Comments Ryan Avent has made
On settlement patterns
All of the research on variable pricing for things associated with driving (be it congestion, insurance, or emissions) indicate that denser, more centrally oriented settlements are the result. By increasing transportation costs, these prices increase the incentive for everyone to be near everyone else.
Think about pre-highway America, when transportation costs were much higher. Cities and towns both were far denser.On Congestion pricing might come in handy posted 1 year, 6 months ago 11 Responses
To Jabailo
Several points. First, commutes aren't the only driving households do. Second, how many households have only one commuter? Third, if households made a housing decision based on a given home price and a given cost of transportation and the cost of transportation then doubles, then households on the margin will find themselves in serious trouble. And of course, if gas prices pose no problem to drivers, it becomes very difficult to explain the recent surge in transit ridership and corresponding drop in vehicle miles traveled.
Billions in transit taxes? Really? You'd think that transit spending wasn't a tiny fraction of spending on highways. What's more, the self-satisfied exurban commuter is enjoying some nice benefits thanks to transit. In Washington, for example, Metro handles around 750,000 trips a day. Local buses carry another 500,000 people, and commuter rail accounts for thousands more. How would our friend the driver find his commute if those trips were instead made in single-occupancy vehicles?
And there are also accident and pollution externalities to consider. Research on the subject has suggested, in fact, that once all costs are taken into account, transit subsidies are actually lower than they should be. One has to take an extremely narrow--and incorrect--view of cost and benefit to find that exurban living and long commutes are anything close to economically efficient, or sustainable.On America is ill equipped to handle expensive oil posted 1 year, 7 months ago 10 Responses
Couldn't have said it better
Nice post, Jon.On Government-financed construction plus carbon pricing is the key posted 1 year, 7 months ago 23 Responses
Retrofitting suburbs
Jon, it's not easy to do this, but it is possible, and often quite successful. Washington provides many good examples, some of which have been built in isolation, many more of which have been built around Metro stations. Two key things about such efforts: 1) suburban development is rough on local budgets, and so local governments are increasingly looking at densification as a means to boost tax base and reduce per capita infrastructure spending; and, 2) as I note in the post, rent and price premia for these new walkable developments indicate a lot of unmet consumer demand.
A planned extension of Metro's Orange Line, recently nixed by the FTA (strongly anti-transit under Bush) would have paved the way for one of the most significant land-use shifts in recent history. Tysons Corner, a car-clogged suburban shopping mall and office park, would have been turned into a gridded downtown, served by four Metro stations. The federal share of the project was quite small relative to comparable highway plans, but the Bushies never seem to fail to make the wrong decision in such cases.On Transit investment should and will be a part of the peak oil solution posted 1 year, 7 months ago 39 Responses
I can't figure it out, either
The constituency is clearly there. I can see why politicians might be hesitant to argue in favor of transit; it sits in the "urban issue" category that only inner-city leaders are allowed to talk about on the campaign trail. That doesn't explain why so few intellectual types embrace transit. It's odd--transit is a far more realistic and cost-effective solution to these problems than some other ideas which get tons of airtime.On Transit investment should and will be a part of the peak oil solution posted 1 year, 7 months ago 39 Responses
Density and transit use
John Dewey, you're just not making accurate statements. Transit ridership on existing systems is increasing. Where transit exists as an option, increased gas prices have limited growth in vehicle miles traveled and increased transit ridership.
Sprawl does cause congestion. The per capita cost of congestion is far higher for residents of the Dallas and Houston metropolitan areas than it is in, say, New York. And the statement that Los Angeles is the densest metropolitan area is highly misleading. If you compute a weighted average, in order to reflect the density at which the average resident lives, New York is twice as dense as LA.
Frankly, I have no problem with cities building themselves as they choose. If Houston wants to continue to build itself in its current manner, then fine. I only ask that commuters pay the cost of the pollution they create, and that the federal government allow cities who'd like to build transit to have the same funding options as those who want to build highways.
You put driving and transit on a level playing field, and we'll see what the market actually wants.On A comprehensive solution to end congestion posted 1 year, 8 months ago 33 Responses
What people want
John, please. There is incredible demand for the tiny pool of federal money available for use on transit. The demand is so great, in fact, that a number of cities have begun building their transit systems without federal help. Surveys conducted by planners increasingly find that commuters are willing to tax themselves to pay for transit.
