Silence

Here is one of a very large number of essays that argue for the importance of public spaces. We are "balkanized" and an "archipelago nation."

Agreed that most public spaces in U.S. cities are not what they ought to be. I recently had early morning coffee in "tony" Westwood (in West L.A.) and a homeless person came in (as many do) and not to make a purchase. The staff tried to escort him out and he started spitting wherever he could. I asked the staff if calling the police was an option and they mentioned that the response rates are much too slow to make a difference.

A woman who helps us keep house is occasionally dependent on public transit, but reports that, aside from the serious time costs, there are some bus stations where she does not feel safe. Avoiding these makes her trip much longer.

All of the high-minded advocates of public spaces and public interaction are silent on the serious civility deficit in many of our public spaces. Perhaps they have nothing to say about a very serious problem.

Old questions

I'm reading Timothy Snyder's Bloodlands and it is not easy. One chapter a day is about all that I can handle. I've read a good bit of 20th-century European history, but the bottomless brutality-insanity is still dizzying. Which is worse the murderous sadists or the indifferent murderers? In any event, there were plenty of both.

And then there is this for much-needed uplift. (H/T Tom) Where would we be without people like Alice -- and her music? How do we get people like that (the ones who write the music and the ones who perform it)? Are they really from the same gene pool as the murderers Snyder writes about?

Successes

Here is Ed Glaeser describing the recent economic successes in Manhattan and in Santa Clara. He describes both as successful "cities". Glaeser has published many fine studies that call attention to the benefits of density and citihood.

I had already blogged here about research with Sandy Ikeda which pointed to success in the same two places as indicating that the simple consideration of population density tells us very little.

Clearly information networks matter a great deal. Such networks grow in a variety of urban settings. It's pretty clear that the future will bring many more Silicon Valleys than Manhattans -- and Manhattan is very likely to continue to adapt and hang on.

Where do they get this stuff?

Matt Kahn is justifiably upset over a remarkably inept review of his Climatopolis.

The LA Times has chosen to print some amazingly wild material in recent weeks. Today, it's business columnist described GM as having "blood on its hands" for "murdering" the EV-1. The fact that the car was a money loser is beside the point. Perhaps it was just timing. A few years later and bail-outs could have kept the EV-1 rolling forever.

In the same Sunday edition, the paper's architecture critic writes that "The movement for a public, mass-transit served city is resisted by those still tied to a suburban, car-centric city." The author should know that the county's high-water transit year was 1985. Ridership then plummeted as bus service was trimmed to pay for rail. Now, in 2010, we may be edging back to 1985 ridership levels, but we have added millions to the population and have spent billions on rail transit.

It's not only the reviwer of Kahn's book that is in no position to opine. Others in high positions on the same paper are equally uninformed.

Outrage?

This Washington Post report re the Justice Department's recation to the Black Panther voter intimidation episode is very troubling. (1) Armed thugs openly hang out at the entrance of a voting station; (2) the Justice Department is paralyzed; (3) the Justice Department is shown to vacillate because the thugs are the wrong ethnic group; and (4) this is on the watch of Obama Administration which was elected (in part) because of the appeal of a post-racial-politics position.

And where is the outrage?

What would Coase say?

The Oct 25 New Yorker includes Tad Friend's "Blowback: The great suburban leaf war". Without markets, there is politics and conflict. All politics are local and the most lively of these are the parts that involve home and neighborhood. Leaf blowers than have a special notoriety. They create noise, dust and the various gasoline engine emissions. All of these are hard to price so we are where we are.

What are the alternatives? Labor using rake and broom (and immigrant gardeners) is expensive. Pre-leaf blower, it was water via the right garden hose nozzle (or thumb). The author does note that "Blowers were hailed as an environmental boon: when Los Angeles was suffering from a water shortage in 1976 and 1977, the city instructed municipal workers to use them, rather than the traditional thumb stream from a hose, to clean sidewalks and driveways."

Just as perpetual "famines" in the old USSR and the current North Korea explain their starvation, we have had long-standing "droughts" in California. We actually have politicized water allocation and pricing. So the politics of water pricing brought forth the leaf blowers which brought forth all the politics described in the story.

