NewGeography.com blogs
The Wall Street Journal notes that the London Underground (metro or subway) is on strike and that transit riders are having to find alternate ways to get around. This is of course, not good news, and the transit strikes that happen often in places like Paris and periodically in places like Los Angeles and Philadelphia are a serious impediment to transit's growth (along with spending on extravagant projects and excessive and rising operating costs).
But London is actually well prepared for this emergency. Unlike Paris, Chicago and New York (where making transit strikes illegal did not prevent one), London’s buses and underground are organized in a manner that provides riders with an alternative.
The key is competitive tendering (competitive contracting) of bus service. One of the Thatcher government's most successful reforms was its reorganization of transit in London. It began in 1985, when a small part of the world's largest public bus system was put out to competitive bid. London Transport retained control of the schedules, fares, logos and bus liveries, so that the now privately operated services were an integral part of the system. Riders did not know the difference between the public and private services, until a few years later when the privately operated services began achieving better service reliability than the public services.
By 2000, the entire London bus system had been converted to competitive tendering, with multiple contractors providing the service. Costs per mile dropped by 50%, adjusted for inflation, while service was expanded and ridership rose. Regrettably, some of the efficiency gains were lost once Ken Livingstone assumed the mayorality of the new Greater London Council, while Transport for London (the successor to London Transport) failed to pay sufficient attention to retaining economic competitiveness between the contractors. Still, things are far better today than they were 25 years ago.
This competitively tendered bus system makes it possible for underground riders to get to their destinations by bus, albeit somewhat more slowly.
 Having an alternative is crucial. I recall that in response to a Southern California Rapid Transit District (SCRTD) bus strike (Note), I asked the Torrance and Gardena bus operations to "open their doors" as they traveled through low-income south central Los Angeles on their way to downtown (regulatory restrictions required them to operate in "closed door more" so as not to compete with the services of the larger Southern California Rapid Transit District). It was not long before one of my fellow Los Angeles County Transportation Commission members complained to Mayor Bradley (who had appointed me), which resulted in my withdrawal of the request. My colleague had been more concerned about the good of already well compensated transit employees to a greater extent than south central Los Angeles residents who relied on the buses for their livelihood (granted, this geographic area was outside the electoral constituency of the member).
It is well to remember the less than sage views of Herbert Morrison, Deputy Prime Minister to Clement Atlee in the United Kingdom in the late 1940s. Morrison, the founder of the publicly operated London Transport opined that conversion of privately operated services to publicly operated services would be more efficient and better serve the public because public employees would be driven by an ethic of public service. While Nobel Laureate James Buchanan and the public choice school of economics put an academic end to such muddled thinking, London Underground's workers are in the process of providing even more tangible evidence.
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Note: SCRTD was the operating predecessor to the current Los Angeles County Metropolitan Transportation Association. The board on which I served, the Los Angeles County Transportation Commission was the policy predecessor.
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Photograph by the Author
by Anonymous 09/08/2010
Chicago’s Mayor Daley has decided to end his political career. Chicago’s Mayor since 1989, in December he will break his father’s record as Chicago’s longest serving Chief Executive. No one knows the real reason Daley chose to hang it up, whether it’s his wife’s health or his low polling numbers. Long time Chicago Sun-Times reporter Fran Spielman summarizes Daley’s current troubles:
Chicago’s stunning first-round knock-out in the Olympic sweepstakes, political fall-out from his nephew’s pension fund deals and a budget crisis that forced him to deplete the city’s long-term reserves and demand furlough days and other cost-cutting concessions from city employees.
Chicago is facing more of the same — and another painful round of service cuts — to erase a record $654.7 million shortfall in 2010.
The city’s bond rating was dropped. Its homicide rate is on the rise, including the murder of three Chicago Police officers in recent months.
More voters were increasingly viewing Chicago as a city that doesn't work. Being known as a “union” town isn’t an asset in a competitive, global economy. Who will confront Chicago’s problems as the next Mayor?
