Mention Kansas City, Tokyo, Paris, Brisbane and most people will evoke very different mental images. This is natural but also misleading. What these places have in comon is fast-growing suburbs, ones that look quite similar to each other.
Look at the cover of Wendell Cox's new book (War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life) and there are four photos of suburban homes in these four cities and it is almost impossible to say which is where. The rest of the book explains why. The narrative is backed up by data of the sort that Wendell has long been making available on his three websites.
The whole story undermines the New Urbanist ideas that cities outside the U.S. are somehow better, that people outside the U.S. make wiser choices and/or that policies in other countries make a substantial difference. None of these are true. Preferences are more universal than most think. Middle class resembles middle class. Any differences between countries are due to time lags (and incomes). And preferences trump polices.
Tuesday, November 28, 2006
Sunday, November 26, 2006
Consistency in L.A.
The city of LA (the place) is home to almost 4 million residents. The City of LA (the government) will spend upwards of $6.7 billion on all sorts of services, some more worthy than others, this year. And this does not count all of the "off-budget" items.
In this morning's NY Times, there is a report that the City wants to save approximately $250,000 per year in tree maintenance costs (0.00373% of its budget) by replacing the city's street palms (non-indigenous), as they age and die, with other trees (also non-indigenous; the only indigenous growth is wild shrub).
Never mind that palms have come to be identified with LA, and vice-versa.
About 3 million overseas tourists visit LA each year. At a plausible average of $1,500 spent locally per visitor (Travel Industry Association of America), if just 166 of them (0.0056%) go elsewhere because they like the palm tree and its associated lore, the policy is a loser.
Our leaders are consistent in their treatment of costs and benefits. The do badly with the big-budget items along with the small ones.
In this morning's NY Times, there is a report that the City wants to save approximately $250,000 per year in tree maintenance costs (0.00373% of its budget) by replacing the city's street palms (non-indigenous), as they age and die, with other trees (also non-indigenous; the only indigenous growth is wild shrub).
Never mind that palms have come to be identified with LA, and vice-versa.
About 3 million overseas tourists visit LA each year. At a plausible average of $1,500 spent locally per visitor (Travel Industry Association of America), if just 166 of them (0.0056%) go elsewhere because they like the palm tree and its associated lore, the policy is a loser.
Our leaders are consistent in their treatment of costs and benefits. The do badly with the big-budget items along with the small ones.
Friday, November 24, 2006
Cross-checks
A feel-good standard in U.S. politics is the idea of an "energy policy." Most people think that there ought to be one, presuming (usually sight unseen) that it would be beneficial. But the resulting political documents are usually all about dispensing favors.
Another problem involves all of the unintended but implicit energy policies. A prime example is discussed in this week's New Yorker by James Surowiecki, who observes that protection of U.S. sugar producers pushes prices up to the extent that domestic ethanol is produced with cheaper corn -- which is heavily subsidized.
It raises the very simple point that policy cross-checks are a pretty good idea. Trade policy, energy policy, and all the rest have cross-cutting implications which can be huge but which get little attention.
Another problem involves all of the unintended but implicit energy policies. A prime example is discussed in this week's New Yorker by James Surowiecki, who observes that protection of U.S. sugar producers pushes prices up to the extent that domestic ethanol is produced with cheaper corn -- which is heavily subsidized.
It raises the very simple point that policy cross-checks are a pretty good idea. Trade policy, energy policy, and all the rest have cross-cutting implications which can be huge but which get little attention.
Sunday, November 19, 2006
The power of ideas
Lawrence Summers writes about Milton Friedman in this morning's NY Times and does a good job of putting Friedman's work into perspective: it changed the world of economics and politics.
Summers notes in passing that Friedman was "too cynical about the capacity of collective action to make people better off." Friedman might have said that Summers is a bit unrealistic in his expectations for politics.
Friday's WSJ included Friedman's "Why Money Matters". There will always be boom-bust cycles, primarily in response to abrupt technological changes. The actions of monetary authorities can make these worse (as in the 1930s) or not (as during the most recent downturn).
And, as Summers writes, most of the world has now gotten the message. It's enough to make one appreciate the power of ideas clearly presented.
Summers notes in passing that Friedman was "too cynical about the capacity of collective action to make people better off." Friedman might have said that Summers is a bit unrealistic in his expectations for politics.
Friday's WSJ included Friedman's "Why Money Matters". There will always be boom-bust cycles, primarily in response to abrupt technological changes. The actions of monetary authorities can make these worse (as in the 1930s) or not (as during the most recent downturn).
And, as Summers writes, most of the world has now gotten the message. It's enough to make one appreciate the power of ideas clearly presented.
Tuesday, November 14, 2006
Putting us on?
Today's LA Times reports: "Mayor rides the SUV, not the MTA ... Villaraigosa promotes use of public transit, but he doesn't spend much time on the bus and subway system ... From the moment he took office nearly 18 months ago, Mayor Antonio Villaraigosa made traffic gridlock a cause celebre -- exhorting Angelenos to help solve the problem by forsaking their cars whenever possible . ... "
The rest of the story points out that the Mayor takes transit once a month but is otherwise too busy to make it work for him.
I will never know whether these guys (politicians and newspaper reporters) cannot connect the dots or whether they are putting us on. Transit in America is very lightly used because it is just too expensive -- in terms of what counts most, our time.
The rest of the story points out that the Mayor takes transit once a month but is otherwise too busy to make it work for him.
I will never know whether these guys (politicians and newspaper reporters) cannot connect the dots or whether they are putting us on. Transit in America is very lightly used because it is just too expensive -- in terms of what counts most, our time.
