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.

"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.

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.

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.

Diversity we seldom hear about

There are pedestrian islands in most large (auto-oriented) American cities. Shopping malls are a superb example and why not? Making eye contact, people watching, random encounters are still popular.

I have always enjoyed living in pedestrian friendly parts of West Los Angeles. I walk every day -- and encounter awful sidewalks as well as desperate homeless. There are, of course, less of each in private shopping malls.

But none of this should suggest that walking to work is plausible for any but a small sliver of big-city Americans. David Levinson calls our attention to data on how many jobs are accessible in major American cities via a 30-minute walk.

Studies like this are misleading.  First, not all jobs are interchangeable. Some people have very good reasons for rejecting very accessible jobs. It also appears that walking to work seriously constrains options -- and economic opportunities.

This is all obvious but romantics (locavores) cling to the dream that a car-less/motor-less world is within reach. Consider the cost.

All this leads me to recommending Charles Murray's "The United States of Diversity." Some of his themes are as in his Coming Apart.

It is difficult to exaggerate how different life is in a city of a million people or more and in a small city or town. I don’t mean that people in big cities lack friends or even that they cannot have an important a sense of community in their neighborhood. I refer instead to differences in quotidian culture that bear on the nature of the role of government.

Many from America's elite know very little about all this. They do know a little bit about the big cities where they may live but give little thought to the America they do not see. The America that they do see is beset with "problems" that are amenable to the "programs" elites love -- and love to run.  Thank you, Charles Murray.

Inequality and our cities

Here is Paul Krugman writing about inequality and the urbanism we have.

I have often commuted to and from USC, eastbound ("inbound") in the AM and westbound ("outbound") in the PM.  For as long as I can recall, the heavy AM traffic is "outbound" and the heavy PM traffic is "inbound". In a monocentric city model, this makes no sense. But LA is certainly not monocentric and there are many decent-to-good jobs on the "westside" where housing tends to be expensive and much more low-rent housing on the "eastside".  This is an awful "mismatch" if one cares about commuting efficiencies and/or the plight of lower-income eastsiders.  These are all general statements; generalizing about large metropolitan areas, where there can be stark contrasts block-to-block, can be tricky.

Los Angeles is as "blue" as major American cities get. Urban visionaries and progressives claim to address spatial mismatch as well as the problems of the less well off. But they don't. The local planning process is mainly a politicized, cumbersome and an expensive dogfight. Here is just one high-profile example. Stuff like this is in the news almost daily. Who (besides the rent-seekers) needs it?

Bent Flyvbjerg and Russ Roberts discuss megaprojects here. They do cite rare successes but how do we get from here to there? How to get more successes? More politics is surely not the answer. Flyvbjerg suggests that infrastructure contracts be written clearly so that it there is no question who bears the burden in the event of the inevitable contingencies. How about public posting of all contracts several months in advance? Allow some months for wiki-editing. Then see if the usual suspects still line up to sign.

In the July Reason (gated), Greg Beato writes about "Better Government Through Crowdsourcing."  He likes government's challenge website and the effort get government agencies to work in tandem with large crowds to discover "bold new ideas". So it should be with megaproject contracts.

Not from The Onion

Today's LA Times reports this:

Labor leaders, who were among the strongest supporters of the citywide minimum wage increase approved last week by the Los Angeles City Council, are advocating last-minute changes to the law that could create an exemption for companies with unionized workforces.

Not a lot of comment is required. People who politic for a "level paying field" are typically not so candid about what is meant.  In this case, however, it could not be clearer: provide unionized shops anything bit a "level playing field."  How will our lapdog city council handle this one? I expect brain trusts are churning. Stay tuned.

Big questions and big answers

The big question for many historians and social scientists is still "how did we get so rich?" Economists have come full circle and have again started addressing the role of "society" and "culture".  But these too evolve and are not really exogenous.  What then is?  Jared Diamond says it is geography -- and its own slow (exogenous) shifts. Ian Morris in Foragers, Farmers and Fossil Fuels: How Human Values Evolve takes human hunger (the necessity for energy capture; the more calories per day, the better) and historic climate change (post-ice age warming) as the real exogenous forces. They made it possible for humans to shift their attention from foraging to farming to fossil fuel users. And as they did, their values changed. 

