Saturday, April 10, 2004
Voting With Feet
Arguably the most important contribution to urban economics was by Charles Tiebout in 1956. Challenging the idea that "public goods" are a source of "market failure", Tiebout pointed out that there are, in fact, markets for local public goods. People shop for the packages they like best when selecting a place to live. This amounts to a "quasi-market", imparting demand signals to local governments.The theory has been elaborated in recent years by economists Bill Fischel, Fred Foldvary and Robert Nelson, among others. We now know that demands for public goods show up in land value differences. Local school quality is one such auspicious market. Moreover, if it is a private community, developers benefit from market signals (and returns) when planning the best land use arrangements.
Whether a private community or a small city, leaders are most responsive to the wishes of homeowners who look to them to create the rules that protect home value, most people's biggest tangible asset.
So far, so good. What happens when big-city leaders try to fill the same role? Shades of Inglewood: San Francisco politicians now want to keep chain stores with eleven or more stores from setting up shop in any of selected SF neighborhoods. They argue that they are doing what they can to protect the cities prized neighborhoods.
What is wrong with this picture? Why not let the neighborhoods decide? Let them secede and hammer out their own rules. Top-down one-size-fits-all has never quite worked. Besides big-city politics is less likely to cater for local tastes and more likely to be hijacked in the name of various agendas that have little bearing on neighborhood life.
Thursday, April 08, 2004
Underemployment
Appending the prefixes "under" or "over" to nouns and adjectives is mostly a rhetorical device that regularly appears in political discourse. The current example is political and journalistic analysis of the economy. First, the state of the economy is fretted over; then when recovery sets in, it is a "jobless recovery"; and now, when there are better jobs reports, these are not "good jobs" and many who are working are actually "underemployed". Keynsian analysis or labor market search models can explain underemployment as well as they can explain unemployment. Yet, this is not what the political discussion is all about. Rather, it conjures vague and nefarious schemes.
Time to go back to Occam's Razor and Father Guido Sarducci who reminded those who may have forgetten that, "there's a supply and there's a demand". It even works in labor markets. The "good jobs" have a way of finding trained people. Those who are less productive can complain about the market wage that prevails in their own highest and best use but that does little good.
What makes the demogogery so unpalatable is the fact that so many young people are so poorly trained these days -- and that this sad state need not be addressed if enough people believe that one can catch "underemployment" mysteriously, somewhat like catching the flu.
Wednesday, April 07, 2004
The Demand for Dumb Policies
Many U.S. cities have Redevelopment Authorities that funnel large amounts other people's money to pet causes but which have very little positive effect. The politicization of development is a patently bad idea. As these cities slide further, they simply politicize more activities and the vicious cycle proceeds. Politicized schools do not teach, their grads cannot produce and stay poor -- thereby creating a demand for umpteen new policies, etc. Things can quickly get out of hand and they often do.
Politicized land markets in most U.S. cities mean a costly "approvals process" that hobbles investment and development of the real sort. Poor places stay poor.
When Wal-Mart wanted to locate a new super-store on a white elephant parking lot in Inglewood, CA, they were quickly enmeshed in all sorts of local politics. The sorry ending was a ballot measure (initiated by the company) designed to short-circuit all of the hearings. This lost at the polls last night.
There will be fewer jobs in Inglewood, retail prices and variety will stay stuck where they have been for years and an empty eyesore parking lot will stay empty for a while longer. Oh yes, there will be more work for the City's Redevelopment Authority. Those unproductive jobs are safe.
Tuesday, April 06, 2004
Incoherence All Over AgainCoinciding with the morning of Pulitzer Prize press self-congratulation, Jerry Taylor and Peter Van Doren take many of the nation's top reporters to task for being astonishingly ignorant of basic economics. The two write about the "Gas Panic" and so many journalists' inability to differentiate between nominal, real, and relative price changes.
Beyond ignorance, there is incoherence. If prices are things to have opinions on, then high gas prices are "bad" because (among other things) they hurt "the poor"; yet, prices are never quite high enough because more people ride SUVs than public transit. So, if progressives' fondest dreams suddenly came true and they could actually fix prices, what would they do?
The only way out of that brain cramp is to consider their real agenda. Controlling prices are poor second to controlling people's choices directly. "Get people out of their cars," may soon be among the oldest of fools' errands. Or, treat Hummers like cigarettes; outright bans and/or full-blown campaigns, including half-truths, etc.
That approach, however, creates black markets (new ones for cigarettes all the time as politicians put the screws on smokes) and damages government's credibility, giving rise to increased cynicism, apathy, etc.
Bad policy choices typically create "crises" and the demand for fixes and more policies. Incoherence will do that.
Sunday, April 04, 2004
Voting With Their Feet
David Brooks stands out because he is, both, insightful and fun to read. His Bobos in Paradise as well as Patio Man and the Sprawl People examined modern American lifestyles and, essentially, celebrated them. He does more of that in today's NY Times Magazine ("Our Sprawling Supersize Utopia"). Intellectuals have been sneering at suburbanization and associated lifestyles for many years. Many environmentalists have joined the chorus in recent years. Yet, not only are the new communities the result of free choices but they are also auspicious, once examined rather than dismissed.Brooks sees the (mostly privately) planned communities cropping up in the exurbs as the modern realization of the American Dream and representative of a boldness of imagination missing in many other cultures, including the Province of Intelligensia. Yes, these places are even diverse.
"Suburban America is a bourgeois place, but unlike some other bourgeois places, it is also a transcendent place infused with every day utopianism. That is why you meet so many boring-looking people who see themselves on some technological frontier, dreaming of this innovation or that management technique that will elevate the world -- and half the time their enthusiasms, crazes and fads seem ludicrous to others and even to them, in retrospect."
Under the radar and/or dismissed by people whose vision is squarely focused on the pedestrian past (and the European cities that they have toured since high school art history), the new exurban/suburban places that Brooks describes so well are currently the destination of one of the biggest and most significant migrations of our time.
This is where new modes of living and socializing -- as well as new ways of land use planning and governing are being pioneered and tested.
