Tuesday, January 16, 2018

Infrastructure thoughts of the day

This is Joseph

Some thoughts on transportation and infrastructure.

Duncan Black points out a new proposal to create dedicated lanes for driverless cars.  I think it goes without saying that creating dedicated lanes will make any transportation system look good and that it says a lot that we are thinking about this for expensive cars but not buses.

In parallel, there is a nice article on how high speed trains can replace airplanes for medium distance trips.  To some extent this advantage comes from us deliberately making air travel inefficient.  Whether or not we need TSA screening, do we need long queues?  I like trains, I wish we had more of them, but I think the real barrier is the will to create efficient infrastructure projects. Should Paris be more efficient than New York?  

Mark Palko and Andrew Gelman are grappling with this inefficiency in the comments to this post.  Mark is assuming the stifling world of Los Angeles where even small improvements in density require huge amounts of political capital to change restrictive zoning and to reach out to the impacted communities.  Andrew asks the obvious question of why we can't just let construction companies fix these issues without central planning getting involved (via changing the zoning).  It's a good question.  My pet theory is that we've let house prices get so high that even small changes in value equal huge gains and losses, making local homeowners resistant to improved zoning.    

Too busy for a real post...

... but not too busy to give you a flying machine fix

Looks almost too pretty to fly, but it did.

Scientific American June 17, 1905. “It traveled at a high speed for over a mile, and then came slowly and steadily to the ground ... The experiment was attended with complete success, and testified to the efficiency of the design.”

Monday, January 15, 2018

When the YIMBYs don't have the answer

This is a bit LA specific but you can probably generalize the conclusions to other areas.

While there are certainly cases where simple solutions work with complex problems, you should always beware when the appeal rests disproportionately on that simplicity, particularly when combined with ideology and vested interests.

Recently in Los Angeles, we've seen a powerful alliance between utopian urbanists, free market advocates, and real estate developers. The rhetoric has been lofty, framing their initiatives as a battle against climate change, congestion, and urban decay. A look at the details, however, raises serious questions and perhaps reveals the fundamental flaw of the alliance, that utopianists who depend on market forces and business self-interests are perhaps bound to be disappointed.

Before we get into cases, let's review a few general principles. Building housing so that residents have access to good public transportation is generally a great idea, but it is important to define what constitutes "good" here. Since the objective is to reduce or even eliminate the need for cars, the public transportation options need to be reasonably competitive in terms of range of destinations, speed, convenience, and pleasantness, roughly in that order.

The first is particularly important in terms of jobs and commuting. The main problem with the naïve live-where-you-work model is that people often live in multi-income households and frequently change jobs. This also brings up an aspect of public transportation that is frequently forgotten by people who write about buses and trains but don't actually use them. While as-the-crow-flies distance is usually a pretty good indicator of travel time if you have a car or a bike, it can be almost meaningless when you are relying on other forms of transportation. In a place like Los Angeles, it is easy to find examples where one 10 mile trip will take 20 minutes while another will take two hours.

A good (albeit arbitrary) metric for evaluating public transportation as a commuting option would be to count the number of destinations that can be reached by bus, train, and bicycle within a half hour (maybe 45 minutes). Based on that metric and other factors such as available land and demand for middle and lower income housing, there are a number of spots in LA that would be ideal for development.

Chinatown would be perfect. In addition to having its own train station, it's within walking distance of Union Station, the major transportation hub for the county. Between the different bus and rail lines, you have a reasonable commute to much of greater LA. Another excellent candidate would be the section of the Green Line that connects the silver line in the blue line in South LA.

On the other end of the spectrum, if you were to look at the map of the LA train system and try to find the worst possible place for building housing around stations, you would very probably end up picking the Expo line to Santa Monica. While overall a good addition to the system and certainly better than nothing, the Expo line is a slow and exceptionally badly connected train. The commuter relying on it would have either a very small list of destinations or would face daunting travel times.

You can probably guess where this is going. The one place where everyone's talking about this new urban vision is the one place it's least likely to work, Santa Monica. There are vacant lots used for parking within walking distance of Union Station and a desperate need for good affordable housing in places like Watts. Train station housing developments in those areas make far, far more sense from a public transportation standard and from an economic development standard, but given the choice between a trendy, upscale beach neighborhood and Compton, where do you think the real estate the money is going to flow?

