Local governance debate

Bob Nelson and Evan McKenzie debate private comunities here.  Nelson considers the upside and McKenzie takes the other side.  They actually compare two types of governance (conventional vs. private) and find examples of government failure in each case.  That should not be surprising. 

Conventional zoning rules are actually rights vs protections trade-offs.  These trade-offs are also available via developer sponsored (market vetted) association rules.  The possibility of government failure comes with any non-market preference aggregation procedure.  But in which case is it a bigger problem?

What I find most interesting is that both debaters consider reforms that might improve private governance.  They do not suggest ways to improve conventional government.  But why has there been the rise of associations that both document? 

Nelson makes the point the suburban cities were first formed to block the annexation of newly developed land by the old central city.  That role has gone to private associations in many states.   

McKenzie makes the point that most new private association resident-owners do not even bother to read the association's rules.  Nelson wants to administer a quiz whereby new owners must demonstrate that they have read the rules.  Both of the experts suggest other reforms -- of the private governance approach.

Better chicken

Chidem Kurdas describes the game of budget-chicken now being played in Washington and is not optimistic; the Democrats' "salami strategy" is winning.  "The money has been spent, we have to find a way to pay for it, etc."

Reagan's Starve the Beast did not work (the beast kept growing) so now we will get Feed the Beast.  What's left?

The Congressional Budget Office describes their mandate this way:

CBO's mandate is to provide the Congress with:


Objective, nonpartisan, and timely analyses to aid in economic and budgetary decisions on the wide array of programs covered by the federal budget and

The information and estimates required for the Congressional budget process.

That's much too vague.  I would prefer that all programs (taxation and expenditure) were tagged along two dimensions:  (i) what are the long-term growth implications, pro-growth or not? and (ii) what are the redistribution effects, neutral, regressive or progressive?

Of the six possible tags, my own preference is pro-growth and redistribution neutral, although I could see the argument for pro-growth and progressive.  The analysis is tricky, but so is everything CBO already does.  Honest analysis will require honest caveats, but this is already part of their mode.

If we have reached a point were large segments of the electorate have accepted that "kicking the can down the road" is no longer acceptable, then the current game will be repeated, but the analysis CBO already publishes does not do enough to inform the public or the players of the chicken game. 

So, for starters, let's have the most useful analysis and then let the game begin.

Gays, creatives and densities

I found this at Marginal Revolution.  It includes a list of metro areas with the highest concentrations of gay coupples.  It also includes the following comment by Richard Florida:

The densest concentrations of such families are not necessarily in the places where you'd expect to find them. Especially surprising are the metros that don't make the cut -- like San Francisco and New York.

The mantra had been that (1) Gays tend to be prominent among the Creative Class; (2) Creative Class people go to the densest places: and (3) It is sufficient to estimate the densities of where the gays and/or creatives live or work by considering the metro area average density.  At least #2 and #3 are put in doubt by Florida's post.

Gay marriage supporters argued that gays are just like everyone else.  Why not leave it at that?  Why double back and buy into some stereoptype of the extra cool and hip.  And why take the next leap that the extra cool are the extraordinarily creative.  I imagine that some are and some are not. 
   
Many local governments clamor for a simple and magic formula for revitalization and prosperity.  Florida's approach caters to that.  But we know that knowledge is dispersed and highly specialized and we can guess that creativity is too.  It is much more dispersed than Florida's simple association with gayness suggests.

Some transportation ironies

Here is an LA Times report on parking problems at UCLA.  This is funny (or sad) for several reasons.  First, these were the controversies many (many) years ago when I was there.  Second, same old problem because no one is ready to use market mechanisms.  Third, the report cites UCLA parking expert Prof Michael Dukakis, but the same faculty has a certain Donald Shoup on its team -- who happens to write eloquently about all of the reasons to price parking.  Pricing is not even mentioned in the article.  So nothing changes.  If you do not price ...

Market fundamentals are also valid in Europe.  A recent NY Times includes "Across Europe, Irking Drivers is Urban Policy."  At least this report mentions "hefty congestion charges" in London and Stockholm.  Absent these, there are the many ways to irk drivers.  Ban cars, narrow some roads, cap the number of parking spaces, etc.

Back home, the roads in the Los Angeles area are abysmal.  And this too is the policy.  Highway funds have been shifted to public transit for years, but there has been no shift towards greater transit use.  The only consequence is a miserable ride. 

In some very poor countries, a miserable ride is the consequence of poverty.  Closer to home, it is the consequence of carefully considered policy.

The future of cities?

Here is James Howard Kunstler writing about the future of cities. As readers of this blog can easily see, there is nothing here that I can agree with.  Kunstler sees doomsday and substantial contraction in our future.  We will be retreating to dense small cities in the face of global warming, energy shortages, etc.  You've heard it all before, but here are some of Kunstler's expectations (H/T Planetizen)

But I think the general theme going forward, certainly in the U.S., will be the comprehensive contraction of just about everything.
I see our cities getting smaller and denser, with fewer people. Skyscrapers will be obsolete, travel greatly reduced, and the rural edge more distinct. The energy inputs to our economies will decrease a lot, and probably in ways that prove destabilizing. The first manifestations of climate change will be food shortages, one of the reasons I think super slum cities will be short-lived. The growth of urban megaslums in the past one hundred years has been predicated on turning oil into food, and the failure of that equation is aggravating weather-related crop failures around the world. Food shortages will quickly bend the arc of world population growth downward from the poorer margins and inward to the “developed” center—with stark implications for politics and even civil order. The crisis of money is already hampering the operation of cities and will soon critically impede the repair of water systems, paved streets, electric service, and other vital infrastructure. We are heading into a major reset of daily life, a phase of history I call The Long Emergency. Tomorrow will be a lot more like a distant yesteryear in terms of reduced comforts, commerce, and the scale of things.

In sharp contrast, here is a recent report re natural gas finds and "fracking" which has on more than one occasion been referred to as a game-changer.  There have been quite a few positive game-changers in the past and I expect their arrival to accelerate.

So which way?  We know that the resource doomsayers have always been wrong.  But we also know why.  They ignored the ideas of Adam Smith, Joseph Schumpeter, Julian Simon, Paul Romer and many others.  The facts of our improved material well being and the theories to explain it match up very well.  How can anyone ignore all this?

Las Vegas

Auto-oriented development meets the democratization of luxury.  You can call it Las Vegas which simply represents the extreme version.  Both phenomena represent success stories that are dismissed and/or disparaged by the smart set.  And both phenomena are also symbiotic and irrepressible.

The experts, instead look for "smart growth" which challenges both phenomena and criticizes them as "wasteful".  Unable to admit that the critics are deeply offended by the revealed preferences of a vast segment of the middle class, they stoop to rhetoric.  But finding the sweet spot price-and-quality combinations that work in the market place is anything but wasteful.  It is the opposite.  Calling it "waste" is a cheap shot reach for rhetorical advantage.  Its use really signals analytic ineptness.

Peasants

Europeans used to refer to Americans as "peasants with money."  The whole thing speaks volumes.  But the fact that it has become easier for large numbers of people to become wealthy than to become refined also has an upside. 

It is similarly without irony that many critics lament that we have "too many choices."  And who decides how many toothpastes there should be?

It is perhaps inevitable that many Americans have accumulated assets faster than they have learned to manage them.  The currect economic troubles have provided ammunition for the critics.  And that story plays into the hands of those who are reluctant to let individuals manage their own choice of foods, health plans, retirement plans, etc.  Yes, some of us (many of us?) make mistakes, but is the polticization of our lives and wealth a good alternative? 

A third possibility is more and better financial education.  But a recent paper by Lauren E. Willis (linked here), "The Financial Education Fallacy" argues that it's not so simple. The student audience is in a state of "abysmal" financial ignorance.  Financial instruments are complex and constantly changing.  Rules-of-thumb have limited usefulness; personal financial differences are too complex.  Audience-tailored instruction would be very expensive.  And Willis' list goes on and on. 

What to do?  The author leans to better financial regulation.  But that poses as may challenges as the "more and better education" idea.  She even writes, "A society that is unwilling to pay for a K-12 education system that produces a populace that can perform basic math is not goint to pay for one that can do this and more."  That's a bad place to end.  Our education system does not underperform because it is "underfunded." 

