Thursday, June 22, 2017


In a few words, Mike Munger sums up the new world of the sharing economy (H/T Café Hayek):

"Portable platforms (mostly smartphones) using software (often modular, self-contained apps) and connecting over the internet mean that transaction costs are plummeting. Uber doesn’t sell taxi rides; Airbnb doesn’t rent hotel rooms. These companies, and a thousand others, “sell” reductions in transaction costs. ...

... We’ll need a lot less stuff and a lot fewer parking spaces if we can take better advantage of what we already have. And cities will have a lot more space once we aren’t paying the costs of storing cars in parking lots and loads of equipment and clothing in self-storage facilities."

The WSJ (June 21) includes "The End of Car Ownership ... Ride sharing and self-driving vehicles are going to refine our relationship with cars ..."

Planners' holy grail for as far back as I can remember was to get people out of their cars. Mega-billions spent on public transit and HOV lanes had no effect (except all the red ink).  But the profit-seekers have now entered the picture to bail out all the smart people.

We hear a lot about "stagnation" and also "disruption".  Inevitably, there are both.  Are there trends? N-gram viewer says "no".  Each has held its own.

It comes back to things I often mention. If you had a choice, in which year would you choose to live? The latest one possible? Two words: "medical science".  When next you go for any treatment, you would never say, "please treat me the way you would have X years ago."

All of this in the very politicized U.S. health care system that's in the news all day. What would it be like if the disrupters were really allowed to operate? Perhaps the stagnation, to the extent that it is real, can be pinned on our politics.

Monday, June 19, 2017

Niches, not cities vs suburbs

Here David Warsh speculates on what the new chapter of the Amazon-Walmart rivalry means. Is it good for cities? Is it good for suburbs? Both? The urban vs suburban distinction is no longer useful. Both contain niches and a variety of situations and opportunities.

Here Russ Roberts and his colleagues discuss emergent orders. Mike Munger mentions that cities are emergent orders. Of course. The complexities and the stakes are too great to imagine any other way. Higher high-rise buildings are seen in major cities all the time. It's partly better building technologies (supply) and partly the benefits of location (demand and agglomeration). But it is not "a return to the cities". Think complexities and niches, not urban vs. suburban. The cliche is that cities change slowly. But many people now choose neighborhoods that do not fall on either side of an urban-suburban divide.

A Whole Foods or similar enterprise can serve any of them. Holman Jenkins writes "Amazon Will Free You From the Minivan ... With his Whole Foods purchase, Jeff Bezos takes aim at groceries -- and car ownership."

Stratechery argues that Amazon with its high-fixed-cost delivery infrastructure has actually bought a customer, Whole Foods and its shoppers.

It's hard to know when and where there are substitutes or complements. Order on-line or walk/bike to Whole Foods to see/touch/feel the melons but have them shipped home?

Tuesday, June 13, 2017

Watch out?

No $20 bills on sidewalks is pretty clear. Also clear is the logic of the efficient markets hypothesis (EMH):  in the race for profit, new information is quickly scooped up and acted on -- and "baked into" asset prices. (To be sure, EMH is also misunderstood by many who bizarrely expect any and all surprises to also be reflected in asset prices.) Also clear is evidence that many investors have accepted the logic of the efficient markets hypothesis and have moved their holdings from stock pickers to index funds.

Stock market prices are the original "big data" -- and an unavoidable temptation for study by finance experts. Slightly less expert are those who look for portentious episodes in daily life (business and other).  Joe Kennedy supposedly got out of the stock market just before the 1929 crash because his shoeshine guy tipped him to buy.

This morning's WSJ includes "Does Anyone Remember How to Make a Subprime Mortgage? ... Brokers willing to learn the lost art of making risky mortgages are in demand again."  Your mileage may vary -- and there are many mortgage markets in the U.S.  But mortgage originators have been able to sell the mortgages they make. And the U.S. government GSE's (Fannie and Freddie) and others who buy them have been known to get bail-outs when things do not work as planned (wished for).

The usual caveats apply.

Monday, June 05, 2017


With all the hand wringing over the Trump withdrawal from the Paris climate accord, it is refreshing and useful to get this short (just over 100 words) and clear statement from Cato.  The accord is at best simply a feel-good measure; at worst it is an awful waste.  More details at this conversation by Nick Gillespie with Bjorn Lomborg.  Perhaps the well worn Paris photo of over a hundred heads of state posing and posturing and smiling smug over their success in reaching the agreement says it best.

So it is ironic that there is so much breast-beating, now that the carpet has been pulled.

For some years, the best and brightest in urban planning have offered a simple solution to urban traffic.  Price parking.  Get one price right.  In fact, it is easier than it sounds because so many places have nearby commercial parking.  The market signals are abundant and easy to find.

But despite the clarity and simplicity, most parking remains under-priced.  And a thousand expensive and impotent "solutions" have been offered instead.  These include expensive parking requirements, expensive transit, expensive bike lanes, expensive HOV lanes, expensive vehicle mandates and subsidies, etc.

The people who cannot get one price right are eager to "fix" climate, health care, education, poverty, hunger, world peace, you name it.  Is there better word than irony?