Archives: August, 2010

Free Parking and the Geography of Cities

Unlike Randal O’Toole, I was delighted by Tyler Cowen’s New York Times article on the high cost of free parking. And indeed, if I’m reading O’Toole’s post right, it sounds like Cowen and O’Toole don’t actually disagree on the policy issue: both agree that business owners should be free to decide how much parking to supply.

The debate so far has focused on whether parking mandates push the price of parking below the market rate. But I think the more important effect is on the geography of cities. Parking mandates (and other regulations) preclude developers from catering to people who want to live in pedestrian-friendly neighborhoods.

Parking mandates necessarily mean that every large building is surrounded by a large parking lot. And for someone who doesn’t own a car, a parking lot is just a nuisance: a big, empty space he must walk across to get anywhere. Regulations that effectively require a parking lot around every store and restaurant almost guarantees that walking to them won’t be practical.

As Jane Jacobs pointed out, pedestrian traffic is highly sensitive to density. Even a modest reduction in the density of a neighborhood can have a big effect on pedestrian traffic. And as the number of pedestrians falls, so too will the number of businesses that cater to pedestrians. So it’s probably true, as O’Toole says, that charging for parking spaces wouldn’t dramatically reduce the amount of driving people do. But this is partly because the proliferation of parking lots has made walking impractical. Fewer free parking spaces wouldn’t just raise the price of car ownership; it would make car non-ownership more pleasant and convenient.

Government regulations often have subtle unintended consequences. Parking regulations have been on the books so long that the results have come to seem perfectly natural to us. But free markets are unpredictable. If developers had the freedom to decide how much parking to supply, the results might surprise us.

They Should Earn Our Trust

Ronald Brownstein points to the many measures showing Americans have lost confidence in their government and in some private institutions.  He concludes that these signs of distrust “point toward a widely shared conviction that the country’s public and private leadership is protecting its own interest at the expense of average (and even comfortable) Americans.”

Maybe. But there is another interpretation. Consider the recent performance of the government and of more than a few businesses. Most Americans do not pay attention to the details of governing. They have other things to occupy their time. They do, however, notice important matters like war and the economy. Since about 2004, Americans have steadily soured on the wars in Iraq and Afghanistan. The economy remains weak despite promises to the contrary from the current administration. Banks and auto companies flouted the presumed rules of the capitalist game by seeking and taking bailouts when bankruptcy loomed.

The last nine years have given the public little reason to have confidence in the performance of the federal government and of some business leaders. The lack of public confidence Brownstein notes might better be seen as a rational response to what is becoming a decade of incompetence in DC combined with bad faith elsewhere.

Food Stamps Cut?

Prior to last week’s passage of another $26 billion in bailout money for state and local governments, I noted that the legislation wasn’t really offset:

Congressional Democrats say the measure is paid for with a combination of spending cuts elsewhere and tax increases. However, the new spending is front loaded and much of the spending cuts wouldn’t be realized until after 2013. For example, the Congressional Budget Office’s score of the legislation shows savings from the food stamps program of $12 billion from 2014-2018. Congress can come back any time before that and rescind the cuts.

It’s typical Beltway budgetary sleight-of-hand: increase spending up front and “cut” spending on the back-end to get a more deficit-friendly score from the CBO. Democrats don’t really intend to see these cuts actualized, and have indicated as much. That hasn’t stopped media outlets from across the ideological spectrum from running sensationalist headlines.

A headline from CBS News says “Food Stamps Slashed to Pay for Teachers Job Bill.” A hysterical headline at the leftish Huffington Post reads “Cutting Food Stamps to Save Teacher Jobs: A Hateful Trade-off.” And a headline on the conservative Human Events website claims “Democrats Rob Food Stamps to Pay Teachers.”

Adding to the heat is legislation moving through Congress that would “cut” future food stamps spending to help pay for increased child nutrition programs. But as was the case with the bailout legislation, the only change that’s being proposed is to move forward the expiration date for the temporary food stamp expansion contained in the 2009 stimulus bill.