I am always amazed by seemingly sophisticated writers who leave no room at all for standard public choice analysis and who fall back on the "more money" fix.

Given the choices, better to have peasants with money than the other kind.

Sprawl is good

Here is Nicholas Lemann talking about his New Yorker review of recent books by Richard Florida, Ed Glaeser and Elijah Anderson and John Kasarda.  The audio is not as interesting as the print review.  (Lemann likes to talk about his old days in NYC and the where is various old girlfriends lived.)

To his credit, Lemann steers the interviewer from cities to a more useful conversation of the much larger metropolitan areas.  He describes them this way: "When you fly in at night, it's where the lights start."  I thought that I had coined this one, but it is more likely that many others had the same idea.  But more to the point, Lemann is mainly right (in my view) that there is plenty to think about outside of Manhattan and similar enclaves.

Look at it this way.  There is remarkable stability of the size distribution of U.S. urbanized areas at the top.   These (not the metropolitan areas, which are based on county boundaries) are the ones made up of functional boundaries that are redone every ten years and where the lights really do start as you approach at night.

At demographia, there are population data for these for each of the census years, 1950-2000.  So there are five rank changes possible for each area.  But for the top five urbanized areas, there are only three rank changes over the fifty years (out of a 25 possible); for the next five there are 19 (out of 25 possible).  The biggest places find ways to get bigger.  They build on their agglomeration advantages by growing outward -- and without losing their competitiveness via "sprawling." That's the big news.  Can it be that sprawl is good?

Embarrassment of riches

As both IBM and the Carnegie Foundation turn 100 at about the same time, The Economist has launched this conversation starter:  "Has the multinational business or universal philanthropy done more for society?"   The story cites a recent Robert Barro WSJ op-ed wherein the economics professor corrected Bill Gates who, in explaining his new life in philanthropy, had seemingly not fully appreciated how much his business enterprise had improved the world.  Barro thought that more good might come from Gates not switching from entrepreneur to philanthropist.

The magazine piece wanders all over the place and ends this way:  "The achievements of IBM and the Carnegie Corporation are impossible to quantify mathematically. What seems clear, though, is that as it enters its second century, IBM can plausibly hope that its best years lie ahead. Alas, that seems most unlikely for Carnegie."

But a couple of points are missing.  First, fortunes must first be amassed before they can be given away.  While I would like less poverty in the world, I have no problem with inequality.  The possibility of great riches makes it possible to have the Carnegies as well as the Gates's.  Second, if anyone wants to make a difference in more than one way (as Bill Gates seemingly does), that's his choice and if the prospect animated him to have become the creative entrepreneur in the first place, then so much the bettter.

So it's a conversation starter, but there is simply good news.

Every thing's up to date in Washington city

Reports on dumbing down as revealed by quizzes of the population (or students) are usually horribly depressing.  This one is about abysmal results to a very basic history quiz.

So was the President pandering (he is a politician) or is it even worse when he talked like a Luddite. Many of us scoff at modern-day Luddites.  And President Obama is widely regarded as better educated than many of his peers and predecessors.  But look at this item in today's WSJ:

Blogger Jim Treacher on President Obama's understanding of economics.
Jim Treacher writing at DailyCaller.com, June 15:

Obama thinks ATMs cause unemployment—No, really, he does! That's not a joke headline. He said it out loud in front of the whole world and everything. On yesterday's "Today Show," Obama told Ann Curry his brilliant theory about why the economy hasn't been doing so well since he became president: "There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don't go to a bank teller, or you go to the airport and you're using a kiosk instead of checking in at the gate."

That's right, the Smartest President Ever just said innovation is a job-killer. His next step, presumably, will be to demonize the Republicans for making such deep cuts to the Department of Buggy Whips. Hey, why is the President of the United States blaming machines for unemployment . . . on TELEVISION? Doesn't he care about all those out-of-work town criers?"

The right thing, but late

In a better world, we would try common sense first.  Here Mark Perry cites up-and-running private inter-city bus service which might be a better deal than much of the proposed high-speed rail.

Right on time, the Los Angeles planners are proposing express bus service along Wilshire Boulevard.  Actually, they are way late.  Many of us began fretting over subway service along Wilshire many years ago.  But that project went forward and has been a huge waste.  Ridership is one-half of what was "projected" and cost "over-runs" mean that $7-billion have been spent -- and counting.

But costs and benefits aside, there is now a 99-cent store at Wilshire and Fairfax, once the top of LA's Miracle Mile.  This was not how it was supposed to work out.  Lavish transit was supposed to create lavish transit-oriented development and all the cool urban stuff that planners dream about.

This post began with an appreciation of express bus better late than never.  Winston Churchill supposedly remarked that 'You can always count on Americans to do the right thing – after they’ve tried everything else!'  Perhaps he was being kind.

Life beyond Manhattan

Today's NY Times includes "Suburban Hip Is Where It's At ... UBS might like Manhattan. But for all the talk of an urban renaissance, most of the growth is happening beyond the city." 

Yup.  Every ten years we get pretty good data and a reality check.  The story cites Joel Kotkin noting that for the greater-than-one-million-population metros, less than ten percent of 2000-2010 growth had been in the traditional core cities.  The renaissance/revival/regeneration fantasies will have to be placed on hold one more time.

The International Council of Shopping Centers reports that there are more than 100,000 “shopping centers” (including many “Lifestyle Centers”) which account for about 50 percent of all U.S. retail gross leasable area.  Whereas some of the centers are Edge Cities which include many of the functions once associated with downtowns, many others are developed at low densities that are seemingly under the radar (as in Edgeless Cities).  So, rather, than downtown and the ‘burbs, it is an extremely complex arrangement. The many small “centers” are spatially distributed so that the average shopping trip by central city vs. suburban residents in the U.S. were of similar duration, near 15 minutes, no matter where people live (2009 NHTS data).

Yes, there is considerable life outside Manhattan and, yes, shoppers and sellers find ways to co-locate so that they can do business with each other.

Business and state

Here is James Surowiecki's take of Elizabeth Warren's charge as head of the new Consumer Financial Protection Bureau.  But here is Viginia Postrel's account of how policy makers from the same gene pool actually made the rules governing which light bulbs ought to be produced and consumed in the U.S.

Postrel sees waste and crony capitalism verging on corruption.  Surowiecki trusts that Warren and her Bureau will work to the advantage of consumers as well as honest bankers. 

Having just been through a period when it was Washington policy to push debt at people, and having seen where this led, I cannot muster optimism about a new Bureau's ability to stand up to the inevitable Wall Street-Washington double-teaming that will occur. That's the coalition that has brought us to where we are and I do not see it receding.

One would think that Progressive Era thinking was plausible just over 100 years ago, but that we are somewhat less naive these days.  We do a pretty good job separating church and state.  I doubt that we will ever separate business and state.  I understand that Washington hosts ever more lobbyists, no matter which party happens to be in control. 

Big problem and big idea

Making poor places less poor is one of the biggest and toughest challenges.  Many smart people have been grappling with the problem for many years.  It is interesting that most of these discussions have said little about the role of cities.  Development economists recognize the importance of organization, but usually do not go the next step and recognize spatial organization.  Once you think about it, it is hard to imagine a plausible model of development that is not also an urban model.  Cities are where ideas incubate.

How do we get new cities that might be auspicious in making poor places less poor?  Paul Romer has recognized that it is all about instiutions and cities.  This is how he has promoted his Charter Cities idea.  Here is a TED talk in which he makes his case.

Pro-family?

Here is a report from The Economist on the "Perils of Commuting."  It seems that long commutes increase the chances of divorce. 

And here is a report that compares auto commuting times with transit commuting times from the recent NHTS.  According to these data the average U.S. auto commute in 2009 was just under 23 minutes while the average transit commute was about 53 minutes.

Lavish public subsidies have not succeeded in "getting people out of their cars" but persist like all such policies because, once in place, they have constituencies that politicins find almost impossible to neglect.

But who ever thought of transit policy debated as a "social issue?"

