Wednesday, May 25, 2016

LA's Expo Line extension

LA is not a transit town. Even the LA Times has figured this out. They show fewer riders now than when rail transit building began in 1985.  Billions have been spent to achieve this result, But we live in a bootleggers-and-Baptists world where costs and benefits (resource scarcity) are not a big deal.

I decided to test LA's new Expo Line extension this AM. It was a fine-weather LA morning and I was carrying minimal gear. I walked past my parked car and kept walking to the nearest Expo station, about 2 miles away. I am a 10,000-steps-a-day man anyway, so no problem. The walk to the station took just over 40 minutes. The senior fare was $1.75. (A transit pass would have made this less.)

The train arrived 10 minutes late. They have only been in service less than a week.

I got a seat and was able to read. The ride was smooth. The car that I was in was filled with passengers most of the way. Late arrival explained some of this.

One reason to do my experiment is that the train does stop at USC's doorstep, my destination. Total door-to-door trip time for me was 87 minutes. The median morning drive-time for me (over many trials over many years) is about 25 minutes,  So, I "lost" about an hour this AM. This is not that bad considering that one of the trip ends is exactly at the station where I alighted.

Assuming it's similar on the way home, at the margin, will I give up 2 hours a day, every day? LA is not a transit town.

Full disclosure, as an emeritus, I get free parking (looking at you, Prof Shoup) and save that $12/day outlay, Still, 2 hours a day?


The trip home was better. The train arrived on schedule and I happened to arrive at the station just as it pulled in. So that was about 20 minutes less than the AM (when I would have had a 10 min wait had the train been on schedule). But the afternoon walk was uphill and, being later in the day, more tiring. Marginals are not supposed to be fixed. So averaging the 60 minutes added to my normal commute in the AM and about 35 minutes added in the PM, the marginal time cost per day is just over 1.5 hours. 

Sunday, May 22, 2016

Policy uncertainty blob

Many economists (here, for example) are baffled by the Obama administration's new overtime pay regulations. I am baffled that they are baffled. The political campaign to date has shown pretty clearly that the electorate is ignorant of basic economic common sense. The thinnest rhetoric that it's all about "helping people" works. Anything that can be promoted as "helping" anyone, who can without any serious effort be shown to be a victim of something or other, can be sold as a winning policy proposal -- to just enough of the electorate (and media).

Any bargain that I choose to strike with anyone is between me and the other party. If no force or fraud is involved, it's on my shoulders. If I agree to the deal it is because I have decided (as only I can) that it's my best option under the circumstances. (David Henderson lays it out.) I can always dream of better options but that's irrelevant. So Secretary of Labor Tom Perez can go on the PBS News Hour and explain it all as common sense "helping people" -- along with a finger-wagging Joe Biden to back it all up with a stern "mark my words". Case closed.

The blob is growing fast and hard to assess. Last Friday, Holman Jenkins cited the latest: "The Competitive Enterprise Institute finds that, last year, Congress passed a mere 114 laws and federal agencies issued a whopping 3,410 regulations. At 80,260 pages, last year’s Federal Register was the third fattest in history."

Slow recovery? That has absolutely nothing to do with it. It's actually all about "secular stagnation." So bring on more regs and rules that can be sold as "helping people". Just don't think about the policy uncertainty.

Thursday, May 19, 2016

Social media electorate

Matt Ridley reminds his readers that genetically modified foods are safe. He cites a recent meta-analysis that reiterates the point. Yet the EU still rejects them. Food manufacturers here and there are busy stamping "No GMO inside" on the labels of foods they are selling. Our more-educated-than-ever public is apparently prone to hysteria.

Today's WSJ cites Gwyneth Paltrow's views on detox ("Gwyneth Paltrow and Science"). Daniel Henninger writes about "Trump and Bernie" and guesses that their ideas resonate in an age when most people are informed via social media. "The Trump and Sanders phenomena have more in common with Facebook communities than with the two political parties. Maybe that's the future. Criticizing them, we've all learned, violates the social bond." Old-school Hillary Clinton is forced to try to stay in the game by trying to out-Bern Bernie -- and even to promise (threaten) to bring Bill back into the White House.

There is lots of head-scratching over what goes with the electorate in 2016. Henninger's is an interesting one. New technologies are usually mixed blessings. The networked world is a great thing but it appears to have put the electorate in a trance. Will our new politics find a way to cope with tax reform, regulatory reform, terror from non-state actors? 