The "law of unintended consequences"? Only when we ignore basic economics?

Housing recalculation

At econlog.org, Arnold Kling often writes about the Great Recalculation that is underway (and essential) as we get out of the Great Recession. Recalculation is, of course, routine in market economies and explains their success. But the crunch comes when large-scale shocks require large-scale recalculation -- and when the politicians ride to the rescue with their own surprises and shocks.

Here is the story of one such recalculation (H/T Planetizen). It's the story of how home builder Toll Brothers is working to cope with new realities of the housing market and looking for the new sweet spot in it's market: what sort of new homes can builders like this put on the market that their customers will buy as they are less optimistic, less willing to throw caution to the winds and more conservative in their approach and expectations re living space and living amenities?

All this is distinct from the point made in my post yesterday: the rethinking is not in response to the smart-growth ideas from the smart set. The bottom-up rethinking is essential -- and always more usful than what is proposed top-down.

Uncooperative consumers

I had previously blogged about Witold Rybzcynski's Last Harvest which I use as a case study in one of my classes. It is (among other things) all about the mysteries of demand seen through sellers' eyes. In this case, putting a new flavor of residential development (New Urbanist) on the market is a tough gamble. Finding the sweet spot where product quality (with all of its dimensions) and the price it will fetch cover all of the costs involved (including investor expectations) is shown to be very hard work. And the sweet spot is a moving target. This is much more interesting and more useful for the students than just throwing demand curves up onto blackboards or powerpoints.

Yesterday's NY Times Magazine included "The Elusive Small-House Utopia" which covers some of the same ground (with comments from Rybczyinski). The article does acknowledge demand uncertainties, but veers into old cliche land: peculiar U.S. policies explain Americans' demand for living space. But there are plenty of places abroad with higher home ownership rates than here. Persons-per-room is the same as the U.S. (average of 0.5) in Canada, the U.K., Germandy, Sweden, New Zealand. With six others at 0.6.

It's just like the automobile story. The cliche that the U.S. is different may have been true twenty and more years ago, but it's high time to drop it. Regardless of policy differences, consumers know what they want -- even if their betters don't approve.

Ideas and innovations

If you like lists, Steven Johnson's Where Good Ideas Come From (a splendid read) includes an appendix that lists key innovations, 1400-2000. Double-entry accounting is the first entry. Whereas economists and social scientists have come up with some good ideas too, they do not make the list. When does an idea become an innovation?

In this week's New Yorker, Adam Gopnik does a fine job of discussing Adam Smith ("Market man: What Adam Smith really believed"; gated) and does a fine job.

Today's LA Times has a front-page story about Don Shoup and his thoughts on prices (and the neglect thereof) and parking. Don is getting the recognition he deserves and, the piece notes, even beginning to change the world. Smith and Shoup can even be seen as innovators insofar as they have a hand in making the world better.

Words and labels again

Edward Lopez makes the point that what the FTC may see as a "market failure" (e.g., the decline of newspapers and the success of online news sources) is simply another example of creative destruction at work. But one cannot be too wary of market failure peddlers. Often they have an agenda and/or they just don't get it. It's a dynamic market, after all.

In this week's New Yorker, James Surowiecki describes how Netflix won and how Blockbuster lost. They each did their part. Netflix was inovative and Blockbuster was more like the famous dinosaur that tried to don roller skates.

Surowiecki does not call it creative destruction. Instead he refers to "category killers". "These stores killed off all the competition in a category by stocking a near-endless variety of products at prices that small retailers couldn't match." He names the usual big-box suspects.

But I have always thought that the category killers (category busters?) are those who offer a new combination of goods or services -- so that the conventional market share definitions used by anti-trust lawyers become meaningless. I can now get back rubs at the local Whole Foods.

Killing off all the local competition is the opposite. It's the kind of thing that keeps the "trust-busters" engaged.

For the ever expanding you-can't-make-this-stuff-up file

Detroit light rail.

Big question

When Vaclav Havel speaks, we should listen. And here he is speaking his mind about the modern world and also modern cities. (H/T FeedBurner)

But what is he saying? He does not like modern urban "sprawl." He seemingly blames architects, economists, modernists and others. Is he Prince Charles? I cannot be sure.