Gains from trade

I am not the first to suggest that specialization and the gains from trade constitute the most important insight of economics.  And it is beyond depressing that politicians of all stripes and their acolytes either miss the point or purposefully misrepresent it.

I am reading Adam Hochschild's To End All Wars: A Story of Loyalty and Rebellion, 1914-1918 which offers many more grounds for depression.  Most readers already know about the spectacular losses, blunders, cruelties and tragedies of the Great War, but Hochschild's narrative is probably a must-read even to those who have been over this ground before.

Here is the author's report of British-German trade at the height of the slaughter:

More than any previous war, this one depended on huge quantities of industrial products and the raw materials to make them ... Among the more important goods was precision optical equipment ... The British military however was running disastrously short of binoculars. An appeal to the public brought in some 2,000 pairs (including 4 each from the King and Queen), but not the tens of thousands needed ... And so, in mid-1915, just as preparations were getting under way for the big attack at Loos [France], British authorities turned to the world's leading manufacturer of precision optics: Germany ... From London, an agent of the Ministry of Munitions was quietly dispatched to neutral Switzerland to propose a deal. The answer from Germany was prompt and positive, and the outlines of an agreement were sketched out. The German War Office would immediately supply 8,000 to 10,000 each of two types of binoculars, one for infantry and one for artillery officers ... And what did Germany want in return for this astonishing bounty of tools that would better aim British rifles and howitzers at German troops? One treasured commodity, vital for everything from telephone wires to factory machinery to the tires and fan belts of motor vehicles, a commodity unnavailable to Germany because of a tight blockade imposed by the Royal Navy, but abundant in the Allies' African and Asian colonies: rubber ... The rubber, it was agreed, would be delivered to Germany at the Swiss border. During August 1915, the first month of the top-secret devil's bargain, the Germans delivered to the British even more than first agreed to: some 32,000 pairs of binoculars, 20,000 of them the higher-quality types for officers ...

The gains from trade are, of course, a no-brainer.  But listen to all the mercantilists at all levels of government, starting of course in the White House.  In fact, the foolishness is compounded.  We want to make sure that those solar panels and windmills are Made in America. 

Great question

In this week's New Yorker, Louis Menand writes about U.S. higher education and review's In the Basement of the Ivory Tower: Confessions of an Accidental Academic, by Prof X (when will X reveal himself?).

Menand tries to make sense of mass-higher education which comes close to sounding like an oxymoron.  Before I read the essay, what did I "know"?  Many high schools graduate students who are terribly underprepared.  Many of these people go on to college because they can.  They are affluent enough to postpone entry into the workforce.  And there is plenty of room for them and often some financial aid (affluence).  In a better world, all of our students would be better motivated and better prepared.

But Menand goes deeper.  "If there is a decline in motivation, it may mean an exceptional phase in the history of American higher education is coming to an end.  That phase began after the Second World War and lasted fifty years.  Large new populations kept entering the system. First there were the veterans who attended on the G.I. Bill ... Then came the great expansion of the nineteen-sixties, when the baby boomers entered and enrollments doubled. Then came co-education ... Finally, in the nineteen-eighties, there was a period of remarkable racial and ethnic diversification.  These students did not regard college as a finishing school or a ticket punch ...  College was a gate through which once only the favored could pass.  Suddenly the door was wide open: to vets, to children of Depression-era parents ... to women ... to nonwhites ... to people who came to the U.S. precisely so that their children could go to college.  For these groups, college was central to the experience of making it.  ... They were finally getting a bite at the apple ..." 

Menand then harks back to a question a student asked in class: "Why did we have to buy this book?"  In light of his discussion, he concludes that it's a great question and he hopes we keep getting students who ask it.  I may be wrong about the oxymoron.

Walkability

David Levinson points us to this report on pedestrian traffic mishaps.  The report is timely.  There are 47,000 pedestrian deaths in the U.S. each year.  This comparison caught my eye:

"Canada and Australia, both developed countries with a similar infrastructure to the U.S., have pedestrian fatality rates of 1.1 and 0.9 per 100,000, respectively, compared to 1.6 for the U.S."


I walk every day (and I live in LA and I live in a seemingly pedestrian-friendly neighborhood) and it's pretty clear that many motorists have no interest in ceding righ-of-way to pedestrians. It's also apparent that law enforcement when it comes to auto traffic in my neighborhood is spotty and pretty lax.

Oddly, the report says nothing about this, preferring design "solutions".  There are many "good ideas", although there is not a lot of attention to trade-offs.  Taking lanes away from traffic and making streets more bike- and people-friendly is nice, but never free.  There is also the standard objection that summarizing pedestrian-safety and pedestrian-friendliness by metro area is almost useless.  Variations within metro areas are vast when it comes to these conditions. I was unable to eyeball any correlation between the report's "Pedestrian danger index" and "Percent of traffic deaths that were pdestrian."  Such are the problems of indices applied to very large and varied places.

Nevertheless, the report is useful.  Walking is a good thing and "walkable" enclaves do exist that can be made much safer by even moderate enforcement of laws that are already on the books.  More civility would also be nice.

UPDATE

Alex Tabarrok kindly sent me the correction that the 47,000 deaths refers to a whole decade.  That does change things.  My error and thanks, Alex!

Bravo!

Here is Don Boudreaux's challenge bet made in this morning's WSJ.  The approach is inspired by the famous Julian Simon-Paul Ehrlich wager.  Bravo, Don!

Driverless is not very macho

Tyler Cowen wrote about the potential of driverless cars, and why they are slow to emerge, ("Can I See License, Registration And CPU?") in yesterday's NY Times.

Granted that absent peak-load pricing, we waste a lot of time stuck in traffic.  (The title of a pretty good book on the problem.)  And granted that as the highway system is politicized and auto engineering and production are heavily regulated (and, of course, politicized), available new technology will become available too slowly.  A privatized highway system would be better in all respects.  These points have been made over the years by many writers.  I like this collection by Gabriel Roth and friends.

The only thing missing from Cowen's essay is that fact that most people love to drive.  Many grudgingly choose automatic transmission and miss the real thrill of actually driving. The cliche is "ask any teenager".  Many people prefer "motoring" to "driving".  And then we get into discussions of the psychological factors ("macho motoring") that come into play.  Dargay and Gately show the demand is pretty universal.

Transportation planning with hands tied

Gilles Duranton and Matthew Turner have "The Fundamental Law of Road Congestion: Evidence from U.S. Cities" coming out in the American Economic Review.  Here is the pdf.  They investigate whether new highway or new transit investments relieve traffic congestion and find that the answer to both questions is "no".  And "Surprisingly, our data also suggest that a new lane kilometer of roadway diverts little traffic from other roads."  Their empirical work is interesting because it has to address the problem of simulteneity between road capacity and the demand for road use.

The findings corroborate Anthony Downs' "Fundamental Law of Highway Congestion" which is just one more way of saying that the absence of pricing messes things up.  Not only is congestion the default rationing device, but the build-option has limited usefulness if the price-option is discarded.  It' a little bit like having one hand tied behind your back. These thoughts are well understood and it is very good to have them corroborated via serious analysis.

Research help

Here are the submission guidelines for the Journal of Spurious Correlations.  This is good to keep handy for at least two reasons.  First, if your favorite journal rejects your work because referees report that it is simply about spurious correlations, it's good to have a back-up place to send your manuscript.  Or you could go to the JSC first. 

But the second reason is a new and handy research tool called Google correlate which expedites data mining.  The WSJ offers this wonderful example of a useful application.  They show the great fit between three variables that were always suspected of being causally linked:  Fed Balance Sheet, How to Get Over a Guy, and Nausea Remedies. 

The report does suggest the need for further research.

Shocking!

"Insider trading" is hard to define and successful prosecutions are rare.  The recent conviction of Raj Rajaratnam is an exception.

Alan Ziobrowski and his colleagues have recently published "Abnormal Returns From the Common Stock Investments of Members of the U.S. House of Representatives" in the Berkeley Electronic Press.  Here is a link to the abstract.  I have no idea whether investigations are underway and if there will be accusations, prosecutions and convictions.  I'm not even sure these would be feasible.  But exposure as in the cited paper is nice.

