www.slowboring.com
23 - 29 minutes
I really do not care for the late-July D.C. heat, and unlike many parts of the world, we aren’t even experiencing a particular temperature outlier at the moment. I just don’t like it!
In happier news, my man Martin O’Malley is getting tapped to run the Social Security Administration — he would’ve won! It’s nice to see the Justice Department actually go after legacy admissions and not just use it as whataboutism. Paris is cleaning up the Seine in advance of next year’s Olympics. Consumer confidence is rising. Much-bemoaned “gentrification” really does reduce aggregate segregation, and it seems like the Teamsters got a great new contract for UPS drivers.
Kevin Barry: There was recently news in NYC that 50% of people stopped on NYPD's new fare beater enforcement program had open warrants. Jibes with what you've said about enforcement.
I wouldn’t be surprised if that turns out to be an overestimate based on some kind of selectivity in terms of where the enforcement is happening, but yes, this is something the legendary police chief William Bratton always said — that fare enforcement was a good way of catching people with open warrants and illegal handguns.
I think it’s really sad that this wisdom, which I believed had become well-established by the mid-aughts, was forgotten over the course of the teens. One of the big dilemmas of law enforcement is that there’s a disjuncture between the crimes that seem really important (shootings, home invasions, car thefts) and the crimes that are easy to detect. The easiest way to resolve that would be to significantly degrade everyone’s right to privacy, which people don’t like. A more appealing solution, in some quarters, is to do a lot of racial profiling — you can “efficiently” focus the invasions of privacy on young Black and Hispanic men. But I think this is immoral and degrades the legitimacy of the system in an unsustainable way. This leaves you with what I think is the best option, which is to try to be strict about unambiguous rule violations like improper license plates and fare evasion, not just to create general orderly vibes but specifically because it’s an opportunity to do warrant enforcement and generate prosecutable gun charges.
Jonathan Salmans: I recently attended a presentation on Pittsburgh's land bank. Since Pittsburgh's population has declined there are a number of neighborhoods with blighted, vacant or tax delinquent properties. A number of considerations were discussed on how to handle the situation. Some considerations are, should Pittsburgh just auction properties to the highest bidder or should some consideration be given to other factors, such as their financial ability to rehabilitate the property and address blight, or should priority be given to low income people or to people who have been living in that same neighborhood. Should Pittsburgh use local funding to subsidize property demolition or rehabilitation? When proposals are made to upzone more desirable parts of Pittsburgh, people at the public meetings say it would be better if the development occurred in neighborhoods with vacant properties. If Pittsburgh upzones desirable neighborhoods, is there a risk it would worsen vacant property issues in less desirable neighborhoods. Is this a drawback to upzoning in metro areas that have seen population loss? (I wouldn't see this as a reason not to upzone, but maybe there should be a fee on new construction to demolish blighted structures).
Taking the last part first, I am always struck by the sheer range of logically incompatible reasons people offer to avoid the conclusion that regulatory constraints on housebuilding are bad. These arguments often cite strange second-order bank shot impacts, and I think it’s important to try to re-orient the conversation around the economic fundamentals of deadweight loss.
This is a chart from an economics textbook illustrating the deadweight loss of imposing a quantitative quota on oil production, but it works just as well for a quota on housing production. An important thing to note is the yellow box — a transfer of welfare from consumers of housing to producers of housing.
A lot of what people argue about is encompassed in that yellow box — maybe the regulatory restrictions are good for homeowners. Or in the case of Pittsburgh, maybe there are specific benefits for homeowners and landlords in blighted neighborhoods.
These effects obviously do matter, but it’s important not to ignore the gray triangle of pure economic loss caused by forcing the economy into an inefficient pattern. If you want to see your country — or your city or your state or whatever — become more prosperous, then it’s good to try to identify large gray triangles of deadweight loss and shrink or eliminate them. Because housing is such a large share of the overall economy, it is the largest source of gray triangles in the American economy. So if you’re thinking about how to make Pittsburgh a more prosperous, more dynamic city that offers more opportunity to its residents, then I think you should really focus on the first-order growth benefits of allowing construction where demand is high and not worry so much about second-order impacts. It’s challenging to predict what the exact neighborhood-level impact of upzoning would be on every Pittsburgh neighborhood (and it’s going to depend in part on what happens in other cities), but we can say pretty confidently that Pittsburghers will have more job opportunities and higher incomes with upzoning and the city will have more tax revenue at its disposal.
There is reasonably good evidence that fixing up vacant buildings and blighted lots has public safety benefits, so I do think that’s a reasonable use of public funds, though I don’t think I’ve ever seen a detailed cost-benefit analysis of how it stacks up to other ideas. Paul Grogan’s old book “Comeback Cities” talks about the benefit of supporting neighborhood-level organizations that do this kind of work in part with sweat equity, which is an interesting idea.
