Wednesday, November 30, 2011
Nov 30, 2011
Banana giant bring 375 jobs to Charlotte
This is an interesting video as it points out how governments attempt to bring businesses and jobs to their states and cities with incentives and how that may not always pan out. With Chiquita moving its headquarters from Cincinnati Ohio to Charlotte North Carolina. Apparently the Cincinnati incentivized Chiquita to “create” 90 jobs and the Charlotte government anticipates that the move will lead to a “creation” of 375.
These are interesting estimates as they assume that these jobs will come from the people of these respective cities. I think that most if not all of these jobs come from Chiquita promoting people from their other branches around the nation. With something as technical as logistics and upper management I would think that a company like Chiquita would want to promote from within their own company so that they are certain that the individuals filling these positions have the experience necessary to fulfill the duties of the new position.
I also wonder what the chief differences in the business climate are that have led to this choice. It would be interesting to look into whether either city follows development that is highly structured by the government to reduce sprawl.
According to the Sun Times, Charlotte offered 22 million. It seems that each city has made a public stance on how valuable they deem each job in their city. With an offer of 22 million on the table in the hopes that it means 375 residents of Charlotte will get hired by Chiquita, doesn’t that mean Charlotte is willing to pay close to $60,000 per job that is created? In fact, the average job is supposed to be around $107,000. If companies sell out to the highest bidder then local governments are contributing to their own demise.
Absorbing Chiquita’s risk to relocate is not a role of government in my view. This practice just encourages companies to locate away from where they would be most profitable. It is also most likely not in the best interests of the city because they could be setting themselves up to have a lot of vacant buildings from companies that relocated there because of artificial funds infusion of subsidies.
Tuesday, November 29, 2011
Today I read an article on The Boston Globe by Paul McMorrow that attacks some zoning pitfalls (Click on the title to read it). On this opinion piece, he goes on to make some controversial statements that I thought were worth addressing (or not...). The subtitle of the paper reads: “Sprawl isn’t so much a deliberate choice as it is a product of bureaucratic inertia.” It seems to me that McMorrow is arguing for more bureaucracy in the system, which implies tighter government regulations on matters such as zoning. Now, wouldn’t a bigger government mean less control for the population? The fact that people are sprawling as a product of not having enough bureaucracy appears to be a very deliberate choice rather than what the author presents.
Secondly, he argues that “land is finite and exhaustible, so sprawl is a waste of land.” In economic terms, a distribution is efficient when it goes to the most highly possible valued use. Now, it seems to me that a waste of land as a marketable good would be to prohibit it from being used in a more valuable way. Studies have shown that a very low percentage of the land available in the United States has been developed, which leads me to conclude that there is still plenty of room for growth without seriously affecting any of the natural resources around us.
Lastly, he reasons that “smart growth creates the type of vibrant mixed-use neighborhoods that Jane Jacobs celebrated a half century ago, but there’s no policy imperative in urban romanticism.” This last statement shows, to say the least, a distorted view of Jane Jacobs’ ideas. To be clear, the “vibrant communities” acclaimed by Jacobs weren’t created by any development system arbitrarily set in place, but rather by people and their spontaneous interactions with one another. The best possible way to try to foster these communities into existence is to protect them from government intervention and let people live for themselves. Maybe then we will have communities that resemble such romantic times, but even if not, at least we will know that the power to make deliberate choices will have been honored in the Land of the Free.
Among the problems with UGBs is, apparently, whether or not they even work. Sprawl, the phenomenon that UGBs are meant to constrain, continues despite measures against it. An article from the Journal of Urban Economics (When are urban growth boundaries not second-best policies to congestion polls, by Alex Anas and Hyok-Joo Rhee, from volume 61) even states outright in its title that UGBs are considered inferior to tolls in most cases. There are other problems as well: the fact that policies like UGBs are born from government power rather than the interaction of the market means that there is little opportunity for experimentation. The options are to abide by the rule or be punished. This means that society loses some of its optimal good as well, because experimentation in the market shows whether or not people will use it.
In general terms, I think that there is a problem with the policy, in that it is and is not supportable. It is supportable because the environment that sustains everyone’s’ lives is worth protecting, but it is not supportable because the liberty that makes life worthwhile is impacted and reduced by these policies. But I really can’t be helpful; the best advice that I can give is to let time and innovation cure things in the future, and to find a way to charge those who use a resource at the cost of society to reimburse society.
