He who lives by the federal grant ...

Dean Stansel sent me his "Why Some Cities are Growing and Others Shrinking".  He finds that low tax rates go with better economic performance.

One of his tables lists the "Ten Highest Tax Large Metro Areas."  Stansel's measure is "State and Local Taxes as a Percentage of Personal Income, 1977-2002 Average."  The top seven of his top ten are all in the same state.  Can you guess?  It's New York.

In 2007 (the latest Census of Governments year), the State received almost 10 percent of all federal transfers, but accounted for just over 6 percent of the national population.

Keith Hennessey speculates how the Treasury will pay its bills if/when you-know-what happens.  He suggests that payments to the states will be first to stop.  Fifty governors will be pressed into action. 

He who lives by the federal grant ...

Hollywood

"Hollywood comeback continues" is only one of a thirty-year-plus series of almost identical popular press reports on all of the wonderful things that the Los Angeles Community Redevelopment Agency has brought to the area.  The LA Times loves this stuff and there are just enough red carpet events and tourists milling around Graumann's theatre to obscure the reality.  But Hollywood is still mostly a nasty place that attracts large numbers of hookers, hustlers, druggies, runaways, pimps and other predators that usually follow. 

"Budget crises" have a silver lining, including the possibility that California may lose some of the redevelopment scam.  The Insitute for Justice elaborates.

I have always cringed at the misleading (polite term) boosterism that surrounds talk of the Hollywood "comeback" and this is why I looked at the Reason.tv interview with Nancy Rommelman as she discussed her new novel The Bad Mother.

It is one of those short, spare and honest stories that follows the misadventures of a pathetic bunch of Hollywood street people.  None of it is pretty.  But it quietly explodes the official "Hollywood comeback" fantasies that are a staple of LA media.  It's very short and I hope it gets a wide reading.   

Nothing but trade-offs

Two of my all-time favorite pieces from the New Yorker are (1) the famous cover depicting the mock "New Yorker's view map of the world"; and (2) the more recent cartoon of two cavemen sittting around a fire with one saying to the other: "Something's just not right -- our air is clean, our water is pure, we all get plenty of exercise, everything we eat is organic and free-range, and yet nobody lives past thirty."  This is also a cute joke and I use it all the time in classes and other presentations.

But I suspect that Timothy Egan's "What We Can Learn From Carmageddon" in this morning's NY Times is no joke. We closed a segment of I-405 for a part of the weekend and there was more biking, more walking, more transit use and more good old-fashioned stay-at-home fun.  Here is the punch line:

No, the big lessons of Carmageddon are not about transportation. They are about something else, something less easily quantified. They are about the small salves in life that make a day easier, or even memorable. When millions of Angelenos decided to hold a block party, or go to the park, or ride a bike, or play soccer, or spend half a day at the farmers market, or take advantage of free admission at some museums, they found a city far removed from that awful commuter stress index.

Most of us do not want to move back in the direction of the cavemen existnce and most of us understand that we live lives involving complex trade-offs. Permanent freeway closures would make that very clear very quickly

Auto-oriented

Here is a report by Brookings' Alan Berube on the 2010 census and what these data say about U.S. metropolitan areas.  He documents "demographic convergence."

This make sense.  Income, ethnic and class distinctions aren't what they used to be and they are not as easily plotted on city maps as, say, fifty years ago.

There are employment centers and sub-centers all over the place.  Many of the traditional downtowns offer residential variety.  Commuting is more complex than ever.  San Francisco is a dramatic example.  Its former "bedroom" communities along the Bay Area's penninsula are now the places where many who now live in SF go to work.

The 2010 census data show once again that it's an auto-oriented world.  Auto-oriented is a much better descriptor than "sprawling."  It describes most development in most U.S. metropolitan areas.  "Central city" vs. "suburb" are dusty labels still used in academic literature, but they are fading as useful descriptors for most others. 

These hard to find budget cuts

For years, it has been planning dogma that carpool lanes will induce carpooling and thereby reduce road congestion.  Trouble is that, just like public transit, the renaissance never came.  But the beat went on and on and on. Kevin Drum wrote about the billion-dollar-405-carpool lane-project and the hyped Carmageddon last week, just before the big nothing, and also voiced some concern about the whole idea.  Back in January, the NY Times had this piece about the decline in carpooling generally.

