ever.

Another broad problem: the younger the sports fan, the less they enjoy being in an arena where their smartphones can't get a signal. "People don't like to be out of touch," said Doug Perlman, founder and CEO of consulting firm Sports Media Advisors and a Duke graduate. "They want to be sharing the experience with their friends."

Where will this go?  The home options will only get better.  It's not for everyone, but hassles (and even drunks and boors) are more avoidable then ever.  "Good" vs. "bad" substitutes are in the eye of the beholder.  But the cited trend is not a surprise.

Monday, February 13, 2012

Not so bad

To kill time at the airport the other day, I went to the bar to get a beer.  I was carded --in spite of the fact that I will soon be 70.  The guy next to me (my guess) was over 70 and he too was carded.

The woman tending bar looked to be humorless, not pulling a stunt, and just implementing what was probably the policy, "card everybody."

I see this in other venues.  Sales people and bank tellers and many telephone "help" people know about three things.  If they cannot pidgeon-hole your request into one of those, they are helpless.

Welcome to the world of labor market "churn."

The Economist (Feb 11, "Free exchange ... Go for the churn") highlights the Department of Labor's Job Openings and Labor Turnover Survey (JOLTS) which tells us about job openings, hires and separations.  This is vastly more interesting than the widely reported "unemployment rate".

In a world of rapid job turnover, which can be a good thing as employees as well as employers have a chance to correct mistakes, training as well as experience are limited.  It is best to keep things simple.

Yes, there is always a downside.  Loyalties are not well established and service is spotty.  But old guys being carded is not so bad.  And error-correction opportunities are the best we can ask for in the world of second-best.

Sunday, February 12, 2012

Thinking about growth: the seventh "killer app"

I just returned from the 51st annual meeting of the Western Regional Science Association where  I was privileged to deliver the presidential address.

What to talk about?  Economic growth, of course.  I took off from Niall Ferguson's six killer apps.  What's missing?

We know that ideas matter and ideas are spawned in cities.  But the popular and conventional density explanation is too simple and cannot do all the "heavy lifting" (as Sandy Ikeda puts it).

Cities afford "agglomeration" economies that are congenial to all sorts of supply chains.  But the same can be said of the less visible supply chains for good ideas.  We rely on the adjacent possible.  Actually, the propitious adjacent possible. 

I like this much better that "creative cities" and "creative class" people. This is how I wound up:

We know that places grow because they remain vital by attracting and maintaining and facilitating the activities of talented people. But talented people come in all sizes and shapes; they are not simply the selected occupations itemized in recent “creative class” writings. Many of these people want affordable homes with space for family; they end up in suburbs and that is where most of the urban growth has been. But doesn’t that sound like more “sprawl” and traffic? Yes and no. Urban growth vitality would quickly disappear if only costly growth were possible. So what is the explanation?
It must be that land uses (users) find ways to arrange themselves such that positive agglomeration and networking economies remain available while the costs of agglomerating are kept in check. When discussing agglomeration economies (including externalities), we must recall that most of them attenuate with distance; transactions and transactions costs are simultaneously determined. Likewise, most externalities are potential externalities; they become realized externalities in light of specific spatial arrangements.

Just as networks create opportunities, making locations and interactions endogenous, so realized externalities are endogenous. A successful (competitive) urban form is likely to be one in which the positive realized agglomeration economies dominate the negative realized agglomeration economies.

We could not get competitive growth or advancement if we could not get spatial arrangements that are suitable or congenial. In this light, city-size debates are meaningless.  It is all about how places are laid out – and whether we allow them to find competitive spatial arrangements.  This is unlikely to happen in any top-down fashion.


Thursday, February 09, 2012

Old story

It is possible to discuss the business cycle without conventional aggregate analyses that focus on aggregate demand.  I am particularly impressed with Arnold Kling's approach via Patterns of Sustainable Specialization and Trade (PSST).

But it is not possible to have the discussion without a public choice model.  Politics cannot be assumed away.  My favorite public choice model is Bruce Yandle's Bootleggers and Baptists.  It is always about building and sustaining coalitions.  Include at least one of these: For the children.  For the poor.  For the planet.  There are many others.

