Out of Control

What’s a company supposed to do?

Virginia Postrel looks at GM, which lost 1.1 billion last quarter.

She points to a Holman Jenkins column (sorry no link):

GM's boss should be the media's darling, running his company to provide job security and health care for its workers first, second and third. Wonder why GM invests just enough in new product to keep the game going, not enough to make its cars really sought after? Because the extra capital that would have to be invested goes instead to doling out gold-plated health care -- no copays, no deductibles -- to workers and to plumping up their pension fund, which two years ago required the largest corporate debt offering in history to top off....

GM made an effort to imply that Zeta resources were being deployed to speed up redesigned pickup trucks and SUVs, which will begin to appear next year. This was smokescreen. Zeta was shelved to free up money in coming years to meet the pension and health-care obligations to workers -- money that manifestly won't be coming from sales of G6s, Cobalts and LaCrosses, the new models that GM had nursed high hopes for.

Get more scoop here.

Per capita tax burden, that is. Texas has the lightest burden.

Here’s the breakdown.

Here’s an article about all this.

Here’s a related Goldwater Institute study that hits on the issue of outforcing:

Over the years examined [1995-2000], the 10 states with the lowest overall tax burdens (Alaska, New Hampshire, Delaware, Tennessee, Alabama, Texas, Florida, South Dakota, Nevada, and Colorado, respectively) enjoyed a total net gain of more than 1,300,000 residents resulting from across-state migration. The nine states and the District of Columbia with the highest total tax burdens suffered a total net loss of more than 1,700,000 residents as a result of migration.

Economic policy matters, but it isn’t everything—there are, after all, lots of low tax, low reg places that aren’t booming.

Then again, population growth can come to some unlikely places, like South Dakota, where the state tax burden is the nation's second lowest:

[T]wo rural South Dakota counties are among the nation's 10 fastest-growing counties from 2003 to 2004: Lincoln County (pop. 31,437), south of Sioux Falls, and tiny Hanson County (pop. 3,786), 45 miles to the west.

Sioux Falls, site of Citibank's first credit card processing center, has attracted Internet and biotech companies. The number of jobs rose about 28% to 119,000 from 1994 to 2004, says Joel Kotkin, a senior fellow at the New America Foundation, a research group.

The jobs are luring back young people who moved to big cities such as Chicago, he says. When they reach their 30s and have kids, "they feel they can't have good quality of life in those urban centers because of price. ... They're also coming back to a convenient thing called grandparents."

Today’s NYT explores the growing popularity of highway pricing:

[S]tate and federal governments, beset by deficits, say they have barely enough money to service the existing system, let alone build new roads. As a result, nearly two dozen states have passed legislation allowing their transportation systems to operate pay-as-you-go roads, and in many cases, letting the private sector build and run these roads.

Social engineering is merging with traffic engineering, creating new technologies that charge people a variable toll based on how many cars are on the road - known as congestion pricing - or reduce toll rates for high occupancy to encourage car-pooling. The White House wants to allow states to charge user fees for virtually any stretch of an interstate.
…

[T]he number of miles driven has gone up more than 80 percent over the last two decades while the number of new highway lanes has increased by just 4 percent.

So Virginia is negotiating with a private company to build and operate 14 miles of toll lanes in one of the most congested parts of the Capital Beltway. Chicago just leased its 7.8-mile skyway toll bridge to a private operator for $1.8 billion.

And the vast Trans-Texas Corridor project, which would be the largest private highway system in the country, would allow corporations to charge tolls for 50 years as a way to pay for high-speed lanes in the state.
…

"Californians can't get from place to place on little fairy wings," said Gov. Arnold Schwarzenegger in announcing a plan in January that could allow private investors to build toll roads. "We are a car-centered state. We need roads."

And SoCal’s 91 Express lanes which use variable pricing to keep people moving:

[P]eople say they like the fact that there are no toll booths, and they can virtually guarantee being on time - for a child's soccer match, job appointment or doctor's visit. Average peak hour speeds on the 91 Express lanes were 60 to 65 miles an hour last year, versus 15 to 20 m.p.h. on the free lanes, according to federal officials.

"It's like everything else: you can fly coach, or you can fly first class," said Caleb Dillon, an X-ray technician in Riverside whose commute is an hour each way. "I'm not a rich guy, but I like having the option of saving time when I really need it."

And no article like this is complete without Bob’s take:

"It's a big cultural shift for people all of a sudden to get used to paying for roads that were free," said Robert Poole, of the libertarian Reason Foundation. But, he said, "people are so fed up with congestion" that they are open to change. For 17 years, Mr. Poole has been the chief theorist for private solutions to gridlock. His ideas are now embraced by officials from Sacramento to Washington.

Never underestimate academia’s ability to obscure the obvious.

Thefts of iPods and cellphones have shot up recently on NYC subways. Cops say the bad guys aren’t reselling they booty; they’re just keeping it for personal use.

Here’s how Henry Jenkins, the director of the Comparative Media Studies Program at the Massachusetts Institute of Technology, put it:

"The participation gap creates techno-envy, where the kids who are locked out of participation in the culture covet those tools and devices that are considered essential to being a young person."

And here’s how the NYPD’s chief of transportation put it:

"The thieves are upgrading their cellphones."

Here's the whole story.

I just came across a very interesting passage in a Time article from Nov 04.

The passage explains how Burt Rutan came up with the design that won the X Prize. There’s the exhilaration of the “aha!” moment followed by the inevitable skepticism from those who think he’s nuts (which is always so enjoyable in hindsight).

The market process is so often described as dog-eat-dog, hyper-competitive Gordon Gekkoism that it’s easy to overlook the creativity inherent in entrepreneurial discovery:

[G]etting a human into space is the easy part; it's getting them back that causes the real trouble. The friction of the atmosphere, combined with Earth's gravitational pull, creates an intense and deadly heat. The space shuttle solved this problem with millions of dollars' worth of tiles on its underbelly (although, as a shocked world saw last year, that system is not foolproof).

Rutan woke up one morning six years ago at his desert home in Mojave, Calif., with a heat-beating idea no one had considered before: Why not build a space plane with wings that hinge up at its highest altitude, creating a feathering effect so it floats gently back to Earth like a shuttlecock in a game of badminton? Rutan quickly sketched out his idea and started showing it around.

The reception was muted. Rutan was widely respected in the experimental-plane-building industry, having designed Voyager, the first aircraft to make it around the world nonstop without refueling, which his brother Dick helped fly into the record books in 1986. But the design for SpaceShipOne inspired near universal derision. "When I first saw it, I thought he'd lost his mind," says Mike Melvill, Rutan's oldest employee, longtime friend and faithful test pilot.

To Rutan, the raised eyebrows proved he was on the right track. "If you don't have a consensus that it's nonsense," says Rutan, "you don't have a breakthrough."

Quite a bit different than “Greed is good.”

Might those shrimp tariffs go away?

Kerry Howley has the scoop.

I don't think a $100 computer is out of the question in a three-year time frame. A lot of people forget that the first cell phones came out at $3,000 to $4,000 dollars and today are free. I think there's going to be some of that same kind of movement with computing and communications devices.

That’s from Hector Ruiz, CEO of Advanced Micro Devices.

Imagine telling a high school freshman that cell phones used to cost a few grand. How amazing it is that just 30 years ago an IBM-370-168 mainframe cost $3.4 million. Technology continues to improve in quality even as it falls in price.

With this sort of progress, it’s easy to see how technology “takes” more jobs than the current worry, offshore outsourcing. How many secretaries would be replaced by $100 PCs?

Yet there’s a lot more reason for optimism.

As more and more people have access to the tools of creation and self expression, culture will continue to boom. So will entrepreneurship. Without the low cost of communication, many start-ups would stall. It’s getting easier for someone with a good idea to turn that idea into something real.

(And $100 PCs could also make it easier for more people to telecommute.)

Good lord, could the EU be getting something right while the US is punting? The Economist has a nice article on how the EU is picking up the use of cost-benefit analysis of regulations just as the US starts to be suspicious of it. Article here--sorry, subscription needed, but here are some highlights.

A number of critics doubt the worth of the techniques [cost-benefit analysis] and distrust the motives of the practitioners. They say that America's current administration is guilty of “regulatory underkill” and that cost-benefit analysis is its weapon of choice. . . [Skeptics object] to two features in particular: the “translation of lives, health, and the natural environment into monetary terms” and “the discounting of harms to human health and the environment that are expected to occur in the future”.
. . .

Cost-benefit analysis does not always argue for less regulation. It weeds out regulations that do not pay their way, but it can also identify measures not on the statute books, that should be.

You can get a good sense of the debate by looking at In Defense of the Economic Analysis of Regulation and at Pricing the Priceless: Cost-Benefit Analysis of Health, Safety, and Environmental Protection.

It is irksome how tools always wind up being debated as if they are policies themselves. CBA gives policymakers information about the merits of regulations. It is not complete, it is not all of the info needed, but it is useful. For crying out loud, as much as regulators whine about how complex things are, while too much to hope they will realize the real limits of their knowledge, they ought to embrace a tool that helps makes sense of tradeoffs.

But then, as the Economist article puts it, "A safe childhood, a breathtaking view, a clean pair of lungs—all are reduced to fungible “dollar-equivalents”. In doing so, the method forces into the open trade-offs that many would rather not face too squarely."