Several people are interested in being Chicago’s next Mayor. The most noteworthy is Obama’s Chief of Staff Rahm Emanuel. Whether Emanuel will leave the White House before the November election to start a campaign for February is anyone’s guess. Would President Obama get involved in local Chicago politics to endorse Emanuel?
Emanuel will face scrutiny over his tenure as a board member of the failed GSE Freddie Mac. What exactly did Rahm Emanuel know about corrupt accounting there? But, Emanuel has other problems. Whether Emanuel can overcome hostility from the African-American and Hispanic community over comments made about issuing drivers licenses to high school dropouts is another issue. Both communities will look to run a candidate in February’s election.
Then there’s the problem Chicago may be reluctant to elect a Jewish Mayor. As Alderman Burke told Professor Milton Rakove’s in an interview :
“There is a latent anti-Semitism in Chicago and a large population that will never vote for a Jew. They would vote for anybody before a Jew.”
Whoever decides to run for Mayor will have to have the backing of powerful Alderman Ed Burke, who is Chairman of the Finance Committee. With $6 million in his campaign fund, Alderman Burke will be the kingmaker behind the scenes. After all, the business community “feels” it is good business to be on the good side of Alderman Burke. Chicago Sun-Times reporter Fran Spielman asked Alderman Burke if he would run:
“Stay tuned,’’ he said, laughing. “It would be one of the farthest things from my mind. [But] in Chicago politics, people never close the door.”
It’s not likely Alderman Burke is going to give up his lucrative legal business to take a pay cut as Chicago’s Mayor. Alderman Burke was handing out the money before Mayor Daley was elected and he will continue in that role no matter who is Chicago’s next Mayor.
The “Chicago Way” is likely to continue whoever is the next Mayor.
Despite its smart growth policies, the city of Austin has approved a new development on the urban fringe that will include new detached housing starting at $115,000.
Austin is the third fastest growing metropolitan area with more than 1,000,000 residents in the United States, following Raleigh, North Carolina and Las Vegas. The city of Austin accounted for 53% (672,000) of the metropolitan area's 1.27 million population in 2000, but has seen more than 70% of the growth since that time go to the suburbs. Now the metropolitan area has 1.65 million people, and the city has 785,000.
The Austin metropolitan area managed to experience only modest house price increases during the housing bubble, though other metropolitan areas in Texas (Dallas-Fort Worth, Houston and San Antonio) did even better (see the Demographia International Housing Affordability Survey). Austin's Median Multiple (median house price divided by median household income) peaked at 3.3, slightly above the historic maximum norm of 3.0. Like other Texas markets, there has been little price decline during the housing bust, illustrating the lower level of price volatility and speculation identified by Glaeser and Gyourko with less restrictive land use regulation. This stability has helped Texas weather the Great Recession better than its principal competition, the more intensely regulated states of California and Florida.
The city of Austin, however, is rare in Texas for generally favoring the more restrictive (smart growth) land use policy devices that have been associated with the extreme house price escalation in California, Florida, Portland, and many other metropolitan areas. The city's freedom, however, to implement the most draconian policies and drive house prices up is severely limited by far less restrictive land use policies in the balance of its home county (Travis), neighboring Williamson County (usually among the fastest growing in the nation), Hayes County and the other counties in the metropolitan area.
Austin is competing. This is illustrated by the recent Austin city council action to approve a new "mega" development on the urban area's eastern fringe that could eventually add 5,000 new houses, town houses and apartments. The first phase will be 350 detached houses that the developer indicates will be priced from $115,000 to $120,000 (including land), an amount less than a building lot San Diego, Los Angeles, Vancouver and Australia.
By comparison with other developments in the Austin area, however, these houses may be expensive. One home builder is currently advertising new detached houses, only 7 miles from downtown Austin for $90,000. These are not the least expensive in Texas. Detached houses in Houston are being advertised for $79,000.