We built highways for a half century, because we didn't understand what we were getting into--that congestion, pollution, and sprawl would be the result of such an unbalanced approach to transportation. What's that they say about doing the same thing repeatedly and expecting different results?On A comprehensive solution to end congestion posted 1 year, 8 months ago 33 Responses
Some responses
Obviously, any new transit system is going to be considerably more advanced than what we had in 1850. Under the umbrella of rail, different cities have deployed a wide variety of light, heavy, and intercity technologies, which will only continue to improve as investments in rail grow worldwide.
Jon, I'm not sure quite what you're getting at. There are plenty of different configurations imaginable, but I have to say it's more likely we'll see significant expansions of mass transit and intercity rail within the next ten years then market penetration by personal electric vehicles. Another related point: transit oriented development--dense growth around rail nodes--can make a lot of trips walkable. That's one of the chief benefits.
And Sam, you've trotted out two tired old transit fallacies. Yes, a mile of transit costs more than a mile of highway. So what? One lane of rail carries at least six times the capacity of a lane of highway, at a fraction of the energy and emissions cost. And if you wonder why transit doesn't eliminate congestion where it's built, you have to look at the funding disparity between highways and transit, and you have to look at the economics of driving. Roads get billions more than transit, and drivers are heavily subsidized. We should be surprised that the pittance given to transit didn't solve all our problems?On The next generation of infrastructure should help more Americans go carless posted 1 year, 8 months ago 14 Responses
Not just a sub-prime problem
To address a few comments, I don't think that what we're dealing with is primarily a sub-prime problem. Rather, it's the slow accumulation of serious imbalances and a way of organizing our lives that makes resolution of those imbalances difficult.
We have eliminated a lot of the flexibility in our economy by giving ourselves only one transportation option operated by one fuel, and by racking up large personal debts. These two things are connected via massive outflows of capital to oil-exporting nations.
The outcome (probably) isn't calamity, but instead a creeping economic discomfort and malaise. It's not a good place to be in given the very serious problems we're going to need to address in the next decade.On We've borrowed more than we can afford to borrow, sprawled more than we can afford to sprawl posted 1 year, 9 months ago 32 Responses
Hey, Jon
My pleasure.On Land-use policy is not a laughing matter posted 1 year, 10 months ago 24 Responses
More on markets
Well, I think we should be building more transit now anyway. Emissions reduction is not the only reason to support mass transit.
The nice thing about using markets and carbon pricing is that it maximizes results while minimizing consumer pain. Say we introduce a carbon tax. One consumer might be fairly indifferent to one type of cheese relative to another, while production of the two kinds of cheese may involve vastly different emission levels. With a carbon tax, the cleaner cheese is the cheaper one. The customer will choose that cheese, and since he's indifferent between cheeses, he's reduced emissions without harming himself.
Now another customer may care quite a bit about cheese types, and he'll choose his favored cheese with or without a carbon tax. That guy, however, may be totally indifferent to one kind of light bulb relative to another. For him, carbon pricing will incentivize the purchase of the cleaner bulb, and he's no worse off. Since we all have some things that we don't care much about, carbon pricing allows us to cut back on emissions where its cheapest for us to do so. But what can the government do in this case? Well, it could say, "everyone must buy the cheese with the lowest emissions level available." That ends up reducing emissions less and hurting consumers more.
There will be some activities, however, for which all consumers find it difficult to cut back. Maybe it's really difficult to make clean water (I'm making this up for example's sake) without emitting a ton of carbon, but everyone needs water, and so everyone ends up paying lot of carbon tax. In this case, private investors know that any technology they come up with to reduce carbon output in the making of clean water will allow them to corner much of the water market, making them millions. As such, lots of firms with good ideas about water will invest in clean water technology. One of them will hit on something, and we'll get cleaner clean water. And investors will do the same thing for thousands of different products: light bulbs, televisions, iPods, mobile phones, sweaters, and so on. Government can't duplicate this activity--millions of entrepreneurs following the profit motive to make incremental but important improvements in thousands of different goods. Government is far more likely to say: "let's pour millions into ethanol, and maybe into solar panel research, and maybe a few other things."