Two San Diego entrepreneurs have come up with a very literal twist on offshoring software development jobs. This pair wants to get their hands on a 600-cabin cruise ship and park it off the coast of El Segundo, Calif., just over the 3-mile border that marks international waters. They'll pack the boat with engineers who will write code day and night.

The two founders of SeaCode, David Cook and Roger Green, are confident their plan will float. All they need to do is classify their workers as "seamen," so that they're protected by international maritime laws that skirt the need for those pesky immigration visas. The workers will fly in and out of Los Angeles International and board the ship with a sailor's card from the Bahamas, where the ship likely will be registered. This lets the company avoid U.S. payroll taxes on the foreign coders. Cook, a former supertanker skipper, plans to dock in Long Beach once a month to resupply and dispose of waste.

The idea is to offer developing-world prices and let execs skip the long flights they make to check on overseas projects.

Crazy? Illegal?

As much as it sounds like a joke, the plan could work. "Nothing tells me that it's flatly prohibited," says San Francisco maritime lawyer James Walsh. That's because a "seaman" can be defined broadly as anyone who works on a vessel.

Whole story is here.

Via Jonathan Skillings.

With a new promise of $125 million from Minnesota Twins owner Carl Pohlad in hand, Hennepin County will seek state permission to increase the local sales tax for a Warehouse District ballpark in downtown Minneapolis.

Under the terms of the plan to be unveiled at a Metrodome press conference Monday, the Twins and the county would build a $360 million, 42,000-seat open-air stadium. The site is near the confluence of Interstate Hwy. 394, the end of the Hiawatha Light Rail line and the proposed Northstar commuter rail in downtown Minneapolis.

The total cost of the ballpark project is projected to be $478 million, including bonding costs, site preparation and surrounding infrastructure, such as road and pedestrian improvements. No state money would be required.

Read on.

And here’s Sam on Indy’s stadium plan.

Reason's Ron Bailey opines on the 35th anniversary of Earth Day:

The Hallmarkization of Earth Day aptly symbolizes the predicament of 21st century ideological environmentalism. Unfortunately for green activists, the public now recognizes that their relentless predictions of imminent environmental apocalypse are a bunch of hooey. In fact, people need only look around to see that the state of the natural world in the United States and much of the world has greatly improved over the past 35 years. Sure, public schools still teach environmental doomster tracts to impressionable children, but public schools are always decades behind the rest of society, being, after all, the absolutely last places where new facts and ideas infiltrate.

And be sure to check out the 2005 edition of the Index of Leading Environmental Indicators for more on the positive environmental trends that the media fails to make room for amid the endless torrent of doom-and-gloom articles.

For example, check out these air pollution stats. According to EPA data, since 1976:

• ozone levels have decreased by 31 percent
• sulfur dioxide levels have decreased by 72 percent,
• nitrogen dioxide levels have decreased by 42 percent,
• carbon dioxide levels have decreased by 76 percent (!),
• particulates (smoke and dust) have decreased by 31 percent, and
• air quality in the 10 largest U.S. metro areas has improved an average of 53 percent in the last 25 years.

Doesn't quite jive with The Day After Tomorrow alarmism we're used to hearing, huh? Read the 2005 Index for even more food for thought.

And be sure to pass some of this environmental sanity along to others; friends don't let friends believe the enviro-nonsense that emanates from Big Media. And if you have kids, it is ABSOLUTELY your mandatory duty to give them a healthy dose of deprogramming this weekend.

The Economist weighs in on market-based environmental policy:

"Mandate, regulate, litigate." That has been the green mantra. And it explains the world's top-down, command-and-control approach to environmental policymaking. Slowly, this is changing. Yesterday's failed hopes, today's heavy costs and tomorrow's demanding ambitions have been driving public policy quietly towards market-based approaches. One example lies in the assignment of property rights over "commons", such as fisheries, that are abused because they belong at once to everyone and no one. Where tradable fishing quotas have been issued, the result has been a drop in over-fishing. Emissions trading is also taking off. America led the way with its sulphur-dioxide trading scheme, and today the EU is pioneering carbon-dioxide trading with the (albeit still controversial) goal of slowing down climate change.

These, however, are obvious targets. What is really intriguing are efforts to value previously ignored "ecological services", both basic ones such as water filtration and flood prevention, and luxuries such as preserving wildlife. At the same time, advances in environmental science are making those valuation studies more accurate. Market mechanisms can then be employed to achieve these goals at the lowest cost. Today, countries from Panama to Papua New Guinea are investigating ways to price nature in this way

Read the whole thing here (as well as this more extensive piece in the same issue).

And be sure to check out Michael De Alessi's work on Individual Fishing Quotas for a great example of free market environmentalism in action.

(hat tip: The Commons)

Related to the post before last, is this story.

To Amtrak reform apparently means asking for a 50 percent funding hike.

But yes, there is the “possibility” of contracting out some work.

Here’s the scoop:

Amtrak proposed a package of changes on Thursday that would seek additional money from states and from commuter rail lines that operate on its tracks.

The proposal raises the possibility of allowing other companies to take over some services or even run trains. In exchange, Amtrak asked Congress for $1.8 billion for the next fiscal year, about 50 percent more than it is receiving.

The Bush administration has proposed stopping all subsidies unless Congress reorganizes the company.

…

Amtrak's proposal is different on many points from what the administration wants. It calls for Congress to pay off its $3.5 billion debt and does not rely on financing from regional groups of states, and it rejects the idea of turning over the Northeast Corridor, the tracks between Boston and Washington, to someone else. It also rejects the idea that Amtrak should break even on operating costs.

…

The idea that Amtrak could collect more money from the commuter agencies that use its tracks also drew fire.

"It's robbing Peter to pay Paul," Senator Charles E. Schumer, Democrat of New York, said.

“Robbing Peter to pay Paul,” isn’t that the official motto of Congress? Why the sudden objection?

CO, ID, and NV governors can't stand up to the pressure to increase spending, so they are looking to cave in on tax increases. What a crock. No serious effort to find ways to live within their means

Nick Gillespie unloads on our nation’s passenger rail service.

The Census Bureau says that’s where more Americans are headed:

Three states — Florida, California and Texas — were expected to account for nearly half of the country's population growth between 2000 and 2030, the Census Bureau said.

Together, the South and West should account for 88 percent of the nation's projected population growth. The number of people living in the South and West was expected to increase to 65 percent in 2030 from 58 percent in 2000.

For the same period, the share of population living in the Northeast and Midwest was predicted to decline from 42 percent to 35 percent.

The fastest growing states are expected to be, in order, Nevada, Arizona, Florida and Texas.

Here’s the whole story.

Speaking before the House Subcommittee on Space and Aeronautics Wednesday, SpaceShipOne designer Burt Rutan said the commercial space industry will thrive but the current regulatory system is need of repair and nearly destroyed his program.

Rutan was one a of a group experts in the emerging commercial space market to testify before lawmakers. Congress is attempting to define what role the government should or shouldn’t play in supporting entrepreneurial space progress.
…

“The airline experience has shown us that it is not just technology that provides safety but the maturity that comes from a high-level of flight activity,” Rutan said.

However, Rutan criticized the Federal Aviation Administration (FAA) and its office of the Associate Administrator for Commercial Space Transportation (AST), saying “the AST process, focusing only on the non-involved public, just about ruined my program.”

AST’s stated mission is to ensure protection of the public, property, and the national security and foreign policy interests of the United States during a commercial launch or re-entry activity and to encourage, facilitate, and promote U.S. commercial space transportation.

“It resulted in cost-overruns,” Rutan said. “It increased the risk for my test pilots. It did not reduce the risk to the non-involved public. It destroyed our safety policy of always question the product, never defend it.”

The regulatory process imposed by AST, Rutan continued, “was grossly misapplied for our research tests. And worse yet, is likely to be misapplied for the regulation of future commercial spaceliners.”

Here’s the whole article.

Here are more Rutan-related posts.

Better gas mileage is a good thing, right?

Not for tax collectors:

The federal tax man has an eye on those increasingly popular high- mileage vehicles, gas misers whose drivers love going further between fill-ups and saving on sky-high gas prices.

The idea is simple but technologically daunting -- base gas taxes on miles driven instead of on gallons of fuel bought. And advocates say the reason for such a change is also simple -- although such fuel-efficient vehicles as hot-selling hybrids pay less in gas taxes, they're still out on the nation's roads contributing to congestion and wear and tear on an aging infrastructure.

A switch in the way the 18.4-cent-a-gallon federal gas tax is levied could be in the offing, making it more of a user fee than a tax. By unanimous voice vote, the Senate Finance Committee approved legislation Tuesday to establish a 15-member commission to report back within two years on ways to ensure enough tax revenue to pay for the nation's highway, bridge and public transit programs.

High on the list the panel will consider is the per-mile fee that is already the subject of a $1.25 million pilot project in Oregon that will use a special "smart'' odometer coupled with a global positioning system in every vehicle, a system invented at Oregon State University.

Might be easier to just mandate lower gas mileage.

Whole story is here.

Check out this recent post on hybrid love.

Minority bus riders and community groups from Alameda and Contra Costa counties filed a federal lawsuit Tuesday accusing the Bay Area's Metropolitan Transportation Commission of maintaining a "separate and unequal transit system" that favors white suburban commuters.

