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What Caused the Crisis: Greed or Volatility?

By | | Meltdown
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I haven’t seen The Big Short, which opens tomorrow, but I’ve read (and own a copy of) the book and cite it in American Nightmare. Based on the trailer, the movie appears to focus on the notion that the financial crisis was caused by greed and lack of bank regulation, an idea endorsed by Paul Krugman.

As both Krugman and New York Times writer Neil Irwin point out, the movie’s notion that only a few people were able to figure out there was a housing bubble is wrong; many people realized there was a bubble (or bubbles). What the heroes or antiheroes in Michael Lewis’ The Big Short figured out was a way to profit from the bursting of the bubble. While it is possible to “short” stocks, i.e., bet that their price will go down, it normally isn’t possible to short bonds, such as the packages of mortgage bonds that banks were selling.

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The Antiplanner’s Library: Zoned in the USA

By | | Book reviews
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A review of this 2014 book on Amazon says, “Hirt explains that in the early 20th century, pro-zoning interests argued that zoning was a means of increasing homeowners’ property values and excluding lower socio-economic classes.” Since that’s not far from one of the conclusions of American Nightmare, I was intrigued to see if she followed the same line of reasoning as the Antiplanner or reached that conclusion from a different direction.

Click image to go to the book publisher’s web page for this book. Click the link above (“2014 book”) to buy this book from Abehbooks.com.

It turns out the reviewer was wrong; Hirt briefly quotes others who argue that zoning “serves as a local immigration law that protects the rich from the poor” (p. 45), but it is hardly the focus of her book. Instead, her main question as an immigrant from eastern Europe herself is: why do Americans zone for such low densities and a separation of residential from other uses when Europeans seem perfectly happy living above stores and across the street from amusement parks? She also correctly observes that, relative to the rest of the developed world, Americans have moderate homeownership rates but high rates of single-family detached housing (p. 20), and wonders why this is the case as well.

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Vilsack to Congress: Give Me More Money or I’ll Let the West Burn

By | | Public lands, Wildfire
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Congress rejected the Forest Service plan to give the agency access to up to $2.9 billion a year to suppress wildfires. In response, Secretary of Agriculture threatened to let fires burn up the West unless Congress gives his department more money. In a letter to key members of Congress, Vilsack warned, “I will not authorize transfers from restoration and resilience funding” to suppress fires. If the Forest Service runs out of appropriated funds to fight fires, it will stop fighting them until Congress appropriates additional funds.

This is a stunning example of brinksmanship on the part of an agency once known for its easygoing nature. Since about 1990, Congress has given the Forest Service the average of its previous ten years of fire suppression funds. If the agency has to spend more than that amount during a severe fire year, Congress authorized it to borrow funds from its other programs, with the promise that Congress would reimburse those funds later. In other words, during severe fire years, some projects might be delayed for a year–hardly a crisis.

Yet Vilsack and the Forest Service are intent on turning it into a crisis. In a report prominently posted on the Forest Service’s web site, the agency whines about “the rising costs of wildfire operations”–that cost not being the dollar cost but the “effects on the Forest Service’s non-fire work.”

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Nice Work If You Can Get It (and Keep It)

By | | Transportation, Urban areas
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Stephen Banta, the CEO of Phoenix’s Valley Metro transit agency, resigned in disgrace after revelations that taxpayers paid for him to fly first class around the world, stay in $600-per-night hotel rooms, and take elected officials out to expensive dinners trying to woo them into supporting light rail. After resigning, he then tried to rescind his resignation, apparently wanting to negotiate a better golden parachute.

This tactic apparently worked, as the Valley Metro board has agreed to pay him $265,000 if he leaves on January 4. That’s approximately his average annual pay.

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2014 Transit Database Posted, Then Withdrawn

By | | Transportation, Useful Data
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The nation’s transit industry carried about 1 percent more trips and passenger miles in 2014 than in 2013. But to carry that many, industry operating costs grew by 7 percent and maintenance costs grew by 2 percent. For that increase in operating costs, vehicle revenue miles grew by less than 3 percent.

Transit is thus becoming increasingly expensive to operate and maintain per rider: the operating cost of single trip grew from $3.81 to $4.04, a 6 percent increase. Fares, meanwhile, grew by just 2 percent, and the industry as a whole collected just $15.1 billion in fares while spending $42.4 billion on operations, $11.0 billion on maintenance, and $6.0 billion on capital improvements.

