This Reuters article suggests the current U.S. housing bubble may be starting to deflate, if not pop. I don’t quite follow the logic, because it seems to suggest at the same time that the rate of housing starts is not sufficient to meet demand, and that the cost of construction is rising due to rising material, land, and labor costs. In basic economics 101 class, if there is an unmet demand, prices are supposed to rise until supply equals demand. But maybe people are just not willing or able to buy houses they want at the current market prices. What do they do instead? Again in textbook economics land, they should move to less expensive locales, buy smaller houses, live with roommates, rent extra rooms on AirBnB, etc. I guess there are all sorts of legal and cultural reasons these things don’t happen enough or fast enough for the market to equilibrate. Still, even knowing that the real world is not the textbook economic world, it’s hard to buy the argument that developers aren’t building houses because there aren’t as many houses for sale as people who want to buy houses.
Tag Archives: economics
Trumponomics – just plain made up
Trump claims recent economic growth is unprecedented. The claim is demonstrably false and just plain made up. According to Politifact:
Trump said, “Watch those GDP numbers. We started off at a very low number, and right now we hit a 3.2 (percent). Nobody thought that was possible.”
This is inaccurate two ways. First, the most recent saw GDP growth of 2.0 percent, not 3.2 percent. And second, exceeding 3 percent GDP growth in a quarter is not an unusual achievement — Obama accomplished it eight times. The real achievement would be a full year at 3 percent, which hasn’t happened under Trump yet.
We rate the statement False.
Much more interesting is that the U.S. has not managed a full year of 3% growth since 2005. Politifact has a much more interesting article here that explains why most economists think a sustained 3% will not be achievable in the foreseeable future. In summary:
- Growth in the working-age population is much lower than it was (political response: prevent willing workers from entering the country, oppose measures to provide childcare to working age adults…)
- Productivity growth has also slowed significantly (political solution: underfund infrastructure, education, research and development; although to be fair, some of the recent changes to corporate tax policy might help if companies choose to invest the savings in plants, equipment, research and development rather than just letting executives pocket them)
Who’s really crossing the U.S. border?
This article is from Lawfare, and the answer is interesting.
First off, while the current administration has tried to tie Central American migrants to MS-13, government data reveals that gang members crossing irregularly are the rare exceptions. Since the Trump administration took office, the Border Patrol has detected fewer gang members crossing irregularly than during the Obama administration. In FY2017, these detections amounted to 0.075 percent of the total number of migrants (228 MS-13 members out of 303,916 total migrants). When combined with MS-13’s rival, the Barrio 18 gang, the number rises only slightly to 0.095 percent. This is far from the “infestation” of violent gang members described by the president…
The face of migration has also changed. Back in 2000, Mexican nationals made up 98 percent of the total migrants and Central Americans (referring to Honduran, Guatemalan, and Salvadoran migrants) only one percent. Today, Central Americans make up closer to 50 percent.
A declining Mexican birth rate, a stable economy, and the U.S. border buildup have all contributed to the decrease in migration from Mexico. But as Mexican irregular migration has plummeted, Central American migration has simultaneously picked up. Until 2011, Central Americans constituted less than ten percent of total U.S.-Mexico border apprehensions, but by 2012 they constituted 25 percent, and by 2014 they numbered half of all illicit border crossers. While migration from each country within the Northern Triangle (El Salvador, Guatemala, and Honduras) has fluctuated over time, each country has sent roughly similar numbers of people in the aggregate. From FY1995 to FY2016, the U.S. Border Patrol apprehended around 500,000 citizens from each country. In other words, it’s not a coincidence that most recent news stories about migrant parents separated from their children feature families from Honduras, Guatemala, and El Salvador.