Monday, November 28, 2011
An article in the Wall Street Journal address the issue of urban sprawl in, believe or not, South East Asia. Kuala Lumpur has been nicknamed a mini Los Angles because of its sporadic and disheveled growth patterns throughout the last century or so.
The World Bank recently informed the Malaysian countries that they need to adopt more “smart cities” or “smart growth” policies in order to attract talent and they need to improve their livability guidelines. This is a tall order for the Asian countries due to the already out of control sprawl that they face. With a poor infrastructure and public transit system, the cities have become less dense and the land use has gone to those who are not using the land to its greater possible use.
The World Bank does not go into detail when the term “smart city” is thrown around, so I will do my best to clarify this term. What constitutes as a smart city is, as the Siemens group puts it, is a city in which improved transportation, green buildings, water conservation and reuse technologies, and smart grid infrastructure are implemented. This intern will create a new blissful happy, carefree Utopia were Kuala Lumpur used to be while eliminated sprawl as we know it.
In response to this statement the region of Kuala Lumpur is aiming at creating a more efficient rail system that will allow more than 60,000-70,000 people to commute between the cities of Singapore and Johor Bahru. I actually believe that this will help in the city’s economic growth and development. However, the next issue that needs to be addressed is all of the natural disasters that Malaysian cities are vulnerable to.
Thursday, November 24, 2011
Over the past five years, health care costs have dramatically increased due in large part to a general unhealthy lifestyle led by many. Obesity has been directly linked to "higher rates of depression, absenteeism, low productivity, and more medical claims. An overweight employee costs employers $5,000 more a year in health costs than a healthy weight individual."One could say that this is an entirely personal issue, but I beg to differ. I think there is a clear externality involved here...
E.g. Suzie chooses to partake in a relatively active lifestyle and makes mostly healthy food choices. Because of this lifestyle, she gets a clean bill from the doctor during her once yearly physical exam and is less likely to develop a plethora of health problems ranging from diabetes, to high cholestorol, to heart issues. Bob, on the other hand, has never endured any kind of physical activity other than the stroll from his car to his office building, which leaves him winded. His daily diet consists of Big Macs and XXL Coca-Colas. Because of his lifestyle choices, he does develop health problems. Suzie and Bob work for the same company and because of people like Bob who cause 1000s of dollars in extra health care costs every year, and misses more work because of it, Suzie is forced to pay more in health care costs (or their employer covers less). Bob is not intending to cause higher costs for Suzie, but that is exactly what is happening. If that isn't a negative externality, I don't know what is! Although a tax is the common way to correct a negative externality, an "obese tax" might be a little silly or extreme.
More and more employers are recognizing the problems associated with unhealthy employees, and are starting to step up. The first article cited above is one of many which discusses the different ways in which employers are encouraging their employees to make healthy lifestyle choices. I think this is a great alternative to another stinking tax. Statistics show that individuals who work out more than three times a week have 44% lower health costs. Lower health care costs for a few lead to lower health care costs for many. If employers can start expecting that their employees will incur less medical costs, they can provide better rates for everyone. If more employers follow suit and encourage their employees to get in better shape, and therefore lead healthier lifestyles, the payoffs benefit everyone.
The second article cited talks about companies (Walmart in particular) who are penalizing smokers. I left smoking out of the previous argument because one, cigarettes are already taxed (and quite heavily in some places), and two, that discussion is much more controversial. But I do fully believe there is clear negative externality associated with smoking as well. I mean, if I'm in a bar as a non-smoker (obviously, not in Colorado, but many other states still permit smoking in public restaurants, etc.) and I'm surrounded by smokers, my health is largely affected, especially since second hand smoke is even worse for your health (because you are inhaling the smoke directly with NO filter). The effect may be unintentional, but it is happening nonetheless. Again, I'm not really looking to get in to the smoking argument, just another interesting article along the same lines.