These numbers are from the 2014 National Transit Database that the Federal Transit Administration posted last week. The numbers are only tentative, however, as the FTA took the numbers down this week (though some of the data are still available if you know where to look for them–see below). Moreover, a few key spreadsheets were missing from the data that were posted.

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Cars Saving Energy Faster Than Transit

By | | Transportation, Useful Data
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The average automobile on the road in 2013 used 1.2 percent less energy per mile than in 2012, according to table 2-15 of the latest edition of the Department of Energy’s Transportation Energy Data Book. Both cars and light trucks achieved about the same gain.

Click image to download a 12.9-MB PDF of the data book. Click here to access individual spreadsheets of all the tables and charts in the data book.

In contrast, says the datebook, the average transit bus used 0.9 percent more energy per mile in 2013 than in 2012. Worse, the average number of people on board transit buses declined slightly, so buses used 1.0 percent more energy per passenger mile.

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The Solution to Congestion

By | | Transportation
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It is distressing, at least to economists, how many problems could be solved by adopting basic market principles yet those solutions are ignored or stridently opposed by the very people who would benefit from them. California’s drought is one of those: California actually has plenty of water, it is just poorly priced.

Another is traffic congestion. Brookings economist Anthony Downs wrote a whole book about congestion that concluded there was no solution to the problem–except, almost parenthetically, congestion pricing which Downs decided was politically impossible. Of course, that’s a self-fulfilling prophecy because if no one argues for something because it’s impossible, it will truly be impossible.

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Restoring the Blank Check

By | | Public lands, Wildfire
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A bill before Congress would practically give the Forest Service a blank check for firefighting. HR 167, the Wildfire Disaster Funding Act, proposes to allow the Forest Service to tap into federal disaster relief funds whenever its annual firefighting appropriation runs out of money. It’s not quite a blank check as the bill would limit the Forest Service to $2.9 billion in firefighting expenses per year, but that’s not much of a limit (yet), as the most it has ever spent (so far) was in 2006 when it spent $1.501 billion.


The Forest Service puts out fires by dumping money on them.

Having a blank check is nothing new for the Forest Service. In 1908, Congress literally gave the agency a blank check for fire suppression, promising to refund all fire suppression costs at the end of each year. As far as I know, this is the only time in history that a democratically elected legislature gave a bureaucracy a blank check to do anything: even in wartime, the Defense Department had to live within a budget.

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DC Streetcar Still Not Open for Business

By | | Transportation, Urban areas
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Speaking of poorly managed governments, Washington, DC’s streetcar, which has been planned for at least nine years, won’t be carrying any revenue passengers in 2015. That’s news because, just a couple of months ago, the city promised that it would be in business by the end of this year.


The string of embarrassing accidents, fires, and other problems have proven so embarrassing that someone has rewritten the Simpson’s monorail song for the DC streetcar.

Despite all those years of planning, the streetcar continues to be accident-prone, partly because the streetcar route is too close to a parking strip and partly because streetcars, unlike buses, can’t swerve around poorly parked cars. When the streetcar hit a city police car that was parked over the white line, the city suspended the streetcar driver for five days without pay, but otherwise DDOT blames the motorists for improper parking. Of course, it wasn’t the motorists who decided to run inflexible, 30-ton vehicles down a busy street just inches from a parking strip.

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San Jose Proves BRT Can Be as Wasteful as Light Rail

By | | Transportation, Urban areas
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San Jose’s Valley Transportation Authority–a perennial contender for the title of the nation’s worst-managed transit agency–is building a bus-rapid transit line, and it is proving as much of a disaster as some of its light-rail lines. It was supposed to open two months ago, but now appears that it won’t open until 2017. Torn-up streets are damaging businesses along the route, and VTA is having to pay them compensation, making the project far more expensive than expected.

The problems have gotten so bad that the chair of VTA’s board, Perry Woodward, has written a highly defensive op ed not to apologize to taxpayers but to argue that the damage done by this project to the local neighborhood has been more than made up for by all the good things VTA has done in the last twenty years.

What good things? Santa Clara County taxpayers voted to tax themselves to relieve congestion by building more roads, and they proved that you can, after all, build your way out of congestion: congestion levels declined for several years despite a rapid increase in local jobs. But then the county made the mistake of merging its congestion management authority with its transit agency, and pretty soon the transit agency stole all the congestion relief money to fund its expensive projects. The result has been some of the nation’s emptiest light-rail trains (an average of 18 passengers per car vs. a national average of 24) and rapidly rising congestion.

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