It has been a tough year and a half in Christchurch. Christchurch is the largest urban area South Island and second in size in New Zealand only to Auckland. On September 4, 2010, Christchurch was hit by a 7.1 magnitude earthquake, stronger than the 7.0 magnitude earthquake that with its aftershocks killed 300,000 people in Haiti in 2010. To the great fortune of Christchurch, there were no fatalities from the September quake.
In Christchurch, the earthquakes just kept coming and the luck ran out. A major aftershock nearly a year ago (February 22, 2011) registered 6.3, but did much more damage to buildings and infrastructure weakened by the September 2010 quake. A total of 184 people lost their lives, with more than one-half of the victims in the Canterbury Television (CTV) building (photo), which collapsed. Many of the victims in the building were foreign students. The area's tallest building, the 23-story Grand Chancellor Hotel (photo) was condemned and demolition is underway. Another major hotel, the Crowne Plaza, was too damaged to be repaired and will be demolished. A number of heritage buildings were also condemned and have either been demolished or will be, such as the Manchester Courts (photo), built more than 105 years ago and the Christchurch Press building (photos: before and after), which housed the city's daily newspaper.
The city's fabled Christ Church Cathedral (Anglican/Episcopal) was badly damaged (photos: before and after). The damage was ecumenical, with the Catholic Cathedral of the Blessed Sacrament also suffering serious damage (photos: before and after). Strong aftershocks in June and December of 2011 did additional damage. Much of the central business district was declared a "red zone," off limits except for special permission (red zone map). Finally, the disasters have been a serious enough blow to the nation to cause postponement the 2011 census to 2013.
For many of the survivors, the earthquakes were just the beginning. In the eastern part of the urban area, toward the Pacific Ocean, streets, houses and commercial buildings were undermined by liquefaction. New Zealand Prime Minister John Key said that 10,000 homes would need to be condemned. Some neighborhoods will not be rebuilt because of potential future liquefaction.
In the meantime, there has been growing dissatisfaction with the area's largest municipality (local government authority), the city of Christchurch. Replacement housing consents have been slow in coming and far slower than in neighboring suburban municipalities. This has caused considerable concern for households needing to move and rebuild.
Then, the city council narrowly approved a 15 percent, $68,000 salary increase ($56,000 US) for the city council chief executive (city manager) Tony Marryatt. The pay raise ignited the unusual phenomenon of an everyday citizen's protest movement. Marryatt initially defended the pay raise to $540,000 ($450,000 US) claiming he would be paid the market rate. As the debate intensified, Marryatt subsequently decided to decline the pay raise. That was not enough for the protesters, who include homeowners, business owners, members of the clergy and an array of citizens. Protesters demanded that Marryatt resign, that Mayor Bob Parker resign and that the national government schedule new elections.
For his part, Mayor Parker's television interview doublespeak characterizing the $68,000 as "not a pay rise" and then mumbling on about "paying the market rate," won him no friends. In the same interview, protest leader, the Reverend Mike Coleman questioned the council executive's travel for golfing outings to North Island and travel to Australia's resort Gold Coast. Coleman was particularly critical of Marryatt's not having interrupted his Gold Coast vacation to return to Christchurch after the December aftershocks.
On Wednesday, February 1, an estimated 4,000 people (according to the police) gathered in Christchurch at a rally to press their demands. A television report called the "most poignant moment" a speech by firefighter Kelvin Hampton, who told of having to perform a double amputation with "a hacksaw and a knife" above the knee of a victim. Hampton noted the irony that his annual salary was less than the salary increase for the council executive.
A protest committee released an open letter to Dr. Nick Smith, the Minister for Local Government calling for the national government to:
- Call for mid-term (unscheduled) elections for city council and mayor
- "to impress on our council to develop a process that will address the issues around the council holding up the rebuild of Christchurch. This will include how and when to fast-track land-zoning changes, sub-divisions and other consents in an open and transparent way, while ensuring that the suitability of the land and the safety of the buildings is assured."
The protest committee also called upon Mayor Parker and sitting councilors to "commit to transparency and accountability to the people they were elected to serve in the lead up to new elections."