Monday, November 13, 2006
Happiness
Almost every economics textbook takes students on a tour of the well-known shortcomings of GDP as a measure of well-offness. Along the way, they learn about stocks and flows and pick up other useful tidbits.
There is also a mountain of books and tomes on happiness -- and how and why it has little to do with economic prosperity. Google "Gross National Happiness" and 127,000 entries come up, many of them taking us to Bhutan. Does GNH refer to a stock or a flow? Is it a proposed metric or should it be an optimand?
This morning's LA Times includes Eric Weiner's "Be like Bhutan." No, thank you.
But I have found something that makes me very happy. It is reading Daniel Gilbert's Stumbling on Happiness. The author is very wise about a very difficult and important topic.
There is also a mountain of books and tomes on happiness -- and how and why it has little to do with economic prosperity. Google "Gross National Happiness" and 127,000 entries come up, many of them taking us to Bhutan. Does GNH refer to a stock or a flow? Is it a proposed metric or should it be an optimand?
This morning's LA Times includes Eric Weiner's "Be like Bhutan." No, thank you.
But I have found something that makes me very happy. It is reading Daniel Gilbert's Stumbling on Happiness. The author is very wise about a very difficult and important topic.
Thursday, November 09, 2006
For want of a rail ...
Those of us who think that passenger rail is nothing but boondoggle may have to reassess the politics of the issue. Today's WSJ reports that had Virginia U.S. Senate incumbent George Allen gone with the Green Party candidate's pet project, he would easily have garnered the votes to win that tight race.
That would have kept the Senate Republican, might have kept Don Rumsfeld on the job, and changed the course of history.
In Virginia Race, 'Gail for Rail'May Be a Spoiler
Candidate Says She OfferedTo Endorse Webb, Allen;
26,000 Votes Went Green
WSJ, By JUNE KRONHOLZ and AMY SCHATZ November 9, 2006; Page A1
Gail Parker may have helped decide which of two Virginia gentlemen goes to Washington, which goes home and who controls the U.S. Senate.
Two weeks ago, Ms. Parker, a 59-year-old Independent Green Party of Virginia candidate, says she offered to swing her support in the Virginia Senate race to either the Democratic or Republican candidate. In return, she wanted them to back her pet issue: high-speed rail across the traffic-clogged state.
"I was willing to endorse the candidate who would earn it the old-fashioned way," says Ms. Parker.
But neither man was much interested in her offer, she says. Now it looks like her "Gail for Rail" campaign could have been a factor in deciding which party controls the U.S. Senate.
On Tuesday, Ms. Parker collected about 26,000 votes -- which could have given either Republican Sen. George Allen or Democratic challenger Jim Webb a decisive victory.
As it is, Mr. Webb seems set to replace Mr. Allen after taking a lead of just 7,000 or so votes. With most precincts reporting, Mr. Webb led Mr. Allen with a vote of 1,173,805 to 1,166,488, and the Associated Press last night declared Mr. Webb the winner, based on its survey and analysis of votes counted and ballots remaining. A Webb victory would give Democrats control of the Senate.
Mr. Allen refused to concede yesterday and said he would wait for a full review of the vote, but it didn't seem likely that the totals could change significantly. Absentee ballots have already been counted. That leaves in doubt only the provisional ballots -- that is, those cast by voters who, for one reason or another, may not be eligible to vote.
Such votes are collected locally, so there was no way to know yesterday how many are outstanding. In the 2004 presidential election, the Virginia state elections board says, 4,000 provisional ballots were cast, and only 700 accepted -- not enough to overcome Mr. Webb's lead.
Ms. Parker acknowledged from the beginning that her campaign lacked the steam to win, but says she hoped it would work up enough noise about rail travel to prompt the two leading candidates to pledge support.
Transportation is a hot topic in Virginia, where rapid growth has left taxpayers sitting in traffic. The Census Bureau says the typical Northern Virginia commute is at least a half hour. Virginia's budget for rail transport is $23 million a year.
Since January, Ms. Parker, a retired Air Force Reserves major, says she has logged more than 40,000 miles campaigning around the state in her gray Volkswagen Jetta. She had no paid staffers and personally collected 8,000 of the 10,000 signatures that she needed to get on the ballot.
She says she raised just $1,200 in donations and according to a Federal Election Commission report, she financed much of her campaign through an $18,472 personal loan. "Maybe I should have spent more time trying to raise money," she said yesterday.
Ms. Parker, who ran unsuccessfully for the Virginia General Assembly last year, says she ran a few radio ads during her Senate bid, but mostly campaigned by greeting voters personally. She printed her pamphlets at Staples and ran the campaign from her Alexandria condo. Her campaign photo was taken last December at Glamour Shots, a mall photo studio that specializes in soft-focus, windswept portraits. Even before the last votes were counted yesterday, Ms. Parker and her Jetta had left the state to visit her daughter in Oklahoma.
"Our campaign was about faith, about family and about being fiscally conservative. I have faith we can balance the budget and also build high-speed rail in Virginia," she said in an interview, staying on message even after the campaign had ended.
The Webb campaign says it did try negotiating with Ms. Parker but came to the conclusion she wasn't seriously interested in endorsing him. "There never seemed to be any clear intent on her part to endorse," says Webb campaign spokeswoman Kristian Denny Todd. She says that Mr. Webb is in favor of finding ways to improve the state's traffic congestion and "obviously, he respects [Ms. Parker's] opinion on the matter and her passion for the issue."
Calls to Mr. Allen's campaign, press and Senate offices weren't returned.
Ms. Parker attended Mr. Webb's pre-election rally Monday in Roanoke in a subtle show of support, she says, but didn't endorse him. She bristles at suggestions that her quixotic campaign might help decide control of the Senate. "This is politics," she says. "This country is about discussing issues and informing voters."
