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June 01, 2009

Quote of the century of the week

From this article, I shall piss into the wind since it seems like half my extended family works in the parasitical finance industry anyways. Posted here since even the quote was a bit too long for the meth-fueled megaphone-wielding-10-year-old-girl twitter machine.

GM's failure after 101 years is an indictment of American management in general. It highlights the damage to our economy that results when finance becomes the tail that wags the economic dog.

Guess what Toyota and Honda do? No, not finance; they actually make cars! Cars that the whole world wants to buy, instead of creating demand out of whole cloth for suburbanites to use 10 mpg trucks to hit the grocery store; demand that evaporates outside of the US and even inside the US as soon as gas gets expensive. Yeah, for a while you didn't have to worry about competing against those two; but they found their way into the SUV market eventually, and in the meantime you got out of the market segments the rest of the world actually buys.

Not just GM; but our entire economy fell prey to the stupid idea that if you could sucker somebody into paying you to do something for a while, it had to be valuable work. Rebuttal: Ponzi schemes work for a while too.

At my current jorb in the military-industrial complex, I'm already more removed from making useful things than I like to be; but compared to most jobs in our 'economy', I'm practically still a farmer.

May 27, 2009

Rail Should Reduce Operating Costs

One of the major selling points of rail service over bus service is that it reduces operating costs (at the expense of higher capital spending, although not as much of a difference as most people assume given how frequently buses must be replaced). Is this going to work out for the Red Line?

Here's a little table for you to consider:

ModePassenger loadDrivers per 100 passenger trips
Express bus402.5
Red Line (train)1500.67

Sounds pretty good, huh? Saved on quite a bit of labor there - as well as other costs that track with 'trips', like fuel! But wait a minute - how are the passengers getting from the train station to their office again?

Continue reading "Rail Should Reduce Operating Costs" »

April 16, 2009

More teabagging

An IM conversation with my gracious host, just a moment ago:

[12:33] (gracious host): After a lifetime of working, paying taxes and raising three children on her own, Wilder is struggling. She said she retired on disability from M&T Bank three years ago after undergoing knee replacement and back surgeries. She lives on her Social Security and disability benefits. Last year, she petitioned the bankruptcy court for protection from creditors. She said she did not have to pay federal income taxes last year because her income was too low. "I don't want to see this country turn into a welfare, nanny state, where we stand in line for groceries, and we're in welfare lines, and in socialized medicine lines," Wilder said.
[12:33] (gracious host): http://www.syracuse.com/news/index.ssf/2009/04/antitax_tea_party_could_draw_c.html
[12:33] mdahmus: fuh guh buh
[12:35] (gracious host): with appologies to the Princess Bride.... socialism... You keep using that word, I do not think it means what you think it means.
[12:35] mdahmus: my favorite comment so far: http://www.syracuse.com/news/index.ssf/2009/04/antitax_tea_party_could_draw_c.html#3333987

April 15, 2009

Label help needed from the teabaggers

Please help me fill in the ?????. Thanks in advance.

March 18, 2009

The thing so many right-wing economist-hacks aren't getting

It's not about classism or about contract law, even though it's amazing how many of you hypocrites though it was OK for the government to throw out UAW contracts but just awful to even talk about touching AIG's.

It's not even too small of an issue to worry about. It's a pretty damn big issue, by my reckoning, because at its fundamentals, it's about not letting capitalism destroy itself, as Karl Marx predicted it would do.

As odograph puts it:

There have been a number of articles which make the argument “we must pay the AIG bonuses so that businessmen keep their trust in the system.”

I heard that a few times yesterday before it occurred to me how exactly backwards it was.

At this point in time, business needs to earn our trust. They need to convince us that they are not playing the game laid out by Taleb (and probably others) before this blew up. They need to convince us that they aren’t making long-term risky bets in exchange for short-term bonuses.

Until they convince us of that, I am not going to trust them with an unregulated, too big to fail, investment bank and bonus structure.

You want people to support free markets? Make damn sure this kind of crap doesn't keep happening - call corporate cronyism what it is, and stop defending it because you think 'financial services' is somehow more worthwhile than actually making things that have some inherent value. If you lose a guy like me or a guy like odograph, you lost more than enough of the electorate to make socialism (the real kind; not the pejorative applied to mildly progressive taxation) inevitable.

Oh, and while you're at it? Stop blaming all this crap on too much regulation. Ayn Rand's corpse has suffered enough indignities by now, hasn't it?

March 05, 2009

The right way to do solar PV

Atlantic City shows off exactly what I was talking about.

We've got a big Convention Center (not as big as theirs, but pretty darn big). Why not put Austin Energy-owned solar panels on that roof (and a couple others of similar size) instead of on the ground in Webberville where the only thing they cool is the dirt?

February 13, 2009

Oh Snap, Mankiw

Newsweek has a decent story with which I only partly agree, but the best parts are bits like this one:

Let's say you're a tenured professor of economics at Harvard. You have—and have earned—a great deal of stability and security. Your job is guaranteed, at pretty much the same salary, until retirement. Your employer, which has been around for more than 350 years, isn't going anywhere.

[...]

If you believe the typical American worker would respond to tax cuts the way a typical tenured Harvard economist would, then it makes all the sense in the world to focus on tax cuts to the exclusion of other types of stimulus. But if you believe the typical American worker might respond to tax cuts the way, say, a typical Cambridge-area worker would, you might be less sure.

I've always been skeptical of economists with tenure telling me how I should think about globalization, for instance. Of course, Dr. Mankiw turned off comments at his blog some time ago, so he'll never get any feedback with which he's uncomfortable - one more way in which he's more like those he served at the Bush administration than he would like you to believe.

February 12, 2009

M1EK versus solar

I don't have time for anything but a quick hit, so here you go:

As the Statesman indicates, some councilmembers, most notably Mike Martinez, are balking at the cost of the proposed gigantic solar photovoltaic plant out in the middle of nowhere.

This is a good objection. I commented to this effect at the austinist last week.

One of the primary benefits of solar PV is as a peak demand displacer/replacer. Why would you want that capacity at the other end of your distribution network from the actual customers, where you undergo all the normal distribution losses and don't get any ancillary benefits for the customer, like shade (cooler roof)?

If you want to invest a bunch of money in PV, and don't want it to be simply rebates for customer systems, then build an Austin Energy photovoltaic farm on top of a bunch of short, wide, buildings with air-conditioning needs. Like the Convention Center, or the millions of warehouses up off Metric, or Costco. AE still owns the energy, but it's being delivered to the grid far more efficiently than from the Webberville location.

(Also, an eastern location is kind of stupid as well - there's a non-trivial difference in hours of sunlight between west and east Austin).

In short, since unlike a coal or natural gas plant, you don't have to put it in the middle of nowhere, why on earth would you want to, and suffer the same drop-off in power due to transmission that they do? Why not take advantage of the few things solar PV is unquestionably better at - nobody minds it if there's solar panels on a roof nextdoor; and everybody loves some free shade.

If you wanted to build a solar plant in the middle of nowhere, given all the above, what should you do? Solar thermal - i.e. the mirrors that focus on a bunch of molten salt. Much more efficient than PV, and there are no ancillary benefits like shade that go to waste when you're out in the middle of nowhere.

January 20, 2009

Wherein M1EK defends teenagers

Even though I'm 96 years old, I found myself defending teenagers twice recently - as per the following comment on this post on Steve Crossland's local real estate blog (which I'm also adding a long-overdue link to today). Steve was arguing that the quality of contractors he uses as a property manager is declining dramatically (as a landlord of one unit myself, I can definitely agree with his point), but then placed the blame mostly on today's kids not wanting to work hard. My response:

I had this same conversation with my dad over Xmas, or at least one very much like it, and I ended up defending teenagers.

Why is it that when we talk about ourSELVES, and our work choices, we think we're being rational economic actors when we decide to pursue work that offers us the greatest compensation for our effort (whether that be strictly financial or some other compensation), but we expect teenagers to work crappy jobs for low pay just because we had to do it?

Frankly, the importation of so much illegal labor has made it a suckers' game for teenagers to do a lot of that hard work. My dad was complaining more about fast-food workers all being illegals because the kids didn't 'want' to do that work (I had to point out to him that when I was in high school, the local McDonald's briefly raised wages to $5.00/hour in the $3.35 minimum days and then had no problem whatsoever getting local kids to work there).

If economics is a good reason for you and I to pick certain jobs, it's a good reason for them, too. So if you want better tradesmen, you're going to have to get the contractors to give up on the illegals first, and then invest a bit more in wages to attract locals (no, there's no such thing as a "job Americans won't do", but there damn well are jobs they won't do for a specified wage - as is true with any occupation).

And like with my field, if you allow outside-of-the-market competition to take all the entry-level jobs (or, if you prefer, discourage Americans from pursuing those jobs), you're going to see an eventual erosion of the more advanced jobs, too, because you don't become an experienced senior guy at trade X without spending a number of years working as the junior guy. You touched on this briefly with regards to your favorite handyman, but misidentified the cause.

Insisting that teenagers give up more attractive or more lucrative options just to suffer so we can feel better, uh, ain't gonna happen.

December 10, 2008

Labor cost isn't the Big 3's problem

Backing up a point I've made many times at my favorite car blog, we now have a link from Marginal Revolution to a Times story which says:

[H]ere’s a little experiment. Imagine that a Congressional bailout effectively pays for $10 an hour of the retiree benefits... the U.A.W. agrees to reduce pay and benefits for current workers to $45 an hour — the same as at Honda and Toyota. Do you know how much that would reduce the cost of producing a Big Three vehicle? Only about $800.... An extra $800 per vehicle would certainly help Detroit, but the Big Three already often sell their cars for about $2,500 less than equivalent cars from Japanese companies....

The problem isn't the $800. The problem is the $2500 (and I think that number is a bit low, actually). If GM was building Cobalts that were as good as Civics, they'd have a small case for some help - but they aren't; not even close; not even in the same ballpark.

November 20, 2008

Bailout those that deserve it

You can guess how I feel about the #1 target from this comment I just left at this thread at gm-volt.com. Yes, the same bunch of idiots who scoffed at me and others a few months back who said the Volt wouldn't make it because GM was going Chap 11.

Hint: Ford might be worth throwing a life-jacket to. The others? (Outer blockquote is me).

It’s also important to remember that it wasn’t only the U.S. automakers who built these lumbering behemoth trucks and SUVs. Toyota, the auto maker with the fallen green halo is slowing down production of its Toyota Tundra monster truck plant here in San Antonio. They have also stated that they do not plan to build a plug-in hybrid and have talked down GM’s progress on the Chevy Volt.
More crap from denialists.

