The post Survey: New Yorkers like Manhattan, the subway and more housing appeared first on Market Urbanism.
]]>One question (p.8) asked “If you could live anywhere, would you live…” in your current neighborhood, a different city neighborhood, the suburbs, or another metro area. Because of Manhattan’s high rents, high population density, and the drumbeat of media publicity about people leaving Manhattan, I would have thought that Manhattan had the highest percentage of people wanting to leave.
In fact, the opposite is the case. Only 29 percent of Manhattanites were interested in leaving New York City. By contrast, 36 percent of Brooklynites, and 40-50 percent of residents in the other three outer boroughs, preferred a suburb or different region. Only 23 percent of Bronx residents were interested in staying in their current neighborhood, as opposed to 48 percent of Manhattanites and between 34 and 37 percent of residents of the other three boroughs.
Manhattan is the most dense, transit-dependent borough- and yet it seems to have the most staying power. So this tells me that people really value the advantages of density, even after months of COVID-19 shutdowns and anti-city media propaganda. Conversely, Staten Island, the most suburban borough, doesn’t seem all that popular with its residents, who are no more eager to stay than those of Queens or Brooklyn.
Having said that, there’s a lot that this question doesn’t tell us. Because no identical poll has been conducted in the past, we don’t know if this data represents anything unusual. Would Manhattan’s edge over the outer boroughs have been equally true a year ago? Ten years ago? I don’t know.
Another question asked people to rate ten facets of life in New York City, such as the economy, mass transit, and housing. Not surprisingly people were most dissatisfied with housing costs; 48 percent of adults rated New York housing as “poor.” By contrast, New York’s mass transit was the most highly valued part of city life; only 20 percent of people rated it as “poor.”
A third question asked people to endorse or oppose various policy changes. One was “loosening land-use regulations in order to allow the building of new housing”. Surprisingly, 59 percent of adults endorsed this change; evidently, NIMBYs are in the minority. Roughly equal proportions of Democrats and Republicans endorsed more housing!
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]]>The post Protectionism Is Already Harming American Workers And Cities appeared first on Market Urbanism.
]]>Both Vermont Senator Bernie Sanders and New York reality television personality Donald Trump have based their presidential campaigns in part on the issue of trade. Both of them oppose free trade policies like the North American Free Trade Agreement and the pending Tran Pacific Partnership, arguing that free trade has resulted in American jobs going overseas, leaving American workers worse-off. To remedy this situation, Trump has proposed declaring China a currency manipulator and imposing duties on Chinese-made goods, while elsewhere he’s advocated a 35 percent import tax on items made in Mexico and a 20 percent tax on all other imported goods. Sanders has also advocated imposing tarrifs on countries that manipulate their currencies to subsidize exports.
To counter both candidates’ narratives of heartless corporations offshoring American jobs or unscrupulous foreigners “stealing” jobs that belong to American workers, economists and commentators from across the political spectrum have compiled impressive arrays of statistics proving that free trade actually benefits everyone. But they didn’t have to do so much. There are already examples, right now, of protectionist legislation that explodes the myths of the Trump and Sanders crowds.
Since 1978, the “Buy America” provision of the Surface Transportation Assistance Act has forced transit agencies and passenger railroads like Amtrak and commuter rail services to have around 60 percent of the equipment and structural components manufactured in the United States if they want federal funding for their projects, unless they apply for and receive a waiver.
Has this provision protected American workers? Does the United States now have a thriving rail equipment industry capable of competing with European, Japanese and Chinese companies, bearing out Alexander Hamilton’s “infant industry” argument?
No.
According to Metro Magazine, the Buy America provision makes “significant supply-chain disruptions” likely because the American market share for bus and train components will decline and manufacturers will pull out in order to focus on meeting requirements for larger Indian and Chinese orders. The policy also hinders innovation, as requirements for American content would discourage technology transfer.
“Those who want to place greater mandates or structured procurement incentives on the marketplace may, in the long run, create fewer, not more jobs,” wrote Metro’s Cliff Henke. “The market distortions these proposals would cause will likely raise the prices or create delays for goods, services and projects delivered — which usually also means higher costs — or lower performance quality. Even if they are short-lived, these effects threaten to shrink job creation because fewer cars, buses and systems can be procured with the available funding and potentially undermine the political case for greater public transportation investment if the new rules undermine quality and performance.”
Delays and price increases have already become a way of life for transit agencies attempting to fulfill the Buy America requirements. It has become common for a foreign-owned company manufacturing rolling stock to commit to building a factory in the United States in order to fulfill the provisions. State and city politicians, eager to be seen to be Doing Something, then enact subsidies and help with site acquisition and permitting.
South Korea’s Hyundai Rotem, for example, built a new factory in Philadelphia in 2006, after winning a contract to build electric multiple units for SEPTA. Much flag waving and stories about blue collar jobs resulted, but it soon became apparent that nationalism can’t make up for skills.
