Sunday, October 30, 2011

The best movie out right now

Sorry, assorted readers, for the unacceptably slow blogging as of late -- I'm currently in the process of solving all the conceptual ambiguities of the Fourth Amendment for my law journal article. This has proven a less agreeable task than I initially expected: I've sunk enormous amounts of time into writing atrociously fragmented sentences and drawing incomprehensible graphs and, so far, I don't have a lot of genuine progress to show for it. The price of hubris, I guess.

Also, I've been watching a lot of movies.

Which brings me to the real point of this post: you should go out, right now, and see Margin Call. Somehow, this film seems to have flown under the radar so far, receiving blandly positive reviews and very little attention from the general public. That's criminal: it's easily the best new movie I've watched in ages and ages.

Margin Call is another entry into the suddenly-burgeoning genre of "financial crisis retrospectives." It's set in spring of 2008, and it features a bunch of investment bankers dealing with the oncoming crisis. As such, it's likely to get lumped in with polemics like Inside Job and blow-by-blow accounts like Too Big to Fail. As a work of fiction, it's also probably going to be compared to the horrifically bad Wall Street 2. None of these comparisons is quite accurate, or fair. It's almost certainly the best of the bunch -- I wouldn't be surprised if it ended up being the best film about the financial crisis, ever, period. More importantly, though, it's not all that concerned with short-term political furors around and about Wall Street. While it doesn't shy away from the moral questions arising from the crisis, it's also more comfortable dealing with the personal than the political. It's less about the breakdown of the great financial machinery driving the modern economy, and more about what happens to the men and women caught up in the machinery when the world they've built begins to crumble.

My roommate made an uncannily astute comparison: he noted that the movie's closest cinematic relation is probably Spike Lee's fantastic 25th Hour, which managed to weave an intensely personal story focusing on a handful of friends with a thematic narrative about, among other things, racial tension, September 11th, the failure of the criminal justice system, and America's (possibly illusory) promise of new beginnings. Margin Call shares with that film a graceful ability to comment on the larger social context without talking about it directly. In both cases, the subtle approach pays off, leaving us with cultural documents disguised as engrossing works of fiction -- or maybe the other way around.

To be fair, Margin Call isn't quite as ambitious in scope as Lee's film, choosing instead to focus on the interplay of morals and money at the highest levels of professional success. It's still a joy to watch. The film never quite goes where you'd expect it to go -- quite an achievement considering everybody knows how the story ends -- weaving through the experiences of seven or eight main characters over the course of one very bad day, showing us the interesting bits and then moving on before anything predictable happens.

It's got verisimilitude in spades. While the film's basic conceit is straightforward enough -- an investment bank has gotten stuck with a lot of bad financial instruments, and needs to sell them all before it goes bust -- it doesn't shy away from Wall Street jargon. Rather than restricting all the nitty-gritty of the actual financial transactions to vague montages, a la Wall Street 2, it includes details where they belong, and trusts the audience to keep up. It doesn't oversell the situation, either: the characters are all justifiably freaked by what's happening around them, but the film dutifully avoids the apocalyptic overtones of, again, Wall Street 2.

(I almost forgot to mention the cast: the entire reason I watched the film in the first place is because it stars Stanley Tucci, but as it turns out, it also contains the best Kevin Spacey performance, uh, possibly ever. Also: Paul Bettany.)

The real genius is in the details. The way the characters are introduced in a parade of bosses, each cockier than the last, and each eventually humbled into calling the next guy up the chain. The little bits of dialogue serving double duty as character development and political reflection. (One banker obsessively compares paychecks. Another is an aerospace engineer tempted into finance by the money.) Two world-class monologues, which, in a just world, would replace Gordon Gekko's "Greed is good" speech as the rallying cry for unapologetic capitalism. The brilliant final scene, which reveals nothing about the plot but everything you need to know about one key character.

Really, I want to go on, but I don't want to spoil the whole thing. So just go watch it. Really. Go now. Hurry up.

Wednesday, October 26, 2011

Right and wrong still matters in policy

So this Felix Salmon post isn't the sort of thing you don't read on economically-oriented policy blogs very often:
The latest CBO report on income trends says nothing particularly surprising, although it does underline quite emphatically what we already knew about the 99% and the 1%. In particular, the key message, both in charts and text, is all about the 1% and how they’ve torn away from the rest of the population in the past 30 years.

And in the wake of the 99% getting tear-gassed in Oakland by their own municipal government, I’m going to get personal for a minute here: I am the 99%. I have an absolutely wonderful life in my favorite city in the world, protected by a large and prosperous centuries-old democracy. I have enough money to eat and to travel just about anywhere I want. My home is filled with fabulous art and features a small collection of equally fabulous wine; I suspect it might even be worth more than I paid for it. I love my job, which pays extremely well, and affords me a huge degree of professional freedom. I have the kind of transferable skills which are in demand by multiple potential employers. I get to wonk out with some of the most interesting people in the world, and I also get to ignore the bores. I have a gorgeous wife, we’re both in good health, and we’re blessed with wonderful friends. In short, I have the kind of life which would be the envy of well over 99% of anybody who’s ever lived, and well over 99% of anybody alive today.

And yet — I’m still in the (upper quintile of the) 99%, and if you boil things down to just their income and wealth numbers, the 1% is as far away from me as I am from a struggling working family with an onerous mortgage and a highly uncertain employment outlook. And there’s no need for them to shower themselves with that kind of money. From me on out, it’s pure avarice. Which is human, and natural, and probably even helps in terms of economic growth. But given the amount of misery and poverty in America, it’s simply unconscionable that I and the people earning vastly more than me — including all of the 1% — are getting such an enormous share of the income and wealth so desperately needed elsewhere.

