Social Equity and Sprawl

Smart growth seems to be touted as a tool to help contain and even possibly stop sprawl, which is an evil because of the costs to transportation, natural resources, etc. This article doesn't look at sprawl from a standpoint of being a nuisance to the environment or even as a problem in terms of convenience. Rather, this article argues that sprawl creates a social injustice because the wealthy, impartially the white or non minorities, are able to move out of the inner cities or other undesirable areas and neighborhoods, leaving behind vacant and run down communities. The minorities are stuck in a community that doesn't offer decent jobs because they too have left with the 'whites'. Smart growth is seen as the tool that will fix these injustices. The article blames the sprawl primarily on public policy, rather than free market responses. I would have to disagree.

The article claims that it is public policies, such as the federal government authorizing funds for interstate, that cause, or at least at a minimum enable sprawl. As the argument goes, the highways make it easy for people to leave the densely populated cities and move outward. The article contends this is not due to free market principles. I disagree. The federal government allocates money to be spent on interstates when demand is such that the interstate is warranted. The way that a demand is established is through people choosing (through free market) to move to the suburbs or other outlying areas. The government doesn't simply choose to put interstates in random locations and then people emerge around them. Rather, an identifiable pattern emerges where people are beginning to locate in an area, without an interstate, and the government decides that the funds for an interstate are best spent in that particular location due to the concentration of residents. Without a doubt the emergence of the interstate makes it easier for people to move to outer areas, but the interstates are only placed there after people choose to be there.

The article also posits the claim that sprawl is unfair to those in the inner cities or neighborhoods that are left vacant because they can not afford to get out like the others. This argument, while possibly true, doesn't seem to be reason enough on its own to warrant drastic measures to implement smart growth to curb sprawl. This is simply a moral argument. The authors of the article obviously feel bad for the people who are left behind and 'trapped' in the ran down neighborhoods, but they fail to make a convincing argument as to how this is such a bad thing. It can't possibly be that because sprawl caused the migration to the outer limits, and abandoned buildings in its wake that this somehow makes those stuck behind significantly worse off. If they were significantly worse off, then that means that they would have had to have been fairly good off before everyone began leaving, and for this to have been true then they too should have been able to afford to flee to the suburbs with everyone else. Because they didn't we have to assume that they were in poverty to begin with or at least not 'well' off, in which case them being left behind doesn't seem to hinder their economic situation much more.

While smart growth may ultimately be a positive economic tool, this article doesn't seem to make a convincing argument that the use of smart growth to control 'white flight' in order to protect the poor left behind is practical or even necessary. Sprawl seems to be a result at least in part to free market activity and not specifically driven by government policy like the article claims.

Political Economy

I have been intrigued by the notion that there are some that blame National City Lines owned by GM, Standard Oil, and Firestone for destroying light rail trantsit in the early 20th century. I read an opinion article in the Courant newspaper dated, March 5, 2006 by a Tom Sevigny

http://www.courant.com/news/opinion/commentary/hc-plcsevigny10305.artmar05,0,7131096.story?coll=hc-headlines-commentary .

In the article he contends that Urban Sprawl happened because of a conspiracy by National City Lines (NCL) to systematically destroy light rail transit by buying them up, trashing them and ultimately being able to solidify monopolistic power by getting Americans to buy automobiles.

After further research into this subject, I have come to realize that sprawl was probably going to happen anyway. In the interest of profits this company could probably see the "writing on the wall" so to speak and got in on the action a bit early.

Light rail transit had actually been declining in the previous ten years to NCL buying up all the light rail lines and since it was in a position to do so it did. It then converted what wasn't already converted into bus lines, since bus lines aren't constrained to a certain track like light rail is. Making it more efficient to have bus lines. This also consequently cause a fundamental shift in the preferences of consumers for cars.

I think on a basic level we might all have an innate desire to be more spread out instead of packed into densely populated areas. Since the advent of the automobile this has allowed us to travel further out in our quest to be more "spread out". Obviously, Mr. Sevigny has a slanted view of what caused sprawl but his own conspiracy argument works against him. If it hadn't been GM it could very well have been, Ford or Dodge. The fact remains, "sprawl" was already starting to take hold when the light rail lines of the early twentieth century were in decline.

I wonder, What caused what?

Lowry Redevelopment

This article in the Rocky Mountain News talks about the redevelopement of Lowry Air Force Base in Denver and the positive economic impact it's had on the city. It says that while Denver invested $1.37 million into the redevelopement of Lowry, the area has provided $5.7 billion in economic benefits, $3.3 billion of which has benefited the Denver area. I can't quite tell if it's talking about tax benefits (which would be a transfer) or if it's talking about economic activity within the area such as jobs and the like, though the article does use "economic activity," so it seems the latter is more applicable.

Regardless of how they got their definitions, readers should be a bit skepticle of the study when they see that there is a "240,776% return to Denver on its initial investment." Since you can't do a whole lot with$1.37 million in terms of development, I assume that Denver spent that money planning the development of Lowry. Another clue regarding government intervention is when it mentions price controls on housing.

"The Lowry Community Land Trust has sold 100 affordable homes priced from $115,000 to $167,000, with another 86 homes planned or under way priced from $138,000 to $167,000. And another 100 homes are being sold with no price controls, starting at $150,000, according to the report."

Given these price controls, price controls probably set by planners, it's possible if not probable that Denver's investment actually COST them money in economic activity (by whatever standards they used, which themselves could also be suspect). The $1.37 million Denver spent could have hindered the redevelopment of the area, especially given its location close to Cherry Creek and Downtown Denver. With such a high demand for land in the area, it would be easy to imagine the "benefits" being much greater. Unfortunately, Denverites can't compare these current results with identical results if Denver had just left it alone.

Governmental flaw cuts both ways

I've suggested in class that I believe the fundamental problem regarding sprawl relates not to transportation times or excessive land use, as these are all natural outcomes of consumption, but rather inefficient local government. I believe this to be so, largely because local government must provide infrastructure to the vast tracts of low density space, but its unimaginable that government could keep up with the pace of the free market driven real estate market.
However, in researching for the paper, I came upon the above article. Basically, a group of new urbanism developers bought an isolated piece of property, intending to develop it into a successful and self contained New Urbanist community. They sited many potential advantages, many of which we've discussed in class, however, much more interesting are the reasons for its failure. The first major disadvantage was that they choose a tract of land that was simply too far away to justify the convenience of high density containment. I found this amusing, as a fundamental argument against the evils of sprawl involves long commuter times. Naturally, they tried to establish an employment center within the community, but then a series of large scale corruption scandals related to the construction and development were revealed, and the community has totally stagnated. I believe that this highlights the main reason why New Urbanism is destined for (at best) mediocrity. Though we talk about the 'all knowing planer' in the context of a perfect city, perhaps we must also call this person, the incorruptible planner. An additional irony is found in a fact I read related to the topic. According to the Congress for New Urbanism, about half of the NU projects are geared towards 'suburban fill', while the other half is called 'green land-fill', meaning the establishment of a community on previously undeveloped space. As I consider these two topics, it seems that the command economy element of this movement are already rearing its inefficient head. Instead of more densely packed, efficient cities, we may soon see America's heart land (the breeding ground for sprawl) dotted with failed NU communities, established too far way to be of any use and sunk by corruption, actively and wastefully consuming land, which the movement supposedly desires to protect.

Planning, New Urbanism, and Sprawl

Community planners in Chesterton, Indiana have seen hopes sunk about a planned new urbanist community at a development called Coffee Creek Center. The vision for the center was conceived in 1996, but the planners have had trouble making the transition from planning over to actual construction of the homes intended for the center. The chief marketing intent was to lure commuters to this area just south of Chicago with the hope of offering country living in an urbanist setting while still providing easy access to the major market in Chicago.

http://www.nwitimes.com/articles/2006/03/26/business/business/214a7026f04a42c78625713b00812fe2.txt

The problem, according to Samuel Staley, director of Urban and Land Use Policy at the Reason Public Policy Institute is that the planners didn't estimate their market properly. Segedy said "the new urbanism concept remains a tough sell in much of the Midwest, where potential homebuyers are still more interested in having a big house on a big lot than in recreating an urban experience". He goes on to state that if someone wanted to live in a city-like setting, then why live one hour away from it? Segedy also claims that most new urbanist projects should be targeting suburban markets or areas near "older, crumbling inner cities", but miss the mark when they go after these other residents.

Robert Steuteville, whose New Urban News (http://www.newurbannews.com/) provides information to planners and those curious about the movement claims that most new urbanist centers have been primarily successful. He points out that many communities developed on new urbanist principles are not only successful, but also motiviating other communities to consider just such developments.