Honda and Toyota didn’t fight CAFE kicking and screaming and getting loopholes for awful SUVs and pickup trucks. Toyota sells trucks to those who want them, sure, but hasn’t tried to create the market from those who didn’t want them and never needed them.

As for talking down the Volt, they’ve sold a million Prii. Even if the Volt was an obvious success, talking down the Volt to sell the Prius isn’t damaging to the economy, the environment, or our national security the way it was when GM spent years talking down hybrids so they could continue to sell polluting inefficient SUVs.

GM needs to die in a fire. Yesterday.

I always forget to mention GM's role in destroying urban rail. Yes, a lot of the stuff you hear is exaggerated if not myth, but they did play a large role in it nonetheless.

If GM was a person, I have a hard time believing we wouldn't be charging him with treason for enabling our enemies (and disabling our ability to pressure our 'friends' the Saudis) and destroying our environment and our economy.

November 05, 2008

Why we should subsidize more projects like The Domain

Quick reminder as I prepare to go on a business trip. The reason we need to subsidize projects like the Domain, and especially Mueller, is that existing crappy strip malls actually cost us (the city) more money than they make but thanks to our suburban zoning code, they are the only thing that can be built without special subsidy or regulatory relief.

Read that again. You heard me right - Brian Rodgers' strip malls are already getting subsidized via the tax code and already get regulatory preference in the zoning code. We tax by land and improvement value rather than assessing based on the costs generated by retail - and strip retail is the worst on this scale, since, for one simple example, if you want to visit a half-dozen different stores on Anderson Lane, you may have to move the car 6 times(!). That's not good for Austin, and it shouldn't be subsidized - but if we can't change the tax/regulatory code, and the neighborhoods won't let us do that, then at least we can attempt to level the playing field by subsidizing their more sustainable competition.

I'll try to fill this argument in with some backing data when I get more time, but I thought it important to say this right after the election, since he and SDS are making noise about how close they got. The only reason it was that close is because most people have no idea how much of the status quo isn't natural or 'choice'; but actually the result of public policy that has favored suburban crap like strip malls for decades.

It makes it even harder when a project like Mueller faces so much opposition from nearby neighborhoods that affordability has to be 'bought down' rather than provided through more reasonable density entitlements (subsidizing affordable housing is less efficient than getting the ridiculously low-density zoning out of the way and letting the market provide more supply, but local neighborhoods hate that, so we had to settle for this far-inferior option). No, Virginia, Mueller isn't going to be high-density, not even close - the area around the Town Center, if it's ever built, will approach but not exceed the density of the Triangle - i.e. moderate density mid-rises.

Update: Austin Contrarian argues that retail subsidies are bad but leaves a "design subsidy" hole large enough to admit both the Domain and Mueller, arguably. I'd have no problem dressing my position up in a similar fashion except that I suspect this is too nuanced for the average "corporations bad!" voter to accept.

PS: I believe on this issue that I'm now More Contrarian Than The Austin Contrarian. Woo?

September 16, 2008

Republicans Still Heart Hugo

A local radical 'winger has gotten on board my McCain/Chavez ticket suggestion, although like most of them, he doesn't understand it yet. Who's going to tell Palin the bad news?

Meanwhile, my favorite car site covered the issue and I have hope again for the world, after some relatively right-wing guys came up with comments like:

I’m not a particularly smart guy, but what is the value of exploiting a LOCAL resource when the price is going nowhere but up? If “we” have oil under our territory, and “they” have oil under theirs, shouldn’t we BUY THEIRS now while it is still relatively cheap?

Think ahead 25 or 50 years. If all of “theirs” is gone, but we still have “ours” in the ground, won’t we be WAY better off?

If I were a leader, or somebody who has oil under their feet, I’d hold mine and buy theirs, because mine will be worth orders of magnitude MORE when theirs is gone.

Or am I just a far too strategic thinker for the average American?

and

This idea the US can drill itself into control of the price of oil makes the Saudi’s, the Canadian’s and Hugo Chavez laugh.

The USA simply does not have enough oil to meaningfully influence the price from a supply point of view.

This will be remain true at any price of the stuff.

Honestly, you’ll do a hell of a lot better on the demand side.

But I guess nostalgia is an even more powerful force than the laws of the nature when it comes to politics.

Some of them get it, at least.

September 05, 2008

Austin Contrarian on Austin Rail

Since I'm stuck driving 200 miles a day in the desert here in Yuma with no internet access except at hotel at evening, please go over to Austin Contrarian's take on Austin rail - to which I've commented a few times already.

August 28, 2008

Lamar Smith Hearts Hugo

A note I just sent to the morning show guys at KLBJ after I got to work late from the car dealer:

Ed and Mark,

I heard your conversation with Lamar Smith while coming late to work today from the car dealer. While his figure of 20% for ANWR's possible increase to US oil production is higher than anything I've ever seen anybody say, that's not the most relevant thing: the more important point is that oil is priced on the world market (it's 'fungible'), so it doesn't matter whether the US produces 1% or 99% as much oil as we consume; what matters is the world supply and demand (unless we were to nationalize our oil industry and force 'our' oil to be sold to us at a discount).

I wrote a short post on this a few weeks ago; finding it ironic that the party that has stood for supposed economic literacy and against nationalization is proposing a plan that can only work if you ignore one or both. Here's the link: http://mdahmus.monkeysystems.com/blog/archives/000515.html

Regards,
Mike Dahmus
mike@dahmus.org

August 14, 2008

An airline that needs to die, as soon as possible

Makes me angry just reading this. If our country had a saner transportation mix, airlines could focus on the stuff they're objectively better at (long-haul or overseas flights) instead of trying to keep alive this retarded hub/spoke model for domestic flights. Would only have helped this situation indirectly, but still - this kind of thing is precisely why I'm flying Southwest on Monday to Nashville and driving 2 hours to Huntsville instead of flying a 2-leg on one of the legacies (which would save 30-60 minutes).

And, by the way, If we didn't have incredibly stupid landing charges at most US airports that charge by the weight of the plane rather than by the time the plane ties up the runway and/or traffic control, we'd have already killed off most of these stupid legacy nightmares. It's time to make this change now - which would restore a rational air traffic model more like what you see in Europe and Japan (hubs for international travel, not domestic). If it kills United dead as a side-effect, that's just an added bonus, isn't it?

August 05, 2008

Republicans Heart Hugo

So follow me on this one:

  1. Self-identified Republicans like to claim to have a far superior understanding of economics than those they call Democrats.
  2. Same batch of folks are now calling for off-shore drilling on the theory that it would have a non-trivial impact on US oil prices.
  3. We know, of course, that oil is fungible, so the impact of any production here is spread across the entire world market for oil, not just the US market.
  4. Those self-identified Republicans must know that too, because of the superior understanding of economics mentioned in #1.
  5. Shirley those Republicans aren't putting forward all this fuss over a pennies-sized drop in the world price of oil which is what would happen if we drilled the hell out of ourselves (including not only offshore but ANWR as well).
  6. Therefore, those Republicans must have some other means in mind by which US prices will fall more than the prices paid by the rest of the world's oil consumers.
  7. There's only one way I can think of, though: forcing oil companies to sell us "our oil" at a discount (compared to the world price, which would only drop a little bit with the amount of production we can bring to bear). In other words, separating the US price from the world price - like our friends in Saudi Arabia do.
  8. What's another word for that? Nationalization. Or socialization, if you prefer. Either one will do.

I wonder if we know anybody who's an expert at that kind of thing. Perhaps even in our own hemisphere?

hey, how you doin'?

I think we found McCain's running-mate. If you're tired of paying too much to fill up your SUV, it's time to push your party leaders towards the McCain/Chavez ticket in '08. THIS IDEA NOT FOR STEALING.

June 13, 2008

Transportation Microeconomics Bites Me In The Butt

So you may have heard me talk about the new suburban office. For a while, we were trying to keep making a go of it with just one car - my wife driving me in most days and picking me up sometimes; other times me taking that hour and 45 minute trip home with a long walk, 2 buses, and a transfer involved. I tried to work from home as much as possible - but the demands to be in the office were too great; and we couldn't sustain the drop-offs and the long bus trips.

Well, we relented. Just in time; I got my wife to agree on a color and we now own a second Prius - this one obtained right as the waiting list shot up from zero to many months (ours was ordered; but there was no wait beyond that so it took about 2 weeks - arriving right as the house exploded so ironically I ended up working exlusively from home for a few weeks longer anyways). Do not argue with the M1EK on the futurism/economics predictions is the lesson you should be taking away from this.

So that's the intro. Here's the microeconomics lesson.

Assuming $4 gas, the trip to work in the car costs $1.56 according to my handy depreciation-free commute calculator. The morning drive takes 20 minutes. The afternoon drive more like 30.

The transit trip costs $1 (although soon to go up to at least $1.50). That means I save $0.56, at least before the fare increase, right? Not much, but every bit helps, right?

Well, the transit trip takes an hour and a half in the morning; an hour and 45 minutes in the afternoon; and I can't afford that much extra time anyways, but even if I could, it would be placing an effective value of 23.1 cents per hour on my time, which seems a bit, uh, low.

So it's gonna take a lot more than $4/gallon gas, sad to say. You might be seeing some marginal increases in ridership around here, but only in areas where transit service is very good and where people should have been considering taking the bus all along. And there's no prospect for improvement - the reason bus service is so bad out here is because Rollingwood and Westlake don't want to pay Capital Metro taxes, although they sure as heck enjoy taking my urban gas tax dollars to build them some nice roads to drive on. In the long-term Cap Metro plan, there may be a bus route on 360 which would at least lessen the 30 minute walk/wait involved, but that could be a decade or more - by then we'll probably be getting chauffered through the blasted alkali flats in monkey-driven jet boats. Not gonna help me.

Also, those who think telecommuting and staggered work schedules are more important than pushing for higher-quality transit and urban density can bite it, hard. If even people in my business often get pressure to come into the physical office, there's no way the typical workaday joe is going to be able to pull it off in large enough numbers to make any difference.

February 22, 2008

More depreciation nonsense for cars

I've covered this before, but it's popped up again, thanks to The Overhead Wire and others. A short summary:

You will not save much money by leaving your car parked in the driveway and taking the bus. Yes, the IRS allows you to deduct based on a formula that includes depreciation - because it's the only way to give you any credit for having your personal vehicle tied up for business use. It does not under any circumstance mean that depreciation is mostly a function of miles driven - because it is definitely NOT; depreciation has more to do with age than use.

The last time I did this, I ran the numbers and estimated that depreciation due to age is roughly ten times the depreciation due to miles in a high-mileage scenario.

The summary is: in most cities, you will not save much money, if any, by leaving your car at home and taking the bus or train to work - unless you're unlucky enough to have to pay a lot of money to park. And, of course, you have to have unbundled parking costs (pay per day rather than per month).