TVNZ highlighted the uniqueness of the protest, running a feature on Andrea Cummings, who had never participated in such a protest before. She and her husband run a small business in a hard hit neighborhood
of east Christchurch. Like Ms. Cummings, most of the attendees had not protested before, though one lady indicated that she had participated in Viet Nam war protests in college.
Where it goes from here cannot be said. Mayor Parker remains confidently in charge, with the council executive by his side. And, the protesters are determined to keep up the fight. Christchurch may never have seen such a thing before.
Letting the nation’s roads and bridges deteriorate may worsen traffic congestion and add to our commuting woes, but when water and sewer systems begin to fail our very civilization is at risk. That is the message of a recent story in The Washington Post drawing attention to the alarming state of the nation’s water and sewer infrastructure. The story looks at the Washington D.C. system as a poster child for neglected and dilapidated municipal utilities. The average age of the District water pipes is 77 years and a great many were laid in the 19th century, notes the Post article. Emergency crews rush from site to site to tackle an average of 450 breaks a year. ("Billions needed to upgrade America’s leaky water infrastructure," by Alfred Halsey III, January 2, 2012).
Antiquated municipal water and sewer systems are indeed a ticking bomb— all the more so since their deterioration, unlike that of highways and bridges— remains invisible until a break occurs. But maintaining water and sewer infrastructure in a state of good repair is a fairly straightforward challenge. Water supply and sewers are a public utility and as such they can cover their maintenance and replacement costs through user fees. So can many other public services such as electricity, natural gas, broadband and telecommunications. The ability to charge for service (and to raise rates as necessary) assures public utilities a steady and reliable stream of revenue with which to maintain, preserve and grow their assets.
Finding the resources to keep transportation infrastructure in good order is a more difficult challenge. Unlike traditional utilities, roads and bridges have no rate payers to fall back on. Politicians and the public seem to attach a low priority to fixing aging transportation infrastructure and this translates into a lack of support for raising fuel taxes or imposing tolls.
Investment in infrastructure did not even make the top ten list of public priorities in the latest Pew Research Center survey of domestic concerns. Calls by two congressionally mandated commissions to vastly increase transportation infrastructure spending have gone ignored. So have repeated pleas by advocacy groups such as Building America’s Future, the U.S. Chamber of Commerce and the University of Virginia’s Miller Center.
Nor has the need to increase federal spending on infrastructure come up in the numerous policy debates held by the Republican presidential candidates. Even President Obama seems to have lost his former fervor for this issue. In his last State-of-the-Union message he made only a perfunctory reference to "rebuilding roads and bridges." High-speed rail and an infrastructure bank, two of the President’s past favorites, were not even mentioned.
Why pleas to increase infrastructure funding fall on deaf ears
There are various theories why appeals to increase infrastructure spending do not resonate with the public. One widely held view is that people simply do not trust the federal government to spend their tax dollars wisely. As proof, evidence is cited that a great majority of state and local transportation ballot measures do get passed, because voters know precisely where their tax money is going. No doubt there is much truth to that. Indeed, thanks to local funding initiatives and the use of tolling, state transportation agencies are becoming increasingly more self-reliant and less dependent on federal funding
Another explanation, and one that I find highly plausible, has been offered by Charles Lane, editorial writer for the Washington Post. Wrote Lane in an October 31, 2011 Washington Post column, "How come my family and I traveled thousands of miles on both the east and west coast last summer without actually seeing any crumbling roads or airports? On the whole, the highways and byways were clean, safe and did not remind me of the Third World countries. ... Should I believe the pundits or my own eyes?" asked Lane ("The U.S. infrastructure argument that crumbles upon examination").
Along with Lane, I think the American public is skeptical about alarmist claims of "crumbling infrastructure" because they see no evidence of it around them. State DOTs and transit authorities take great pride in maintaining their systems in good condition and, by and large, they succeed in doing a good job of it. Potholes are rare, transit buses and trains seldom break down, and collapsing bridges, happily, are few and far between.
The oft-cited "D" that the American Society of Civil Engineers has given America’s infrastructure (along with an estimate of $2.2 trillion needed to fix it) is taken with a grain of salt, says Lane, since the engineers’ lobby has a vested interest in increasing infrastructure spending, which means more work for engineers. Suffering from the same credibility problem are the legions of road and transit builders, rail and road equipment manufacturers, construction firms, planners and consultants that try to make a case for more money.