There are many places on Earth that can be (have been) ruined by their political leaders. Here, at home, we can select awful leaders but we always survive them.

Saturday, May 14, 2016

A feature, not a bug

The WSJ's car guy, Dan Neil, writes about "Commute to Thrill ... A new wave of electric-powered rides -- scooters, long boards, unicylces -- is ready to whisk you from your mass-transit stop to your final destination ..."  He notes rail transit's last-mile problem.  Actually, it's a first-and-last-mile problem. The piece is Manahattan-centric; in the rest of America it would be last-and-first-several-mile-problem. Or call it fatal flaw problem.

Right on cue, today's LA Times writes about LA's about-to-open latest light-rail extension, "The Expo Line is finally coming to the Westside, but limited parking raises concerns." The Times (in spite of having recently noted rail's woeful 25 years in LA, see their chart) coverage does include some memorable lines. Here is one: "In planning documents for the Expo Line, officials said they expected commuters will drive into surrounding neighborhoods to find street parking at every station." This stuff passes all of the mandated environmental reviews. Most of these neighborhoods have posted one- or two-hour limits as well as once-per-week street cleaning/tow-away warnings. Often more. Not to mention that some neighborhood residents or business who might have some things to say.

It gets better. "The goal, urbanists say, is to change land-use patterns near stations over time, adding apartment buildings and office complexes along rapid transit corridors that would make it easier for people to get to work, run errands and go out to dinner without a car." So lack of parking is a feature, not a bug. It's a vital part of a grand New Urbanist strategy.

And we hear that some in the public are cynical about what their betters do all day.


DC's Metro problem. Different but similar.

Wednesday, May 11, 2016

Not a 'Libertarian Moment'

Less than two years ago, the NY Times asked "Has the 'Libertarian Moment' Finally Arrived?" I know the answer. The answer has arrived loud and clear via Hillary and Bernie and Donald and their many followers. Perhaps these three have more in common than sets them apart.

If creative destruction made us rich, it also unleashed the passions that mobilized most primary voters. The three remaining candidates want to "protect American workers." Status quo wins votes these days.

I look out my window at a construction site just across the street and quickly realize that if the immigrants working there were somehow removed, the site would be deserted. The project and countless others would remain unfinished. We are today further away from reformed migration than ever.

Not long ago, the economist Giovanni Peri wrote, "From 1990-2010, scientists and engineers admitted by the H-1B visa program added $615 billion to the economy".  And Congress has seen fit to cap that program at a miserly 65,000 + 20,000 (see here for explanation). And, although directed to scientists and engineers, the program does nothing for my construction friends across the street. And the New Yorker recently reported that Donald Trump's bride (yes, an immigrant) was admitted to the U.S. under the H-1B program. No, she is neither a scientist nor an engineer.

Fine tuning and social engineering are hard work. Politicians have no way to know which talents are most "needed" when and where. Labor markets do that. But the "moment" when we would let free people (employees and employers) agree to who gets hired when, where and how has not arrived. In fact, it is receding with every speech and rally involving Hillary, Bernie, Donald.

Friday, May 06, 2016

What to do?

When people don’t want to talk about the weather, many ask if I prefer Clinton or Trump.  It’s interesting that “none of the above” strikes many as odd.  “You have to vote”. "What if everyone had that attitude?" “It’s a precious right and a civic duty.” Young people learn about “democracy” and "majority rule"from a very early age.” But the fact that there is much more to it is seldom taught. The franchise recognizes the dignity of the individual and this is a great thing. But there are downsides that are on display every day – especially this election season.

Imagine buying cars the way we buy governments. Ten thousand people would get together and agree to vote, each for the car he preferred. Whichever car won, each of the ten thousand would have to buy it. It would not pay any of us to make any effort to find out which car was best; whatever I decide, my car is being picked for me by other members of the group. Under such institutions, the quality of cars would quickly decline. ...  David Friedman, The Machinery of Freedom (1995).

What can be done? Smaller government is my only answer. How do we get there? Re-charter every agency and every law every x years. Will the third-party candidate (whoever he/she is) please campaign on this platform so that it can at least have a shot at being discussed? The right candidate could bring it up before Charlie Rose and his audience. That would be a start.

