Friday, July 20, 2012

Two kinds of (unequal) city

This is an interesting article by Virginia Postrel on divergence in housing costs. It used to be that incomes tended to equalize across the country, she says. That isn't happening as much any more. It doesn't pay people to move to get jobs in the more expensive parts of the country. The cost of living - mainly housing - means it does not make sense.


...there are two competing models of successful American cities. One encourages a growing population, fosters a middle-class, family-centered lifestyle, and liberally permits new housing. It used to be the norm nationally, and it still predominates in the South and Southwest. The other favors long-term residents, attracts highly productive, work-driven people, focuses on aesthetic amenities, and makes it difficult to build. It prevails on the West Coast, in the Northeast and in picturesque cities such as Boulder, Colorado and Santa Fe, New Mexico. The first model spurs income convergence, the second spurs economic segregation. Both create cities that people find desirable to live in, but they attract different sorts of residents.

This has been also been called the luxury city phenomenon. People fight development, regulation tightens land use, and so housing costs go up. Existing residents preserve amenities like low density, and reap capital gains. Lower-income workers can't afford to move to town.

Why shouldn't a combination be possible? Clearly, there isn't much more undeveloped land around the big coastal cities like LA or New York, so just adding subdivisions on the edge of town like Albuquerque or Dallas isn't an option.

So we need much more density. Cities should build very high density in their cores and main transport arteries. Instead, New York still has its crazy rent control system and crazy development costs, which restricts new development. We need far more middle-class high rises, places where twenty-somethings and lower middle people and artists and people with big ideas but little cash can live. Jamaica, Flushing, Sunnyside - inner "suburbs" with major transportation connections - should go vertical, fifty or sixty stories high.

Post-war social housing devastated the public image of high rises in all but a few places. No one wanted to live in a crummy project. But that has been changing. The Miami skyline looks glamorous (even if a lot of the condos are empty). Vancouver is sprouting new glass towers. It's not just Manhattan any more.

And the appeal of outer suburbs is fading, as they age and commuting costs rise, and congestion throttles transport.

Of course, most people are still going to want to live in suburbia. But it is important that cities can attract the young and the dreamers and people who don't have trust fund incomes. The bias against development has grown too rigid. Build.



Thursday, July 19, 2012

Virtue, Seeing, and Disagreement

I've been interested for some time in Virtue Ethics on this blog. I think universalized, neutral rules - our depersonalized, process-oriented broad liberal tradition - block any substantive discussion of what kind of good life or society we want, and prevent us making the evolution of the economy follow a path which we find attractive. We get a lot of process but no direction.

There has been increasing interest in virtue ethics in philosophical circles in recent years. I read a book coming back on the plane from the southwest: Virtue Ethics (Oxford Readings in Philosophy). There is one quote, from a John McDowell of Oxford/Pittsburgh, which I particularly like because it links ethics to perception, another long-standing interest of mine:

If the question "How should one live?" could be given a direct answer in universal terms, the concept of virtue would have only a secondary place in moral philosophy. But thesis of uncodifiability excludes a head-on approach to the question whose urgency gives ethics its interest. Occasion by occasion, one knows what to do, if one does, not by applying universal rules but by being a certain kind of person: one who sees situations in a certain distinctive way.(p161)

It's not a matter of codified universal rules: it's a matter of seeing things. Another (critical) article of virtue ethics, by J.D Schneewind, says 

The first point about a virtue-centered view is that the primary or central moral judgements are judgements about the character of agents....Second, on the epistemological side, the virtue theorist holds that the perceptions of the virtuous person are the original and central source of knowledge about how much good to pursue, for whom, in what circumstances, and how vigorously.

I am highly attracted to this strong link between perception and virtue/ethics. Improvement in policy and society is most often a matter of educating and improving perception.

Co-existence as the prime aim of ethics

Some of the criticism is very interesting. Schneewind argues moderns, including Kant, did not neglect or ignore virtue in pursuit of other ideas, so much as built on the natural law tradition which saw coexistence as the primary problem in society. Grotius is the key figure.

If we ask why the project of the Grotians was to establish a law-like code of morals, the answer must be that they took the central difficulties of life to be those arising from disagreement - disagreement involving nations, religious sects, parties to legal disputes, and ordinary people trying to make a living in busy commercial societies.

...In tackling these problems, classical virtue theory is of little or no use. Aristotle does not tell us what a virtuous agent is to do to convince someone who is not virtuous to agree with him, other than to educate him all over again. He does not suggest criteria which anyone and everyone can use to determine who is a virtuous agent and who is not. He does not discuss the situation in which two virtuous agents disagree seriously with one another. And consequently he does not notice what seems to be an implication of his view: that if two allegedly virtuous agents strongly disagree , one of them (at least) must be morally defective.