This does not mean that the country does not need to invest more resources in preserving and expanding its highways and transit systems. The "infrastructure deficit" is real. It’s just that in making a case for higher spending, the transportation community must do a much better job of explaining why, how and where they propose to spend those funds. Usupported claims that the nation’s infrastructure is "falling apart" will not be taken seriously.
People want to know where their tax dollars are going and what exactly they’re getting for their money. Infrastructure advocates must learn from state and local ballot measures to justify and document the needs for federal dollars with more precision so that the public regains confidence that their money will be spent wisely and well.
Seldom has public opinion and expert judgment been more unified than in its opposition to the California high-speed rail project. The project has been criticized by its own Peer Review Group, the Legislative Analyst's Office (LAO), the California State Auditor, the State Treasurer and a group of independent experts (Enthoven, Grindley, Warren et al.). In addition, the bullet train has come under severe criticism by influential state legislators and by members of the state's congressional delegation. Equally damaging to the project's future prospects have been two public opinion surveys showing that California voters have turned solidly against the project, and the opposition of virtually all of California's newspapers, including The Orange County Register, whose latest editorial we reprint below.
Editorial: Bullet train becoming "Moonbeam Express" (OC Register, Feb 1, 2012)
Gov. Jerry Brown wants to use anti-global-warming carbon taxes to fund California's much-maligned high-speed rail project.
In a brazen denial of the obvious, Gov. Jerry Brown now insists the proposed California high-speed rail can be built for much less than its own business plan stipulates, and wants to use anti-global-warming carbon taxes to underwrite the proposal, whose price tag has nearly tripled in the three years since voters approved it.
The governor seems intent on demonstrating how California's state government has burdened taxpayers with mounting debt, while overspending to create consecutive years of budget deficits. The rail project has been dubbed "the train to nowhere" because the only portion close to being built would link relatively sparsely populated Central Valley towns and no metropolitan areas. Perhaps with Mr. Brown's new foolish insistence, it should be christened the Moonbeam Express.
Since the rail proposal appeared on the 2008 ballot, it has been widely and legitimately criticized in detailed analyses by the rail project's own Peer Review Group, the state auditor, treasurer, Legislative Analyst's Office, local governments including Tulare, Madera and Kings counties and the city of Palo Alto, numerous state and federal lawmakers from both parties and studies by UC Berkeley Institute of Transportation and the Reason Foundation. These highly unfavorable critiques reflect many of the criticisms the Register Editorial Board has raised since the project was proposed.
In only three years, the train's estimated cost has increased from $33 billion to $98.5 billion in the latest version of its own ever-changing business plan.
Voters approved only $9.9 billion in bonds based on the rest coming from Washington and local governments along the route, and private investors. Washington has provided about $3 billion and not another dime has materialized or been pledged. Meanwhile, the estimated completion of the original phase of the project, from San Francisco to Anaheim, has been extended 14 years beyond the original estimate of 2020.
Ridership estimates are unrealistic, meaning trains can't operate solely on ticket revenue as required by the initiative. Costs, even at their current highest level, are certain to increase, and the needed additional funding sources are not forthcoming. Given hostility in Congress to the project, more money from Washington, which is grappling with its own massive deficits and debts, won't be seen in the foreseeable future.
State Sen. Doug LaMalfa, R-Richvale, introduced a bill Monday to put the high-speed rail proposal back on the November ballot so voters can de-authorize selling the $9.9 billion in bonds.
The Register has urged this ill-conceived and increasingly untenable project be resubmitted to voters. Thankfully, for the most part, bonds remain unsold. There is no reason taxpayers should assume billions more debt --- with annual interest payments of up to $1 billion --- when the likelihood is remote the train ever will be built, despite the governor's strained assurance.
Moreover, state Sen. Diane Harkey, R-Dana Point, notes that the governor's proposed new revenue stream --- carbon taxes created by the 2006 Global Warming Solutions Act--- is another hoped-for, rather than assured, solution. "The state's cap-and-trade program is not yet in operation, and revenue estimates of $1 billion per year are unreliable and unsubstantiated," Ms. Harkey said. "Relying on projected revenues that fall short is the key reason why our state deficit continues to explode year after year. To rush this project forward, just using up the $3.5 billion of federal funds, with the hope of an additional funding mechanism based on guesswork, is irresponsible."