People from Honduras and El Salvador are often fleeing urban gang violence, while those from Guatemala are often fleeing rural poverty.
more on the downward spiral of nuclear power economics
This one is from Five Thirty Eight:
The age of the nuclear fleet is partly to blame. That’s not because America’s nuclear reactors are falling apart — they’re regularly inspected, and almost all of them have now gone through the process of renewing their original 40-year operating licenses for 20 more years…
Instead, it’s the cost of upkeep that’s prohibitive. Things do fall apart — especially things exposed to radiation on a daily basis. Maintenance and repair, upgrades and rejuvenation all take a lot of capital investment. And right now, that means spending lots of money on power plants that aren’t especially profitable. Historically, nuclear power plants were expensive to build but could produce electricity more cheaply than fossil fuels, making them a favored source of low-cost electricity. That changed with the fracking boom, Morgan told me. “Natural gas from fracking has gotten so cheap, [nuclear plants] aren’t as high up in the dispatch stack,” he said, referring to the order of resources utilities choose to buy electricity from. “So many of them are now not very attractive economically…”
Morgan and other researchers are studying the economic feasibility of investment in newer kinds of nuclear power plants — including different ways of designing the mechanical systems of a reactor and building reactors that are smaller and could be put together on an assembly line. Currently, reactors must be custom-built to each site. Their research showed that new designs are unlikely to be commercially viable in time to seriously address climate change. And in a new study that has not yet been published, they found that the domestic U.S. market for nuclear power isn’t robust enough to justify the investments necessary to build a modular reactor industry.
May 2018 in Review
Most frightening stories:
- The idea of a soft landing where absolute dematerialization of the economy reduces our ecological footprint and sidesteps the consequences of climate change through innovation without serious pain may be wishful thinking.
- Lake Powell is in increasingly deep (actually shallow, ha ha) trouble.
- The American Academy of Pediatrics says climate change is already killing children.
Most hopeful stories:
- There are some new ideas for detecting the potential for rapid ecological change or collapse of ecosystems.
- Psychedelics might produce similar benefits to meditation.
- Microgrids, renewables combined with the latest generation of batteries, are being tested in Puerto Rico.
Most interesting stories, that were not particularly frightening or hopeful, or perhaps were a mixture of both:
- I learned about the stag hunt, a cousin of the prisoner’s dilemma in game theory.
- Uber Air is looking a little more real. There are other ideas for autonomous urban helicopters too.
- Connecticut is the latest U.S. state to join the National Popular Vote Compact.
value of learning curves in climate change planning
This article gives an example of how to put an economic value on climate change adaptation incorporated in a larger planning framework.
Traditional methods of investment appraisal have been criticized in the context of climate change adaptation. Economic assessment of adaptation options needs to explicitly incorporate the uncertainty of future climate conditions and should recognise that uncertainties may diminish over time as a result of improved understanding and learning. Real options analysis (ROA) is an appraisal tool developed to incorporate concepts of flexibility and learning that relies on probabilistic data to characterise uncertainties. It is also a relatively resource-intensive decision support tool. We test whether, and to what extent, learning can result from the use of successive generations of real life climate scenarios, and how non-probabilistic uncertainties can be handled through adapting the principles of ROA in coastal economic adaptation decisions. Using a relatively simple form of ROA on a vulnerable piece of coastal rail infrastructure in the United Kingdom, and two successive UK climate assessments, we estimate the values associated with utilising up-dated information on sea-level rise. The value of learning can be compared to the capital cost of adaptation investment, and may be used to illustrate the potential scale of the value of learning in coastal protection, and other adaptation contexts.
March 2018 in Review
Most frightening stories:
- One reason the U.S. blunders into war repeatedly is that it does not do a good job of analyzing the motives of its adversaries.
- International investors may be losing confidence in the U.S. dollar. And a serious financial crisis in China is a possibility, although China is also trying to become a “cyber superpower“.
- One reason propaganda works is that even knowledgeable people are more likely to believe a statement the more often it is repeated.