Hillary Clinton made some astute cattle futures trades in her First Lady days and quickly made a lot of money.  She explained it all with "I read the Wall Street Journal," and that was that.  Some of us are inevitably better placed than others to make lucrative market bets.  That's life.  It goes back to the quaint old idea that the only antidote is a smaller role for politics and politicians.

H/T Brad Hill

Tomorrow's transport?

Today's WSJ has a whole section ("Tomorrow's Transport") devoted to transportation.  Some of it is OK and some not. 

The lead piece by Robert Puentes leaves the impression that existing public sector transportation programs leave much to be desired, but they can be fixed.  That begs the important question of which and how many epiphanies there will be among our elected officials.  The companion piece by Richard Geddes ("Where the Money Is [Hint: It Isn't Government"]) boosts public-private partnerships.  These can be a source of cash, but crony capitalism may not be a source of wisdom and practicality.

"Highway Robbery" features some of the Texas Transportation Institute's cost estimates of U.S. urban road congestion.  The dollar value of delay costs and fuel costs for the U.S. add up to $115 billion a year.

On the positive side, the section alludes to some of the transportation projects that had been highlighted in past years as collected at Paleofuture.  But nearby, there is "Has the Monorail's Future Finally Arrived?"  Unintended irony?  The accompanying graphic shows Monorail performance where such systems run.  (Disneyland's excluded.)  The biggest (not counting projections) is Chongqing's (which I recently rode) which gets 380,000 daily riders which is more than double Disneyland's, but not much for a metro area of about 14-million residents.

There are more pieces, most of them pretty good converstation starters.

Learning from trial-and-error is the only way

Most of the problems we come up against are much too complex to benefit from an analytical solution.  There is only one option and that is to be open to trial-an-error learning.

Tim Harford applies this insight to various episodes from politics (including war), science and business. His Adapt: Why Success Starts with Failure is well worth reading.

Harford malkes his case by carefully describing the successes as well as the failures.  Of the latter, he studies several of them and finds that, "[Leonid] Kantorovich, [Salvador] Allende, [Robert] MacNamara and [Donald] Rumsfeld all seemed to operate on the assumption that better computers and better communication links would help the process of centralisation, gathering everything into one place where a planner could make the key decsision.  The exact opposite is true ... " (Location 1246)

But before we scoff at these four failures, we are reminded that their mind-set is widely shared.  In fact, all who resist learning from their own past mistakes are candidates for the fate of failure.  Yes, Harford also writes about the financial crisis of 2008.

Towards the end of the book, he briefly writes about his own three-year old daughter briefly lost in a car-free area of London and having a great time, oblivious to anything wrong.  He concludes this way:

The ability to adapt requires this sense of security, an inner confidence that the cost of failure is a cost we will be able to bear.  Sometimes that takes real courage, at other times all that is needed is the happy self-delusion of a lost three-year old.  Whatever its source, we need that willingness to risk failure.  Without it, we will never truly succeed.

UPDATE

Here is the author discussing Adapt on Econtalk

The R-word and the S-word

Here is Ken Green on wind power.  Here is Matt Ridley on renewable energy.  Anyone interested has surely seen various discussions of the silliness of "renewables".

While "sustainability" is often left undefined and used to evoke feel-good responses, many of the discussions do end up with the idea of somehow promoting a switch from "non-renewable" to "renewable" fuels.

There are at least two problems that the two cited links bring up.  Ridley reminds us once again that the stone age did not end because our ancestors ran out of stones.  We rarely "run out" of stuff and then move on.  Price signals kick in way before that.  Secondly the "renewables" that are so often touted (like wind and sun) are not free.  Instead they are very expensive.  What is "sustainable" about that?

Suffice it to say that it makes no sense.  But how many course syllabi come up with "sustainability" mentioned when you do a Google search?  About two-million.

UPDATE

It's just a Google search.  Try "sustainability" with "syllabus" and you get 1.2 million hits.  "Economics" and "syllabus" gets 4.4 million; searching "sex" along with "syllabus" gets 5.5 million.

Migration and the job market

Ruben Hernandez-Murillo and colleagues report on "Patterns of Interstate Migration in the U.S. from the Survey of Income and Program Participation."  Panel data (which the SIPP is) that report on individuals before and after some event (in this case migrating) are the best.  And I am drawn to these types of studies because macro-level labor market analyses can mislead. Unemployment remains high in many places and many sectors because of bad matches between jobs and workers. Migration can help.


The authors are able to consider before-and-after wage and employment characteristics of the movers.  They can do this for by gender, age, race, and level of education.  An odd result is  that they find that the employment rate falls for all groups.  Then why move?  For reasons that are unclear the authors only look at a three-month window at either end of the move.  Do people eventually become better off?  Or are the movers making a huge mistake?   

The authors can also compare origin vs. destination unemployment rates, incomes, foreclcosure rates school rankings and homicide rates.  That's the good news.  The bad news is that even their rich data source tells them little. "Surprisingly, there seems to be little difference between between a majority of the characteristics."  I think that it's a problem of aggregation.  The authors also had metropolitan-level data available from the SIPP, but only for two of the panels, 1996 and 2001.  I expect that a five-year window and smaller areas would have been more useful.  So I wish they would not have done a state-level study.

There is good news and bad news.  Panel data are best.  Maximum spatial disaggregation is best and wider time-windows are a good idea.  There are dissertations to be written.

Making the right call is not enough

Fred Foldvary is one of the smartest economists I know.  I have cited his Public Goods and Private Communities many times.  Charles Tiebout advanced our thinking of local public goods and Fred Foldvary took it the next logical step.  There are market signals and markets for the local public goods that have a spatial ambit.  Fred calls them "territorial goods" and we find them in private communities, shopping malls, industrial parks, cruise ships and all sorts of other places.  This upends much of the public goods/market failure story that is still pedaled so widely.  

This piece by Mason Gaffney tells the story of how Fred was right once again while much of the economics profession was not.  And to make matters worse, he did not get the credit he deserves.  The failure of so many economists to call the crash of 2008 is well known, but Fred made the call in his 1997 paper.  He wrote about cheap money and housing. 

Here is the abstract to Gaffney's report:

In 2010 there was a contest to discover and recognize the economists who foresaw and warned of the crash that came in 2008. Fred Foldvary foretold the crash exceptionally early and exceptionally precisely, writing in a refereed journal article in 1997: “the next major bust, 18 years after the 1990 downturn, will be around 2008, if there is no major interruption such as a global war.” Although Foldvary was nominated for the prize by some thirteen separate individuals, his name was excluded by the prize organizers. Instead the prize went to two of the “family” members of the prize organization, and one other person. I compare the predictions by the prize-winning “family” members to the prediction by Foldvary. The ideas represented by Foldvary’s research deserve attention.

Going green

Not so long ago (Feb 7, 2008), the NY Times included "In Many Communities, It's Not Easy Going Green."  Going green is not a free lunch.

But yesterday's NY Times included a review ("Behind the Greening of Wal-Mart") of Force of Nature: The Unlikely Story of Wal-Mart's Green Revolution (which I have not yet read).  Apparently, attention to the bottom line made them "go green."

Can both be true?  Of course.  Management has to make customers happy and some may choose green products and retailing in their shopping.  Management also has to please various local governments and any hurdles they put up.  And management has to be able to post performance numbers that impress capital markets.

They can apparently do all three up to a point.  Decent management is, after all, a full-time activity of dynamic discovery of new ways to do just about everything the company does.  This is how and why a behemoth can remain successful -- unlike some others we can name that look for hand-outs to stay alive.

This does not mean that Wal-Mart's managers will follow the environmentalist playbook, but perhaps the story will move some commentators away from the tired juxtaposition of "business vs. consumers" or "business vs. the environment" or you name it.

Build it and they will come?