All of which is to say that my taxes are too low. If my taxes went up and the money was used to reduce poverty and unemployment in America, my standard of living would still be glorious — and millions of lives would be improved. And as for the 1%, their taxes could double and they would still be fabulously well off. I’m not proposing that as a policy solution. But I am trying to put things in perspective here. I’m not in the 1%, and I can and should be giving back much more to the society which is supporting me and making my lifestyle possible. The people who are in the 1% are the most fortunate of the fortunate. The least they can do is pay as much in taxes as, say, I do.
Okay, so it's probably poor form to just copy and paste Felix's entire post. I did it anyway because I think it really hits at a key element of the income inequality problem. You can make all sorts of economic arguments for and against taxing high-earners, but at the end of the day, it's very difficult to look at the wealth gap, and the many miseries inflicted by poverty, and think that lives couldn't be improved by moving some of that money around. We can debate the particulars, of course -- there are a lot of mechanisms for wealth redistribution, and certainly those who believe that government intervention only exacerbates preexisting divides. But there are also people who look at the status quo and think this is the way things should be -- that there's something intrinsically fair about income inequality. People who believe that individuals with money simply deserve that money more than anyone else. It's hard to argue policy with those people -- they're starting from a different point than me and it's natural that they'd end up at a different point as well. There's really no choice but to do what the post above is doing: attack the dismal morality of their position instead. Policy types are generally pretty averse to talking about issues in moral terms -- it's too black-and-white and too subjective -- so I think it's fairly courageous of Felix to write what he did. Everything doesn't always come down to efficiency and functionality: sometimes, simple notions of justice matter too.

Everyone's seen this already, right?

Because wow.

Monday, October 24, 2011

How to make Jersey Shore worth watching again

Over at the AV Club, Marah Eakin and Genevieve Koski turn out a postmortem of Jersey Shore's most recent season. They do not like what they see:
The easiest way to make something fun not fun is to make it an obligation. That being said, there are plenty of shows that have been on for far longer than this one that are still just as fun as they were at the beginning. I think this season, what's soured the whole thing for me is just how little the whole gang seem to care. In the beginning, their dramas seemed real, as did their personalities. They were just doin' them, out on the boardwalk. Now, paid not just by MTV but by Xenadrine, a pistachio company, clubs around the country, whatever, to be these characters, these over-the-top party animals, it just feels a little bit icky.
I've only seen scattered bits and pieces of this season, but it doesn't take much to confirm that the AV Club diagnosis is basically correct. The people on the show have become fictional characters, and not only are their antics undermined by the sneaking suspicion that all the drama is essentially scripted, any astute viewer can feel the show's forward motion quickly petering out. Look, I know it's just the Jersey Shore. I know that for a lot of people, it functions as little more than a weekly collection of seedy vignettes -- or maybe more accurately, a tour through a zoo. But character development and plot momentum are the key elements in any narrative medium. And even a cursory overview of Jersey Shore storylines from the last season is enough to demonstrate that nothing unexpected will ever happen on the show again. Here are my predictions for next season: Ronnie and Sammi will fight, Mike will be creepy, everyone else will hook up, and they'll all come back again in six months. Here are my predictions for the season after that (god help us): Ronnie and Sammi will fight, Mike will be creepy, everyone else will hook up, and they'll all come back again in six months.

But here's the thing: like the AV Club review points out, this process is starting to take a toll on the participants:
I've brought this up many times over the years—months, whatever—but the cancer of Jersey Shore is self-awareness, and that self-awareness has grown especially malignant this season. We see it in the way Pauly and Vinny hang back until it's time to make a quip or put on a production of guido theater for the cameras' sake; we see it in Sam and Ronnie's endless pas de deux of terribleness, as they continue circling each other like sharks because they realize they're stuck with each other through the duration of this show, unless they choose to leave and give up their fat paychecks; we see it in the way the cast members are referred to by their actual, given names rather than nicknames in my cable guide (Who is this “Paul Del Vecchio”?). And we see it in tonight's episode, with Mike styling himself as the "villain" because at this point he knows the whole illusion of "deep down it's all love between roommates" isn't holding up.

Doesn't that last paragraph sound more interesting than anything you've ever actually seen on the show?

A group of variously damaged people, forced to reconcile their increasingly fake personas with their own beliefs and characteristics, not to mention their limited abilities and talents? Duking it out with each other for a few extra minutes in the spotlight, but also inextricably tied together for years and years to come? There's your character development: the cast members' moral decline and fall, even as their fame and fortune grows endlessly.

Wouldn't you watch a show about that?

I certainly would. I honestly think, hidden in Jersey Shore, there's a Godfather-style epic, about the collapse of an American family-of-sorts, destroyed by excess, and success, and their own desperate pursuit of fame. It might seem a cruel at first -- tuning in every week to watch the further degradation of a bunch of fun-loving kids at the hands of American media culture -- until you realize it's already happening, and will continue to happen as long as MTV makes the show, regardless of what gets portrayed on the screen.

In the interstices between the fake drama between fake people there's real drama between real people, drama with weight, drama that matters because it's about money, and reputation, and the wellbeing and the futures of everyone involved.

So show us the real people! It'll be more honest, it'll be more entertaining. It might even be thought-provoking.

And if all else fails, come on, it's not like they're going to stop coining stupid catchphrases.

Saturday, October 22, 2011

Felix Salmon is wrong about congestion pricing

On the way to school the other day, fellow 4:17 A.M. contributor Charles and I were talking about congestion pricing; specifically, this Felix Salmon post about why it will never be popular. Here's the heart of his argument:
When congestion pricing is first introduced, people recoil against it — they expend quite a lot of effort to avoid the charge, and traffic goes down. Over time, however, it becomes just another part of the cost of driving, along with gas and insurance and parking tickets. As that happens, traffic goes back up again. Congestion-charge revenues go up too, of course, and those can be reinvested into public transport....

In Singapore, they set the amount of traffic they want, and then dial up the congestion charge until they get it. It’s much the same idea as the one behind SFPark: you set the number of empty parking spaces you want, and then dial up the parking-meter pricing until you get there....

[T]he charge has to be variable over time — specifically, it has to increase over time. Without those steady increases, drivers become inured to the congestion charge, and traffic will go back up to its former level.

As a result, drivers are pretty much never happy with congestion pricing. Either it’s painfully expensive and going up in price — expensive enough to keep them from driving — or else it doesn’t have much effect.