The lawsuit is modeled on a 1994 Los Angeles case filed against the Metropolitan Transportation Authority by the Bus Riders Union. The settlement in that case resulted in a federal consent decree mandating improved services for urban riders.

The Bay Area lawsuit alleges that the commission has disproportionately funded Caltrain and BART — rail services used predominantly by white suburbanites with relatively high incomes — while under-funding the East Bay's AC Transit bus system, used mainly by low-income minority city dwellers.

According to the lawsuit — filed on behalf of three minority riders from East Oakland and Richmond, the nonprofit Communities for a Better Environment, and Amalgamated Transit Union, Local 192 — the commission has channeled a per-person public subsidy of $2.78 to AC Transit riders, $6.14 to BART riders, and $13.79 to Caltrain riders.

Whole story is here.

And, just last Friday, more drama in L.A.:

The Metropolitan Transportation Authority must put 134 new buses into its Metro Rapid fleet under a legal order issued Thursday.

The agency's ability to pay for the vehicles by eliminating regular local buses on the routes the new Rapid lines serve is limited by the order.

The court action by Special Master Donald Bliss is a victory for the Bus Riders Union. Earlier this year, the transit advocacy group accused the MTA of flouting a consent decree requiring the agency to improve bus service for Los Angeles County residents.
…

Part of the agency's response to the decree was the Rapid Bus service, which features bright red vehicles that make fewer stops than ordinary buses.

"The MTA had implemented the Rapid Buses by reducing local services," said Manuel Criollo, a Bus Riders Union organizer.

Under Bliss' order, the MTA must pay for the new buses mostly with funds currently designated for services such as light rail and the subway that are unrelated to the agreement. The MTA is allowed to recoup only a third of the costs by reducing local service along the Rapid routes.

Steven Carnevale, the county attorney who represents the MTA, said it would cost about $20 million to operate the new buses — at a time when the agency is strapped for funds.

For more on this, go here (pdf).

Here’s (pdf) an interview I did with an L.A. bus rider on this issue.

The L.A. Times ran two pieces this past weekend discussing ideas long advocated by Reason to reduce congestion and improve mobility. In the first piece, Jonathan Richmond writes:

Like a beautifully wrapped toy train at Christmas, shiny new light-rail projects offer an excuse to cut ribbons. But this symbolic mode of transportation will lead Los Angeles nowhere.

L.A. is too dispersed for a rail system to take most people where they want to go, nor can rail's relatively low rider capacity influence urban development in significant and desirable ways. Meanwhile, rail's huge construction costs and operating subsidies divert resources from more suitable transit projects. Advocates of rail transit say it would siphon excess traffic from roads and freeways. But the proportion of travelers riding rail is invariably minuscule, and any increase in freeway speeds is fleeting, as new drivers fill the available space.

. . . .

But the only way to dramatically improve traffic flow in Los Angeles is to charge tolls. Ideally, as traffic congestion worsens during the peak hour, transportation agencies will charge higher tolls for road use, with lower fees at other times. This would encourage motorists either to travel at less-congested hours or take routes that cost less.

Reason's own Bob Poole has been THE vanguard of the tolling movement for years. Check out his latest study on reducing congestion in California through tolls and public/private partnerships, among others.

In the other piece, USC's James E. Moore (who has authored several Reason studies) writes:

If we are serious about improving transit and easing traffic in Los Angeles and nationwide, we should allow smart entrepreneurs and successful corporations to make money moving people from place to place.

As matters now stand, public transit agencies are franchises: They have an exclusive right to provide service in their communities. It is illegal for private providers to enter the market for transit services and compete against a franchise operator. In truth, though, transportation is just another service. A public franchise for bus or rail service is no more necessary or natural than a public franchise for selling shampoo.

Read both pieces, then check out Reason's Transportation Resource Center for our extensive body of work on these topics.

Congress of New Urbanism President John Norquist (the former Milwaukee mayor) takes Steven Greenhut to task for his scathing slam on new urbanists last week.

According to Norquist:

Smart growth has been government-initiated and policy-driven, while the New Urbanism has historically been developer-initiated and market-driven. When properly understood, the New Urbanism is not at all incompatible with Greenhut's libertarian concerns - in fact, it may indeed be a more pure expression of them.

The New Urbanists do not demand the elimination of suburbia - only that we be allowed to build compact, walkable and mixed-use communities.

Current zoning codes in most areas allow only the development of single-use, auto-dependent housing subdivisions, shopping centers and office parks. New Urbanists have found that there is a strong market demand for traditional towns, and that towns should not face regulatory obstacles greater than conventional suburbia.

The New Urbanists think that it is fiscally prudent that new development should, when it requires the extension of infrastructure and services, pay its own way. Currently, subsidies for extending urban services effectively rob taxpayers in existing communities that have long since paid for their infrastructure.

. . . .

Greenhut says he's for freedom and, if he is, he should join us in seeking to ease restrictions that block traditional urban development.

. . . .

Greenhut could join us in seeking to broaden current state and federal rules and practices that force developers to obtain variances to build smaller less expensive streets. He could also support restricting the government's power of eminent domain as I did recently as an individual, submitting an amicus brief supporting the rights of property owners in Kelo vs. New London. Or he could join the many members of the Congress for the New Urbanism who support school-choice vouchers because we believe the government monopoly of K-12 funding is bad for kids and the cities they live in.

If Norquist and the Congress for New Urbanism folks are serious about their commitment to opening the door for new urbanism in the marketplace while distancing themselves from the statist, regulatory hammer approach of the Smart Growthers, then we can indeed find a lot of common ground in our mutual pursuit towards removing regulatory obstacles to development innovation and allowing the housing market to respond to the wide range of consumer preferences.

With all due respect to Greenhut (whose opinions I often share), I'd have to agree that his piece was a bit off-the-mark. It's easy to lump in the new urbanists with the smart growth movement since they often agree on desired outcomes in terms of urban form, but to claim equivalence between the two movements is simplistic and counterproductive.

For more on the common ground between New Urbanists and libertarians, see this post.

A new research paper by Harvard's Edward L. Glaeser and Wharton's Joseph Gyourko (with Harvard's Raven Saks) provides yet more empirical evidence of the regulatory influence on rising housing prices:

Since 1950, housing prices have risen regularly by almost two percent per year. Between 1950 and 1970, this increase reflects rising housing quality and construction costs. Since 1970, this increase reflects the increasing difficulty of obtaining regulatory approval for building new homes. In this paper, we present a simple model of regulatory approval that suggests a number of explanations for this change including changing judicial tastes, decreasing ability to bribe regulators, rising incomes and greater tastes for amenities, and improvements in the ability of homeowners to organize and influence local decisions. Our preliminary evidence suggests that there was a significant increase in the ability of local residents to block new projects and a change of cities from urban growth machines to homeowners’ cooperatives.

More from the paper:

In much of the country, new housing units still are abundant and housing prices remain low. In contrast, new construction has plummeted and housing prices have soared in a small, but increasing number of places. These changes do not appear to be the result of a declining availability of land, but rather are the result of a changing regulatory regime that has made large-scale development increasingly difficult in expensive regions of the country.

For more on Glaeser, et al.'s extensive work in this area, see their research from Manhattan and this paper on zoning and housing affordability.

Who'd of thought it? Big news in the USA Today this morning about a study by Lance Freeman of Columbia looking at national data on gentrification. Turns out the poor are not displaced from gentrified neighborhoods any more than non-gentrified ones.

The poor like the improvements that come with gentrification too, and stay if they can. The poor also move a lot, so as some move out anyway, in gentrified areas they are often replaced by folks with more money. Not displaced.

Why do so many think there is a forcing out of the poor with gentrification? I think it is a salience effect. The study finds a lot of moving going on, and when new poor people move in to replace those who left, nothing changes, and only their friends notice. But when a poor family leaves and is replaced by college students or bohemian artists, that is a change and people notice.

Now, you could argue that a poor family would have moved in there if not for gentrification, so they are forced out in a sense. But at the same time, the vast majority of poor who stay in a neighborhood really benefit from the improvements.

Freeman's article itself, if you want to pay, here. It confirms results he found looking just at NYC and published in JAPA. Duke U's Jacob Vigdor found similar results as well.

Seriously, are you surprised? If you've flown in the last three years you know what I'm talking about.

The Government Accountability Office found statistically significant evidence that passenger screeners, who work at five airports under a pilot program, perform better than their federal counterparts at some 450 airports.

A second report by the homeland security department further noted that TSA screeners performed no better in covert tests after a stinging assessment last year on failures to detect prohibited items at airport security checkpoints.

Oh, don't forget to leave your lighters at home...feeling safer yet?

We've known for a couple of decades that optimizing street light systems can made a significant difference in congestion levels, and also reduce emissions and other side effects of congestion. But a new report from Institute of Transportation Engineers shows that of the nation's traffic agencies surveyed:

• 68% said they have either no documented management plan for their traffic signal operation, or their plan is to simply respond to problem intersections as they happen.

• 57% said they don't conduct routine reviews of traffic signals within three years.

A USA Today article on the report here.

The full report is supposed to be available here today.

Politicos love to show how much they love hybrids.