Morris' Table 4.1 (p. 134) is the summary: The four "universal" values listed on the left best serve the three activity types if they are accorded the status shown in the the body of the table.

                        Foragers         Farmers                    Fossil-Fuel Users
Political
Inequality         Bad                 Good                         Bad

Wealth
Inequality         Bad                 Good                        Middling

Gender
Inequality         Middling         Good                        Bad

Violence            Middling         Middling/bad        Bad

The book includes the reactions of four eminent respondents as well as Morris' rejoinders.
                                               

Minimum wage

The LA Times has been popping corks over the LA City Council's vote to hike the minimum wage. This morning's lead editorial, however, exhorts the Council to also mandate more and better jobs. Why not?

Matt Kahn sees the LA wage hike as an opportunity for a natural experiment. James Pethokoukis notes its a gamble, at best.  But Joel Kotkin points out that the experiment has been running for some time and the findings are not pretty: regulations, mandates and taxes kill growth and jobs -- and worsen inequality along the way. Alex Tabarrok offers a useful visual to (perhaps) chasten the Law of Demand deniers. Don Boudreaux has been hammering this group for some time. Bryan Caplan and Mark Perry cite slow phase-ins as a gadget to mask unemployment downsides of mandated wage hikes.

Central planning is hard work; the "helping people" part is extraordinarily difficult.

ADDED

Megan McCardle

Not easy or simple

Central planning is hard work. This is why they usually get it wrong. This morning's NY Times includes "Brown's Arid California, Thanks Partly to Father ... Pat Brown Used Water For a Booming State. His Son's Era Is Far Different." Southern California "needed" lots of water and the elder Brown pushed through the costly California State Water Project to channel water from the north to the south. The south grew and now "needs" even more water. The younger Brown has responded with his own rationing-by-edict plan. No one said it would be simple.

Departing from its policy of never mentioning "price" and "water" in the same piece, the same NY Times also includes "How to Get People to Pitch In ... We cooperate because it makes us look good." Yes, to some extent, you can shame people into being ostentatious conservationists. Interesting, but I doubt that this alone will get the job done. Widespread conservation is surest if it responds to incentives. Incentives must respond to conditions. That would also be "cooperation."

The op-ed continues, "The 'Pigouvian' approach to encouraging cooperation ... Make water more expensive ... But Californians are stubbornly unresponsive to higher water prices. Estimates suggest that a 10 percent increase in price would result in reductions in water use of 2 to 4 percent."

Yes, pricing is also hard work. Trial-and-error discovery of the right price is widespread, essential, challenging and ongoing. We encounter proclamations of "sale" and the like a thousand times. These sellers are looking to discover a better price, not from econometric estimations but from hands-on experiments.  Water planners would have to do the same.  Not easy or simple.

Our infrastructure and theirs

Taxpayers are often asked to spend ever more, even as they get less in terms of services. Los Angeles' political leaders cannot manage to make sidewalks safely walkable and it takes an ADA lawsuit to compel them. This LA Times summary tells the story. Note that the story hints at new taxes to meet the lawsuit requirements -- because the old money had "dried up." I guess, left out in the noonday sun, money will do that. Today's WSJ highlights the same phenomenon with respect to the Amtrak derailment tragedy.

I recently spent about two weeks cruising Germany's amazing autobahn. The riddle is how they manage to keep surfaces so smooth while back in Los Angeles the potholes jar cars as well as drivers. This is not a cheeky comment; our road surfaces are perilously bad in many places. OECD reports that as a percent of GDP, the U.S. and Germany spend about the same. Germans, apparently get more bang-for-buck than Americans do.

Is too much of our spending politicized? Do our leaders see infrastructure spending as mainly a jobs program? As the Amtrak story unfolds, we will see more evidence on this.

ADDED

Amtrak's budget

Charter city rules

Paul Romer has long argued the case for "charter cities". There is a growing (and unmet) demand for urban living, especially in poor countries. How can "start-up cities" help?  If they are able to offer and enforce rules that respect private enterprise and property, they are likely to attract labor and capital -- and to thrive.

