My Favorite Review of Modern Principles

by  Alex Tabarrok in

I have been reading your book and I must say I am most impressed. The layout is clear, the examples good but the writing is great!  It is clear, concise, logical and interesting. I have to say I found it good reading. Congratulations.

Love Mum.

If you are interested in a review less tangled with the bonds of affection, Robert Whaples is teaching his principles of economics class using a pre-pub version of our textbook (micro and macro; fyi, more on micro in a few weeks) and he is is blogging his thoughts as he covers each chapter. Whaples conveys the flavor of our book very well.

The revisionist view of Lehman

by  Tyler Cowen in

This kind of observation is becoming popular:

Almost everyone I’ve ever spoken to in Hank Paulson’s old Treasury
Department agrees that without the immediate panic caused by the Lehman
default, the government would never have agreed to make the loans
needed to save A.I.G., a company it knew very little about. In effect,
the Lehman bankruptcy caused the government to panic, which in turn
caused it to save the firm it really had to save to prevent
catastrophe. In retrospect, if you had to choose one firm to throw
under the bus to save everyone else, you would choose Lehman.

Here is much more, by Joe Nocera.

John Stossel is jumping to Fox Business

by  Tyler Cowen in

John Stossel, the ABC anchor known for his libertarian bent, is moving to the Fox
Business Network to host a weekly prime-time program. He will also make
regular appearances on the Fox News Channel.

…Mr. Stossel will start work in October, and his weekly program,
named “Stossel,” will begin sometime in the fourth quarter. Fox said
“Stossel” would include news segments and conversations about
“libertarian issues in the United States and abroad,” including
free-market economics and civil liberties.

In a post on his ABC
blog, Mr. Stossel said he wanted to “dig into the meaning of the words
‘liberty’ and ‘limited government’ ” on the program.

“ABC enabled me to do some of that, but Fox offers me more air time and a new challenge,” he added.

The story is here.  I thank Yana for the pointer.

Department of Duh

by  Tyler Cowen in

Justin, a loyal MR reader, writes to me:

Funny
new story. Near the end it mentions citizen's group that wants to
remove cameras from a highway because, in their words, "It's nothing
but a speed tax".

I liked the opening paragraph of the piece:

A driver has racked up dozens of speeding tickets in photo-radar zones on Phoenix-area freeways while sporting monkey and
giraffe masks, and is fighting every one by claiming the costumes make
it impossible for authorities to prove he was behind the wheel.

Monkey masks I can see.  But giraffe masks?  That's good enough for a markets in everything.  Who, other than this guy, buys a giraffe mask?  And how is this for governmental wisdom?

…It took Arizona state police months to realize the same driver was involved

And the guy's car?

…has black-and-white checkered racing stickers on its sides and a sticker on the windshield that reads "Bucktooth Racin'."

The state now has surveillance photos of him putting on a mask before driving but vonTesmar, the driver, offers up a novel defense:

…[he] said if the Department of Public Safety
does have surveillance photos of him on the road, it proves he's not a
danger to other drivers. If he were, officers would have pulled him
over, he said.

The cameras remain unpopular in Arizona:

Arizonans have used sticky notes, Silly String and even a pickax to sabotage the cameras.

Many
believe the shooting death of speed-enforcement van operator Doug
Georgianni on April 19 on a Phoenix freeway was a result of anger over
the cameras, although authorities haven't made that direct allegation.

Three separate citizens groups are targeting the cameras in initiatives for the 2010 ballot.

As you can see, the local government blogging marathon continues.  Soon I'll offer up some posts on crime.

