Sunday, February 28, 2010

Would High-Speed Rail Affect Urban Sprawl?

When you are sitting in your car in a parking lot on the insterstate, staring out the windows and hoping for a better song on the radio, lots of ideas can sound like good ones. The highway and road systems are often chastised by policy makers, city planners and environmental activists as a cause of negative sprawl, and many different problems in our urban and suburban areas. In fact, President Obama is interested in pursuing a plan to develop more high-speed rail systems across the United States in order to eliminate many of these challenges.

The President's vision for the rail system involves several components that he believes will be a marked improvement from our current situation. He argues that the rail system will be able to pull Americans off of highways, which should lower our dependence on foreign oil, as well as lower our gas bill from filling tanks. He argues that there will be increased labor productivity in the areas serviced by the rail, by decreasing the amount of congestion that travels in and out of the city. Most impressively, he argues that there will be a great environmental impact, a lessening of damage to the planet.

Edward Glaeser, an economist at Harvard, would disagree with this assessment from an economic perspective. He has been attempting to run a cost-benefit analysis over several weeks to develop an evaluation of the effects of a single rail-connection between Dallas and Houston. His estimates for this area specifically would seem to indicate that the costs would exceed the benefits (including estimates for environmental and social benefits) by $524 million dollars per year, if the ridership of the rail was equal to the air traffic between the two cities. Clearly this is a simplified and fairly estimated argument, but it presents a huge difference between an investment in America that will successfully save us money from reliance on fossil fuels and an expenditure that is unsustainable. As long as Glaeser's assumptions hold reasonably well to reality, he paints a very convincing argument that a high-speed rail system would do very little to change the existing situations in metropolitan areas for the better.

Do Government Polices Increase or Decrease Efficiency?

Through the first couple of weeks during class we have been discussing different aspects of Urban Economics, more specifically
government policies related to the issues that come with urban sprawl. From these early discussions many economic topics have
come up.
The main economic topic that comes up in discussions is the topic of efficiency. What I've been noticing is that there has been
some debate about whether there is such a thing as efficient when it relates to urban sprawl. The main problem as I see it is that we
are searching for a way to define efficient urban sprawl. This is our mistake because instead of trying to define per se in stone what
is efficient sprawl versus what isn't efficient sprawl, we should be observing the market for symptoms of inefficiency. If we can find
even one economic symptom of inefficiency, we can observe this inefficiency to determine what its cause is in order to fix it. As a
classical economist, I believe that if there is signs of government intervention or other outside intervention there has been or still is
a market failure present which relates to market inefficiency.
I believe that the presence of government policies is the sign of government intervention, but my economist side wants to call
it government interference. The reason I call it government interference is because I believe that there are signs that the government
implements policies that cause market failure instead of solving market failures; one such instance is the policies that either permit
or restrict building additions onto one's own personal property. This is a caused market failure that we have been referring to in
class as a government failure, because the government has increased the transactions cost for increasing the utility of one's
personal property.
To conclude, we can find proof of both, government intervention, in the policies they implement, and that there are market
failures that relate to urban sprawl and urban development. Thus, what we should do is examine the policies that we have
currently implemented and determine whether they are there to solve a market failure or if the policies are whats causing the
market failures.

Wait, it didn't really work? You're kidding!

Not that this comes as a surprise but the tax credit offered for buying a new house, didn’t really work according to Alejandro Lazo. It is simply putting off dealing with the housing market. One of the main problems currently is that there too much supply for the demand. The housing market was down in January from December, and had been down in December from November. We all keep hearing that it’s a great time to buy a house, foreclosures are making them cheaper AND you get a tax credit? Well that certainly spells a good deal! Once the tax credit started, people got really excited and went ‘yeah I can afford one of the foreclosure houses, like that house across town that I’ve always liked’, and bought houses. And then the excitement kind of wore off, and then the housing market decreases. This somehow came as a shock from my understanding, which why it was a shock is beyond my understanding. Isn’t this basic supply and demand? I mean really make something cheaper, more people buy the good, then when prices rise back up they buy less of the good? Making the good cheaper in the first place when it’s not actually cheaper is a great way to get screw up demand in the first place.