I am interested in U.S.-western Europe city comparisons and found "Transit and Density: Atlanta, the U.S. and Western Europe" by Alain Bertaud and Harry Richardson (chapter 17 in Richardson and Bae).  Here is the paragraph I liked best:

Hypothetically, suppose that the city of Atlanta wanted to provide its population with the same metro accessibility that exists in Barcelona, i.e. 60 percent of the population within 600 meters from a metro station.  Atlanta would have to build an additional 3,400 kilometers of metro tracks and about 2,800 new metro stations.  This huge new capital investment would allow Atlanta's MARTA to potentially transport the same number of people that Barcelona does with only 99 kilometers of tracks and 136 stations.  The effect of density on the viability of transit is far from trivial. (p. 307)

U.S. planners have learned about this the hard way.  Look at rail transit's performance in U.S. cities. 

Or have they?  The response is actually, "build it and they will come."  "Transit-oriented development" will make Atlanta more like Barcelona.

Is the high-speed rail discussion any different?  Remember this from January 26 of this year?

Our infrastructure used to be the best, but our lead has slipped. South Korean homes now have greater Internet access than we do. Countries in Europe and Russia invest more in their roads and railways than we do. China is building faster trains and newer airports. Meanwhile, when our own engineers graded our nation's infrastructure, they gave us a "D."
We have to do better. America is the nation that built the transcontinental railroad, brought electricity to rural communities, constructed the Interstate Highway System. The jobs created by these projects didn't just come from laying down track or pavement. They came from businesses that opened near a town's new train station or the new off-ramp.

So over the last two years, we've begun rebuilding for the 21st century, a project that has meant thousands of good jobs for the hard-hit construction industry. And tonight, I'm proposing that we redouble those efforts.

We'll put more Americans to work repairing crumbling roads and bridges. We'll make sure this is fully paid for, attract private investment, and pick projects based [on] what's best for the economy, not politicians.

Within 25 years, our goal is to give 80 percent of Americans access to high-speed rail. (Applause.) This could allow you to go places in half the time it takes to travel by car. For some trips, it will be faster than flying -- without the pat-down.  As we speak, routes in California and the Midwest are already underway.

It's safe to say that Atlanta will never be anything like Barcelona and that U.S. travellers will not adopt the habits of Chinese or Europeans.

UPDATE

Speaking of Barcelona, here are some thoughts about its urban problems.  H/T Urban Demographics

FURTHER UPDATE

Brookings study shows providing transit access to jobs in U.S. cities is not simple.  Is anyone surprised?

FURTHER FURTHER UPDATE

Adrian Moore and Bob Poole take up these issues and fittingly invoke the S-word (sustainability).

Cheap is (mostly) good

It is by now well known that obesity and diabetes afflict the poor disproportionately.  Here is reference to a recent case study. 

Through history (and in parts of the world today) the poorest were at risk because of the reality of malnutrition and famine.  But our successes include better technology that makes calories cheaper and within the reach of more people.  Writing in last Saturday's WSJ, Matt Ridley offers "Three Cheers for the Cheapeners and Cost-Cutters ... The greatest impact of a new idea comes not when it's dreamed up, but when it becomes cheap enough for many people to use." 

Arnold Kling here notes that smart phones used to be seen on people wearing business attire, but now they go with any attire, including that of the young and the thuggish (my descriptor, not his).

Affluence (like anything) is a mixed blessing.  But I will take obesity over famine any day.  In Bonfire, Tom Wolfe referred to the wealthy ladies of the NYC Upper East Side as "social x-rays".  The rich are now thin and the poor are not.  What what would life be without all these ironies?

The future

Tell anyone that you are an economist and pretty soon they want to know if you can share what you know about where the economy is going -- ans what to do about it.  Economists have brought this on themselves by often taking on the posture of a forecaster.  Back in the day, undergrad econ majors were taught things like "cobweb models" (micro) and Evsey-Domar models (macro), but I do not think that there was ever the hint that these are useful for making forecasts.  What then?  They were useful for grasping some market fundamentals so that we could think about markets clearly.  Forecasting is an entirely different matter.

In today's NY Times, Greg Mankiw addresses this topic "If You Have Answers, Tell Me."  He discusses three topical questions, all of which begin with the words "How long ...?"  These three questions are unanswerable, but they are inevitably asked and pondered by many people, inside and out of government and business and also in private life.  The story of bad forecasts is very old, but there is an understandable demand for advice about the future and some will then show up to supply it. 

Also in today's NY Times Book Review, there is Francis Fukuyama's review of Ronald Hamoway's collection of Hayek's works in particular his edition of The Constitution of Liberty.  The headline writer notes that (gasp!) "The economist F.A. Hayek believed that no government could know enough to plan for society."

Perhaps he did, but what is the hot topic on campuses, bookshelves and all sorts of journals?  I would nominate "sustainability."  We can make predictions about the future and we can control the future.  Double-gasp!

Regional government or home rule?

Why can't Los Angeles be more like New York?  This is not something that Rex Harrison sings in My Fair Lady, but the subtext of "Los Angeles Is 88 Cities, Many of Them Corrupt" in the April 28 Atlantic.  It is all pretty predictable. 

The writer likes the way New York is run, Mayor Bloomberg, its City Council and the politics of the five boroughs.  He likes the centralization of NY and compares it favorably to LA county and its 88 cities.  This is all apples and oranges.  (The pun just snuck in.)

The LA metropolitan area is actually spread over parts of five counties and includes twice as many cities as writer Conor Friedersdorf cites.  The Orange county-LA county boundary is invisible to most of us.  And even granting Friedersdorf's view of the world, trading the 88 cities he acknowledges for even more authority accruing to the LA County five-member Board of Supervisors would be no great boon.  These five already have much more power and money than they can wisely administer.

There are many good reasons that Americans migrate to the suburbs and one of them is home-rule.  Another one is a measure of local government choice.  The City of Bell and some others have been found to be corrupt.  But the fact that the bad guys have a small jurisdiction to steal from rather than a big one is a good thing. 

One very important, though imperfect, check on local government corruption is competition among local governments.  This trumps the fact that Friedersdorf's girl friend has a dog not licenesed in Santa Monica, the place that she prefers to take him.  Yes, boundaries create problems, but there are also huge advantages.

Life on the slow track

Here is Wendell Cox, responding to this piece in The Economist.

An old trope is that Europeans wisely invest in infrastructure (especially rail) while dumb Americans are stuck in their cars in heavy traffic.  Read no further than their lede:  "America's transport infrastructure: Life in the slow lane."  One should immediately be suspicious.  Wendell's post sets the record straight, but look for the magazine's report to be widely cited and quoted.

I have mentioned in previous posts that I have been looking at the EU's Urban Audit which includes city-specific and metro area-specific commuting data.  Urban Audit and The Economist's source both have Hungary/Budapest with the worst travel times.  But even if I include Budapest, an unweighted average for 13 major European cities for 2001 is 34 minutes one-way (all modes).  It is slightly less for 12 major metro areas (Dublin included in city list only), 32 minutes one-way.  In most cases, the metro numbers are lower because they include the less congested suburbs.

Go to the survey that The Economist links to and they report an EU average commute for 2000 of 37.5 minutes (clarification: one-way).

I had reported earlier that the 2009 (NHTS) averages for U.S. commuters were lower, 25 minutes for urban areas and 24 minutes for suburbs (22 minutes for what they call "second city", and edge city label).  These are also one-way and all modes.

Why are the U.S. averages lower?  Probably because we have more suburb-to-suburb commuting.   But that's the last thing that a proper and cosmopolitan reporter would come up with.

Good for politics and good for cities

Former Milwaukee Mayor John Norquist wrote thoughtfully about school choice in his The Wealth of Cities: Revitalizing the Centers of American Life.

He repeats some of this in today's WSJ ("School Choice and Urban Diversity ... Many more middle-class parents would live in big cities if they could pick the public schools their kids attend.")  I get the impression that Norquist would be agreeable to removing "public" from the quote.

Many have wondered how those on the left square their concerns for poor people with their support of the education establishment's opposition to school choice.  This is why it is so nice to see that it is possible for someone with real political as well as Democratic party cred to break out of that logjam.  It suggests the possibility of progress for U.S. politics as well as for American cities.

Urban planning success

The current problems with drugs and violence in Mexico have heightened interest in Colombia and the successes of the Uribe regime.  Francis Fukuyama and Seth Colby provide some interesting observations in the May/June 2011 Foreign Policy ("Half a Mircale: Medellín's rebirth is nothing short of astonishing. But have the drug lords really been vanquished?")