But in my previous post, I said some good things about modern cities and land markets. I fear that modern metro areas are too big and too complex for human design. They evolve from human action rather than from human design. But designers do come up with some wonderful things. Almost everything I can see or feel in my immediate surroundings represents some triumph of human design and engineering. So what is the proper division of labor? New Urbanists have great faith in their ability to craft almost the entire built environment. But that has Fatal Conceit written all over it.

When smart people like Havel speak up about cities, I wish they would address the division of labor question.

Explain that!

Readers of this blog know that I worry about aggregate measures used to describe large metropolitan areas. Here is a discussion that highlight's "L.A.'s traffic" and cites the latest Texas Transportation Institute congestion rankings. There is also a link to this report that criticizes the TTI approach.

TTI relies on the ratio of the metro area's lane-miles to its vehicle miles traveled (with minor tweaks). But is way too simple; it says nothing about sub-metropolitan variations -- and opportunities.

How is it that metropolitan areas have grown and yet survived and even lived to grow further? The biggest metros, after all, have managed to stay on top. Why is this key fact overlooked in all of the hand-wringing?

I do not know the answer to the second question, but the answer to the first question is fairly simple. It has two parts: (i) these metro areas provide offsetting advantages ("agglomeration economies"); and (ii) these places manage to grow in ways that mitigate the associated growth in congestion. Subcentering and suburbanization are not random "sprawl", but rather facilitate survival and competitiveness by offering agglomeration benefits outside the traditional center while also taking congestion pressures off the traditional center. Land markets do this. Nothing else can.

If, on the other hand, growth were accompanied by random sprawl, the stability of metro area rankings at the top could not be explained.

Spend more, get less

Here is a post by Wendell Cox that calls attention to the rise of working-at-home, as reported by the 2009 American Community Survey.

Alan Pisarski reviews the Census commuting data back to 1980. Commuting-at-home was 2.3 percent of the U.S. workforce in 1980 and 3 percent in 1990. We now know that it was 4.3 percent in 2009. This probably understates the impact of telecommuting, whereby many of us are neither strictly work-at-home, nor just work-at-workplace.

The Cox post compares transit use to work-at-home 2000-2009 trends for 52 of the nation's largest metro areas. In 37 of these, the work-at-home proportion exceeded the proportion using transit. The differences were negligible in six metro areas. Guess which way the wind is blowing?

Paul Krugman has a series of recent blogs that try to make the case for more rail transit spending. He mentions that auto use is subsidized, so why not transit? In fact, the highway trust fund subsidizes transit use and has for many years. Ron Utt documents all this here.Krugman also writes that public transit is a good investment because it takes cars of the roads.

But here is a post that mentions recent research by Paige Elise Kolisar and myself that does rail transit cost-benefit which accounts for the externality benefits of new-to-transit riders. Even then, losses per round-trip were in the range of $17 (weighted average of six post-WW-II heavy rail systems) to $40 (weighted average of eight post-WW-II commuter rail systems).

U.S. transit subsidies in 2006 exceeded $35 billion in 2006, up from $10 billion in 1978. In that period, transit market share (passenger-miles) fell, from about 3 percent to about just over 1.5 percent. Correlations do not denote causation, we all know. So we have to dismiss the thought that all that spending caused the decline.

Nice places to write or read about

Here is Paul Goldberger writing about the CityCenter of Las Vegas. And here is his punchline:

Even though there is more density to CityCenter than there is to anything else in Las Vegas, and more sophistication to its architecture, it doesn’t feel urban. Its planners have crammed more square footage into a tighter space than anyone else has managed in Las Vegas, and that may make this place seem like an antidote to sprawl. But it still isn’t much of a center, or much of a city. Indeed, as you drive around the site, you suddenly wonder if CityCenter only appears to be different from the rest of the Strip. After all, cutting-edge contemporary architecture by the likes of Libeskind and Foster has been migrating steadily into the cultural mainstream for years. Now, perhaps, it has reached the point where it is familiar enough, and likable enough, to be just another style available for imitation, like the Pyramids or Renaissance Venice. CityCenter is the Las Vegas you already know, but in modernist drag.