At times the philosophy and ideals of new urbanism seem at odds with what they call the problem of sprawl as well. The Center for New Urbanism's own philosophy is as such: " In all cases, New Urbanist neighborhoods are walkable, and contain a diverse range of housing and jobs. New Urbanists support regional planning for open space, appropriate architecture and planning, and the balanced development of jobs and housing. They believe these strategies are the best way to reduce how long people spend in traffic, to increase the supply of affordable housing, and to rein in urban sprawl. Many other issues, such as historic restoration, safe streets, and green building are also covered in the Charter of the New Urbanism, the movement's seminal document.

Although these new urbanist philosophies tout the lack of dependency on automobiles and the availability of affordable housing, the fact remains that most who would live in such a development would more than likely still have to drive to their place of employment and will still pay a premium for the structure. And although many of these developments have shops and other amenities in the community itself, they still have to drive to get to other, more specialized and cost-controlled centers (even though they probably would never admit it). Also, in the very words of the developer responsible for the Prospect Park neighborhood in northern Colorado, "Current prices range from $285,000 to over $500,000, which at the "lower end" is about the average price of housing in Boulder County". Those kind of prices still do not resonate as the kind of housing a family living at or just below the poverty line would be able to afford.

The communities themselves seem on the surface to be a good idea (and in a sense, a very good idea--who doesn't like the notion of not having to rely on automobiles and would like to be more in touch with their community?), but the problem still remains. Sprawl is sprawl, and even though many new urbanists contend that the new urban community combats sprawl, they still seek out old farmland and build on it, and construct roads on it, and put shops on it. And in essence, isn't that the very sprawl they claim to be fighting? It seems like nothing more than slapping a label on something just to be able to market it a little differently and then sell it to those that consider themselves to be alternative thinkers. Their neighborhoods may be a bit different, but those that are building on farmland are just as "guilty" as those they slam for promoting sprawl.

Included is one of the links to the local Prospect Park community that has stated just such an ideal here in Colorado. It's a fascinating place to visit, and actually does look like a nice place to live. It just seems odd not to consider it as also being part of our evil "sprawl problem" (http://www.terrain.org/unsprawl/8/.

Academic paper

here is the link to the academic paper I will be summerizing in class

Benefits of Sprawl

Matthew Kahn has posted a research paper on his blog titled The Benefits of Sprawl. Here are the first 2 paragraphs of the paper:

"Today, most Americans who live in metropolitan areas live in single detached homes and commute to work by automobile. New York City is America’s sole urban center where a significant fraction of the population lives in apartment buildings, works downtown and commutes by public transit. As transportation costs continue to decline and household incomes rise, we are choosing sprawl as we live and work in the suburbs.

The conventional wisdom is that this trend imposes major social costs relative to its benefits. An advanced Google search reveals that there are 39,500 entries for the exact phrase “costs of sprawl” while there are only 455 entries for the exact phrase “benefits of sprawl”. The beneficiaries of sprawl may be a “silent majority” who are not as politically active as center city boosters, environmentalists and the urban poor’s advocates in voicing their views on the merits of the ongoing decentralization of jobs and people taking place across cities in the United States.
This paper seeks to address this intellectual imbalance by presenting original empirical work documenting some of the benefits of living in a sprawled metropolitan area. This paper uses a number of U.S data sets to explore how sprawl improves quality of life. I focus on how sprawl affects firms, workers and consumers."

Perhaps someone would like to read the paper and gives us a summary in class?

sprawl

There is an article on the Sierra Club website titled, “If We Don’t Like Sprawl, Why do We Go On Sprawling?” I think it is one of the most important questions we can ask as economists dealing with sprawl. Is sprawl the result of government giving into the rent seeking behavior of a few very rich, well connected people, or are our own preferences more involved than we want to admit? The article paints a pretty bleak picture of government subsidies and developers. It states that growth isn’t all good, that sprawl raises taxes, and that a few profit at the disadvantage of the masses. But I still wonder what would really happen if the invisible hand of the market were left on its own and people made their own decisions without government building stadiums or giving out tax breaks. Would the allocation of resources people would choose put cities in a place where they are all neat, low cost, close together, with low-cost transportation? I’m not sure. Besides the government interference, which is admittedly huge, why do people move outside of the city? Is it because people just don’t like living in cities, is it due to people wanting lower cost homes?

Taxes are a big issue. The governments give large tax breaks to companies that move into town. This is not efficient, and I’m against it. Let them build where they build. The article I read states that, In Redmond, Washington, single-family houses pay 21 percent of property tax but account for 29 percent of the city budget.” This is obviously an issue.

Sprawl is definitely an issue worth considering. However, I’d hate being the economist who has to analyze the benefits and costs with different sprawl reducing policies. The topic is so loaded, so vague, so made up of a bunch of individual issues that should be considered on their own, that it seems impossible to get a clear picture of what sprawl is, let alone how to fix it. The fact that sprawl happens in the midst of all the heat around the issue, is a pretty interesting fact. We won’t get to the bottom of it until we separate the individual issues under sprawl and find out where the market failures are. It seems like it’s another of those issues that the government created, not one that the government is going to fix.

Rebuilding New Orleans

Richard Florida writes an interesting commentary on rebuilding New Orleans. He doesn't seem to offer specific proposals, but he does seem to offer warnings. Here is his concluding paragraph:

"The people of New Orleans know what they want. More than just reconstructed levees, a refurbished downtown, or even rebuilt homes, they want the soul of the city back. Their insights - both angry and enthusiastic - remind us of the underlying source of resilience that really rebuilds fallen cities: the people. Let's hope that their leaders will understand this, and provide us all with a compelling model of a creative, prosperous and sustainable city."

Please read the entire piece. Then consider whether or not you think New Orleans can be successfully rebuilt, in view of Florida's warnings, if government planners and government officials are going to be involved?

Fix It First - Sprawl - Sierra Club

Fix It First - Sprawl - Sierra Club

The sierra club has an interesting view of sprawl and development. Their concern is increasing the quality of already developed areas, rather than expanding outwards. The Sierra Club makes a good point to the need to fix current roads and bridges before expanding into "nowhere". What's important is to realize is the government is providing club goods that act as public goods. In essence there creating a market inefficiency yet meeting demands. People have taken on the belief that government should provide our roads, highways, parks, etc. Because of this it is provided best fit as seen by government rather than market demand. This could be a cause of sprawl.

http://www.sierraclub.org/sprawl/community/transformations/index.asp

The sierra club also provides an interesting set of photos on what the development of certain locations should look like. I think these show a good picture of new urbanism development. I find it interesting to see how they add light rail and make the area look more congested. It is like a return to the past where buildings are close together. Although these look nice, the area will become more congested and could defeat their own purpose of reducing sprawl. If people don't respond and start taking rail, biking or walking then cars will be even more crammed causing more pollution and could create another inefficiency in the market. I think its best to let developers produce what is demanded, if that's a new urban area than great, and if a suburb than that's good to.

Just who is locating near Airports?

In a past issue of the Economist (26 Nov 2005) there was an article that is quite relevant to the topic of Urban economics; in particular, the location decisions made by businesses. We all know about the pollution (noise, air, and otherwise) that come form airports, but this article notice a funny thing going on:
Working in the shadow of an airport has its problems. There are height restrictions on buildings, and residents and office workers have to put up with the noise and traffic that airports generate. But, despite those drawbacks, more and more businesses feel the need to be near a runway.

It is not surprising that airports draw market-oriented firms; in fact the article mentions that consulting firms locate near airports (thus reducing their costs to changing clients). But this isn’t the only reduction in transportation costs that airports can provide. Amazon.com is planning a plant in Irving, Texas just a short drive from DFW international airport. This is a good example of median location oriented firms. What is unusual is that whole communities are being built airports. According to the article:
When Washington Dulles International Airport opened in 1962 in rural Virginia, it was considered a white elephant; but it has spawned a high-tech corridor and now sits in the fastest-growing county in the United States. Denver's ten-year-old international airport, about 40 miles out of town, is expected to be the centre of a community of 500,000 people by 2025—almost as many people as live in Denver itself.

Could it be that living near airports isn’t all it’s cracked up to be?

Urban Sprawl: Good for Minorities?

Urban Sprawl: Good for Minorities?