The recently released 2009 NHTS (first table listed) shows that worktrip vehicle occupancy is 1.13 for cars and 1.15 for all private vehicles. Table 16 of this report shows that these numbers had not budged since 1990 (also NHTS surveys).  Adding all those carpool lanes did nothing for carpooling.

But it's "green".  So seemingly adult men and women keep the myth (and the "investing") going.  Bob Nelson says its religion.  Bruce Yandle has a similar idea.

It's all pretty amazing, especially in the context of all the hand wringing in Washington and other capitals over figuring out where we can possibly cut the spending.

Progress in urban economics

A recurrent theme of this blog has been to question the popular idea of "urban sprawl".  No one is quite sure what it means and (far worse) it is used to spawn countless (and hopeless) statist policies (with feel-good names like "liveability" and "smart growth", etc.).

Many of us have documented the remarkable stability of commuting times.  Most metro areas grow, but they find ways to accommodate the growth.  Otherwise, they would not grow; capital and labor would go elsewhere.  Traffic "doomsday" is (as Steve Polzin reminds us) forever impending.  Land markets (imperfect though they are) must be doing something right.

Alex Anas has been doing the heavy lifting on these topics for some years via his work on computable general equilibrium models of cities.  Here he applies his model to explain commuting trends.  He finds that, "From the microeconomics of the model, we see how the location of jobs influences where residences are located and how, in turn, the location of residences influences where jobs locate" (p. 17).

If it were not so, we would indeed have a "sprawl" problem.

Another big nothing

Here is LA's Mayor Villaraigosa assuring us that we have a good chance of surviving Carmaggedon.  In fact, he and his team are on the traffic and transportation case with all sorts of extra rail and bike lanes coming to a neighborhood near you.  And here is Reason's Tim Cavanaugh reporting that the whole thing is a big nothing.  There is no Carmageddon.

Doomsday narratives are attractive to politicians and other statists because it is then a hop-skip-and-jump to their agenda to "help" people -- including their well connected donors and constitutents.  And were they to grasp the simple fact that most people are much smarter than lemmings who march over the cliff, they might have chosen another line of work.

In fact, most people have pretty good sensors and are keen to employ them in continuous trial-and-error learning.  Here is Tim Harford spelling it out beautifully.  In fact, Harford points out that trial-and-error learning is the perfect antidote to the God complex.  God-complex people have no use for a trial-and-error world.  What would they do for a living?

Haunting movie

What makes a film great?  My simple answer involves the extent to which it haunts me long after I have seen it.  Perhaps this is why I do not watch them a second time. I have just seen Of Gods and Men and it is going on my list of great ones.  The link takes you to reviews (mostly very positive) and more description of what is involved. 

It is based on  a true story of a small group of French Trappist monks living and working by a small Algerian village during the 1990s civil war.  One of the monks is the locals' only source of basic medical care.  The monks are caught between jihadist terrorists, a corrupt Algerian government (and army), their loyalties to the villagers who are also terrorized and the monks' understanding of their own vows.  Several Europeans in the area were just murdered.  Should the monks stay or go?

First, this is not about a "clash of civilizations."  The Algerian side has many expressions and even the small group of monks cannot easily converge to a single view or understanding.  Good acting, music, photography and all that.  But what is best about the film is the depiction of the agonies of conscience and faith experienced by each of the conflicted monks.  The viewer grasps and experinces these without a the benefit of lot of dialog.

We see and read news clippings about tragedy and devastation in Afganistan, Iraq, Lybia, Pakistan and many other places in that region on a daily basis.  These conflicts are a big part of our times and this film does take us to a corner of that world.

Three ways to better public policy

Which is worse, U.S. immigration policy or the way we finance our highway system?  Both are addressed via sensible op-eds in today's LA Times.

Peter Schuck writes about immigration policy and suggests rational reforms.  In light of the tremendous value of a green card to the U.S., auction them.  Let employers identify talent whatever and wherever it may be and allow them (or anyone, any group) to bid.  If we must have an immigration policy, then base it on market mechanisms.

Lisa Schweitzer (my colleague at USC) writes about privatizing infrastructure.  This addresses several problems, including the sorry state of much of our highways and the politicized administration and provision of most infrastructure.  Schweitzer notes that letting facilities continue to run down simply pushes down their market value.

Third, the WSJ editorialized the other day on their backing of soccer star Abby Wambach ("She's a header above anyone else") for U.S. President.