The converse of this, though, is: You will save a surprisingly large amount of money by going from two cars to one car. Insurance. Registration. Car payments. Most of the depreciation bill. Maintenance (like depreciation, most maintenance is a function of time rather than miles).

Alternatively, if your company opens up an office in one of the few parts of the suburbs to which even I can't tolerate the bus commute, you face spending a LOT more money going back up to two cars. That's where to focus the energy - not on the "leave your car at home today and save N bucks" argument - because N is likely too small to be worth the trouble.

For my trip, for instance, google doesn't have cost figures (must not be hooked up to Capital Metro's farebox) - but I can give an estimate from my own commute calculator which shows that the bus trip cost $1.00 round-trip (allocate 50 cents each way) compared to $1.32 for the car (66 cents each way). That means that I can save 16 cents by spending an hour and forty-five minutes on the bus instead of the 15-30 minute drive, which is only a good deal if the value of my time is at or below 15 cents / hour.

September 24, 2007

It IS time to raise fares, BUT

Dear Friends at Capital Metro:

Hey, the last few rides, taking my 3-year-old to the UT lab school and back, have been swell. Good work. So I saw your fare increase went over like a lead balloon. Well, I just filled out your survey. Here's my additional comments:

  1. This fare increase is long overdue, especially for the door-to-door special transit stuff. Yes, I so went there. It costs like 60 cents to provide a ride which actually costs the taxpayers something like 20 or 30 bucks. But even the normal fares are too low (and, no, almost nobody rides the bus to save money on an individual trip - because the economics of that don't make sense, even when the bus ride is free).
  2. It's typical stupid PR by Capital Metro to be pushing this fare increase at precisely the time when it's most easy for the bus riders to complain about subsidizing suburban commuter rail passengers. Of course, I don't think there will be many of them, but it's still an incredibly dumb bit of timing.
  3. No, eliminating free transfers and Ozone Action Day free rides doesn't count as raising fares. Cut it out. Presumably, you had to take a round-trip, so even with that free transfer slip, you used to pay a buck, and you're paying a buck now; it's just costing CM a bit less in driver time.

M1EK's recommendations:

  1. The aforementioned STS hike (yes, disabled people should get more of a break than regular bus riders. If we expect a 25% farebox recovery on able-bodied people, then let's shoot for 10% for the disabled. Something has got to be done here, though - serving the disabled is not Capital Metro's only mission).
  2. STOP THE FREE RIDER PROBLEM. Even today, with nothing but express buses to serve them, many residents of Pflugerville and Cedar Park, who don't pay any Capital Metro taxes, get to ride the bus for the same price as the Austin and Leander residents who DO pay those taxes. My solution? Walk-up fares go up dramatically (to about 80% of estimated full cost - remainder covered by Federal subsidy). Residents of the service area can buy discounted single or multiple rides by showing proof of residency in the service area. You guys actually encouraged this by moving the old Pflugerville express bus stop to just inside the CM service area right next to where it used to be - CUT THIS SHIT OUT. We don't owe Pflugerville anything but contempt for refusing to fund transportation solutions. Likewise with this stupid Round Rock idea.
  3. Since you guys think this shitty commuter rail service is going to be a magical gold unicorn which poops out fairy rainbows, PROVE IT by charging double the express bus fare. This will take the wind out of the sails of the bus riders complaining that poor eastsiders will be subsidizing rich suburbanites.

Here's what those fares might look like (this is just a wide estimate, though). Let's assume that we have developed a smart-card for residents of the service area which can be used even for the walk-up case - this is simple and is done in many other jurisdictions to identify people who qualify for reduced fares (such as senior citizens).

Ride typeCurrent fareTarget FRR for residentsResident fareNon-resident fare
Standard one-way bus fare$0.5025%$1.00$3.00
STS ride$0.6010%$2.00$15.00
Express bus one-way fare$1.0025%$2.00$6.00
Commuter rail one-way fareN/A40%$4.00$8.00

(similar relative discounts as today for students, seniors, and day/monthly passes. Assumption is that average cost of a one-way city bus ride, all costs included, is $4.00; $8.00 for express; $10.00 for commuter rail with shuttle bus; $20.00 for STS).

The conclusion is that if we're going to raise our farebox recovery ratio but simultaneously not drive away choice commuters (who are the voters we need to keep on board), we need to do something to capture the free-rider revenue, or lower the free-rider cost. Systems like New York's can handle this by heavily discounting monthly passes and having relatively steep one-way fares; we're not to that point yet here.

I'll expect my consultants' fee any day now.

Your pal,
M1EK

September 19, 2007

Driving: Fixed versus variable

Wanted to point readers to a discussion between Austin Contrarian and myself about fixed versus variable costs of driving, and how best to account the fixed costs. One thing many commute calculators get just absolutely and stupidly wrong is the idea that depreciation is a factor of miles driven (it's actually far more a factor of age - miles a distant second). For instance, this is a comparison I ran for one of the early comment's on AC's post: a 1998 Honda Civic LX, automatic, all other values default. All values as "private party" and "excellent condition".

Miles drivenValue
20,0006,540
90,0005,640
180,0004,825

(KBB said 86,000 would be "typical", but actually seems a bit low to me).

A 1998 Civic would be either 9 or 10 years old today, depending. The added depreciation due to driving normally versus the little-old-lady case is no more than $100 per year ($8.25 per month). The depreciation due to age swamps this figure by a factor of 10 or more. This stands to reason - would you really pay a ton of money for a 9-year-old Civic just because it wasn't driven very much? Of course not.

What does this mean? Ignore the commute calculators which include depreciation, insurance, and registration, unless you're one of the vanishingly rare few people who can completely get rid of a vehicle. Instead, use one of the calculators which only includes truly variable costs, like mine (originally written for bike commutes, but can be used to compare the cost for transit commutes just as easily - just zero out the cost of bike tubes and tires and put bus fare in "extra costs"). For instance, at gas prices of $3.00, and with $80 tires (about what our last set cost, each), you end up with these values for some of my old commutes (assuming I got to use our Prius instead of what I actually drove back then, which only got 38 mpg):

TripCarBus
Home to 183/Braker (Netbotz)$1.31$1.00 / $2.00 (regular / express)
Home to downtown (free parking)$0.46$1.00
Home to downtown ($8 parking)$8.46$1.00

Now, if AC's parking cost was unbundled - charged per-day, his commute would actually come out cheaper on the bus by a fair margin, as indicated above. He indicated a monthly cost of $100, and I'm just guessing that $8 might be the price on the spot market, but that means that if he drives even about half the time, it'd be smarter to pay for the parking pass and then drive every day.

How can we fix this? If more of the costs of driving were borne directly by drivers, at the time they drove (or at least paid for gas), it wouldn't be so artificially cheap. For instance, when I drive downtown, I'm using roadways which were paid for out of property and sales taxes - not the gas tax. If we were to pay for all major roadways out of the gas tax, well, first, Round Rock would start to have to finally pay something approaching the cost of their infrastructure without free-riding on Austin, and second, at the extra buck a gallon I figure it would take, the math would shift a bit. It'd shift more if we could get auto insurance priced by the mile (although you keep hearing about it, it's never been an option for me or anybody I know personally). And, of course, if we paid for the costs of our Iraq adventure by gas taxes instead of through income taxes, the story would be even more different. But in the meantime, it rarely makes sense on purely economic grounds to ride the bus, even at our currently way-too-low fares so we're going to have to keep working on the other reasons. Like reliability. Light rail, dependable in time and at least competitive with the car, on which you could comfortably work or read, would be an easy winner. City buses - well, I salute AC and Tim for being able to work and/or read on the jerky city buses, but I was never able to, and I doubt most people would consider it acceptable even if saving a couple of bucks. Unfortunately, of course, our brand-new commuter rail line is going to inflict two of those jerky bus rides on every single rail passenger every single day. Oops.

July 17, 2007

I'm off the capitalist medicine bandwagon

If a conservative is a "liberal who has been mugged", as the hoary old saying goes, then a modern proponent of socialized medicine could be said to have been a fiscal conservative who has had more than five health care plans in the last four years (yours truly). I used to be 180 degrees opposed on this, but frankly, what we have is so much worse than even the bad socialized systems that it's nothing more than ideological idiocy not to join the rest of the civilized world. To say nothing of the fact that we could easily match the French system, for instance, if we think the British or Canadian ones suck too much; and we'd spend less money overall, by all rational estimates (we already spend more public money than the average completely-socialized system; but we spend it stupidly and inefficiently on things like emergency care for the uninsured).

The people opposing such a move continue to spout baloney about waiting times, as if even those of us with insurance don't wait as much or more in the US (and this matches my experience). For the benefit of equal or worse waiting times, I get to kick in thousands per year, and drown in paperwork (for all the payment plans we're on to try to make sure we pay out of our HSA rather than out of after-tax money, and of course, to make sure I don't overdraw the stupid thing). What's worse is that the modern know-nothings who still push this disaster we live under are lying about the options people really have. You don't realistically have the option to go to another doctor, even if you're willing to pay standard (non-discounted) rates. Nor should you accept that as an answer - you're already paying dearly for health care which these idiots claim is the "best in the world".

Enough is enough. I'm turning in my capitalist-medicine decoder-ring. Call me Fidel LaFrenchie if you must. Better an honest socialist, if only for pragmatic reasons, than a lying capitalist.

July 02, 2007

DOUBLE TAX BAD! HURR!

A really great comment from a really odious thread on one of the economics blogs I read, where libertarian ideologues cluster like vultures and peck away at Warren Buffet for daring to have the gall to point out that it might not be such a great idea that our tax system taxes his secretary at a higher RATE than it does him. Double-tax whiners, pay attention.

Ok, so where did Buffett get the money to pay his secretary? Why probably capital gains and dividends from corporate stock he owns! Wasn't that already taxed at 35%?! Since money always is moving around in our economy there's always some way to spin a story that "my dollar was already taxed!"

True corporate income is taxed and owners of corporations have less to pay themselves after their company pays its taxes. But corporations are treated as separate persons under the law so Mr. Buffet doesn't have to worry that he will be sued should one of his companies goes bankrupt. If this benefit of incorporation isn't worth the 'double taxation' then why not simply 'unincorporate' his companies and let them take on the form of partnerships or sole proprietorships whose income would then only be taxed once?

I'm still stuck working in a conference room and very busy, so no non-trivial crackplogging from me for a while longer. Please contain your disappointment. Extra credit for those who identify the other libertarian commenter stereotypes which correspond to Tonto and Tarzan.

May 18, 2007

Survivorship bias

A long overdue followup:

After this thread on Econbrowser, I stumbled (randomly) on the term which seems to match what I was trying to get across, which is basically in the Peak Oil case:

We are the result of a bunch of transitions, all successful, from a lower-density energy source to a higher-density energy source. Many other societies which could not find a higher-density energy source ended up in overshoot and collapsed - but, of course, they aren't around to serve as a cautionary example.