Ralph Nader, whose own third-party candidacy in 2000 is thought by some commentators to have helped swing that race to President Bush, agrees with her.
"Everyone has an equal right to run," he says. "Obviously, Webb and Allen took a lot more votes from her than she took from them."
Ms. Parker's votes represent 1% of the state's total.
The congressional elections' most successful independent candidates were Connecticut Sen. Joe Lieberman and Vermont's Bernie Sanders. An Illinois Green Party candidate, Rich Whitney, also turned in a respectable performance with 342,000 votes, or 10% of the state's total. Maryland Green Party candidate, Kevin Zeese, director of a national antiwar group, collected 2% of the state's vote.
Mr. Allen's chances of overturning his apparent loss seem unlikely. In Virginia, a recount "is largely about checking the math," says James Alcorn, a lawyer with the Virginia State Board of Elections.
Voters in much of the state used touch-screen voting machines, which record votes on memory cards with a backup count on an internal memory. The state's 2006 election law says that in a recount, the vote totals from the memory cards are to be looked at again to make sure they were read correctly the first time.
The memory cards in each machine record an image or "screen shot" of each ballot. But there's no provision in the law for looking at the image during a recount. And in any event, only the machine makers could do that because they have kept access to their software a trade secret.
Challenges based on the state's voting equipment also seem fairly remote. Mr. Webb's last name didn't appear on the summary page of many voting machines -- a glitch that brought howls from his campaign before the election. But at least initially, Mr. Allen seems to have faced no similar disadvantage that might be the basis for a challenge.
Ms. Parker says she plans to write thank-you notes to supporters when she returns from Oklahoma and will run for office again -- although she's not sure for what job. "Politics in Virginia is a noble pursuit," she says.
That would have kept the Senate Republican, might have kept Don Rumsfeld on the job, and changed the course of history.
In Virginia Race, 'Gail for Rail'May Be a Spoiler
Candidate Says She OfferedTo Endorse Webb, Allen;
26,000 Votes Went Green
WSJ, By JUNE KRONHOLZ and AMY SCHATZ November 9, 2006; Page A1
Gail Parker may have helped decide which of two Virginia gentlemen goes to Washington, which goes home and who controls the U.S. Senate.
Two weeks ago, Ms. Parker, a 59-year-old Independent Green Party of Virginia candidate, says she offered to swing her support in the Virginia Senate race to either the Democratic or Republican candidate. In return, she wanted them to back her pet issue: high-speed rail across the traffic-clogged state.
"I was willing to endorse the candidate who would earn it the old-fashioned way," says Ms. Parker.
But neither man was much interested in her offer, she says. Now it looks like her "Gail for Rail" campaign could have been a factor in deciding which party controls the U.S. Senate.
On Tuesday, Ms. Parker collected about 26,000 votes -- which could have given either Republican Sen. George Allen or Democratic challenger Jim Webb a decisive victory.
As it is, Mr. Webb seems set to replace Mr. Allen after taking a lead of just 7,000 or so votes. With most precincts reporting, Mr. Webb led Mr. Allen with a vote of 1,173,805 to 1,166,488, and the Associated Press last night declared Mr. Webb the winner, based on its survey and analysis of votes counted and ballots remaining. A Webb victory would give Democrats control of the Senate.
Mr. Allen refused to concede yesterday and said he would wait for a full review of the vote, but it didn't seem likely that the totals could change significantly. Absentee ballots have already been counted. That leaves in doubt only the provisional ballots -- that is, those cast by voters who, for one reason or another, may not be eligible to vote.
Such votes are collected locally, so there was no way to know yesterday how many are outstanding. In the 2004 presidential election, the Virginia state elections board says, 4,000 provisional ballots were cast, and only 700 accepted -- not enough to overcome Mr. Webb's lead.
Ms. Parker acknowledged from the beginning that her campaign lacked the steam to win, but says she hoped it would work up enough noise about rail travel to prompt the two leading candidates to pledge support.
Transportation is a hot topic in Virginia, where rapid growth has left taxpayers sitting in traffic. The Census Bureau says the typical Northern Virginia commute is at least a half hour. Virginia's budget for rail transport is $23 million a year.
Since January, Ms. Parker, a retired Air Force Reserves major, says she has logged more than 40,000 miles campaigning around the state in her gray Volkswagen Jetta. She had no paid staffers and personally collected 8,000 of the 10,000 signatures that she needed to get on the ballot.
She says she raised just $1,200 in donations and according to a Federal Election Commission report, she financed much of her campaign through an $18,472 personal loan. "Maybe I should have spent more time trying to raise money," she said yesterday.
Ms. Parker, who ran unsuccessfully for the Virginia General Assembly last year, says she ran a few radio ads during her Senate bid, but mostly campaigned by greeting voters personally. She printed her pamphlets at Staples and ran the campaign from her Alexandria condo. Her campaign photo was taken last December at Glamour Shots, a mall photo studio that specializes in soft-focus, windswept portraits. Even before the last votes were counted yesterday, Ms. Parker and her Jetta had left the state to visit her daughter in Oklahoma.
"Our campaign was about faith, about family and about being fiscally conservative. I have faith we can balance the budget and also build high-speed rail in Virginia," she said in an interview, staying on message even after the campaign had ended.
The Webb campaign says it did try negotiating with Ms. Parker but came to the conclusion she wasn't seriously interested in endorsing him. "There never seemed to be any clear intent on her part to endorse," says Webb campaign spokeswoman Kristian Denny Todd. She says that Mr. Webb is in favor of finding ways to improve the state's traffic congestion and "obviously, he respects [Ms. Parker's] opinion on the matter and her passion for the issue."