That doesn’t mean that congestion pricing isn’t good public policy. It is. But it’s always going to be unpopular with a powerful constituency.
Like Felix, I'm in support of congestion pricing. But I don't really buy his analysis here. If you unpack what he's saying, he's really making three assertions: one I'm sure he's right about, one I'm sure he's wrong about, and one I'm unsure about either way.

So let's look at it a little more closely.

His first argument is that the correct way to use congestion pricing is determine the optimal level of traffic and set prices so that level is achieved. This is clearly correct. There wouldn't be much point in implementing it otherwise! The whole idea of congestion pricing is that road space is a scarce good, and when it's given away for free, is overconsumed, creating a shortage (and gridlock).

There is, of course, the libertarian objection -- that the government shouldn't be arbitrarily setting the price of goods, but instead, goods should be priced by achieving an equilibrium of supply and demand. But that's a framing issue more than a real difference of opinion. Congestion pricing isn't actually any different than any other market mechanism -- instead, the problem is that the supply is virtually fixed in most dense urban areas, and therefore the only way to achieve the most efficient use of available road space is to adjust prices.

(The one real question here is what "the most efficient use of available road space" actually means -- high-traffic, near-gridlock conditions, or roads that are well-trafficked but quickly navigable. The answer depends on exactly what sort of good the city wants to provide when it provides roads. Once again, I'm sure this will raise accusations of improper government meddling in the marketplace -- but it's worth noting that the government makes exactly the same decision anytime it builds a road, congestion pricing or no, and metering simply allows it to more finely target particular goods.)

Then there's his second assertion:
But the point in all of these cases is that the charge has to be variable over time — specifically, it has to increase over time. Without those steady increases, drivers become inured to the congestion charge, and traffic will go back up to its former level.
In economic terms, this is sort of bonkers.

First, a caveat. It's totally conceivable that, in the short term, the introduction of congestion pricing would have an irrationally large impact on driving habits. People are excessively fee-averse, and I'd fully expect a widespread overreaction the introduction of driving fees. In other words, the initial reduction in city mileage would be the product of both a changed market equilibrium and the cognitive biases of potential drivers.

But as the fees became more widely accepted (as drivers became inured to them, if you will), the amount of traffic in the city would also more closely reflect the new equilibrium. If the traffic increases past an acceptable level, the fees were too low to begin with (possibly because the initial overreaction deceived the fee-setters).

I am very confident, however, that drivers becoming inured to congestion charges would not result in a perpetual increase in the amount of urban traffic, up until the point where roads were at maximum capacity and traffic literally couldn't get worse. That's not how people work.

I suspect Salmon has confused himself because it's hard to think of road space as a normal good. Traditionally, after all, it hasn't been treated as one. There was no easy way to exclude someone from a city street and as a result, we think of people's demand for access to city streets as insatiable.

So let's use an analogy instead -- something that is incontestably a normal good --let's say, bananas. The process that Salmon fears has already played out with bananas. You and I have become "inured" to the price of bananas in the sense that we've accepted that bananas cost what they cost. We don't go out of our way to avoid buying bananas because we feel they're unfairly priced. So are producers forced to continually raise prices to keep us from buying up all the world's bananas? Well, uh, no. None of the negative consequences Salmon predicts have manifested themselves here. We don't regularly go to the grocery store and clean out its banana stock. Our daily banana consumption doesn't perpetually increase. There are not widespread banana shortages. Somehow, society has managed to simply stave off mass banana consumption without penalizing consumers with constant banana price hikes.

Described in terms of bananas, the idea that people will become unaccountably "inured" to prices seems ridiculous and obviously wrong. But that's what Salmon is saying would happen to road use. Why? There's simply no reason to think that road use would be treated any different in the marketplace. People might not take undue caution to avoid driving, but they're certainly not going to completely ignore the cost of driving either. Some number of drivers will opt to stay home, walk, or take the bus, and if congestion prices are higher, that number will be higher as well. That's what a market equilibrium is.

Really, only three things should drive up adequately priced congestion charges over the long run: a reduction in supply (i.e., less road space is available for some reason), an increase in demand (i.e., more people want to be in cities, or want to drive), or a decrease in the value of money (i.e., inflation). If congestion continually increases even in the face of congestion, you can safely assume one of these three things is the cause. (Perhaps somewhat ironically, successful congestion pricing should result in a one-time increase in the demand for road space, since driving would be a significantly more pleasant experience.) On the other hand, if people simply stop caring about paying the fees, that means the fees were too low to begin with, any initial objections to the fees were essentially irrational, and any fee increase would just represent a move towards a stable price equilibrium.

Finally, there's his third assertion:
That doesn’t mean that congestion pricing isn’t good public policy. It is. But it’s always going to be unpopular with a powerful constituency.
I can definitely see the argument for this. There's no realistic way to create congestion pricing that isn't going to be subject to public pressure. And the public, in general, is always going to favor lower prices. (The same would be true of any good whose price was set by the public at large, rather than private entities.) As Salmon suggests, "I'll lower the cost of driving!" is a pretty obvious promise for aspiring elected officials to make. It's impossible to create a congestion pricing scheme without also creating the opportunity for indirect vote-buying.

With that said, there's a difference between a possibility and a certainty. There are already any number of small, annoying fees associated with the administration of local government, and they're all subject to the same dynamic. Even if sometimes they result in the fees being arguably lower than they should be, you don't see municipal governments falling over themselves to abolish, say, utility fees. Nor do you see widespread discontent with the concept of having to pay for utilities. Besides, governments have gotten pretty good at segregating fee-supported public entities from tax-supported public entities, and in the process have done a mostly acceptable job of protecting fee-supported entities from the vicissitudes of the electoral process. In the end, it's very hard to know how people will respond to something like congestion pricing over the long-term, and given the straightforward economic logic behind the idea, any number of reasons to pursue it.

Wednesday, October 19, 2011


(h/t: Klein, CBPP)

Herman Cain, perpetual underdog

I haven't watched tonight's Republican debate yet, but by all reports the candidates spent the entire time going after Romney. Which is interesting and sort of funny, because it suggests not even the GOP field itself regards (current leader in the polls) Herman Cain as a legitimate contender for the nomination.