Notably included are urban planning successes in Medellín.

... It would take a political revolution, however, to turn the ideas into a real-world policy agenda. This revolution was led by a newcomer to politics: Sergio Fajardo, a professor with a Ph.D. in mathematics from the University of Wisconsin who became mayor in 2004, boosted by an unorthodox coalition of business people, grassroots community organizers, and the middle class.
Telegenic with his trademark blue jeans, open shirt, and curly locks, Fajardo began writing a regular column in the 1990s for the Medellín newspaper El Mundo about local politics. "We realized," Fajardo told us, "that politicians are the ones who make important decisions in society whether we like it or not, so we said to ourselves that we have to get into politics. Instead of saying how things should be, we said this is the way it is done." In Fajardo's view, Medellín had two fundamental, and related, problems: extreme inequality and a culture of violence. Fajardo believed that policies aimed at repairing the city's damaged social fabric could alleviate both.
The most striking feature of Fajardo's approach was his plan to erect high-quality public architecture in Medellín's poorest neighborhoods. "Architecture sends an important political message," he says. "When you go to the poorest neighborhood and build the city's most beautiful building, that gives a sense of dignity." Fajardo and his colleagues believed in social urbanism: the idea that modernist buildings and transportation systems of the sort Libia Gomez now enjoys would help bridge the enormous gulf of distrust separating the poor from mainstream society. In barrios like Santo Domingo and Comuna 13, the city created digitized maps of every street and building, noting where drug gangs operated and money flowed, and devised architectural features to disrupt them.

This sounds like "broken windows" on steroids.  Pay attention to appearances in a credible way and good things happen.  Good things here happened in the context described in the rest of the piece.

UPDATE

I should be clear.  I am not referring to "broken windows" in the Bastiat parable sense, which parodied the idea that there are stimulative benefits from destruction.  I meant to refer to the Kelling-Wilson idea that physical repairs signal that there is civilization rather than anarchy.

Paper money

We teach that money must be homogeneous, divisible and durable.  It must also be credible.  And politicized central banking can limit credibility.  We also teach that economic freedom means that people can be inventive about ways to dodge crises in their lives.

I can ignore debased currencies and revert to barter and some do, but that's horribly inefficient. 

But free instiutions have also brought us the internet.  Put all of these observations together and you get Bitcoin.

Here is a description from the May 9 Forbes:

The Internet has left plenty of dead and maimed paper-based institutions in its wake. If Gavin Andresen and his underground cadre of cypherpunks have their way, another archaic slice of pulped tree may be next: the dollar.

Bitcoin is a grassroots nonprofit project that seeks to fashion a new currency out of little more than cryptography, networking and open-source software, and Andresen is the closest thing the project has to a director. Bitcoin is not, he explains, just a new way to digitally spend dollars, pounds and yen. ... Bitcoin is different: It wholly replaces state-backed currencies with a digital version that's tougher to forge, cuts across international boundaries, can be stored on your hard drive instead of in a bank, and--perhaps most importantly to many of Bitcoin's users--isn't subject to the inflationary whim of whatever Federal Reserve chief decides to print more money. "Bitcoin is designed to bring us back to a decentralized currency of the people," says Andresen, a 44-year-old software developer and entrepreneur based in Amherst, Mass. "This is like better gold than gold."  As with shiny-metal-backed currencies, Bitcoins derive their value partly through their scarcity, which is defined not by how much can be dug up with shovels but by a cryptographic lottery. Anyone can get Bitcoins without paying cash for them by downloading and running Bitcoin's "mining" program. The machines in Bitcoin's mining network, now in the thousands, compute an encryption function called a "hash" on a set of random numbers, and coins are awarded every ten minutes to whichever miner happens to compute a number below a certain threshold.

That lottery tightly controls how many Bitcoins are created. There are currently close to 6 million in existence. By 2014 there will be about twice that number. Bitcoin's distributed software is set to slow production over time so that there will never be more than 21 million in circulation. "No banker can control it. No evil dictator tyrant can print zillions and destroy the value," says Bruce Wagner, organizer of New York's Bitcoin developer's meet-up.

Of course, the other factor that determines the worth of a currency is whether anyone will accept it in exchange for goods and services. And for Bitcoin, a subculture of geek-friendly merchants is catching on. About $30,000 worth of Bitcoins change hands every day in electronic transactions, spent on Web-hosting, electronics, dog sweaters and alpaca socks.

Also drugs. Particularly illegal ones. Since Bitcoins can be spent on the Internet without the use of a bank account, they offer a convenient system for anonymous purchases. There's no centralized storage of funds, so accounts can't be frozen by law enforcement or PayPal administrators. "Illegal stuff will be a niche for Bitcoin," admits Andresen. "That bothers me, but it's just like any currency. You can't stop dollar bills from being used for the drug trade either. That's an unfortunate feature of any cashlike system." ..

Sounds very geeky, but so did Facebook.

S&P downgrades the dollar and the response has been to scoff at S&P. Bond markets are derided as "bond vigilantes," a usage that smacks of ancient misunderstandings of "the speculators." No, they are facts of life. Name-calling will not stop the creative juices and better alternatives than simply barter or politicized money.

Antidote

Mark Pennington and his thoughts (video here) are the perfect antidote for the depressing nature of the previous post (the one just below).

WalMart in NYC

Just when you thought that there must be some reason to reserve a warm spot for unions and their local government supporters, along comes this reason.tv clip about WalMart in NYC.

It speaks for itself.

Conscience of an economist

I am a great fan of Russ Roberts' econtalk (link at econtalk.comorg; printed text of podcasts also posted). I actually look forward to Mondays when the new ones are posted.

This week's discussion is with Ariel Rubinstein and begins with his views of game theory.  He is a prominent contributor and a skeptic.  Rubinstein and Roberts then focus on the limits of economics and especially behavioral economics and also on widespread tendencies towards scientism.

The discussion is wise and refreshing, prompting listerners to work towards a sense of perspective, especially with respect to their own work.

Sad to say, perspective cannot be bottled, but listening to discussions by wise folks is very helpful.  Rubinstein even notes that he is not shy about spilling the beans to eager young students.

Work to do

Peggy Noonan writes about "What the World Sees in America ... It's not all something to be proud of. ... We have work to do at home, on our culture and our country."  Read the whole thing.  She writes about grafitti and unfriendly public places as well as some of the garbage on TV that enthralls millions.  I like the U.S. probably as much as Noonan does, but she has a point when she itemizes the coarse aspects of our culture. 

Visiting some of Shanghai's neighborhoods.  Some very old ones are "gated" in a very informal sense.  I found that perfect strangers are welcome.  I visited a very poor neighborhood and felt very safe.  I wish it were so in my home country. 

Trouble is that I have no idea what Noonan has in mind re "work to do at home."  Does anyone? 

Getting to three

Go from the mainland to Hong Kong and you go through immigration and exchange currencies.  This is part of the odd post-1997-fifty-year arrangement called one-country-two-systems.  At the end fifty years, which side will have evolved to be more like the other?

On the Hong Kong side, there is also internet policing.  I could not buy via Kindle.  I cannot link to my blog.

This morning's International Herald Tribune includes "Confucius vanishes from square ...  'When you have faults, do not fear to abandon them,' Confucius once said.  Apparently, someone extremely powerful has taken that saying to heart, having decided that a 9.4-meter ... bronze statue of the ancient Chinese sage that was unveiled four months ago did not belong on the nation's most hallowed slice of real estate.  The sudden disappearance of Confucius which took place under cover of darkness early Thursday morning, has stoked outrage among the philosopher's descendants, glee among devoted Maoists and much conjecture among analysts who try decipher the intricacies of the Chinese leadership's decision decision-making ..."

I am greatly enjoying Francis Fukuyama's The Origins of Political Order.  He tries to make sense of all this, noting that of the three categories of institutions he writes about -- the state, the rule of law, accountable government -- many places only manage to get two of the three.  How do you get to three?  If you have all three, how do you keep them?