Calls to Mr. Allen's campaign, press and Senate offices weren't returned.
Ms. Parker attended Mr. Webb's pre-election rally Monday in Roanoke in a subtle show of support, she says, but didn't endorse him. She bristles at suggestions that her quixotic campaign might help decide control of the Senate. "This is politics," she says. "This country is about discussing issues and informing voters."
Ralph Nader, whose own third-party candidacy in 2000 is thought by some commentators to have helped swing that race to President Bush, agrees with her.
"Everyone has an equal right to run," he says. "Obviously, Webb and Allen took a lot more votes from her than she took from them."
Ms. Parker's votes represent 1% of the state's total.
The congressional elections' most successful independent candidates were Connecticut Sen. Joe Lieberman and Vermont's Bernie Sanders. An Illinois Green Party candidate, Rich Whitney, also turned in a respectable performance with 342,000 votes, or 10% of the state's total. Maryland Green Party candidate, Kevin Zeese, director of a national antiwar group, collected 2% of the state's vote.
Mr. Allen's chances of overturning his apparent loss seem unlikely. In Virginia, a recount "is largely about checking the math," says James Alcorn, a lawyer with the Virginia State Board of Elections.
Voters in much of the state used touch-screen voting machines, which record votes on memory cards with a backup count on an internal memory. The state's 2006 election law says that in a recount, the vote totals from the memory cards are to be looked at again to make sure they were read correctly the first time.
The memory cards in each machine record an image or "screen shot" of each ballot. But there's no provision in the law for looking at the image during a recount. And in any event, only the machine makers could do that because they have kept access to their software a trade secret.
Challenges based on the state's voting equipment also seem fairly remote. Mr. Webb's last name didn't appear on the summary page of many voting machines -- a glitch that brought howls from his campaign before the election. But at least initially, Mr. Allen seems to have faced no similar disadvantage that might be the basis for a challenge.
Ms. Parker says she plans to write thank-you notes to supporters when she returns from Oklahoma and will run for office again -- although she's not sure for what job. "Politics in Virginia is a noble pursuit," she says.
Wednesday, November 08, 2006
Hold your nose and enjoy
The stock market has been downright exhuberant since Monday. On Monday and Tuesday, this was judged to be in anticipation of divided government. Today's rally was in celebration of divided government.
Now we know what the markets mean by divided government.
Gridlock has its attractions and that, apparently, includes the contents of today's on-the-air interviews with the new barons of capitol hill. John Dingell, for example, wants nationalized health care ASAP to save Detroit's auto makers. Many others were equally ambitious.
If you believe that divided government is the closest that we will ever get to no government (which may be true), then hold your nose and enjoy.
Ticket-splitting was never this good.
Now we know what the markets mean by divided government.
Gridlock has its attractions and that, apparently, includes the contents of today's on-the-air interviews with the new barons of capitol hill. John Dingell, for example, wants nationalized health care ASAP to save Detroit's auto makers. Many others were equally ambitious.
If you believe that divided government is the closest that we will ever get to no government (which may be true), then hold your nose and enjoy.
Ticket-splitting was never this good.
Monday, November 06, 2006
Oddball theories
Today's LA Times actually includes a piece that cites challenges to the sprawl-and-obesity silliness. "Road to fat city starts at home ... Can a neighborhood make you gain weight? Urban planners think so, but a study questions the link between ZIP Code and waistline." Imagine.
Good news and bad news. The same newspaper includes: "Lower pump prices fuel political conspiracy theories ... Many Americans think that the recent drop is tied to the Bush administration and GOP election hopes." Gallup reports that 42% of those polled believe this.
We keep hearing that more Americans than ever are college educated. Also many more than ever before have finished high school. What have they learned?
Good news and bad news. The same newspaper includes: "Lower pump prices fuel political conspiracy theories ... Many Americans think that the recent drop is tied to the Bush administration and GOP election hopes." Gallup reports that 42% of those polled believe this.
We keep hearing that more Americans than ever are college educated. Also many more than ever before have finished high school. What have they learned?
Thursday, November 02, 2006
Life in the big city
Measure H , on the L.A. City ballot next week, proposes to raise $1 billion for "affordable housing". Linking up big boondoggle with feel-good, it has a very long list of supporters.
Today's L.A. Times also reports "L.A. sues over unaccounted for funds ... The city, alleging misapporpriation of aid to poor, files a civil suit against former Housing Authority Officials."
There is also the minor issue that housing affordability is a problem mainly because of all of the well-meaning controls put in place by the boondoggle-feel-good crowd (see, for example, Glaeser, Gyourko, and Saks).
Today's L.A. Times also reports "L.A. sues over unaccounted for funds ... The city, alleging misapporpriation of aid to poor, files a civil suit against former Housing Authority Officials."
There is also the minor issue that housing affordability is a problem mainly because of all of the well-meaning controls put in place by the boondoggle-feel-good crowd (see, for example, Glaeser, Gyourko, and Saks).
Wednesday, November 01, 2006
Not easy being Green
Whenever a wave of new data are released, the "smart" people who (without irony) trumpet "smart growth" take it on the chin.
Alan Pisarski is the leading analyst of census commuting data and his Commting in America series slices and dices these data better than anyone. Ken Orski reports that Commuting in America III, the definitive work on the 2000 census commuting data, is here.
And what do you know? There are more nonwork trips than ever? Solo auto commutes are up. Carpooling is down. Transit use is flat (it has apparently hit bottom and floats there on subsidies). Telecommuting is up and walking-to-work is down.