For example:

A San Francisco assemblyman is pushing a bill that aims to increase the production and sale of hybrid and other lower-emission vehicles while cutting the cost to consumers.

The bill, authored by Assemblyman Mark Leno, D-San Francisco, went before the Assembly Transportation Committee on Monday evening, but a vote was postponed until next week.

AB1223 would allow automakers to sell hybrid vehicles — a combination gas/electric car — through outlets other than dealerships, like Costco and eBay.

State law currently prohibits auto manufacturers from selling cars to anyone besides dealerships. The bill allows automakers and even existing retailers to obtain an Internet hybrid-vehicle sales license so they can sell the cars directly to consumers.

Supporters of the bill claim it creates competition, which would give manufacturers incentive to produce more hybrid cars.
…
But car dealers dispute the notion that the bill will shed the cost of hybrids or boost sales.

"Dealerships are selling as many hybrids as they can," said Marcella Rojas, spokeswoman for the California Motor Car Dealers Association, which represents 1,400 franchised new-car dealerships in the state. "It’s not a question of the dealerships’ unwillingness to sell hybrids; it’s the manufacturers’ inability to meet the rising production demand."

Whole story is here.

Here’s my take on hybrid-loving politicos.

American students aren’t too keen on math and science these days. Increasingly, companies are looking overseas to fill tech positions.

Congressman Vernon J. Ehlers has an idea:

Concerned by the lack of U.S. students who choose to pursue degrees and careers in math, science, engineering and technology, Congressman Vernon J. Ehlers Tuesday joined with fellow Congressman Frank Wolf in introducing legislation that would pay up to $10,000 in student-loan interest for students who agree to commit at least five years to teaching or working in related fields.

The Math and Science Incentive Act of 2005 was introduced in the U.S. House of Representatives Tuesday by Wolf, R-Va., with Ehlers, R-Mich., as the legislation’s primary co-sponsor. House Science Committee Chairman Sherwood Boehlert, R-N.Y., also co-sponsored the House legislation, while Sen. John Warner, R-Va., said he planned to introduce companion legislation in the U.S. Senate.

The bill would establish a new program through the U.S. Department of Education, under which the government would pay the interest on a student’s loans in exchange for five years in a job related to science, technology, engineering or math (STEM), including teaching in those fields at any level. The government would pay the interest on the loan starting at the beginning of the service requirement up to a maximum of $10,000 per person.

Read on.

Via Ed Frauenheim.

For more on the outsourcing-education connection, go here (pdf).

I recently mentioned offpeopleing, a new (slightly annoying) term used to describe something that’s happened since the beginning of civilization—new technology doing jobs that humans used to do.

Professors have reason to worry:

Jeremy Stribling said Thursday that he and two fellow MIT graduate students questioned the standards of some academic conferences, so they wrote a computer program to generate research papers complete with "context-free grammar," charts and diagrams.

The trio submitted two of the randomly assembled papers to the World Multi-Conference on Systemics, Cybernetics and Informatics (WMSCI), scheduled to be held July 10-13 in Orlando, Florida.

To their surprise, one of the papers -- "Rooter: A Methodology for the Typical Unification of Access Points and Redundancy" -- was accepted for presentation.

Research firm Gartner predicts:

1. Offshoring will increase faster than previously thought.
2. 30% of IT jobs will be offshored by 2015.
3. Offshoring will not cause net job loss.
4. Automation will claim six times as many jobs as offshoring.

Which of the above will make the headline?

Here’s another for the offshore outsourcing glossary: offpeopling

Consultant Richard Samson argues that the replacement of human workers by technology is a bigger deal than the much-publicized offshore trend. And he's turned to the increasingly popular Web log, or blog, medium to share his views.

Dubbed "Automatic Abundance," the blog is slated to provide alerts on topics such as tasks that are shifting to machines, income opportunities that are relatively safe from automation and emerging business ideas consistent with the trend.

"It's happening every day, right before our eyes, but few notice," Samson said in a statement Friday. "A child born today will find very few of today's jobs in the want ads when graduating from college. Most work tasks done now by people will be done by smart technology within 20 or 30 years."

And Gartner analyst Frances Karamouzis puts it like this:

[M]ore IT jobs in the West are at risk of disappearing because of automation and productivity gains than from offshore outsourcing. The effect of those factors on IT job displacement will, by 2015, be six times greater than the impact of offshoring ...

No, I didn’t call it “offpeopling,” but here’s my take on job “stealing” machines.

Starbucks, the coffee giant that so many love to disparage (though they're loathe to fess up to their guilty pleasure derived from imbibing the occasional Mocha Frappucchino), has been variously pegged as a category killer, global capitalist thug, and sprawl beneficiary over the last decade. What are the next condemnations to come, you might ask? Apparently we can add "congestion generator" and "air polluter" to the list:

The two men represent what one researcher says is evidence that the national craving for gourmet coffee may be adding mileage to the morning rush hour. And the numbers might be significant enough to complicate efforts to reduce traffic congestion, save fuel and reduce air pollution.

. . . .

What [travel behavior analyst Nancy] McGuckin and two colleagues found in comparing the 1995 and 2001 [National Household Travel] surveys, the two most recent ones, was that 1.6 million new Americans tacked personal errands onto their commutes. Studies have long shown that errands are an integral part of the daily routine, especially on the way home from work, when arrival times are more flexible. Women continue to outpace men in these trips, shouldering most of the early-evening family tasks after leaving the office, such as grocery shopping and picking up children.

But the researchers also discovered that for the first time most of the growth in errands occurred during the morning commute -- and far more men had joined in.

A closer look showed that many of those men had destinations more enjoyable than the dry cleaner. While younger men were sharing in more household-related errands such as ferrying children, older men were devoting many of their morning trips to coffee and such portable breakfast food as bagels.

The full article is here.

The City of Miami, FL is about to embark on a multi-year comprehensive planning process that will include a complete rewrite of its zoning code:

The goal is a simple ''form-based'' zoning code that clearly and concisely delineates where intensive development is appropriate and where it isn't, and outlines how buildings should be shaped to ensure attractive, people-friendly streets.

Miami would be the first major U.S. city to adopt such a code.

It will be written by the Miami firm of Andrés Duany and Elizabeth Plater-Zyberk, co-founders of the New Urbanist movement, which seeks to revive the principles of traditional town planning -- denser, compact development and walkable streets -- as an alternative to auto-dependent urban sprawl.

This attempt to replace an outdated, complex, and convoluted zoning code with something more simple and streamlined can be seen as a step in the right direction, to the extent that it can expedite and add greater certainty to the development process and remove obstacles to development innovation and neighborhood evolution.

However, the benefits from a form-based planning approach will be inversely proportional to the extent to which land use is micromanaged and specific outcomes (particularly design elements) are dictated. See here for more on this topic.

For those of us that advocate market-oriented planning approaches, it is important to make a distinction between "new urbanism" and the control-minded "smart growth" movement that it typically gets confused with. Free marketers generally have no objection to new urbanist design principles per say; the objection comes when NU design is promulgated through highly prescriptive and coercive policy mechanisms. For more on this, check out this Practice of New Urbanism listserve discussion on the relationship between Libertarian and New Urbanist ideals; participants include Reason's own Sam Staley and NU guru Andres Duany, who will be leading Miami's zoning code rewrite.

Also check out this piece by Reason's Chris Fiscelli, which lays the groundwork for a market-oriented new urbanism.

(hat tip: Planetizen.com)

Florida will be the first state in the nation to fully privatize its child welfare programs, after agreeing with a company that will take over those responsibilities in the two remaining counties that a government agency oversees.

The $75 million contract was signed Friday with Our Kids of Miami-Dade and Monroe counties, which will handle all foster care, adoption, and child welfare licensing operations.

Read on.

Here’s Time’s list of the best and worst big city mayors.

Staffers apparently put their heads together with a bunch of “urban experts” to come up with the list. (Chicago's Daley is on top).

Here’s their approach:

It is tempting to judge our mayors for the little things that make city life livable, the depth of the potholes, the smell of the streets, whether or not the traffic lights are in synch. But the best mayors have also been those who act on a grand scale, building bridges, saving schools, finding the funds that cities forever lack.

Funds that cities forever lack? Hmmm. Are cities forever lacking funds or forever mismanaging them?

And acting on a "grand scale" makes me nervous. The mag points to Denver’s John Hickenlooper (who should win an award for his name alone) as someone who did just that:

And in his biggest score, he won approval for a $4.7 billion mass-transit plan, which involved persuading voters, along with about a dozen mayors in seven regional counties, to back a sales-tax hike.

What if he had proposed a less grand plan that did a better job of improving transportation? Would Time magazine still ooh and ahh over him?

Anyhow, let’s just get to what people really care about.

Here are Time’s worst mayors: Dick Murphy, Kwame Kilpatrick, and John Street.

City Journal's Steven Malanga pulls no punches in his scathing critique of the federal Community Development Block Grants (CDBG) program, the venerable multi-billion dollar urban slush fund:

In its new budget, the Bush administration is proposing to eliminate one of the last and least effective vestiges of the War on Poverty: aid to cities doled out in the form of community-development block grants. The president has proposed slashing funding for this $5 billion-a-year boondoggle, which allows local officials virtually a free hand in spending federal money in their cities. Bush would fold what remains of the block-grant program into other, more tightly focused and controlled grant schemes.