So what’s the solution? Extend the tax credit. Of course, that will make this whole problem go away. Temporarily. And the temporarily part is the worrisome part really. There’s been this lovely little history where when something is meant to be temporary, and is ‘helpful’ depending on how you look at it, it is no longer temporary. At some point in time the housing market is going to have to start wearing big kids pants and fend for itself. Sadly the extension of the tax credit makes that a little more unlikely. Somewhere down the road I’m sure our children will pay for this, until then it’s all just hoping that this is a one-time extension, not a lifetime extension.

"A New Goal"

In his State of the Union address in January, President Obama said:

...we need to export more of our goods. Because the more products we make and sell to other countries, the more jobs we support right here in America. So tonight, we set a new goal. We will double our exports over the next five years, an increase that will support tow million jobs in America. To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistence with national security.

When I heard this I thought that it's a nice thought but how you get people to other countries to buy our goods and services if they are not already doing it? You cannot increase demand for products that is just not there.

I decided to do a little more research into how the administration is expecting to accomplish this task. The articles I read where not clear on how they expect to do this. One article said the plan is to have "tougher enforcement of trade pacts, strong government advocacy to US Exporters and increased export financing." It sounds more like a plan to come up with a plan.

Both articles stated that the administration is going to create an export promotion cabinet. Because we all know that bureaucrats are the most effective and efficient way to get nothing done. In fact an article from the New York Times quoted Sidley Austin, a lawyer, who commented about this new cabinet. Austin said "rearranging chairs around a table, or changing the name of the table, seldom charges results."

I still think it is theoretically possible but unlikely for the US to double exports in the next five years given what I have read about the Obama administration's plan.

Thursday, February 25, 2010

Is this a dream?

There are some people who have a dream to make Colorado Springs into a Utopian city. In the vision statements of this dream, there are a few things that I would like to point out. First has to do you transportation: "We embrace a culture of a highly-mobile community through viable alternative transportation options (e.g., buses, light rail, shuttles, bicycles) to reduce road congestion and automobile-generated pollution." This statement is repeated throughout the country in one way or another; that is, the sentiment that there is too much pollution and too much congestion is a widely discussed topic. People blame the congestion (and pollution) on sprawl and thus encourage government to develop public policies to diminish this "problem". But as we have discussed in class, bad public policy usually is followed by bad public policy.

The second part of the vision statement that I would like to point out has to do with public safety: "
Parks, public spaces, and streets are family friendly and safe to enjoy free of crime and drugs 24/7." Now, I understand that this is a vision, but if you don't explain how you are going to achieve this safe environment then I don't see how it would be possible. The government currently offers what it sees as the best option for the public's safety, and in general I think the public is safe. However, would I let me (theoretical) children go play alone in a park, or street? Heck no! So this vision, while it sounds nice is not something that is actually probable in the next ten years (especially when there is no indication how these dreamers plan on making it so).

The next bit of the statement of vision that I would like to draw your attention to is about a planned environment: "
A vital downtown Colorado Springs is a focal point of the greater Pikes Peak area preserving, creating, and promoting a safe and vibrant hub for business, family entertainment, culture, arts and educational activity. Downtown will be a destination for local residents and area visitors. Downtown Colorado Springs incorporates mixed use development creating a high density area that is walkable, bikeable and pet friendly." Is it just me, or does this statement seem to be totally about stopping sprawl? They say that we need to concentrate our efforts into the growth of the downtown area (growth going up), not in growth outwards. They seem to believe that it is vital that we (the general public) live in a high density area. Personal preference aside, this is still only a vision. People must live where they find the highest utility, not where some dreamer tells them is best for society.

The final aspect I would like to point out of this vision statement has to do with the economy of this dream city: "
Our employers attract the Nation’s best talent for quality jobs and have a commitment to community." This goes into what we talked about in class one day, a city government basically bribing employees (or entrepreneurs) to come to their city. One reason this might be seen as desirable is that is might bring the "local knowledge" up within that society. However, doesn't new business and new people in a city mean that there might be more opportunity for sprawl? What if this dream city does not "agree" with these entrepreneurs and they decide to leave the city for a different one? There are simply too many maybe's to be worried about to believe that this concept of "Attracting the Nation's best talent" will actually work. How do you plan on attracting these people to your city anyways?

According to The Gazette, '
“We’ve got a lot of vision out there,” said David Menter, the Transit Planning Supervisor for the Mountain Metropolitan Transit the agency that runs the region’s public bus service, “but vision hits reality in the annual budgeting cycle.”' I think that if they did not rely on a budget, and just let the city run on its trial and error there would be an even better result than these dreamers are dreaming about.