The auctions piece just seems like a straightforward tradeoff. If you sell property exclusively to long-term residents of the city, those residents get a windfall financial benefit. Delivering financial benefits to residents seems like a reasonable thing for a city government to do. On the other hand, if you sell to the highest bidder you could create a larger aggregate financial windfall. If it were me personally, I would sell to the highest bidder and use the revenue for something broadly beneficial. But you can’t take the politics out of politics, and if compromises get made around this, it’s not that big of a deal.
Cameron Parker: San Francisco seems to be moving closer to establishing a public bank, or at least it's getting momentum in the political discourse. The idea seems to be there's a gap in credit provision that commercial banks aren't filling. Do you have any thoughts about public banks in this or other contexts?
The woman who is leading this charge mounted a failed primary challenge against Scott Weiner, so I’m instinctively skeptical that she has her finger on the pulse of what San Francisco needs.
But thinking about public banks in general, there are really two kinds of things that banks do that we might be interested in. On the one hand, they provide a lot of retail financial services to consumers — checking accounts, debit cards, and other stuff like that. On the other hand, they do lending.
The SF Public Bank proposal seems very focused on the lending side, on the idea that — as you say — there is some major gap in credit provision that isn’t being met by the private sector. I’m really pretty skeptical. San Francisco is not like an obscure corner of the world that’s being overlooked by major existing firms. My vision of the credit provision side of a case for public banking is that you might be worried about extraction of capital from your community. Like suppose everyone suddenly gets very interested in lithium mining and you have lithium, so a mine gets opened and there’s a bunch of investment in meeting the immediate needs of the mining operation, but also a bunch of people — the mine owners but also workers and some local stores and whatever else — are suddenly making money. They deposit some of the money they make in their bank, but then the workings of global capitalism dictate that the savings mostly end up financing investment opportunities elsewhere. This is maybe good for the world, but also maybe bad for your state or country, so you set up a public bank or other mechanisms to try to ensure that locally created savings are re-invested locally.
SF Public Bank has this rhetoric about reinvestment that matches that narrative, but it doesn’t make any sense to me as an account of San Francisco’s problems.
There are enormous amounts of capital available for investment in San Francisco, not just for venture capitalists but also for extremely boring things like construction projects. But there are also enormous regulatory barriers to actually executing on those capital investment opportunities. The solution is to listen to Scott Weiner and change the regulatory environment to make it easier for financial capital to be transmuted into physical capital. “How do we generate more investment in San Francisco?” is honestly one of the most trivial policy problems in the world. The difficulty is that a lot of people don’t want additional capital investment because additional investment would mean altering the built environment, more traffic, and increased parking scarcity. That’s an important argument about which I obviously have strong feelings, but that’s really the whole debate.
I think a lot of people don’t really understand that “economic growth” and “real estate development” are essentially the same thing. But look at any place that’s experienced growth and you see a ton of new buildings. If San Francisco’s poorest residents were richer, they would have larger homes and more stuff, and that stuff would need to be physically located somewhere. If they had access to more and better health care services, those services would need to be provided by doctors and nurses who would need to live somewhere and who would also need offices and clinics to work in.
I think a much more promising venue for public banking is actually on the retail side. The government manufactures physical currency as a public service so that people can get money and buy stuff. But in the contemporary world, it is very inconvenient to rely primarily on physical currency for transactions. And oftentimes our ability to provide public services is compromised by the fact that it’s difficult to make financial payments to unbanked people. Or we want to have a bike share system but we need to find a way to make it accessible to the unbanked. I think the most natural thing to say would be that 2023 is not 1823 and we need to provide basic checking accounts to everyone as a public service. I wrote about this way back in my February 2021 post “The Federal Reserve Should Give Everyone a Bank Account,” and I think it holds up.
Captain Mal: I think most people (Matt included) agree that Matt has moderated on policy since the inception of Slow Boring. As such, I'm interested in getting Matt's current take on the utility and practicality of a wealth tax, especially as it relates to this case.
I was trying to think how much have I really moderated and was recalling a recent conversation I had with a friend where he said all he really wants is to “make America 2012 again,” except with full employment. I agreed with him in the sense that I liked 2012-vintage politics and think a lot of progressive discourse innovations since Obama’s second term have been bad. But I didn’t actually agree with that as a policy agenda. Going back to the day after Obama’s re-election, I was happy that he won but I wasn’t satisfied with the policy status quo. Just in terms of conventional partisan lib ideas, I wanted to see higher taxes and more generous public services, I wanted to see more emphasis on developing zero-carbon energy sources, I wanted comprehensive immigration reform, I wanted marriage equality, and I wanted employment non-discrimination for LGBTQ people.
