Category Archives: Web Article Review

Menino Survey of Mayors

The Menino Survey of Mayors is a survey where mayors are surveyed. Basically they say they need help with infrastructure, and they complain that states are useless at best and anti-city at worst.

It would make sense to have some kind of infrastructure planning at the scale of the metropolitan area. If a metro area could agree on a planning body to represent it, and that planning body could come up with a truly comprehensive infrastructure plan, the federal government could bypass the state and pass funding directly along to that body for implementation. An infrastructure bank, part of the Federal Reserve or alongside it, could issue infrastructure bonds as part of the country’s monetary policy – invest when the private sector is underinvesting and the overall economy is lagging, and let the private sector play as large a role as it is willing to when the economy is strong. This shouldn’t be controversial – there is a near-consensus among economists that expanding infrastructure spending would be a win-win for jobs and economic growth.

This wouldn’t have to mean states would be completely obsolete. They could do the planning and implementation for the infrastructure that connects the metro areas together, and for agriculture policy and the infrastructure that brings agricultural goods to market. Their political power could be equal to a metro area in proportion to the people they represent, not the empty land they represent.

Changing the balance of power on paper between the federal government, states, and cities might require constitutional changes. But create the infrastructure bank and the funding mechanisms might change the practical balance pretty quickly.

agent-based social system modeling

One approach to agent-based social system modeling is the Institutional Analysis and Development Framework developed by Elinor and Vincent Ostrom at the Indiana University:

The IAD Framework offers researchers a way to understand the policy process by outlining a systematic approach for analyzing institutions that govern action and outcomes within collective action arrangements (Ostrom, 2007, 44). Institutions are defined within the IAD Framework as a set of prescriptions and constraints that humans use to organize all forms of repetitive and structured interactions (Ostrom, 2005, 3).  These prescriptions can include rules, norms, and shared strategies (Crawford and Ostrom 1995; Ostrom 1997). Institutions are further delineated as being formal or informal; the former characterized as rules-in-form and the latter as rules-in-use.

The IAD framework identifies key variables that researchers should use in evaluating the role of institutions in shaping social interactions and decision-making processes.  The analytical focus of the IAD is on an “action arena”, where social choices and decisions take place. Three broad categories of variables are identified as influencing the action arena:  institutions or rules that govern the action arena, the characteristics of the community or collective unit of interest, and the attributes of the physical environment within which the community acts (Ostrom 1999; Ostrom 2005). Each of these three categories has been further delineated by IAD scholars into relevant variables and conditions that can influence choices in the action arena.  For instance, the types of rules that are important in the IAD include entry and exit rules, position rules, scope rules, payoff rules, aggregation rules, authority rules, and information rules.  Key characteristics of the community can include factors such as the homogeneity of its members or shared values.  Biophysical variables might include factors such as the mobility and flow of resources within an action arena.

The IAD further defines the key features of “action situations” and “actors” that make up the action arena. The action situation has seven key components: 1) the participants in the situation, 2) the participants’ positions, 3) the outcomes of participants’ decisions, 4) the payoffs or costs and benefits associated with outcomes, 5) the linkages between actions and outcomes, 6) the participants’ control in the situation, and 7) information. The variables that are essential to evaluating actors in the action arena are 1) their information processing capabilities, 2) their preferences or values for different actions, 3) their resources, and 4) the processes they use for choosing actions.

Here are a couple papers that describe attempts to operationalize this framework:

MAIA: a Framework for Developing Agent-Based Social Simulations

Modelling socio-ecological systems with MAIA: A biogas infrastructure simulation

Inequality and violence in Europe and the U.S.

Following the shocking events in Belgium, maybe people here in the U.S. should reflect on inequality and violence closer to home. Here is a Slate article called Why Belgium Is Such a Hotbed for Islamic Terrorism:

As my Slate colleague Josh Keating wrote last November, the apparent concentration of Islamic extremism in Belgium is largely the result of a group called Sharia4Belgium and its charismatic leader Fouad Belkacem. The group, which was founded in Antwerp and first gained attention by staging public commemorations of the 9/11 attacks, has capitalized on the high rates of poverty among Muslims in Belgium, as well as anger over widespread discrimination against Muslims and bans on Islamic veils that were passed in Antwerp in 2009 and at the national level in 2011.

Speaking to CNN for a recent article, the brother of two young men who left Belgium for Syria cited a sense of marginalization and a lack of opportunity as the main drivers of radicalization. “The Belgian state rejects children and young people,” he was quoted as saying. “They say, ‘They are all foreigners, why should we give them a job?’ They fill us with hate, and they say we aren’t of any use, so when young people see what’s going on over there [in Syria], they think ‘Well OK, let’s go there and be useful.’ ”

Which makes me wonder, if poverty and inequality are really the issues, can we see that in the statistics compared to a random country like…oh, I don’t know…the United States of America? For a ready source of statistics, it’s fun to go to the CIA World Factbook. Here are the poverty rates and Gini Index for the two countries. The Gini Index is a measure of how wealth is spread across households, ranging from 0 (a hypothetical perfectly equal distribution) to 100 (a hypothetical case where one household has all the wealth and all the others have nothing). We can also look at GDP per capita at purchasing power parity and unemployment just to round it out.