The end cannot come soon enough. Over the last 30 years, the block-grant program has expended some $100 billion in thousands of communities, with little to show for the effort. Local officials squandered the billions by financing unworkable projects that often went bust, investing in new businesses that couldn’t survive in depressed neighborhoods, and funding social programs with little idea of how they might actually strengthen their communities. A paradigmatic example of government ineffectiveness, this tempting pot of money gradually evolved into nothing more than a funder of local patronage and congressional pork spending. By killing the program, the Bush administration will do more than just save billions of taxpayer dollars. It will send a message that cities must cast off the 1960s dependency mentality that viewed federally subsidized programs as the only road to inner-city community revival and economic development—a notion that years of failed efforts should now put to rest.

Read the whole thing.

UPDATE: Not surprisingly, the beneficiaries of CDBG largess won't let it go down without a fight.

Or 107 days.

That’s how long we have to work to pay our taxes.

Tax Freedom Day is April 17:

“Despite all the tax cuts that the federal government has passed recently, Americans will still spend more on taxes than they spend on food, clothing and medical care combined,” said Hodge.

In 2005, Americans will work 70 days to afford their federal taxes and 37 more days to afford state and local taxes. Other categories of spending measured in the report include housing and household operation (65 days), health and medical care (52 days), food (31 days), transportation (31 days), recreation (22 days), clothing and accessories (13 days), saving (2 days) and all other (42 days).

Taxes got you down? Not sure what to do? Need a drink?

Visit The Winecommonsewer.

According to this recent Tax Foundation survey, Americans don’t like doing their income taxes. In fact, 70 percent either dislike or hate it.

Interestingly, some people (11 percent) like it and a tiny sliver of taxpayers (1 percent) actually love doing taxes.

Some other interesting tidbits: 77 percent think the tax system needs major changes, 55 percent think taxes are too high, and only 25 percent rate the value received from the taxes paid to the feds as excellent or pretty good.

And it's a far cry from dumping tea into the ocean, but a good portion of us change our behavior to avoid high taxes:

The survey asked respondents what choices they’d made in the last year that were made in order to pay less tax. 28 percent said they had bought something over the Internet rather than from a local store, 25 percent said they gave more to charity, and 14 percent said they crossed a border to shop in a neighboring area with lower taxes—a vivid illustration of what economists call “tax competition.” Another 8 percent said they had worked fewer hours or overtime to avoid higher tax bills. Younger respondents and those with higher incomes and educational attainment were more likely to cross borders or shop over the Internet to avoid taxes.

The U.S. Department of Education has completed the first-year evaluation of participation in the Washington D.C. school voucher program.

Last year, more than 1300 public school students received scholarships to attend a private school of their choice from the DC Opportunity Scholarship program. There were 2,700 applicants to the program, 85 percent of which were from public schools.

The DC Opportunity Scholarship is America's first federally funded scholarship program. The Washington Scholarship Fund anticipates up to 1,000 new scholarship recipients in the 2005-2006 school year.

Some of the findings from the 108 page report, which has a wealth of interesting data points, include:

·Fifty-eight schools, or more than half of the private schools in DC, are participating.

·Twenty-eight percent of the schools are non-faith based, compared to 4 percent in Cleveland's school choice program.

·433 scholarship recipients would otherwise have attended schools "in need of improvement" under No Child Left Behind.

·Applicants to the program are substantially more economically disadvantaged than DC public school students overall.

·When asked why they chose a new school, "academic quality" was the most commonly cited.

The applicants were also more likely to be African American than the general population of the Washington D.C. public schools.

Thanks to Education Excellence Utah for the tip.

A new study by Harvard researchers Martin R. West and Paul E. Peterson found that Florida's fourth and fifth grade students make modest progress in reading and math if their school is at risk of becoming a part of the state's voucher program. However, Florida schools at risk of being subject to the public-school choice provision of the federal No Child Left Behind Act showed no gains.

New Mexico has always been a bit spacey.

But now Governor Bill Richardson is going in a slightly different direction. He’s getting into the private space flight groove by bringing a big event to his state:

“Countdown to the X Prize Cup” will include X Prize Cup team demonstrations, an exhibition, the largest-ever space education day and space-related community events statewide, Richardson said.

X Prize Cup week throughout the state will also be in October, he said.

“New Mexico continues to take the lead in advancing the next generation of space vehicles and space travelers,” Richardson said. “This year’s Countdown to X Prize Cup is the important first step in creating an event that will not only assist in opening the space frontier to all private citizens, but will bring new companies, provide new jobs, increase tourism statewide, and help brand New Mexico as the place to be to experience the future.”
…
The X Prize was the second biggest story of 2004 nationally, said Rorie Hanrahan, communications director for the New Mexico Economic Development Department during a New Mexico Space Alliance meeting in Alamogordo April 2.

“The good thing is there is lots of excitement,” Hanrahan said. “It’s a boost to tourism. We are on the cutting edge. This is the next generation in space commercialization.”

Here’s my take on growing jobs in space.

And here’s my recent interview with X Prize winner, Burt Rutan, who reminds us that private space travel isn't first about creating jobs, it's about fun.

It’s The Nation vs. The Economist.

Check out the debate here.

Related to Len's previous post is this article, also from JAPA, which came out a few years ago.

It too documents the gap between promises made and promises delivered in transportation projects. In this case the focus is cost forecasting, and, once again, that familiar pattern holds:

All transportation projects were prone to cost escalation, but rail’s escalations were most dramatic. For example, in North America, the average cost escalation for road projects was 8 percent, for rail projects it was 41 percent.

Why does this keep happening?

According to the authors:

Cost underestimation cannot be explained by error and seems to be best explained by strategic misrepresentation, i.e., lying.

More on the promises made, promises delivered gap.

And here’s Miami’s version of “strategic misrepresentation.”

A new article in the Journal of the American Planning Association offers a damning indictment of planners' use of forecasts for transportation infrastructure projects.

Here's the abstract:

This article presents results from the first statistically significant study of traffic forecasts in transportation infrastructure projects. The sample used is the largest of its kind, covering 210 projects in 14 nations worth U.S.$59 billion. The study shows with very high statistical significance that forecasters generally do a poor job of estimating the demand for transportation infrastructure projects. For 9 out of 10 rail projects, passenger forecasts are overestimated; the average overestimation is 106%. For half of all road projects, the difference between actual and forecasted traffic is more than ±20%. The result is substantial financial risks, which are typically ignored or downplayed by planners and decision makers to the detriment of social and economic welfare. Our data also show that forecasts have not become more accurate over the 30-year period studied, despite claims to the contrary by forecasters. The causes of inaccuracy in forecasts are different for rail and road projects, with political causes playing a larger role for rail than for road. The cure is transparency, accountability, and new forecasting methods. The challenge is to change the governance structures for forecasting and project development. Our article shows how planners may help achieve this.

This article is a breath of fresh air, and it validates the concerns of those of us who have been warning for years about the extreme mismatch between forecasted and actual demand, particularly for new light rail projects. We repeatedly hear rosy ridership forecasts used as a primary selling point for new light rail systems when real world experience indicates that new systems almost never get close to meeting their promoters' lofty expectations.

Here's more from the article:

We conclude that the traffic estimates used in decision making for rail infrastructure development are highly, systematically, and significantly misleading (inflated). The result is large benefit shortfalls. For road projects the problem of misleading forecasts is less severe and less one sided than for rail. But even for roads, for half the projects the difference between actual and forecasted traffic is more than ±20%. On this background, planners and decision makers are well advised to take with a grain of salt any traffic forecast that does not explicitly take into account the uncertainty of predicting future traffic. For rail passenger forecasts, a grain of salt may not be enough. The data demonstrate to planners that risk assessment and management regarding travel demand must be an integral part of planning for both rail and road projects. This is especially the case because prediction errors in the early stages of forecasting appear to amplify, rather than decrease, in later stages.

. . . .

The striking difference in forecasting inaccuracy between rail and road projects documented above may possibly be explained by the different procedures that apply to how each type of project is funded. Competition for funds is typically more pronounced for rail than for road, which creates an incentive for rail promoters to present their project in as favorable a light as possible—that is, with overestimated benefits and underestimated costs...We speculate further that rail patronage will be overestimated and road traffic underestimated in instances where there is a strong political or ideological desire to see passengers shifted from road to rail, for instance for reasons of congestion or protection of the environment. Forecasts here become part of the political rhetoric aimed at showing voters that something is being done—or will be done—about the problems at hand. In such cases it may be difficult for forecasters and planners to argue for more realistic forecasts, because politicians may use forecasts to show political intent, not the most likely outcome.

. . . .

The policy implications of our findings are clear. First, the findings show that a major planning and policy problem—namely misinformation—exists for this highly expensive field of public policy. Second, the size and perseverance over time of the problem of misinformation indicate that it will not go away by merely pointing out its existence and appealing to the good will of project promoters and planners to make more accurate forecasts. The problem of misinformation is an issue of power and profit and must be dealt with as such, using the mechanisms of transparency and accountability we commonly use in liberal democracies to mitigate rent-seeking behavior and the misuse of power. To the extent that planners partake in rent-seeking behavior and misuse of power, this may be seen as a violation of their code of ethics—that is, malpractice. Such malpractice should be taken seriously by the responsible institutions. Failing to do so amounts to not taking the profession of planning seriously.