The original SEPTA order took seven years to fulfill and an order by Boston’s MBTA resulted in cars of such poor quality the T had to have them rebuilt at great expense in Rhode Island. For a recent order for new subway cars, the T rejected a Hyundai Rotem bid in favor of one from a Chinese company.
Hyundai Rotem is hardly the only company to offer nothing but delays and poor quality in its dealings with American transit agencies. France’s Alstom was hired in 2010 by PATCO to rebuild its railcars at a cost of $194 million at its Hornell, NY facility and as of 2014 the rebuilt cars had failed every single test put to them.
Each delay and cost overrun – which hurts transit riders, who are usually the people protectionist politicians claim to be helping, by increasing cancellations due to over-reliance on aged equipment and forcing the agency to spend more money, preventing it from investing in maintenance and driving fare increases – makes the agency gun-shy about dealing with the same company, so the next order goes to another company and the cycle repeats. The MBTA, for example, has light rail vehicles by Boeing, Bombardier, Kinki Sharyo and Ansaldo Breda. For its next order, it’s contracted with a Spanish company, CAF.
The delays and high costs associated with Buy America have helped to make American transit costs the world’s highest. The Congressional Research Service found that new bus prices were double in the United States versus Japan and South Korea. According to Alon Levy, locomotives purchased by Amtrak cost 30 percent more than the European equivalent, increasing costs by $100 million.
“In other words, it’s a scam,” Levy wrote. “Blocking parallel imports ensures only a select number of vendors can bid, driving up prices. Usually there’s a small sop to American labor, well-publicized in the media with photo-ops of people in hard hats – e.g. the 250 jobs heralded for the [Amtrak] order – but the bulk of the extra money goes elsewhere. It creates makework for consultants and lobbyists. It increases vendor profits, since fewer companies, typically the largest and most global ones, can bid.”
And that’s just rolling stock. Since Buy America applies to all aspects of transit work, including construction, the policy also inflates the costs of building tracks, stations, elevators and escalators.
It is evident that protectionism is already harming American workers and American cities. A Trump or Sanders regime would harm them still more and benefit the lobbyists, Wall Street insiders and patronage politics both men claim to be running against.
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]]>The post Urban[ism] Legend: Transportation is a Public Good appeared first on Market Urbanism.
]]>As Tyler Cowen wrote the entry on Public Goods at The Concise Library of Economics:
Public goods have two distinct aspects: nonexcludability and nonrivalrous consumption. “Nonexcludability” means that the cost of keeping nonpayers from enjoying the benefits of the good or service is prohibitive.
And nonrivalrous consumption means that one consumer’s use does not inhibit the consumption by others. A clear example being that when I look at a star, it doesn’t prevent others from seeing the same star.
Back when I took Microeconomics at a respectable university in preparation for grad school, I was taught that in some cases roads are public goods. We used Greg Mankiw’s book, “Principles of Economics” which states the following on page 234:
If a road is not congested, then one person’s use does not effect anyone else. In this case, use is not rival in consumption, and the road is a public good. Yet if a road is congested, then use of that road yields a negative externality. When one person drives on the road, it becomes more crowded, and other people must drive more slowly. In this case, the road is a common resource.
This explanation made sense, but I was skeptical – something didn’t sit right with me. Let’s take a closer look.
First, Mankiw uses his assertion as an example of rivalrous vs nonrivalrous consumption, while not addressing the question of excludability. Roads are easily excludable through gates or any other mechanism that could restrict access.
Furthermore, Mankiw’s assertion that an uncongested road is nonrivalrous is simply confusing rivalrousness with the fact that the road is under-utilized and/or over-supplied at certain times.
For a silly example: if the government literally manufactured mountains of marshmallows free for the taking, Mankiw would have to consider marshmallows equally as non-rivalrous and non-excludable as uncongested roads in the US. Would he then call marshmallows a public good?
Thus we can clearly see that all roads (when done right) are neither nonrival nor non-excludable. We can use the diagram below (from Living Economics) to see that a congested (or tolled to prevent congestion) road is a private good, and in the case that a roadway is oversupplied, it is simply a “low-congestion good”, often called a “club good.”
I found this diagram at a very helpful site: livingeconomics.com
Roads are the more commonly misused example of a public good, but we can apply the same logic to transit. First, most transit operations in the US already use a method of exclusions: the turnstyle. Second, we can see that non-rivalrousness is simply a function of over-supply in the case of the subway car that isn’t full to capacity.
As economist, Don Boudreaux puts it :
So I’m more than sympathetic to the claim that government provision of roads, bridges, and highways distorted Americans’ decisions over the years to drive and live in suburbs. But my sympathy for this claim comes from my rejection of the classic, naive case for government provision of public goods — and once that case is rejected, it cannot then be used to argue for government provision of, say, light-rail transport.