Monday, October 17, 2011

Why electric cars are a good investment

Ezra Klein:
One criticism of electric cars is that they often just replace one source of carbon pollution with another. Instead of a combustion engine that burns gasoline, you get a plug-in vehicle that depends on electricity from burning coal. In extreme cases, this can look like a dismal trade-off. One recent report from the Innovation Center for Energy and Transportation estimated that, in many parts of China, a Nissan Leaf powered by coal-fired power plants could actually produce more carbon emissions per mile than a comparable gas-powered car. Bad news.
I had always assumed (incorrectly, it would seem) that people generally understood that simply switching to electric vehicles would not immediately remedy the vehicular carbon emissions problem. But while they're no panacea, electric cars do broaden the number of ways the problem can be addressed. When gasoline-powered cars are the norm, transportation creates two distinct types of carbon emissions: emissions from producing the fuel and emissions from using the fuel. Electric cars fold the latter category into the former: because they produce no carbon, their entire carbon cost is reflected in the cost of producing the electricity they consume. In either case, of course, the total amount of carbon emitted will be a function of the total amount of energy used for transportation.

The key here is that gasoline-powered cars insulate the carbon emission total from efficiency gains at the production level. If (hypothetically) 30% of carbon emissions from gasoline-powered cars are produced by generating the electricity required to the refine gasoline, and 70% are produced by burning the gasoline in an internal combustion engine, a 33% increase in the efficiency of generating power only creates a 10% drop in emissions. In fact, it would be impossible to generate a 33% drop in transportation emissions by finding more efficient energy sources, even if we could generate power with literally no carbon emissions at all. Reductions past the first 30% could only be achieved by attacking the problem somewhere between the gas pump and the exhaust pipe (i.e., building vehicles with better MPG). In a world in which we only drove electric cars, on the other hand, a 33% improvement in energy production efficiency would reduce emissions by 33%, and emissions-free energy generation would mean transportation would also be emissions-free. And any carbon savings derived from improvements to the actual car would be piled on top of that.

Obviously, this doesn't automatically mean electric cars are the superior option. For instance, if for some reason we expect improvements in the efficiency of fuel use to outstrip improvements in the efficiency of energy generation, then we're better off sticking with gasoline. But it's hard to see how this could be the case, given the necessarily miniature scale of automotive engineering, and the simple fact that we're not going to be mounting nuclear power plants on the backs of cars anytime soon. (An engineering feat helpfully illustrated in the picture above, which, while tangentially-related at best, I deemed more interesting than the obvious choice of "ominous smokestacks.")

Sunday, October 16, 2011

More thoughts on Occupy Wall Street

Timothy Noah:
I have never been entirely clear about what you're supposed to do at a protest march. The only one I ever participated in was an anti-apartheid march during the 1970s. A few years after that, I co-authored a story for the Wall Street Journal about how the new African National Congress regime in South Africa was tearing its hair out because small towns all over the U.S. were continuing to boycott their country, blissfully unaware that Nelson Mandela was now in charge. Protest movements are kind of sloppy that way.

But the anti-apartheid protesters won. It's easy to forget that chaotic and often harebrained-seeming public demonstrations can lead to important changes in the world.
Noah reminds me of one of the more memorable things I've read about popular protest. It's a passage from Patriots, Christian Appy's oral history of Vietnam:
I still believe the antiwar movement was naive and ill-informed. I just didn't think these kids knew anything about Soviet, Chinese, and Vietnamese Communism. I used to argue that what's wrong with them is that we've instilled in them the most corrosive of all emotions, namely guilt...

I'm still not certain the antiwar protesters knew what they were talking about in terms of the war and I'm certain they were ill-informed about Communism. But they grasped something essential about the nature of America's imperial role in the world that I had failed to perceive. For all their naivete and unruliness, the protesters were right and American policy was wrong.
It's easy to criticize popular movements. No large political rally has ever consisted exclusively of people who are right about everything. So it's good to keep in mind that, time and time again, history has given us movements full of the misinformed and misguided that, on a more cosmic scale, nonetheless proved correct, important, and impactful.

Relatedly: although I've previously voiced skepticism about Occupy Wall Street's tactics, coherence, and viability (and probably will again), I'm completely in favor of its strong stand against income inequality. I'm absolutely of the conviction that a growing gap between rich and poor in the United States degrades civil society and has perilous implications for the continued development of a freer (and more efficient!) nation. In a sense, this conviction goes hand-in-hand with my support for generally free markets and economically-oriented policymaking: when money talks, income equality is how you give everyone a voice. However long-lasting or temporary the protests end up being, I wish them the best of luck at raising awareness of the enormous economic divides that have silently riven America.

Thursday, October 13, 2011

Herman Cain is unelectable*

Why? Because his 9-9-9 tax plan raises the average American's tax burden by thousands of dollars. And its simplicity surely cuts both ways here: it surely isn't too hard for many families to figure out that they'll be paying more -- much, much more -- than they would under the current tax regime.

Even if you ignore the incredible inequity created by regressive flat tax plans, they're always going to be politically hobbled by the tremendous burden they put on lower income people -- people who make a larger portion of the voting base than the economic base.

And isn't it funny how libertarians who so dearly believe that every aspect of life is governed by microeconomic principles also so quickly forget that the marginal utility of additional dollars decreases like the marginal utility of virtually everything else?

*There may be other reasons Herman Cain is unelectable. E.g., he's a doofus who hasn't spent twelve seconds thinking about policy (or, seemingly, anything else).

Wednesday, October 12, 2011

Dear friends and acquaintances: stop posting this chart already.

Perhaps you've seen this chart. I myself have seen it many times, over and over, on my facebook feed. Over and over and over.

It's not hard to see why it's getting reposted so much: it's intuitive, it's simple, it boils down all the tension in America over the last two years into a single straightforward problem.

It is also wrong about everything. It fails on every front.

The chart fails as a description of the situation.

There might be some overlap between the Tea Party and the Occupy Wall Street movement, but by and large most Tea Partiers are, in fact, right wing activists. They subscribe to traditional Republican dogma. This has been demonstrated again and again, in poll after poll. This means they are more predisposed than average to be sympathetic to private interests.

