Saturday, February 21, 2004
I was once asked about widespread boosterism for big-city downtowns, where fewer us go anymore but where there are continuous and pricey efforts to revitalize. I think that I mentioned that many people confuse the downtown with the hometown. This sentiment is, of course, often hijacked by those with lots to gain from the large-scale transfer of resources involved in most redevelopment projects.Likewise, in the recent Los Angeles neighborhood secession votes, many smart people worried about the demise of the LA idea -- if its government was split. This sentiment confused the government with the place; it also confused the government with the idea of the place. The sentiment was, of course, eminently prone to hijack -- as it was by those who had an economic stake in the status quo.
Thoughts like this are elaborated and probed in The People's Romance by Dan Klein. Klein's many insights are auspicious for anyone prone to head-shaking when, against all the evidence, smart people continue to embrace the idea of a benevolent state and go on to support state programs and their political champions.
Friday, February 20, 2004
Everyone complains about highway congestion but no one does anything about it. Well, not quite. Lots is done but mostly the wrong things. Anyone with a passing acquaintance with economics knows that if price does not ration, something else will. In this case, it is crowding which results in substantial dead-weight losses. Not long ago, time-of-day highway access pricing was dismissed as making sense only to economists . Yet, the feasibility of the approach is now clear because, not only have there been a mountain of studies but, there have also been numerous trials around the world that demonstrate that Econ 1 really works. Singapore since 1975 is an auspicious case as is London since last year. Now, even the socialist Mayor of London gets it.
Not here. The latest U.S. study of the problem, by the Highway Users Alliance, finds 233 crossings and interchanges in the U.S. that, together, account for one-half of all the congestion. Right on schedule, there is a multi-billion transportation bill pending in Congress that promises relief via highway construction and more public transit projects
Pricing is usually fended off as "inequitable" -- and it would undermine the porkfest, the perennial political favorite. We all know how "equitable" pork spending tends to be.
Milton Friedman has demonstrated that the costs of government are not simply measured by the taxes we pay (or by what they spend), but must include the costs of mandates that they routinely impose on the private sector. In this case, not only are wasteful highway and transit projects added as a putative solution but an uncountable number of land use regulations and construction barriers have been put in place to create settlement patterns that are supposed to limit auto traffic. As mentioned in yesterday's blog entry, these are expensive and ineffectual.
The costs of avoiding the road pricing option are, then, staggering. Most textbooks refer to congestion as an example of a market failure. It is really much more a policy failure.
Thursday, February 19, 2004
Reformers gravitate towards seemingly simple "solutions". Too much crime? Ban guns. Too much smog? Many would, of course, love to ban cars but that may be even more tricky than trying to ban guns. So what can be done "to get people out of their cars?" Get them to live at higher densities. Easy. Well, no. Most Americans like their cars and their spacious living. Alas, many years of "smart growth" plans have had almost no impact.The most interesting evidence is from abroad where policies are different and where the people are surely more sensible than here.
USC colleague Gen Giuliano (with grad student Dhiraj Narayan) looked at a large sample of travel diaries from the UK and found that, "how people travel in Britain has very little to do with low-, mid-, or high-density living."
Another USC grad student, Bumsoo Lee, and I compared settlement trends in Canada with those here. We found that, as in the U.S., jobs and people are suburbanizing -- in spite of even tougher policies in Canada to get people to do the right thing.
Social engineering is very hard work because people's preferences find a way of being honored. It's not easy being Green.
Wednesday, February 18, 2004
Put enough money into a government program and they can put a man on the Moon. In a world of scarcity, however, the truism is irrelevant. Put enough money into a government program and can they keep us safe and secure?-- a responsibility that they are actually charged with in the U.S. Constitution.Intelligence agencies consume a lot of money (actual amounts unknown) and they often fail miserably. Perhaps worse than the Iraq WMD failure by all of the Western intelligence agencies was their inability to detect 15 years of nuclear secrets sales by Pakistan's Abdul Qadeer Khan. Yesterday's WSJ featured an op-ed by Bernard-Henri Levy whose best-seller in France, "Who Killed Daniel Pearl?" seems to have been closer to reality than anything else. Levy argued that Pearl was murdered because he was on the trail of the Pakistani clandestine nuclear secrets sales. The Khan confession (and his strange public pardon by Pres. Musharraf) gives Levy's version some substantial corroboration.
One free-lancer upends armies of professional spooks. Is anyone surprised?
On the positive side, only in open societies can we expect to get even one man who gets it right.
Tuesday, February 17, 2004
Writers Joel Kotkin and David Friedman list their "Top 25 Cities for Doing Business in America" in the March issue of INC. Magazine. The top three are Atlanta, Riverside-San Bernardino and Las Vegas. Many such rankings are published each year but this one acknowledges where labor and capital are actually choosing to go. Of course, these places are not the darlings of planners and elites who prefer Portland and Boston. Once again, bottom-up messages and top-down plans conflict. Whereas the winners of the calculation debate are widely acknowledged to be the side that argued for markets and local knowledge, land markets are still thought to be best managed top-down. Why this exception? Economists have argued that Americans (prompted by tax codes) have overinvested in housing and, therefore, have a demand for tough property rules that they get from local governments.
Economist William Fischel has elaborated the "homevoter hypothesis" and the appeal of small cities and their governemts as a source of property rules. The rise of private communities offers another chance for homewoners to get the rules they want. New developments with market-pleasing rules of governance thrive in the places that make the Kotkin-Friedman list of top cities. Bottom-up rules of property are on the rise. It is still unclear whether this means that top-down rule-making will recede. It has fostered an expensive "approvals process" -- and housing shortages and "afforadability crises" along the way. The resulting approvals lobby and top-down real property rules now have a considerable constituency.
Monday, February 16, 2004
The protectionists (anti-globalists seems to be the up-to-date appellation) may have the upper hand this election year. "U.S. Firms Lament Cutback in Visas for Foreign Talent ... Companies say too few in U.S. have the needed math and science skills. Critics claim the H1-B program is misused," reports this morning's LA Times. The same edition cites recent findings by USC colleague Dowell Myers, that, "Latinos are experiencing a degree of upward mobility not previously detected by demographers." The upward mobility story has always been the one that is most significant and auspicious. And most people combine geographic with social and economic mobility. Yet, politicians are typically not equipped to take the long view. We have to muddle through in spite of their input. It's a wonder that we are as prosperous as we are.Sunday, February 15, 2004
A recent World Bank study concluded that if Atlanta could somehow be remade into Boston, its annual vehicle miles traveled (VMT) would fall by 25 percent. Left unsaid was the fact that, in 1990-2000, the Boston metro area grew by 6.7 percent while the Atlanta metro area grew almost six times that, 38.9 percent. And so it goes.Just last Sunday, the LA Times real estate section featured "New generation is right on track ... Transit villages appeal to home buyers who are willing to sacrifice square footage to be closer to rail stations." Towards the end of the article, there was brief mention of the huge subsidies involved in transit village development. Even larger subsidies to rail were not mentioned.
In 21st-century America, top-down land use planning is alive and well -- with predictable results. Pricey redistribution towards favored builders and little of the intended revitalization effect. The fact that people are steadily voting with their feet away from planners' favorite sites seems not to matter. Serious cost-benefit analysis is never considered. Whether it is World Bank economists or LA Times reporters, it is enough to simply presume that it's a good thing.