Is there any connection between the fact that Salinas has the gang problem that it does, and the fact that Monterey County's restrictions on the building of housing are very strict? I can see why the inhabitants of the Monterey Peninsula might want to protect the coastal strip. But if they apply their policies to the whole county, it becomes very difficult to build any housing. I saw a proposal 40 years ago from Ralph Nader's think tank that would encourage the building of Italian style hill towns along the hills along both sides of the South Santa Clara Valley, thus leaving the lowlands along the river for agriculture; such a plan could be applied to the Salinas Valley as well. I don't have the expertise to draw the connection between restricted housing and the gang situation in Salinas, but surely the situation is worth looking at. What kind of novels would a John Steinbeck write, if he were growing up in Salinas today?
Overall migration rates in America appear to be down in the wake of the Great Recession, reaching the lowest levels recorded since the 1940's. While some statisticians argue that changes in data collection over time have led to an overstatement of such changes, there seems little doubt that "interstate migration has been trending downward for many years," regardless of recent recessionary effects. That said, Americans remain a mobile people. Each year, millions of Americans make an interstate move. While overall migration rates may be down, "the commonly held belief that Americans are more mobile than their European counterparts still appears to hold true." In good times and bad, the draw of opportunity in a new state still remains a siren call for many Americans.
Adding a bit of information on current American migration patterns, Atlas Van Lines, a major American moving company, recently released it's annual data on interstate moves. A plurality of states (24) had a balance between inbound and outbound moves. Magnet states included the upper south (TN and NC), the capital region (DC, VA, and MD), and hubs of energy production, including North Dakota, Texas, and Alaska. Many Midwest and Great Lakes states had more outbound movers than inbound. While the Atlas numbers don't mesh completely with Census migration estimates, they may lend some support to Wendell Cox's argument that domestic migration may be returning to some sort of normalcy. Simply put, people continue to go where they can find work, economic opportunity, reasonable costs of living, and good weather.
Our 8th Annual Demographia International Housing Affordability Survey included the Saginaw, Michigan metropolitan area, which we noted had the lowest Median Multiple (median house price divided by median household income) among the included 325 metropolitan areas. This made Saginaw the most affordable metropolitan market, principally due to depressed economic conditions. Saginaw has been ravaged by the loss of manufacturing jobs and a generally declining economy because of its strong industrial ties to the Detroit metropolitan area.
D. Robertson of Freeman's Bay (Auckland, New Zealand) must think that things are much worse, as indicated by a letter to the editor in the New Zealand Herald on January 24 (The Herald does not post letters to the editor on its internet site). Robertson says that including and prominently reporting the result of Saginaw Michigan (population 297 in 120-odd dwellings) was inappropriate. Robertson makes a 99.9% error, having apparently confused Saginaw, Missouri (population 297) with Saginaw, Michigan. According to the 2010 US Census, the Saginaw metropolitan area has a population of 200,169. That would be substantial enough to qualify Saginaw as one of New Zealand's largest metropolitan areas if it were there.
Kevin Drum of Mother Jones reports on the highly questionable "cost of alternatives" that has been routinely repeated by proponents of the California high speed rail project, in an article entitled "California High Speed Rail Even More Ridiculous than Before."
The mantra goes something like, "yes high speed rail is expensive, but it would cost even more to not build it." Yes, indeed, it is expensive, starting at the low estimate of $98.5 billion the press and proponents usually cite to the nearly $118 billion that the California High Speed Rail Authority itself indicates. Advocates then cite a $171 billion figure as what Californian's would have to pay if they didn't build the line.
Joseph Vranich and I detailed the flaws in this "alternatives estimate" in a Wall Street Journal commentary on January 10 ("California's High Speed Rail Fibs"). We noted that the claim "sets a new low for planning projections in a field that has been rife with abuse." This was a reference to "strategic misrepresentation” ("lying") that has characterized rail project forecasts, according to top European academics.
Drum goes further, calling the claim "jaw-droppingly shameless," an appropriate characterization based upon the method and documentation. He goes on to suggest that "A high school sophomore who turned in work like this would get an F."