Likewise, the roots of the Occupy Wall Street movement are in the left. Sure, they oppose banks and corporate interests, but they also are basically in favor of government. They like redistributionism. They like the social safety net. They're not marching in the streets in order to end big government and institute some dumb laissez-faire fantasyland, they're marching because they want to tax the millionaires and use those taxes to pay for college funding.

Put bluntly: there is virtually no overlap between these two groups. Occupy Wall Street is defined in part by its opposition to the things the Tea Party believes, and the Tea Party is defined in part by its opposition to the things Occupy Wall Street believes.

The chart fails as a normative policy prescription.

In suggesting that everyone in America is worried about the same thing, it implicitly endorses that supposedly universal concern. Unfortunately, it's almost impossible to connect the worldview it describes with the actual world we live in.

The chart describes a collusive system in which Big Government and The Corporations boost each other up on the backs of the common man. It starts, it seems, with "large corporations lobbying for the government to have more power."

Ah, yes, indeed. Who can forget the time Exxon-Mobil lobbied for the EPA to adopt broader authority over emissions?

Oh, that didn't happen? How about when Citibank lobbied to centralize banking oversight in one strong regulator?

Wait, they did no such thing? Well surely you remember the time health insurers lobbied for large national insurance exchanges instead of localized state exchanges?

It's a ridiculous to think that corporations would, as a rule, favor larger government. It takes about two seconds to see why: corporations generally prefer less government interference in their business, and they lobby for smaller, weaker government because a smaller, weaker government is less able to interfere. Government can overwhelm private enterprise in the right circumstances. And wealthy, emboldened private enterprise can certainly capture government agencies. But genuinely powerful government does not go hand-in-hand with large, out of control corporations. There's only so much civic space to fill, and they can't both fill it.

History backs this up. It's hard to think of even one major example of this dynamic playing out in modern-day America. The idea that it is not only happening, but somehow endemic, is completely absurd.

Oh, and finally, and maybe most gratingly of all, the chart fails as a functioning Venn diagram. Because as you no doubt learned in early grade school, the basic rule of Venn diagrams is that the overlapping section should include something that falls into both sets. Instead, this chart includes something that incorporates elements of both sets but really falls into neither. To fix it, it would need three circles, none of them overlapping, and one of them very tiny. The labels should read "What Occupy Wall Street is upset about," "What the Tea Party is upset about," and "What dead-ender libertarians are upset about." But since that chart doesn't exist, please, let's not let the dead-ender libertarians pass their beliefs off as everyone else's.

Tuesday, October 11, 2011

"But I like Minnesota!": the nomenclature of protest groups

Whatever else you think about the Occupy Wall Street movement, you have to admit it has a catchy name. After all, not many people really like Wall Street all that much. The idea of occupying it, taking it over, taking it for the jobless, is at least symbolically pleasing.

Which is why I find it odd that the national movement has generally ditched the "Wall Street" bit and kept the "Occupy" bit. So we have a lot of groups and rallies with names like Occupy Minnesota or Occupy Chicago.

Doesn't anyone else find these names strange and maybe a little offputting? I don't want anyone to occupy Minnesota! Minnesota is where I live. Minnesota is a decent place. I'm generally happy with the decisions being made by the Minneapolis city government, and Mayor R.T. Rybak is by all accounts a pretty cool dude. If anyone has a problem with the state's governance, I'd really prefer they address it by making use of the state's functioning democratic mechanisms.

OWS caught on because wealth inequality is obvious and grating, and taking a stand against it resonates with a lot of people. Not because a lot of people want to effect a hostile military takeover of their municipal government. But the movement's ringleaders, to the extent they exist, have gotten very excited about the word "occupy." It's the sort of silly, overheated people-power rhetoric that has inspired young lefties -- and mostly annoyed everyone else -- since the beginning of time. It's a minor thing, but it suggests to me that left is making precisely the same mistake the Tea Party made when it started to gather national media attention: assuming that the slightest display of sympathy with its ill-defined agenda means the country is primed for revolt. And it's just not so. There isn't a secret army of empowered progressives lying just below the surface. America isn't a powder keg of class tension, waiting for someone to light the fuse. A lot of people on the left seem to have mistaken populism for the revolution, and their movement is going to sorely disappoint them eventually.

Monday, October 10, 2011

The Greenback Party is the new Tea Party

A reader wrote in to Yglesias today concerned that members of the 99% movement were taking on Ron Paul-type monetary policy views. One thing I always find interesting is the way individuals on the Left seem oblivious to the effects of monetary policy. This wasn't always the case. Here is a Wikipedia entry on the Greenback Party from the 1870s:
The party opposed the shift from paper money back to a bullion coin-based monetary system because it believed that privately owned banks and corporations would then reacquire the power to define the value of products and labor. It also condemned the use of militias and private police against union strikes. Conversely, they believed that government control of the monetary system would allow it to keep more currency in circulation, as it had in the war. This would better foster business and assist farmers by raising prices and making debts easier to pay.
The 99% does seem to be focused on the inability of citizens to pay off student and housing debts, so maybe that's a good place to start. Easier monetary policy would make these debts less burdensome.

Sunday, October 9, 2011

In defense of political gossip

As someone who has spent a lot of time in his academic career reading old newspapers, I found this post interesting:
Every now and then I wonder what future generations will make of our notions about what constitutes a Page One story. We live in an era of mind-blowing scientific discovery, virtually none of which ever makes the front page, even as every trivial twist and turn in the rococo political drama has a secure place as the lead story. Today, for example, the New York Times leads with the news that Chris Christie, who after all has been saying for some time now that he won't run for president ... won't run for president. Meanwhile, it relegated to Page 7 the news that the expansion of the universe is not merely the aftereffect of the Big Bang, but also the result of an accelerating force called dark energy.
The amount of attention our society pays to ultimately ephemeral political developments might seem silly or myopic. But go read a newspaper from 1850 (or 1950, or 1750). You'll see it's not any different. I'm sure that many people could describe a number the historically significant events of the mid-nineteenth century. I'm equally certain that most of those developments commanded relatively little newspaper ink and page space compared to the vicissitudes of day-to-day politics.