Path bias.

There's not any guarantee that an economically feasible energy source even at petroleum's energy density is out there waiting for us. Nuclear + major battery improvements, for instance, doesn't even cut it; nor does anything using hydrogen as its energy store.

Physics trumps economics.

The term is survivorship bias and it usually arises in the world of finance, but has applications elsewhere. In short, if the things you're studying are those that survived previous transitions/calamities/events/whatever, you may either have an inaccurately high rating of the current 'survivors' or you may assume that all such transitions are successfully navigated.

In the Peak Oil case, this fallacy rears its ugly head as people bring up "well, we survived Peak Wood and Peak Horse and Peak Whale". But there were societies that did not survive, because they didn't find a higher-density energy substitute in time. We just don't hear about them, because they aren't AROUND anymore. They overshot their resources and didn't find an alternative, and they died out.

May 08, 2007

Yes, We Can Be This Dumb

The upcoming rewrite of CAFE (fuel economy regulations) will actually incent carmakers to produce larger, heavier, vehicles than they do today. The Truth About Cars has the scoop here.

For those who think that higher gas prices will force people to change their behavior without us having to unwind existing subsidies towards suburban sprawl and automobile use - remember to factor in the political imperative to protect GM, Ford, and Chrysler. If anything, we're likely to see even MORE counterproductive rules like these as gas gets more and more expensive. I wouldn't bet against an actual gasoline subsidy (or elimination of the far-too-low-to-pay-the-road-bills gas tax, at least) in the next few years.

Hint: STUFF LIKE THIS IS WHY WE NEED AS MANY TOLL ROADS AS POSSIBLE.

February 28, 2007

Good short link

In many discussions about Peak Oil, economists are smug that the market will provide an alternative when oil gets too expensive. This, of course, focuses purely on the most pedantic definition of "alternative" - which includes things like demand destruction to the point of worldwide economic collapse - which is probably not what most people have in mind when they think of "solution". Most "cornucopians", as they're called, believe the Magic Of The Market will provide new energy technologies when rising oil prices make them profitable; which ignores the reality that there is no energy source out there with anything approaching the "energy balance" of oil - i.e. the difference between the energy you get out vs. the energy you put in.

However, it's been difficult to express this - for some reason, economists believe their soft science over the hard science of physics (specifically, thermodynamics, or in this case, energy return on energy investment).

Here's a good short explanation of the difference between money economics and energy economics - IE, why the market can't beat the laws of thermodynamics - for those Peak Oil cornucopians.

Fuel cells won't save us. Electric cars won't save us. Only taxing carbon and doing it quickly has any hope - and even then, it'll be using the market to move from today's default setting of "government provides more incentives for you to waste energy than to save it" to "energy becomes very expensive, giving you automatic incentives to conserve".

February 20, 2007

Managed Lanes: Good Theory; Will Suck Here

A short entry; and I won't inflict a drawing on you, so please use the power of your mind to visualize.

CAMPO has already tentatively allocated $110 million for "managed lanes" (one in each direction) on Mopac from Parmer to Town Lake and is now explaining the plan. These will, apparently, boil down to a new inside lane in each direction, with possibly flimsy barriers between them and the general-purpose lanes, similar to what you see on the northbound frontage road just north of Bee Caves Road. General-purpose lanes will have to be narrowed a bit, and some shoulder will be lost (especially the inside shoulder - which will be effectively gone).

I'm generally a moderate supporter of HOV lanes, and a stronger supporter of managed lanes. Tolling road capacity anywhere is a good move away from our current system in which urban drivers and especially non-drivers subsidize SUV-driving suburban soccer moms. Ironically, the more red-meat conservative you are around these parts, the more you apparently pine for the old Soviet method of market-clearing, at least as it applies to road capacity.

And, one of the best reasons to support HOV or managed lanes is the boost in performance and reliability it can give bus transit, which needs all the help it can get.

HOWEVER, the system considered here will do nothing to improve the performance of transit, for this reason:

To exit Mopac, the bus (or car that paid a toll) must travel through three lanes of general-purpose traffic in order to get to the exit lane.

If that traffic is backed up enough to make you want to use the toll facility, it will also be backed up enough that it will be impossible to quickly cut through to get to your exit. Much of the time savings in the managed lane will be lost at entry and exit.

This is the same problem other half-assed HOV facilities have around the country - in places like South Florida (no barrier; hard to enforce; and mostly useless during extremely high traffic periods except if you're going all the way through where the traffic is). Likewise, this facility won't help the commuter going to UT, or downtown; the only group it could really help dramatically would be people going from north suburb to south suburb.

IE, we're going to spend city drivers' gas tax money to even more excessively subsidize the suburban commuter - but just in case we might accidentally benefit the city; we're going to do it in such a way that it only helps those who don't live OR work in the center-city.

STUPID.

By the way, $110 million would pay for the entire commuter rail line (which won't do anything good for Austin), OR, it could be used as a down payment on a rail transit system which will work, i.e., build a leg of real non-streetcar light-rail from downtown up to the Triangle.

January 11, 2007

Higher minimum wage

An argument I've made poorly in comments at some of the economics blogs I read has finally been backed up, at least anectdotally by a story linked to by Mark Thoma out of Washington State.

Briefly, if a higher minimum wage leads to higher-quality workers (whether previously uninterested adults or just better teenagers), the predicted negative effects on employment and business may actually not materialize. This is important because despite what the more ideologue economists will tell you (based on theory), there's actually little real-world evidence that increases in the minimum wage actually increase unemployment.

Just a quick hit for the people getting tired of All Wal-Mart, All The Time.

December 18, 2006

Things I hate about Wal-Mart

Since some people probably think I like them, it's worth expanding on a comment I made in response to Austin Contrarian on this posting. Bear in mind that my poltical/economic bent is that, when operating in a reasonably (lightly) regulated environment where externalities are properly assessed, free enterprise generally provides for a more positive outcome than government intervention would do. That being said:

What did AC get wrong? Wal-Mart are definitely bad guys. They have done very little good, and most of the good they did do was way back in the mists of time when Sam Walton was pretty new to the job. Since being an early (good) competitor in some areas that badly needed a kick in the pants, they've devolved into a lean mean destroying machine - wiping out small town after small town after small town. (On my summer trip up to the UP of Michigan, a shiny new Wal-Mart was in the process of decimating a pretty nice old downtown - yes, they've still got places they haven't killed yet). You can make money and be a bad guy - the market often isn't the perfect frictionless machine that libertarian ideologues believe it is.

They're bad because they build suburban crap even in the middle of urban areas. No, making the store 2 stories with a parking garage isn't urban. Building to the street, not to your parking lot, is what makes a store urban. Unfortunately, many people on the other side of this argument have a similar misunderstanding of the issue. Target gets it, but unfortunately, appear to not have been interested in this location. (Not that I blame them; the added expense of a truly urban store isn't justified by the surrounding low-density residential; they'd never make their money back). Costco is nicer to their workers and sells better quality stuff, but they've never expressed any interest in changing from their own awful suburban store format.

Wal-Mart is bad because they've used their size in an adversarial (monopsonial) relationship with their suppliers that has bankrupted some and seriously hurt many -- companies which were providing at least medium-quality goods have either been destroyed or been forcibly shifted into selling junk because of what Wal-Mart did. (And don't tell me they chose to sell to Wal-Mart; in vast parts of the country that's not a 'choice').

Wal-Mart is bad because they've used their size to eliminate competitors who were providing necessary goods and services, but doing it in a way which required substantially less public investment (an old downtown area doesn't cost the town in question much if anything; but the new one-story strip with huge parking lot on the edge of town costs them a bundle). They're also pretty crappy to their workers, but I don't necessarily buy the workers' welfare arguments in rural areas, since the small-town employers weren't paying for good heath insurance either, but there are certainly parts of the country where they can lead such a race to the bottom. But these poor areas have to pay for a lot of road upgrades, police patrols, and utility costs which would not be necessary if the downtown stores had won out. Wal-Mart doesn't contribute jack-squat to make up for these public costs.

So why am I not afraid of them doing the same in Austin?

Unlike Microsoft, the area in which Wal-Mart enjoys monopoly profits (rural retailing) is merely garden-variety lucrative, not Scrooge-McDuckesque-roll-in-the-money-while-wearing-a-monocle insanely lucrative. There aren't enough excess profits there to provide enough money to destroy Target and Costco (both Significantly Less Evil) in suburban and urban areas. Believe me; if there was, they'd have done it by now.

So here, at least, Wal-Mart must compete on its own merits - not like how Microsoft destroyed OS/2 and Netscape, but more like how Apple ended up as the primary name in MP3 players. They might still successfully win the urban retail market, but they're going to have to do it the right way.

So, it's worthwhile to despise what Wal-Mart does. It's good to point out that they're doing bad things. But don't be afraid that they can do the same thing in an area Austin's size that they've done to little 5,000 person towns, because they won't. Not because they wouldn't if they could, but because they simply don't have the excess money it would take.

All we'll do if we successfully keep Wal-Mart out of this location is forego a bunch of tax dollars for the benefit of a bunch of badly-behaved neighborhoods which have, I think, already been pandered to enough for one lifetime. Nobody better wants to move in, and the neighbors are being disingenuous by claiming now to have gotten the New Urbanist religion. Even if they had, though, this isn't a very good site for urban infill - it's still too far away from the parts of town people want to live close to.

So remember: Wal-Mart is bad. But that doesn't make keeping them out of this empty mall the best thing for Austin.

October 19, 2006

Truly iconic businesses will find a new lease

Another quick hit:

As a refreshing change, News 8 found somebody besides Las Manitas to use as the poster-child for the local nascent effort to protect 'iconic businesses'.

Tambaleo might be great but it's only been there because the definitely great Electric Lounge went away (where I was introduced to my favorite band). Who knows what the next great club might be - we might never find out if we obstruct downtown development that can provide additional spaces for and customers for those future 'icons'.

Anyways, a truly iconic business would just go get a new lease (or buy their building). Las Manitas is the worst offender here - they own a building next door to where they are right now; they're being offered a sweetheart deal in finding a new place if they don't want to move into that spot; but they're still complaining. It's as if the landlord has no rights whatsoever here, which is just abhorrent to me.

In 99% of local development politics, I think we'd be well-served to follow the rule "do whatever Dave Sullivan recommends". But not here; it will be too difficult to decide which local businesses are icons and which aren't; and the first one to get rejected will sue the city and win. At least Dave, to his credit, isn't proposing the kind of heavy-handed tactics that the City Council recently put into play against Marriott - he's instead calling for a mix of incentives to encourage preservation of such businesses.