We absolutely have to harness this dynamic. Now there are going to be cases where the economics make private investment unattractive. There are public goods and other similar products--much of which is infrastructure or network oriented--where government support is absolutely necessary. And you're right, in the event that warming began to proceed on a very short and catastrophic timescale, then there's no substitute for the military-backed authority of the federal government in shaping consumer decisions.
But we're not looking for any old solution. We're looking for the best package of solutions--those that achieve good results without unnecessarily harming consumers or the economy. The market economy has come up with magnificent ways to deliver huge varieties of all kinds of new and improved and cheap and random stuff with great efficiency. Carbon pricing puts that mechanism to work on behalf of the global climate.On Conservatives still don't seem to get global warming posted 1 year, 11 months ago 12 Responses
To Jon
Jon,
I am a big supporter of funding for public transit, which goes hand-in-hand with support for carbon pricing. A carbon tax would encourage more people to use transit, and expanded transit service would reduce the burden of a carbon tax on consumers.
It isn't difficult to imagine a world where private companies developed mass transit solutions. In fact, in the age before massive highway construction, private entities did build and operate transit systems in many of America's large cities. Unfortunately, a half-century of government-funded road construction has destroyed any chance for a private transit company to survive.
Of course, even in a world where private entities did run transit services, those operations should still be subsidized by the government. Transit displays what economists call positive externalities, which suggests that without subsidies, private markets will under-provide transit. And even without highway construction, it's probable that transit would have evolved much as other infrastructure or utility oriented businesses have, becoming either publicly owned or semi-public or heavily regulated.
My main point in the above article, however, doesn't concern infrastructure per se. Reducing emissions is going to involve millions of micro decisions on the part of consumers and businesses, and the market is the most efficient way to deliver cheap and effective conservation and technological solutions within this framework. It's just very difficult for government to replicate this dynamic--to be able to say, look, it will be easiest for consumers to cut back here, and we really ought to invest more in biodiesel as opposed to hydrogen, or whatever.
This isn't to say that government can't have success in technology research. It has, and it will continue to. It's just to say that in looking for the cheapest and easiest solutions to the problem, it would be foolhardy to rule out the market mechanism in favor of a government-funding only approach.On Conservatives still don't seem to get global warming posted 1 year, 11 months ago 12 Responses
One more sally
Sorry to have been absent from the debate for while there. Jon, there is a very rich literature in economics on trade dynamics and the location of industrial production. It's more than I can get into here, but if you want to email me I can suggest some starting points.
Yes, the government is involved in many aspects of the economy. The vast majority of that involvement comes in shaping the institutional environment, however, which is quite a different matter from advocating specific production decisions. I think it's clear that in a world of better policies, some production would be more localized, but I'd also bet a lot of money that the volume of trade would increase. It's incredibly difficult for a central planner to know what ought to happen in any specific area, which is why I advocate improving policy and letting the market sort out where to trim, where to expand, and where to shift.
Jon, I think you your focus on manufacturing is very misguided. On a per capita level, we out perform the vast majority of world economies. You suggest this might change if the dollar fell, but if the dollar fell, our exports would suddenly be dirt cheap to the rest of the world. Demand for those exports would grow substantially, boosting our share of global manufacturing.
Many aspects of the service economy are simply parts of the manufacturing production process. Finance, accounting, research: these are parts of the manufacturing business, and just because the actual assembly is done elsewhere (and often it isn't) doesn't mean we aren't contributing to the value added in manufacturing goods.
There are advantages to locating close together for many businesses, but for others, those advantages were long ago exhausted. As transportation costs fell through the last century, the importance to manufacturing concerns of being near each other eroded, and those firms then dispersed. In new industries, it's helpful to be near other firms because there is constant experimentation to optimize unfamiliar technologies. For old processes, there is little left to be learned, and the cost of being near other firms (who bid up labor prices), outweighs whatever knowledge benefits remain. If you force (or strongly encourage) firms using old technologies to locate near each other, you just increase their labor costs, and as a result, they'll produce less. You can't force the market to do what you want.