We don't recognize how little has changed in this regard, because we don't realize how much of our political history gets forgotten. One the real joys of historical research is perpetually rediscovering the sheer amount of stuff that happened in the past. For every Watergate, there are dozens upon dozens of minor controversies or deflated crises that never wormed their way into the popular consciousness -- and often, not even into the academic record.

Anyway, it turns out we've always overvalued short-term political drama. That's partly a reflection of the extraordinary difficulty of understanding which events will be important in the future -- in advance, it's impossible to say whether an occurrence will become the stuff of legends or simply be forgotten. And it's partly a reminder that however stupid or juvenile politics may get, the political arena is the beating heart of society, the great public forum where ideas get traded and tested against each other and occasionally dashed to bits. It doesn't matter that most of those ideas end up not mattering. Our obsession with them represents a healthy form of introspection. I couldn't imagine living in a society that concerned itself primarily with the great arc of humanity's progress through the ages. It would be worse than dull; it would be unsettling. Society is a mass of human beings, not an engine for progress, and it's fitting and comforting that society focuses so much on the self-absorbed gossip that interests human beings the most.

Friday, October 7, 2011

Are cracks appearing in the filibuster?

Maybe, thanks to a highly esoteric bit of parliamentary maneuvering last night between Harry Reid and Mitch McConnell. But it might be a while before they develop into anything.

I don't much to say about this, other than to point out that (a) supermajority requirements and massive minority obstruction are not a sustainable equilibrium for a parliamentary system, and even if killing the filibuster outright is too tall an order right now, it's not surprising that other Senate institutions are beginning to snap under the pressure, and (b) just how silly Senate maneuvering is in the first place. Steve Benen describes the motives leading to this madness, and they're sort of jaw-dropping:
The Senate is poised to consider a bill on Chinese currency manipulation, but McConnell is desperate to play games with the American Jobs Act, trying to force it onto the China bill as an amendment. The goal is to get at least some Democrats to vote against the jobs bill, so Republicans can run around claiming “bipartisan opposition” to the proposal. McConnell was so desperate to pursue this, he was poised to rely on a rarely-used Senate tactic that would have required a two-thirds majority to pass the American Jobs Act. Dems would have voted against the stunt en masse, well in advance of the actual vote on the jobs bill next week, allowing GOP members to claim Senate Democrats were responsible for voting down the bill, even though that wouldn’t really be true.
What's incredible about this -- besides the pettiness of it all -- is how little it matters. There's just no evidence out there that anybody in the electorate pays attention to the exact vote breakdown when a bill passes (to say nothing of bills that fail and drop out of the public eye). In other words, our Senators spend huge amounts of time trying to sneakily structure bills so that other Senators look bad to spectators. But there's a catch: there aren't any spectators outside a handful of D.C. political junkies.

The perpetual stupidity of Senate "tactics" (can something that has no effect on anything be called a tactic?) goes a long way towards explaining the filibuster's continued survival. It suggests that politicians in D.C. are really, really bad at extracting themselves from the congressional fishbowl and determining which factors actually matter in the pursuit of their various electoral and policy agendas. Senators remind me of middle-schoolers: they're vain and self-absorbed, convinced everyone in the world is watching their every move, and unwilling to step out of line or help themselves lest anyone anywhere turn a judging eye on them.

Wednesday, October 5, 2011

Goodnight, sweet jobs bill

In news that is appalling and unsurprising in equal measures, the Republicans have quietly stuck a knife in the president's job plan.

This outcome was always inevitable. The pundits who pointed out that the bill contained many ideas broadly acceptable to both parties were always failing to reckon with the political element: nothing, including continued joblessness and unemployment, is more unacceptable to Republicans than passing a bill that improves Obama's electoral prospects. You can argue about the exact psychological operation creating the problem -- rationalized self-interest or calculated economic sabotage -- but it's hard to deny its basic shape anymore. Traditional Republican thinking and traditional Democratic thinking both suggest a number of policy reactions to our current economic difficulties. Many of these policy prescriptions diverge; some overlap. Republicans now reject not only the diverging policies but many of the overlapping policies as well. Quite simply, the only recovery they'll accept is a recovery that can be exclusively credited to their own party, rather than jointly to both parties. Whatever they tell themselves at night, it's implausible to believe this sudden change of heart finds its root anywhere but aspirations for 2012.

Of course, this move wouldn't be popular, if anyone were to hear about it. That's why, for a good long while after the president proposed the bill, the GOP let cable networks and newspaper pundits chatter about the possibility of the bill actually passing. The party's full-throated opposition to virtually everything the president does was suddenly muted, convincing many that a deal was in the works. Now, weeks later, after the nation's attention has moved on, the bill can die quietly in the House. That's perfect for Republicans: come election day, the nation will wake up, remember the president's big talk about jobs, look around and realize there still aren't any jobs, and head to the polls confident that it knows exactly who to blame.

Tuesday, October 4, 2011

The Gated City

I finally got around to finishing The Gated City by Economist blogger Ryan Avent, it's a little repetitive but I would recommend it to people interested in Urban Planning.

The major argument of the book is: 1) denser cities are more productive, 2) the densest/most productive cities in America have strict zoning laws, 3) these strict zoning laws constrict housing supply, even as demand rises, 4) this causes the price of housing in these cities to increase, 5) so citizens migrate to less dense cities where the housing is cheaper, 6) America becomes less productive

It's a good argument and pretty well presented throughout the book. There are arguments to be made for and against each of the points above but for the most part I agree with Avent's analysis. My main problem with the book is how D.C.-centric it is.

From what I gather Washington D.C. is moderately dense metro area with a good public transit system. They also have notoriously restrictive height limits, tight zoning laws, organized NIMBY groups and an overactive Historic Preservation Review Board. By removing these restrictions the free market would create a greater supply of housing, the city would become denser and the prices of housing in the city would fall. All would be good in D.C.

The problem is most American cities are not D.C. (or San Francisco, or Portland, or Boston, or New York). Most American cities are midwest rustbelt cities where the downtown core and inner ring suburbs have stagnating population growth and relatively low rent prices or newer sunbelt cities that have relaxed zoning laws and low density suburban sprawl.

In order to increase density/productivity in these cities some central planning will need to take place to increase transit and job centralization. Otherwise we will continue to see sprawl.