Through the course of the semester we have tried to establish a definition for sprawl. It seems that we have come to the conclusion that sprawl is indefinable. We have been unable to find a definition that we like or that is not corrupted by the policies that are placed on sprawl. I have included the website that has many definitions of sprawl from many different aspects. We as a group have seemed to say that it is growth that moves in an outward fashion.
Who is affected by this idea of sprawl? In looking at an article titled “ Urban Sprawl: Good for Minorities” written by Leonard C. Gilroy. He says that sprawl seems to be very important for minorities especially those of African American decent. Areas that are high sprawl metropolitan areas seem to see minorities being able to buy homes in the suburban areas just like their white counter parts. In areas that are low sprawl minorities are left to live closer to the business center. They are unable to afford what lays out side the metropolitan area. This is an interesting idea that sprawl allows the minorities to achieve a better freedom. Gilroy argues that if policies are put in place to stop sprawl or overly plan sprawl those that are greatly affected is the minority. They are the silent victims that are not taken into account for.
In reading this article it is hard to believe that it is the minority that suffers. Gilroy in the article states that more African Americans today have college degrees than in the past and that their incomes seem to steadily rise. They are able to live the American dream. It makes you question wither sprawl has anything to do with the minorities. Is this even an issue of race? It seems that it is the market at work. As we said in class several times if the factors are efficient to move outward into the suburbs families will do so. As we have evolved as a society we see more equality given to all mankind. This would say that the opportunity is fair.
I think that Gilroy is missing the idea. I think people whether African American or White will stay close to the metropolitan area if it is not efficient to move outward. If market allows for the sprawl then most people will move outward. It is the American dream to spread out and have land and live the happy life. This idea is not restricted to color. The opportunity is provided to all those effected by the outward movement of a metropolitan areas quick growth. The race of a person will should not affect how sprawl affects them.

What Is Going On In New Orleans?

Almost half a year has passed since Katrina, so there is no reason to be impatient. Yet it is impossible to escape the distinct impression that the city is adrift. It is normal in emergencies for the state to suspend or curtail municipal powers. That has not happened in New Orleans, leading to wrangling between the mayor and local neighborhoods about where and especially where not to locate FEMA trailer housing. A city that is unable to decide where to temporarily house its own refugees is unlikely to struggle successfully with the more complex question of exactly how to rebuild. Should low lying areas be turned into parkland, and housing concentrated on higher ground? Should building codes be changed to require all structures to be raised on platforms or stilts? The social and economic implications of both strategies are major. Private property would have to be expropriated, and new lands would have to be made available. Upgraded building codes would raise the cost of construction.

It would obviously be simpler if everything could stay as it is, and if the flooding problem could be solved by simply constructing higher levees and more and bigger pumps. The recent White House commitment to increase spending on reinforcing levees to $3.1 billion does not even begin to resolve this issue, however; it has been estimated that fully protecting the city against a Category 5 hurricane (recent reports suggest that Katrina was actually a Category 3 storm when it made landfall) could cost more than $30 billion. But absent adequate protection, many people who were evacuated from the city have been reluctant to return. The population of New Orleans is currently about 100,000 not even a quarter of its pre-Katrina size.

What strategy to adopt? “Build levees and they will come back,” or plan for a better but smaller city?

New Orleans is different, and not only because effective leadership and governmental action have been clearly absent, but also because it is an American city. The shape of our cities is not the result of bureaucratic planning, but of demand. If people want to live in houses with their own gardens, you get suburbs; if yuppies want to live in lofts, you get rehabbed industrial districts; if wealthy investors want to put their money into sun drenched real estate, you get the Miami condo boom. If businesses want their offices in high rise buildings, you get central business districts, but if those office buildings become too expensive, you get suburban office parks and Silicon Valley. Moreover, because the country is large and there are many cities, competition is fierce.

Conversely, if people don't want to live somewhere, they are free to leave. “Demand” in New Orleans was already a problem before Katrina. The population of the city hit its peak in 1965 and has been declining ever since. At the time of the hurricane, the city had a third fewer inhabitants than 40 years earlier. The metropolitan area wasn’t doing much better. The result was that although New Orleans is in the Sunbelt, where urban areas are generally booming, in many ways it is a Rust Belt city, think Detroit or Newark, with a sluggish economy, a lot of unemployment, and poverty. Research has shown that while cities grow extremely quickly, they decline slowly, since people’s homes and their attachment to a place act as a barrier to moving. Katrina cruelly removed that impediment for many New Orleanians.

Given weak demand and weak governmental leadership, the prognosis for recovery is not good. It’s going to take a massive federal program to deal with the hard case that is New Orleans.

At What Cost Suburbia?

In an article from the Federal Reserve Bank of Boston:

So, Maine's planning office is working on expanding available choices. Their goal is to use better urban design to address the issues that are pushing people out of built-up areas by promoting the construction of what they call "Great American Neighborhoods. "Based on traditional towns and villages, these neighborhoods ideally will be relatively dense — a ten-minute walk across — and will be built around a civic core such as a library or a school. They will include open space, such as a town green, and small-scale commerce. They will also have a decidedly Maine slant. "We are talking probably of lower densities than what would be acceptable in Atlanta, and the neighborhood has to have linkage to nature," says Della Valle.

Such development would help to limit sprawl — without limiting growth — by promoting more compact developments while addressing some of the lifestyle concerns people are worried about." (emphasis mine)


I found this article to be very informative, covering a lot of aspects of the subject of sprawl concisely and evenly. The negative aspects of sprawl are addressed, along with counterarguments. The question of externalities is covered, not only with the topic of higher taxes on fuel and car ownership to reduce the negative effects of increased air pollution (and a possible residual effect on lessening a demand for suburban housing), but also addressing the arguments that suburban development is subsidized (indicating that there is a perceived positive externality) by the absence of these higher taxes on fuel and the home mortgage interest deduction. In addition, a stated viewpoint is that unless local governments assess exaction fees against developers, "other people bear part of the expense of the new suburbanites location decision."

It is the last item that makes me feel uncomfortable if the result is to slow economic growth. If exaction fees are levied against developers, the price is passed on to the consumer and in this way some of the externality of additional tax burden or the effects of a decreased budget that would be borne by other consumers would be internalized by those that could afford to pay the price, thus allowing for economic growth and the freedom to choose (for those that could bear the cost). I'm okay with that. What I would worry about is whether those exaction fees were so high as to prohibit economic freedoms - and from what this article states, it is very hard to put a dollar amount on the "lifestyle concerns people are worried about". So who would be in charge of quantifying these things and then assigning a dollar value? I think there is too much leeway for politics there.

I'm also a little queasy at the thought of the type of planned development outlined above. I see subsidized building as backward-thinking. If we're so in love with the idea of subsidizing something, why not subsidize existing area businesses to operate in the urban areas? If there really is competition between urban and suburban areas, wouldn't this approach make more sense?

Cosmix: too little, too late...

In my humble opinion as a Jr. Economist, it would seem that the effort put forth by the city of Colorado Springs with the CosMix project is an attempt to make amends for lack of planning and underestimation of the growth of our suburban setting. While the effort will not be looked on with brazen eyes, it would seem that being one step behind the situation will continually leave the city one step behind the sprawl. For example, the poorly planned expansion of the Woodmen Rd and I-25 by-pass left southbound commuters wanting much in regard to the same number of lanes as before the project.

I think that the inefficiency of the local/state legislature is to blame for the retarded action time in regard to the city and state interstate expansion. I believe that the demand for legislature pertaining to effectively timed and implemented road repair/expansion.

By the time that this project is completed in the summer of '07 I believe that the current rate of growth will overshadow almost all efforts that the city is making in order to address the already over-crowded roads. Unfortunately the legislators cannot always plan on growth or even sprawl as it may be, but I believe that it is their duty as the elected officials of the city and county to make effective and efficient use of legislation, however ill timed it may end up.

Urban Sprawl Not Just a Problem for the Developed World

It seems to make sense that urban sprawl isn't just a problem that the developed world faces. As the article states, the developing world is facing problems with sprawl as well, but for different reasons. The developed world's sprawl seems primarily due to people choosing to move out of the cities, while sprawl in the developing world is occurring because there is nowhere else to live in the highly populated cities. Too many people are being born with nowhere to live inside the cities, so they are forced to move outward, unlike the people of the developed world, who choose to move outward.

The article suggests that the developing world faces sprawl because they have looked towards the developed world for ideas of how to plan for developing, and this has caused them to fall in the same sand pit as the developed world. One solution that the article suggests the developing world should look at to help solve the sprawl problem is reusing old buildings and land in the inner cities in a more efficient way, such as turning old abandoned schools or other building into housing or other more efficient uses. The article suggests that the problem and ultimately the solution to sprawl is to look at efficient uses of land space. I agree that land should be used in an efficient manner; however, I don't believe that this solves the problem.