Since that time, we won in court on marriage and employment discrimination, we got the zero-carbon energy investments via the Inflation Reduction Act, and we have moved the needle only slightly on the welfare state and immigration. We’ve also lost ground on abortion rights in an unfortunate way.
So I’d say that Obama-style liberalism is still markedly left of the status quo (though somewhat less so), and that it’s still where I am. A bunch of new stuff has come up that I am mostly skeptical of, but it’s not like we actually won all of those Obama-era fights (we won some of them!) or that I’ve given up on them.
That being said, the wealth tax is in fact an idea that I have become less supportive of over the past 10 years specifically in response to the changing macroeconomic situation. I worry a lot more than I used to that a wealth tax would be a highly inflationary way of raising revenue because you’re basically giving rich people a “use it or lose it” dare with regard to their amassed financial resources. In the context of secular stagnation, ultra-low interest rates, low inflation, and stubbornly high unemployment, this didn’t seem like a problem to me. But today, part of taking a victory lap on full employment is that we need to be more measured in our thinking about the economic consequences of more spending — whether that’s private spending or public spending. What we want to do is actually shift consumption possibilities away from the rich to the poor, to families with kids, to people with unmet health needs, etc., and I’m not sure that a wealth tax would actually accomplish that.
Sean: Annie Lowery keeps citing this 8 year old paper that claims if zoning rules were much more relaxed New York City would have over 60 million people. That would be by far the most populous city in the world (nearly twice the population of Tokyo) and be way denser than even Manila. That just seems wildly implausible. Even 100 years ago when Manhattan was at its densest and people were living in absolute squalor it only had a little over 2 million people. For this paper to be accurate Manhattan would have to have well over 10 million people. Do that many people actually want to live in NYC? And if not, should journalists keep throwing this paper around?
The claim is about the New York metro area, not about New York City.
And as a gut-check, given that the United States has 2.6 times Japan’s population and is also growing faster, it makes sense to me that New York in some sense “should” be bigger than Tokyo. Now would it really grow that large with more relaxed land use rules? I doubt it, because you would hit transportation capacity bottlenecks. Tokyo is so large in part because of Japanese land use, but in part because Japan has great transportation infrastructure.
These are, in principle, solvable problems. If New York could build rail transit at the costs paid by Sweden or Denmark, there are innumerable new subway lines and extensions that it would make sense to build, along with an extensive five-line S-Bahn system overlaid on it. Those would be massive upgrades to capacity, but it’s also worth emphasizing that with currently available technology, New York could greatly increase the speed of its regional rail. To offer some illustrative figures, while right now a trip from White Plains to Grand Central station takes nearly an hour, that could be cut to 38 minutes. You could do the LIRR trip from Hempstead in 33 minutes instead of 51. Those kinds of infrastructure improvements paired with upzoning would lead to booming demand for apartments near suburban rail stations. This would also, in effect, expand the size of the metro area, fully incorporating New Haven to the north. Similarly, if you could get to Trenton in an hour on the train rather than 90 minutes, and that extends the metro area to the south.
The point is, just as the vast majority of people in the current New York metro area live in the suburbs, so would the vast majority of the residents of Mega New York. Man of them would live a kind of “urban” lifestyle where they take a train to work, but lots of them would just live in central New Jersey and work in dentists’ offices or elementary schools that are also in central New Jersey.
In terms of Manhattan, though, it does seem to me that the population “should” be far higher than its 2.3 million peak way back in 1910. After all, the population of the country has risen enormously since then. And as you say, achieving that level of density back then involved people living in squalor. Today, they’d be living in those nice, shiny, super tall apartment buildings. There’s tons of spare subway capacity on the B and C lines by the Upper West Side and tons of old brownstones and rinky-dink tenement buildings. You could easily replace all that with much larger, more modern buildings and incorporate dramatically more people into the neighborhood while increasing the square footage per person. How many people really want to live like that? We don’t know for sure. What we do know is that housing prices are higher in New York than in D.C. or Boston, even though wages are lower. People have, in other words, an affective preference for living in New York rather than other smaller-but-richer northeastern cities.
WC: What crimes are you willing to admit that your friends have committed during your adult life? Did you ever confront any of your friends and urge them not to commit said crime? Did you ever consider snitching on any of them? I understand that virtually nobody lives their life in a way that perfectly aligns with their values. But if you've turned a blind eye to the transgressions of people in your network, how do you square that with your belief that our laws should generally be enforced?
I can only think of non-violent drug crimes, which I think are the category of crimes everyone feels most wishy-washy about. Now, I wouldn’t be surprised if someone I know has committed tax crimes — they seem reasonably common and I know a lot of people — but nobody’s told me that in an actionable way. People did used to sometimes tell me about borderline abusive tax deductions they were claiming, but I was humorless and scoldy about it and now nobody tells me stuff. But I sincerely don’t think my friends are going around with illegal concealed handguns, settling interpersonal disputes with violence, or stealing things.
