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Liberalizing Cities
From The Ground Up
Apparently, IBM helped implement a congestion pricing solution in Stockholm, Sweden. Could commercials like this help break down aversion to market-based solutions? [hat tip: The Overhead Wire]
Of course, Chicago is just privatizing the revenue from meters, not the actual parking spaces. Plus, the city will regulate rate increases, but it’s a step in the right direction. (right?) For today’s politicians, this is a great way to get windfalls of money today for revenues of future generations in order to mask their fiscal irresponsibility. I think we’ll see more of this during the current mess as other municipalities catch on. Ideally, cities should auction off the spaces (including the land), with no regulations on rates or use of the land. Let market mechanisms determine the highest-and-best use of the spaces and land. Chicago Tribune: Most city parking meters to cost $1 an hour [Hat Tip: reader, Dan M] City Hall officials said that after the first five years of the 75-year parking meter lease, rate hikes will be subject to approval by alderman and are expected to be at the rate of inflation. The $1.1 billion to city coffers will come from Chicago Parking Meter LLC, which is made up of two Morgan Stanley infrastructure funds. The Daley administration said $400 million will go into a long-term reserve, $325 million will be spent in city budgets through 2012 and $100 million is earmarked for programs helping low-income people. An additional $324 million is headed toward a fund city officials said “may be used to help bridge the period until the nation’s economy begins to grow again.” and a video:
Wow! This market is a mess. As a great follow up to his posts at CafeHayek on government’s intervention in the housing market, Russell Roberts discusses the situation and bailout with reason.tv: Also… Here’s the video from an Economics forum discussion at MIT (my Alma mater) on Wednesday: The US Financial Crisis What Happened? What’s Next? And another forum at USC. [HT Richard’s Real Estate and Urban Economics Blog]
I enjoyed this short video that compares Chicago’s Lincoln Square, where I have lived and Buffalo Grove, which is a suburb similar to where I grew up. The video was produced by CEOs for Cities, a Chicago based organization that advocates for cities. Their website gives this description: A new analysis shows that high gas prices are not only implicated in the bursting of the housing bubble, but that the higher cost of commuting has already re-shaped the landscape of real estate value between cities and suburbs. Housing values are falling fastest in distant suburban and exurban neighborhoods where affordability depended directly on cheap gas.
This is a topic I want to cover more thoroughly, but for now I present a one hour documentary video on green buildings for you leisurely viewing. I came across the snagfilms website from a recent Wall Street Journal article. Most of the documentary videos lean towards “progressive” tastes, but hopefully they’ll add some free-market content such as Friedman’s “Free To Choose” videos. Through quick browsing, this video seemed to be the only one that had relevance to Market Urbanism. I think it does a decent job dispelling the Urbanism Legend that high density is bad for the environment. However, some of the commenters seem to fall for the myth that further government intervention will somehow solve the problem. They all seem to forget that progressive government meddling in transportation and land use has done much to cause the problems of sprawl and auto-dependency that modern progressives are now trying to fight with more intervention. [Watching it a second time, I wanted to point something out. One commenter stated that European and Japanese developers plan for a 50 year life-cycle of buildings, while in the US only 12 months. This is absolutely false. Developers usually use a 10-year discounted cash flow model, but still incorporate a sale value of the property based on projected incomes in the 11th year. That sale value could be calculated on the cash flow of the next 10 years and so, on, but they usually use a more simple calculation for the 10th year sale. They could use 50 year models, but they wouldn’t give much better information than the standard 10-year model. European developers use the same methods as the US. Anyone who says otherwise is trying to decieve you.]
The latest edition of the Atlantic Monthly features an article by John Staddon, a Professor of psychology and brain sciences at Duke University. The article discusses some of the differences in how the US and Britain regulates traffic and how there are unintended consequences to over-regulation. Distracting Miss Daisy: I began to think that the American system of traffic control, with its many signs and stops, and with its specific rules tailored to every bend in the road, has had the unintended consequence of causing more accidents than it prevents. Paradoxically, almost every new sign put up in the U.S. probably makes drivers a little safer on the stretch of road it guards. But collectively, the forests of signs along American roadways, and the multitude of rules to look out for, are quite deadly. Economists and ecologists sometimes speak of the “tragedy of the commons”—the way rational individual actions can collectively reduce the common good when resources are limited. How this applies to traffic safety may not be obvious. It’s easy to understand that although it pays the selfish herdsman to add one more sheep to common grazing land, the result may be overgrazing, and less for everyone. But what is the limited resource, the commons, in the case of driving? It’s attention. Attending to a sign competes with attending to the road. The more you look for signs, for police, and at your speedometer, the less attentive you will be to traffic conditions. The limits on attention are much more severe than most people imagine. And it takes only a momentary lapse, at the wrong time, to cause a serious accident. The tragedy of the attention commons concept reminded me of a video I recently came across on youtube called “Awareness Test.” In fact, the article refers to the […]
With the referendum approaching, the debate over rent control is heating up in California. This video is pretty balanced in showing both sides. There are some memorable quotes, like “social security and pension plan would not pay the market rent, so I just wouldn’t eat.” I guess this guy values his $375/mo apartment over food. Or the pro-rent-control activist who says, “If you can’t find a place now, what will it be like if we lose rent control?” Another says, “Economically, this would be devastating.” I encourage them to take microeconomics, but I think economics was banned in San Francisco. Was that Proposition 76?
This post has been released as the first in a four part series: Rent Control Part One: Microeconomics Lesson and Hoarding Rent Control Part Two: Black Market, Deterioration, and Discrimination Rent Control Part Three: Mobility, Regional Growth, Development, and Class Conflict Rent Control Part Four: Conclusion and Solutions Opposition to rent control among economists spans the political spectrum, including over 90% of American and Canadian economists. In fact, Swedish socialist Economist Assar Lindbeck famously said, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing it.” (Assar Lindbeck, The Political Economy of the New Left, New York, Harper and Row, 1972, p. 39) Without getting into the morality of restrictions on property rights, I will discuss the more subtle consequences of rent control over a series of posts. Quick Microeconomics Lesson: As stated by the National Multi Housing Council: Rents serve two functions essential to the efficient operation of housing markets: they compensate providers of existing housing units and developers of new units for the cost of providing shelter to consumers; and they provide the economic incentives needed to attract new investment in rental housing, as well as to maintain existing housing stock. In this respect, housing is no different from other commodities, such as food and clothing — the amount producers supply is directly related to the prevailing market price. Those of us who have studied microeconomics understand the near-universally accepted supply/demand consequence of rent-control: a decrease in the quality and supply of rental housing over time. But, for those who need a refresher or quick intro lesson, Professor Alex Tabarrok of George Mason University and the popular Marginal Revolution blog explains the microeconomics of rent control in this video: When you have some spare time, watch this more […]
Watch it right here: And also, Kunstler on oil & suburbia:
Not directly speaking about urbanism, but the same ideas can be applied to green developers, and even developers in general. ‘“You serve people by making things people want.” And if people want pollution-free power, the free-market can deliver it.’ Watch here.