While efficiency, by definition, makes the best use of the land possible, doesn't necessarily mean that it will solve or even inhibit sprawl. For instance, it depends on how efficiency is being weighed. What is more efficient, housing for people, or skyscrapers for businesses for income? From an economic standpoint, it may make more sense to use abandoned land in the inner city for enormous skyscrapers to attract more business, more taxes and wealth, which would force people to move outward because of lack of available land for housing in the inner city. In this situation, the land within the city appears to be being used in the most efficient manner (if efficiency is weighed heaviest by economics and wealth), yet sprawl will continue to exist because people are forced to live outside the city where land exists for housing. If too much land within the city is designated to housing, then it seems that you could either end up with too much housing and not enough people since there isn't enough land for businesses and thus no jobs so people don't want to live there, or if people do occupy all the dwellings then businesses would naturally follow to make profit from all the people and because people are making money, they would naturally want to move out of the concentrated areas (outside the city), creating sprawl or businesses would buy up housing within the city to build their business, which would force people to the outskirts to live. Either way it seems like you end up with sprawl, if you use the broad reasoning given in this article.

Sprawl almost seems to be a natural occurrence where cities exist. This article shows that it exists within high density cities in developing countries, and we know it happens within less dense cities within the developed world, which are two examples on both ends of the spectrum (one by necessity and one by choice of luxury). Within the developed world, sprawl happens by choice and within the developing world, sprawl happens by necessity, and in both situations would seem to still occur even if land was used in it's most efficient manner (because defining efficient land use in terms of housing doesn't curtail sprawl and neither does it seem that weighing efficiency in terms of building offices for economic benefits). Perhaps sprawl is a natural occurrence in cities by either necessessity, choice or other unknown reasons and perhaps this is why it is so difficult to address all of the major causes of sprawl and more importantly determining a solution for sprawl.

No land regulation without compensation

Oregon court strikes blow for property owners.

A constitutional battle continues to develop in the national legal arena. Disputants for "no land regualtion without compensation" celebrate the contest's latest headline.

On November 2004, voters in Oregon passed legislation known as Measure 37, requiring that citizens be paid when land use regulations diminish their property values. The legislation targets a governmental practice known as "regulatory taking," a term that refers to governments using and/or appropiating private property for public use. Including instances when governments impose rules that diminish the use and value of land without making the property owner whole. Last tuesday, February 21st, Oregon's Supreme Court upheld the measure as constitutional and stroke a powerfull blow to the hopes of smart-growth advocates, planners and new urbanists in the north-western state.

According to an article published by the Denver Post, in the days after the Court's ruling came down, "the Court's upholding [of Measure 37] lifts the burden of land use regulations off the shoulders of property owners and puts it where it belongs -on the regulators, politicians and special interests who impose their aesthetic values on others. They'll still be able to regulate -as long as taxpayers share those values enough to pay for them." Forcing governments to compensate owners when the value of their land is affected by any zoning laws or any other regulations aimed to manage the way growth occurs in a city, makes the implementation of Smart-growth policies more complicated and costly.

The article poses an illustrative question:
"What is protecting the Preble's meadow jumping mouse worth to the American people? It's impossible to say at the moment, because this costs are largely hidden, foisted on land owners living in mouse habitat. But if the federal government (read:taxpayers) had to pay when the Endangered Species Act impacts land values, we would quickly find out what value average Americans place on these plants and animals."

Practices such as regulatory taking and emminent domain appropiations face serious challenges in courts across the nation under the argument that they violate the Fifth Ammendment's "takings clause." This clause requires proper compensation to be paid when the government uses or appropiates property. Measure 37's upholding is a groundbreaking veredict in solving the debate. At the very least, Oregon just became a much more expensive playground for planners and smartgrowth advocates.

Notes:
Here is the link for the Measure 37 ballot's website:
http://www.sos.state.or.us/elections/nov22004/guide/meas/m37_bt.html
Here is the "No on 37" site:
http://www.takeacloserlookoregon.com/
I did not find an electronic copy or link to the Denver Post's article. If you want to read other articles on the subject, here is a place to start:
www.google.com
Fifth Ammendment of the United States Constitution (Full text):
"No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation."

City rankings of Urban Sprawl

I believe we've mentioned the website sprawlcity.org in class, but I didn't see any writings on it in the blogs. It's a website devoted to "smart-growth" policies and population control (I don't know about you but I think of China, where millions of girls are given up for adoption). The main thing I want to high-light and the site is its sprawl-growth rankings. It gives the top 100 cities according to how much land area became urbanized in and around those cities in an attempt to show how bad sprawl is.

"Over a 20-year period, the 100 largest Urbanized Areas sprawled out over an additional 14,545 square miles. That was more than 9 million acres of natural habitats, farmland and other rural space that were covered over by the asphalt, buildings and sub-divisions of suburbia. And that was just for the half of Americans who live in those 100 cities."

However, these top 100 cities include the most densely packed cities in the nation. In fact, L.A., the "densest urbanized area," ranks number 6. New York, Washington D.C., and every other major city in America is on the list (including Denver and Colorado Springs). If you return to the homepage, there is an article about L.A. and how, despite its density (and "smart growth" planning), it has continued to grow outward. The site blames this on population growth, particularly immigration. Another page talks about Detroit, where population declined but sprawl increased. Here, it doesn't give an explanation, but only says that the sprawl would have been far worse with growth, adding that such cities should hear the "education" of the woes of population growth. If you can't tell yet, the site is quite against population growth, and very much for "smart growth" initiatives.

However, there are several issues it doesn't seem to address. The first is people's choice and why they spread out. Many people don't always like to be clustered together, especially if such clustering means living with large amounts of pollution. They make the choices they do to be better off. Such choices can increase health, life expectancy, or even just their personal happiness.

The second issue the site doesn't address is where this population is coming from. A large part of it, seemingly their most feared population increase, comes from immigration. Is this really population growth? People come to cities for jobs. They congregate, creating economies of scale and thus a potential for higher income. This congregation means they actually find it more worthwhile to move to higher denstity areas. If everyone started out perfectly sprawled (meaning the earth was divided per capita with each person being as spread out as possible), we would gather to denser areas, forming cities. This is why cities grow. This means that immigrants come to cities, which often means they see better economies of scale, which means they usually come from more sprawled out areas! Not counting immigration from foreign countries, cities would still be growing by more than the birth rate. This has been witnessed by the phenomenon of small towns disappearing as its citizens move to larger cities (I personally am an example of this). This means that the city growth which is criticized by Sprawlcity.org is actually the result of a reduction in sprawl. This doesn't mean that sprawl is decling per capita, but it does mean that the population growth of cities which such sprawlist doomsayers criticize is actually a good thing. As people gather into cities, they reduce transportation costs, economize on education, and overall become better off. If they didn't, they wouldn't make the move.

One last thing I want to point out because it is interesting to note is a comparison between Denver and Portland, which as sprawlcity states "is at the top of most Smart Growthers' list for best planning and execution of anti-sprawl efforts." The comparison comes from http://www.demographia.com/db-porden.htm. It makes a shocking comparison, since sprawlcity boasts that Portland's NEW population density was 53% better than the decade before. I capitalize new because its overall density declined by 6% according to the other site's figures. Meanwhile Denver's urbanized population density increased 16%, with the imposition of fewer, if any, smart growth initiatives. Apparently, government involvement once again hinders the goal it seeks to achieve by telling individuals how to live. Go figure.

Eminent Domain

Recently there has been quite a tempest stirring in the public regarding eminent domain. Events in Connecticut and Ohio have many states reviewing eminent domain laws and their constitutionality, and battles are being waged before two state supreme courts in regards to this very question. Two links exploring these battles and how they came about are here:

http://news.yahoo.com/s/usatoday/20060221/pl_usatoday/ohiocommunitytestseminentdomain

http://www.ij.org/private_property/connecticut/

In the New London article, please click on the picture download link and take a look at the “blighted” homes that have been targeted by these vague eminent domain laws. The pink home in particular looks not at all like a blighted home one would expect being marked for condemnation. I guess Mellencamp had it wrong when he once said, “little pink houses for you and me”. Government has no place in seizing these properties to hand over to developers and others in the name of economic growth (and then, even more shockingly, in a “compromise”, decided to let the residents stay but charge them rent). Not only are multipliers and other indicators of such growth often misinterpreted or misused in the name of progress and/or politics, but the government is treading on thin ice with the law when they seize the property. Property rights are one of the most fundamental tenets of our free market economy. When the lines of this are blurred then the free market existence is questionable. In the study of economic development, one of the first things the WTO and other organizations will look at is the existence of such rights and their enforceability. In what’s arguably the greatest country in the world, these rights are in some communities being trounced underfoot. But, unfortunately, the Supreme Court didn’t see it that way when they ruled on the New London court battle.