In many ways, I think Jon and I want the same thing. My approach, however, is to find the weaknesses in our institutional structures and improve them. Resource prices don't include negative externalities? Price them in. Transportation funding biases us toward over-intensive use of fossil fuels? Rectify the distribution of funding. If you improve the institutional environment, then the market will adjust, mitigating the costs to the economy of the adjustment. If you legislate the actual changes in production, however, you sharply limit the extent to which the market can move resources around to find an optimal distribution given constraints. It keeps bumping up against statutory walls, and those walls mean losses.
And I think you disregarded my point on the insurance benefits of global trade a bit too quickly. If we can expect large supply shocks in the future, due to warming or peak oil or whatever, then the presence of a robust global trade network will allow us to handle those shocks. Before insurance markets, farmers spread their fields around villages, even though one connected plot would have allowed for more efficient plowing and harvesting. This was because an unexpected event--a flood, animal infestation, etc--would be less likely then to wipe out all of the farmer's holdings. Regional economies will be very vulnerable to localized disasters; the global economy far less so.
The main point is that relative to just about any period in the industrial area, the global economy is in good shape. We are not facing economic crisis. We are facing environmental crisis. It's important to understand that a healthy economy is an asset in addressing environmental problems, and not a hindrance. We can do everything we need to do without drastically altering the way the economy works. Focusing our effort on rebuilding the basic structure of the economy is liable to utterly distract us from the key issue--climate change. We know right now what it will take to stop warming. We can do it with currently available technology. So let's work on that--the task is heady enough, I think you'll all agree. If we do it correctly, we'll solve many of the problems Jon references without ever having to speculate about where we ought to move what.On We don't need to destroy our economy to save the planet posted 2 years ago 79 Responses
To Jon
My question to you, Jon, is why you believe you know the proper distribution of production better than the market does. The market may not always make the perfect decision, but it's awfully presumptuous to suggest you know how to improve the way everyone is doing things. If the world would be better off, if production would be more efficient, with more localized industry, then why aren't companies already doing it? If your answer is because oil is too cheap, then fine, make oil more expensive. Problem solved, no need to make top-down declarations of who ought to make what where.
There is no better or worse when discussing a trade deficit or surplus, and a comparison with Argentina is really not helpful. There can be questions about the sustainability of specific patterns, but these things don't unwind in catastrophe. We have a balance of trade and payments; goods flows in one direction are balanced by capital flows in the other direction. Terms of trade change based on conditions in trading nations' economies, relative prices shift, and flows respond to those shifts. You see this happening right now. The dollar is depreciating. As a result, imported goods are a little more expensive and our exports are a bit more competitive, and our trade deficit has recently declined.
These are complicated issues, but the idea that we need to be manufacturing and exporting more, just so that we manufacture and export more, is an intellectual dead end. It's deadly for developing economies also. If China weren't able to produce for European and American markets, then it wouldn't be able to pull a fifth of the world's population out of dire poverty. If we're upset with their pollution, then we can solve that without cutting off trade and causing their economy to collapse.
Sprawl? Jon, population is already spread all over the world. There's not much we can do about that. The question isn't whether we produce everywhere or not, it's whether we trade or not. If we create a world of regional trade blocs, we just ensure that production is less efficient, not less dispersed. Also, how are you ignoring the fact that the US, with less than 5 percent of the world's population, is producing 20 percent of the world's manufacturing output? That figure has held roughly constant for over a decade. This is a catastrophic loss of manufacturing capability?
It's easy to get caught up in bad news, but from a historical perspective, the global economy is very healthy. Are there distributional issues here in the US? Sure, but we shouldn't address those by shutting down markets. On this point, I think you'll find wide agreement from economists and pundits across the ideological spectrum.
The issue is resource use, and our poor choices on that front have everything to do with underpricing of those resources. Economist Greg Mankiw (who leans right) has established a Pigou Club, which is based on the idea that the best way to solve these problems is to tax overuse. His club's membership is as wide as anyone might hope; it includes liberal heroes (my heroes) Al Gore and Paul Krugman, among many, many others. The point is that we shouldn't disable the market, but get it to work for us.
I completely respect your desire to improve the way we do things, but I believe your solutions are misguided. We have a great deal of empirical evidence showing that efforts to dictate production patterns end badly, and often disastrously. The market isn't magic, but it's a lot better than you or I saying make that here and make that over there.On We don't need to destroy our economy to save the planet posted 2 years ago 79 Responses