In addition to unnecessary hand-wringing over the future, the near past is all but being ignored. As the following chart shows, the cost of the food stamps programs has exploded over the decade thanks to the recession and benefit increases under presidents Bush and Obama:

The food stamps program needs to be cut. In fact, the entire federal welfare system needs to be devolved to the states, or preferably, private charity. That phantom cuts following a massive increase in food stamps spending would cause such angst indicates that those of us who believe the needy aren’t best served by Uncle Sam have our work cut out.

Yes, a Free Parking Space Grows in Manhattan

In my recent comments on Tyler Cowen’s op ed on the supposedly high costs of free parking, I boldly wrote, “I defy Cowen to find any free parking anywhere in Manhattan.” That just shows how little time this Oregon resident spends in Manhattan.

It turns out that the western invention, the parking meter (first installed in Oklahoma City in 1935), hasn’t thoroughly penetrated east of the Hudson River. Many streets in Manhattan offer free parking, albeit often with the caveat that you have to move your car from one side of the street to the other every night.

But this doesn’t change my main point, which is that it is one thing for Cowen to argue that cities should not price parking below market rates where there is a market for parking. I have no problem with this. But it is quite another thing to argue, as many urban planners following the Shoup model do, that private businesses should be required to charge for parking (or be limited in how much parking they are allowed to provide) in areas where the market rate for parking is zero.

If Manhattan has so much free on-street parking, why are some people willing to pay hundreds of thousands of dollars for their own personal parking space? The answer is simple. Although Manhattan has one of the lowest rates of per-household auto ownership in the nation – less than a quarter of households own a car – its population is so dense that it has one of the highest rates of auto ownership per square mile. Based on 2000 census data, I calculate that Manhattan has 8,355 locally owned vehicles per square mile, vs. less than 4,000 vehicles per square mile in car-crazy Los Angeles and less than 2,000 vehicles per square mile in auto-happy Houston. So much for the idea that increasing population densities reduces congestion.

Paul Krugman on Carter and Reagan: Wrong Again

Measured in constant 2005 dollars, real federal revenues rose from $968.4 billion in 1970 to $1,197.6 billion in 1980 and to $1508.7 billion in 1990.   In other words, the cumulative real revenue gain was 23.7% under the high and rising tax rates of the 1970s, and 26% under the dramatic reduction in tax rates of the 1980s.

Paul Krugman recently looked at these same figures through his logarithmic Kaleidoscope, and concluded that “the revenue track under Reagan … is exactly what you would expect to see if supply-side economics were just plain wrong: revenues are permanently reduced relative to what they would otherwise have been.”

Financial Times columnist Martin Wolf was so awed by Krugman’s creative artwork that he imagined “the theory that cuts would pay for themselves has proved altogether wrong.”

Notice that Krugman starts his trend with 1970, which was a year of recession and falling revenue.  If he had instead measured real revenue growth between the cyclical peaks of 1969 and 1979, the overall increase would have dropped to 19.5%.  Note too that Krugman ends his trend with 1981 rather than 1980, while suggesting 1981 was part of the glorious Carter years:

The Carter years, contrary to legend, were not a period of economic stagnation and falling revenue because high tax rates were strangling the economy; there was a nasty recession starting in 1979, largely thanks to an oil shock, but overall growth was respectable.

The comment is strange.  There was no recession in 1979, nasty or otherwise.  And non-energy inflation topped 11 percent that year – before oil prices peaked in early 1980.

The continually accelerating inflation during the Carter years, 1977 to 1980, pushed more and more families into higher and higher tax brackets.  It also resulted in brutal taxation of illusory, nominal capital gains and ephemeral inventory profits.   As a percentage of GDP, federal taxes soared from 17.1% of GDP in 1976 to 19% in 1980 and 19.6% in 1981.   Does that really look like a sustainable trend that President Reagan interrupted for no good reason?