It is important that these rules allow the operation of flexible land markets. Cities can be "engines of growth" as long as labor and capital are able to seek and find propitious locations. What does this mean? We are used to simplistic definitions of location, e.g, journey-to-work, distance from CBD, etc. But these will not do. People and business interact with many others. And they interact in complex ways. including via physical and electronic access. Physical access can by via a variety of transportation modes.

People and businesses manage a variety of networks -- and they choose sites and networks simultaneously. Flexible land markets are the only way to accommodate all this.

In fact, transactions costs evolve -- as networking options expand. Networking and location choices will change accordingly.

The current mode of land use planning is quite the opposite.  It s guided by top-down "visions" of how land use arrangements ought to look and evolve. Any such visions are clearly inappropriate.  The complexity to be managed is far beyond the ken of top-down planners.

Better policy

Here is the Governor of Maryland intoning that Baltimore's inner city (any inner city) "needs" more money. That, or more "unrest." Alex Tabarrok is one of many who blasts that one into the bleachers. But it does not matter. In 1989, diehards shrugged off the implosion of the East bloc by claiming that the "real" Marxism had not actually been tried. A dismal U.S. economic recovery is explained by the fact that "real" stimulus spending had not been tried. Fifty years into the "War on Poverty" and we get armies of Johnny one-notes saying guess what?  Failing public schools?  Guess what?

It's a pretty neat gambit. No failed policy can ever be acknowledged a failure. Policies tested via randomized trials linked to betting markets would be a step forward. If there could be randomized participation in a program involving schools, housing, you-name-it -- and with a betting market attached, we could get real and identifiable winners and loser.

ADDED

http://econlog.econlib.org/archives/2015/05/markets_polls_g.html#

Mark-up

The WSJ recently described the costs involved in Smart phone manufacture and the "mark-up" to the retail price. This is where economists part company with accountants -- and useful for teaching purposes. Prices are discovered by sellers. This is on-going work. "Sale", "discount", "clearance" and so many others like it are just shorthand for "we made a mistake and must try again to find the market price." So the "mark-up" is endogenous and responsive to market conditions. This also means that it is impossible to judge mark-ups as "too big" or any such thing.

There is much misunderstanding of simple economic thinking in the world and one would hope that respected business press would get this one right.

Successful branding impacts demand and gives sellers a shot at mark-up and profit. But buyers have their reasons for preferring brands. Whether these are "good" or "bad" reasons is unknowable. Sellers do their best to understand all this - and often get it wrong. Will people like the current version of the Smartphone -- at the current price?  Many are anxiously waiting to see.

Minimum wage

There are many descriptors for people able to hold contradictory thoughts without flinching. It can be seen as profound sophistication or as muddled thinking. President Obama famously blamed ATM machines for job losses and unemployment. The President is also a fan of raising the minimum wage.

The picture below is of a McDonald's robot order-taker-cashier. This one surely replaces entry-level workers. It's also a sure bet that as employing real humans becomes costlier, more such machines will be installed.

Recall that the much-celebrated Card-Krueger study that found wage hikes are harmless looked at fast-food outlets.

Remembrance

With the centenary of the Armenian genocide, many are mourning but others stick with denial. Of all the people with crimes to face up to, the Germans must be commended for the all the Holocaust memorials they have created.

The most moving one, in my view, is Gleis (track) 17 at Berlin 's Grunewald station. This is the place from which Berlin's Jews were sent to the death camps. The platform has been retired from use and an iron plaque has been placed for each transport to "the east", noting the date, destination and how many were sent away. The last dates were in February, 1945. The war had been lost but the murders went on (Kershaw).

Science over hysteria

Here is the summary of Prof Judith Curry's testimony to the Committee of Science, Space and Technology of the U.S House of Representatives on "The President's U.N. Climate Pledge."

Curry, to her great credit, is neither a true believer nor a "denier." She is a scientist and writes about what we know and what we don't know. This moves away from the land of "climate pledges" and a million other trendy postures and policies.

Scientists, as well as non-scientists, should know that human ingenuity has always triumphed over past doomsday forecasts. Scientists should never scuttle scepticism and should be wary of politicians making climate pledges. "Fatal conceit" is what the latter traffic in.