Many states have now seen the light and are finally questioning the wording and use of such eminent domain laws. Some 36 states are now considering legislation and other changes to wording in laws to limit the use of eminent domain in property seizures for the use of private development. The high-profile case of the New London landowners has fostered a bit more discussion in regards to governmental rights and has at least done the job of bringing the question of eminent domain to the spotlight in almost every state in the union.

http://freeinternetpress.com/modules.php?name=News&file=article&sid=5974

The cascade of politicians pushing bills through state legislatures has been overwhelming in the wake of the public uproar that followed the Supreme Court decision. In following their constituent’s voices and not the special interests that lobby for more government power in this regard, it looks like the politicians may finally be getting this one right. From an economic standpoint, using eminent domain in such a broad, ambiguous manner can be damaging to the free market system the United States was founded on, not to mention blurring the line between property rights and a totalitarian state.

Hurricane Katrina

I recently read an article, the synopsis of which states:

Katrina's destruction was as much a policy disaster as a natural disaster: Development that sprawled into marshes, swamps and flood zones, poor citizens isolated in concentrations of poverty, neglected and overstressed infrastructure. Smart Growth America's coalition has crafted and embraced a comprehensive response for the near, medium and long term actions needed to restore the Gulf Coast and prevent similar disasters elsewhere.

I must admit that having been born and raised in this town, when the class began I had a natural disinclination towards sprawl, and didn't tend to think of it as a political issue. However, after reading a variety of 'anti-sprawl' articles, I see now that many of the proponents of 'smart growth' often use this sort of argument, generalizing situations into contextual oblivion. I was under the impression that the Katrina disaster was the fault of inept FEMA leadership, and negligent local government, however, apparently the disaster may also be evoked to prove the danger of many environmental platforms. I recently heard that the hurricanes are getting stronger due to warmer water from global warming. I don't know if this is the case, however, clearly the above instance seems an irresponsible use of a national tragedy to further a political agenda.

“Brown Mice!”

It was about two years ago when my brother was working up at the Cripple Creek gold mine. They were preparing to blast another section of the mountain. The watch officer called on all drivers to look for safety violations or hazardous conditions. My brother, seeing two little mice near his truck, got on the radio and yelled, “Brown Mice!” Initially, this stopped everything to be combined with laughter. Almost everyone on that crew was quite familiar with the issues with brown mice involved with the interchange in Monument. Then when the joking was over, it resulted in someone going to the ‘principal’s office.’

This would be a funny story if it weren’t for the fact that throughout the western states, this little brown acrobatic mouse has been holding up construction jobs in the name of conservation. The fate of protection for the Preble's Meadow Jumping Mouse has important implications in El Paso County. The northern portion of the county, especially along the Interstate 25 corridor, contains a good chunk of the 31,000 acres of mostly private land along Colorado’s Front Range that the U.S. Fish and Wildlife Service and U.S. Geological Survey have declared as areas of critical mouse habitat.

By no means am I advocating the destruction of a mouse for the sake of commerce. However, I have a disregard for a government that will dictate how private citizens use their land. Critical habitat is highly controversial, spawning lawsuits from groups such as the National Association of Home Builders and exemptions from the law for the military. Fortunately, the Fish and Wildlife Service has rarely opted to designate critical habitat on its own accord. Overall, it has not seen to be sensible to eliminate the free use of land strictly because a creature has been placed on the endangered or threatened list. However increasingly, it has been forced to issue designations under tight timelines as a result of litigation from environmental groups.

The developers and property owners of northern El Paso County should be given the freedom to use the land as they deem fit. However, if the regulations will not be revoked, then it is the responsibility of the government to make private citizens whole. Also, if the government dictates an alternate course of action for construction companies, the government should compensate for the deviation from the original plans.

The greatest issue here is a lack of trust. The bureaucrats and environmental lobbyists do not believe that the private citizen will make smart choices with respect to conservation. The approach that has been taken since the Endangered Species Act has been one of government’s coercive power. Instead of trying to control Americans’ lives from the cradle to the grave, these bureaucrats and lobbyists must choose a strategy of education. As Pope Pius XII said, “The American people have a great genius for splendid and unselfish acts.” When provided with a true problem, the populace and the market will find answers without government intervention.

How divisive is this issue.....?

I was doing a search on "sprawl" and ran across this book at Amazon. What I found more interesting were the reviews posted below it. Are we really this divided on "sprawl"? Here is the link for the book and the reviews are down below http://www.amazon.com/gp/product/0226076903/104-6897368-5937533?v=glance&n=283155. Since, we have been talking about "sprawl" I have come to discover that this word is "loaded" both politically and socially. What exactly do you suppose this is supposed to mean? I have an inkling that loaded words come about because politicians don't want to deal with issues individually so they group many different issues together and then name them making them "loaded". What do you think about this definition of loaded? Do you think loaded terms are made to evoke an emotion for or against a specific issue? These are just questions I am developing as I study this issue of "sprawl" (loaded or not).



Political Economy

A Definition of Sprawl

Jonathan Levine defines sprawl:

"The low-density, car-dependent development that characterizes most U.S. metropolitan areas. . . ."

Do you like this definition?

Sierra Club & Sprawl

The Sierra Club has a web page devoted to stopping sprawl:

"Poorly planned development threatens our environment, our health, and our quality of life in numerous ways.

Sprawl spreads development out over large amounts of land; puts long distances between homes, stores, and job centers; and makes people more and more dependent on driving in their daily lives.

Sprawl pollutes our air and water. As reliance on cars and pavement of more and more roads increases, so does smog and pollution from water runoff. Today, more than half all Americans live in areas where the air is unsafe to breathe. Sprawl destroys more than two million acres of parks, farms and open space each year.

Sprawl increases traffic on our neighborhood streets and highways. Sprawl lengthens trips and forces us to drive everywhere. The average American driver currently spends the equivalent of 55 eight-hour workdays behind the wheel every year.

Sprawl wastes tax money. It pulls economic resources away from existing communities and spreads them out over sparse developments far away from the core. Taxes subsidize millions of dollars worth of new roads, new water and sewer lines, new schools and increased police and fire protection at the expense of the needs of the core communities. This leads to degradation of our older towns and cities and higher taxes."

I think there are at least a couple of things to note in this quotation.

No clear definition of sprawl is emphasized. Perhaps the Sierra Club defines sprawl simply as "poorly planned development."

Note also the choice of language. It seems as though sprawl has human abilities and characteristics: sprawl threatens, sprawl spreads (perhaps sprawl is viral), sprawl makes people more and more dependent, sprawl wastes money.

Denver Transit

Matthew Kahn:

"Highways are durable goods. Many highways were built in the 1950s. Out near denver the amount of driving has soared since then and now the roads are clogged. This article below provides details about a public policy fight over whether road expansion is 'good public policy'. The article does not mention road pricing as a means of solving congestion problems. The article slightly naively keeps talking about mass transit investments as a means of getting people off of the roads. In 1970, 5% of Denver's workers commuted by public transit and in the year 2000, 5% of Denver's workers commuted by public transit. Clearly, this is car country and even if you build light rail people will continue to take their cars. The Denver CBD is not enough of an employment hub.

People who oppose the road expansion must either be concerned about 'scale' effects or they are worried about 'composition' effects meaning what types of people are likely to be moving to their communities. "

Note the reference to road pricing. If using the highway carries no price per use, then the quantity (or number of uses/users) demanded will be at the horizontal intercept of the demand curve. When congestion occurs a "price" is paid by each user in terms of delayed travel time.

Expanding the road's capacity can surely reduce congestion, at least for a time. But, without pricing per use, we can expect congestion to increase over time, once again.

Assuming no pricing per use, if a road's capacity is expanded, are there others effects we can expect to see over time?

Sprawl

Robert Bruegmann is interviewed by USNews:

"Sprawl is a loaded word. How do you define it?

I try to define the word in the most objective way possible, as relatively low-density settlement without any overarching master planning."

Is this a good definition? Do you agree that this definition is the most objective definition we can find?

I think the entire interview is worth reading.

