Big questions, new index

Are we in The Great Stagnation (as Tyler Cowen argues)? Will Chinese economic growth continue after off-the-shelf technologies have been used up? Will newly democratic nations in the Arab world (assuming we get any) be any more prosperous than in despotic days? How to answer these big questions?

The Feb 26 Economist's Schumpeter column ("Uncorking enterprise ... Policy makers are desperate to promote enterprise. A new index could help") points to a newly developed Global Entrepreneurship and Development index by Profs Zoltan Acs and Erkko Autio.

The Schumpeter column review is mixed, but it all sounds like a worthy first step. The news coverage from North Africa often falls into the trap of suggesting that once the autocrats are gone, there will be prosperity. Perhaps it is much more about any newly open societies making entrepreneurship possible. The new index can re-direct the discussion this way.

Multiple choice

UCLA Prof Peter Baldwin writes about the value of California higher education. He wants to voice enthusiasm for continued generous state support for the UC system, but he says kind things about the rise of Califronia private universities in the State also (including mine). It really is an amazing story and his comparisons with the Northeast are interesting.

There is lots of nostalgia in California for the "good old days" when the California public sector seemingly "worked." What has changed since the early 1970s or so? (a) Climate change; (b) The rise of the Internet; (c) Unionized government employees; (d) All of these; (e) None of these.

You can pick (c) if you like, but it is not really mentioned when this question comes up in polite company.

Reversal/renaissance still on hold

My favorite quote from Robert Bruegmann's Sprawl: A Compact History is this one:

Most American anti-sprawl reformers today believe that sprawl is a recent and peculiarly American phenomenon caused by specific technological innovations like the automobile and by government policies like single-use zoning or the mortgage interest deduction on the federal income tax. It is important for them to believe this because if sprawl turned out to be a long –standing feature of urban development worldwide, it would suggest that stopping it involves something much more fundamental than correcting some poor American land-use policies. In the following chapters I will argue that the characteristics we associate today with sprawl have actually been visible in most prosperous cities throughout history. Sprawl has been as evident in Europe as in America and can now be said to be the preferred settlement pattern everywhere in the world where there is a certain measure of affluence and where citizens have some choice in how they live. (p. 17)

But there is always the steady drum-beat of opinion that the trend is a "market failure" that must be addressed and/or that it already has been reversed because we have finally gotten smart via "Smart Growth" policies.

I mentioned last week that early census 2010 returns are dribbling in and the reversal/rennaisance of central cities is not yet in evidence. Here is more on the latest from Census via Aaron Renn and Wendell Cox.

Smart Growth policies do not do well against people's preferences. Or as Witold Rybczynski summarizes: “Virtually every technological innovation of the last fifty years has facilitated, if not actually encouraged urban dispersal” (italics added). p. 170.

Good graphic and good news

New York and other big cities have supposedly been able to reduce crime by improving police tactics, including the clever use of geographic data, applying tools like this one.

But this report suggests that other city services could do as well (H/T Planetizen).

The Wired story suggests that 311 calls are as rich a source of data as 911 calls. I love the graphic at the top. But why all the calls about street lights in the late morning and at noon? This stuff is surely not simple, but perhaps the other NY departments can learn from the NY cops.

Those beer commercials are not a joke

Today's WSJ includes excerpts from Kay Hymowitz's Manning Up: How the Rise of Women Has Turned Men to Boys. The piece is titled "Where Have the Good Men Gone?" and will surely work its way up the Journal's most-emailed list.

"The guys we find, says one woman are 'more like the kids we babysat than the dads who drove us home.'" And "What explains the peurile shallowness? I see it as an expression of our cultural uncertainty about the social role of men. It's been an almost universal rule of civilization that girls became women simply by reaching physical maturity, but boys had to pass a test. They needed to demonstrate courage, physical prowess or mastery of the necessary skills. The goal was to prove competence as protectors and providers. Today, however, with women moving ahead in our advanced economy, husbands and fathers are now optional and the qualities of character men once needed to play their roles -- fortitude, stoicism, courage, fidelity -- are obsolete, even a little embarrassing."

Perhaps. And this is the time to insert that there are no unmixed blessings. Most of us like the modern world, but modernity has always had a downside. Affluence brought the option of adolescence. That has now become extended adolescence. Many politicians had given up on reforming our high schools and suggested that it's time to send everybody to a two-year college. Governments' budget troubles may have put that one on hold, but it was brilliant. Do not mess with the education establishment, but grow it instead.

What matters most is that finally tapping into the female talent pool is a wonderful thing. Some of the most talented students and colleagues that I encounter at my university and other places that I pass through are now female. Seeing them at work makes one wonder how we ever managed to get by without them.