Most hopeful stories:
- One large sprawling city could be roughly the economic equivalent of several small high-density cities. This could potentially be good news for the planet if you choose in favor of the latter, and preserve the spaces in between as some combination of natural land and farm land.
- The problems with free parking, and solutions to the problems, are well known. This could potentially be good news if anything were to be actually done about it. Self-parking cars could be really fantastic for cities.
- The coal industry continues to collapse, and even the other fossil fuels are saying they are a bunch of whining losers. And yes, I consider this positive. I hope there aren’t too many old ladies whose pensions depend on coal at this point.
Most interesting stories, that were not particularly frightening or hopeful, or perhaps were a mixture of both:
- Some people really do win the lottery more than they should.
- You can buy a computerized chicken coop or cider maker.
- You can do network analysis or call Matlab in R.
the sinking dollar
Barry Eichengreen points out that while the differential between growth and interest rates between the U.S. and most other countries should have predicted a stronger dollar in 2017, it actually fell by 8% and is still falling so far in 2018. Explaining exchange rate changes after the fact is a lot like explaining stock market changes after the fact – they are easy to rationalize after the fact, but if anyone really knew how to predict them accurately, that person would be a trillionaire. Somewhat humorously, Mr. Eichengreen links to an article that gives 17 possible reasons (with links to sources for many of them), which is essentially the same as giving none.
Finally he says the most likely explanation is just uncertainty. Foreign investors just don’t know where the U.S. and its economy are headed, or that it will continue to be the rock solid safe haven it has been for the past 50 years. This sounds about right to me. Foreigners have been willing to stuff U.S. dollars under their mattresses for 50 years, in the last couple decades with low or even no returns, and some may have decided it is time to diversify.
January 2018 in Review
Most frightening stories:
- Larry Summers says we have a better than even chance of recession in the next three years. Sounds bad, but I wonder what that stat would look like for any randomly chosen three year period in modern history.
- The United States is involved in at least seven wars: Afghanistan, Iraq, Syria, Yemen, Libya, Somalia, and Pakistan. Nuclear deterrence may not actually the work.
- Cape Town, South Africa is in imminent danger of running out of water. Longer term, there are serious concerns about snowpack-dependent water supplies serving large urban populations in Asia and western North America.
Most hopeful stories:
- There are some new ideas and practical examples of urban green infrastructure planning that take full advantage of ecological and social science to maximize benefits. Also, there are some advances in the idea of using gamification in urban planning. Biophilic Cities is a new (to me) group trying to create “cities of abundant nature in close proximity to large numbers of urbanites.
- There is new evidence that reading is really good for the developing brain.
- Practical wireless charging may finally be getting close. End the tyranny of the cord!
Most interesting stories, that were not particularly frightening or hopeful, or perhaps were a mixture of both:
- Sales of electric vehicles may take off in 2018. Sales of autonomous vehicles will eventually take off, but 2018 may not be the year.
- Just when people on the street might have heard of CRISPR, there are already newer and more powerful gene editing techniques coming online, including the idea of gene circuits. There is some doubt about whether CRISPR will ultimately work in humans. And in other biotech news, brain scans have reached the point where they can reveal an image you are picturing in your mind.
- If you are a white supremacist, it’s okay to have an Asian girlfriend according to the New York Times. The unfortunate corollary would seem to be that if someone is accusing you of being a white supremacist, you can’t just get an Asian girlfriend and expect that to be a sufficient defense.
cities and gamification
This article is about applying gamification to the planning and running of cities.
Cities and the politics of gamification
Gamification is widely intended as the mobilisation and implementation of game elements in extra-ludic situations, including the management of social problems and issues. By mobilising virtual rewards and playful elements, mobile apps, websites, social initiatives and even urban policies are getting more and more gamified. The aim of this viewpoint paper is to stimulate a critical discussion on the potential relationships between gamification processes and cities, particularly by reflecting on the cultures of gamification and by discussing potential lines of research for urban studies.