He could have said Y-A-W-N. Las Vegas fascinates, but it does so for some of us at a distance. There are the cities one likes to live in (but not visit as tourist) vs. the ones one likes to visit (but not live in) and we can also list the places we like to write or read about but not visit. Perhaps Dubai comes next. The most attractive urban places are the ones the offer the possibility of (pleasant) surprise. Designers have a devil of a time coming up with such venues and when they try (Disneyland, some shopping malls, Las Vegas, new towns, etc.) the results may be worth seeing. But for many people, once is enough. The real draws (who doesn't like the classics of old Europe?) are the ones we try to return to as often as possible.

Are we there yet?

Forbes' regular stock-picker David Dreman writes, "When it comes to popular investing gospel, the Capital Asset Pricing Model (CAPM) ranks right up there with its elder cousing the Efficient Market Hypothesis. As a value investor I don't think much of either of these. I make my living investing in market inefficiencies." Of course. The model depends on active arbitrageurs.

And this is why we love teaser stock market performance charts. Here is one of my favorites from Visualizing Economics. Is it a random walk? Are we there yet?

Lots of modeling depends on the equilibrium idea. And this is often misunderstood as a place that we are either at or not at.

Yesterday's WSJ headlined this: "Americans Sour on Trade ... Majority Say Free-Trade Pacts Have Hurt U.S. ..." When it comes to teaching the basics, we certainly aren't there yet.

Happiness

Michael Norton reports on his happiness research here. Here is his summary:

Does money buy happiness? We certainly behave as though it does, spending most of our waking hours pursuing it. If only we got that raise, owned that second home, third car or 3G iPad, things would be better, we tell ourselves. We would finally be happy.

Truth be told, people drastically overestimate the impact of changes in income on their well-being. In a survey I conducted with my colleagues Elizabeth Dunn and Lara Aknin at the University of British Columbia, we asked 315 Americans to rank their happiness on a 100-point scale and predict how happy they would be if they made ten different incomes, ranging from $5,000 up to $1,000,000. Those who reported earning $25,000 a year predicted that their happiness would double if they made $55,000. But when we measured the actual happiness of these two groups, the change was only 7%. Beyond that, our data showed that once people reach the median income in the U.S. (about $60,000), the happiness return on additional income is very small.

Hapless lotto winners, take heart. We did discover at least one way to buy happiness with your money: Give it away.

... To test our idea, we approached strangers on the street and gave them different sums of money ($5 or $20) and told them to spend it by 5 p.m. that day. Half were told to spend the money on themselves, while the other half were told to spend it on others. When reached that evening, those who spent the money on themselves bought things like coffee and food, while those who gave money to others reported spending it on things like gifts for their siblings or donations to the homeless.

The result? Those who had spent their money on others reported feeling much happier at the end of the day than those who had spent their money as they usually did, on themselves. There was no difference in happiness between those who spent $5 or $20, suggesting that it is not how much money you spend, but how you spend it, that boosts the spirits. When we asked people to choose what would make them happiest, most people predicted that spending money on themselves would make them happier than giving it away, suggesting that people overestimate the buzz they get from a new purchase and underestimate the warm-and-fuzzy benefit to social spending.

We've heard this before. So what is going on? Most of us are self-regarding as well as other-regarding. We have also evolved through eons when death by starvation was a serious threat and have learned to accumulate. And we have also been hard-wired to extend love and care to those close to us. Extending it to those less close is the challenge. We can extend the circle of care measure by measure beyond immediate family to close friends and even to less close friends. And many of them can do little things to antagonize us along the way (they are only human). But the rewards from seeing a smile on those who we can be good to are serious. We may still have a bit of trouble extending this to anonymous and distant candidates for our love and charity, but Norton and others are surely right. There are great rewards from from flexing our other-regarding muscles. There is even some happiness to be found.

The Arthur Brooks research on philanthropic giving adds another wrinkle. Those describing themselves as conservatives are more charitable. Those on the left (he finds) are generally stingier. That makes sense too. If you busy yourself with coercing society at-large to transfer wealth, your other-regarding juices might be spent.

But is there any happiness for the stingy coercers?