(Yes, I do realize that there's a trickle-down argument, but LA's a big place and the idea that lowering prices in fashionable beach communities will have a noticeable effect on the market in East LA seems unlikely.)

 At the risk of pounding home the obvious,bad housing regulations and zoning laws have done a lot of damage and NIMBYs bear a great deal of the blame. Under the right circumstances, intelligent deregulation and selective application of market forces could help alleviate some serious problems, but blind faith in those forces and in the enlightened self-interest of developers is foolish and dangerous.

Friday, January 12, 2018

Thursday, January 11, 2018

Linking health insurance and employment: does the saga ever end?

This is Joseph

Yesterday, I wrote about Matt Reed talking about unions.  He had an earlier post on how an aging work force was doing bad things to the health insurance costs at his institution.  His solution is pretty obvious from a policy perspective -- linking health insurance to employment is looking like less and less of a good idea over time.  Among other things, it reduces job mobility and insulates customers from directly seeing the relevant costs (a second payer causes problems).  But it also reduces the quality of life for older adults.

One of the commentators on the post had an excellent point about how it discourages things like early retirement for burnt out staff:

Here is how we think Matt: Retiring before 65 is economic suicide. Even if you have a decent pension and some serious savings, a quick look at the private health insurance market will dissuade you from even thinking about it. This is doubly the case if you have any known health problems. Those $2,000 a month premiums, $5,000 deductibles and $7,500 out-of-pocket maximums mean you are $30,000-some a year in the hole the day you walk out the door. If you become disabled and don't have private disability insurance that you bought when you were 20 it is even worse. I have known people who have been fired before age 65, but I don't know any that went out the door on their own. (Oh, and your chances of finding another job? Zero! Unless you like driving Uber.)
It's astonishing that costs of health insurance exceed that of many people's pensions.   It is also likely that we've long since hit the point of diminishing returns on trying to get people to pay more in deductibles.

Now I am not unaware of the risks and costs of transitioning to a single payer style of system, especially when health care costs are already high.  But it isn't absolutely clear to me that these high costs are necessarily helping improve health, overall, which is an issue.  But it is also clear that suddenly radically reducing compensation for a huge segment of the economy is likely to cause . . . disruption.

But it is a problem worth thinking about and it would likely pay large dividends to have a good policy plan for improvement.  I mean it isn't like there are nearby functional models that work in decentralized and diverse English speaking countries with a large immigrant population that manage to have a decent life expectancy.  Right?

Wednesday, January 10, 2018

Colleges and unions

This is Joseph

Matt Reed is worried about unions in discussions of the financial stability of colleges:
Internally, for instance, many public colleges (including my own) are unionized. Collective bargaining agreements, and sometimes state laws, can greatly narrow the strike zone for any prospective downsizing. When you have to do layoffs by seniority, and your salaries are mostly determined by seniority, the most expensive employees are the most protected. That makes the math harder.
While I get that this creates problems, there are bigger issues that everyone wants to ignore.  I want to talk later about health insurance costs, and how that creates a relatively large crisis.

But the idea that job security is a problem suggests that there is already an assumption of neoliberal ideals of a lack of security in life.  Keep in mind that wealth provides options and people with lots of money have an implicit security -- you have options if working is optional or if you can cover a gap without problems. Why have we evolved from seeing people as resources to liabilities?  Why would you not want to keep your most experienced employees?

It is also worth noting that institutional loyalty is much harder to develop if senior managers are constantly worried about high seniority employees.  How can you be loyal to a place that sees you as a barrier to efficient lay-offs.

Now I do get the main point -- that colleges are meant to be grown and shrunk in slow and organic ways.  It is not a style of organization that works well with either fast growth or fast shrinking.  This suggests that maybe stabilization of finding (both directions) should be a piece of the conversation.  After all, doesn't it make sense to be able to plan?

Tuesday, January 9, 2018

It took Coke a while to escape its patent medicine origins

As this July 6, 1907 issue of Scientific American demonstrates.