I know this is easier for me to argue as a healthy indvidual, but I make choices that help me maintain that characteristic and I don't feel like people, like myself, should have to incur higher costs because others don't make the same choices. I'm not even talking about overweight, I'm talking obese, and there is a very clear difference. And yes, there are those out there who suffer from things like a thyroid problem which makes maintaining a healthy weight impossible, but those people are the minority without a doubt. Instead of penalizing those who CHOOSE (because nobody forces them to eat fast food and sit on their butts) an unhealthy lifestyle, it seems more positive and beneficial to encourage them to make healthier choices.
Tuesday, November 22, 2011
Blog series: http://www.grist.org/biking/2011-07-05-bicycling-our-way-into-work-and-out-of-the-great-recession
Two popular topics pertaining to urban sprawl that consistently appear on this blog include: transportation methods and land uses. I recently found an interesting article that encompasses both of these topics in a very compelling discussion about something I have never heard of before: bike rooms. This article titled “A Room of Their Own for 2-Wheeled Commuters” was published earlier this month in The New York Times, and I realized an interesting link between this topic and urban sprawl.
According to the article, the 300-400 square foot bicycle room created in 2008 at 345 Hudson Street in northern TriBeCa (New York) replaced a ground-level unused storage space, and is used by many of the employees that work in the block-long building and were already riding their bikes to work. The costs for creating the bicycle room totaled $30,000, which included the installation of lighting, a new paint job, a new front door, and 10 bike racks at $2,500 each. The building’s landlord also pays an estimated $13 to $30 per square foot annually for rent.
In 2009, New York City created a law that requires commercial office buildings to allow cyclists to bring their bicycles into their offices. The fact that the 345 Hudson Street bicycle room was created before this law exemplifies the underlying motive behind the sprouting trend of bicycle rooms in New York City commercial buildings. Landlords realize that they forfeit the potentially high rent for the precious ground-level space in their buildings, but they also recognize that creating bicycle storage provides an incentive to potential two-wheel commuting tenants and to employees and customers that would take advantage of free parking.
Furthermore, Noah Budnick, the deputy director of the nonprofit Transportation Alternatives, states that bicycle rooms are becoming a selling point for the real estate industry in New York. Landlords are incentivized to create bicycle rooms by the opportunity to earn LEED certification points. LEED certification indicates to the public and to investors that the building contributes to the efforts for establishing a greener community. In the case of 345 Hudson Street and a few other office buildings mentioned in the article, the bicycle rooms that replace an unused storage or basement space portrays land being transferred to its most highly valued use. If landlords can turn an unused space into an incentive for potential tenants or for current employees and customers, why not create bicycle rooms? If tenants, employees, and customers have a safe, weather protected, and free space to store their bicycles, why not trade their four wheels for two?
The topic of bike rooms spurred my interest about the practicality of bicycle transportation in our supposedly sprawling nation. I stumbled across a blog series titled “Bikeconomics” on www.grist.org that discusses the economic impact of bicycling and how the bicycle is “emerging as an effective engine of economic recovery.” At first I found the idea a bit far-fetched, but after reading the majority of the columns in the series, I began to see some sense in Elly Blue’s compelling argument. (I definitely recommend checking out this blog series if you have some spare time.)
I realize that bicycle transportation is not practical for certain cities, climates, and people; a bicycle would certainly not be the best option for a family that must transport kids to school and buy a lot of groceries, or for someone who must travel a long distance in a snowy climate along a route with busy streets and highways. But for a healthy individual that is located in a typically warm climate and within a reasonable distance (5-10 miles) from their job and other economic activities, a bicycle offers a very inexpensive and convenient transportation method. Consider the benefits of two-wheel commuting. Bicyclists can save the estimated $8,485 annual cost of driving a car (according to AAA), take multitasking to a new level by exercising while commuting, and help decrease air pollution in their city, all while still enjoying the same individual freedom that a car offers.
Bicycle transportation offers just as many benefits to cities as it offers to individuals. The blog series briefly discusses these benefits: “A 2008 study in Portland clocked bicycle-related industry alone as contributing $90 million to the local economy every year. Bicycle tourism is another huge boon to regions that can attract it -- in 2010, Wisconsin bragged of a yearly $1.5 billion bike economy.” And to add onto the discussion about the growing trend of bike rooms, city businesses certainly cannot complain about the prospect of reducing the need to provide expensive parking for car-dependent tenants, employees, and customers.