Tax fiscalization as another cause of suburban sprawl

by  Tyler Cowen in

This hypothesis has its own paper, by Robert Wassner and David Edwards.  Here is the bottom line:

The more land use decisions in a state are driven by fiscal considerations, the more likely may be the degree of sprawl observed in the state’s urban areas. The reason is that outlying local governments in an urban area, with a greater likelihood of possessing undeveloped land, are more likely to use revenue considerations in choices related to land use. As discussed next, the extent that outlying local governments in a state’s urban areas weigh fiscal considerations in land use decisions is expected to depend on the relative reliance by local governments in the state on the different possible forms of local revenue. That is, greater statewide reliance on a form of local revenue that rises and falls with differences in land use choices can result in forms of land use decisions in an urban area that generate greater sprawl. The theoretical connection between sales tax reliance by local governments in a state and greater urban decentralization centers on the ability of local government officials to influence the location of retail activity in an urban area. The amount of overall retail activity in an urban area is determined by factors such as population, income, age distribution, etc. in the region and is unlikely to change due to local government influences. But local land use decisions can shape the distribution of overall retail development in an urban area. Local this land for retail activity if local greater retail generates for them. This surplus comes in the forms of (1) non-residents paying local sales taxes and (2) the lower alternate land uses.

The paper offers a good bit of evidence, though the authors are very careful to claim this is not the only or even the major factor behind sprawl.  Lots of little local governments, of course, also enhance educational competition and the quality of the local schools, which further encourages sprawl.

The myth of “no zoning” in Houston

by  Tyler Cowen in

I found this Michael Lewyn paper very interesting.  Here is his bottom line:

In fact, Houston regulates land use almost as intricately as cities with zoning by mandating suburban-style low densities, ordering businesses to hide their stores behind an asphalt ocean of parking, encouraging segregation of land uses, and forcing pedestrians to cross wide streets and to trudge through long, intersection-free blocks to go from one place to another. These policies have helped to make Houston as sprawling and automobile-dependent as other American cities (if not more so). By reversing such policies, Houston and other municipalities with similar policies can create an America that is both more deregulated and less sprawling.

It's a good paper.

How much will denser suburbs help the environment?

by  Tyler Cowen in

John Thacker points us to a study of California (registration required, but free).  I've only browsed it but the introduction states:

In September 2008, the California state legislature passed the first state law (Senate Bill 375) to include land use policies directed at curbing urban sprawl and reducing automobile travel as part of the state’s ambitious strategy to reduce greenhouse gas (GHG) emissions. The legislature recognized that cleaner fuels and more fuel-efficient vehicles would not be sufficient to achieve the state’s goal of reducing GHG emissions to 1990 levels by 2020. The bill requires the state’s 18 metropolitan planning organizations to include the GHG emissions targets established by the state Air Resources Board (ARB) in regional transportation plans, and to offer incentives for local governments and developers to create more compact developments and provide transit and other opportunities for alternatives to automobile travel to help meet these targets. ARB currently estimates that reductions in vehicle miles traveled (VMT) resulting from these actions will contribute only about 3 percent of the 2020 targets–an estimate that reflects uncertainties in the state of knowledge about the impacts of more compact development patterns on travel and the short time horizon involved.

In other words, the environmental benefits of checking pro-suburb subsidies are real, but they are smaller than many people think.  That's from the National Academy of Sciences and the authors are no haters of the environment.  If you check out p.59, you'll see that a forty percent increase in population density decreases vehicle miles traveled by less than five percent.  pp.131-132 offer a summary of the study's conclusions and quantitative estimates. 

The authors conclude that density-friendly policies are a good idea, and I agree, but still these are not overwhelming effects.  Keep in mind that current trends are strongly pointing toward population dispersion, so to reverse those trends and see greater density would take some doing.  We're not close to that margin.

There are many other interesting parts of the report, including case studies of Portland and Arlington.

First debug the child, then the computer

by  Alex Tabarrok in

The idea of computers as liberators appealed to Silicon Valley philanthropists and Nicholas Negroponte could certainly tell a compelling story but, as Timothy Ogden explains, today the one laptop per child project seems to be in technical and financial trouble, the evidence that computers increase learning either in the classroom or at home is weak and the demand for the computers (as opposed to say cell phones (pdf)) in the developing world is low.  Meanwhile, simpler, cheaper approaches with proven evidence are not being fully exploited.  Here's Ogden.