I am reading Morgenson-Rosner on Reckless Endangerment and eager for relief, including policies and people that I can get behind.

Those 1930s suburbs

Wendell Cox tipped me to Population: The Growth of Metrpolitan Districts in the United States, 1900-1940.  In those days, the discussion cited "metropolitan districts," including and their "satellite areas" which seemingly refers to the suburbs.

On page 8, the report summarizes 1930-1940 changes.  "Thus for the first time the major increase in numbers in our metropolitan districts was found in the satellite areas and the slower growth of metropolitan districts as a whole, which might have been expected to retard decentralization, had just the opposite effect."

In 2008, Wendell Cox and Chris Redfearn and I responded to a QJE paper by Nate Baum-Snow in this issue of EconJournalWatch.  Baum-Snow had sought to demonstrate that U.S. suburbanization was very much the product of the post-1956 Interstate Highway System.  That is the view of many who see suburbanization as being an artifact of policy.  We argued that policies followed preferences, rather than the other way around.

The right stuff

With the last NASA Space Shuttle launch, just fifty years after Alan Shepard's flight, all of the old debates over manned vs unmanned space flight come up all over again.  Some of that is captured in Tom Wolfe's The Right Stuff (the book and the movie).  One of the things that stand out in my memory of the book was the astronauts having to fight the engineers for the inclusion of a window in the cockpit.  These guys were pilots and they wanted windows.  The pilots won and they got windows, but deep space exploration, even if it does include humans on board will be ever less than traditional piloting.  Differences of degree eventually grow into differences in kind.

Discussions like this will surface as soon as driverless cars are perfected.  Will Americans want driverless cars?  I don't think so. Autos are one part conveyance and many parts piloting. 

The early astronauts were right.  Take the piloting out of spacecraft and you may as well stay home.  I realize that many air force pilots are becoming drone operators, but I expect they see this as a step down. 

Most Americans (and others) spend a lot of time in their cars not stuck in traffic.  Just look at how much they spend on their cars and all of the fru-fru they pack into them.  It's as close as most will ever get to being pilots and fantasizing about the right stuff.

It's time

To all those who have been saying that congestion pricing on freeways is "an idea whose time has come", it is here.  Specifically, the LA Times reported that it is at last coming to some of LA's freeways.  Here is that story.

There is a cliche that markets are regarded most seriously in the U.S.  That is not necessarily so.  Here is Bjorn Harsman and John Quigley's summary of how congestion pricing came to Sweden, including an analysis of the politics involved.  While they do have politics everywhere,  it appears that the Swedes are a bit more "hip" than the Americans when it comes to being imaginative in their public policy.


UPDATE

This reason.tv video vividly shows that capitalism, where it exists in the U.S., is under threat from shameless crony capitalism.

UPDATE2

Here is good capitalism.  H/T Dan Klein

CAFE

I have to say that I was (almost) at a loss for words when I saw that the Obama Administration chose this time to almost double the never-a-good-idea CAFE standards.  Mandate new product and (somehow) that's what people will buy.  Not a huge problem, of course, in a world of auto industry bail-outs.  But the WSJ's Holman Jenkins has plenty of words.

Praying for the insanity to blow over is the auto industry's strategy for dealing with the Obama administration latest urge to double down on fuel economy mandates. Auto makers, wishing to appear deferential to the government that bailed them out, only plead that any new targets be ratcheted up slowly so future administrations will have plenty of chance to repeal the rules before they take effect. ...

If ever a president seems to have learned nothing from the times he's living in, Barack Obama is it. Economies around the world are foundering from an accumulation of policy excesses produced by the sort of straight-line, robotic thinking he's applying to so-called corporate average fuel economy rules.

If more money for less work is popular, thought Greece, twice as much money for half as much work will be even more popular.

If 64% of Americans owning their own homes is a good thing, thought Bill Clinton, 67% is better. If 67% is good, thought George Bush, 69% is better.

If forcing auto makers to build cars that deliver an average of 35.5 mpg is good, believes Mr. Obama, forcing them to deliver 56.2 is even better.

Engineering is absent. Any appreciation of the law of diminishing returns is absent. Sean McAlinden of the authoritative Center for Automotive Research recently pointed out that many of the materials needed for ultra-high-mileage vehicles would outstrip current world production several times over.