GDP Per Capita

  • Belgium: $44,100 (34th highest in the world)
  • USA: $56,300 (19th highest in the world)

Unemployment Rate

  • Belgium: 8.6%
  • USA: 5.2%

Poverty Rate

  • Belgium: 15.1%
  • USA: 15.1%

Gini Index

  • Belgium: 25.9 (8th most equal out of 144 countries tracked)
  • USA: 45 (43rd most unequal out of 144 countries tracked)

So average income is a bit higher in the U.S. Unemployment is fairly high in Belgium, but the poverty rate happens to be identical for the most recent statistics. The U.S. is much more unequal (Belgium is right up there with the most equal countries in the world, including the Scandinavian countries.) So it is a little hard to see the U.S. having the moral high ground when it comes to poverty or inequality. And yet our media is pointing to poverty and inequality as the reasons for the violence in Belgium. I suppose it is possible that the poverty and violence that does exist disproportionately involves one ethnic group. But that too is true of the United States.

Let’s look at one more set of statistics which I pointed out recently –  deaths from violent assault happen at more than double the rate in the U.S. than they do in Belgium. So the body count is actually much higher here. It is just less shocking because we have come to take the daily violence on our streets as normal, which is sad.

 

autonomous vehicles at intersections

Some people are raising questions about pedestrians. Well clearly, you can’t do this around pedestrians. It has to be elevated, underground, or on the edge of town. Notice I am not suggesting we send people through underground tunnels or over bridges. It is time for we flesh and blood humans to reclaim the surface of our cities!

this is Michael Pollan’s brain on drugs

Michael Pollan has written an enormous article in the New Yorker on medical research into psychedelics. They were banned in the U.S. in 1970 as having no legitimate medical uses, but that is changing now with some researchers are using them to treat depression, post-traumatic stress, and to ease suffering near the end of life. It’s so long I don’t know what part of it to quote.

I had a relatively common, relatively easily curable form of cancer when I was a kid. And with apologies to people out there who have far more horrible, deadly forms of cancer, it was hell. Beyond all the physical pain and psychological stress involved for me and my parents, the worst parts were sheer boredom (hours of waiting, followed by hours of hydration, followed by hours of intravenous drip for a routine out-patient chemotherapy session every other week), and extreme nausea that lasted for days which they had absolutely no effective drugs for (this was 1987, and I think the situation has improved today.) But the idea that there might be effective and low-risk ways to reduce that suffering, like controlled doses of marijuana or LSD under a doctor’s supervision for example, and that these treatments have been denied suffering people for decades, is shameful.

Economist Risk Analysis

The Economist “Intelligence Unit” issues a top ten list of global risks each month. The high probability and high impact ones include severe recession and debt crises in Asia, military tension between the U.S. and Russia, and a breakup of the E.U. Donald Trump makes the list as high impact but only moderate probability:

In the event of a Trump victory, his hostile attitude to free trade, and alienation of Mexico and China in particular, could escalate rapidly into a trade war – and at the least scupper the Trans-Pacific Partnership between the US and 11 other American and Asian states signed in February 2016. His militaristic tendencies towards the Middle East (and ban on all Muslim travel to the US) would be a potent recruitment tool for jihadi groups, increasing their threat both within the region and beyond.

Terrorism, U.S.-China confrontation, and a sudden oil price shock make the list lower down as potentially severe but less likely.

Mekong drought

The El Nino drought in Southeast Asia appears to be getting worse.

While Thailand continues to block rivers feeding the Mekong and divert small volumes, Vietnam said it had recorded the lowest levels of the Mekong River since 1926.

Salinity in the Mekong Delta is a growing problem for Vietnam’s rice bowl and has been made worse by rising sea levels pushing salty water upstream.

Modelling conducted by the Mekong River Commission predicted salt intrusion on Vietnam’s main Mekong channel would reach up to 162 kilometres inland this year, which is nearing the Cambodian border.

A normal year would see salt intruding only 98 kilometres inland.

Thailand is hoping the rainy season comes in late May, but the current El Nino weather pattern has so far exceeded forecasts — meaning South-East Asia’s water resources and regional relations could be further tested.

 

measuring productivity

There was a recent Wall Street Journal (which I don’t subscribe to) article arguing that productivity has not really slowed down, that we are just not measuring it correctly. This Brookings paper argues against that idea.

After 2004, measured growth in labor productivity and total-factor productivity (TFP) slowed. We find little evidence that the slowdown arises from growing mismeasurement of the gains from innovation in IT-related goods and services. First, mismeasurement of IT hardware is significant prior to the slowdown. Because the domestic production of these products has fallen, the quantitative effect on productivity was larger in the 1995-2004 period than since, despite mismeasurement worsening for some types of IT—so our adjustments make the slowdown in labor productivity worse. The effect on TFP is more muted. Second, many of the tremendous consumer benefits from smartphones, Google searches, and Facebook are, conceptually, non-market: Consumers are more productive in using their nonmarket time to produce services they value. These benefits do not mean that market-sector production functions are shifting out more rapidly than measured, even if consumer welfare is rising. Moreover, gains in non-market production appear too small to compensate for the loss in overall wellbeing from slower market-sector productivity growth. Third, other measurement issues we can quantify (such as increasing globalization and fracking) are also quantitatively small relative to the slowdown. Finally, we suggest high-priority areas for future research.