The Aristotelian theory may have been suited to a society in which there was a recognized class of superior citizens , whose judgement on moral issues would be accepted without question (p200)

This is very stimulating. It is a different and less ambitious aim for ethics, and indeed society: it is the Rodney King question, "Can't we all get along?", rather than the "what is the good life" question. It is a matter of minimal coexistence, and it certainly seems to be a key to classical liberalism. I've said before that liberalism as the broad tradition which encompasses most of our politics today had its origin in the reaction to the blood spilt in the wars of religion. And this view has a natural attraction in fractured, multi-cultural societies, where many politicans will see not rocking the boat as the principal aim of policy.

I don't think it follows that it is impossible to resolve disagreement with virtue ethics. Quite the opposite, in fact, because it would have implications for how you discuss problems and look for solutions - moderation, open-mindedness, honesty, courage. Conpare how legalistic procedures can inflame disagreement - infamously in divorce cases, for example, where involving lawyers and rules seems often to make disagreement much more entrenched.

Nor is it a fair criticism to say that somehow Aristotle's views were suited to a more homogenous, hierarchical society, but not to today's diverse and complicated states. We've seen fifth and even fourth-century Athens were riven with disagreement and conflict between the aristocratic classes and the people. Indeed, much of the motivation for that original ethical philosophy may have been to find a better way to live in a violent, conflicted society.

Schneewind also thinks Kant did not ignore virtue, although much of it is relegated to Kant's more obscure books. However,

..The virtuous agent, for Kant, has no epistemological privilege: when she exercises her virtue she is simply choosing at her discretion among alternative ways of helping others, she is not displaying insight into the morally best thing to do. Moreover, Kant sees virtue in a most un-Aristotelian way, as always a struggle, never a settled principle. Kant's vision of the divided self is the villain here, with morality springing from an impossibly pure reason in conflict with reprobate passions forever calling for discipline. Virtue is not so much the expression of our nature at its most developed as it is the triumph of one part of it over another.

And so from this follows the idea that rationality is the main ground of moraity, of course, rather than experience (or religion.)

Rules versus Discretion

Much of the criticism of virtue ethics is that it does not give a definitive black-and-white rule of what to do in particular circumstances. Schneewind draws attention to how Hume developed a modified virtue ethics, of natural versus artificial virtues. And he notes Adam Smith's view in the Theory of Moral Sentiments:

.. he shared the Grotian belief that society could not function properly without clear and precise rules for the guidance of action. .. These points stand out sharply in Smith's criticusm of the views of virtue he attributes to Plato, Aristotle, the Stoics, clarke, Wollaston and Shaftesbury. All of them, he says, place cirtue in the propriety of affections, but 'none of them give, or pretend to give, any precise or distinct measure by which this fitness or propriety can be ascertained or judged of.' Yet to direct such judgements is 'the great purpose of all systems of morality.'

..If the natural lawyers' stress on actions and on perfect duties is thus apparent in Smith, so too is their preference for the clear and definite over against that which must be left to the discretion of the agent. (p191)

It is similar, in a way, to the contemporary long-standing debate in economic policy about rules versus discretion. It also perhas reflects the difference between traditional Anglo-American common law and Napoleonic style codification of the law.

In this case, at least, it seems to be a matter of fundamental taste or personality.

Co-existence is very important, of course. And radical reform schemes have a terrible record of producing discord and bloodshed in practicce. But a legalistic procedure to arbitrate disputes does not exhaust what we want out of life. Indeed, the approach is based on a fatalstic idea that there can be no real agreement on ends or aims in society, perhaps aside from a few abstract notions about equality or rights.

And the whole point of judgement is it leaves room for balance, for realizing (like Berlin) that there is a golden mean, not a crystalline purity of moral rules.

The idea that ethics or social life is a rational, depersonalized means for arbitrating disputes, a kind of machine, actually often undermines itself, as people get entrenched in irreconcilable rights and aggressive self-assertion.

Wednesday, July 18, 2012

Signs of the End Times

Sometimes you have to wonder....


New York hedge fund manager drops $1m shoe collection case

Daniel Shak, 53, filed a lawsuit against his former wife Beth Shak last month, demanding 35 per cent of her shoe collection.He claimed she had kept the shoes hidden in a secret room in their Fifth Avenue apartment, meaning he was unaware of their value when he agreed to a $3.25 million (£2m) divorce settlement.

LaGuardia shame

We just flew into LaGuardia after a week travelling in the Southwest. I'm proud of New York City in so many ways. But LGA is a disgrace. The ratty Central Terminal feels like arriving in some run-down developing country, and that impression is reinforced by the scammers trying to sell illicit taxi service to tourists just outside. It is a terrible first impression of the city.

