Wednesday, July 29, 2015


Here are some minimum wage data from Pew:
Perhaps surprisingly, not very many people earn minimum wage, and they make up a smaller share of the workforce than they used to. According to the Bureau of Labor Statistics, last year 1.532 million hourly workers earned the federal minimum of $7.25 an hour; nearly 1.8 million more earned less than that because they fell under one of several exemptions (tipped employees, full-time students, certain disabled workers and others), for a total of 3.3 million hourly workers at or below the federal minimum.
Yet, to look at all the attention, one would think that many more workers are involved.  The advocates of raising the minimum wage do not believe that the Law of Demand applies and that mandated increases are a free lunch. Perhaps they should ask themselves why nearly all salaried workers earn more than the law requires. (In a few cases, local mandates may be higher than the federal.)  Boosters might respond that most workers are productive enough to earn more; they might say that employers compete for their services and pay their workers just enough to keep them from leaving. They would be citing the Law of Demand, perhaps without realizing it.
Greg Mankiw points us to his review of Arthur Brooks' The Conservative Heart. Author and reviewer are addressing political candidates of the right and telling them to streamline their messages.  "... say it in thirty seconds. Extended rational argument can come later. A good first impression is crucial ..."  Short attention spans (and low levels of interest) are a fact of life so streamlined messaging is a good idea.
Just ask: why do so many people earn more than a minimum wage? Why does anyone earn more?

Saturday, July 25, 2015

Hope and change

By now, almost everyone has grasped the fact that Uber has built the better mouse trap. Customers have spoken, capital markets have spoken and (Holman Jenkins in today's WSJ notes) the winners have enough money to hire progressive David Plouffe to outmaneuver progressive Bill de Blasio in the NYC taxi wars.  I did not know until I read the Jenkins piece that among de Blasio's lame claims was the one that Uber adds to NYC congestion.

My wife and I live in a walkable neighborhood and walk to the bank, the ATM, the market, the cleaners, the drug store, restaurants and more. We have no good reason for being a two-car family.  But that will soon change. We plan to become a one-car-plus-Uber family.

Most of my professional activities are from my connected home office. So the formula involves internet connectivity + walkable neighborhood + Uber (or equivalent) + one car. I will even have an unused parking space from which I plan to earn a few extra dollars. Mandated parking requirements will eventually have to be re-thought. (Looking at you, Don Shoup.)

As always, the forces of change come via markets; the forces of reaction come via the usual suspects -- the ones who cannot abide change.

Wednesday, July 22, 2015

"Living wage"

It's hard to say whether there is greater voyeurism re other people's sex lives or their incomes (even better, their net worth). LA politicians and their allies (see non-stop LA Times cheer leading) are all over this because they (somehow) know what various people "need", what "living wages" everyone should have, and  how these can be achieved by edict. Today's Times coverage cites the MIT "Living Wage Calculator".  Who knew?

Everything we thought we knew about subjective choices and tastes, scarcities, trade-offs, productivity, prices, and the wisdom of politics and politicians goes out the window. The feel-good fest of redistribution is just too alluring. Greece never happened.

Sunday, July 19, 2015

The (less than) 1% solution; not pretty

The Washington Post reports interesting survey results. "Why Don't Americans Vote? We're Too Busy."

Call it cynicism. Call it turtle soup. Many people see the utterings of Donald Trump and Hillary Clinton (and a few others) as too bizarre to take seriously.

In Los Angeles, the MTAs buses now carry ads that boast: "Metro is 25 years old ... 1.5 billion rides and counting." Counting on voters who are too busy to ask the simple questions. "At what cost?" "At what opportunity cost?"

There are about 10 million people in MTA's service area (LA county). The average person (all ages) takes 3.8 trips per day (U.S. data).  Use 300 days/year. The percentage of L.A. rail travel is about less than 1%. Could that be? "1.5 billion and counting" sounds much better. 

But MTA data show that estimated daily (weekday; system wide, all bus all rail) in FY 2015 was 1,423,458. In FY 2010 it was a little higher, 1,445,109. In other words, slightly worse than flat. Using  the same parameters as above, MTA serves 3.25% of all daily trips.

But look closer. The National Transit Data Base includes the agency's 2013 data. Rail (light + heavy) accounted for just over 24% of the boardings (24% of 3.25%, actually less than 1%!) -- and just over 27% of operating costs but almost 74% of capital costs. This is all too much to shoe horn into a boast to plaster onto the sides of buses. And it's not pretty.