“Non-market” eh? I think some of the twisted sentences in there are arguing that we may have reached a point in richer countries where we value things that are not measured in money. Bradford Delong kind of agrees with me, saying:

Isn’t “measuring consumer welfare” the point? We (a) arrange atoms (b) in forms we find pleasing and convenient, and then use them in combination with (c) information and (d) communication to accomplish our purposes. That our measures of economic growth are overwhelmingly “market” measures that capture the value of (a), much of the value of (b), and little of the value of (c) and (d) is an indictment of those measures, and not an excuse for laziness by shrugging them off as “non-market” and claiming that measuring the shifting-out of market-sector production functions is our proper business.

Finally, I got on this growth and productivity kick after reading this article in FiveThirtyEight, which links to a lot of the above sources.

None of this economic commentary ever talks about links to the physical world or ecosystem services. I will puzzle that out one day.

economic “derailment”

David Lipton, a deputy director at the IMF, gave a speech on March 8 in which he stated, “Global economic recovery continues, but we are clearly at a delicate juncture, where risk of economic derailment has grown.”

Why?

In many parts of Europe, for instance, sovereign and private sector balance sheets remain highly leveraged and banks’ non-performing loans high. In the US, aging-related spending pressures and unfulfilled infrastructure needs diminish economic prospects. And in Japan, deflation is putting the recovery at risk.
At the same time, we are witnessing an emergence of new risks. The global economic slowdown is hurting bank balance sheets and financing conditions have tightened considerably. In emerging markets, excess capacity is being unwound through sharp declines in capital spending, while rising private debt, often denominated in foreign currency, is increasing risks to banks and sovereign balance sheets.

Concerns about the global outlook have weighed heavily on world financial markets. The decline in equity price indices in 2016 so far this year has averaged over 6 percent, implying a loss of global market capitalization of over US$ 6 trillion (or 8.5 percent of global GDP). This is roughly half the US$ 12.3 trillion loss incurred in the most acute phase of the global financial crisis. Some Asian markets, such as in China and Japan, have been particularly hard hit, with losses of over 20 percent since the beginning of the year. Meanwhile, emerging market currencies have weakened, while their sovereign credit spreads have continued to widen—in Latin America and Africa by over 300 basis points over the past year.

What may be most disconcerting is that the rise in global risk aversion is leading to a sharp retrenchment in global capital and trade flows. Last year, for example, emerging markets saw about $200 billion in net capital outflows, compared with $125 billion in net capital inflows in 2014. Trade flows meanwhile are being dragged down by weak export and import growth in large emerging markets such as China, as well as Russia and Brazil, which have been under considerable stress.
Furthermore, inflation has fallen to historical lows. Headline inflation in advanced economies in 2015, at 0.3 percent, was the lowest since the financial crisis, and in emerging markets core inflation remains well below central bank targets.

The solutions proposed are mostly things you might expect from the IMF – free trade, free capital flows, floating exchange rates, and reduced regulation of big business. But buried in the fuzzy language, they are nowhere near as hawkish on debt as they once were and are talking about richer countries reducing taxes on labor, and taking on debt to invest in infrastructure, education, and research.

Remaking Economic Development

This is a new Brookings study on a vision for economic development at the metro scale. Here’s an excerpt, but the rest is worth reading.

As Michael Porter, the Harvard authority on competitiveness, describes it, the anchor firms, supply chains, supporting entities and organizations, research centers and specialized knowledge assets that make up industry clusters arise from a “highly localized process” that creates differentiated competitive advantages tailored for particular industry clusters.

Those assets are sometimes called “market drivers,” “factors of production,” or the “industrial commons”— because they benefit a wide array of firms. They include applied research and technical expertise, supports for entrepreneurial activity, robust pipelines of skilled labor, deep benches of suppliers and related firms, globally connected infrastructure, and responsive, predictable governance to maintain them all. It is the productive mix and synergy among these distinctive drivers—innovation, traded sectors, human capital, infrastructure, and governance—that create the conditions in which industries thrive, create value, and generate growth and income.

Globalization and technology have not dispersed these market assets but instead have further concentrated them in cities and metropolitan regions, with leading centers of knowledge and production capturing an increasingly greater share of specific market opportunities.

That is in part because innovation today reinforces the power of place. The rapid pace of competition requires solutions often developed through collaborations among firms, research institutions, national labs, competitors, customers, venture capitalists, and entrepreneurs—collaborations that are most readily forged through the networks formed within metropolitan regions.

 

This sounds right to me. Policies like minimum wage and affordable housing have their place, but ultimately I feel like they are treating the symptom and not the disease. The pie has to be growing.