September 14, 2006

Tying together two forms of crackpottery

A Bush-apologist economist I occasionally read keeps talking about how the EITC is more effective than the minimum wage at providing incentives for the very poor to work. I just added the following comment:

You misunderstand the point.

Group A advocates that we increase the minimum wage. They're serious. They're really trying to do it.

Group B says "that's stupid; just raise the EITC instead". They're not serious. They have no intention of raising the EITC.

Group B, when in power, did and continues to do nothing to raise the EITC. Hence, disingenuous.

Even if raising the EITC worked as well as its proponents claim, today, it's just a stalking horse, because its proponents have no intention at all of doing it.

Parallels abound. For instance, in most cities planning light-rail lines, you always end up with a group pushing for fully elevated transit - and if you dig hard enough you find that the guys who don't want any transit at all form about half of that group.

It's not just Austin where this happens, but of course, Austin is where we live. I'd say about half of the impetus behind the "build elevated transit, not grade-level transit" (whether grade-level is bad streetcar, good light-rail, or mediocre commuter-rail) comes from road warriors who find the naive but well-meaning monorail crew useful cover. Not to say that there aren't people on the monorail side who really believe it's what we need - my former colleague Patrick Goetz is certainly one of them - but whenever discussions come up of the "why would we build rail on the ground?" type, you can always dig a bit deeper and find some guys who really don't want any rail transit at all.

July 03, 2006

"I wouldn't have bought a Corolla"

Another person gets it: Consumer Reports screwed up big-time in comparing the Prius to the Corolla rather than to the Camry.

I've done my own purely economic comparison here - I had done an earlier version of this on a spreadsheet; it's not that difficult. But many people will never try now that CR has incorrectly told people that hybrids don't pay for themselves.

A complete misunderstanding of economics

So this guy has demanded that I post some kind of authoritative manifesto defending 'supply-side real-estate' and has banned me from commenting further because I dared make the assertion that adding a bunch of units to the luxury apartment market does, in fact, have an eventual impact on the moderately-priced apartment market. (To be extra conservative here, a typical comment by me is this:

The only thing worse for affordable housing than building a bunch of new luxury apartments downtown is NOT building a bunch of new luxury apartments downtown, and doing everything else the same.

Can somebody explain to me what, exactly, makes comments like that so reprehensible that they justify a chest-thump like his last paragraph? It's basic economics. If you add additional supply in any segment of a market with vast participation, eventually it affects the supply/demand balance in other segments, too.

Let me repeat for emphasis:

The only thing worse for affordable housing than building a bunch of new luxury apartments downtown is NOT building a bunch of new luxury apartments downtown, and doing everything else the same.

Paging through his voluminous response, I suppose you could best sum up his retort as "the markets are segmented, and thus adding additional supply to the luxury segment can't possibly affect the supply/demand balance for the moderate segment". He then uses a Ferarri/Camry example.

Well, his first assertion is true - the markets are 'segmented', but individual complexes can, and do, migrate from luxury to moderate segments. (Barring new construction and population growth, this is usually a function of time - for instance, the Penthouse1 and Westgate buildings near the Capitol were doubtlessly considered luxury units when built - but today are fairly cheap compared to the new lofts going up farther south). Data on those and other downtown properties can be found from downtownaustin.com. This also explains why the car analogy doesn't hold water - cars don't last long enough for entire models of cars to migrate like that. (If cars lasted 50 years, let's say, then a bunch of 50-year-old Ferraris might, in fact, be competing with brand-new Eclipses. And changes to the current production run which drastically increased new Ferrari output would lead to some people moving up from slightly less prestigious sports cars to that Ferrari, of course).

The impact of the new construction is that the migration of buildings from the "expensive" to "moderate" category will happen quicker. The 10-year-old properties can't obtain the rents they otherwise would have if a bunch of brand-new buildings are built in the surrounding blocks.

I'm not going to bother spending any time defending basic supply and demand to this person by siphoning the internet for studies on real estate. Others are more than welcome.

1: Relatives by marriage have purchased several units in this building over the last couple of years - for a pittance compared to what it would cost to buy a new loft.

Addendum: I went back to his previous entry and discovered why he's so pissed: a comment of his went to moderation and/or rejected. Dude. I didn't even see your comment; I don't force moderation on anybody - all I do is use the built-in automated Movable Type stuff based on words it thinks might be spam and some other metrics (probably number of URLs or whatnot). Try again; email me; whatever; but take off the tinfoil hat.

Addendum Deux: Wikipedia has a good overview of the differences between the real estate market and the market for, say, cars. Models for real estate economics must take into account the fact that the good being purchased is immovable (unless you live in West Virginia) and highly durable (this varies, of course).

June 29, 2006

Smaller houses -> goodbye center-city schools

Here's a tip for my pals at the ANC: If you:

  1. Push an ordinance which will greatly add to existing disincentives for middle-income families to live in the central city
  2. Then, shortly thereafter, hold a radio show on the topic of center-city schools, bemoaning the lack of investment and closing of some urban schools by AISD;

we are unlikely to be impressed with your intelligence.

Next week:

ANC dumps a bucket of water on their own head; then complains that they're all wet.

June 24, 2006

Surprise! Students want to live near UT!

This is from a thread on the Austin Neighborhoods Council yahoo group. None of the people who post there are remotely likely to be convinced, but some of the people who read (including, I assume, staff members for city council) are still not entirely lost causes. Reposted here for posterity as well.

Block-quoted items are from the person I was responding to.

Mike's complaint that neighborhoods are reluctant to allow SF to MF zoning changes is completely irrelevant.

No, I'm sorry, but it's perfectly relevant. The market tried to provide multifamily housing near UT for decades, and people like the ANC got in the way. Students still want to live close to UT; so (more) of them move into houses than otherwise would have. Some who would have lived in apartments instead live in rental houses. This should not be difficult to believe - all you have to do is put yourself in their shoes. Pick between riding the shuttle bus from Far West every day or cramming into a house and riding your bike to campus. I know which one I'd pick.

I understand why these students want to live in a house. Houses are fun. You can't throw keggers in the back yard of an apartment. You can't set up a pool table a juke box and a wet bar in the garage of an apartment.

On the other hand, most new apartment buildings have party rooms and pools; and are unlikely to have people living next door who call the cops on you every time you make noise after 10:30 (see below). You don't have to worry about the trash; you're less likely to have maintenance problems; parking is a simpler issue; etc.

Only one of us is making an extraordinary claim here. Clearly if there wasn't pent-up demand for multifamily development in this area, the recent relaxation of absurd height restrictions near UT wouldn't have resulted in an explosion of new projects, right?

No matter how many apartments we build near campus (and we are building a LOT right now),

Now, after 20 years of building essentially nothing. It's going to take a long time to catch up.

there will always be people who want the party "frat house" atmosphere you can't get in a dorm or an apartment.

Yes. There will always be SOME people who want this. But a few such houses in each neighborhood would certainly be better than 2 out of every 3 houses, wouldn't it? At Penn State (where I did my undergrad years), there were a ton of apartments near campus - far more than UT, compared to the number of students who couldn't fit in dorms, and the result was that far fewer houses near campus turned into rental properties.

But that party "frat house" atmosphere really sucks for people living next door trying to raise children and wanting to enjoy luxuries of home-ownership such as being able to pull out of their own driveway whenever they want or walk down the street without fearing for their safety.

I live next door to a duplex which until this summer had UT Wranglers in the front _and_ the back. I have a 2-year-old son and a 12-year-old stepson. I've called the cops enough that they now have become fairly quiet neighbors. I can tell you from observation that the situation wasn't ideal for either one of us - they certainly didn't enjoy dealing with the police or their landlord after some of those parties.

As for the parking issue - that would merit an entirely separate discussion. Think for a moment how you can ethically support the proposition that people in one given house have a right to on-street parking, but people in another house on the same street don't.

(That's the end of the posting. It's amazing to me how quickly people of this particular ideological bent will immediately assume that anybody arguing against their position must not have a family (or, even more common, be a developer. For the record, again, I'm trying to raise a family in the urban core; and I'm not a developer).

June 21, 2006

Water and micro vs. macro economics

As usual, local leaders (most of whom hail from the environmental side of the divide) want to do something good, but come up with a stupid way to do it.

New rules could force homeowners to make plumbing improvements like removing wasteful showerheads and fixing leaking faucets or sprinklers. It may also include rules requiring watering of lawns and landscapes once every five days.

The City Council appears ready to impose a set of rules which attempt to solve this problem from the top down, via a sort of macroeconomic (for lack of a better word) approach. It will likely work, for given values of 'work' - I'm sure they can reduce water consumption to a certain degree with these measures, but it will likely be an inefficient effort which requires additional spending on inspection and enforcement which could be better spent elsewhere.

A far better approach would be a more graduated and progressive water charge - today, you pay a tiny amount per gallon for the first N gallons, and a higher (but still very very cheap) amount per gallon for the remaining gallons you use, where N is an amount which appears to be designed to handle a small family's typical water usage if they don't water a lawn. Adding more gradiations to this scale and more drastically accelerating the water cost as you go up would be the smartest way to internalize the incentives you want people to have to conserve water, without the need for a big bureaucracy at the city. (Yes, rain barrels should still be subsidized - there are drainage benefits to them which far exceed the tiny water supply benefits). Some people would xeriscape; others would take more showers instead of baths; others would wash dishes differently. You don't really care HOW they do it; the only interest of the city is in delaying the need to obtain more water supply. The additional cost to the city of this solution is basically zero.

This particular approach, which I dub "marketatarian", uses the power of the market to solve a readily identifiable problem involving what's commonly referred to as the tragedy of the commons, but doesn't wallow in the mire of hard-core libertarian nonsense (whose practitioners would go on and on about how the market would solve the water supply issue if we just let it do so, but would then call the pricing strategy above an example of socialist statism run amok). The Sierra Clubbers, on the other hand, typically have such a deep-seated mistrust of capitalism (thanks to those self-identified libertarians, among others) that they can't even wrap their heads around the simple fact that the market is a really really really good tool to solve problems, as long as you supply the right rules inside which it must operate. In this case, the only rules are "less water supply" and "progressive pricing so we don't completely cut off poor peoples' basic water needs".

By the way, the lack of support from the city for people who want to install "grey water" irrigation systems is another big part of the problem here. Now that we have a small child in the house who likes baths and I spend a couple nights a week soaking my aching legs in hot water, we send a ton of water down the drain which could just as easily be dumped in the yard.

This starts a new category I'm working on - titled "subsidies to suburban sprawl". This water billing scheme is one of many such 'user fees' which total up to massive undercharging of suburbanites for the costs they generate compared to urban dwellers. More to come - next up: garbage collection.

Also found another new Austin blog which seems right up my alley: New Urban Prospect.