Bennie: A lot of economic policy debates — especially in the areas of trade, immigration, automation, minimum wage, “welfare” — tiptoe around an uncomfortable question. What do you do for people who may be good at performing well-defined repetitive tasks, but lack the creative, analytical or organizational aptitude that is generally a prerequisite for personal economic success?
To put it slightly more bluntly: Politically, do people of low abilities or achievements need to be comforted and told that they are “victims”?
I would put this differently.
What I think is going on is that in any given policy argument, you have on the one hand a direct literal argument about public policy options and their likely impacts. But what you also have supervening on the argument is a kind of meta-argument about who is valued and whose status deserves to be higher or lower. And a lot of people, on a practical level, are more interested in the meta-argument about status than they are in the specific argument about public policy.
So for example, if I were to say “Elon Musk is an incredibly smart, incredibly hard-working person with a ton of intrinsic motivation to accomplish great things in life who cares more about the long-term future of humanity than he does about his personal comfort,” left-wing people would get angry at me. And if I said in general “the vast majority of successful business people in America are smart, hard-working people with a lot of intrinsic motivation who care more about the long-term and less about their personal comfort than the average person,” they would get even angrier. But the straightforward implication of this for public policy is that higher taxes on the rich will have minimal economic downsides, since Musk and his colleagues aren’t really out there grinding for the sake of the next $100,000 worth of personal consumption.
There’s just a bit of a disjuncture between the policy question (“will taxing the rich increase average welfare?”) and the status issue (“are rich people worthy of more or less admiration?”), and a lot of discourse is more focused on the status question.
Flipping this around to where you started, I think an unfortunate aspect of contemporary American life is that we’ve accepted a broad norm that the right way to raise the status of a group of people is to emphasize the idea that they are victims across one or more important dimensions. This used to be something that conservatives complained about a lot because of their sense that progressives were doing it too much with regard to racial minority groups. But over time, the right got increasingly invested in doing the exact same thing, just inverting the identity groups or inventing new ones. The problems with this strategy, though, are the ones that the right identified in the first place — whatever a person’s circumstances in life, he will end up in a better place if he learns to cultivate an internal locus of control, a sense of resilience, and an ability to express gratitude. If you want to express the idea that a group of people deserves help, it’s useful to talk about how the system is rigged against them. But if you actually want to make them better off, that’s a bad strategy.
Anders: Clearly in light of your recent column, there is some movement afoot in Canada for a high speed rail corridor between Toronto and Quebec City (hitting Ottawa and Montreal). Early planning signs seem discouraging — “Heritage Minister Pablo Rodriguez, the Liberals' Quebec lieutenant, said a fully high-speed rail corridor — called for by some politicians in that province — that hits peaks of up to 300 km/h is not feasible, given the number of stops the trains will make.” What should Canada do?
Comparing Toronto-Quebec to the northeastern United States, Toronto is about the size of Philadelphia, Montreal is smaller than Boston, Ottawa is like Providence, and Quebec City is about the size of the Bridgeport-Stamford-Danbury metro area. In other words, it’s like doing the northeast corridor without New York, D.C., or Baltimore, which is a lot less appealing.
Now one thing that I outline in the post is that it’s possible it would make sense to build a spur not just from Philadelphia to Pittsburgh but extending further to Cleveland, Toledo, and Chicago. I don’t think it’s 100% clear from the existing data that this is true, but it might be true. And if it is true, then I think it would definitely make sense to build HSR from Toronto west to Detroit (which is about the size of Montreal) and Chicago (which is much larger). If that line existed, then further extending it to Montreal really would make sense because you’d be getting the onward connections to Detroit and Chicago for free. A further extension to Quebec City seems dubious to me just because it’s really small, but I think Canadian political considerations might dictate doing it anyway, which seems fine. Long story short, I could imagine a world where building this Canadian Corridor made sense, but it’s contingent on stuff happening in the United States and going well.
But I also want to return to one of the core points of that earlier post, which is that improving New York City’s rail connections with cities that are either nearby (Pittsburgh), large (Chicago, Atlanta), or both (D.C.) has a specific purpose in terms of freeing up airport capacity to run more flights to other places. I’m not sure there are equivalently strong reasons to think building fast train connections from Toronto to Montreal or Chicago is important. If you want a Toronto-centric train project to get excited about, I think the idea of upgrading the Go Transit commuter rail to S-Bahn standards — which they are sort of doing under the name Go Expansion — is potentially very valuable, especially if complementary land use changes are made.