Friday, July 17, 2015

The good news

It makes great sense that the world speeds up, tech speeds up, and measurement gets left behind. Many smart people work in data gathering and analysis but keeping up is harder than ever. Almost everyone gets cheaper and better tech applications routinely these days. How is anyone going to measure the consumer surplus involved? How then to measure productivity trends? Economist Hal Varian understands this better than anyone and explains in today's WSJ. "Silicon Valley Doesn’t Believe U.S. Productivity Is Down ... Contrarian economists at Google and Stanford say the U.S. doesn’t have a productivity problem, it has a measurement problem"

Thursday, July 16, 2015

Better angels

Here are four smart people (Lee Ohanian, Arnold Kling, John Cochrane and Russ Roberts) discussing the economy -- and the very big question of whether to be an optimist or a pessimist. Listen to the whole thing.

Do we take our many unfunded liabilities seriously? Do we then pursue economic growth? How about the many people who never consider these in the same discussion? In our overly long presidential election campaign (does it ever stop?) we get the freak parade that both parties muster; this has to make any observer tilt to the negative.

What to do? First, avoid (ignore) the daily news. Second read works like Robert Fogel's Escape from Hunger and Angus Deaton's The Great Escape. There is nothing like economic history.

It is also the week of the Pluto fly-by. Wright Bros flight in 1903. Man on Moon just 66 years later. Man-made object reaches edge of solar system 46 years after that. It's always a race between what our better angels and our worst instincts come up with. I keep betting on our better angels.

Thursday, July 09, 2015

Weak ties stronger

The latest release from the Bureau of Labor Statistics' Time Use Survey mentions this:
In 2014, on days they worked, 23 percent of employed persons did some or all of their work at home, and 85 percent did some or all of their work at their workplace, ... In 2003, the first year for which comparable data are available, 19 percent of employed persons did some or all of their work at home, and 87 percent did some or all their work at their workplace on days worked. 
Is this a lot or a little? Is the glass half-full? Half-empty? By themselves, these data say nothing about how many cars were taken of the roads. Quite a few home-workers also spent some time at the office. In a recent post, I did cite some evidence on how many (how few) just worked at home.

But this is where standard concepts of productivity fail us. We are unable to measure the comparative "well-offness" of those who spend more time at home. They are (no pun) voting with their feet and telling us something about how they choose to use modern communications (and work) options. "Death of distance" never came; cities and agglomerations keep growing -- mostly at the edges. People seemingly do more work-spreading (some at home, some at the office). As with social networking, they can strengthen weak ties from a distance. That's a good thing.

Tuesday, July 07, 2015

Hearts and minds

There is, it seems, a government program for everything. The Life of Julia was made without irony -- but as a promotion for the Obama campaign of 2012. My friends at the Independent Institute have now made a series of videos for Julia, called LoveGov. These shorts may be the way to the hearts and minds of generations X,Y, and Z. Enjoy.

Friday, July 03, 2015

Certainties and uncertainties

It's pretty awful that if you type "climate change de ..." into Google' search window, you quickly get "climate change deniers" (as in Holocaust deniers?) and thousands of links. Of all places, science should not be the place for lockstep agreement and thought police. Yet, that is where we are.  Matt Ridley makes the point brilliantly.

When will coastal property values crash?  This blogger is certain they will and says that the "deniers" will (someday) be the only buyers. And then we'll see!

This report speculates which communities will be threatened by rising sea levels. But I have seen no evidence that this has actually happened in anywhere the U.S. In fact, Al Gore recently bought sea-front property in Montecito, California. What was he thinking?

Prediction markets are best. Asset markets are prediction markets. Uncertainties everywhere but keep your eyes on the relevant markets.

Wednesday, July 01, 2015

Wrong drift

I am a huge fan of Joseph Epstein but not much of politics as we know it. Epstein's "The Unstoppable Appeal of 'Going Forward'" in today's WSJ (gated) does it for me. "Going forward" is one of those anodyne (probably road tested) phrases, contrived for feel-good appeal but committing to nothing. "Hope and change"?

Many people are wise to this stuff and turned off.  Many others enjoy the team sports appeal of politics. I suppose that there is a third group grudgingly optimistic that the effort must be made to make the best of a bad situation -- and at least slow down the bad ideas and even promote some good ones.

This is one reason why in a federal system, the more that is done locally, the better.  The more local, the greater the chance that real discussions of real questions occur.  Too bad that our drift is in the opposite direction.

Sunday, June 28, 2015

Our highways, our culture

Massive car ownership and driving came to China very recently and very fast. In their cars or not, people jostle for position. On the roads, voluntary yielding only occurs after two drivers have engaged in what we would call a “game of chicken”.  Much honking of horns comes first. Established customs rather than unevenly enforced traffic laws rule the road; whoever manages to nose in first, goes on his/her way. I have not seen data on how much (what we would call) “road rage” there is in China. I suspect very little. But what you see among drivers (as well as drivers vs. pedestrians) would surely lead to confrontations and even shootings in the U.S.
Kudos, then, for Chinese culture and less so all for ours. I cannot say much about China, but we may have a problem.