Regardless of the views that officials or the public may have on high speed rail, they are entitled to a standard of professional (and taxpayer financed) analysis above "jaw-droppingly shameless."
In a previous post we looked at which states have been most competitive in terms of job creation since the recession.
In this post we teamed up with our friends at Tableau Software to produce the following interactive graphic, which details individual industries that are driving states to be more (or less) competitive. The graphic breaks down the performance of the 20 major sectors in every state in the contiguous US (plus Hawaii and Alaska) in terms of expected and actual job change from 2007-2011. Further explanation of the analysis is below.
Rundown on the data
We used shift share, a standard economic analysis method that reveals if overall job growth is explained primarily by national economic trends and industry growth or unique regional factors. Shift share analysis, which can also be referred to as “regional competitiveness analysis,” helps us distinguish between growth that is primarily based on big national forces (the proverbial “rising tide lifts all boats” analogy) vs. local competitive advantages.
To generate our ranking, we summed the overall competitive effect for each broad 2-digit industry sector by state (e.g., agriculture, manufacturing, health care, construction, etc.) and added them together to yield a single statewide number that indicates the overall competitiveness of the economy as compared to total economy. We calculate the competitive effect by subtracting the expected jobs (the number of jobs expected for each state based on national economic trends) from the total jobs. The difference between the total and expected is the competitive effect. If the competitive effect is positive, then the industries within the state have exceeded expectations and created more jobs than national trends would have suggested. Those industries are therefore gaining a greater share of the total jobs being created. If the competitive effect is negative, then the industries are not gaining jobs as fast as what we would expect given national trends. In this case the state is losing a greater share of the total jobs being created.
Observations On Most Competitive
The big thing that stands out is that most of the competitive states tend to be in the middle of the country. This is tied to the growth in the oil and gas sector, yes, but in most cases better-than-expected performance in construction, government, and other miscellany sectors. In Alaska, North Dakota, and Nebraska, smaller states in terms of population and jobs, manufacturing, transportation, and construction are some of the most competitive industries. Louisiana also fares quite well in healthcare and accommodation & food services.
Observations On Least Competitive
For states that rank toward the bottom, the housing bust and subsequent construction downturn is the biggest culprit. For instance, in Nevada, which is last on the list, construction is nearly 50,000 jobs below what would be expected given national and industry trends. Florida, a much more populous state, is more than 130,000 jobs below what would be expected. For states like Michigan, Ohio, and Indiana, the poor performance in manufacturing and government weighed heavily in our ranking.
Here is the original graphic that show the comparison between states.
Please check out the graphic and let us know if you have any questions. Email Rob Sentz (firstname.lastname@example.org) or hit us via Twitter @DesktopEcon. Data and analysis comes from Analyst, EMSI’s web-based labor market analysis tool.
Anyone familiar with housing affordability in the Washington (DC-VA-MD-WV) metropolitan area is aware that prices have risen strongly relative to incomes in the last decade.
However, a recent Washington Post commentary by Roger K. Lewis both exaggerates the contribution of higher construction costs and misses the principal factor that has driven up the price of housing: more restrictive land-use regulations.
Lewis compares construction costs in the early 1970s to current costs and finds that they are approximately 6 times as high. However, when the R. S. Means construction cost index for locations in the metropolitan area are adjusted for inflation, the increase is more like 15% (1970 to 2007).
Lewis also indicates that construction costs have risen faster than the "relatively flat income curve." In contrast, Census Bureau data indicate that median household incomes in the Washington metropolitan area have increased more than 30% since the early 1970s, after adjustment for inflation. House construction costs are the flatter of the two, not incomes.
While Lewis' focus is affordable housing, costs in this low income sector are impacted by many of the same factors that drive overall housing affordability (overall house prices relative to incomes).
Lewis does not consider the huge cost increase in the non-construction costs of housing. In the Washington metropolitan area, we have estimated that the land and the regulatory costs for a new house have been driven to more than 5.5 times the level that would be expected in a normal regulatory environment (see the Demographia Residential Land & Regulation Cost Index). The problem is that the restrictive land-use policies, such as the Montgomery County agricultural reserve, similar regulations in other metropolitan area counties and the large lot building restrictions in Loudoun County have driven the price of land up substantially, and with it, the price of housing. We estimate that more restrictive land use regulations have driven the price of a new house up approximately $75,000.
