Why People Live Where They Do April 27th, 2008

Dupont Circle

Marc Fisher in the Post writes about an issue that has long interested me: why people live where they do. Different neighborhoods and jurisdiction provide different amenities that appeal to different people. Suburbs such as Montgomery and Fairfax Counties offer high-quality public schools, a feature especially appealing to middle-class families. Other neighborhoods offer proximity to bars and nightlife, a feature especially appealing to the young and single. Some jurisdictions have low crime rates, appealing to everyone, no doubt, but to different degrees. Others offer affordable housing, something becoming scarcer in DC and close-in suburbs.

Fisher concludes:

In the end, there is a bit of a city-suburb split. Many suburban residents love where they live but labor to pry open hours in which they can take advantage of what they’ve worked so hard to be near. City residents lose out on amenities such as libraries and recreation programs, and on essentials such as strong schools, but gain something some find equally precious: time.

Ask people who live and work in DC and you will find few of them complaining about spending too much time sitting in traffic.

The End of Free Parking April 21st, 2008

The Examiner reports that D.C. Councilmen Jim Graham and Phil Mendelson have introduced a bill to levy a $25/month tax on employer-provided parking, labeling the tax the “Clean Air Act Compliance Fee”.

Though it is good force drivers to pay for their burden on the pubic infrastructure, their sullying of the air, and their use of taxpayer-subsidized oil, the bill does not accurately account for air pollution.

Image two commuting scenarios: a Prius driven one mile to work and an SUV driven thirty miles to work. Certainly the SUV puts a greater strain on the environment and infrastructure, but both vehicles will face the same parking tax. This is why I advocate increasing the gas tax, which is a better indicator of the burden people put on the roads and the environment. However, since the city cannot tax the gas of Virginians and Marylander who drive in, the parking tax is the next-best solution.

My only fear is that such a tax is yet another factor pushing business out to the suburbs. The suburbs, despite their horrendous traffic and lack of practical transit alternatives, offer cheaper office space, the perception of lower crime, and plenty of qualified workers.

It’s Not Easy (Or Popular) Being Green April 19th, 2008

All three candidates have promised the impossible: to cut greenhouse gas emissions and to lower the cost of gasoline.

McCain wants a gas tax holiday from Memorial Day to Labor Day. His rationalization is that the slight savings would encourage consumer spending. He also avers that such boosted spending would bring about economic recovery to offset losses to the Treasury. Yeah right.

The Clinton and Obama camps have added an anti-corporate flare to their equally populist proposals, promising gas tax reductions to be compensated by a “windfall profits” tax on “Big Oil,” the Democrats’ favorite bogyman.

But what about the environment? Any gas tax reduction incentivizes consumption of gasoline and thus the production of greenhouse gases. Cheap gas, often mistaken for being listed in the Bill of Rights, is entirely antithetical to curbing greenhouse gas emissions. Like President Bush’s belief that Americans need not sacrifice one bit to pay for war, the Democrats believe Americans need not sacrifice one bit for clean air or to reduce CO2 emissions. They prefer to shift the burden to “Big Oil” and the auto companies, whom they demand to produce more fuel efficient cars. Candidate resort to rhetoric demanding in increase in the CAFE standards, expecting the auto companies to deliver.

Sadly, raising mileage standards is unlikely to reduce emissions anytime soon. Blaming mileage standards does, though, provide politicians with convenient political cover as they shift the burden of environmentalism to car companies. This is unwise for several reasons.

First, raising mileage standards takes years and does nothing to address the emissions of existing vehicles.

Second, the moment a president signs a bill mandating high standards, the auto industry’s lobbyists will shift into top gear, lunching and golfing in full force to dull the bite of any CAFE legislation either by obtaining extensions or all-out waivers.

Third, a high-mileage vehicle, though emitting less CO2 per mile, can still emit an overall large amount if driven frequently.

The simplest and most effective solution is also the least politically popular: increasing the gas tax to act as a carbon tax. This would immediately reduce greenhouse gas emissions since gas consumption would decline as the price rose. However, while the Democrats like to bash the Bush administration for doing precious little to reduce greenhouse gas emissions, they know that the public would not tolerate any intentional increase in gas prices.

Though the president displays a weak commitment to reducing greenhouse gas emissions, his aversion to Kyoto and other initiatives is more honest than the Democrats’ double-talk. He states correctly that the nation is neither willing nor prepared to pay the economic price of reducing emissions. This is true.

Too many Americans believe they are entitled to cheap oil and Democrats and Republicans have long realized that these people vote. Half of Americans live in suburbs, which are notorious for their car-dependency and whose very existence is due largely to cheap gas and free highways. Are the people who drive to the store, to school, to work, to the mailbox—everywhere!— going to appreciate paying $7.00 per gallon? Not likely.