Sunday, May 01, 2016


JFK was no fool. He knew all about close elections and the importance of (somehow) lining up votes. In 1962, he issued an executive order that paved the way for the emergence of public sector unions. This has paid off spectacularly for Democratic Party candidates ever since. Trouble is that (see Francis Fukuyama cited in a previous post) it harmed the quality of public administration in the U.S.

Failed public policies (of which there are now many) are forever "underfunded." Political candidates feast on the "need" for more funding. More funding usually happens and the programs still underperform.  This can go on for long while. Most voters pay little attention to deficits and unfunded liabilities.

This year's big political issue is inequality. The 50+ year War on Poverty has not done the job and is surely underfunded.

But there is another possibility. Some people remain poor because they make poor lifetsyle choices. Pointing this out brings on the "blaming the victim" chorus -- and undermines the "need for more funding" refrain.

Christine Rosen's "Lifestyles of the Not-Rich and Unequal" makes the point. "Liberal handwringing about inequality obscures an endemic cultural NIMBYism. A racially diverse but economically homogeneous private school for little Jasper is heaven -- but a playdate with a kid whose parents didn't go to college and might own a gun? Awkward." Read the whole thing. Not only do we have the inequality thing wrong but the same for the diversity thing. Narratives!

What to do? You may want to dust off Charles Murray's Coming Apart.


Wendell Cox thinks that Washington DC's Metro is not in trouble because it has been underfunded.

Wednesday, April 27, 2016

Confidence soup

Holman Jenkins writes about "The Auto Emissions Crackup ... 'sophisticated state failure'" It's not just VW.  He mentions nine other auto-makers that have been forced to issue recalls (or worse) for similar emissions tests tampering. Could it have been any other way?

Prostitution and hard drugs have been "illicit" and illegal for some time. Enforcement has failed. Prohibition re alcohol consumption in the U.S. had to be rescinded via Constitutional amendment. Unenforced/unenforceable laws and standards are not hard to find. But vote-hungry politicians enact them anyway. Posturing is often involved.

In the auto emissions case, political posturing gives us impossible standards and automakers can cheat or go out of business. "Sophisticated state failure" sounds about right.

The slow recovery (here and abroad) strongly suggests that risk-taking has retreated in the face of policy-inspired uncertainty. Paul Krugman mocks all this as the "confidence fairy".  Alberto Alesina responds (in part) on Econtalk.  So is people's confidence way down?  It's fair to say that in desperation more and  more voters are ready to gamble on unusual candidates for high office (previous post). That looks like a desperation move. Call it confidence fairy. Call it turtle soup.


Abysmal GDP growth.

Regulation is not free

Friday, April 22, 2016

It can't happen here

Peggy Noonan comments on the 2016 presidential campaign in the WSJ, She is quite unhappy, as are many people. "That Moment When 2016 Hits You ... Because too much is being lost. Because the great choice in a nation of 320 million may come down to Crazy Man versus Criminal."

Many people will have many questions. Is this where the electorate goes after eight years of an administration bent on being transformational? Is this where the electorate goes in the age of twitter? Is this where the electorate goes after years of political correctness encroaching on school curricula? Someday there will be dissertations and books.

Those are hard questions. What are we to do with economists' models of the (mythical) "median" voter?  That model has often been applied to the choices that voters make in local elections. William Fischel writes about "homevoters". In suburban areas where most residents are owners rather than renters, they are keenly interested in how local public policy issues might impact the value of their home, their primary financial asset. As such, we expect their votes to be "rational" from their point of view. If, for example, they expect local schools to be improved by a proposed measure and if they see the link between home value and local school quality, they will compare the tax-price (to them) of the proposal with the expected home value appreciation and vote accordingly.

But can this type of economic voter rationality be seen anywhere else? "Rational" is complex and has to be defined in narrowly -- which works in the case of the homevoter example. But looking around (as does Peggy Noonan), what is before us is much more complex. We have seen voters (the public) lose their minds in other countries. We kept saying "it can't happen here."



Thursday, April 14, 2016

Infrastructure chorus

What do we know?

1) Infrastructure in much of the U.S. is in bad shape. In the current New Yorker, James Surowiecki reminds everyone of this once again. Where do I go to claim $1 for every such essay written?

2) Most U.S. local governments in the U.S. are in bed with their public employees' unions. Pension obligations are huge (often unfunded) and have first claim on infrastructure (and other) revenues (see my April 7 post).  On a related theme, politicians here and abroad love pork mega-projects. These are prone to cost overruns; normal infrastructure maintenance gets postponed (often indefinitely). There are no ribbon-cutting photo-ops for repair and maintenance projects. And nothing can stop the California Bullet Train project.