Starbucks Economics

Starbucks EconomicsSolving the mystery of the elusive "short" cappuccino.
By Tim Harford http://www.slate.com/id/2133754/

Here's a little secret that Starbucks doesn't want you to know: They will serve you a better, stronger cappuccino if you want one, and they will charge you less for it. Ask for it in any Starbucks and the barista will comply without batting an eye. The puzzle is to work out why.
The drink in question is the elusive "short cappuccino"—at 8 ounces, a third smaller than the smallest size on the official menu, the "tall," and dwarfed by what Starbucks calls the "customer-preferred" size, the "Venti," which weighs in at 20 ounces and more than 200 calories before you add the sugar.
The short cappuccino has the same amount of espresso as the 12-ounce tall, meaning a bolder coffee taste, and also a better one. The World Barista Championship rules, for example, define a traditional cappuccino as a "five- to six-ounce beverage." This is also the size of cappuccino served by many continental cafés. Within reason, the shorter the cappuccino, the better.
The problem with large cappuccinos is that it's impossible to make the fine-bubbled milk froth ("microfoam," in the lingo) in large quantities, no matter how skilled the barista. A 20-ounce cappuccino is an oxymoron. Having sampled the short cappuccino in a number of Starbucks across the world, I can confirm that it is a better drink than the buckets of warm milk—topped with a veneer of froth—that the coffee chain advertises on its menus.
This secret cappuccino is cheaper, too—at my local Starbucks, $2.35 instead of $2.65. But why does this cheaper, better drink—along with its sisters, the short latte and the short coffee—languish unadvertised? The official line from Starbucks is that there is no room on the menu board, although this doesn't explain why the short cappuccino is also unmentioned on the comprehensive Starbucks Web site, nor why the baristas will serve you in a whisper rather than the usual practice of singing your order to the heavens.
Economics has the answer: This is the Starbucks way of sidestepping a painful dilemma over how high to set prices. Price too low and the margins disappear; too high and the customers do. Any business that is able to charge one price to price-sensitive customers and a higher price to the rest will avoid some of that awkward trade-off.
It's not hard to identify the price-blind customers in Starbucks. They're the ones buying enough latte to bathe Cleopatra. The major costs of staff time, space in the queue, and packaging are similar for any size of drink. So, larger drinks carry a substantially higher markup, according to Brian McManus, an assistant professor at the Olin School of Business who has studied the coffee market.
The difficulty is that if some of your products are cheap, you may lose money from customers who would willingly have paid more. So, businesses try to discourage their more lavish customers from trading down by making their cheap products look or sound unattractive, or, in the case of Starbucks, making the cheap product invisible. The British supermarket Tesco has a "value" line of products with infamously ugly packaging, not because good designers are unavailable but because the supermarket wants to scare away customers who would willingly spend more. "The bottom end of any market tends to get distorted," says McManus. "The more market power firms have, the less attractive they make the cheaper products."
That observation is important. A firm in a perfectly competitive market would suffer if it sabotaged its cheapest products because rivals would jump at the opportunity to steal alienated customers. Starbucks, with its coffee supremacy, can afford this kind of price discrimination, thanks to loyal, or just plain lazy, customers.
The practice is hundreds of years old. The French economist Emile Dupuit wrote about the early days of the railways, when third-class carriages were built without roofs, even though roofs were cheap: "What the company is trying to do is prevent the passengers who can pay the second-class fare from traveling third class; it hits the poor, not because it wants to hurt them, but to frighten the rich."
The modern equivalent is the airport departure lounge. Airports could create nicer spaces, but that would frustrate the ability of airlines to charge substantial premiums for club-class departure lounges.
Starbucks' gambit is much simpler and more audacious: Offer the cheaper product but make sure that it is available only to those customers who face the uncertainty and embarrassment of having to request it specifically. Fortunately, the tactic is easily circumvented: If you'd like a better coffee for less, just ask.

Why Do Houses Cost So Much?

Randall O'Toole:

"If this happens, you can blame urban planners for creating the bubbles. Throughout the United States and much of the rest of the developed world, home prices are rising fastest where planners have imposed rules aimed at slowing or controlling growth. Planners call this growth management, of which smart growth is a recent variation. By preventing homebuilders from meeting the local demand for housing, growth management leads to sharply increased housing prices. This in turn attracts speculators who have shied away from the stock market. As a result, housing prices in many areas have risen far above the true value of the homes."

Is this a plausible analysis?

The Eternally Sprawling City

Virginia Postrel:

"Most of the problems people attribute to L.A.'s sprawl--notably traffic and long travel times--are actually caused by its density. The same is true in New York, however defined. Forget driving to New Jersey or Connecticut. It can take 45 minutes to travel the roughly five miles from the Upper West Side to Greenwich Village, even if you take the subway. When you pack a lot of people close together, the place tends to get crowded. That's great for culture and commerce, but it ratchets up social stress and makes getting places harder."

What do you think? If people spread themselves out across the landscape, do the highways end up more congested or less congested?"

The War Against Suburbia

Joel Kotkin has a commentary on the war against suburbia in the Wall Street Journal [subscription required]:

"Suburbia, the preferred way of life across the advanced capitalist world, is under an unprecedented attack -- one that seeks to replace single-family residences and shopping centers with an 'anti-sprawl' model beloved of planners and environmental activists. The latest battleground is Los Angeles, which gave birth to the suburban metropolis. Many in the political, planning and media elites are itching to use the regulatory process to turn L.A. from a sprawling collection of low-rise communities into a dense, multistory metropolis on the order of New York or Chicago. Mayor Antonio Villaraigosa has outlined this vision, and it does not conform to the way that most Angelenos prefer to live: 'This old concept that all of us are going to live in a three-bedroom home, you know this 2,500 square feet, with a big frontyard and a big backyard -- well, that's an old concept.'"

Do you think it is an old concept? Kotkin refers to the idea as an "imposed vision." He points out that there is now a substantial effort to use public monies to expand underused train systems, build downtown condos, convention centers, and even sports stadia. He says there is a widespread prejudice in planning deparments of our universities and in our city bureaucracies against suburbs and single family neighborhoods. He writes:

"Acolytes of such worldviews in our City Halls are now working overtime to find ways to snuff out "sprawl" in favor of high-density living. Portland's "urban growth boundary" and the "smart growth" policies promoted by former Maryland Governor Parris Glendening, for example, epitomize the preference of planners to cram populations into ever denser, expensive housing by choking off new land to development. More recently, this notion even has spread to areas where single family homes and suburbs are de rigueur. Planners in Albuquerque have suggested banning backyards -- despised as wasteful and "anti-social" by new urbanists and environmentalists, although it is near-impossible to find a family that doesn't want one. Even the mayor of Boise, Idaho, advocates tilting city development away from private homes, which now dominate the market, toward apartments."

Kotkin suggests that perhaps the best known anti-sprawl government policy was the urban growth boundary in Portland. He believes the result was not the "new urbanist nirvana" envisioned by the proponents, but rather the result has been higher land prices within the boundary and people and businesses have been moving away from Portland in the direction of the communities across the Columbia river in Washington state. He cites that 95% of the regional population increase has taken place outside the city limits.

Perhaps people like living with suburban sprawl? If Kotkin is right about Portand, then people seem to have chosen to live farther away rather than live in the more densely populated "planned" areas within the urban growth boundary. Kotkin also refers to recent polls that say "roughly 51% of Americans . . . prefer to live in the suburbs, while only 13% opt for life in a dense urban place."

Kotkin's conclusion:

"It is time politicians recognized how their constituents actually want to live. If not, they will only hurt their communities, and force aspiring middle-class families to migrate ever further out to the periphery for the privacy, personal space and ownership that constitutes the basis of their common dreams."

Borking

With the new hearings and likely appointment of Alito to the supreme court, people are again remembering Robert Bork, a Reagan nominee of 1987, whose failed political campaign sunk his chances before the explosive hearings even got underway. With the new occurrence of the 24 hour 'news' media, the supreme court nominees can gain more public attention. When I consider democracy in general terms, it seems reasonable to assume a well informed populace would constitute a stronger society. However, with the current state of affairs, featuring a sharp rise in partisan politics (a device actively fed by a citizenry that believes in the enormous over simplifications contained therein) is the attention being paid to the supreme court nominees a positive trait for our democracy to posses, or simply the way in which the lifetime positions of the justices will be undermined by the fact that they will essentially need to be elected or confirmed in the court of public opinion?

technology amendment

With the recent debate surrounding Presidential powers to monitor the telecommunications of suspected citizens, as well as the discovery of the NSA, a highly secret department of the government, it seems that our Constitutional Liberties are again unsafe. If we adhere to the protective state point of view, and believe that the Constitution protects or right to privacy, then could a new Amendment be added which would in some way protect our virtual privacy? People currently fear, justifiably so, the threat of identity theft. The amount of information available to those who know how to get and exploit it, greatly enhances ability of cyber criminals to gain access to any conceivable amount of private information; an unpleasant thought. However, while it is true that most people are likely to have their identity stolen in their lifetime, this definition can be broad and the odds of a catastrophic theft of personal information is actually quite low. If we imagine a war-time government, with vast funding, legislative capabilities, and access to the cutting edge of personal surveillance, it is not at all inconceivable to picture our federal government unabashedly mining our private information for potentially misguided reasons of 'security'. Can this amount and level of sensitive information be scrutinized, without any limits on those investigating? Clearly, if ever there were a contemporary reason to adjust the constitution, it would be to protect the new individual rights found within the realms of technology.