June 15, 2006

Double taxation on city streets

For the anti-toll whiners patriots, and even those who use it to try to get more hits, here's a story for you.

There's this guy. His name is Joe Urbanite. He owns a car, which he drives sometimes. He used to walk and bike a lot, but now due to medical problems, can't bike at all and can only rarely walk. When he drives his car, he usually goes a mile or two to the grocery store on Red River, or downtown via Guadalupe for a show to the main library, or up Speedway to the pool at Shipe Park, or across town on 38th/35th Street to get to his inlaws' house. Joe's wife also uses the car a lot to go to the frou-frou grocery stores like Whole Foods (Lamar, 6th) and Central Market (38th). Joe might also use the car later today to go to the hardware store (29th near Guadalupe) to get some wiring supplies. Even when Joe's going far enough where Mopac or I-35 might be an option, he usually tends to stay away from those highways because he's found out it's a bit quicker to stick to surface streets than going through those awful frontage road traffic signals.

Those roads range from very big to merely minor arterials; but we're not talking about residential streets here. All those roads were paid for out of Joe Urbanite's property and sales taxes (usually but not always in the form of bonds). And remember, Joe lives in a property which is valued very high per acre compared to Bob Suburbanite, so he's paying proportionally more in property taxes.

Joe Urbanite goes up Guadalupe to the gas station to fill 'er up. He notices that the state of Texas has assessed a "gasoline tax" on his fuel. Wow! Neat! Does this money go to pay for the roads Joe used? If so, man, that's an awesome user fee; barely even a tax at all.

But no. The gas tax in the state of Texas is constitutionally prohibited from being spent on anything but state highways and schools. That means that if it doesn't have one of them nifty route shields with a number on it, it ain't getting squat. What about the federal gas tax? In theory, it could be spent on roads outside the state highway system, but it rarely is - most of that money gets dumped right back into big highway projects.

In summary: Joe pays the entire cost to build and maintain the roads he uses out of sales and property taxes. (Compared to Bob Suburbanite, far fewer roads in his area get any state gas tax money). Joe also pays as much in gasoline taxes per-gallon as does Bob Suburbanite, but that gas tax really only goes to build roads for Bob.

So tell me, anti-toll whiners patriots: how, exactly, is Joe Urbanite not double-taxed? And how is this example not much worse than toll roads?

May 16, 2006

Facts about the McMansion proposal

Some answers to questions raised by my letter to the Planning Commission and today's Statesman article. Updates will be made here as I think of them and/or receive comments or emails.

  1. I believe the greatest effect of this ordinance is going to be to make small-lot bungalow homes less attractive to buy than they are today which will probably lead to more deteriorating rental stock rather than an owner-occupied renaissance. McMansions themselves are hurt less by these rules than are traditionally styled two-story residences which are quite common on the narrow lots of Hyde Park.
  2. Despite being a response to a "drainage emergency", the sum effect of the regulations being proposed is that it will become even more proportionally expensive to build "up" rather than "back". Consequence: more impervious cover; worse drainage.
  3. Garage apartments appear to count towards the FAR total. Consequence: fewer housing units in the central city. Existing garage apartments would be more likely to be demolished so that the owner could put a more practical second story on the "front house".
  4. Detached and attached garages count, over a certain square footage. More credit is given to detached than attached garages, which is good from an aesthetic perspective but stupid from a drainage perspective.
  5. Yes, one of the proposed solutions for those who want more space than the new regulations would allow is to just build a basement. Yes, apparently they were serious. After all, if you live in central Austin, what's another hundred grand or so worth of cost, right?
  6. I don't yet know where the "height" measurement is taken from (average elevation of lot or front elevation or minimum or maximum). This affects the practicality of a second story dramatically in our cases.

More to come as I get comments / emails.

Letter to Planning Commission - McMansion Ordinance

Just sent the following to the Planning Commission, which is the most likely place for a rebuke to the ridiculous McMansion people. (My bet is that the City Council will be more afraid of angering center-city neighborhood associations).

Dear Planning Commissioners:

My name is Mike Dahmus; I served on the city's Urban Transportation Commission for about 5 years, and I live and own property in two central city neighborhoods. As a resident of OWANA, I chaired the transportation subcommittee for our neighborhood plan, and remain to this day very proud of the work we all (especially Dave Sullivan, who chaired the zoning subcommittee) did in making sure our neighborhood answered the question "where do you want your additional density" with a more responsible answer than "NO".

Since then, many other central neighborhoods have failed in their responsibility to identify appropriate infill and have instead attempted to stand athwart the market and yell "stop", as the saying (sort-of) goes. Today, you find yourselves considering yet another attempt to artificially retard the market from solving our housing problems for us -- all under the guise of a so-called "drainage emergency". The same neighborhoods that prevented and delayed multi-family housing from being built anywhere in or near their neighborhoods for so long (resulting in a plague of superduplexes and other rental housing as the unstoppable demand for close-in living by students could not be denied) now want you to further restrict residential development at precisely the time when we should, in fact, be allowing more density and more infill. And, of course, these same groups claim to be against sprawl.

Consider our case - I have a family of four living in a 1250 square-foot house on a 6000 square-foot lot in NUNA. My next-door neighbor is about to have a new addition, raising their family to 5, in a house about 1050 square feet. We're both presumably the kind of people who you'd rather have in center-city neighborhoods than party houses full of rowdy undergraduates; but we're precisely the ones who will be most hurt by these overreaching regulations. In fact, both of us bought our houses assuming that we would eventually build up; and yes, even the supposed compromise engineered by the working group will drastically affect both of us - likely making it financially impossible to expand our homes. We both have detached garages (his with an apartment overtop) and we both have narrow lots. The task force's "solution" to cases like ours is to build a basement, or seek a variance. Fat chance.

My family will probably stay, although our rights to develop will be unfairly eliminated. My neighbor, on the other hand, probably won't. Neither of us would seek to build a McMansion, but we (especially they) need more space to be comfortable - even my grandparents' family of 12 had more square feet per person than my neighbors will without building up.

The beauty of this is that I already live next to a duplex - built "straight up from the 5 foot setback line" on the other side of my home.

The drainage emergency itself is a joke - yes, there are real drainage problems, but notice that the only item in the regulations which could possibly have a direct effect on drainage is OPTIONAL (impervious cover changes). And, of course, regulations which only apply to new homes can't be said to be a fair response to a drainage problem which older homes of course contribute to. I've mentioned several times on the group's discussion board that there's a trivially simple way to address drainage problems - simply change the utility's drainage billing to a formula based on the square feet of impervious cover. That way, old houses which cover too much of their lot will have to pay more to solve the problem, and so will new houses.

Finally, the task force itself is a joke - it's staffed by people who mainly fall into two groups - 1: those who already have big homes which violate the spirit, if technically not the letter, of the new regulations, see footnote below; and 2: those who have small families, i.e., childless couples.

The only correct answer to this group is "NO". Instead of further restricting center-city development, we need to be allowing more small-scale multifamily infill to relieve the demand for close-in living. We need to make it easier, not harder, for families to stay in the city for the sake of center-city schools. And we need to make it clear that those who have been irresponsible in the past by obstructing worthwhile projects ought not be rewarded now for their bad works.

I chose not to become engaged with this group despite Chris Allen's invitation because I firmly believe that you do not negotiate over how MUCH to drag your city in precisely the wrong direction - you simply say "NO. That's the wrong way". I hope you'll join me in opposing this plan on those grounds.


Thank you for your time.


Regards,
Mike Dahmus

1: (member), NUNA, on Laurel Lane - lives in a home with an 'incompatible' front setback, and her second story 'towers over the backyards of her neighbors'. (member), Hyde Park, lives in a huge house which dwarfs its neighbors. Several other task force members live in huge houses, albeit on bigger lots than the two mentioned specifically, and I haven't seen them personally.

May 08, 2006

Tree Trimming and Power Outages

I'm experiencing a bit of schadenfreude as the folks pushing hardest for restrictions on Austin Energy (AE)'s trimming plans in the neighborhoods with the most power outages due to tree limbs (and entire trees) falling down are forced to defend themselves against the quite accurate charges that a more vigorous pruning regime would have resulted in less problems overall. One example:

Last week's storms and some gratuitous vilification of those of us trying to preserve as much of our shade canopy as possible present something of a difficult environment for saving the trees in our alleys and especially along our numbered strees where lines cross, so if you want to support our work, I hope you wll attend.

It doesn't help that these same people form much of the nucleus of the abominable "let's further restrict residential development in the Center City while claiming to be against suburban sprawl" contingent.

However, I also don't want to see beautiful trees hacked to pieces, and, frankly, AE will do it if they're not reined in.

So, here's my proposal:

Each AE customer gets to choose between the following:

1. AE gets to do whatever they want.

2. AE can't trim anything, but residents at this address will be assessed a (fairly large) monthly charge designed to build up funds for putting electric lines underground (where, in more civilized parts of the country, they generally would be). This doesn't include wires from the street to your house; just the wires along the street. AE pays 50% of the cost of any such projects; the remaining 50% comes from the local residents' contributions and must be spent within the local neighborhood planning district (i.e. maybe not on your individual street but not too far from it).

Problem solved. Those who want to preserve their trees at the possible risk of cutting off their neighbors' electricity must pay for the privilege, and the money must go into a much better long-term solution than trimming.

(I'd choose #2 myself, by the way, depending on the charge. I don't want my trees hacked up either; but I don't assert the right to cut off power to my entire neighborhood).

Next up: M1EK solves the "Drainage Emergency".

February 20, 2006

Fungible doesn't mean you're off the hook

The economists who are gleeful over the Dilbert cartoon on Sunday are missing a very, very, very important point.

War trumps economics, and economics can prevent war. Sometimes that's a good thing (economics preventing war); sometimes not.

In this case, We're (in the US) supposedly prevented from dealing forcefully with the country which paid most of the money and sent most of the people on the planes which killed 3,000 of our own people on our own soil. Why? That country is essentially the only one today which could practically increase or decrease its oil production, and we, unlike the rest of the industrialized world, are critically dependent on not just oil, but CHEAP oil.

In other words, the French and Germans care less about the Saudi royal family being overthrown because they don't need cheap oil as badly as we do. They use oil, sure, but they've taxed it heavily (as a rational response to the costs of delivering it, the associated infrastructure such as roads, and negative externalities such as pollution). We, on the other hand, actually keep gasoline CHEAPER than it would be if we just required drivers to pay for all of the roads and such they use, without even accounting for pollution and other less easily quantifiable externalities.

As a result, we still haven't really struck back at the people who so badly need striking back upon because the ruling party is so critically dependent on the votes of people who 'need' to drive a truck 15,000 miles a year at 12 miles per gallon and were livid at $3/gallon gas, much less the $6 or $7 the Europeans pay.

