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The Kauffman Index of Entrepreneurial Activity produced good news for the year 2009: Americans have created businesses at its fastest rate in 14 years. This past year, 558,000 businesses were created each month, marking a 4% increase from 2008. Though this comes in the midst of economic recession, president and CEO of the Kauffman foundation Carl Schramm seems to think the unsavory results of massive layoffs have fostered these higher rates of entrepreneurship, serving as “a motivational boost” for the newly unemployed to become their own boss. He sees the recent rates in business startups as a favorable sign for economic recovery.

Using the monthly Current Population Survey from the US Census Bureau and US Bureau of Labor Statistics, the Kauffman index has tracked the demographic makeup of business creators, as well as their location. Though African Americans lag behind other groups in terms of the number of entrepreneurs, they saw the largest increase from 2008 to 2009 from an index of .22 to an index of .27. Both the 35-44 and 55-64-year-old groups have increased to an index of .40 percent, also the greatest of their demographic category.

The index followed predictable trends in terms of location of entrepreneurial activity, showing that the largest rate increases occurred in the south and west in states like Oklahoma, Montana, Texas, and Arizona while Mississippi, Nebraska, and Pennsylvania floundered. However, business creation rates in the Midwest and South outdid those of the west, which actually declined from 0.42 to 0.38 percent from 2008 to 2009.

You can find interactive data on entrepreneurial activity for the period spanning 1996-2009 on the Kauffman Foundation’s website at www.kauffman.org/kiea.

Kirsten Moore is an undergraduate at Chapman University majoring in US history and screenwriting.

Matt Yglesias has been making the case recently that zoning and land use laws encourage suburban sprawl, and if we did away with them we'd have a greater number of dense, walkable neighborhoods. Cato's Randall O'Toole took exception, so Matt condensed his argument into PowerPoint form:

There's a lot I could say about this, but that's a mistake in a blog post. So I'll stick to one main point: these regulations aren't something that's been imposed by "government." They exist because people really, really, really want them.

I need to be clear here: I'm neither praising nor condemning this, just describing how things are. To get an idea of how strongly people feel about this, you really need to come live in a suburb for a while. But failing that, consider the balance of power here. Corporations would like to be able to build wherever and whatever they want. Wealthy land developers would like to be able to build wherever and whatever they want. And local governments hate single-family neighborhoods because they're a net tax loss: they cost more in services than they return in property tax remittances. And yet, even with corporations, wealthy developers, and local governments all on one side, suburban zoning is ubiquitous. This is a triumvirate that, under normal circumstances, could get practically anything they wanted, but in this case it's not even a close fight. Suburban residents have them completely overwhelmed. That's how strong the desire is for suburban sprawl. Read more

More than two years ago we suggested in these pages that the era of multi-billion dollar system-building investments in urban rail transit is coming to an end. We wrote: "The 30-year effort to retrofit American cities with rail infrastructure, begun back in the Nixon Administration, appears to be just about over. The New Starts program is running out of cities that can afford or justify cost-effective rail transit investment. To be sure, federal capital assistance to transit will continue, but its function will shift to incrementally expanding existing rail networks and commuter rail services rather than embarking on construction of brand new rail systems." ("Urban Rail Transit and Freight Railroads: A Study in Contrast," February 18 2008).

Now comes a startling new revelation from a senior U.S. DOT official that even rail extensions may be at risk. Speaking at a National Summit on the Future of Transit before an audience of leading transit General Managers on May 18, Federal Transit Administrator Peter Rogoff questioned the wisdom of expanding rail networks when money is badly needed to maintain and modernize existing facilities:

"At times like these, it's more important than ever to have the courage to ask a hard question: if you can't afford to operate the system you have, why does it make sense for us to partner in your expansion? If you can't afford your current footprint, does expanding that underfunded footprint really advance the President's goal for cutting oil use and greenhouse gases... Or are we at risk of just helping communities dig a deeper hole for our children and our grandchildren?"

In Rogoff's judgment, the first priority for the transit industry is to follow the precept "fix it first." "Put down the glossy brochures, roll up our sleeves, and target our resources on repairing the system we have," he told the assembled transit officials. Transit systems that don't maintain their assets in a state of good repair risk losing riders, he warned. The Administrator cited the preliminary results of an FTA study of the financial needs of 690 public transit systems across America that show a $78 billion backlog of deferred maintenance. Fully 29 percent of all transit assets are "in poor or marginal condition." The challenge facing transit managers is to resist the siren call of new construction and devote money to the "unglamorous but absolutely vital work of repairing and improving our current systems."