The simplest and least costly of these programs is deworming. Nearly 2 billion people around the world are affected by parasitic worm infections, with children disproportionately affected. While each variety of parasitic worm affects a person differently, they all take a substantial toll on growth, energy and attention, with entirely predictable impacts on school attendance and learning. Harvard economist Michael Kremer has studied the impact of mass deworming in Kenya and India. Delivering deworming medication costs 50 cents per child per year in Kenya but yielded a 25 percent increase in school attendance; a similar program in India cost $4 per student per year and yielded a 20 percent attendance gain. "This is a simple, cost-effective and yet tragically not-done program. It's a scandal that [deworming] hasn't been addressed," Kremer says. There are spillover effects as well. "The most surprising thing about the study in Kenya was the widespread impact," Kremer says. The program drove down infection rates for several kilometers around the schools, he says, and there were significant improvements in attendance for untreated students, in the treatment schools as well as in nearby schools not in the program.

Read the whole thing.  Help to deworm the world.

Hat tip to Alanna Shaikh via Chris Blattman and also to Dan in the comments.

How much did highways really matter for suburbanization?

by  Tyler Cowen in

Following up on my earlier post, Dan Klein points my attention to the following piece by Wendell Cox, Peter Gordon, and Christian Redfearn, from Econ Journal Watch.  Excerpt:

Suburbanization has, for a long time, been a trend based on consumer preferences and larger trends, notably rising wealth and transportation and communications improvements (including the highways Baum-Snow investigates). Jackson (1985) finds U.S. suburbanization began at the end of the 19century. Indeed, he refers to “streetcar suburbs.” The 20th century U.S. experience is shown in Figure 1, which shows the percentage of US population living in metropolitan areas, and breaks that percentage down into central cities population and suburbs. The growth of the suburbs relative to the central city is seen well before 1950. Moreover, in the figure the relative decline of the central cities is understated because central cities have been annexing suburbs for many years.

The simple broad narrative is that, by and large, suburban living expanded throughout the twentieth century. Around the world, as incomes rise, people choose the mobility of the automobile; they overwhelmingly prefer the range and choice of personal transportation. As they choose automobility, origins and destinations disperse; and as these disperse, the attraction of the auto grows. It is a self-reinforcing cycle that is facilitated by better highways. But as with most public sector infrastructure developments, these usually follow rather than lead.

This article offers some striking facts.  Before the interstate highway system, the percentage of the U.S. population living in suburbs went from 7.1 percent in 1910 to 23.3 percent in 1950.  From 1950 to 2000 it had a smaller proportional increase, namely from 23.3 percent to 50 percent.

The central city of Copenhagen reached its population peak in 1950 and by 1990 had lost nearly 40 percent of its population; that is comparable to some of the highest losses in the U.S. Rust Belt.  The central city of Paris reached its peak population in 1920 and has lost one-quarter of its population by 1990.

There are many other interesting points in this piece.  I am not suggesting that highways do not matter, but the extent of the influence is maybe not as large as many people think.

The French carbon tax

by  Tyler Cowen in

France is finding is hard to pass a stiff carbon tax, though of course they already use lots of (non-carbon) nuclear power:

Details are finally emerging about the country’s planned “carbon tax,” to be put in place next year. And the idea is anything but popular.

The center-right French government wants to levy a tax of 14 euros per ton of carbon dioxide starting in 2010; carbon taxes are popular with many economists and business leaders because they are seen as easier to implement than carbon-trading plans, which France also belongs to.

In reality, France’s carbon tax is basically just a gasoline tax–and a tiny one at that. The electricity sector, overwhelmingly powered by emissions-free nuclear power, isn’t part of the plan [TC: Duh!], Prime Minister Francois Fillon told Le Figaro. The tax will basically fall on liquid fuels–raising pump prices 3 euro cents a liter (that’s roughly 15 U.S. cents a gallon).

In theory it will be revenue-neutral but most French voters are nonetheless opposed to the measure.  Here is further information:

Large CO2 emitters, such as oil refiners and steel makers, will be exempted from paying the new tax. The government will propose special compensations for fishermen, farmers and truckers…