So how does bicycling and the current trend of bike rooms relate to urban sprawl? As we have discussed throughout this semester, transportation and policies affecting transportation directly relate to the spatial size of cities. In general, as the cost per mile travelled or overall cost per trip decreases (usually caused by increase in income or by transportation subsidies), the urban density also decreases as people can now afford move away from the urban center. It’s no wonder our current primarily automobile and mass transit dependent cities experience a decrease in urban density. Yes, bicycle transportation boasts obvious financial, health, and environmental benefits, but perhaps we have overlooked the most obvious benefit: the distance limitations of the bicycle! Unlike car or mass transit dependent residents, bicycle-dependent residents must live close to the CBD.
In my opinion, cities ought to create policies that exploit this specific benefit of bicycle transportation to encourage residents to switch from four to two wheels. New York City’s law requiring commercial office buildings to allow cyclists to bring their bicycles into their offices doesn’t exactly command the creation of bike rooms. But through incentives to both businesses (LEED certification points and a unique selling point for potential tenants) and individuals (safe, weather-protected, and free bicycle storage), this law indirectly encourages bicycle transportation.
Cities could directly encourage bicycle transportation (and also indirectly encourage a denser urban center) through any of the following: 1) a yearly tax rebate for two-wheel commuters, 2) an increase in the amount of safe bike lanes, or 3) bicycle advocacy agencies that educate the public about buying, riding, and maintaining bicycles. According to the Bikeconomics blog series, some U.S. cities such as Oakland have already taken initiative: “Earn-a-Bike programs empower participants with a free bicycle and the skills and knowledge to maintain and ride it well.”
Clearly, bicycle transportation is not for everyone, and clearly these suggested policies will not encourage everyone to switch to bicycle transportation. Furthermore, bicycle transportation cannot entirely shrink and/or reshape a city’s spatial size. But perhaps a city’s policies can simply encourage people to reconsider their primary transportation method and locational choices. The population of bicycle-dependent residents will undoubtedly be smaller than car and mass transit dependent population, but sometimes even the smallest changes can have the biggest impact.
Wednesday, November 16, 2011
Tuesday, November 15, 2011
Monday, October 31, 2011
In light of the reading entitled:THE EFFECT OF TRANSPORTATION SUBSIDIES ON URBAN SPRAWL, I find it interesting that the above article featured in the Associated press discusses how people that took advantage of the lower cost of buying a home before the housing bubble burst are dealing with it now. Even as the confidence of individuals participating in what we call the American economy dwindles further, many people have the same mortgage and interest rate that they had before the recession, but have experienced personal hardship as the participants in the economy begin to trod through the slow correction to prices that had been held up by artificial means.
I think that the ease with which many americans were able to get homes a few years ago because of government intervention, is very similar to how the road subsidies mentioned in our reading drove transportation costs down by quite a bit. Both of these government policies had noble ideas behind them, but it isn’t that hard to see where these pieces of legislation went awry. Though the errors manifest themselves in different manners, one can use either of these subsidies as case studies as to where bad policies can lead to even worse consequences.
It is funny how highway subsidies were probably initially provided for a few reasons bootleggers undoubtedly were happy with how good roadways would provide a reliable infrastructure with which to build up the trucking industry which could be seen as a good by the baptists because it would eliminate an overland transportation monopoly that had been held by the railroads for nearly a century.
Freddie Mac and Fannie Mae were most likely supported by bootleggers because of all of the money to be had in the constructing of new homes with the support of the government. Baptists, more than capable of hiding the ulterior motives under the thought that such subsidies would give housing to needy families just trying to live out the American dream.
It is funny how both of these subsidies have at least incentivized if not contributed to sprawl in America. Cheap transport got americans out to cheap land on the outskirts of cities, and with the help of cheap loans houses were built on large lots away from the city causing vast outward expansion of the urban areas. It is ironic that many officials in government hate sprawl yet probably voted for these subsidies in some capacity whats more is a possible solution to transport based causes of sprawl proposed in the reading for this week is raising the taxes on things related to transportation in order to “coax consumers into driving less and relying less on motor transport so that they are less vulnerable to energy price based shocks to the economy” something tells me that this will not go exactly as planned.