Ouch. The whole article is definitely worth a read, as it also outlines some remedies that would inject some sanity and accountability into the decisionmaking process. Suggested remedies include:

• Transparency and public control (e.g., federal "agnosticism" regarding transport mode, as it relates to funding; independent peer review of forecasts; and professional/criminal penalties levied for professional malpractice);
• Competition and market control (e.g., reducing risk by making project approval contingent on the willingness of private financiers to contribute at least one third of the total capital costs; avoiding full public financing; requiring forecasters to share financial responsibility for covering benefit shortfalls and cost overruns resulting from forecasting bias and misrepresentation); and
• Reference class forecasting (comparing proposed projects with a group of other similar projects)

Kudos to the researchers for bringing this dirty little (not-so-hidden) secret to light, and also to JAPA for publishing it. I doubt that most of the APA rank-and-file will welcome this research with open arms, given that they've invested themselves so heavily in light rail advocacy. But often in life the painful truths are the ones that most desperately need to be confronted.

From our friends at The Commons comes an interesting debate. PERC's Jonathan Adler started a discussion on the Free Market Environmentalism list-serve a few months ago that asked an important question: if we were to assume that anthropogenic emissions are indeed contributing to global warming, and if we accept that climate change would affect different regions in different ways (some beneficial, some negative), then, from a free market environmentalism (FME) perspective, what measures are justified to mitigate the negative effects?

If property rights lie at the heart of free market environmentalism, than FME advocates should think seriously about the normative implications of human-enhanced climate changes that could disproportionately harm those portions of the world that have (at least thus far) contributed least to the problem. Even if a modest warming were, on balance, beneficial, the impacts would not be uniform. It may well be, as some argue, that increases in crop productivity and reduced energy costs in temperate regions will be greater than the costs to tropical regions, but this does not address the property rights concern absent some system whereby industrialized nations would compensate or indemnify less-developed nations. No such system exists -- nor is it likely that existing international institutions could implement such a system -- but that does not mean it would not be the first-best approach to climate change from an FME perspective.

Check out the debate here, featuring heavy hitters such as Adler, Steven Hayward, Jane Shaw, and Julian Morris.

Any student of statistical analysis quickly discovers that the presentation of research results can be very a very subjective enterprise. Junkscience.com presents an excellent example today.

A Honolulu Advertiser article on Sunday contained the following graph showing CO2 concentration at the Mauna Loa Observatory over the last several decades:

The trend line reflects the "CO2 rises sharply" theme of the article. You can just imagine someone reading this article with their morning coffee and thinking, "Wow, this sounds pretty scary, and there's no end in sight. I'm officially alarmed."

But Junkscience's Steven Milloy helpfully puts this chart in perspective by simply adding the zero point to the y-axis and reducing the time interval to 2 years down from 10. The result presents the data in a much different light.

Doesn't seem like that scary of a trend line anymore, huh?

Of course this is nothing unusual for those of us with an understanding of how the statistics game works, but I think it's always useful to point this stuff out from time to time. I remember my "Aha!" moment in grad school when I realized how powerful the shaping and presentation of data really is, and my skepticism level rose tremendously after that, particularly as it relates to the media.

People routinely make judgments and decisions on issues based on charts and graphs all the time. We see them in the news, we see them on financial statements, we see them everywhere. So much so that people are often inclined to trust what they're presented with, rather than approaching new information with a healthy skepticism.

Not that one should doubt every graph they see, just that they should look deeper to see the underlying structure of the data and the logical implications that flow from that, rather than keeping their focus fixed on the surface.

Max Borders defends Wal-Mart against the "Mom-and-Pop store killer" charge (yawn...) today on Tech Central Station:

The question becomes: do we really need small, inefficient and expensive shops to supply us with our shaving cream and plastic laundry baskets? How vibrant is a downtown where such items are being hocked? Since Wal-Mart consolidates these kinds of goods into "big boxes," we [...] can get them for dirt cheap all in one place. Charming downtown areas can then evolve into gorgeous window-shopping and restaurant-hopping districts for both locals and tourists. In the meantime, everyone knows where to go to get the bare necessities quickly and at a lower cost.

The Wal-Mart effect is happening all over the country, allowing many municipalities to renew their town centers. In fact, residents able to reduce their day-to-day shopping budgets at Wal-Mart have more money left to spend on the things that make life great and towns charming -- whether it's hand-blown glass or delicious roadside produce grown by local farmers. (Take it from me, no big box can do Silver Queen corn like North Carolina farmers on the side of the road.)

. . . .

The Wal-Mart effect may be destructive from time to time, but it's also profoundly creative. Wal-Mart has inadvertently hastened the pace of specialization and municipal renewal. As consumers, of course, we only benefit from the presence of Wal-Mart and other big box retailers. People in developing countries and at home are being lifted from squalor because Wal-Mart seeks out the great, low-cost products they offer. Wal-Mart is also giving a lot of people opportunities to earn a living -- including retirees who want to stay active as well as immigrants prepared to accept the wages Wal-Mart offers.

Check out the full article here.

The Christian Science Monitor weighs in on the House bill introduced by Rep. Richard Baker that would bring stronger regulatory oversight to mortgage behemoths Fannie Mae and Freddie Mac:

Fannie and Freddie have expanded beyond their original government charter of providing affordable housing to low-income Americans - so much so, they now control half of the $7.6 trillion US mortgage market. Their portfolios grew some tenfold between 1990 and 2003. Critics contend they've used those portfolios simply to generate profits for their stockholders, not to further their charter.

If they failed, taxpayers could be forced to pay off the mortgage duo's debts because of their quasi-governmental status, which includes a nominal line of credit with the Treasury Department that allows them to undercut the banks by borrowing at below-market rates.

Fan and Fred's intense lobbying, together with a currently weak regulator, has let them balloon in size for years. But both were recently red-faced by nothing less than multibillion-dollar scandals that used accounting tricks to smooth earnings.

For Fannie, that meant being forced to restate an estimated $11 billion in earnings going back to 2001. In 2003, Freddie was forced to reduce its earnings by $5 billion - proof positive a new regulator with enhanced oversight powers is in order.

Earlier this year, the CSM called for privatizing Fannie and Freddie in light of evidence that -- contrary to their original mission -- they aren't buying as many mortgages of low-income borrowers as private banks are.

It's not clear whether this is a retreat from CSM's earlier position, or if it's just a case of hitching on to what they perceive as a more expedient reform option.

Here are some other related articles on the proposed bill:

• Investor's Business Daily
• SmartPros
• KPMG Banking Insider
• Interest.com

Another interesting piece from Expansion Management magazine...they've released the results of their annual “America’s 50 Hottest Cities” survey, and Nashville, TN comes out on top:

The perception of Nashville began to change when Nashville-Davidson County, along with nine other counties in the region, pooled their resources together to create a regional economic development initiative, Partnership 2000.

Since the partnership (since renamed Partnership 2010) began, the region has seen a radical transformation in economic development. That transformation has resulted in more than 350 companies relocating their corporate headquarters to Nashville; numerous high-skill and high-wage manufacturing projects, including several automotive plants, have relocated to the metro; the population of the region has risen from No. 53 in the country to No. 38; and income growth has risen from No. 138 to No. 49.

. . . .

At a time when many cities are struggling to create new jobs, the Nashville metro added more than 11,300 jobs to its work force in the fiscal year ending in July 2003. Of cities of similar size, only Orlando, Fla., (20,364) added more jobs, according to the Bureau of Labor Statistics.

Many of the new jobs being created in Nashville come the relocation of corporate headquarters. The metro has put headquarters projects, and their high-skill, high-paying jobs, at the tope of its economic development priorities.

Read the whole article. There's an interesting bit on the significance of the Nashville metro area's 19 colleges and universities on the relocation decision process. Business leaders understandably savor the prospect of access to a large pool of highly educated job candidates.

And check out the full top-50 list here. The rankings are developed based on interviews with dozens of site location consultants to gauge which cities their clients find most attractive for business expansion or relocation purposes. The consultants consider such factors as the business climate, political climate, work force quality, operating costs, and incentive programs.

More from the survey:

Metros in the southern and western United States dominate this year’s “Hot Cities.” Of the top 25 cities, only two are not from those regions —Indianapolis (tied for No. 4) and Pittsburgh (No. 23).

Texas has five “Hot Cities” metros, while South Carolina had four cities. Five states — Alabama, Florida, New York, Virginia and Tennessee — each had three cities.

UPDATE: Also, if you're interested in logistics, EM also has released their list of the 100 most logistics friendly metros. Logistics deal with those significant factors influencing business location and operation, such as road network; work force; labor costs; infrastructure and spending; road density/congestion; and air, rail, and water access.

Anyone frustrated with the nonsense promulgated by tax incentive and Smart Growth proponents on economic development will find the most recent commentary by Bill King in Expansion Management magazine refreshing.

Mr. King takes on a number of "myths" about urban and suburban development head on and provides some important practical insights into the nature of business location and development.

*Suburban development, he says, occurs because suburbs often provide a more attractive and cost-effective busienss climate. While declining central city tax bases are a problems, we also need to accept the fact that the population growth in our metros is taking place in the outer suburbs, not in the city center, so it’s only natural that that’s where the job growth is.