Rent Seekers

Today, several law makers 'returned' or donated money received from one of the most influential lobbyists in Washington, after he plead guilty to fraud. Though this story is catching a great deal of media attention for its similarity and complex ties to the recently embattled Senator Delay scandal, one cannot help but laugh at the 'shocked' reaction from the Hill. Is not rent seeking simply a part of our social system of government? After recently reading Ayn Rand's Anthem, I began to wonder what the alternative to this situation would be. Clearly rent-seeking does have a significant negative impact on our rights (Kelo), however, the condition of an honest government would by necessity imply a strong dogma that would compel those running the government to turn away from corrupt activities. However, in the government that oversees the largest and wealthiest economy in the world, such a devotion could only be preserved on the highest scale of fanaticism, which is clearly an undesirable motivator for any government. If the above is true, then is the best we can hope for some middle ground in which we incentivize our politicians with the culturally understood promise of mass bribery yet view the culmination of that understanding with disdain when it offends our notions of propriety?

What is GAO and Who is David Walker?

I listened to a past program or rerun on C-Span, which actually took place on March 20, 2005. It involved the interview of David Walker who is Comptroller General of the United States. Prior to this I never gave much attention to the U.S. comptroller or of the GAO or Government Accountability Office. Little did I know, that they serve the longest term of any U.S. position, which is 15yrs.

When Walker was asked by his host Brian Lamb, “Why do we need the GAO?”
Walker responded, “We need the GAO in order to try to help the Congress discharge its constitutional responsibilities to assure the performance and help – pardon me (ph) – improve performance and assure accountability of government for the benefit of the American people, to help it discharge its oversight responsibilities, its authorization responsibilities and its appropriations responsibilities. So, we are the watchdog for the Congress. And I think our primary client is the Congress, but our beneficial client is the American people.”

The GAO seems to be a fairly good agency, which is often called the "congressional watchdog" because it investigates how the federal government spends taxpayer dollars. It gathers information to determine how well executive branch agencies are doing their jobs. Its investigations answer such basic questions as whether government programs are meeting their objectives or providing good service to the public. Ultimately, GAO ensures that government is accountable to the American people.

GAO supports congressional oversight by:
· evaluating how well government policies and programs are working;
· auditing agency operations to determine whether federal funds are being spent efficiently, effectively, and appropriately;
· investigating allegations of illegal and improper activities; and
· issuing legal decisions and opinions

As I mentioned, the GAO seems like a very good agency, which offers some very useful information to Congress, but what good is it if all they do is provide it and it is never utilized. Congress doesn’t seem to be taking the GAO’s advice, if you take a look at the Social Security and Medicare program (to name a few). It does give Congress some accountability but it also puts a lot of pressure on Congress because the information is available to the media and special interest groups. The media and special interest groups can utilize this information to inform the American people on how well the elected officials in Congress are listening to the GAO’s advice. I think it is good that we have “congressional watchdogs” but what good is a dog that just watches and is not allowed to "bite", to ensure reform of some current programs. It is probably the people who need to do the biting by electing officials who stand behind their promises.

Links: <http://www.gao.gov/> and <http://www.qanda.org/Transcript/?ProgramID=1014>

Economics and Government: O'Reilly's Price Theory Again

"You should remember that earlier this semester we talked about Bill O'Reilly's analysis of gas price increases following Katrina. You may also have noticed that our fearless leaders in Congress are still talking about 'windfall profits,' while the prices you are paying for a gallon of gasoline have fallen significantly of late. Well, apparently O'Reilly is still holding to his earlier analysis."

Read the rest.

Baseball & Economic Development

Here's a local economic development story to take a look at:

"The city and MLB worked to finalize the terms of the lease yesterday, but it was not completely done. It is unclear whether the council will approve it when it votes. Many council members have threatened to vote against the lease if it does not contain additional financial commitments from baseball, and some members said they will reject it because they favor building the ballpark near RFK Stadium, where it could be less expensive.

City officials, including Mr. Williams, insisted yesterday the RFK site is not necessarily cheaper because it would have a smaller impact on economic development in the area and because the city already has sunk more than $100 million into the South Capitol Street site. MLB officials said they would consider the RFK site only if Mr. Williams asked for it. The city is doing an updated cost estimate for the RFK site and expects the results shortly."

I think there are a few things to note:

1. Apparently some on council say they think a site near the existing RFK Stadium would be less expensive. I suspect this isn't what they really think. I suspect they think if located at RFK their constituents will benefit (and that they will have greater chances of re-election).

2. Note the reference to cheaper and smaller economic impact in the second paragraph. This seems confused to me. From an economic point of view, we would probably say that emphasis on being less expensive is a bit misplaced. The real interest should be which location for the facility would mean the community enjoyed greater net benefits. Smaller cost, other things constant, would mean greater net benefits. But greater benefit, other things constant, also means greater net benefits. Economics advises that the facility should be located at the site that means greatest net benefits.

3. There is a reference to having sunk $100 million on one of the sites already. Sounds like a sunk cost to an economist, and that means the number $100 million should be seen as irrelevant to the best decision to make moving from now and into the future. Unfortunately, the reference here to the relevance of a sunk cost is an illustration of a common economic mistake made in debates of the best public policy to choose.

4. Consider the reference to the economic impact at one site versus another site. The idea is to pick which site provides the greatest economic impact. Unfortunately, economic impact is not the same as net (social) economic benefit. Instead the reference is to estimates of jobs, spending, and taxes. The idea here illustrates a common mistake in economic development discussions. The economic impact on jobs, spending, and taxes invariably consider only government spending money to build the facility. Of course the money to build the facility comes from somewhere. The estimates of economic impact never show estimates of jobs, spending, and taxes that would have been "generated" if the money spent on the project had been left in taxpayer pockets. Interest in economic impact is simply bad economics, and is very likely to lead to public policy that contributes to relative economic decline rather than to true economic development. Of course, good economic analysis would emphasize the question of whether we have a source of market failure. If we had a source of market failure, then we might well have reason to think a good choice of public policy would enhance economic development of the community. But, without a source of market failure, we have to expect government's choices will not be efficient and hence will not contribute to the community's economic development.

Supreme Court's Abortion Case

The Supreme Court heard the first abortion case in 5 years on Wednesday. The topic of this particular case is to whether or not it should be a requirement for doctors to notify a teenager's parent before preforming an abortion. This topic is a repetitive one, as it has been the main topic for many abortion cases in the past. The issue of a patients right to privacy, regardless of the patients age. After reading this article I am very interested to read the outcome of the case. Will the Supreme Court site police power as they enjoy doing it so much? How will they justify the use of police power in an abortion case? The article also mentions "health exception." Could this be turned into a public health case and therefore the court will rule in favor of protecting public health? Based on the other cases from the class, this one sounds like it is shaping up to be a wrong opinion by the court based on a stretch of what is in the Constitution.

Economics and Government: It Just Doesn't Work That Way

An addendum to an earlier post.

Corporate Welfare

Agriculture is one of the most interfered-with industries on earth. Across the world, government subsidies wreak havoc with farm economies. Though we haven’t made much progress in eliminating the payments, this concept is increasingly understood by Americans. Many people believe that the low income of farm families justifies farm subsidies. But in reality most of the subsidies go to large farms and big agricultural businesses. Recently President Bush said that the U.S. would eradicate its farm subsidies “as other countries do the same.” I would like to know what is preventing him in the first place. Eliminating these subsidies would save tax payers money, lower the cost of food, encourage international trade and lower global poverty, as well as promote increased domestic production. What’s less appreciated is that subsidies also cause environmental problems. By encouraging the cultivation of unneeded marginal land, overuse of scarce environmental resources, and increased use of chemicals, farm subsidies harm the land as well as consumers.

The government spends $9.3 billion dollars a year on farm subsidies. Apart from the apparent burden on tax payers, it hurts Americans in a number of other ways too. The Organization of Economic Cooperation and Development estimated that in 2004 government subsidies cost the country $46 billion dollars a year through direct taxation coupled with the high domestic food prices brought on through the tariff quotas that kept lower priced foreign food out. Cutting these subsidies would save a lot of tax payer’s money, like 9.3 billion a year, and would lower domestic food prices, especially helping lower income families that spend a higher portion of their budget on food. By abolishing these subsidies we would rely more on foreign produced food. We would then be able to save $46 billion dollars a year through cheaper food from international trade along with the money we would save in taxes. Also, many farmers from poor countries would be able to raise their incomes, and this would be a significant step to ease tension between third world countries and the U.S.

Lastly, by supporting prices above the market-clearing level, governments encourage farmers to expand production. Agricultural subsidies that stimulate larger production further increase the tax burden to consumers, and impede international trade. In some cases the government actually pays farmers to not produce their maximum through deficiency payments. This program encourages farmers to intensify production and to plow up more land, often highly erodible, to qualify for larger government deficiency payments. These practices would be reduced, along with the use pesticides and chemicals, if subsidies were eliminated.