Avent makes same great points about how to increase density and productivity. But I'm cautious to take his free market approach as a panacea for all of America's urban planning ills.

Monday, October 3, 2011

The scariest thing you'll read all week

It's not about global warming. Or the coming Rick Perry presidency. Or the economy.

No, it's this piece by the A.V. Club's Steven Hyden, reminding us that no matter how much you'd like to believe otherwise, you are not like other people. Normal people find you strange and weird. Normal people do not care about the things you care about.

How do we know that? Because while you're watching Community and raving over Bon Iver, the rest of America is still listening to Staind.
If I never left my house (or looked away from my computer screen), I would believe that Breaking Bad is the nation’s most popular TV show, Drive the most successful movie, and whatever Pitchfork and Stereogum are covering this week the biggest band.

But I do leave my house occasionally, and I know that what seems like common knowledge on the web is in fact a curated version of reality that, at times, gives off an impression of how things are that is flat-out wrong. The fact is that a lot of cultural institutions that have been dismissed as passé, if not on the verge of extinction—network television, daily newspapers, summer blockbusters, compact discs—are in fact still drawing a plurality (if not a majority) of available eyeballs and eardrums.
So the next time something you love disappears from the cultural radar forever, remember who's to blame: everyone else. The great churning mass of Americans, obese and stupid and ignorant, loving things that are awful beyond words and never even dimly aware of the entire world of -- let's just say it -- objectively superior culture that exists right at the tips of their greasy fat fingers. It's okay, though. They'll always have Fatboy Slim.

Subsidizing suburbs

The new Atlantic Cities page has lead me to a debate surrounding a recent blog post by University of Minnesota Professor David Levinson. Levinson argues that the we ought to evaluate which public transit routes are profitable and which lose money and use the results to make decisions about which routes to keep and which to drop:
Mass (or public) transit agencies are transportation organizations first, not welfare organizations. They should be considered public utilities rather than departments of government, which provide a useful service for a price to their users.

My thesis is that the local transit systems should identify and propose to retrench to the financially sustainable system, and present local politicians with a choice.

If local politicians want additional "equity" services, they should be presented with a cost of subsidy per line, and then can collectively choose which lines to finance out of general revenue, as this is primarily a welfare rather than an transportation function.
There are a few obvious criticisms of this point of view. First, a lot of government services don't make money (like the army). They are maintained by taxpayer dollars because we perceive them to be beneficial to our society. We aren't in the midst of a giant fiscal deficit because of an underutilized bus route. Second, there are clear environmental reasons to subsidize mass transit. Third, as pointed out by Jarett Walker in response to Levinson:
I'd like to see this as well in a perfect world. But that would be a world in which government isn't heavily subsidizing transit's competitor, the private car -- not just through road expenditures but through such interventions as minimum parking requirements and petroleum-based foreign policy.
I think what is interesting is the way the debate is framed by Walker. He argues that the government is subsidizing two competing methods of transit (the car and public transit). The way I see it the government is actually subsidizing people traveling from the suburbs into the city on a day-to-day basis. In a sense this is a giant subsidization of sprawl.

If we took Levinson's theory and also applied it to paying for road work and new roads (you charge people to use roads and charge them more for roads that are less frequently used, a sort of reverse-congestion tax) you would incentivize people living more densely and closer to their jobs. It would also make it more difficult for businesses to move out to the suburbs because it would be more expensive for employees to get to work every day, thus increasing centralization and creating the opportunity for more effective and financially sustainable public transit service.

Another thing that I would add is that most of the critics of Levinson seem to assume that the underused and unprofitable buses are located in poorer areas. I have no evidence to back this up but my guess is that the buses in the poorer areas are actually the most profitable because poorer people tend to not own cars and thus use the bus to get to work. It is in the wealthier suburbs, where most people own and use cars, that you find underused bus routes.

A Tale of Two City-Planning Theories

Will posted recently about the causation vs. correlation relationship between zoning laws and density. I think he is probably right, but I think the debate needs to be properly framed for discussions surrounding urbanism.

Most of us (urbanists?) agree that a few things are needed to improve American cities. First, increased government investment in public transit, as opposed to highways. Second, decrease subsidies for oil and gas. Third, increased planning at the regional, as opposed to local, level.

I think we also all agree on what we want our final cities to look like. First, more walkable/bikeable/busable. Second, less sprawling. Third, mixed-use areas that are affordable for poorer families.

There seems to be a mostly be a disagreement around what, if any, government measures should be used to achieve this end. The Yglesias/Avent argument seems to mostly focus on removing zoning laws that prevent density in cities like DC, Portland, San Francisco and New York, while New Urbanists look to how central planing of cities can prevent the sprawl seen in the sun belt.

Each city is different in the way it has developed but I think Portland is a good example a certain type of American city ideal. In the 1970s the Oregon passed a law mandating that metropolitan areas establish an urban growth boundary. This was mostly done for environmental conservation as opposed to urbanist purposes. As a result, Portland established an urban growth boundary and a regional planning committee. The urban growth boundary establishes a boundary to the city. Any area outside of the boundary is zoned in a way to only allows very low density housing. The low density limits effectively make it unaffordable for developers to build suburbs outside of the boundary. The area is essentially limited to agricultural purposes.

The regional planning committee also began zoning the city in a way that forced office buildings and commercial centers into the downtown of the city. As a result a high percentage of people in Portland work in the downtown core. This is different from other American cities where a lot of the jobs began moving to cheaper land in the suburbs.

By limiting residential growth outwards and forcing jobs into the center of the city it became very easy for Portland to start building effective public transit. If most people are traveling to a single job center it is easier to get them there via public transit because you just need to build a number of light rail main lines in each direction that take people to the center of the city. It is much more difficult to do this in cities where a lot of commuters go from suburb to suburb. Portland also began building mixed-use residential areas along different light rail stops, to encourage the use of light rail. Portland has also limited its development in a way to create walkable and bikeable neighborhoods.

For a certain type of urbanist Portland is an ideal city. It has low sprawl, moderate density, less congestion, great public transit, walkable, bikeable moderate to low congestion etc.