Not surprisingly, Washington's Median Multiple (median house price divided by median household income) remains more than a third above the 3.0 historic norm, at 4.0, even after the burst of the housing bubble. So long as governments in the Washington, DC area continue to strictly ration land for development, higher than necessary costs will continue to plague both housing affordability and affordable housing.
America has two basic economies, and the division increasingly defines its politics. One, concentrated on the coasts and in college towns, focuses on the business of images, digits and transactions. The other, located largely in the southeast, Texas and the Heartland, makes its living in more traditional industries, from agriculture and manufacturing to fossil fuel development.
Traditionally these two economies coexisted without interfering with the progress of the other. Wealthier gentry-dominated regions generally eschewed getting their hands dirty so that they could maintain the amenities that draw the so-called creative class and affluent trustifarians. The more traditionally based regions focused, largely uninhibited, on their core businesses, and often used the income to diversify their economies into higher-value added fields.
The Obama administration has altered this tolerant regime, generating intensifying conflict between the NIMBY America and its more blue-collar counterpart. The administration’s move to block the Keystone XL oil pipeline from Canada to the Gulf of Mexico represents a classic expression of this conflict. To appease largely urban environmentalists, the Obama team has squandered the potential for thousands of blue-collar jobs in the Heartland and the Gulf of Mexico.
In this way, Obama differs from Bill Clinton, who after all recognized the need for basic industries as governor of poor and rural Arkansas. But the academic and urbanista-dominated Obama administration has little appreciation for those who do the nation’s economic dirty work.
NIMBY America’s quasi-religious devotion to the cause of global warming is the current main reason for their hostility to the basic economy. But it is all a part of a concerted, decades-long jihad to limit the dreaded “human footprint,” particularly of those living outside the carefully protected littoral urban areas.
Oddly, in their self-righteous narcissism, the urbanistas seem to forget that driving production from more regulated areas like California or New York to far less controlled areas like Texas or China, may in the end actually increase net greenhouse gas emissions. The hip, cool urbanistas won’t stop consuming iPads, but simply prefer that the pollution making them is generated far from home, and preferably outside the country.
The perspective in the Heartland areas and Texas, of course, is quite different. They regard basic industries as central to their current prosperity. Oil and gas, along with agriculture and manufacturing, have made these areas the fastest growing in terms of jobs and income over the past decade.
Of course, the apologists for the NIMBY regions can claim that they, too, create economic value. And to be sure, Silicon Valley — now in a midst of one of its periodic boom periods — Wall Street and Hollywood constitute some of the country’s prime economic assets. Similarly, highly regulated cities such as New York, San Francisco, Seattle, Boston and Chicago offer a quality of life, at least for the well-heeled, that draws talent and capital from the rest of the world.
But the NIMBY model suffers severe limitations. For one thing, these high cost areas generally lag in creating middle-skilled jobs; New York and San Francisco, for example, have suffered the largest percentage declines in manufacturing employment of the nation’s 51 largest metropolitan areas. Indeed with the exception of Seattle, the NIMBY regions have all underperformed the national average in job creation for well over a decade.
These areas are becoming increasingly toxic to the middle class, especially families who are now fleeing to places like Texas, Tennessee, North Carolina and even Oklahoma. NIMBY land use regulations — designed to limit single-family houses — usually end up creating housing costs that range up to six times annual income; in more basic regions, the ratio is around three or lower.
Ironically, America’s most ardently “progressive” areas turn out to be the most socially regressive, with the largest gaps between rich and poor. Even the current tech bubble has not been of much help to heavily Latino working-class areas like San Jose, where unemployment ranges around 10%, nor across the Bay in devastated Oakland, where the jobless rate surpasses 15%.
To succeed, America needs both of its economies to accommodate the aspirations not only of its current population but the roughly 100 million more Americans who will be here by 2050. If the regions that want to maintain NIMBY values want to do so, that should be their prerogative. But stomping on the potential of other, less fashionable areas seems neither morally nor socially justifiable.