Monday, January 8, 2018

Self-driving cars would be wonderful

This is Joseph

Another new year topic seems to be that of self driving cars.  This is a nice piece on the subject, with a smart take on the problems of having a human driver ready to take over
First, as one might infer, the human who is suddenly asked to intervene is going to have to quickly asses the situation. The handoff delay means a slower response than if a human had been driving the entire time. Second, and even worse, the human suddenly asked to take control might not even see what the emergency need is. Third, the car itself might not recognize that it is about to get into trouble. Recall that Uber tried to blame a car accident when its self driving car was making a left turn on the oncoming driver, when if you parsed the story carefully, it was the Uber car that was in the wrong.
This is exactly correct.  Problems that can be foreseen well in advance really don't typically need a human driver.  It is the moment that things go wrong that you need a sense of judgment.  And I can't think of a more boring thing to be doing than constantly watching the car drive.  I would much rather either check out and do something else (e.g. read) or be accumulating information on issues like road surface slipperiness. 

Remotely located drivers are even worse (imagine a bad cellular connection during the driving emergency). 

If we have a way to make a self-driving vehicle work than I am an enthusiast, but I want to make sure that the new option is better than the current technology.  We might get there, but it is during an emergency that I want the enhanced reflexes of a computer the most. 

Friday, January 5, 2018

Bitcoin skepticism

This is Joseph

This is a very good critique of bitcoin and blockchain approaches in general.  It pairs with some recent work by Megan McArdle, who is also skeptical.  It's got to be a great solution for something if this part is even close to correct:
Plus, it’s not actually that good a payment system — Visa can handle sixty thousand transactions per second, while Bitcoin historically taps out at seven. There are technical modifications going on to improve Bitcoin’s efficiency, but as a starting point, you have something that’s about 0.01% as good at clearing transactions. (And, worth noting, for those seven transactions a second Bitcoin is already estimated to use 35 times as much energy as Visa. If you brought Bitcoin’s transaction volume up to Visa’s it would be using as much electricity as the rest of the world put together.)
I value privacy in my transactions but I also value fast and cheap, as well.  I am not sure what problem this solves that cash or gold can't solve, given that they also have the slow transaction problem.  Cash has the added advantage that things are priced in it, making it a bit easier to come to agreements about the cost of things (a volatile currency is a bad store of value).

So I suspect that this is one more case of a market showing irrational exuberance.  Which should get us to wonder about what other price discovery mistakes could be embedded in markets, and why it is key to think about how and why a market can fail.  Bitcoin is a small issue, but health care is a much bigger one and it is quite possible that we have similar issues of market failure there as well.  

So food for thought.  

Thursday, January 4, 2018

All of Ryan's speeches sound better in the original Newspeak

For years, Joseph and I have been arguing over the use of terms like “Orwellian.” His position was that certain comparisons (such as those to Hitler and the Nazis) were so emotionally charged and carried so much baggage that you could seldom productively employ them in a rational argument. My counterargument was that if the similarities were both fundamental and specific and the relationships were truly analogous, you should use the most apt comparison.

At the time I think he got the better of me in the debate, but conditions have changed and I am feeling stronger about my arguments. Certainly a reference to Orwell wouldn't be out of place in this excellent column by Michael Hiltzik.
One expects politicians to conceal their intentions behind a obfuscating scrim. The problem is that news organizations become complicit in their underhanded efforts to cut social program benefits by employing the benefit-cutters' terminology.

Just after Christmas, for example, Politico achieved a multi-fecta in an article about disagreements between House Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) over Medicaid and Medicare.

Reading from the top down, the article referred to "overhauling" the programs, to "reform," "welfare and entitlement changes" and "policy modifications." These are Republican terms for benefit cuts. There's no excuse for journalists repeating them without defining them. But one has to drill pretty deeply into the Politico piece to find the first mention of benefit "cuts" (to paragraph 12, actually).
Politicians aiming to cut Social Security and Medicare use weasel words to hide their plans. Let's call them on it.

Other weasel words often found creeping into what purport to be objective reports about social programs are "reshape," "revamp," "modernize" and especially "fix." As we've observed in the past, Republican plans for Medicaid, Medicare, food stamps and other such programs are "fixes" in the same sense that one "fixes" a cat or the Mafia "fixes" an informer.