At first blush Rogoff's position would appear to go counter to the Administration's announced policy of favoring public transit. Hasn’t Transportation Secretary Ray LaHood repeatedly championed public transit as an alternative to highway expansion? Hasn’t the Administration’s proposed Fiscal Year 2011 budget include major commitments to funding new rail lines in Denver, Honolulu, Minneapolis and San Francisco? Hasn’t the Federal Transit Administration dropped the former emphasis on cost-effectiveness as an evaluation factor in rail project selection in favor of a broader range of factors? All true.

But fiscal realities can do wonders to bring federal officials down to earth. The Transit Account of the Highway Trust Fund is barely solvent. The U.S. DOT budget will grow by only one percent in 2011. With commendable consistency and fairness, the Administration seems to have decided to apply the same investment standard to transit as it has preached and laid down for highways: Forget about massive capacity expansion; focus on getting the most out of the assets already in place by maintaining them in a state of good repair. To critics of the DOT's new posture – and there will be some – a good answer could be: It’s just a different way of looking at what it means to be pro-transit.

Seattle's tony Belltown condo neighborhood hardly needs more bad news. Like many other similar areas in central city cores, the supply of new high rise condominiums has far outstripped the demand. Over the past year, the downtown area condominium market has experienced a median price decline of 35%. Units in at least three downtown buildings have been auctioned off at prices from 30% to 50% below the latest, already discounted prices.

Yet things have gotten even worse. A 25 story apartment building, only 9 years old, will be demolished due to substandard construction. Owners of the McGuire Apartments (photo on web here), Carpenters Union Local 131 and the Multi-Employer Property Trust issued a letter recently announced saying that "Since the necessary repairs are impractical, the decision ... is to dismantle the building.” The letter also indicated that tenants would be assisted in finding new housing.

A local blogger (Hideous Belltown) has provided a more than one-year long chronicle of the building, since scaffolding was erected, and concluding with two "death-watch" entries.

The Seattle tower may be the newest and tallest building to ever be demolished, especially in the United States.

An article in The Wall Street Journal details the difficulties that were faced by home owners caught in the Goldman Sachs/John Paulson finance scheme ("The Busted Homes Behind a Big Bet"). The article calls the situation a "dizzyingly complex transaction, involving 90 bonds and a 65-page deal sheet. But it all boiled down to whether people ... could pay their mortgages." There is plenty of blame to go around, but surely there were both big winners and big losers is these deals. The big winners were Goldman Sachs and John Paulson. The big losers were the homeowners, though they were not without blame, since they were not forced to take out the excessively large mortgages.

The striking thing about this story, however, is the photograph of a Levittown style house in Aberdeen township, New Jersey, a distant suburb nearly 40 miles from New York City. The picture in the article cannot be directly linked, and the best view is on an interactive slide show linked to the article. We have provided a photograph of a near somewhat smaller house in Levittown (see photo).

In 2006, the owner had refinanced the house with a $308,750 loan, indicating a value more than triple that of comparable housing in much of metropolitan America.

Levittown, of course, was the late 1940s housing development on Long Island that set the stage for the automobile oriented suburban expansion that did so much to create the largest and most affluent middle class in the world. The Levittown houses were very small, starting at about 750 square feet, though many have been expanded. It was not long before suburban housing became larger, eventually rising to the present 2,250 square foot median. The Wall Street Journal's Aberdeen township house is under 1,500 square feet, according to Zillow and was built in 1953.

The Wall Street Journal article misses a significant point. How could such a modest (and doubtless comfortable) house have become so valuable that it could justify refinancing for more than $300,000? The answer is simple. During the real estate bubble, house prices in New Jersey exploded. The state's restrictive land use regulation largely prohibit new housing on the suburban fringe, leaving prices nowhere to go but up and up strongly. Between 2000 and 2006, the median house value in Monmouth County, where Aberdeen Township is located, rose 125% (according to US Bureau of the Census data). 2006 data for Aberdeen township is not readily available.

By the peak of the bubble, the median value house in Monmouth County was 5.8 times the median household income, up from 3.0 times in 2000. In 2000, prices were even lower in Aberdeen township, at 2.3 times incomes – well within the 3.0 standard that defined housing affordability for at least one-half century.

While owners were borrowing $300,000 or more on their modest early 1950s houses in Aberdeen township, households were buying brand new houses of the same size for under $120,000 in Dallas-Fort Worth, Atlanta, Houston, Indianapolis and a host of other metropolitan areas where the American Dream had not been outlawed. Expansion of the housing supply was allowed, and prices stayed within historic norms. For example, in Indianapolis, house prices were less than one-half that of Monmouth County, after adjusting for income levels.

Meanwhile, a judgment of $370,000 has been entered against the owner of the Aberdeen township Levittowner. The auction in late April by the Monmouth County Sheriff for a price that is probably closer to its real value if it had been in a rationally regulated jurisdiction: $100.