FDR and Truman would have had the heads of anybody who suggested that we couldn't 'afford' to fight the Germans or Japanese. But, today, that's exactly what people say about the Saudis. We can't 'afford' to even SPEAK toughly with them, because, hey, the oil!

In WWII, we put up posters reminding people that they were sacrificing cheap oil for a bigger cause. War, in other words, trumped economics, as it should have. Now, of course, we can't, because even the Democrats are in the thrall of suburban sprawl, and the Republicans are much worse. Even when 3,000 of our own civilians died on our own soil. It'll be hard to change this even when cheap oil is no longer possible, but Scott Adams is making it even harder by making those who care about the issue seem like fools.

It makes me sick that we still haven't done squat to the Saudis after all this time, but it makes me even sicker that Scott Adams has fallen in with such loathsome, cowardly people. Shameful, Scott. Shameful.

February 08, 2006

"Stick the renters in high-rises"

The past position of essentially all central-Austin neighborhoods (and, unfortunately, current position of many, including my current one and the last one) regarding high-density development was "none, never".

Now, there appears to be, in some of the more enlightened neighborhoods, a position which they believe to be sufficient which is certainly BETTER than the old "none, never", but still has some problems. I call it "stick 'em in high-rises downtown", and it goes something like this:

"Preserve our single-family character by banning all apartments in and near our houses - instead, support more density downtown. Apartment dwellers want to be where the action is, anyway, don't they?"

Unfortunately, in my response to a thread along these lines in one neighborhood's yahoo group, I completely forgot the economic argument - namely that condos like my unit in Clarksville are affordable, but neither the high-rise downtown nor the single-family house in Rosedale ever will be.

Here's what I wrote in that last response to that group. (I've paraphrased the quotes I responded to in parenthetical double-quotes below).

("Central Austin is still desirable because most people want to live central in houses")

I prefer to live on Congress Avenue in a mansion. There appears to
only be one way to do that, though, and as Tony Sanchez can tell you,
being rich doesn't necessarily cut it.

There is a lot of unfilled demand to live central. When all other
things are equal, the majority of people would prefer to live in close
proximity to their job or other frequent non-home activity center.
When all other things are equal, the majority of people would prefer
to live in single-family housing on big lots. Where things get
interesting is where we are now, when those two forces come into
conflict (i.e., there is no possible way to satisfy both to their
fullest degree).

("The multi-family building, not the tenants, being the problem" - part of this discussion centered on renters being bad neighbors, to which I responded with my theory about rental houses being much worse for neighbors than apartments or condos)

With all due respect, I do not think this is a strawman argument at
all, given how many people in this very discussion have complained
about the behavior of renters (usually packed into HOUSES). It's
fairly obvious to me that if you restrict the development of
multifamily buildings in the central city, you will get more people
living together in rental houses, and that those tenants are more
difficult to control when they are renting from one landlord each
without the oversight of a HOA (as in a condo building). What about
this is difficult to agree with?

("Center-city neighborhoods restrict multi-family housing; leads to downtown becoming like Vancouver; and I'm OK with that", implication being that this satisfies the 'problem').

This leaves no room for moderate-density housing, which, for most of
US history, was the development style which the market provided for
most people. The fact that, before zoning restrictions and many of the
governmental economic activity that affects housing development today,
the market tended to provide mostly townhouses, rowhouses, etc. shows
to me that this style of moderate-density housing IS the sweet spot
where the demand for central living and the demand for space are best
compromised.

For instance, the condo unit I lived in for 6 years (and still own) is
one of 14 on Waterston Avenue (Clarksville) which takes up the space
of about 3 single-family houses. I slept with my windows open at
night. Can't do that in one of those high-rises. On the other hand, I
can't walk to the grocery store from my single-family house. Frankly,
if we had rowhouses here in Austin in a walkable neighborhood, that's
where I'd be. We don't have them, not because there's no demand, but
because neighborhoods have forcibly kept them out.

To say that there's no place for anything between (single-family
house) and (high-rise) seems to me to be not much better than saying
that everybody must live single-family.


If I forget, I'm counting on my three devoted readers to please remind me to expand on the rental house vs. apartment/condo issue in the future. OK THANKS BYE.

February 06, 2006

The Capital Metro Finances

Ben Wear finally checked in this morning about the "commuter rail finances causing pressure for cost reductions causing union strife issue" which I covered here, although I disagree completely with his conclusion that light rail would have left us in the same mess.

  1. The commuter rail plan would NOT have received any substantial Federal funding. Wear glosses over this for more commentary about how difficult the New Starts process is. Rail lines with such paltry projected ridership have not done well at the FTA in recent years.
  2. The light rail plan, on the other hand, would easily have received the 50% Federal funding. We already know the Feds rated it highly even though they weren't allowed to include the impact of TOD and other future development such as the Triangle (which is now, in 2006, online).
  3. The commuter rail plan was sold to the voters of Austin on the premise that it was so cheap (with the Federal money that Capital Metro is now NOT seeking) that it would not necessitate touching the 1/4 cent "rebate" or the Build Greater Austin funds.
  4. The light rail plan counted on using both. Wear glosses over this to some degree, but at least mentions it.
  5. The operating costs of commuter rail are likely to be high - Wear mentions this, but doesn't mention why they're disproportionately high compared to light rail - again, it runs back to low ridership. Operating cost per passenger, in fact, is likely to be much higher with commuter rail than with light rail. The physical cost of moving each train is quite likely to be higher with diesel than it was with electricity, and many of the ancillary operating costs such as maintenance actually rise at a lower rate than the number of vehicles do thanks to economies of scale. Then, when you divide that cost by a much smaller number of commuter rail passengers, you're in bad news city. It's going to be a feeding frenzy for the local suburban Republicans masquerading as libertarians when the "we're paying a $15 subsidy for each rail passenger's daily ride" stories start coming out.

Summarizing: the 2000 light rail plan would have gotten a bunch of money from the Feds, would have had access to the 1/4 cent 'rebate' and Build Greater Austin funds, would have had greater income from fares, would have had proportionally lower operating costs, and would have opened up more TOD income than will this commuter rail plan. Since it would have gone "right down the gut", i.e., right next to all the neighborhoods which actually want to use transit, and directly in front of UT, the Capitol, and the parts of downtown where people actually work, it would have become the success story that we've seen in Minneapolis, Portland, Dallas, etc. IE: a credible alternative which encourages even those who drive to work every day to support future expansions and even (shudder!) tax increases.

Instead, based on what we have now, it's unlikely that, if it's ever built out, the complete commuter rail + streetcars plan being pushed today will end up being any cheaper anyways, which really puts the lie to the idea that cost was the reason for picking it. It was about screwing the center-city in favor of Krusee's suburbanites all along. If you are one of the few who ride it, this is how you're gonna get to work. And our "success story" that we're attempting to emulate is South Florida: Shuttle buses for those who were going to take the bus anyways, and branded as a big fat failure by everybody else.

February 03, 2006

How Overtaxed Are You, Really?

Note: This article refers to federal tax only. If you want to mix it up about local or state taxes, be my guest, but if you're a suburbanite, you're not gonna win this one, trust me.

Just submitted my federal income tax return. My marginal rate is 25%, and of course we all pay social security + medicare of around 8%. So, if I were one of the 'wingers at my last jorb, I'd be bitching about the feds taking a third of my income.

Yes, really. That's the way they operate. They willfully conflate marginal tax rate with effective tax rate (i.e., ignoring the fact that the first N dollars of their income are taxed at a far lower rate than the last M); AND they ignore the effect of all their various and sundry deductions. Here's a handy calculator showing both rates.

What's worse are the ones who are in the next marginal tax bracket, and then get to claim that THEIR overall tax rate is (28 + 8) = 36%.

Luckily, thanks to TurboTax, I also get an "effective tax rate" number. It's 8.27% this year. (Add social security + medicare, and you get up to about 16.25%).

And I guarantee you that most of those whining 'wingers are in the same boat as me - big mortgages, big property tax bills, multiple dependents, etc. Oh, except for the ones in that 28% marginal bracket. Don't forget that the social security tax ENDS at about $90,000 - so the income over that is NOT subject to the social security part (6.2%) and thus the marginal rate is much lower. So it's actually fairly likely that some of those people in that bracket pay a LOWER effective tax rate than some of the 25%ers.

16.25% (8.25% income tax) just doesn't sound like overtaxed enough to justify cutting taxes more, now, does it? So they complain about a 33% overall burden, and meantime, we continue to move further and further away from a progressive tax system in reality.

February 02, 2006

Even The Ideal Health Insurance Is NOT Like Car Insurance

Continuing my oddball string of non-transportation rants, there's an analogy which has been bugging me for a while now, and I just finally figured out why it's so crappy.

There's a lot of folks out there who argue that old-style health insurance really isn't 'insurance' because it pays first-dollar stuff (i.e. you get coinsured on essentially everything after you meet a small annual deductible). Car insurance and home insurance, these people say, don't pay for oil-changes and gutter-cleaning. They only cover catastrophic conditions. Fair enough. (Google on "health insurance" and "oil changes" to see how widespread this meme has become).

But then you take a look at their proposed solution - HSA's (paired with high deductible plans). You have to meet a large annual deductible, and then most stuff is covered. Sounds like a better match, right?

Except for this little problem: in both car and home insurance, the deductible is per-event, not per-year. By that metric, traditional insurance actually maps better to car and home insurance!. Hint: the 'copay' is sort-of a per-event deductible. If you visit the doctor and it costs a hundred bucks, and your copay is $20, then your insurance covers $80 (although unlike car and home insurance, it probably doesn't cover 100% of that $80). Likewise, if my roof needs a $2000 repair, and my deductible is $1000, you could call that my co-pay.

Maybe a table is a better way to present this. I'm using what I remember of my old PPO, my current HSA, and my automobile insurance as examples here.





PlanPer-event deductibleAnnual deductibleCoinsurance after reached
PPO$25$25080%
HSA / high-deductible planNONE$4000Almost 100%
Auto$1000NONE100%
Home$1000NONE100%

Clearly the high-deductible plan isn't any more like "insurance" if you define it as "how homes and autos are covered", despite the rhetoric you hear. A PPO isn't perfect either, due to coinsurance rarely being 100%, but one could imagine a similar auto/home policy being floated and still being called "insurance". On the other hand, I have yet to see an automobile insurance company ever offer a policy where you had to meet an "annual deductible" in addition to a "per-event deductible".

More on HSA's

from that liberal rag "The Economist", an article on our health care dilemna, including this tidbit on why HSA's won't do squat to control costs:

To an administration that believes the answer to every problem is lower taxes, the appeal of these ideas is obvious. Many health experts, however, are deeply sceptical, both about whether the shift to higher-deductible plans will actually reduce health-care inflation and, even if it does, whether the government should encourage this trend with more tax cuts.