It's not easy being green -- and even harder being smart.
Alan Pisarski is the leading analyst of census commuting data and his Commting in America series slices and dices these data better than anyone. Ken Orski reports that Commuting in America III, the definitive work on the 2000 census commuting data, is here.
And what do you know? There are more nonwork trips than ever? Solo auto commutes are up. Carpooling is down. Transit use is flat (it has apparently hit bottom and floats there on subsidies). Telecommuting is up and walking-to-work is down.
It's not easy being green -- and even harder being smart.
Monday, October 30, 2006
No golden age
Even the title of the piece is an eye-opener. The May, 2006, QJE includes Xavier Sala-i-Martin's "The World Distribution of Income: Falling Poverty and ... Convergence, Period". It's lovely when the work is solid enough to back the claim that it is shutting the door on an ongoing debate. Einstein did it with mathematical proofs; Sala-i-Martin does it with incredibly clever data analysis.
In today's LA Times, Lawrence Summers writes about "The global middle matters." As some of the poorest start to participate in the world economy, they become better off. The rich also get richer. But, Summers writes,
"[e]veryone else has not fared nearly as well. Low-cost labor -- ordinary, middle-class workers and their employers, whether they live in the American Midwest, Germany's Ruhr Valley, Latin America or Eastern Europe -- are left out. ... Just as the GI Bill and domestic housing programs in the aftermath of WW II were crucial parts of the overall policy approach in the U.S. that permitted the Marshall Plan, GATT and international financial institutions go forward, our success in advancing international integration will again depend on what can be done for the great middle class, at home and abroad."
Summers' call for more "international integration" is promising insofar as it limits the damage that local policy makers can inflict -- and makes possible the outcomes that Sala-i-Martin documents. But Thomas Di Lorenzo questions the wisdom of (and the motivations behind) the GI Bill. If he is right, there goes the last of the plausible policy success stories. Perhaps there never was a Golden Age of inspired policy making.
In today's LA Times, Lawrence Summers writes about "The global middle matters." As some of the poorest start to participate in the world economy, they become better off. The rich also get richer. But, Summers writes,
"[e]veryone else has not fared nearly as well. Low-cost labor -- ordinary, middle-class workers and their employers, whether they live in the American Midwest, Germany's Ruhr Valley, Latin America or Eastern Europe -- are left out. ... Just as the GI Bill and domestic housing programs in the aftermath of WW II were crucial parts of the overall policy approach in the U.S. that permitted the Marshall Plan, GATT and international financial institutions go forward, our success in advancing international integration will again depend on what can be done for the great middle class, at home and abroad."
Summers' call for more "international integration" is promising insofar as it limits the damage that local policy makers can inflict -- and makes possible the outcomes that Sala-i-Martin documents. But Thomas Di Lorenzo questions the wisdom of (and the motivations behind) the GI Bill. If he is right, there goes the last of the plausible policy success stories. Perhaps there never was a Golden Age of inspired policy making.
Saturday, October 28, 2006
Urban economics can be fun
The various factors of production are valued at any time according to how productive they happen to be which rests on how efficiently they are combined with the other factors. This applies to land, labor and capital, of course.
But the most highly valued land is in cities. The value of parcels and sites comes from competitive bidding for each location. The bids have a lot to do with what is going on at all of the other proximate locations.
This is complex and requires smoothly functioning land markets to sort out. There are inevitable externalities but their dollar value depends on realization, i.e., location. Does the laundry end up next to the soot-producer? Profit-seeking land users can be expected to locate so that the externalities that are realized end up bestowing the largest possible net effect and benefit.
This is some of the story of how cities come to be the engines of economic growth and the places where human creativity is most likely to flourish.
Matt Kahn's new Green Cities: Urban Growth and the Environment is good background for thinking about cities. It is refreshingly fact-based.
Cities are exciting but most urban economics texts are bone-crunching boring. Matt's book, on the other hand, is fun.
But the most highly valued land is in cities. The value of parcels and sites comes from competitive bidding for each location. The bids have a lot to do with what is going on at all of the other proximate locations.
This is complex and requires smoothly functioning land markets to sort out. There are inevitable externalities but their dollar value depends on realization, i.e., location. Does the laundry end up next to the soot-producer? Profit-seeking land users can be expected to locate so that the externalities that are realized end up bestowing the largest possible net effect and benefit.
This is some of the story of how cities come to be the engines of economic growth and the places where human creativity is most likely to flourish.
Matt Kahn's new Green Cities: Urban Growth and the Environment is good background for thinking about cities. It is refreshingly fact-based.
Cities are exciting but most urban economics texts are bone-crunching boring. Matt's book, on the other hand, is fun.
Tuesday, October 24, 2006
Agglomeration in the news
Agglomeration economies come in many flavors. In Forbes (Oct 30), columnist John W. Rogers Jr. writes about "Home Court Advantage". He cites an academic paper that confirms that investors do best if they invest in companies that are close to home (within 62 miles).
"Since my days as a hot dog vendor at Chicago's Comiskey Park through my years on Princeton's basketball team, I have always been fascinated by the theory of the home team's advantage. Many studies have found that athletic teams tend to win more home games than away games. For the Big Ten Conference in men's basketball last year, home teams won 70% of the games.
"Why? The home team has a certain confidence. It knows the feel of the court and the give of the rims. And, of course, the fans are on its side.
"Similarly, the home court can make a big difference to an investor. Living in Chicago gives me an informational advantage with businesses headquartered here because I encounter them all the time. I buy their products, cross paths with their executives and employees, and talk to their customers and competitors.