The Ruse of the Creative Class April 12th, 2008

Richard Florida’s 2003 book, The Rise of the Creative Class explained his theory that the economic growth of cities is driven by the “creative class,” which accounts for 30% of the workforce. Florida defines these “creatives” very broadly as those who use creativity in their jobs. It’s an interesting notion until you realize that his definition of creativity would seem to include any thinking person. Nonetheless, says Florida, this class of people is looking for good experiences in the places they choose to live. Thus, mayors should pave some new bike paths and sponsor art festivals and the like. His list of suggestions oddly resembles the satirical list, Stuff White People Like.

Florida and his team dutifully collected stats to rank cities’ creativity—an index calculated from the number of patents per capita (representing invention), presence of a strong high-tech industry (representing business innovation), and the number of gays per capita (representing cultural openness). Cities that score high on these indices will succeed in the 21st century, Florida pronounced.

His critics, though, weren’t as cheery and noted that his index had not actually bothered to correlate creativity with broad indicators of economic growth. Furthermore, Florida didn’t distinguish city centers from their entire metropolitan areas. Why would Dupont Circle in Washington have any relationship to the economic growth patters in Prince William County, Virginia, an exurb forty miles from Washington?

My long-standing criticism of his theory comes from what the Left might consider “social justice.” Florida’s suggestions to the nation’s mayors essentially come to this: transform your cities into playgrounds for well-heeled, predominantly white, urban liberals and they will reward you with high income tax receipts. Economic growth of cities under the Floridian model would not be fulfilled primarily by improving failing public schools, reducing violence, or lowering business taxes—such policy prescriptions would not sell as many books!—but rather by hosting gay pride parades and subsidizing indie rock venues.

Florida’s “creative class” theory is an odd form of classism in itself. It uses the rhetoric of the Left (celebrate diversity! hire a green-haired secretary! bike to work! etc.) to justify a policy of wooing the well-to-do, an accusation often levied at the Right.

Having taken a cue from Law and Order, Florida has turned his original book into a full franchise with numerous sequels essentially pushing the thesis of the original work. Though I read The Rise of the Creative Class and its sequel, The Flight of the Creative Class, I will not read his latest book, Who’s Your City?, which right-leaning City Journal has reviewed as tired and flimsy:

One criticism of The Rise of the Creative Class was that the ideas Florida proposed for attracting certain types of people were at odds with surveys that actually asked people what they thought was most important in a city. I don’t recall a single reference to public security and policing, for instance, though of course the lack of them almost completely destroyed New York’s attractiveness in the late 1980s and 1990s and continues to hamper the revival of other cities like Newark and Detroit. Similarly, it’s hard to find in that earlier book more than a passing reference to schools and their importance locally. Unfairly or not, the impression one comes away with after reading Creative Class is that if mayors can just figure out a way to attract some musicians and gays to their town, they don’t need to worry much about intractable problems like crime and failing school systems.

In Who’s Your City?, Florida tries to rectify this flaw by commissioning a massive survey asking people what they look for in places to live. Unsurprisingly, the factors that Florida had mostly ignored-including the basics of personal security and education-top the lists of what people, even creative types, seek. In other words, subsidizing arts festivals and enacting legislation promoting openness and tolerance might not matter much if the city’s crime rate is as high as Detroit’s.

Lifestyle surveys suggest that all people, creatives and others, value quotidian issues of safety and quality public services. The only difference is that the people Florida wants cities to lure already have the means to afford private school and other supplementary services to compensate for urban failures. But one need not worry since issues of crime and lousy schools will be moot once your city has been successfully colonized by Florida’s much-vaunted creatives. Their privileged lifestyles will eventually price out poverty and accompanying social ills to some nearby locale (Prince George’s County, Maryland; Oakland, California; etc.).

Though Richard Florida’s creative class may appreciate symphony halls and coffee districts, society would be better served if mayors improved services and fixed schools rather than giving tax breaks for sushi bars.

Trade-baiting April 9th, 2008

One of the most disappointing moments in the recent Democratic debates came when Sens. Clinton and Obama nearly tripped over each other in a contest to denounce the North American Free Trade Agreement (NAFTA). Threatening a unilateral withdrawal from NAFTA upon her increasingly unlikely election, Sen. Clinton admitted that some regions of the country do benefit from NAFTA, while others, primarily in the rust belt, suffer. Sadly, Sen. Clinton fails to explain why the economic interests of those who benefit, including American consumers, should take a back seat to the economic interests of a few rust belt manufacturers.

A recent article in the Post explains that many economists estimate that NAFTA has benefited the United States, particularly Texas:

Overall, the Texas economy has profited from NAFTA, studies have found, with manufacturers taking advantage of cuts in Mexican tariffs to send more electronics, industrial machinery, chemicals and instruments south, according to a 2006 Federal Reserve Bank of Dallas study. The same report found that the export of Texas lumber and furniture declined after NAFTA.