JFK is much better than it used to be, with Terminals 4, 5 and 8 all relatively new, as well as the Airtrain connections built a few years ago. But the Airtrain just takes you to Jamaica or Howard Beach. Contrast that to, say, Zurich Flughaven, with mainline connections across the country, or the TGV connections from Charles De Gaulle, or the amazing Hong Kong airport and the express connection to downtown.

It is remarkable that there is no subway connection at all to LGA, which partly explains the taxi lines and general air of chaos outside the terminal.

It is far too hard and far too expensive to build infrastructure in the city. We've swung to the opposite extreme from the days of Robert Moses, who seemed to knock down whole neighborhoods on a whim to build projects like the Cross Bronx Expressway. Fifty years ago America could build the interstate highway system. Could we do anything on that scale now? Yes, but it would take five times as long and cost fifty times as much. It is a disturbing contrast to the traded goods sector of the economy where costs have plunged.

It now seems to require Herculean effort to do anything at all. The Second Avenue construction, the LIRR connection to Grand Central and the Fulton Street Project are both over budget and behind schedule.

We can see World Trade Center One topping out. But in the same time they've built a whole city of high rises in Dubai. The Burk Khalifa cost $1.5 billion ( at least according to Wikipedia). That's a mere third of the cost overruns on the World Trade Center project between 2008 and today. Construction costs in New York seem vastly inflated compared to similar projects elsewhere. And some of that cost is just stupid bureaucratic infighting.

Here's an interesting example. Amtrak announced a proposal for high speed rail in the Northeast last week, at a cost of $151 billion and finishing in 2040 or later. It is possible we could achieve much of the same improvement in speed for 90% less, according to this detailed take, by upgrading rolling stock and switches, and getting the different agencies - Amtrak, MTA, New Jersey transit- to integrate operations and track usage better and function to the same standards that Japanese and French operators do.

I'm actually a supporter of high speed rail and similar infrastructure investment. But the pattern of vast cost overruns and delays and inefficiency in public infrastructure projects makes it far more difficult to make the case for it. We have an ossified, sclerotic planning system, erratic political decision-making and an inefficient public sector.

If public goods get too expensive, self-evidently we get less of them. Both parties need to realize this. Republicans need to concede that many things are naturally public goods. And Democrats have to admit that regulation can have a devastating effect on provision of them.

A similar example is the billion dollars or so it takes to get a new drug through the FDA approval system.

Productivity is the driver of wealth. And in large sectors of the economy, we actually see lower effective productivity. It takes steadily more effort and expense to accomplish the same thing.

I talked about Baumol's disease some time ago here. In general, I think the problem in the economy is dealing with abundance - the fact that we have such high productivity in sectors producing material goods that cater to our basic needs. But we have problems of relative shifts in costs that make some desirable things seem much more expensive. Public goods, education and medical care get more and more expensive relative to basic goods.


Reservoir Dogs in policy world

The LIBOR scandal is still spreading, and regulators are now starting to get pulled in like heavy objects towards a black hole. The Bank of England looks careless, following the revelation of emails from the New York Fed. Much of the British establishment is in disarray. The Guardian puts it colorfully:

Only two weeks into the market-rigging scandal and already the economic-policy establishment resembles the final scene of Reservoir Dogs: a bunch of men in suits all blindly shooting at each other.

It is one of those mornings where the world seems a little crazy, especially in the UK. Another British bank, HSBC, has been astonishingly careless over money laundering. That isn't just a financial scandal, by the way. It's also a deep failure by US and UK intelligence agencies, who are supposed to be in business precisely to stop billions of dollars flowing to benefit drug lords and terrorists.

And to add to the catalog of British follies, the Olympic security fiasco looks just idiotic at present. If there are any incidents in coming weeks, it could yet look tragic. The pensions industry there is accused of systematic overcharging and hidden fees. And this is just one day's news.


Monday, July 16, 2012

Rehabilitating Capitalism

A book review in the Economist, looking at books by Allan Meltzer and Luigi Zingales.

Capitalism’s core defence, Mr Meltzer argues, is that it is the only system that leads to freedom and economic growth. It is less good at ensuring virtue or stability; failure is an inherent part. Indeed the author’s observation that “capitalism without failure is like religion without sin. It doesn’t work well,” has already been widely circulated. However, the sins attributed to capitalism—corruption, fraud and greed, to name but three—are not only pervasive in systems where the state controls production, but far more damaging and far less likely to be rectified.
Zingales argues capitalism is not the same as pro-business cronyism:

When government favours the private sector, Mr Zingales argues, it is all too often by being “pro-business” rather than “pro-market”, meaning that favourable conditions are provided to particular institutions rather than to institutions broadly.

Sunday, July 15, 2012

Manhattan has a new avenue - 6 1/2 Ave

This is a wonderful and quirky little innovation by New York City. They've put up signs marking a linked pedestrian way. Somebody at City Hall definitely has some creativity.