"There's academic support for my beliefs about the home advantage. Tobias J. Moskowitz, a finance professor at the University of Chicago's business school, has conducted extensive research on the geography of investing. His conclusion: One way to beat an investment benchmark over the long haul is to buy stocks close by--which he defines as businesses headquartered within 62 miles.
"Managers' home-area portfolio holdings outperform their faraway holdings by 2.7 percentage points per year. Let me explain just what is meant by that. Of course Moskowitz is not claiming that each town's corporations beat the national average. Rather, he's saying that a money manager has a superior ability to sort good companies from bad when the companies in question are nearby. Those stock pickers with strong convictions about neighboring businesses do particularly well. According to Moskowitz's research, which spanned 1975 through 1994, money managers who committed 20% or more of their assets to proximate companies' stocks did four full percentage points a year better with them than with the rest of their portfolios."
Likewise, the NY Times recently ran "It's not the people you know. It's where you are."
"If you have a brilliant idea for the New New Thing and want Sequoia to provide its funds and blessing — using the same golden touch provided not long ago to Google’s founders — you would be much better off in Beijing, where Sequoia has an office, than in Boston, where it does not.
"It’s convenient for venture capitalists to have entrepreneurs close by, but the reverse is true, too, said Allen Morgan, a managing director of the Mayfield Fund, which manages $2.3 billion in venture capital and is also on Sand Hill Road. Mr. Morgan made the case by pointing out that a prospective entrepreneur would, on average, need to have three to eight meetings with a venture fund before he or she was successful, but would have to go through a similar process with 5 to 10 firms before finding the one that approved the funding request.
"Even if the process goes smoothly and requires only 15 meetings — the fewest possible, given the lowest range of possibilities — and even if most of those meetings are set up in advance, the time consumed in getting to Sand Hill Road, even using local highways, can be significant. The problem is that much worse when, as often happens, a meeting is called with just an hour or two of notice. 'If you live in Santa Clara, it’s doable,' Mr. Morgan said. 'If you live in Dubuque, it’s not.'
"Entrepreneurs who live in Silicon Valley also find the technical talent they need faster than they can in any other place; they pay more for that talent, but speed is the sine qua non for success. Seth J. Sternberg, the chief executive of Meebo, an instant-messaging company in Palo Alto that is backed by Sequoia, described Silicon Valley with the fervent appreciation of a recent transplant from New York, where he had suffered three separate bad experiences with start-ups, none of which had attracted venture funding.
"The ecosystem in Silicon Valley, Mr. Sternberg said, includes “incredible techies, who live here because this is the epicenter, where they can find the most interesting projects to work on.” The ecosystem also includes real estate agents, accountants, head hunters and lawyers who understand an entrepreneur’s situation — that is, emptied bank accounts and maxed-out credit cards."
"Since my days as a hot dog vendor at Chicago's Comiskey Park through my years on Princeton's basketball team, I have always been fascinated by the theory of the home team's advantage. Many studies have found that athletic teams tend to win more home games than away games. For the Big Ten Conference in men's basketball last year, home teams won 70% of the games.
"Why? The home team has a certain confidence. It knows the feel of the court and the give of the rims. And, of course, the fans are on its side.
"Similarly, the home court can make a big difference to an investor. Living in Chicago gives me an informational advantage with businesses headquartered here because I encounter them all the time. I buy their products, cross paths with their executives and employees, and talk to their customers and competitors.
"There's academic support for my beliefs about the home advantage. Tobias J. Moskowitz, a finance professor at the University of Chicago's business school, has conducted extensive research on the geography of investing. His conclusion: One way to beat an investment benchmark over the long haul is to buy stocks close by--which he defines as businesses headquartered within 62 miles.
"Managers' home-area portfolio holdings outperform their faraway holdings by 2.7 percentage points per year. Let me explain just what is meant by that. Of course Moskowitz is not claiming that each town's corporations beat the national average. Rather, he's saying that a money manager has a superior ability to sort good companies from bad when the companies in question are nearby. Those stock pickers with strong convictions about neighboring businesses do particularly well. According to Moskowitz's research, which spanned 1975 through 1994, money managers who committed 20% or more of their assets to proximate companies' stocks did four full percentage points a year better with them than with the rest of their portfolios."
Likewise, the NY Times recently ran "It's not the people you know. It's where you are."
"If you have a brilliant idea for the New New Thing and want Sequoia to provide its funds and blessing — using the same golden touch provided not long ago to Google’s founders — you would be much better off in Beijing, where Sequoia has an office, than in Boston, where it does not.
"It’s convenient for venture capitalists to have entrepreneurs close by, but the reverse is true, too, said Allen Morgan, a managing director of the Mayfield Fund, which manages $2.3 billion in venture capital and is also on Sand Hill Road. Mr. Morgan made the case by pointing out that a prospective entrepreneur would, on average, need to have three to eight meetings with a venture fund before he or she was successful, but would have to go through a similar process with 5 to 10 firms before finding the one that approved the funding request.
"Even if the process goes smoothly and requires only 15 meetings — the fewest possible, given the lowest range of possibilities — and even if most of those meetings are set up in advance, the time consumed in getting to Sand Hill Road, even using local highways, can be significant. The problem is that much worse when, as often happens, a meeting is called with just an hour or two of notice. 'If you live in Santa Clara, it’s doable,' Mr. Morgan said. 'If you live in Dubuque, it’s not.'
"Entrepreneurs who live in Silicon Valley also find the technical talent they need faster than they can in any other place; they pay more for that talent, but speed is the sine qua non for success. Seth J. Sternberg, the chief executive of Meebo, an instant-messaging company in Palo Alto that is backed by Sequoia, described Silicon Valley with the fervent appreciation of a recent transplant from New York, where he had suffered three separate bad experiences with start-ups, none of which had attracted venture funding.