There is seemingly a taboo among most commentators to connect these two realities. Pork (by definition) is unlikely to be de-politicized.  What we can do, however,  is to only take seriously discussions of infrastructure "needs" where the writer/speaker also pays some attention to where the money already allocated is going.

BTW, here is Matt Kahn re LA's new Expo Line. And last January (and after 40+ years(!) of cheer leading), an LA Times writer looked at the numbers for LA rail transit and reported the colossal waste.


When you hear the standard laments about infrastructure, ask how the spending plans can be made pork-proof. Also ask about the California bullet trains which has no redeeming qualities

Wednesday, April 13, 2016

Cities, growth, talent, location choice

When it comes to economic growth, it is all about human capital. Add the importance of human capital externalities, and you want cities with properly trained and skilled work forces. This morning's WSJ reports that one of employers' favorite data sources in this quest is LinkedIn profiles. "Companies Flock to Cities With Top Talent."

I have argued that the importance of location choice within cities cannot be overestimated. Here follows an abstract of a talk I will give at USC today on "Cities and Economic Growth: Emergent Spatial Organization"

Prosperity and economic growth require robust specialization and exchange. This means the formation and maintenance of numerous complex supply chains. These include supply chains for things and supply chains for ideas. The latter can be via transactions and/or realized positive externalities.

All supply chains have a geographic dimension. Firms carefully choose what to make vs what to buy and also where to buy it, from near or far. The whole system tends to a pattern of locations that denote realized transactions (and transactions costs) as well as realized externalities. The city remains a competitive producer if these costs are contained.

Cities have been seen as “engines of growth.” This means they offer attractive supply chain formation and management opportunities. Networking and location opportunities are significant as these choices are made. Flexible land markets denote more such opportunities. Cities are the spatial realizations of many complex supply chains. This is much too complex for top-down planning.

Thursday, April 07, 2016

Getting to Denmark?

Francis Fukuyama (among others) asks how we can "get to Denmark."  He means, how can we emulate that country's seemingly efficient public sector.  He cites the problem of U.S. public sector unions: "Today, these same public-sector unions have themselves become part of an elite that uses the political system to protect its own self-interests. ... the quality of American public administration has declined markedly since the 1970s, in no small measure because of these unions' ability to limit merit as a basis for promotion." (p. 163-164 of Political Order and Political Decay). With rare exception, a visit to your local post office or DMV (or similar agency) will bear this out.

This morning's WSJ includes yet another op-ed on how to fix America's infrastructure. "Finding the Money for America the Fixer-Upper" by George Shultz and John Cogan. Reform health care, social security and public pensions and the money will be there.

But I am not sure that such reforms in our lifetime are plausible. And more money fails to fix anything if the system is flawed. (Example, large public school districts.) In light of the politics now on display, is there a plausible challenge to the influence of public sector unions? Unlikely.

Sunday, April 03, 2016

Free lunches

The free lunch fantasy is a favorite among politicians. It often garners enough support from voters to tip an election. The Santa Claus fantasy works on kids until (approximately) the age of five but the free lunch fantasy seems to work on enough people (voters) of all ages.

It is interesting that the LA Times occasionally broaches the idea that the money will have to come from somewhere -- including higher retail prices and fewer low-skilled people hired. "Some restaurants face pressure to trim menus and staffs under California's wage hike." There will be price hikes for those who shop at low-price outlets and job cuts for those with the fewest prospects.

TV talking heads have noted the interesting labor market "experiment". What will be the effects of the biggest minimum wage boost ever? We hear this a lot. Is not federalism supposed to be an opportunity for competing sub-national units to experiment and innovate? Are not the states supposed to be the "laboratories of democracy" in the words of Supreme Court Justice Louis Brandeis?

That abstraction supposes state officials seeking the best economic outcomes for their state, not the class warfare fantasies of those who run so many state legislatures. And, as David Henderson reminds us, "Don't Experiment on Non-Volunteers." Their lives are not a free lunch for the social engineers -- or for the posturing class warriors.

This NY Times op-ed predicts that there will be more gainers than losers. But who gains and who loses? Among the losers may be those who most need to break into the world of work. Social engineering is so hard.