Central planning and city planning

The China Daily's April 12 opinion page included "Debate: Urban congestion."  One by Murad Qureshi, ("Charge cars out of city center") argued for Singapore-style congestion charges.  Another by Tian Li, ("Problem lies deeper in economy") blamed government policies that favored autos as well as poor traffic management.  The third by Su Lang ("Multiple centers can clear jams") suggested that, "... city planners must also shift from concentric-circle to cluster-based development development, building multiple centers in a city."

The same sentiments could have appeared in any major U.S. paper.

Why do the major Chinese cities feature concentric ring beltways?  Beijing now has seven.  Historically, the emperor was to be at the center of Beijing.  Perhaps that was the model for the other cities.  Perhaps this thinking was reinforced by Western monocentric city ideas.  There is much willy-nilly copying of Western approaches.

But missing from the China Daily's debate as well as from so much Western city planning discussions is the thought that land markets left to themselves can best place and populate any city's sub-centers.  When it comes to cities, Americans as well as Chinese think in terms of central planning.

Markets and cronies

From the Shanghai Sunday Daily (17 April; will not link):  "Shanghai's car license plate prices continued to rise in April after reaching a three-year record high last month.  Industry analysts said the rise is within market expectations as the introduction of a policy limiting vehicles with out-of-town plates has prompted a demand for local licenses.  ... The average auction price for a private car license in Shanghai was 47399 yuan (US $7,260) this month, up 742 yuan from March. ... The local government offered 8,000 licenses for auction this month."

These things are tradable, with premium prices going for numbers thought to be "lucky."  I understand also that there are "black" markets.  Why not?

Market mechanisms have obvious appeal.  But they can veer off the tracks when corrupted via cronyism and worse.  And then it is the idea of markets that gets the blame.  Can we get capitalism without the threat of crony capitalism?  The widely cited U.S. example is the internet which reached full steam faster than the FCC and Congress could react.

Is that our best hope?  I hope not.

Trying again

Anyone trying to read my posts can tell that I am no match for the internet blockers.

Tyler Cowen at Marginal Revolution recently mentioned that he liked Brasilia and that planned cities can work.  (I cannot link to his post from here.)  Another way to approach all this is to note that there are top-down plans as well as bottom-up plans.  There is no "unplanned".  But what is the division of labor?

Top-down is intuitively plausible to many.  Bottom-up planning is not.

Paris has Haussmann's top-down plan plus a lot of infill which is likely to be bottom-up.  Americans are increasingly moving into bottom-up privately planned communities and shopping and playing in bottom-up planned lifestyle and other centers.  And anything that can be metered can be privatized.

Top-down has exclusive jurisdiction of "mega-projects".  We know how most of those have worked out.

All cities are "planned"

City planning here and there

City planning here and there

Sustainable?

The case of modern China suggests that widespread corruption and strong economic growth can co-exist.  The caveat is that the combination is not sustainable.  That is the view of Toke Aidt.  But at what point do we toss in the towel?  China has posted strong growth numbers for almost thirty years.  Aidt evokes the idea of "sanders" and "greasers".  The latter reduce transactions costs whereas the former do the opposite.

Over the years, there have been numerous recommendations for political reform that would do away with the demand for greasers. That's first-best, but second-best is to have the greasers dominate the sanders.

While there are many cases where corruption throttles growth, there is also China.  But does second-best suggest untenable distributional outcomes?  The authorities are forever looking for the "sweet spot", the level of limited rights and freedoms whereby the regime stays in power, rent-seeking and rent-extraction continue as they are and economic growth is maintained.  But sustainable is a huge order.  

Strong cores

The April 10 China Daily includes this report on the Beijing Metro.  Infrastructure planners everywhere dream of (i) accurately projecting urban expansion to the point of having the proper infrastructure in place when and where growth arrives; or (even better) (ii) putting advance infrastructure in place so that it guides urban expansion.  Both are seemingly on the minds of Beijing subway planners with an emphasis on the latter. "For most of its length, the new line runs through open fields and small towns -- and the construction sites that will transform the area into miles of densely populated suburbs."  

But the story also alludes to the fly in the ointment.  "A 2010 survey conducted by IBM rated Beijing's commute as the worst in the world, tied with Mexico City." And, "For many planners, tackling Beijing's will take more than building a better subway. ... the underlying problem was the concentration of government, universities, and companies in Beijing's relatively small historic core."

Tokyo, Moscow, Seoul, Beijing, Mexico City and New York boast great subways and awful road traffic.  The great subway "fix" falls short when the core is a dominant employment center.  With the exception of NYC, these places maintain big central government bureaucracies (and all of the activities that these attract) in their historic cores.  It's very difficult to build subways fast enough to impact the auto traffic that growth plus centralization account for.

Blocked

The subject matter of Frank Dikotter's Mao's Great Famine is fair game to people I have spoken to in Beijing.  But Facebook is blocked.  And, I was surprised to see, so is Peter Gordon's blog.  I am trying to scratch my head to figure out how that happened.

In any event, blogging will be light for a couple of weeks as I figure out how to scale the walls that have been set up.

Mating dance

When economists discovered "signaling", they were recognizing what the whole world already knew, that we spend a lot of time and effort trying to communicate strength and worthiness to everyone else.  It's part of the mating dance as well as the career dance.  In fact, there is even the possibility that the latter is a part of the former.  Men have been accused of choosing careers only for the money involved because it makes available a larger selection of females.

Advertising and branding are well established.  Much of their focus is on our selection of the signals we want to transmit.

This week's Economist includes "Status displays ... I've got you labeled ... Clothes may make the man, but it is labels that really count."  The story describes experiments that establish the point.  Show people photos of subjects wearing the same shirt, but with designer label digitally removed and note the different impressions on viewers.

It's the sort of news about who we are the upsets some.  The story ends with, "marketers can open another bottle of champagne."  Perhaps, but without the mating dance, where would we be?

Competing spreadhseets

Today's LA Times has this story about the soon-to-open LA Expo light-rail line.  Officials expect 27,000 boardings by 2020 and have spent $931 million to date.  There will also be operating costs in the ballpark of what LA's MTA now spends on its existing light-rail lines.  The Expo line does not look promising.

This coincides with the current issue of Public Works Management and Policy which includes the Gordon-Kolesar rail transit cost-benefit analysis that I have blogged about before, along with a competing cost-benefit analysis by Robert Cervero and Erick Guerra and Commentary by Lisa Schweitzer.

For teachers of cost-benefit analysis, the two side-by-side studies provide interesting case-study fodder.  The assumptions differ, the findings are (in my view) broadly similar, but the authors of the two studies emphasize different conclusions and policy recommendations.

Every worthy cost-benefit analysis ends with the caveat that there is more to life than just the costs and benefits that we have accounted for (or can account for).  And so it is here.  But competing spreadsheets, when we can build them, is much better than competing rhetoric. 

Thoughts on urban policy to think about

I enjoyed Claude Gruen's New Urban Development.  The author knows the economics and adds the lessons he absorbed as a long-time consultant on urban development.  And the book is short and readable.

Gruen's last chapter discusses his 13 favorite development policy reforms.  #9 is "Vest Tenants of Redevelopment with Rent Differential Subsidies."  In other words, in cases of eminent domain purchases, treat the renters to more than relocation assistance. #10 is "Distribute a Portion of Sales Tax Revenue on the Basis of Population Rather Than Point of Sale."  That would be an antidote to local governments' scramble for new retail development in their cities -- especially in light of Proposition 13-type limits on property tax revenues.  #11 is "A private Alternative to Public Urban Redevelopment."  This is timely as public redevelopment is now even unpopular with the likes of Gov Jerry Brown.  "... private parties who have acquired 80 percent of properties within a blighted project area will be granted the power of eminent domain to acquire the remaining 20 percent."  But there would be additional payments to these former owners from project profits once these are realized.

A recent NY Times Book Review Essay by David Greenberg is titled "Why Last Chapters Disappoint" ("No Exit" in the print edition).  "Why do books on social problems always end with suggestions that are banal, utopian or beside the point?" 

That one hit home.  Many of us should watch what we recommend. 