"The ecosystem in Silicon Valley, Mr. Sternberg said, includes “incredible techies, who live here because this is the epicenter, where they can find the most interesting projects to work on.” The ecosystem also includes real estate agents, accountants, head hunters and lawyers who understand an entrepreneur’s situation — that is, emptied bank accounts and maxed-out credit cards."
Monday, October 23, 2006
Fat city
Ben Dachis points us to the University of Toronto working paper (by Jean Eid, Henry G. Overman, Diego Puga and Matthew A. Turner) "Fat City: The Relationship Between Sprawl and Obesity. .. Our results indicate that current interest in changing the built envornment to counter the rise in obesity is misguided."
These results should not surprise anyone. Yet, serious people publish papers that link "urban sprawl" with obesity. Google scholar brings up almost one-thousand papers with keywords "sprawl" and "obesity." I sampled and all the ones that I found argued for a positive link.
But I did not find this stuff on the Wikipedia pseudoscience list. Well, the cited paper is a nudge in that direction.
These results should not surprise anyone. Yet, serious people publish papers that link "urban sprawl" with obesity. Google scholar brings up almost one-thousand papers with keywords "sprawl" and "obesity." I sampled and all the ones that I found argued for a positive link.
But I did not find this stuff on the Wikipedia pseudoscience list. Well, the cited paper is a nudge in that direction.
Sunday, October 22, 2006
Assimilation on steroids.
In their on-line coverage of their on-air coverage of the 300-million mark reached by the U.S. population last week, the editors of The News Hour did not highlight what may have been the most important point of all.
They did have the good sense to interview Brookings' Bill Frey and he had many interesting things to say. Among them was the thought that when we reach 400-million (in as little as 37 years), inter-ethnic marriage and coupling will likely have become so extensive as to wipe out (not his words) today's obsessions with race. How lovely.
Becker and Posner do the usual fine job of weighing the many sides of population growth. But they too miss Frey's big point. Politics alone creates many problems but it becomes poison when it mixes with race.
Most countries have their own peculiar histories of racial strife and the U.S. is no exception. But assimilation has always been the most promising antidote -- and intermarriage between the races and ethnicities on a scale where the tired old categories fade is assimilation on steroids.
They did have the good sense to interview Brookings' Bill Frey and he had many interesting things to say. Among them was the thought that when we reach 400-million (in as little as 37 years), inter-ethnic marriage and coupling will likely have become so extensive as to wipe out (not his words) today's obsessions with race. How lovely.
Becker and Posner do the usual fine job of weighing the many sides of population growth. But they too miss Frey's big point. Politics alone creates many problems but it becomes poison when it mixes with race.
Most countries have their own peculiar histories of racial strife and the U.S. is no exception. But assimilation has always been the most promising antidote -- and intermarriage between the races and ethnicities on a scale where the tired old categories fade is assimilation on steroids.
Wednesday, October 18, 2006
Expanding universe
Brookings demographers have been mining 2000 census data re "exurbia." To paraphrase a former U.S. president, "it depends on what you mean by exurbia."
Dr. Soojung Kim and I have been looking at employment, population and income growth throughout the U.S. counties, using the 35-year REIS file from BEA. Interestingly, the outward trends are dominant but there are cycles.
The "micropolitan" areas can be categorized as adjacent to large or small metros or nonadjacent. Their performances vary from region to region. They do best in the west -- even though counties tend to be larger and this region's micropolitan counties tend to be more remote than those in other regions.
Rural counties (those that do not qualify as core-based [micropolitan or metropolitan]) can also be grouped by whether they are adjacent or nonadjacent to any of the two core-based groups. In years when there is an outward impetus, the latter also do well. The pulses push further than anyone had thought.
Today's WSJ reports this:
"Seeding Sprawl"
October 18, 2006; Page B4
"The American "exurbs" are growing twice as fast as the overall metropolitan areas from which they sprawled, according to a new report by the Brookings Institution.
"These areas, on the far fringes of cities, still house relatively few people -- an average of about 6% of the population of 88 large U.S. metropolitan areas, as of 2000. But the exurbs' rapid growth, about 31% in terms of population during the 1990s, poses a big challenge to developers, regional planners and conservationists.
"'The question for all exurbs is are you going to remain the fringe of a metro area, or in 20 years are you going to be a conventional suburb, which means you will lose more and more rural land and the congestion will be worse,' says Alan Berube, the study's head author.
"The Brookings study defines exurbs as communities with relatively low housing density where at least 20% of workers commute to jobs in urban areas. In cities such as Cleveland and Detroit, the exurbs have become havens for wealthier people escaping more impoverished cities and inner suburbs. In higher-priced Boston, New York, the San Francisco Bay area and Washington, D.C., residents are being forced farther outside cities because they can't afford housing.
"In the long run, Mr. Berube says it will be less expensive to encourage development nearer the center of a metro area because communities won't need to spend money creating infrastructure to support residents on the fringes. But residents' conflicted views complicate matters, he adds. "People want a single-family home and a bunch of bedrooms, but at the same time they want to be able to walk to things and commute less than 45 minutes each way.
Dr. Soojung Kim and I have been looking at employment, population and income growth throughout the U.S. counties, using the 35-year REIS file from BEA. Interestingly, the outward trends are dominant but there are cycles.
The "micropolitan" areas can be categorized as adjacent to large or small metros or nonadjacent. Their performances vary from region to region. They do best in the west -- even though counties tend to be larger and this region's micropolitan counties tend to be more remote than those in other regions.
