Green shoots in Detroit

Markets recycle resources. This story mentions the conversion of parts of Detroit to farmland.

Growing cities reallocate peripheral land from rural to urban uses, but the reverse can also be an option. Some of the older places (New York, Boston) have been able to renew themselves by adapting to new technologies and industries. But not all cities can do this, including various places in the northeast and north central. Detroit may be the prime example. What else, then, but have it shrink? The highest and best use of some of its acres is in farming.

"Saving" GM and Chrysler is politically expedient, but land, labor and capital are best reallocated and recycled when politics are not involved.

In good times and in bad, the capability to reallocate scarce resources to their highest and best uses has first-order importance. Detroit's urban farmers show the way in bad times.

A thousand flowers bloom

In today's NY Times, William Falk ("Should Old Articles Be Forgot") itemizes what he sees as major news from 2009. He dwells on Robotic Warfare (ever more drone attacks over Pakistan and other places), Car-Crazy in China (duh), Real Working Wives (wives are now "needed" as breadwinners to keep ever more families "afloat"), A New Source of Stem Cells (superb), and Teeming With Planets (yup, we are unlikely to be alone or even unique).

Re China and cars, when people have money they want cars. And when people have cars, origins and destinations disperse. But then more people want cars, etc., etc., etc.

In today's WSJ, James B. Stewart cites Amazon's amazing sales in an economic downturn and describes a " ... paradigm shift: the coming-of-age of Internet shopping and the long, slow demise of the mall,"

Perhaps. Yesterday, I finally visited the Americana at Brand in Glendale, near LA. It is a mixed-use, vertical "lifestyle center" that could sustain downtown Glendale. It has lots of parking.

Paradigm shifts (such as Amazon and internet shopping) occasionally happen, but it is also fascinating that regional sub-centers (like downtown Glendale) can accommodate up-to-date developments that can give them new life. Glendale (its politicians and various local lobbies) and market-savvy developers found a way to live with each other -- as well as with "car-crazy" Southern Californians.

Immigrants

Immigrants enrich this country in many ways. Today's NY Times includes "Taking Hold in Silicon Valley, a Ping-Pong Boom."

The Economist (Dec. 19) calls is "A Ponzi scheme that works ... The greatest strength of America is that people want to live there ... No matter where an immigrant hails from, he can find a cluster of his ethnic kin in America."

In a better world, those on the left who see the U.S. as a great evil, would spend some time looking at the world through immigrants' eyes. Those on the right who only see a threat to a romantized past would spend some time looking at America as it was before the arrival of immigrants gave us better science, medicine, art, music, food, sports, literature, you name it.

Who to trust?

The Independent Review (Winter 2010, apparently not yet online) includes "Lost Trust: The Real Cause of the Financial Meltdown" by Bruce Yandle.

Yandle cites the importance of trust in financial transactions and cites three "assurance mechanisms" -- credit ratings, international accounting standards, and credit-default swaps. All three collapsed when easy credit and policy makers' push to make housing more widely available combined in the crazy ways that we now read and talk about on a daily basis.

But the author's focus on how the three assurance mechanisms were overwhelmed by policy errors (well documented by the Yandle) is informative and eye-opening.

Markets expanded when trust was formed, and they collapsed when the politically distorted assurance devices failed to function. In the process, government, the lender of last resort, also became the owner of last resort.

Read it in print or when it comes online.

UPDATE

Here it is. Silly me.

Pigouvian subsidy?

The Copenhagen confab on climate change may have "failed", and we can only speculate on what "success" would have meant. The November 2009 HUD Research Works includes "Powered by the Sun". Look at Table 1. Place a $50,625 solar panel system on a New Jersey home and your outlay is $6,049 (just less than 12%).

Is this a Pigouvian subsidy? But Pigouvians (as well as Keynesians and many others) have given statists a club (and a gift). But public choice analysis does not get equal billing in the textbooks, nor anywhere else. Governments with rare exception grow. What does it take for Pigouvian and Keynesian study to be tempered by a discussion of how these are used to to grow the state? This is not a trivial matter.

Lose-lose

Here is Reason's report on the nation's public roads and highways. California ranks 48th and I am not surprised. I was in Mexico last week where I found much better roads.

It has been California policy for years to divert gasoline taxes to pay for public transit. It's been lose-lose all the way because transit ridership is still going nowhere but the roads are generally awful.

There were 1200+ delegates in Copenhagen last week, most of them eager to give us many more such policies. And Copenhagen skeptics are seen as the ones who don't "get it."

If you can make it there ...

New York is the subway capital of the U.S., but in the 21st century, it's hard to sustain subways even there. Here is the story.

But last night on the Jim Lehrer Evening News, IPCC Chief Pachauri noted that more transit use in Houston was the way to go to reduce global warming.

Wine economics

This is excellent.

History, mathematics, economics

Of all the Paul Samuelson obits and reflections that I have seen, I liked this one by David Henderson best. A remarkbale man, economist, body of work as well as the state-of-the-discipline are all touched on, including Samuelson's "tin ear" re the fraudulent economic news from the Soviet Union.