The Economist’s article from earlier this month about social housing in China (No way home: giving the urban poor a place to call home) piqued my interest about the economics of housing policy. Income, current housing prices and access to mortgage financing comprise just a few of the factors that influence people’s choices of residential location, and policy makers have long been attempting to expand social and economic opportunity for low-wealth individuals and families through a variety of housing options such as housing vouchers, mortgage interest subsidies, and public housing. Access to affordable housing for low wealth individuals and families promises more than just shelter; their quality of life is increased as they also gain access to better educational and employment opportunities. But what economic implications do policy makers face when trying to achieve “a decent home for all at a price within their means?” I would like to focus on two different policies- one that influences demand and one that affects supply.
The housing voucher program is a demand-side policy that gives rent certificates with a value based on household income and the fair market rent to low-income individuals or families to purchase housing that meets minimum quality standards. As the household’s budget line shifts to the right, there is a trade-off between housing and other goods. Granting households with a larger budget and the freedom to choose the utility maximizing consumption combination of housing and other goods causes an increase in both household consumption and household utility. However, the voucher program causes the demand curve for moderate quality housing to shift to the right as low-income households begin to demand less of low quality housing. As the demand for moderate quality housing increases, the equilibrium price also increases in order to compensate for the excess demand. Additionally, the increase in moderate quality housing prices decreases the supply of low quality housing by slowing the filtering process between housing levels, and consequently the decrease in supply of low quality housing increases the price. This increase in low quality housing prices hurts low-income families that do not receive housing vouchers.
Public housing is a supply-side policy in which the government builds housing units of minimum standards in large quantities specifically for eligible low-income individuals and families and charges a rent of no more that thirty percent of the household income. Similar to housing vouchers, public housing shifts the households’ budget line to the right by decreasing the cost of housing for the individual or family. Again, the ability to make trade-offs between housing and other goods increases the household consumption of goods and household utility. But in this case, the implication is that the cost of public housing significantly exceeds the cost of private housing. According to Green and Malpezzi in “A Primer on US Housing Markets and Housing Policy, the production cost of new low-income housing is twice the market value. A large supply of low quality housing already exists, which means that the least expensive new low quality housing costs more than existing used housing. Additionally, the private sector can build new low-income housing more efficiently than the public sector. Social housing yields low return rates, but the developer may be influenced by the low risk.
In China’s case, the social housing program appears to be more of a political strategy instead of an effort to benefit urban residents. The article states that the central government aims to complete 36 million social housing units by 2015. Zheng Siqi of Beijing’s Tsinghua University expressed her concern over the sustainability of the project; she estimated that the government is only paying for ten to twenty percent of the $204 billion construction costs. Furthermore, the central government declared that they would not allow local authorities to build new office buildings for themselves if they did not meet their social housing quotas. Considering the economic implications of social housing, it seems that there are other housing policies to best accommodate China’s rapidly growing population and to successfully provide affordable housing for the low wealth population. But with the supposed motives of the central government in mind, I would surmise that this housing policy might fail to make the necessary housing additions or changes that China needs.
Saturday, October 29, 2011
This is a commentary on an article written by Marcy Burchfield, Henry Overman, Diego Puga, and Matthew Turner entitled, “CAUSES OF SPRAWL: A PORTRAIT FROM SPACE. Within this article, one interesting piece of information comes from a poll result taken by the Pew Center. The poll stated that within the sample, people were almost equally divided on how to stop sprawl. Half wanted government involvement while the other half did not.
There is not much known about the “scattering patterns” of sprawl. So dealing with this type of problem can be hard to find a resolution to. One step to “fight back” sprawl is to determine what causes sprawl, but can be a problem in itself. The authors of this article suggest that cities will sprawl more if there is uncertainty about population growth, the type of terrain, and if the road system was built around a single rather than public transit system.
The data collected for this article suggests that from 1972-1992, there has been a constant growth pattern of sprawl in specific areas. Now the question becomes what should we do to limit this phenomenon? Involve Government (force) or look into other options of city planning such as letting the private sector (market forces) dictate the growth of cities? I’m a proponent for the non-governmental approach to solving sprawl; however zoning may be a problem. Meaning you may have a Wendy’s behind your house.