Does this alone prove that roads should be privatized? No, but the fact roads are either private goods or grossly oversupplied help weaken anyone’s case that transportation is government’s business in the first place.
I should warn you, if your Microeconomics professor teaches you this misconception unchallenged (perhaps using the Mankiw book), and gives you a true/false exam question of whether an uncongested road is a Public Good, you may want to answer “true”, or else be prepared to dispute your grade. (And feel free to send your professor a link to this post.)
Next time you catch a commenter repeating this Urban[ism] Legend (like Jeremy H. did), refer them to this post. Here are a few other links to back you up:
Are Roads Public Goods, Club Goods, Private Goods, or Common Pools? by Bruce Benson, Floria State University
Privatizing Roads by Tim Haab, “Environmental Economics” (blog)
Public Goods and Externalities: The Case of Roads by Walter Block, Loyola University
Highways Are Not (Economic) Public Goods by Rob Pitingolo, “Extraordinary Observations” (blog)
Public Goods from an Austrian Economics perspective
The post Urban[ism] Legend: Transportation is a Public Good appeared first on Market Urbanism.
]]>The post Private Buses: Econtalk Takes A Second look at Santiago appeared first on Market Urbanism.
]]>Munger and Roberts discussed the advantages and problems of the evolution of the system over the years. In the case of the private system with over 3,000 competing private bus companies, accidents and injuries were common, and pollution was problematic. However, the regulation and publicization of the buses led to unintended consequences that were probably far worse than the drawbacks of the private system. Unfortunately, although the administration has apologized for the failures of the system, it would be politically impossible to revert to some of the beneficial aspects of the private system.
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]]>The post Matt Yglesias fails to make the right case against highways appeared first on Market Urbanism.
]]>Or consider the fact that Randall [sic] O’Toole is indignant about the prospect of public expenditures on mass transit systems, but appears to have little to say about public funding of highways. This, too, looks more like a case of narrow business interests than sterling free market principles.
While Yglesias’ instincts are right – current transportation markets in America are highly distorted – the reason they’re distorted has little to do with the ways highways are financed. Based on some basic figures, Randal O’Toole concludes that the vast majority of road funding – over 80% – comes out of user fees. Now, of course there are still some subsidies there, but it’s really nothing compared to the subsidies that mass transit systems receive, which in America never even come close to covering operating costs, never mind capital expenditures. Now, there are some problems with the 80% number, such as the government’s favorable access to bond markets and the legacy of infrastructure that wasn’t paid for with user fees, but all in all, it’s hard to argue that roads have a subsidy advantage over mass transit.
However, that’s not to say that Yglesias doesn’t have a point when he says that libertarians and conservatives have blind spots when it comes to how they see transportation. But the real government benefit that the road/car system has over mass transit is density: there are innumerable regulations at every level of government in the United States which favor low-density, single-family detached housing over the denser forms that dominated non-rural areas before the 20th century. Successful roads as we have in America require this low density to remain (almost) financially solvent – it would be very difficult to cope with people’s road needs if they were allowed to build as densely as they would without maximum density zoning rules and minimum parking regulations.
As a thought experiment, imagine your local town/neighborhood with twice the density. Chances are, the roads would quickly become very congested. They would have to be widened, which would require money, and even more money than normal, because the government would have to purchase valuable land next to existing roads. (That is, assuming that eminent domain is not used.) The gas tax would have to be raised, and soon the costs would get out of hand. On the other hand, mass transit would become more profitable rather than less, because much less track needs to be laid to satisfy the same demand, and mass transit systems have much more excess capacity than roads. If densities are limited, though, then this alleviates both stress on roads that go through valuable urban property (which are expensive and difficult to widen) and forces people to drive farther, thus paying more in user fees.
There’s a legitimate case to be made against American transportation and land use policy, but condemning highway subsidies ain’t it.
This post was written by Stephen Smith, who writes for his own blog called Rationalitate.
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]]>The post Krugman: Stranded in Suburbia appeared first on Market Urbanism.
]]>Changing the geography of American metropolitan areas will be hard. For one thing, houses last a lot longer than cars. Long after today’s S.U.V.’s have become antique collectors’ items, millions of people will still be living in subdivisions built when gas was $1.50 or less a gallon.
Infrastructure is another problem. Public transit, in particular, faces a chicken-and-egg problem: it’s hard to justify transit systems unless there’s sufficient population density, yet it’s hard to persuade people to live in denser neighborhoods unless they come with the advantage of transit access.
Over the long-run the US can adapt it’s living patterns to expensive oil by curbing it’s habit of subsidizing roadways. However, only if density restrictions soften accordingly.
If drivers were responsible for the full costs of their location and transportation decisions, they would gradually locate to more European-like locations. This will naturally increase the demand for transit. Private investment and entrepreneurship under such conditions should be able to provide innovative solutions to the chicken-and egg problem Krugman is concerned about.
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