The GOP and the “Ground Zero” Mosque

Some leaders within the Republican Party seem to have fixed on a useful club with which to bludgeon the president and his fellow Democrats – Cordoba House, aka the “Ground Zero” Mosque. Over the weekend, Republican strategist Ed Rollins explained how the party would use the issue in the coming months:

ROLLINS: Intellectually, the president may be right, but this is an emotional issue, and people who lost kids, brothers, sisters, fathers, what have you, do not want that mosque in New York, and it’s going to be a big, big issue for Democrats across this country.

“Face the Nation” Host Bob SCHIEFFER: So you see it as an issue that’s going to continue?

ROLLINS: Absolutely. No question about it. Every candidate – every candidate who’s in the challenge districts are going to be asked, how do you feel about building the mosque on the Ground Zero sites? 

This strategy, exploiting still-raw emotion and implicitly demonizing Muslims, threatens to trade short-term political gain for medium-term political harm to the party. And it most certainly will translate into long-term harm for the country at large.

Opposing the construction of a mosque near the Ground Zero site plays into al Qaeda’s narrative that the United States is engaged in a war with Islam, that bin Laden and his tiny band of followers represent something more than a pitiful group of murderers and thugs, and that all American Muslims are an incipient Fifth Column that must be either converted to Christianity or driven out of the country, else they will undermine American society from within.

It isn’t a political slam-dunk, either. Though 64 percent of Americans think a mosque near Ground Zero is ”inappropriate”, 60 percent of all respondents in the same survey, including 57 percent of Republicans, believe that the organizers have a right to build in that location, and presumably would not favor a government prohibition on this activity. (h/t  Nate Silver at fivethirtyeight) If anyone were to show evidence that the parties building the center were in any way linked to the 9/11 terrorists, or funded by or funding these same  terrorists, then the issues at stake would change.  But they haven’t done so, and are unlikely to do so. In the meantime, those GOP leaders who oppose the mosque betray a basic inability to discern public attitudes, even as they propel this country on a ruinous course, headlong into a civilizational war which pits all Americans against all Muslims.

A number of public officials and commentators, not all of them Obama supporters, have staked out a position that walks this country back from that precipice. NYC Mayor Michael Bloomberg’s courageous and eloquent statementon this issue should be read by all, not just Republicans. But Bloomberg is unlikely to swing opinion within the GOP base. So too with Fareed Zakaria, who nonetheless deserves enormous credit for distancing himself from any organization that would adopt a public position of thinly veiled bigotry, especially one whose mission is “to put an end forever to unjust and unfair discrimination against and ridicule of any sect or body of citizens.” Dan Drezner’s take is aimed squarely at right-of-center readers, and sprinkled with a tone of sarcasm; but he is a pointy-headed intellectual, so he’ll have a hard time convincing the most skeptical of the lot.

A more convincing spokesman for sensible voices on the Right is former Bush speechwriter Michael Gerson, who wisely opposes a short-sighted and cynical political strategy to exploit anti-Muslim sentiments. Likewise, Mark Halperin recognizes the political salience of an anti-mosque stance, but advises party leaders to steer clearof that position. Josh Barro at National Review Online renders a devastating refutation of all the dubious arguments erected to block the mosque. 

Indeed, George W. Bush himself set the tone in the immediate aftermath of the 9/11 atrocities, counseling against retaliation against innocent Muslims who had nothing to do with the attacks, and noting that a number of Muslims were killed on 9/11. Other conservative organizations and institutions took notice of Bush’s leadership, and wisely sacked the few voices who preached violence against all Muslims because nineteen of their coreligionists had perpetrated the attacks.

Not quite nine years later, we’ve come full-circle. With Bush enjoying retirement in Texas, who within the GOP will affirm the party’s position that declaring a war on Islam does not advance our nation’s security?

Should Govt Regulate Executive Pay?

Every couple of weeks, the Economist conducts an on-line debate between two economists over a timely public policy issue.  This week’s debate features yours truly, debating Professor Wayne Guay of the Wharton School.  The question being debated:  should government regulate the pay of corporate executives?

You probably won’t be surprised to learn I take the position that government should generally stay out of regulating executive pay (or any pay).  To see my argument, just follow the link.