The problem with Portland is that it is extremely expensive. The urban growth boundary has made land a limited resource and the strict zoning laws have made rents in both housing and office buildings very pricey.

On the other hand you have cities like Houston, Dallas, Phoenix and Atlanta. These cities have very few zoning regulations and don't have regional planning committees with zoning authority. As a result you get middle class residents moving to the suburbs and jobs following them to office parks in first ring suburbs. Then middle class residents move out of the first ring suburbs to the second ring suburbs and jobs follow them there to even cheaper office parks, with local city governments offering incentives to move. This results in a decentralization that makes public transit impractical and leads to a downward spiral of sprawl, decentralization and more automobile based transit investment.

However, what you do have in these cities is very cheap housing, as land is readily available. A lot of the times you have a stark segregation between the rich and poor neighborhoods which is a problem. But, unlike Portland and San Francisco, poor people can actually afford to buy homes and rent there.

One of the contentions of Peter Calthorpe, one of the principal New Urbanists, is that cities that are properly built around New Urbanist principles; central planning, reduced sprawl, dense, walkable, mix-used zoning, transit-oriented development, human scale, would be cheap and affordable.

One of the contentions of the Avent/Yglesias/Neoliberal crowd has been that reduced zoning measures would lead the free market to build cities that were more dense and less sprawled.

There are certainly intervening variables at play but I think it is important to note that at this point neither of these contentions has borne out in practice.

The left co-opted itself

I don't exactly disagree with anything in Yglesias' most recent post, but I don't think it quite connects all the dots, either.
The problem at that point was the fundamentally paradoxical attitude of the Democratic Party leadership. On the one hand, they want to be in the center of American politics. On the other hand, they’re viciously opposed to the emergence of any kind of mass movement to the left of the Democratic Party leadership. This combination of preferences is simply not viable. I’m not saying it would have been smart for Barack Obama and Harry Reid to lead radical protest marches, but it would have been smart of them to see it as beneficial if someone was doing so. The dynamic in the House GOP where the Tea Party caucus sometimes annoys John Boehner but also repositions him as a moderate and reasonable guy and gives him leverage in the process. The giant puppet people protests against “globalization” in the late-1990s were, I think, always helpful to Bill Clinton.
He's right that it's counterproductive for governing Democrats to attempt to simultaneously occupy both the left and the center of the political spectrum. I think "simply not viable" overstates the case somewhat -- Republicans are still the primary barrier to action, and there's no reason to think that Republicans would suddenly ease their opposition to moderately progressive initiatives if a mobilized left springs out of the ground -- but an independent progressive movement would place an extra set of constraints on legislative and executive action and, at least, hopefully prevent congressional Democrats from always caving to the right. For any Democrat left of Ben Nelson (a group that notably includes Barack Obama) that's good news.

But Matt implies -- without ever saying outright -- that the absence of a mobilized left during the early years of Obama's term was a product of the administration's political agenda. While I don't doubt that the administration preferred to avoid criticism from the left, I also suspect the existence or non-existence of a mass progressive movement was almost entirely out of its hands. It's not like Obama made a big show of aligning himself with organized progressives. To the extent that co-option or suppression occurred, it didn't happen by design so much as it just... happened.

So instead, I think the left's general lethargy between January '09 and January-or-so '11 is more likely to have been a byproduct of the left's own perception that it was being adequately represented -- a perception that Obama and congressional Democrats did very little to rhetorically cultivate. Despite all the accusations of hippie-bashing and the like, progressives basically clung to the idea that its interests were represented in Congress up until the midterms, when left-leaning legislators actually were wiped out. Some of that is political tribalism, and some of that is probably because, whatever defects you might find in his positioning or his horse-trading, Obama really has done a decent job of shepherding progressive interests around Washington against some pretty steep opposition.

Lessons from history

Political parties who want to restrict access to the ballot booth are always more wrong than political parties that want to increase access to ballot booth.

Sunday, October 2, 2011

Zoning and density

My roommate and I were having a late-night chat about the desirability of zoning laws -- this happens more often than you'd expect -- and whether city density would increase or decrease if they were done away with. Both of us are generally in favor of higher density development, and both of us are generally skeptical of attempts to control land use. I happen to also believe that these two interests dovetail quite nicely: if you were to get use of restrictions on the use of land, the density of most cities and towns would increase, to the benefit of all.

But there's one very big problem with my belief. As my roommate noted, the real-world evidence just doesn't seem to bear it out. Cities with higher densities -- NYC, for instance -- tend to be very restrictively zoned and subject to massive land use regulation. On the other hand, cities without zoning -- think Houston -- aren't dense at all, sprawling out for miles and miles. In other words, at first glance, people seem to prefer to live in wide-ranging, low-density development.

Is my argument completely sunk?

I don't think so. I can't help but suspect that interpreters of the real-world evidence often get the causal relationship backwards: zoning doesn't create density, so much as density creates zoning.

That's because zoning, on the most basic level, is little more than the reflection of the land use preferences of a particular community. The larger and more cohesive that community becomes, the stronger its preferences. And the more people you pack into a town, square mile, or city block, the more likely it becomes that a few of them will attempt to enshrine their development priorities in law. Eventually the neighborhood's collective priorities will manifest themselves legally: not only are residents likely to petition for the creation and alteration of a neighborhood's zoning laws, there are also a bewildering number of ways that one or two concerned citizens can insert themselves in the process of administering the land use code.

In this conception, New York's huge number of zoning laws aren't the reason New York is dense and prosperous, but simply an indication of the large number of cohesive interest groups per square mile within its borders. In Houston and other sprawling cities, neighborhood groups are more dispersed, have fewer common interests, and generally are less likely to have significant legal leverage over the areas they inhabit.

If I'm right, this does illustrate how severely parochialism can undermine efforts to improve land use regulation. It's not deeply held principles that sabotage reform -- it's Neighbor Joe from Down the Street, who doesn't know the first thing about the large-scale economic effects of zoning but does think that a four-story apartment building would be an eyesore. That's not such a problem if Joe is by himself, but as you increase density, the number of Neighbor Joes multiply, meaning reformers are pushing against an ever-greater counterweight.