Back to Hymowitz and the men. "Relatively affluent, free of family responsibilities, and entertained by an array of media devoted to every pleasure, the single young man can live in pig heaven -- and often does. Women put up with them for a while, but then in fear and disgust either give up any idea of a husband and kids or just go to the sperm bank and get the DNA without the troublesome man. But these rational choices on the part of women only serve to legitimize men's attachment to the sandbox. Why should they grow up? No one needs them anyway. There's nothing they have to do. They might as well just have another beer."

Have you looked at the beer commercials on TV? You have to assume that the producers know their audience.

Not just here

As I like to point out, urban economists and urban planners like to prescribe higher "density" -- which sounds like a good thing when we think about the benefits of agglomeration economies. But they presume that city-wide or metropolitan-wide densities are what count. An associated presumption is that low densities and suburbanization (and "sprawl") are a uniquely U.S. phenomenon because of our peculiar policies.

There are also perennial discussions of "urban revival" and "urban renaissance" in the U.S. With respect to these, we are beginning to get the 2010 census data and we shall see. Yesterday's news re Chicago signals continued central city decline. There are probably pockets of success within the city, so again we shall see. Again, the whole city-wide density discussion is much too broad.

What about international comparisons? The data are not simple. I am aware of two sites that help a little. Urban audit covers the EU cities. This UN site covers many others. Again, we are stuck with large spatial units. For those places for which we have city and surrounding area data (correction: city and metro area data) for at least two years, which one grew most? (The data for the two years must be from the same source; do not mix and match.)

I was so inspired by the dribs and drabs coming from the U.S. Census Bureau, that I looked at non-U.S. metro areas. I found readings for at least two dates for central city and their suburbs for seven prominent places abroad. For Berlin (1991-2004), Montreal (2001-2006), Toronto (2001-2006), and Stockholm (1999-2006), the suburbs grew fastest. For London (1991-2004), Brussels (2001-2007) and Amsterdam (2001-2007), the central city grew fastest.

What can we say? We need more cases. And we have to be careful about international reporting peculiarities. But suburbanization does happen way beyond the reach of U.S. policies.

We'll know more as the rest of the 2010 U.S. census data arrive.

Titanic

I hated all the movies and dramatizations I ever saw of the the sinking of the Titanic. This analysis by Bruno Frey and his co-authors in the latest Journal of Economic Perspectives is much better. When there is breathing room, people (for the most part) do the right thing. Social norms do their work.

The empirical analysis is consistent with the view that the effects of status
(passengers traveling in higher classes have a better chance of surviving) and social
norms (such as saving women and children first) depend on time. It seems that on
the more slowly sinking Titanic pro-social behavior played a larger role, while more
selfish conduct prevailed on the rapidly sinking Lusitania. Of course, time may not
be the only factor at work. Natural experiments based on naval disasters may well
have other factors for which control variables would be useful.

This morning's WSJ cites progress on implementation of the Paul Romer charter city idea in Honduras. Sebastian Mallaby is quoted: "We'll develop both different laws, perhaps, but importantly different norms about right and wrong." It's not just about the legislated rules.

High-speed rail savings

Wendell Cox cites Transportation Secy LaHood as admitting that high-speed rail might be a "patchwork" system. That has actually been the suspicion for some time.

But not to worry. Mark Perry cites very low cost (as low as $1 a ride) inter-city bus transportation. With enough such entrepreneurial rescue, the administration can pare down the high-speed rail waste.

Laugh or cry?

Doing what comes naturally

The New Yorker's James Surowiecki is optimistic about President Obama's Sputnikonomics. He is optimistic about federal spending that is not simply "stimulus," but rather serious investment in education, infrastructure, research, etc. He does stipulate that, "Of course, when government is involved, there’s a danger of political considerations trumping economic ones, but our track record of using public money to foster innovation is good." Not sure where high-speed rail fits, but I have my suspicions. I have also blogged about the fact that Californi'a pavements are worse than I have found in some Third World countries.

And Michael Boskin reports the following in this mornings WSJ:

The strongest case for stimulus is increased military spending during recessions. But infrastructure spending, as the president proposes, is poorly designed for anti-recession job creation. As Harvard economist Edward Glaeser has shown, the ARRA's transportation spending was not directed to areas with the highest unemployment or the largest housing busts (and therefore the most unemployed construction workers). Indeed, last September Wendy Greuel, the City of Los Angeles controller, shocked the country when she revealed that the $111 million in ARRA infrastructure money her city received created only 55 jobs—that's a whopping $2 million of federal stimulus per job created.

And the WSJ also reports "Pentagon Loses War to Zap Airborne Laser From Budget" which documents the various weapons systems that three Republican Defense Secretaries had tried to end, but which hang on via Congress and friends doing what comes naturally.