I would not characterize Gruen's 13 points as "banal" or "beside the point."  But some of them ("Plan and Zone to Add More Development Than Would Be Required by Estimated Likely Demand Growth,") assume a long run forecasting ability that planners simply do not have.

But readers should chew on all thirteen.  They are from a smart man with lots of professional practice experience, which comes across in all of the chapters leading up to the recommendations.
   

Chic to cheat

It's OK to "freeload" (steal) if it's for the environment. Today's WSJ includes "Freeloaders Unite to Fight Subway Fares .. In Scandinavia, It's Chic to Cheat Via Insurance Scheme." It appears that the chic honor-system transit freeloaders in some of the Scandinavian cities subscribe to an insurance combine that pays their fines on the rare occasions that they get caught.

The story mentions that subscribers are also part of a protest movement against rising fares. I guess that it's much more fun to be a protester for good causes if there is insurance for any downside.

The turnstile jumpers (when and if they actually have to jump) are called Plankers and Planka Oslo is the outfit described in the story. You pay less when caught if you can pay on the spot, 750 ($135) kroner now vs. 900 later. A monthly transit pass goes for 570, but Planka dues (premiums) are just 250. Do the math.

This all works until authorities increase fares and/or enforcement. But think of the demonstrations and marches.

Taking care of itself

We now have 2010 population tallies for all the major U.S. cities. Table 2 in this post lists Wendell Cox's itemization of major U.S. Core Cities. His latest report on head counts shows that most of these places continue to fall behind their suburbs in terms of population growth.

This is old news to some, but perhaps surprising to many who look for (and proclaim) an "urban revival." More than proclaiming, many have worked to put in place a huge number of plans and programs (including public transit) to bring it about.

In his splendid Triumph of the City, Ed Glaeser writes, "Transportation technologies shape our communities and modern sprawl is the child of the automobile." (p. 167)

Here is an even stronger statement from Witold Rybczynski:
“Virtually every technological innovation of the last fifty years has facilitated, if not actually encouraged urban dispersal.” (p. 170)

Yes, agglomeration economies are crucial, but they are available in many places. And suburbs and core cities complement each other. We can network nicely with people who are not down just the street. This is old stuff that bears repeating because no one has yet offered to give me one dollar for every evokation of "regeneration," "renaissance" or "revival" of "the city". Turning back clocks is never simple.

I did not live in New York in the years it was coming apart, but reading Pete Hamill's Piecework gives me an idea how awful it was. New York city's return from those days is amazing. Fred Siegel covers the fall and rise.

But what about the "costs of sprawl?" In my March 12 post, I mentioned that the latest data on commuting indicate that suburban journey-to-work travel times compare favorably with core city times. But those cites referred to all modes of travel and have an apples-and-oranges problem because transit use varies -- and accounts for much slower travel.

The NHTS data make it possible to compare travel via privately-operated-vehicles only, probably the most direct and representative.

In 2001, the average for the "suburbs" was slightly less than for "urban" (NHTS definitions), 20.8 minutes vs. 22 minutes. They had pulled approximately even by 2009, 22.3 minutes for "urban" and 22.8 minutes for "suburbs." The lowest travel time readings in both years were for "second city" (akin to an Edge City), 17.3 minutes in 2001 and 20.9 minutes in 2009.

These are averages, but standard deviations were small in each case; coefficients of variation were always below 1.0.

There are also data for miles instead of minutes. What do they show? Coefficients of variation always greater than one.

Commuters care most about time costs and manage to find job and home location matches that preclude crazy commutes. Planners worry over "jobs-housing" balance (and what they can do about it), but it seems to be taking care of itself.

UPDATE

Ed Glaeser explains his surprise at the New York numbers.

UPDATE2

Here is more re New York from Wendell Cox.

It's the inputs

Perhaps it's not so weird that heads of state in China, France, the UK and elsewhere have jumped on the happiness bandwagon. GDP has lately become a little hard to manage (and is easy to criticize, anyway). So why not switch sports?

Besides, if the GDP idea is complex and controversial, why not tackle something much more difficult?

Today's WSJ includes a nice summary by Carl Bialik, "Happy? Statisticians Aren't Buying It." The piece is self-recommending.

Jefferson wanted a state that made it possible for each of us to pursue happiness. Period. This is one area where measuring the inputs rather that the outputs is the way to go. Are leaders here there and everywhere making our pursuits possible? If so, very good. All the rest is way beyond them.

I know, that never stops them.

UPDATE

Here are reports that exercising self-control can be aggravating. Happiness will always be fun to talk about, but self-management is no picnic.

Getting past big-is-bad

About a dozen years ago, Richard McKenzie wrote Trust on Trial: How the Microsoft Case is Reframing the Rules of Competition, which argued that modern technology and its applications had overtaken anti-trust law and that the application of the law simply favored rivals who had been left behind.

Yet, the big-is-bad idea is a standard. I listened to a couple of radio-news commentators on the drive home yesterday who fretted over the market share that the AT&T-T-Mobile entity would get. They signed off saying, "the politcians will have to get involved." They will, of course. But they were never not involved.

The spectrum (available to radio, wireless, etc.) has long been likened to real estate, best allocated by market competition. But the FCC likes to do the land use planning (along with pals from Congres and their pals from K-Street). We get the demands of technology moving much faster than the FCC can possibly keep up with.

The Justice Department lost the Microsoft case, but innovation and falling prices continued anyway. In fact, both keep accelerating. I believe that we can take away the lesson that it would be best if the FCC loses this fight too -- if it chooses to fight.

Coase and apps

Ronald Coase famously suggested that mutually satisfactory agreements and property rights allocations would follow property rights clarity when and if accompanied by low transactions costs. He could not have foreseen the power of his insight in light of the internet and smart phones and apps. But these days countless new services and transaction opportunities routinely become available each day. In fact, many of them are "free" or very inexpensive, paid for by linked offers and available upgrades.

Brad Hill points us to zebigo.com whereby instant carpools can be formed. Parker.streetline can find vacant curbside parking spaces. Today's WSJ reviews apps to help us stay fit, eat less, etc.

In fact a Letters to the Editor correspondent (Joe Szeles of Colorado Springs) to today's WSJ joins the criticism of the new Consumer Financial Protection Bureau, noting that, "We already have a consumer financial protection bureau. It's fast, efficient, requires no funding with taxpayer money, has no employees, no unions, no pensions to fund and no health-care expenses. It's called Facebook and it has a back-up system called Twitter."

Good news

My favorite diversity is not the politically correct set-piece photo arrangements that universities, businesses, and others carefully assemble for image purposes. Rather it involves people freely choosing spouses and partners across "racial" lines because they are color-blind and more interested in the contents of the partner's character.

The March 19 NY Times includes "Black and White and Married in the Deep South: A Shifting Image". This may be better than even Martin Luther King had dared to dream.

I am old enough to have seen the old South and am always happy to see good news like this. We will never resolve differences of opinion on whether the changes we see are remarkably swift or too slow. Perhaps it helps to note that tribalism is as old as humanity and seeing it recede in our lifetimes is nothing but good news.

Never say "never"

It is March 18, 2011, and the LA Times' lead editorial (very carefully) endorsed peak-load pricing on selected high-occupancy-vehicle (HOV) lanes on local freeways. These would become high-occcupancy/toll or HOT lanes. Time-of-day tolling just may be an idea whose time has come -- which many had thought was ages ago.

I'm making a big deal of this because back in the day when the Times could have been influential, its writers beat the drums for every dunder-head rail transit proposal (and tax) that local planners and politicians could come up with. We now know that all of these projects have had no effect except on the cost side. So we now have have rutted roads and highways -- that are as congested as they were when this rail craziness in LA began.

It is March 18, 2011, and never say "never".

UPDATE

Today's LA Times reports "L.A.'s bus service faces major cuts .. Changes come with push forward on ambitious plan to expand rail network ..." This speaks for itself.

Black swans

More than a black swan a year. Here is the compilation from just the last 10 years from Barry Ritholtz.

BTW, he has one of the funniest one-liners ever. He mentioned that he saw the movie, but "what happened in production?"

Hilarious for those whoe also enjoyed the book.

UPDATE

"Assume a black swan" That's from this very funny spoof by the WSJ's Holman Jenkins.