The rest of the story

Gaosline prices are up and some people are looking at substitutes for auto use. Some of them are switching to public transit. This morning's WSJ reports that "Riders Swamp Public Transit". That article fails to mention that transit's share of all U.S. passenger miles in 2005 was just 1.5%. If that were ever to double this, we would be back to the 1975 share.

Parry and Small show that public subsidies of operating costs average about 50% -- and most go to bus riders. They argue that these subsidy levels are efficient.

Trouble is that at the margin, transit agencies want to add high-capital-cost rail transit -- and typically in the newer cities with origins and destinations much too dispersed to make these systems cost-effective.

Footprints and thumbprints

I suppose that until we get the prices right in terms of emissions and how they impact climate change and/or we emerge from the hysteria, there will be carbon footprint measures and discussions. Now Brookings has released its "Shrinking the Carbon Footprint of Metropolitan America".

But we know that all resources are scarce and that efficiency is all about making trade-offs in light of the best scarcity information.

The Brookings report and the carbon footprint idea are not helpful in this regard. We get reports of a "bias against public transit" (which has received ever larger subsidies even as ridership has fallen for the last 40 years) and recommendations to "promote more transportation choices to expand transit and compact development options" and other similar chestnuts.

Trouble is that this stuff is now dressed up in seemingly serious analysis. And that can launch a thousand more policies, most of which are likely to make us worse off. I do listen to what the candidates say.

Top ten cities for billionaires

Which city has the world's largest number of billionaires? Here is Forbes' list of the top ten. Is anyone surprised at #1?

Signaling

Almost all of the investment and consumption decisions that we make has a signaling component. This vastly complicates and also enriches standard economic analysis. But to get the full flavor, listen to this podcast (which I came across at Cafe Hayek) and hear Robin Hanson's views

Really fascinating stuff.

Good read

Creationism is silly. We are imperfect. Our memories occasionally fail us. Many of us make bad choices. And natural selection is often misundertsood.

These are not original ideas but Gary Marcus ties them together in a short and readable book, Kluge: The Haphazard Construction of the Human Mind. He brings up the various "bugs" in our cognitive equipment and presents modern explanations from behavioral and neural experiments.

This is all so much more satisfying than the evolutionary-psychology-can-explain-all-quirks approach.

More suspects

The Economist's (May 10) "Map of Misery" highlights the dramatic county-to-county and state-to-state variations in house price changes. The "bubbly states" were the hardest hit. But Wendell Cox shows practically the same list of the places are the ones with the most restrictive land use controls.

To the long list of the usual suspects (the Fed's easy money, bundling and collateralizing of mortgages, failure of models to price them, eager loan officers to make loans and pass them on, national policy to expand home ownership, careless borrowers, etc.) we have to add all those who thought that tough land use controls and development limits are a good idea and without serious cost and consequences.

In a better world

In todays NY Times, Professor Robert N. Frank writes that "The Invisible Hand is Shaking ... How taxes can steer resources toward better uses". Most economists probably share the sentiment.

But how about adding some italics? In a better world, taxes can steer resources to better uses. Donald Rumsfeld fanously mentioned that we go to war with the military we have and not the one we want to have. Likewise, the people who will collect and spend the new taxes are the politicians we have. What if the social good that may come from reduced auto use (once gasoline taxes are raised) is negated by wasteful spending by those who collect these revenues? Plausible? Likely?

Don't even go there

If anyone is going to have a "long-range" plan, then it must be of the most general sort. Mission statements come to mind. But the idea of long-term plans is silly. It presumes (among other things) that there is such a thing as long-range forecasts and these are probably impossible.

The idea that government agencies ought to have long-range plans or make long-range forecasts only makes it worse. Randal O'Toole documents some of the failures of Long-Range Metropolitan Transportation Planning.

Then and now

T.C. Boyle's The Inner Circle does a fine job evoking what appears as a very distant world. Sex research, as pioneered by Alfred Kinsey in pre-WW II America, could easily provoke an uproar (and worse) and its practitioners had to be extra careful to project scientific gravitas.

Times have changed and this is what makes Mary Roach's Bonk: The Curious Coupling of Science and Sex such a delight. It is now 2008 and the author gets to have all the fun. And Roach is very skillfull in not passing up any opportunity to exploit the humor. Read all of her footnotes.

Strange behavior

Forbes (May 19) includes "Strange Behavior ... With oil hitting $120, [how sweet it was], there are some things about energy markets that don't make much sense. Or maybe they do."

The piece mentiones a number of self-inflicted wounds. Here is just one (not mentioned in the Congress' inquisition of oil suppliers):

"The U.S. is on track to import more than $400 billion in
crude oil and gasoline this year, up from $300 billion last year.
Incredibly, some of the easiest and cheapest untapped oil out there lies right
here at home. A small private oil company recently drilled a field in
Colorado's Denver-Jewelsburg basin. It found a good supply of medium-grade
crude oil but had to shut the well for lack of a pipeline to get the oil to
market. 'We would sell for $30 if we could find a buyer,' says the chief
financial officer. How can that be? Paul MacAvoy, economics
professor emeritus at Yale University, explains that the rates pipeline
companies can charge to move crude oil are capped by the Federal Energy
Regulatory Commission. Why should they build more pipelines?"

Glass half-full

The 24/7 news cycle presents ever more miscreants and tragedies to us, here and abroad. So it is ever more true that greatness (where we find it) is what makes life worth living.

The New Yorker's Innovation Issue (May 12) hits the spot. I especially enjoyed James Surowiecki's ("The Open Secret of Success") discussion of Toyota and Malcolm Gladwell's ("In the Air"; gated) discussion of how smart people almost routinely discover large numbers of great ideas.