* Companies moving to new locations within a metropolitan area is a good thing and represent important attempts by firms to remain competitive. If a company decides to move from one part of the metro area to another location within the same metro area, that should be looked upon as a good thing. Why? Because the real alternative is for that company to leave the metro area entirely for a location where it operate more profitably.

*Tax incentives are the primary reason businesses relocate--business costs and competitiveness are. Companies do not move because of incentives; they move to improve the business climate in which they operate.... As for the high growth areas in the suburbs, most of them don’t even have to offer incentives — other than those incentives available to any company in the state that qualifies — in order to convince a company to locate there.

Companies that choose to leave the downtown area for the suburbs do so for any number of reasons: it is almost always cheaper to operate there; they have access to a more highly-educated work force; their tax rate will also probably be lower. Whatever the reason(s), the one thing they have in common is a healthier bottom line.

I could go on, but you get the idea. Take a look at this gem of an article instead.

...according to this paper by UC Berkeley law professor Peter S. Menell. Here's the abstract:

In the late 1980s and early 1990s, it was widely reported that the United States faced a solid waste crisis. Existing landfills were reaching capacity or being shut down because of more stringent regulations while waste volumes were continuing to rise. At the time, several market-oriented policy analysts advocated the adoption of variable rate charges for mixed refuse in conjunction with curbside pick-up of recyclables (without charge) as a means of reducing waste volumes and diverting recyclable material to more valuable uses. During the course of the past decade, such policies have been adopted widely throughout the United States - approximately 20 percent of the U.S. population now face variable rate charges for mixed refuse collection. Even more have curbside collection of recyclable materials. This article collects and reviews empirical studies evaluating the effects of variable rate pricing. It finds that these policies have been quite effective as a means of boosting diversion rates beyond the levels that can be achieved through curbside collection of recyclables alone. The overall cost-benefit analysis of such programs is modestly favorable. Since many states and communities have committed to achieving specified waste diversion targets, variable rate policies have been a cost effective policy tool. The experience with variable rate policies represents a promising example of non-coercive, information-oriented government intervention. With a relatively small budget and no authority to impose household solid waste policy on local governments, EPA has been remarkably successful at developing and diffusing effective solid waste management policies. The economic theory underlying variable rate pricing has proven, after some tinkering at the implementation stage, to be quite workable in practice. In fact, the practical realities of implementing charges have shown that theoretical perfection in terms of getting the prices right is less important in the grand scheme than keeping the transaction costs manageable. Looking forward, variable rate pricing can be expected to become even more economically advantageous as recycling markets continue to mature, landfill tipping fees rise, and improved technologies for curbside collection, monitoring, billing, and measuring waste develop.

Economics buffs will love this offering from Roy Cordato of the Ludwig von Mises Institute: An Austrian Theory of Environmental Economics.

Austrian economics lacks a formalized, self-conscious theory of environmental economics. But in fact all of the major elements of such a theory already exist and in that sense what is needed is to piece together the relevant aspects of Austrian economics in order to draw out and focus a theory that is already there.

The purpose of this paper is to do just that. In developing an Austrian theory of environmental economics, very little new theoretical ground will be plowed. But by bringing together Austrian concepts of costs and the praxeological foundations of economics we discover a unique perspective on pollution and the role of property rights in solving environmental problems. Furthermore by placing environmental problems withinthe context of personal and interpersonal plan formulation, we discover that they are not about the environment per se but about the resolution of human conflict.

Full article here. And check out the related discussion in the Mises Economics Blog.

(hat tip: The Commons)

Local politicians have to be careful if they are going to implement Smart Growth. Wisconsin adopted a Smart Growth law that required cities to adopt comprehensive planning several years ago.

Near Stevens Point, local residents of Sharon Township weren't so happy. In the highest turnout in recent elections, town board members voting for the Smart Growth plan were ousted.

"One connection most of TUesday's winners share is their efforts in getting the townshp ou of Smart Growtin in 2003 and challengin the outgoing town board members in a move to strip some of them of their powers," Andrew Dowd of the Stevens Point Journal writes.

Daniel Sekerka, a landowner of 300 acres elected to the town board, was one of the anti-Smart Growth residents elected to the board. The Journal reports that he ran "because he didn't feel the town government had been working with landowners in their municipal planning efforts."

Notably, the town did not strip planning authority from from the town. Apparently, they are more concerned about who is planning rather than whether they are planning.

According to the Union-Tribune, Gov. Schwarzenegger's administration is pushing for an overhaul of the California Environmental Quality Act to remove obstacles to more affordable housing statewide. The goal is to increase the housing supply by streamlining the development review and approval process and giving developers more certainty as they navigate through it. According to the article:

The Schwarzenegger administration's main thrusts include trimming some environmental reviews that slow housing projects and mandating that local agencies approve enough homes to meet demand.

"The governor's goal is to to have more (development) in the pipeline," said Assemblyman Guy Houston, R-San Ramon. "Right now, it takes an extraordinary amount of time to get that done."

. . . .

One draft bill would limit environmental review of projects that are consistent with approved regional development plans. Environmentalists are suspicious, saying such plans aren't detailed enough to anticipate all the environmental impacts of a specific project.

San Diego developer Reese Jarrett welcomed efforts to reduce redundancies.

"That could save a lot of time, and obviously time is money," Jarrett said.

CEQA is designed to identify the environmental effects of a wide range of developments – everything from water pollution to loss of animal habitat – and find ways to limit such problems. Over time, it has become the de facto land-use planning tool for development in much of the state.

State environmental reviews can take more than a year for tract housing developments and cost tens of thousands of dollars per unit. The process varies widely from project to project.

CEQA reviews also commonly end up being the focus of time-consuming lawsuits.

Houston said that while environmental analysis is important, "you can't keep going back and forth to slow down or stop a project."

"Anybody who builds deserves a 'yes' or 'no' in a timely manner," he said.

My favorite part of this article:

Molloy, of the Building Industry Association, said San Diego County residents wielding CEQA have pushed development to Riverside and Imperial counties. The result is an increasing number of people who buy relatively less-expensive homes in southwestern Riverside County, then commute to work in San Diego, he said.

"The irony is that all of the emphasis on the environmental impacts on the local level has led to ... one long, massive impact on the I-15 corridor's traffic and pollution," Molloy said.

It amazes me that the environmental community largely fails to acknowledge this unintended, but utterly counterproductive, consequence of their often rigid and dogmatic stand on growth issues.

Yesterday's Christian Science Monitor has an interesting piece on the growing demand for private sector ecological restoration services. Types of services include environmental restoration (wetlands, habitat, etc.), sewer system upgrades, and brownfield redevelopment. From the article:

Just a niche market in the 1980s, ecosystem restoration has surged in the past five years, with announced multi-year projects exceeding $70 billion worldwide and annual revenues in the US of more than $1 billion a year, industry sources say.

"From an ecological restoration standpoint, there's something on the order of tens of billions of dollars in the pipeline just in this country," says Bowers, who also is chairman of the Society for Ecological Restoration International in Tucson, Ariz. The group has 2,500 members and 14 international chapters - most of those added in just the past decade.

. . . .

Funding for such obvious restoration projects far exceeds global funding for basic conservation. Because of that, future restoration will one day be a mammoth industry vital to the planet's well-being, some say. Already ecological restoration is a major part of a "huge, almost entirely hidden" economic sector in which more than $1 trillion is being poured into restoration, much of which benefits the environment, says Storm Cunningham, an ecorestoration advocate in Alexandria, Va.

Why hidden? Because accounting for new construction is detailed and well-defined, while infrastructure restoration that helps ecosystems, such as upgraded sewer systems, are rarely accounted as ecosystem restoration. So little data are available, he says.

"The majority of economic activity is restorative but nobody acknowledges it because our systems are still in old-frontier mode," Mr. Cunningham says. "We've come to assume that economic growth is synonymous with conquering new lands and extracting virgin resources."

Read the whole thing.

(hat tip: planetizen)

According to the WaPo, the three-year old Transportation Security Administration is headed for a major shakeup:

The Transportation Security Administration, once the flagship agency in the nation's $20 billion effort to protect air travelers, is now targeted for sharp cuts in its high-profile mission.

. . . .

Under provisions of President Bush's 2006 budget proposal favored by Congress, the TSA will lose its signature programs in the reorganization of Homeland Security. The agency will probably become just a manager of airport security screeners -- a responsibility that itself could diminish as private screening companies increasingly seek a comeback at U.S. airports. The agency's very existence, in fact, remains an open question, given that the legislation creating the Department of Homeland Security contains a clause permitting the elimination of the TSA as a "distinct entity" after November 2004.

Read the full article here. It adds the following bit of news on the public/private screeners front:

Last week, momentum accelerated in the push to replace federal screeners with private contractors at the nation's airports. FirstLine Transportation Security, a Cleveland-area private security firm, became the first company to win approval for liability coverage under the SAFETY Act, which means that if the firm takes over checkpoints, claims will be capped in the event of a terrorist attack. The move clears a major hurdle in the return of private screening companies. The law creating the TSA allowed for federal screeners to be replaced by private companies after two years.

