Category: Current Affairs

K. writes and tells me that she imagines someone writing a novel based on this incident and that I will assign it in my Law and Literature class.  Here is the excerpt:

A number of people have written in, or tweeted (and don’t forget to find me in the tweetosphere), to tell me about a traffic jam in China, currently in its ninth day, that seems to be on the verge of evolving, as per Cortazar’s story “The Southern Thruway” (an inspiration for Godard’s Weekend), into some kind of makeshift settlement.

This has struck an enterprising verve in some locals, notes the BBC:

The drivers have complained that locals are over-charging them for food and drink while they are stuck.

Then again, what is the “market price” for selling food and drink to 100 km traffic jams?

Instant noodles have risen to four times their market price in this new Chinese city.  This account, sent to me by Joshua Hedlund, notes that the jam is 62 miles long and offers good photos.

Interfluidity has a very good and accurate post on the meeting with Treasury.  It's a long post as it includes the background and context of what was discussed.  Also includes links to other write-ups although interfluidity is wrong to say better write-ups.

Here is my latest NYT column, for the ideas I am indebted to pointers from Daniel Klein, Matt Yglesias, and of course Donald Shoup.

Here is the bottom line:

If developers were allowed to face directly the high land costs of providing so much parking, the number of spaces would be a result of a careful economic calculation rather than a matter of satisfying a legal requirement. Parking would be scarcer, and more likely to have a price – or a higher one than it does now – and people would be more careful about when and where they drove.

The subsidies are largely invisible to drivers who park their cars – and thus free or cheap parking spaces feel like natural outcomes of the market, or perhaps even an entitlement. Yet the law is allocating this land rather than letting market prices adjudicate whether we need more parking, and whether that parking should be free. We end up overusing land for cars – and overusing cars too. You don’t have to hate sprawl, or automobiles, to want to stop subsidizing that way of life.

Here are a few quotations from the article:

“Minimum parking requirements act like a fertility drug for cars.”

And:

As Professor Shoup puts it: “Who pays for free parking? Everyone but the motorist.”

And:

If we don’t give away cars, why give away parking spaces?

What are the biggest problems with the idea?  First, the danger of spillover parking means that a lot of parking has to be properly priced all at once.  If the local K-Mart has a smaller lot, you don't want the customers flooding a neighborhood street and simply shifting the problem.  The proper correction requires a coordinated pricing and enforcement effort, not only to succeed, but also to be sufficiently popular with homeowners.  Fortunately, most of the coordination can be done at the level of the individual town or city.

Second, we don't yet know how many more spaces would be priced in the absence of legal minimum parking requirements, and how many fewer car trips there would be, especially if we are holding the quantity and quality of mass transit constant.  The employer still may wish to subsidize appearance at the workplace.  Alternatively, "parking fees as lump sum tax" is fine by me and it bears an odd but pleasant connection to Georgist ideas.  Another possibility is that a lot of parking is shifted to satellite lots, combined with small buses or shuttles; Tysons Corner Mall already does this at Christmas or consider any number of airports.  That still would improve land use (and welfare), but it remains an open question how much congestion and emissions would get better.

Mark Thoma discusses some distributional issues.  I would note that less land for parking should lower other real estate and retail prices, even if more poor people end up taking the bus.  And the very poorest Americans often don't have cars at all.

Pete Boettke says "policy is the problem."  Ezra says he can't find evidence that policy is the problem.

I hold the intermediate view that policy uncertainty is a problem but not the problem.  On one hand, policy uncertainty probably has been greatest for the health care sector, yet job growth in that sector has been relatively robust.  Furthermore, Obamacare may bring uncertainty, but part of the uncertainty is about whether employers can get away with dumping their workers onto the subsidized exchanges.  Arguably that should help hiring rather than hurt it.

I expect electoral gridlock by November yet no one seems to be welcoming that "certainty" very much.

Perhaps most importantly, deleveraging recessions usually take a long time to recover from in any case and there's not a lot of good cheer along the way.

I would be more convinced by the uncertainty view if it were combined into a larger, coherent story, consistent with reported corporate profits being fairly high.

Do the implicit volatilities embedded in option prices show a lot of expected uncertainty?  Maybe, but again I'm waiting to see the evidence.  If so, this one should be staring us right in the face.

On the other side of the ledger, the tax code remains highly uncertain, to our detriment, and monetary policy is some mix of uncertain and baffling (though see the above point on implicit volatilities). 

There is also behavioral economics.  An image or speech or proposed law can crush a mood, whether or not that is rational.  I can't cite a lot of systematic evidence for this having happened, but I know from talking to people how many of them think, rightly or wrongly, that Obama is very very bad for the American economy.  I believe that is a factor in our slow recovery. 

Be careful to separate your positive and normative views here.  Maybe the audience is "at fault," rather than the messenger, but still some people are very upset.  Every time I read a left-wing writer dismantling "right-wing media" I think they are actually providing another data point for the policy uncertainty hypothesis, although that is hardly their intent.  In many circles there is a perceived problem with our country, regardless how much that is based on fact or not.  If food consumers can be irrational and moody, political consumers (who are also investors) can be the same.  Still, I don't know how significant this factor is.

Temporary hiring is quite high, while permanent hiring is not.  However that need not show that the decisive uncertainty comes from politics.  Furthermore it instead could mean that the fixed cost of hiring labor full-time is high but not uncertain.

A lot of the current uncertainty is about a higher estimate of overall systemic risk, rather than from politics per se.  Such risk worries may be a blend of private and public sector factors, such as worries about Europe or China.  Economic and political uncertainty are not always separable categories.

Overall I don't see a lot of clear evidence on this question but I think policy uncertainty is one factor, albeit an exaggerated factor in many circles.

This Friday some people will be so paralyzed with fear they simply won't get out of bed. Others will steadfastly refuse to fly on an airplane, buy a house, or act on a hot stock tip. It's Friday the 13th, and they're freaked out.

"It's been estimated that [U.S] $800 or $900 million is lost in business on this day because people will not fly or do business they would normally do," said Donald Dossey, founder of the Stress Management Center and Phobia Institute in Asheville, North Carolina.

The full story is here, hat tip goes to BrainPicker, and I am not sure how formal that quantitative estimate is.  Note also that some of that business is likely made up on other days, either earlier or later.