The former describes one of the world's largest corporations being innovative in terms of the many details that count, and involving a huge work force in the effort. They are so good (and so confident) that they make efforts to share their ideas with their competitors.

The second piece describes discovery by a company called Intellectual Ventures (and others).

It has been said many times that conventional economics relegates all-important discovery to a black box. But it is also true that creating the cultures that make it all possible is of the first importance.

Now we can go back to the TV news and watch idiotic politicians doing what they can to derail it all.

Another invonvenient truth

When gas prices go up, many (like Paul Krugman "Stranded in Suburbia" in today's NY Times) argue that we should live more like Europeans. Well, yes and no.

He admits that significant transit use is not plauisble in the U.S. but that we should live in denser neighborhoods where auto use is of lower importance. Sustained higher prices will, of course, cause us to demand (and get) more auto efficient cars. And, on the chance that this is not enough, we will find ways to consolidate our travel. So far, so good. But then he adds:

"And there are, as always in America, the issues of race and class. Despite the gentrification that has taken place in some inner cities, and the plunge in national crime rates to levels not seen in decades, it will be hard to shake the longstanding American association of higher-density living with poverty and personal danger."

Let's admit it: Our public spaces do not touch those in Europe because so many of ours are populated by the "homeless". We avoid these places not because we are racist or illiberal but because these folks ruin the quality of the experience. I encounter more panhandlers a day in my neighborhood ("tony" Brentwood in West LA) than I have in over two weeks traveling around Europe.

Overlooking this inconvenient truth undermines the comparison.

Swiss model

Much has been written about the seeming paradox of declining national borders, but rising regionalism (the Belgian mess gets a lot of press in Europe). And Paul Collier finds civil wars to be among the four plagues of The Botttom Billion. But most of these are expressions of tribalism which breaks out across and within national borders.

All this makes the Swiss model so fascinating. (Looking a better source than Naylor). Tribalism may have been useful in our evolutionary past, but it is poison now.

It may be too much to ask that the model has lessons for others, but there are (sadly) so few others.

More unintended self-parody

"Help Wanted: Lefty College Seeks Right-Wing Prof ... CU-Boulder Bid to Endow A 'Conservative' Chair Leaves Both Sides Uneasy" (from today's WSJ).

As they say, you can't make this stuff up. What will the vetting process be like? The non-fiction version will be much better than any fictional academic spoof. Richard Russo, Jane Smiley, and the other practitioners of the genre may be too far on the left to get it right. And Bill Buckley is no longer with us. There must be others to pick up the challenge.

Anything but freedom

I thought that I had seen most of the protectionist arguments, but silly me. Martha Bayles, writing in Friday's IHS, sees cooperation between Hollywood lobbyists and Washington politicos to maintain free trade in movies as the worst sort of of capitalist-politician collaboration. She wants to excuse protectionism by our trading partners.

It is rare that free trade has a powerful lobby behind it. And Bayles might be among those who fret over balance-of-trade negatives, but the U.S. has a strong positive in motion picture trade.

Oddly Bayles worries over U.S. objections to other countries' protectionism and to the Cultural Diversity Convention. In other words, cultural diversity (thinly veiled protectionism by the losers) trumps consumer choice. Anything but free trade and free choice.

Internet cafe plus

When in Europe, go to Switzerland. When in Switzerland, go to Lauterbrunnen. When in Lauterbrunnen, go to Airtime. It is a combination of booking agency (para gliding, bungy jumping, canyoning -- know what that is? -- river rafting, sky diving, hang gliding, canyon jump, horse trekking), internet access place, book shop, coffee shop, souvenir shop, landromat (!), you-name-it. Daniela Michel and/or Beni Brunner welcome and serve you.

It takes a competitive market to come up with combinations that make the most sense. Internet cafe's have sprung up around the world. But this is the next iteration. Retailers have long dealt with the challenge of which goods to stock on limited shelf space. But the new game is which combinations of goods and services to bundle. And it's great fun to stumble on the real life experiments that are underway.

Gramlich on boom-bust

Ed Gramlich died recently, but he left us his book on the subprime mortgage market. I have not read it yet but this summary recently came to my attention. It's a refreshing read.

Cycles are natural to the market economy (boom-bust). The boom-side typically involves major innovations and is remarkably productive. The legacy of the full cycle is positive!

The current real estate finance cycle involved significant innovations on the finance side that put people into homes who would not otherwise have them -- most of whom still have them and are likely to keep them.

Gramlich's analysis included some common sense innovations that deserve further discussion.

But common sense sounds downright boring compared to the devil theories that many observers (and politicians) prefer.

Shmacts

My LA Times "Dust-up" with Bart Reed is over and there are many reader comments. Some are savvy and some are not. Quite a few suggest that we look to Europe for transit success and a better way.

But Wendell Cox posts research from Paris that shows only 3 percent of new light-rail riders come from autos -- compared to the hypothetical 35 percent that I assumed in my crazy-optimist calculations for LA rail. So Paris' light rail adds to greenhouse emissions.

Facts, shmacts.

Too cheap to meter?

Baptists and bootleggers, according to Bruce Yandle, cooperated to give us Prohibition. Likewise, Greens and corn growers gave us ethanol and high food prices around the world. This is why "unintended consequences" is such a cop-out. Politics is zero-sum.

Plug-in autos are such a pleasant thought. Who looks at their electric meters? This morning's WSJ includes "Utilities, Plug-In Cars: Near Collision? ... Electric Firms Say Daytime Charges May Raise Costs." And electric utilities will, one way or another, be hit with carbon taxes or charges.

On a daily basis, we now get feel-good stories about how some high-minded person or group has "gone green". As if it's all free.