I've mentioned (in another context) the warning delivered in a 1965 speech by the late Sen. Daniel Patrick Moynihan (D-N.Y.) about what he called "semantic infiltration" in policy debates: "If the other fellow can get you to use his words, he wins."

Wednesday, January 3, 2018

Retirement and the issue of social security

This is Joseph

Every once in a while I hear about how social security is a monster that will destroy the federal budget if it is not reigned in.  Seriously, just google about the social security trust fund and you will be amazed.  So I was curious as to what the average benefit looks like.

According to Social Security, itself, the average benefit in November 2017 for retired workers was $1,375.29.  It was less for people living on disability.  That averages out to about sixteen thousand dollars per year.  The poverty line, for one person, is twelve thousand dollars per year as of January 2017.

What this actually means is that there isn't actually a lot of room for cuts here. Remember, that is the average and many participants will end up with even less.  Even in low cost environments, this suggests that social security is mostly a hedge against actual starvation and homeless, more than a real plan to retire.

So keep this in mind when there is a discussion of the need to cut entitlement programs to handle the new deficit crisis.  There isn't really a lot here to cut without having very profound economic impacts on vulnerable senior citizens.  And it is not really a driver of increased costs:
According to the Congressional Budget Office, Social Security’s share of gross domestic product will rise by about 1.5 percentage points over the next three decades, to 6.4%. The share going to Medicare, Medicaid and the Childrens Health Insurance Program (if Congress ever gets around to reauthorizing CHIP) will rise by 3.3 percentage points, to 8.8%.
Now there is a looming problem with medical costs, but these apply to all forms of medical insurance and not just public programs

It's inexpensive and bare bones now.  Reform, other than maybe increasing pay-outs to recipients who end up below the poverty line is likely to do real harm for surprisingly small savings (and keep in mind that we recently enacted a huge tax cut that suggests that deficits are not an immediate concern).  Finally, undermining this program undermines the justification for the quite regressive payroll tax, which is a key piece of revenue now that we keep cutting income taxes.

Tuesday, January 2, 2018

Rethinking crossownership

[Warning, I'm pretty much shooting from the hip here. This is not an area where I am knowledgeable and I do not have the time to research the subject properly. As a result, this is very much written to the good-enough-for-blogging standard, so it would be wise to double check any of the following assertions before passing them on.]

As a general rule, I tend to be skeptical of "we need this to be competitive" arguments against regulation and antitrust enforcement. Usually these claims come down to an excuse for gouging the customer or an attempt by incompetent managers to survive by gaming the system. If you can't make a go of a business without monopoly/monopsony power, then you probably aren't very good at your job.

There are, of course, exceptions, cases where technological and economic changes really have made it difficult for even the best run companies to survive, even when those companies serve a real and necessary social good. Local journalism is a perfect case in point. Some of the best reporting I've seen over the past few years has come out of newspapers, and yes, television stations outside of the major markets of New York and LA. I particularly want to single out the TV reporters because, though we all tend to mock them, they've been responsible for some remarkably good work on stories that, though important, are often ignored by institutions like the New York Times.

John Oliver hit many of these same points in his excellent piece on Sinclair broadcasting.


Anything we can do to encourage more and better local journalism is worth pursuing. There are considerable synergies and cost savings from combining a newspaper and a television (and possibly even a radio) station. Furthermore, in an age of cable and the Internet, I am much less concerned with the potential abuses from having this kind of cross ownership.

The key word here (and it is absolutely essential) is "local." As soon as you start to scale up, the social benefits start to drop off while the potential for abuse increases exponentially. As the experience with Sinclair has shown us, ownership across many markets actually tends to decrease the amount of local journalism and, perhaps more importantly, the amount of local editorial control.

Put simply, the standard I have in mind is that crossownership is acceptable, perhaps even desirable, if you're talking about relatively small players in relatively constrained regions. If, on the other hand, you're talking about big players (particularly those like Sinclair with a history of stifling local journalistic autonomy), the tighter the ownership restrictions the better.