Read Curry' statement.

Right and wrong capitalism

Announce you are setting your company's minimum wage at $70,000, probably above the market rate for some of those covered, and people line up to opine.  This NY Times piece reports on some of the views. But this is not a case of a legally mandated minimum wage. So let the employer/owner (of Gravity Payments of Seattle in this case) go forward with his experiment. As far as I can tell, all of the commentators cited have no direct stake in the outcome.

The real stake we all have is in the survival of trial-and-error entrepreneurialism. These are real life experiments involving willing participants. My own impulse is not to buy a stake in Gravity Payments. But I can be wrong in my skepticism. If so, I pay the price as I sit on the sidelines.

With all of the talk of "secular stagnation" (what is it? what are its causes and possible cures?), many people lose sight of the big picture.  We will do well if and only if entrepreneurial trial-and-error capitalism survives. If it does not (the real crowding out we should think about), we will have lost the game.

Here is the wrong capitalism -- all around us. (H/T Newmark's Door).

Here is a book on the entrpreneurialism that I have just started to read.

Superb history

We hear that young people don't know much about history. Perhaps their teachers should have them  read the works of Stephen Ambrose, whose Undaunted Courage: Meriwether Lewis, Thomas Jefferson and the Opening of the American West is what they used to call a page-turner. But it is also essential and well documented history.

Jefferson was a visionary (a word that usually makes me cringe). The Louisiana purchase was a good idea. So was the thought that there might be a water route to the Pacific via the Missouri and Columbia Rivers -- not found, to the great disappointment of all involved. So also was the choice of Meriwether Lewis to assemble the group of explorers and lead them through unknown territory and back. Jefferson was also wise to have Lewis move into the White House as part of his preparation so that the two men could share all that Jefferson knew of the relevant geography, navigation, natural life, etc. Lewis was instructed to bring back information as well as examples of plant and animal life. There was no thought to finding gold or silver. Ambrose calls all this emblematic of the "American enlightenment."

We see that trade and new trade routes were seen for their fundamental value and importance (unlike many commentators today). We learn that Indians who had never seen white men were ready and eager to trade. Aside from one episode, whites and Indians were able to avoid confrontation and violence. This in spite of their mutual strangeness and no common language.

Yes, Lewis and his men referred to the Indians as "savages".  Lewis and others of the expedition saw that it was natural to own black slaves. They were men of their time. But when major route choice decision time came, "[t]his was the first vote ever held in the Pacific Northwest. It was the first time in American history that a black slave had voted, the first time a woman had voted" (p. 316).

Lewis came to  a bad ending. He was a much better explorer than a politician. Jefferson's great failing was appointing him Governor of the Louisiana territory on his return from the expedition. Lewis and Clark failed to follow up and get their valuable journals published. That was left to others. "... [T]he journals he [Lewis] wrote are among his greatest achievements and constitute a priceless gift to the American people, all thanks, apparently, to lessons learned from Mr. Jefferson during his two years of intimate contact with the president in in his house" (p. 67). Read the book.

Big tent

Timothy Snyder's Bloodlands: Europe Between Hitler and Stalin is indispensable. The area was a tough neighborhood even before the two dictators arrived. Borderlands are that way. But modern industrialized killing made everything much worse. George Kaufman makes a similar point. He writes about Flashpoints and updates the story in order to address today's many conflicts in Europe. It's always a "new ballgame" and (Friedman notes) it's not.

Both authors make the point that Hitler and his band murdered millions in the name of race war; Stalin and his followers murdered millions in the name of class war. But Stalin and his heirs (Mao, Ho, Fidel, Che, Hugo, to name a few) still get a better press than the Hitlerites because race war has (rightly) become unfashionable (exclude the jihadists) while class war is still very popular. (What would politicians do without it?)

Writing in the current Independent Review, Andrei Znamenski ("From 'National Socialists' to 'Nazi': History, Politics and the English Language"), notes that Nazis did not refer to themselves as "Nazis." They liked to be called National Socialists. But the label "Nazi" is now preferred by most people in the West so as not to taint the label "socialist". There is supposedly honor in class war so we must be careful who to include in any "socialist" big tent.