Be sure to check out Reason's Aviation Security Resource Center for more on airport security and the debate over private screeners. Also, Bob Poole's latest aviation security newsletter has more on the Congressional discussions about the future role of TSA, along with several other news items of note.

(hat tip: Instapundit)

Many issues fall within the category: “Big Headline, Little Story.”

Take offshore outsourcing. There are all sorts of scary news stories that suggest it’s a huge problem, even though it actually affects only a tiny slice of the labor force.

Then there are other issues that really are huge problems, even though most in the media look at them and yawn.

Here’s our George Passantino, writing in the OC Register, on one of those:

Just five years ago, California paid $160 million to support the retirement costs of state workers. This year, the state will kick in more than $2.6 billion, more than a 1,500 percent increase in five years. And by 2009, the taxpayer bill for state retirement costs is projected to hit $3.5 billion per year.

This is why it’s a really big problem:

When government pension promises are made, they are carved in stone. Unlike salaries which can be frozen or otherwise adjusted to cope with budget shortfalls, pension benefits are forever. That's because courts have repeatedly ruled that once enhanced benefits are bestowed upon state employees, they can never be reduced.

Equally troubling, the state's traditional pension plans are vulnerable to election-year pandering and campaign promises that lead to irresponsible benefit increases that taxpayers are forced to finance without any say in the decisions.

And here’s the solution:

Shifting new state workers to a 401(k) plan would stabilize the state's skyrocketing pension costs, while still allowing state workers to retire with dignity. Schwarzenegger's proposal would put newly hired state workers in 401(k)-style accounts that the employee contributes to, with the state also contributing a portion. Upon retirement, the size of each employee's pension would depend on the contributions made and the personalized investment strategy the employee used - unlike today's guaranteed pensions that can pay many state workers 80 percent to 90 percent of their annual salaries for life.

Read the whole article here.

Silicon Valley is still a great place to start a company in any of the information technology, biotechnology areas. Everybody is available locally. In Silicon Valley the biggest disadvantage is that it's expensive, especially the houses. It's hard to move young people in. Even with the recessions we've had, the price of housing has continued to increase. I don't understand how it can continue to go up.

The area's uniqueness is not as great as it was in the beginning. Now there's a lot of other places competing technologically. As far as my view of U.S. competitiveness, I think it's a real challenge. Our educational system is not what it ought to be, particularly when you are talking about K through 12. The universities are still great.

We (face) very formidable competition in the world--I think the impact of China in particular is just beginning to be felt; 1.1 or 1.2 billion people are going to have a dramatic impact. In the next 20 years, we're going to see how that plays out, I'm expecting the U.S. will still be a successful player, but I don't think it'll enjoy the position it had in, say, the past 20 years. We'll have to work hard at it. China is training 10 times as many engineers. Increasingly, they are a big consumer of the world's resources. Their technology is catching up very rapidly. It's a very entrepreneurial society.

That’s Gordon Moore, famous for Moore’s Law and for being one of Silicon Valley’s founding fathers.

He’s the latest tech big shot to worry publicly about our faltering school system. (Here’s Bill Gates’ take.)

Poor education is a key component of outforcing, as is falling housing affordability. In fact, in a recent report on offshoring, the consulting firm A.T. Kearney had this to say about the Bay Area:

The region has the highest cost of living in the nation, well above the other cities and regions it competes with and nearly 50% above the national average. High housing costs driven by inadequate supply, are the main culprit, raising the amount that companies must pay to attract and retain their workforce.

The report finds that outforcing is likely a much bigger deal than offshore outsourcing.

The second list targets federal government waste.

One of the sections deals with redundant programs.

Turns out there are 12 food safety agencies, 40 separate employment and training programs, 50 homeless assistance programs, 130 programs for at-risk youth, and 342 economic development programs.

Why all the waste?

One reason is that [lawmakers] see [reducing waste] as a thankless job that would go unnoticed back home. With Congress in session just 80 days annually, reducing waste would take precious time away from most lawmakers’ higher priorities of increasing spending on popular programs and bringing pork-barrel projects home.

A second reason is that some of the most wasteful programs are also the most popular (e.g., Medicare), and lawmakers fear that opponents would portray them as “attacking” popular programs. Consequently, waste and inefficiencies continue to build up, costing taxpayers more while providing beneficiaries with less.

Everyone likes lists, and Julian Sanchez (here and here) points to two good ones.

The first lists the world’s worst human rights violators:

The report, "The Worst of the Worst: The World's Most Repressive Societies 2005," includes detailed summations of the dire human rights situations in Belarus, Burma (Myanmar), China, Cuba, Equatorial Guinea, Eritrea, Haiti, Laos, Libya, North Korea, Saudi Arabia, Somalia, Sudan, Syria, Turkmenistan, Uzbekistan, Vietnam, and Zimbabwe. Chechnya, Tibet, and Western Sahara are included as territories under Russian, Chinese, and Moroccan jurisdictions respectively.

And yet:

[S]ix of the eighteen most repressive governments--those of China, Cuba, Eritrea, Saudi Arabia, Sudan, and Zimbabwe--are members of the Commission on Human Rights (CHR), [the UN body, charged with monitoring and condemning human rights violations.]

Full report available here.

How did that bumper sticker go again?

“Buy American” slogans used to suggest that jobless Americans with imported cars should eat those cars.

Now this:

The United States will bring trade cases against China to determine whether quotas should be re-imposed to protect textile and clothing manufacturers against a surge in imports, the Bush administration said Monday.

The decision represents a major victory for U.S. manufacturers, who had been pressing the administration to bring these cases on its own rather than waiting for the industry to petition the government for relief, a process that could take a longer period of time …

The Committee for the Implementation of Textile Agreements, an interagency panel that includes officials from Commerce and other government agencies, voted Monday to launch investigations in three broad clothing categories: cotton knit shirts and blouses; cotton trousers; and underwear made of cotton and man-made fibers.

Textile and apparel manufacturers in the United States have been pressing for help from the government, contending that a flood of imported products had forced 14 plants in five states to close since the beginning of the year and resulted in the loss of thousands of American jobs.

By the way, the Institute for International Economics estimates that protectionist policies cost each American household over $6,000 per year.

And now foreign automakers employ thousands of Americans (Toyota alone says it employs over 31,000). Perhaps we should hold off on eating our imported cars and underpants.

Russell Roberts responds to the claim that imposing a cost on clean water would disproportionately affect the poor:

Unfortunately, left omitted is the fact that not imposing a cost on clean water disproportionately affects the poor. Because water is unpriced, there is insufficient incentive to provide it in the poorest parts of the world. That means there is very little of it for the poor to enjoy and as a result, poor people around the world die from lack of water.

Roberts points to this article, published in the Journal of Political Economy. He notes that the study finds the poor were disproportionately affected by water pricing, but not in the way most market skeptics suspect:

Using the variation in ownership of water provision across time and space generated by the privatization process, we find that child mortality fell 8 percent in the areas that privatized their water services and that the effect was largest (26 percent) in the poorest areas.

For more on water privatization in the developing world, see this post.

The California Legislature and Governor Arnold Schwarzenegger honored the team of SpaceShipOne today in a ceremony at the State Capitol …

"California has a long history of conquering new competitive frontiers," stated The Honorable Andrea Seastrand, Executive Director of the California Space Authority (CSA), and a participant in the ceremony. "With experience honed in the early years of aviation, California ingenuity and intellectual capital was again on display with the success of SpaceShipOne's flights.

And here I thought Burt Rutan and his team designed, built, and flew SpaceShipOne into suborbital space:

Here’s the story.

Stephen Bainbridge explains how the pope steered Catholicism away from Marxism:

John Paul II will be remembered as a great Pope for many reasons, not the least of which will be his standing as the 20th Century's dominating prophet of freedom. In his encyclical Centesimus Annus (CA), for example, the Holy Father insisted that "the good of the individual [cannot] be realized without reference to his free choice, to the unique and exclusive responsibility which he exercises in the face of good or evil." Elsewhere in CA, he further affirmed that "the transcendent dignity of the human person who, as the visible image of the invisible God, is therefore by his very nature the subject of rights which no one may violate...."

In the economic sphere, John Paul's philosophical and theological commitment to human dignity and freedom, no doubt coupled with his personal experience of Nazi and Communist tyranny, led him to decisively break Catholic social teaching's flirtation with command economies and, indeed, Marxism.

Read on, here.

JetBlue was once again ranked as offering the best service in an annual survey that also found five of the top six airlines are low-fare carriers.

AirTran Airways, Southwest Airlines and United rounded out the top of the national Airline Quality Rating study, released Monday.

Read on, here.

From the "Orwell must be spinning in his grave" department:

In the hopes of eliminating crime, [Bellwood, IL] officials say they'll have all the public ways in the 3.5-square mile town under camera surveillance within two years.

Though other cities like Chicago have set up cameras in high-crime neighborhoods, Bellwood will be the first town in Illinois, and possibly the first in the country, to have every public thoroughfare, sidewalk and alley under the watchful digitized eye of the Bellwood Police Department.

. . . .

Bellwood's mayor said he welcomed the suggestion that his town might be considered something akin to a Big Brother-land.

"I wish we could create that image. I would love that," Mayor Frank Pasquale said with a chuckle. Although village officials say their town is not unsafe, and in fact crime has dropped in the last two years, they are aiming for a