Though Clinton and Obama both promise to “renegotiate” NAFTA, it is unlikely that any renegotiation could reasonably be called a free-trade agreement. Both Canada and Mexico have their share of upset constituencies that would demand more protection in any deal, as would American textile mills and manufacturing unions.

American consumers benefit from cheaper goods and American farmers, particularly corn farmers, benefit from export opportunities to Mexico. One group with a particularly strong interest in protectionism is organized labor. As U.S. manufacturing output has increased steadily over the decades, the number of American employed in manufacturing has dropped. Though output is up, labor unions benefit not one bit from output increases, since their economic lifelines come from the dues of employees. Clearly the anti-trade rhetoric of Sens. Clinton and Obama will woo the hearts of union leaders.

Though Sen. McCain steadfastly supports NAFTA even in front of skeptical audiences in the rust belt, it is unlikely that a possible Democratic win in November would number the days of NAFTA. Shortly after the February debate in the video above, Canadian news outlet CTV reported that a senior Obama staff member quietly reassured Canada’s ambassador to the U.S. that Obama’s words were just to please the crowd:

The staff member reassured Wilson that the criticisms would only be campaign rhetoric, and should not be taken at face value.

The Obama campaign stood by the NAFTA-bashing, of course, but did not deny that his campaign had contacted the ambassador.

I am impressed with Sen. McCain’s defense of NAFTA, since it takes a good deal of courage to support something unpopular. His courage on this matter, though, is only admirable because he is right in his assessment on the long-term benefits of trade. Free trade is always a politically fragile issue since the benefits are subtle (decreases in costs of consumer goods), whereas the resulting job losses, even if only for a few, are obvious and painful.

Despite Ross Perot’s famous prediction that NAFTA would result in a “giant sucking sound” of U.S. jobs fleeing to Mexico, the unemployment rate in the U.S. actually declined after the agreement’s ratification. Furthermore, the biggest competitor for U.S. manufacturing jobs is not Mexico, but China, which lies outside the scope of NAFTA.

Nonetheless, NAFTA-bashing, though popular with the more xenophobic section of the electorate, is widely considered by economists to be a net benefit to America. This is probably why the Obama campaign official quietly reassured the Canadian ambassador that the senator had no plans for withdrawal.

The Clinton campaign, as I have noted, also double-talks on trade issues. It was recently revealed that Mark Penn, one of Sen. Clinton’s senior advisors, also consulted the Colombian ambassador about how to secure a U.S.-Colombia free-trade pact. Upon public revelation of this seeming double-dealing, Penn resigned. All for election-year politics. George Will explains:

Mark Penn’s sin was to be caught doing something sensible, surreptitiously. That is the only way Democrats can do sensible things regarding trade when their party is pandering to organized labor. Penn’s downfall makes him a member of a species that many Democrats insist is large and about which Democrats theatrically grieve: Penn is a casualty of free trade.

Penn’s consultations with the Colombian ambassador were to no avail. House Speaker Nancy Pelosi promised today to change House rules to kill the bilateral deal—a deal that she helped negotiate! The New York Times explains:

What Democrats do not want, many of them say, is a vote that would force lawmakers to choose between the labor and working-class opponents of the measure, who say that trade has cost American jobs and led to wage stagnation, and the Wall Street and manufacturing interests that favor the deal.

Interestingly the article notes that both Sens. Clinton and Obama oppose the deal (publicly, at least), “in part because labor groups say that President Álvaro Uribe of Colombia has not done a sufficient job of cracking down on anti-labor violence committed by right-wing groups.”

George Will fires back:

Colombia’s unions, however, document that the number of murders of their members has sharply declined. Edward Schumacher-Matos, visiting professor of Latin American studies at Harvard, notes that “it was far safer to be in a union than to be an ordinary citizen in Colombia last year”: The murder rate of unionists was less than one-eighth the murder rate of Colombians generally.

Sen. Clinton’s opposition to free trade is in markèd contrast to her husband’s position on trade. Though one should not expect her to adopt unswervingly the views of her husband, it is doubtful that her NAFTA threats are sincere. She is pandering to her a core constituency of union members, whom she needs to turn out in significant numbers in Pennsylvania’s upcoming primary. Be it with Mexico, Canada, or Colombia, the Democratic Party has turned against the nation’s overall best interest in trade. The Washington Post’s editorial board, certainly no bastion of conservatism, put it well:

Are [Clinton and Obama] unaware of the real statistics on NAFTA’s effects? Voters are left to wonder, and to ponder which would be worse: that the candidates are sincere and misguided or are insincere and lacking the courage to speak honestly.

Good question.