Wendell Cox notes that the rhetoric on behalf of public transit subsidies for "the poor" leaves out much of the story.  Poor people prefer used cars and get access to them when they can.

It's an old story.  If there are going to be subsidies, send them to the demanders, not to the suppliers.

Tuesday, February 07, 2012


Stephen Moore writes about the other overused four-letter F-word in today's WSJ.  Yes, N-gram does show a long term rise in the use of "fairness". 

Was the Chrysler bail-out "fair"? The rule of law was trampled in the workout.  Clint Eastwood seems to think it was OK; it was in the "spirit of America".

More than one commentator has chimed in on the current popularity of Downton Abbey.  Americans love to imagine that we are a "classless" society and so have voyeuristic fun peering at (a fantasy version of) one. And social class is "as American as apple pie."  But how moored are Americans?

Immigrants to the U.S. have long understood that they can become Americans and many do (not simply formally via naturalization, but in the ways that count).  I doubt that any of us can ever become Italians or Germans or Greeks, or you name it, in ways that count.  Some immigrants to the U.S. insist on being hypthenated Americans, but most do not. It is up to each one.  In that sense, we are classless in ways that do count.

Friday, February 03, 2012

College towns

The University of Rochester's Duncan Moore writes about "No Rust in Rochester ... Eastman Kodak is bankrupt. So why is Snapshot City thriving?" in today's NY Times.

He cites a variety of effects, including the benefits of being a college town (University of Rochester).  Colleges are a town's local export industry that is less sensitive to business cycles.  Students bring in cash as do the recipients of various grants from public and private sources that the people at many colleges and universities compete for.  Even better, some schools have specialized human capital that attracts entrepreneurs and start-ups.  The story of Stanford and Silicon Valley has now been told a thousand times.

The University of Massachusetts' (Amherst) Blake Gumprecht has prepared this list of the nation's 305 "college towns".  He used a screen of 20 percent Enrollment-to-Threshold (in 2000) ratio.  The biggest 17 of these towns (Madison, Tallahassee, Ann Arbor, Fort Collins, Provo, Champaign-Urbana, Norman, Athens, Gainesville, Boulder, Santa Barbara, Columbia, Denton, Lawrence, Tuscaloosa, Kalamazoo, Las Cruces) are cities with population of 70,000 or more.

New Geography has this ranking of the best job-growth small cities for 2010-2011.  243 places are ranked.  Seven of the 17 biggest college towns made this cut (Columbia, MO, was #20; Gainseville, FL, #52; Athens, GA, #89; Lawrence, KA,#165; Tuscaloosa, AL, #91; Kalamazoo, MI, #187; Las Cruces, NM, #43); only one was in the top 20.

This result is for one year only and everyone knows growth is a complex story.  Moreover Gumprecht's screen leaves out places like Stanford.  Propulsive effects can and do spill over city boundaries, especially if there is a congenial surrounding metropolitan area.  But it can also be true that the small places (the 288 college towns below 70,000 population) are that small because they never experienced much growth.  Moore is right to list the complementary efforts and political favors ("The state and federal governments have been a big help too") that Rochester received which seemingly boosted the "college town" effect.


Here are several links to the bigger discussion.

Problem solved

I often pay attention to the #1 downloaded article at the WSJ or other widely read paper.  Yesterday's WSJ #1 was "No More Angling for the Best Seat; More Meetings Are Stand-Up Jobs ... Companies Ban Sitting to Speed Things Up ..."  It turns out that the military had tried this years ago and it is now catching on in more places.  I started to think of faculty meetings.

There is nothing like simple and common sense answers to difficult problems.  There was the (perhaps apocryphal) story that in some of the Soviet Gulag prisons, the inmates were given pants so big around the waist that they always had to use one hand to hold them up.  This sharply decreased the frequencies of assaults -- at least by inmates.

There have been suggestions that members of Congress place a significant portion of their holdings in U.S. Treasuries while they serve.  No more U.S. debt downgrades.

There are probably many other simple rules that could make life better.  Taking away the chairs is probably simplest and a very good place to start.