Alternative minimum tax a new tax all together.

While playing around on the internet I decided to do a search on taxes. I did this and came across the Alternative minimum tax or AMT. I never knew an AMT existed, probably because I don’t make very much money as it is. So for those of you like me I feel the need to explain what it is before going into a discussion.
The AMT is a tax that is paid if the AMT tax amount exceeds the amount you would normally pay for the regular taxes. There is one deduction that can be taken. While, you can't deduct state, local and foreign taxes under AMT rules, you can deduct the refunds, which would be considered income under the regular tax rules. You’re also taxed on the spread on your incentive stock options; because of this your tax basis for the shares you bought is higher under the AMT, meaning your tax bill will be lower when you sell the shares. The more exemptions you have the more likely it is that you will have to pay the AMT. You really only have to find out which tax you have to pay if your gross income is $75,000 or more. The AMT makes you pay 26% on the first $175,000 and 28% on the excess. An example of having to pay the tax is as follows: Your regular income tax is $47,000. When you calculate your tax using the AMT rules, you come up with $58,000. You have to pay $11,000 of AMT on top of the $47,000 of regular income tax. The last thing you need to know about the AMT is that is does not recognize inflation.
First I want to say that the AMT is a flat tax rate. This is because everyone who has to pay the AMT pays 26% of there income no matter what, and if they exceed $175,000 then they pay 28% on the extra money no matter what.
Because the AMT does not recognize inflation this means every year more and more people will be paying the AMT. In my research I have found in several places that in the year 2010 the AMT will affect 33 million taxpayers. This is a great thing for people who like me like and support flat taxes. The only problem is that when state taxes and social security is added you’re paying out about 33% or a third of your income. I would love to make $175,000 a year but I am not too happy to hear that I would lose $58,333 resulting in $116,667 for the cost of living. I feel that 33% is way too much for anyone to have to pay to the government.
As for the deduction, they are very rare. If you aren’t going to get a refund from the federal government because you make too much money, do you really think your going to get a refund back from the state. Secondly, being taxed on the spread on your incentive stock options is a catch 22. If you buy 10 shares of a stock at $100 then under the AMT rules you have to pay taxes on the $1000. In a best case scenario say the stock value goes up from the $1000 to $2000. The AMT forces you to pay additional taxes on the $1000 you made. Now instead of the stock going up, say the stock goes down and that $1000 becomes $100 and you sell it. You would have to pay taxes like you still had the $1000 instead of paying taxes on the $100.
The last major thing that I think is wrong with the AMT is that it hurts the middle class more so then the upper and lower class. The lower class doesn’t have to pay the AMT ; in fact most end up getting refunds. This tax was originally designed for the upper class, so that they wouldn’t be able to have all these deductions, such as huge business expenses, and get out of paying a “fair share” of taxes. Now the middle class is getting hit with the AMT and all the deductions are going away. In fact the AMT seems to discourage marriage and having children. This is because people who have to pay the AMT loose the deductions others get for marriage and having children. You can’t throw your child to the wolves just because you don’t want another exemption, which can make it so that you have to pay the AMT. So now that the cost of living has gone up and your middle class with a spouse and two kids and you have to pay the AMT you may have some trouble saving money for the children’s college or for your retirement. (Since we know that we are never going to see our social security money.)
In conclusion, as much as I dislike the progressive tax, it works and it seems to be a lot better then the AMT. Unfortunately, I know that I will probably have to pay the AMT. The only solution is to get rid of the tax system as we know it and install a flat rate tax that recognizes inflation, and takes at most 20% of income. The flat tax should also start at a certain income level say $30,000. In this way, there will be no deductions and the people who are under the taxable income won’t get any refunds. But I don’t think I’ll get my hopes up, it will probably never happen.

some webcites to learn more :
http://www.fool.com/taxes/2003/taxes030926.htm, http://www.smartmoney.com/tax/filing/index.cfm?story=amt, http://money.cnn.com/2005/11/09/pf/taxes/amt_101/?cnn=yes

Regulating Video Games

As the video game industry has grown by leaps and bounds the past decade, more and more vulgar and offensive games have been released, all to the dismay of many politicians. Many congressman and state officials have regarded that playing these violent and adult themed games might lead to unethical action later in life. They say kids will be so affected and influenced by these games to the point where they might even emulate what they are able to do in virtual reality in real life. There is hardly a correlation that playing video games will make you a violent person, and between 1994 and 2000 juvenile and young adult violent crime arrests have decreased by 44 and 24 percent respectively.

But Yesterday Senators Hillary Clinton and Joe Lieberman announced they would introduce legislation to prohibit retailers from selling video games rated "mature" or "adults-only" to teenagers. Their argument that this bill will empower parents by protecting their kids is inapt. Parents should regulate what their kids are playing because they know what material is best suited for their children. The Entertainment Software Association noted that all the new video game consoles include parental controls that can limit children's access to graphic content, similar to the V-chip embedded in new television sets. In addition, Congress isn’t supposed to have this kind of police power. If violent video games were a real threat to pubic health, then it’s in each of the States hands to protect its people. And so Governor Gary Locke of Washington recently signed a law that would ban the sale of games to minors that depicted against law enforcement officials. Measures like these are not untried. Indianapolis and St. Louis passed laws banning the sale of violent games to minors and both laws were ruled unconstitutional because they violated the first amendment, and Gary Locke’s law is likely to be struck down also.

I believe Congress as well as state officials doesn’t have the right regulate video game sales. There is no market failure involved with selling violent games to minors, so there is no reason for Congress to legislate. Furthermore States shouldn’t be using their police power to regulate these offensive games because it’s quite clear that these video games are not a threat to the safety of the pubic health, and regulating these video games is a violation of free speech under the 1^st Amendment. Parents are in the best position to regulate what their kids are playing. They are in a far more superior position to know if a video game is unsuitable for their children, not the government.

Another Time for Choosing

Law is a specialised field with specialised training, because it involves the analysis of language in light of broader legal policies that cut across the whole body of law. If you've ever seen a pro se brief or the briefing of a lawyer that rarely analyses actual law, it's quickly apparent why such work is done by specialists and that it's only done at the highest levels by the brightest, most rigorous lawyers. If you've ever read an intellectually incoherent state court decision, you see the costs of poor training and low degrees of intellectual ability.

Constitutional law is a difficult subject to speak upon because not many American citizens completely know the Constitution or can be quickly brought up to speed on precedents. For example, I think tax laws are knowable, but I wouldn't want to be a judge in that area, as it is a specialised field with a lot of traps for the unwary. To those that think any intelligent citizen can become an effective Supreme Court Justice because Constitutional Law is simple, they portray that they either don't know how complicated the subject can be--e.g. The dormant commerce clause, Colorado River abstention, Footnote 4 of Carolene Products--or that the politicians want a results oriented justice and are unconcerned how a justice makes his decisions. Just because something is knowable does not mean it's simple. If one believes constitutional law is at once knowable, complicated, and specialised, it's obvious why judges and other lawyers of great achievement and demonstrated intellect and knowledge of the field are the ones that you want making decisions. Without their intellect, their random and uninformed decisions will often be wrong and unpredictable.

Why do judges write opinions at all if the work they do is so obvious and the issues so straightforward? And what does it say about judicial claims of authority that they have long been staked on written opinions that have narrative integrity, both in a single case, and with respect to the law as a whole? Without power of their own, the judiciary depends upon its ability to justify its own assertions against those with physical power, namely the executive and legislative branches. This has been accomplished historically through written opinions that show a transparent and reasonable decision-making process. Opinion writing shows respect for the litigants and the process that is always somewhat suspect due to the absence of popular control over the judiciary. Writing opinions shows that what took place ultimately stemmed from the intersection of human reason, written laws with discernable meaning, and the facts of a particular case. That opinion is written thoughtfully and clearly is of fundamental importance to the integrity of the process and the reputation of the courts. The obvious results-oriented decisions of the 1960s did a great deal to discredit the courts, when ordinary people could discern that what had taken place was sophistry. Writing judicial opinions--like the analytical and writing process of so much law it--shows that a result alone is not enough.

The best and brightest lawyers have long been propelled into the judiciary. By best, I don't mean wealthiest or most persuasive in a courtroom, but those most capable of thoughtful, deliberate, and rigorous legal reasoning. It's important for politicians to recognise that this task can be both objective--or at least with a range of reasonable disagreement--but also requires specialized training and a well-trained, capable intellect. It's no more elitist to recognise this fact in the realm of constitutional reasoning, than it is in the realm of physics or math or other specialized fields.