Tuesday, June 23, 2015

"Balance" is too vague and too simple

I have just spent a few days attending a large meeting (this time in China) of people (researchers and officials) interested in cities. I don’t do many of these but it is always disappointing to see that bad old ideas don’t go away. One of these is the idea of “jobs-housing balance” – and that top-down planners can somehow achieve it by arranging/re-arranging land uses. Advocates claim they are addressing the problem of job access, lengthy commutes, and highway congestion.  But not all jobs are the same; matching problems are considerable; job search is not trivial. It’s the knowledge problem again – this time ignored by embracing a stunningly naive view of labor markets.

I asked whether the problem of finding a mate was simple or complex, whether a matching problem of this difficulty could usefully be addressed by well-meaning but crude spatial policies
Google scholar shows 2349 papers (yes, some that do ask question) in the "jobs-housing balance" sub-field and (I can now say) many more on the way. Students are seemingly encouraged to conduct another and then another pointless study.

People attached to this view also have to face up to the fact that there are many locations that households may be attracted to; they may select residences based on a variety of factors, including spouse’s workplace, children’s schools, friends, shopping and entertainment, assorted amenities, and many more. "Balance" is too vague and too simple.

Saturday, June 13, 2015

It has to get very bad first

Matt Ridley directs our attention to An Ecomodernist Manifesto. Thinking seriously about resources does not require Luddism. Ridley notes,

"Imagine a city on a desert coast at the end of the 21st century. Its main business is software. Its energy comes from advanced forms of nuclear power. Its food is grown in multi-storey, hydroponic factories in the desert, which exclude pests and use sunlight, LEDs, desalinated water and fertiliser manufactured from the air. The city’s metal comes from ore; its glass from sand; its plastic from oil. Its demands on the wild landscapes, free-flowing rivers and fertile soils of the rest of the planet are virtually nil. All just about feasible today."

But how do we get from here to there? Ridley wants the Manifesto to somehow get onto the G-7 agenda as they meet in Bavaria. That would be nice but I expect that the participants and their followers are firmly on board with the green policies we have. The Elon Musks of the world get it. This morning's WSJ includes "High-Tech Solar Projects Fail to Deliver ... $2.2 billion California project generates 40% of expected electricity." Where did the money go? I am reminded of stories of the bad old East bloc days like this one from Charles Wheelan:
“… by the time the Berlin Wall crumbled, some East German car factories were actually destroying value. Because the manufacturing process was so inefficient and the end product so shoddy, the plants were producing cars worth less than the inputs used to make them.” (p. 34)

How do we get from here to there? It has to get very bad first.

Thursday, June 04, 2015

No paradox

I had previously posted that "Death of distance" and "Smartphone city" are not quite here yet. But is the glass half-full or half-empty? In 2013, 4.3% of U.S. workers reported that their primary place of work is the home. Growth in the number who report doing this is faster (and fast approaching) the number who commute via public transit -- and at vastly lower public expense. But some of these (hairdressers, child care workers, etc.) may have a home shop that does not involve "telework" of "telecommuting." Wendell Cox offers perspective on the U.S. trends here.

A new paper in the Journal of Transport and Land Use (ungated) by Glenn Lyons is worth reading. The author uses UK data which includes the various ways of teleworking. The more expansive definition shows 33.1% doing so in 1997 and 58.7% in 2010. But the author is after much bigger game. This is how he begins:
This paper contends that a fundamental transition is occurring in those societies which have hitherto embraced and centralized the motorcar and which are now (also) embracing the digital age. It suggests that we are some years into a process of gradual yet significant change away from the car as a foreground innovation in human connectivity with its important symbolic as well as functional meaning. This change is taking us into a recast form of society brought about by the affordances of the digital age revolution in which the car is set to become a background, functionally supporting technology. It will be accompanied and overshadowed by a much greater richness in forms of being able to reach people, goods, services and opportunities made possible by information and communications technologies (ICTs). Car dependence will abate as the spatial and temporal configurations of social and economic participation in society become more flexible. This will have major implications for our transport and land use systems. 
Lyons believes that, "we are in the middle of a regime change transition for transport." (p. 13). Perhaps. Cities change slowly but changing lifestyles are another matter. But that's OK. We may have passed "peak car" and "peak VMT; Lyons even sees a "low-carbon transition." People who are able to visit a place of work less frequently can tolerate greater distances. This means more suburbanization. But that is very old. Plus ça change, plus c'est la même chose.