Rural counties (those that do not qualify as core-based [micropolitan or metropolitan]) can also be grouped by whether they are adjacent or nonadjacent to any of the two core-based groups. In years when there is an outward impetus, the latter also do well. The pulses push further than anyone had thought.
Today's WSJ reports this:
"Seeding Sprawl"
October 18, 2006; Page B4
"The American "exurbs" are growing twice as fast as the overall metropolitan areas from which they sprawled, according to a new report by the Brookings Institution.
"These areas, on the far fringes of cities, still house relatively few people -- an average of about 6% of the population of 88 large U.S. metropolitan areas, as of 2000. But the exurbs' rapid growth, about 31% in terms of population during the 1990s, poses a big challenge to developers, regional planners and conservationists.
"'The question for all exurbs is are you going to remain the fringe of a metro area, or in 20 years are you going to be a conventional suburb, which means you will lose more and more rural land and the congestion will be worse,' says Alan Berube, the study's head author.
"The Brookings study defines exurbs as communities with relatively low housing density where at least 20% of workers commute to jobs in urban areas. In cities such as Cleveland and Detroit, the exurbs have become havens for wealthier people escaping more impoverished cities and inner suburbs. In higher-priced Boston, New York, the San Francisco Bay area and Washington, D.C., residents are being forced farther outside cities because they can't afford housing.
"In the long run, Mr. Berube says it will be less expensive to encourage development nearer the center of a metro area because communities won't need to spend money creating infrastructure to support residents on the fringes. But residents' conflicted views complicate matters, he adds. "People want a single-family home and a bunch of bedrooms, but at the same time they want to be able to walk to things and commute less than 45 minutes each way.
Sunday, October 15, 2006
Rants
Unlike conservative talk radio, left-wing Air America Radio is in financial trouble. And William Safire's "On Language" in today's NY Times writes about the etymology of rant.
It seems that right-wing rants have an audience and left-wing rants less so. Yet about as many Americans vote for Democrats as Republicans. So what gives?
I am currently enjoying Eric Beinhocker's The Origin of Wealth. Like so many other recent books that feature discussions of economics (David Warsh's Knowledge and the Wealth of Nations, for example), it reminds us that serious people now take property seriously. It was not always so and property is still thought be exotic and/or sinister in many circles (NPR, Dan Rather, Bill Maher, many precincts of U.S. universities, etc.).
Most Americans now own property -- most auspiciously, their own homes as well as 401k's and the like. To most people, the idea of property is coherent while the socialist critique is exotic and/or sinister.
Rants, seemingly, go down better when coherent. What has the left to offer? According to Brad Hill, their remaining trade is critique when the right misfires. It seems that this can win frustrated voters and even elections but it cannot sustain a regular large audience.
It seems that right-wing rants have an audience and left-wing rants less so. Yet about as many Americans vote for Democrats as Republicans. So what gives?
I am currently enjoying Eric Beinhocker's The Origin of Wealth. Like so many other recent books that feature discussions of economics (David Warsh's Knowledge and the Wealth of Nations, for example), it reminds us that serious people now take property seriously. It was not always so and property is still thought be exotic and/or sinister in many circles (NPR, Dan Rather, Bill Maher, many precincts of U.S. universities, etc.).
Most Americans now own property -- most auspiciously, their own homes as well as 401k's and the like. To most people, the idea of property is coherent while the socialist critique is exotic and/or sinister.
Rants, seemingly, go down better when coherent. What has the left to offer? According to Brad Hill, their remaining trade is critique when the right misfires. It seems that this can win frustrated voters and even elections but it cannot sustain a regular large audience.
Friday, October 13, 2006
Glass half-full
What do we know? In less than a week, there will be 300 million of us (and ever fewer Europeans). The Dow has been hitting record highs. And the housing "bubble" is no longer expaning. In fact, it is slowly deflating.
Economists are still divided on whether the housing contraction means sharp brakes on consumer spending. The pro and con views are nicely summerized in The Economist's Economic focus: Home Truths.
Interestingly, the coverage compares two types of mortgage-equity withdrawals, active and passive. The former includes home-equity loans while the latter includes cashing in equity for retirement. The two do not move in tandem.
As usual, demographic context sheds new light. The article also mentions that home-equity cash is being used by many to pay off credit card debt.
When it comes to the U.S. economy, it is very hard work being a steady gloomster/doomster.
Economists are still divided on whether the housing contraction means sharp brakes on consumer spending. The pro and con views are nicely summerized in The Economist's Economic focus: Home Truths.
Interestingly, the coverage compares two types of mortgage-equity withdrawals, active and passive. The former includes home-equity loans while the latter includes cashing in equity for retirement. The two do not move in tandem.
As usual, demographic context sheds new light. The article also mentions that home-equity cash is being used by many to pay off credit card debt.
When it comes to the U.S. economy, it is very hard work being a steady gloomster/doomster.
Tuesday, October 10, 2006
New blog on cities
Fred Siegel usually has interesting things to say. And he has al lot to say about cities. And two of his favorite cities are New York and Los Angeles, about which he knows quite a lot.
Now he has teamed up with his son Harry to maintain a blog, Cities on a Hill, to inform the rest of us re their views.
I learned a lot about New York City from Fred's The Prince of the City. Over the years, he has been prolific and wise. Now we have the good fortune of hearing from the Siegels on a regular basis.
Now he has teamed up with his son Harry to maintain a blog, Cities on a Hill, to inform the rest of us re their views.
I learned a lot about New York City from Fred's The Prince of the City. Over the years, he has been prolific and wise. Now we have the good fortune of hearing from the Siegels on a regular basis.
Subscribe to:
Posts (Atom)
Posts