The logic of consumer-driven health care assumes that unnecessary doctor visits and procedures lie at the heart of America's health-care inflation. And it assumes that individual patients can become discerning consumers of health care. Both are questionable. Most American health-care spending is on people with chronic diseases, such as diabetics, whose health care costs many thousands of dollars a year, easily exceeding even high deductibles.

Instead, critics worry that greater cost-consciousness will deter people, particularly poor people, from essential preventive medical care, a trend that could even raise long-term costs. A classic study by the Rand Corporation in the 1970s showed that higher cost-sharing reduced both necessary and unnecessary medical spending in about equal proportion.

In other words, somebody who already has diabetes isn't going to save you any money when you stick him on an HSA, but somebody who might GET diabetes without preventative care will be even less likely to get that care, since now he's got to pay for 100% of the cost himself.

This backs up what I said yesterday - that the people who think HSAs will make people spend less on health care are fooling themselves. People who can get HSAs are primarily the employed, and those with a fair amount of money. None of those people are likely to go get unnecessary medical treatments - most of the money we spend in this country is on heroic interventions and on inefficient health care provided to the poor at emergency rooms. We clearly aren't going to stop spending so much on the elderly, and they clearly still have plenty of time to sit in doctors' offices anyways. The poor who clog up emergency rooms either aren't going to be able to get insurance at all (just like today), or won't be able to afford to contribute anything into the attached HSA anyways. No change, except that the wealthy employed get a bigger tax break.

February 01, 2006

HSA's are another giveaway to the wealthy

I've been on an HSA for about six months now (only choice at current job). Ironically, the primary reason I had to leave the last job, which I liked a lot, was a benefits cut that hit our family very hard, with no accompanying increase in salary. They (previous company) left us with choosing between a "high" plan which was ALMOST as good as the previous-years' plan, except a couple hundred bucks more a month; a "medium" plan for a few bucks more in which all copays were nontrivially hiked and coinsurance cut; and a "low" plan which was basically a HSA, too.

The HSA works pretty much like an FSA (which we were already using), except a bigger pain in the butt, since the years' money isn't all available on day one, like in an FSA. (In fact, I 'bounced' payments-by-mail twice because I mailed in the bill response without double-checking to see how much had flowed in, each time with a delightful $20 charge tacked on). You also get to enjoy looking like a deadbeat to doctors' offices as you quite frequently fall into the "31-60 days overdue" bill categories since they first have to file with insurance, then insurance tells them what they're supposed to charge you, and then you get sent a bill. The tax savings are no greater than with an FSA, which is to say that they depend on your marginal tax rate, which for most of the people who were having trouble with health care before isn't likely to be high enough to be worth the difficulty of setting aside this money in the first place.

Now, for us, it still makes sense (even though unlike most people on HSA's, we actually hit our deductible last year; i.e., we actually use health care). And it makes a hell of a lot of sense for a high-earning person that doesn't use health care. But it doesn't do squat to help out people who are unable to afford insurance today - the benefits disproportionately accrue to those with the highest marginal tax rates, not the poor. The poor, sadly, probably remain better off going to the emergency room than using this thing.

Even libertarians who have been exposed to single-payer or socialized medicine seem to finally get it, as I got it a few years ago. Medicine is not a case where the market works like it does in computers or groceries or whatever else; nor will it ever be. It's more like providing a police force and firefighters.

And no, switching to an HSA has not given us any incentive to reduce our usage of medical care at all, because, like pretty much everybody who works for a living, I only go to the doctor when I need to because it's such a pain in the ass. The theory that we can save money on healthcare with this "ownership society" crap rests on the questionable premise that most money is being spent by people who can use HSAs, when, in fact, most money is spent on the elderly, the premature, and other heroic interventions.

This is really becoming an issue in which the center is ready to move, and only the far, far, far right balks. There's just no sensible reason not to pick the best socialized system (appears to be France or maybe Germany) and just get it over with.

January 20, 2006

Our lunch, and parking

I'm still not over the current flare-up of my stupid arthritis (now six months and counting since I was able to do, essentially, anything) so even though Julio's is within a good walk, we drove to lunch. My wife wanted to pick up some vegetables at Fresh Plus too. Here's what we had to do:

  1. Drive by Julio's. All spaces taken. Oops.
  2. Drive by the lot at Fresh Plus. Note that it's 2/3 empty, unlike the other big lot in the area. Sign says you will be towed if you leave the premises. Oops.
  3. Drive by the other big lot. Full. (Not really allowed for Julio's either; probably towable).
  4. Park on street amidst many people doing the same.
  5. Walk past Fresh Plus and that other lot over to Julio's.
  6. Eat lunch
  7. Walk back to Fresh Plus and buy vegetables
  8. Walk past 2/3 empty lot back to car

The even-more-suburban version of this would have entailed us parking at a lot for Julio's, then having to move the car to the Fresh Plus lot, then driving home. Some folks would prefer that business customers don't park on the street even in Hyde Park so that's not that far off. In fact, a local small business opening was/is being held up over such concerns. (if you can't read the hyde park group and you're really interested in the details, email me).

This shopping center was used before by Karen McGraw as an example of a good solution to the parking-versus-neighborhood-streets 'problem' when another business on Guadalupe was trying to get a variance to open with far less than suburban-norm parking. Didn't seem that good to me - pretty damn inefficient to have 2/3 of Fresh Plus' lot sitting there empty (and the big lot shared by Hyde Park Bar & Grill and other businesses is often underutilized as well, although not today).

We're not that unusual - when people do drive to this commercial node (many walk or bike), it's quite often to hit several places at once. Most either do what we do and park on the street (thus pissing off the neighbors) or risk getting towed because they 'left the premises'.

Does this strike anybody else as good? What the hell's wrong with just abolishing these stupid parking requirements anyways - businesses that absolutely can't live without dedicated off-street parking would continue to build it; but we wouldn't be left with these wide expanses of mandated, but empty, parking. And if there was a huge demand for off-street parking, somebody could build (shudder) a pay lot instead of forcing businesses to subsidize drivers at the expense of cyclists and pedestrians.

Folks, if you want to live in a real city, you have to get to that place where you realize that forcing every business to have its own parking lot is just stupid, stupid, stupid. You end up with blight (like on Guadalupe) because you just can't pound that square suburban peg into the circular urban hole.

January 19, 2006

Big surprise

These guys have nothing to say about this. Pushing claims of false controversy is obviously the game being played by the current crop of right-wingers (ticking off even moderate Republicans like the ones who used to run the show), but it's been very disappointing to me how much of that has rubbed off on the supposedly non-partisan libertarians.

Hint: Science doesn't care if you don't like the news - and it definitely doesn't care if you don't want to admit climate change is anthropogenic and dangerous just because the only effective solutions require some involvement from the evil State.

January 03, 2006

SUVs are a negative sum game

Most SUV drivers, sad to say, were perfectly happy to drive them when SUVs appeared to be a zero-sum game, i.e., if you drove an SUV, sure you killed more people in cars, but your own passengers were safer at about the same proportion. Because, after all, protecting your own family is the only thing that matters - so it doesn't matter if it happens by making it much more likely that others will die.

And, of course, most people who bother to study the issue always knew they got special treatment allowing them to enjoy more lenient fuel economy, pollution, tax, and safety regulations (pre-1999).

But recently we've found out that they're also more dangerous for pedestrians and finally, the conventional wisdom among those who study the vehicles that they really aren't safer for their own occupants than would be a sedan has been borne out in a recent study involving kids. Yes, the same kids you claim you bought the SUV for.

I guess you still have that high riding position to hang your hat on. Oh, and the donating of all that excess money to Middle Eastern regimes we're all big fans of. Way to go, guys.

December 23, 2005

Choice is never bad

This is pretty much how I feel about what Microsoft's done to the computer software industry. Unfortunately, the site for which Julian writes pretty much takes Microsoft at their word and buys the "statists envious of successful corporation" version of the story.

It's even remarkably timely.

So please imagine a world in which:

  • Meaningful commercial operating system competition existed, thus pushing Windows to actually satisfy customer needs rather than those of its business partners'. IE, what we had from the 80s through the early 90s.
  • Non-trivial commercial office suite competition existed, meaning that Word, Excel, and the lot would have to be GOOD, not just good enough.
  • Commercial browser competition had existed for the last 5 years, meaning IE wouldn't have been able to take half a decade off after Netscape died.

And, no, open source can't save us, with the trivial exception of browsers (which just aren't all that complicated compared to the other things above). I've been using linux, on server and desktop, at my last three jobs. I even prefer it for work. That doesn't make it a competitor serious enough to do much good, even though Microsoft has to say it does so they look good for the media. (In 2005, I couldn't get sound working on a friggin' mass-market HP-Compaq box running Red Hat Linux (and later, same problem with Debian) - and I was far from the only one).

The third-grade libertarians out there replied at the time: "the market will save us" - pointing to the transition to the internet, which would supposedly make operating system monopolies a non-issue. Problem is - Microsoft knew that was a threat and fairly effectively (and obnoxiously) killed it.

December 02, 2005

Why The Drag Sucks

This was going to be a comment at infobong to his entry about another local business biting it on the Drag, but I realized it was getting way too long and probably way too wonkish for that venue.

It's a simple but sadly misunderstood formula:

# of potential customers in area has been going up (more students; more residents).

Amount of retail space has been staying the same (stupidly limited by zoning regulations which effectively prevented any redevelopment along the drag which has way too much single-story car-oriented retail and even surface parking.

Result? Higher demand (from customers); stagnant supply; more demand (from businesses) for static space = higher rents = more national chains

Solution? No parking requirements and very very very generous height limits along the Drag. But even the recent West Campus rezoning didn't go far enough down that path - there's still way too much emphasis on parking minimums. Properties right along Guadalupe as far north as 38th and possibly 45th should have NO required parking, in my opinion. If you think this gives them too much of a leg up (even given the much higher rent they'll pay than their suburban competitors), consider having them pay an "in-lieu parking fee" dedicated to mass transit and pedestrian improvements along the corridor.

That's another piece of the formula of course, which ends up leading to a few big tenants being healthy because they can lock up access to a lot or a garage; while the little individual (usually local) tenants blight out - like what's happening up on Guadalupe between 29th and 45th. Properties can't redevelop because change of use between one type of commercial business and another make the grandfathered variance go away, which means they're suddenly subject to suburban-style parking requirements.

October 03, 2005

How to Destroy the US Economy

I couldn't agree with Barry Ritholtz's argument more. Unfortunately, most rank-and-file Republicans and other potentially reasonable people think that the pandering to their religious nutcase fringe is essentially harmless. They're wrong, and they're going to drag us all down with them.