I had previously blogged that I was worried that there were no constituencies in the world for austerity. But many of the Europeans as well as several U.S. governors (Cuomo, Christie, Brown and others) have seemingly proven me wrong. Now it's the U.S. Congress (and friends) that are the problem.

Several economics bloggers have recently mentiond that public choice economics remains underappreciated. How about ignored?

UPDATE

I should say ignored by the many stimulus optimists.

False choice

Here is David Brooks, writing about Chicago, politics, cities, Ed Glaeser's new book:

Many of us are drawn to the big power politics of Washington, but city politics is better than national politics because the problems are more tangible and the communication is more face to face.

This is a point Edward Glaeser fleshes out in his terrific new book, “Triumph of the City.” Glaeser points out that far from withering in the age of instant global information flows, cities have only become more important.

That’s because humans communicate best when they are physically brought together. Two University of Michigan researchers brought groups of people together face to face and asked them to play a difficult cooperation game. Then they organized other groups and had them communicate electronically. The face-to-face groups thrived. The electronic groups fractured and struggled.

Cities magnify people’s strengths, Glaeser argues, because ideas spread more easily in dense environments. If you want to compete in a global marketplace it really helps to be near a downtown. Companies that are near the geographic center of their industry are more productive. Year by year, workers in cities see their wages grow faster than workers outside of cities because their skills grow faster. Inventors disproportionately cite ideas from others who live physically close to them.

For years, cities like Detroit built fancy towers and development projects in the hopes that this would revive the downtown core. But cities thrive because they host quality conversations, not because they have new buildings and convention centers.

The cities that have thrived over the past few decades tend to have high median temperatures in January (people like warm winters and other amenities). But even cold cities like Chicago can thrive if they attract college grads. As the number of college graduates in a metropolitan area increases by 10 percent, individuals’ earnings increase by 7.7. This applies even to the high school grads in the city because their productivity rises, too.

When you clump together different sorts of skilled people and force them to rub against one another, they create friction and instability, which leads to tension and creativity, which leads to small business growth. As Glaeser notes, cities that rely on big businesses wither. Those that incubate small ones grow.

All true, of course, but people can also "rub against one another" when not in a downtown. The creative people that Brooks and Glaeser and many others write about also find each other and become inventive in places like Silicon Valley and many other such venues outside the Northeast. Looking into the future, will we be building more 19th century-type downtowns or more Silicon Valley-type places? So it is not simply downtown vs "electronic groups".

Mobility

What kind of society do you wnt to live in? One that is stuck in old hierarchies or one where upward mobility is a realistic option? The answer is a no-brainer and I always enjoy studies that find that people at the top came from all sorts of backgrounds -- including all sorts of universities.

I expect that these days, attendance at an elite institution may be good for entree (cheap screening by employers), but quickly fades. After a while, it's "what have you done for me lately?" It would be great to have international (as well as intertemporal) comparisons, but the empirics are difficult.

Here is a study that looks at the evidence from Israel. (H/T Freakonomics) As hoped for, the data show that elite diplomas are good for entree, but you cannot fool the market for long; it (competition) is able to draw deeper conclusions after not too much time has elapsed.

Super Sunday and super buzz

Perhaps the strangest national holiday of the year occurs tomorrow. People with and without an interest in the game gather to watch the spectacle -- including, of course, the commercials.

Time to wheel out the old John Wanamaker worry re "Half the money I spend on advertising is wasted; the trouble is I don't know which half."

But just as there is an advertising industry, there is a related industry hard at work to resolve Wanamaker's problem. Social media can be used to create a sea of buzz, as this piece in yesterday's NY Times describes.

And here is a WSJ blog that describes a project to plumb that newly discovered ocean. What would the old man say now?

New data, old story

Today's WSJ includes "American Idle: On the Road" which describes the latest Texas Transportation Institute report on urban traffic congestion. Same old story. If price is not allowed to ration, crowding will. And if policy makers insist on using highway money for expensive rail transit and high-occupancy lane projects, we get worse crowding. (I know; it's supposed to work the other way.)

Traffic conditions are not even worse than TTI reports because land markets do what they are supposed to (when allowed) and prompt origins and destinations to co-locate and disperse from crowded centers.

My friends and I just presented this paper at the Transportation Research Board meetings in Washington DC. We tested the effects of tolling Los Angeles' freeways in the peak hours (we tested 10 cents and 30 cents per mile). It's a simulation on a real network and many substitutions occur. As expected, peak-hour freeway speeds increase, some people switch to surface streets and that traffic slows, some switch to off-peak hours and some (very few) travel less. And politicians take in a lot of money! That's for the 10-cent toll. The 30-cent toll overloads the surface streets. Many other options can be tested, including only tolling some of the freeways.

Planners have voiced concern that tolling the freeways would overload surface streets. There is probably a "sweet spot" that can easily be found. We also plan to look for effects on freight travel as well as travel by income groups.