Asking consumers, meanwhile, to bear the cost of fuel-economy improvement they don't value will cause them to keep their old cars on the road longer. And in pursuit of what benefits? If we junked every gasoline-powered car and truck in America, it would have no appreciable impact on global carbon dioxide. If, as Mr. Obama intends, we switch to electric cars, those cars would be powered by coal, so the alleged atmospheric dividend will be doubly elusive.

The idea that we would save money by not buying oil, even if the alternative energy is more expensive, is the protectionist fallacy in modern cloak. The idea that we'd save money on wars and military adventures is the kind of Hollywood oversimplification that history can be counted on promptly to gut.

If his goals were rational and important, Mr. Obama would pursue them rationally—asking Americans for permission to tax gasoline to incentivize purchase of high mileage cars. He does not. Early in his administration, he gave a speech delineating the goal of one million electric cars on the road by 2015. He liked the round number. He liked the Kennedyesque ring. Now his bureaucrats are pursuing that goal as mindlessly as his predecessors pursued an increase in the rate of homeowning, because they liked the sound of it. ...

In the end, only a psychiatrist might explain this urge to pile up new policy excesses, destined someday to blow up in our faces, in an age when history clearly calls us to confront past excesses. But Mr. Obama is not deep. His presidency has been a presidency of shibboleths, of endless boasts that he's delivering on the bien-pensant slogans that others just mouth. ...

This is all hard to grasp.  This stuff appeals to anyone so in love with "green" that they stop thinking.  Carbon taxes would be the vastly superior policy. 

Is the Administration so anxious about a tax approach that they embrace CAFE nuttiness instead?  Do they fear that the tax would have to be susbtantial -- and/or ratcheted up for many years?  Are they so eager to pander to the command-and-control crowd that they throw common sense to the winds?  Are they simply true believers in the righteousness of their cause?  Are they enthralled by regulatory visions (and their own capacities as regulators)? 

I suspect that it is all of the above.  It suggests that sending the Best and the Brightest to Washington is perilous.  There are many dunderheads on the right, but will we have to choose between the arrogant ignorant and the just plain ignorant?

Local governance debate

Bob Nelson and Evan McKenzie debate private comunities here.  Nelson considers the upside and McKenzie takes the other side.  They actually compare two types of governance (conventional vs. private) and find examples of government failure in each case.  That should not be surprising. 

Conventional zoning rules are actually rights vs protections trade-offs.  These trade-offs are also available via developer sponsored (market vetted) association rules.  The possibility of government failure comes with any non-market preference aggregation procedure.  But in which case is it a bigger problem?

What I find most interesting is that both debaters consider reforms that might improve private governance.  They do not suggest ways to improve conventional government.  But why has there been the rise of associations that both document? 

Nelson makes the point the suburban cities were first formed to block the annexation of newly developed land by the old central city.  That role has gone to private associations in many states.   

McKenzie makes the point that most new private association resident-owners do not even bother to read the association's rules.  Nelson wants to administer a quiz whereby new owners must demonstrate that they have read the rules.  Both of the experts suggest other reforms -- of the private governance approach.

Better chicken

Chidem Kurdas describes the game of budget-chicken now being played in Washington and is not optimistic; the Democrats' "salami strategy" is winning.  "The money has been spent, we have to find a way to pay for it, etc."

Reagan's Starve the Beast did not work (the beast kept growing) so now we will get Feed the Beast.  What's left?

The Congressional Budget Office describes their mandate this way:

CBO's mandate is to provide the Congress with:


Objective, nonpartisan, and timely analyses to aid in economic and budgetary decisions on the wide array of programs covered by the federal budget and

The information and estimates required for the Congressional budget process.

That's much too vague.  I would prefer that all programs (taxation and expenditure) were tagged along two dimensions:  (i) what are the long-term growth implications, pro-growth or not? and (ii) what are the redistribution effects, neutral, regressive or progressive?

Of the six possible tags, my own preference is pro-growth and redistribution neutral, although I could see the argument for pro-growth and progressive.  The analysis is tricky, but so is everything CBO already does.  Honest analysis will require honest caveats, but this is already part of their mode.

If we have reached a point were large segments of the electorate have accepted that "kicking the can down the road" is no longer acceptable, then the current game will be repeated, but the analysis CBO already publishes does not do enough to inform the public or the players of the chicken game. 

So, for starters, let's have the most useful analysis and then let the game begin.