A case study in the 3rd Annual Demographia International Housing Affordability Survey showed that the median income Austin household could purchase the median priced house for 11 years less income than in Perth, Australia (this includes mortgage interest). While both Austin and Perth have been growing rapidly, Austin's faster growth is evidence of stronger demand, which, all things being equal, would have been expected to drive house prices up more than in Perth. But, with more restrictive land use regulation, all things are never equal.
Commuter rail is often sold to the public as a faster means of travel than buses. This can be true if the drive to the park and ride lot is short and your destination is within walking distance of a station. However, it is apparently not true in Austin.
The Austin American-Statesman reports that bus riders showed up at a Capital Metro hearing this week to oppose cancellation of two express bus routes that parallel the new commuter rail line. Their complaint? Taking the train takes longer.
As has become typical for new urban rail projects, Austin's commuter rail line is carrying considerably fewer riders than projected. During its first month of service, daily ridership averaged 900 (450 each way), less than one-half the projected 2,000. This is less than 1/100th of Capital Metro's daily bus ridership.
by Anonymous 08/24/2010
Robert Samuelson in the Washington Post takes on the role of homeownership in our society. I'm generally a fan of Samuelson's writing, a normally sober, cold-eyed analysis of issues without favor to one ideology over another, so imagine my disappointment when reading him say, "The relentless promotion of homeownership as the embodiment of the American dream has outlived its usefulness."
Of course, there's more to his column. He goes on to say:
Unfortunately, we let a sensible goal become a foolish fetish. Not everyone can become a homeowner. Some are too young and footloose; some are too old and dependent; some are too poor or irresponsible. Some don't want a home.
This is different that saying homeownership is not a worthy goal for our nation and is quite distinct from the ideas of Richard Florida, who has previously written that homeownership is overrated and who’s recent "Roadmap" to recovery focuses on de-emphasizing homeownership. Where Florida is right is in acknowledging that this would "blow up" the fundamentals of our economy.
He's also engaging in what I call strategic diminishment – that is, consciously pursuing a future that is less than our current state. Many elite progressives think we have it too good and that our lifestyle choices are harmful to ourselves and our planet. It's not enough that they want to be scolds; they want to use the power of government to change America into a place where our quality of life is diminished.
And progressives also glorify this reduction with a "less is more" attitude. The Washington Post recently presented the case against air conditioning, and USA Today reported on the banning of drive-throughs in the city that pioneered them sixty years ago. I've addressed strategic diminishment as it relates to the mobility and the Obama administration’s “Livable Communities Act,” but this is also true for homeowners and covers not just the percentage of homeowners but even the size of homes. Ron Utt of the Heritage Foundation warns how even the President has adopted a worrisome narrative on homeownership.
Before we go off the deep end, let's clear up two points. First, the crisis we've gotten ourselves into is not because people own homes. It's because of the flawed policies promoting homeownership. We know about the role of the Community Reinvestment Act and Fannie Mae and Freddie Mac, but also contributing were various land-use planning schemes collectively known as Smart Growth.
Second, homeownership has many benefits. Homeownership is more than a lifestyle choice; it's a source of wealth and stability. And when homeowners take out a second mortgage on their homes, it's often as a source for financing their own small businesses – another ideal we associate with the American Dream.
There are countries with equal or greater rates of homeownership that do not have government intervention policies that skew the market. But as we consider housing policy at the local, state, and federal levels, what should be the principles on which it is based?
- Owning a home is a laudable goal held by millions of Americans.
- Homeownership is positive good that should never be discouraged by government policy.
- Everyone should have the right to pursue homeownership, but not everyone is ready to be a homeowner.
- Government’s role is not to determine who should be a homeowner or when and where they should buy a home.
- Markets are better than mandates at creating the environment in which people pursue renting or owning homes according to their ability.
Before we adopt A Nation of Renters as our new creed, let's fix the broken policies that got us here.
Ed Braddy is executive director of the American Dream Coalition, a non-profit grassroots and public policy organization that promotes freedom, mobility, and affordable homeownership. The ADC's annual conference takes place September 23-25 in Orlando, Florida. For more information, visit americandreamcoalition.org or email Ed at ed@americandreamcoalition.org.
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