Henderson touches on the tension between economists who rely on mathematics as opposed to those who look to history. Obviously, both have much to offer. But when it comes to being wrong about the most auspicious economic event of the twentieth century, the fall of communism (and the demise of Marxist economics), does that tell us something about how mathematical economics leavened by a deep understanding of history would have been helpful?

History and mathematics are each glorious, but the pendulum in economics graduate curricula has been pretty much stuck at the math extreme for many years. A pendulum is, of course, a model that fails to account for stickiness.

Photo-op of the year

"The coming energy abundance" (H/T Manny Klausner) is much more plausible than "peak oil". The case for policy makers to sit on their hands (I know, impossible) rests on the fact that scientists and entrepreneurs are not sitting on their hands. This is why I have much more faith in technological advances than I have in political action to save us from rising sea levels.

From Poverty to Prosperity by Arnold Kling and Nick Schulz offers a delightful tour of the intelligence behind the optimistic view. I think it's a superb holiday gift (to yourself or others). It may even help one get over the depressing spectacle of LA's mayor and California's governor (among many others) jetting off to Copenhagen so that they do not miss the photo-op of the year.

Modernity is never simple

Bob Nelson has written a fair bit about religion and here he chimes in on the problem revealed by "climategate". Neither "sound science" nor "sound religion" are to be found.

Religion gets a bad name when zealots use it to violate one or more of the commandements. The episodes that make the news are the ones involving murder and mayhem by suicide bombers who think they are holy warriors.

But people who shade the truth because they see themselves as crusaders also present a serious problem. Brett Stephens discusses the various aspects that add up to a complex.

The East Anglia emailers as well as celebs that get caught in embarrassments are painfully waking up to the fact that it's now a whole world of paparazzi.

Some brew

It's not beating a dead horse to expand on yesterday's post re Prof. Frank's huge "if". The horse is not dead and the consequences are not pretty. New Urban News includes this item re $1.5 billion in stimulus money to promote "liveable communities" (H/T Alan Pisarski).

The spenders have no clue on whether or not real people want to live in what experts decree is "liveable". The built environment is hugely complex. Jane Jacobs had some things to say about the ability of planners to get this right.

It appears that in the name of "stimulus", anything goes. And in the name of "green", anything goes. What a brew.

If pigs could fly

In today's NY Times, Economist Robert Frank writes "How to Run Up A Deficit, Without Fear ...Taking on debt can be a good thing, if government spends wisely."

That's a very big "if". Prof. Frank is clearly a smart man and many smart men and women speak this way. But at the $4 trillion margin, how fanciful is that "if"?

The politicization of most of these expenditures (and the same can be said of the revenue side) is clear. Add the simple idea that most of these programs are much too large and too complex to be managed by a bureaucracy (politicized or not) and one has to wonder how anyone can be serious about the "if".

Frank is a fan of Pigouvian taxes, but this is textbook stuff that statists feed on. But here is just one small ($700 billion) dose of reality from today's Washington Post.

They can't beat our weather

Cities compete on many margins, but who would have thought of tours of the city's ganglands? Today's LA Times reports "The 'hood as a tourist attraction ... Activists hope to use money from bus tours for community good."

Most cities have cheerleaders who openly sanitize. What is interesting about the new LA venture is that the cited politicos are trying hard to sell tours of the "cradle of gang culture" as some sort of cutting edge eco-tourism. Why not? Newark, Camden, Baltimore, Detroit and many others can't beat our weather.

Opposite ends of the spectrum

Reason's Martin Bailey occasionally writes about "Markets, Not Mandates". In the January 2010 issue (not the one linked; the new one not yet online), he notes that if the tax credit now available only via employer purchased health insurance plans were universally available, many people would shop for cheap high-deductible policies.

Such policies are already available. The online clearinghouse eHealthInsurance pulls a quote of $131 per month from Anthem Blue Shield for a single 55-year-old male with a $3,000 annual deductible, no co-payment after the deductible, reasonable pharmaceutical benefits, and lifetime maximum benefits of $7 million with an option for health savings accounts. ... That was the cheapest plan, but more than 80 other insurance policies were available. As deductibles went down, of course, prices went up.

But imagine what would be available if the tax credit were widely available and if competition were not stifled by politicians.

It is, of course, revealing that the "reforms" that get all the attention (and that are likely to become law) are at the opposite end of the common sense spectrum. I can understand what the political class wants. It gets a little weirder when one tries to fathom how and why so many of the "elites" are in love with the most unpromising, the most expensive and the most politiczed plans.

Inconvenient poll

We are often told that Oregonians are more enlightened than the rest of us. So the report that "Poll finds Tigard residents prefer widening Oregon 99W to adding light rail" cannot be true (H/T The American Dream Communicator).

It's really a very old story. Public transit is best for other people. And this is why many more others should be obliged to pay for it. True believers have no trouble with this, just as they have no trouble dismissing inconvenient questions on climate change.

But the recent urban rail line additions have been much less costly than the planned high speed rail projects. "Kick it up a notch" as they say. At least on the cost side.