Opinion

Felix Salmon

Felix Salmon smackdown watch, pensions edition

Felix Salmon
Feb 23, 2014 20:10 UTC

Many thanks to John Arnold for responding to my post about how he (and his foundation) should approach pension reform. We agree on many things, it turns out; but there’s one big area where we disagree, which is encapsulated most cleanly in the question of what exactly is going on in San Jose mayor Chuck Reed’s Pension Reform Act. I characterized Reed’s ballot initiative as “allowing governments to default on their pension obligations”, and “an attempt to renege on governments’ existing pension obligations”. Arnold says I’m entirely wrong about that:

Salmon repeatedly claims that my wife, Laura, and I and our foundation, LJAF, “support plans making it easier for governments to default on existing promises.” Nothing could be further from the truth. We strongly believe that pension reform should not aim to cut or eliminate benefits…

The initiative explicitly honors and guarantees the benefits earned for work done to date. The only question here is whether the employer and employees should be able to negotiate retirement compensation for work that is not yet performed. In other words, does an employee who was hired yesterday have the guaranteed right to earn pension benefits under the same formula for all future years of service? Under Reed’s proposal, cities in California could negotiate with employees, through the collective bargaining process, to change retirement compensation for future service just as they would do for salaries or health benefits. That change would have no effect whatsoever on benefits that have already been earned.

So, who’s right? In order to answer that question, it’s helpful to follow one of Arnold’s links, to a paper on teacher pensions which was put written by the Arnold Foundation’s Josh McGee. The paper addresses a serious problem: that “teachers accrue relatively meager benefits through much of their careers, and then abruptly become eligible for much more as they near retirement age”. For instance, here’s what happens for a teacher who enters the New York system at age 25, if you value pension wealth as the present value of your pension payments:

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For the first decade, the teacher accrues essentially zero pension wealth, while the value of the pension rises in value by $101,667 in the two years between age 61 and age 63.

Other school systems have even more dramatic backloading. Here, for instance, are McGee’s charts for Miami and Las Vegas. Look at the darkest line, the one showing “pension wealth” over time. In Miami, that wealth can jump by some $250,000 in just one year; in Vegas, the jump is more than $300,000.

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So here’s the question. Put yourself in the position of someone who’s been teaching in Las Vegas for 29 years. The way that John Arnold sees things, over that time, you’ve managed to earn pension benefits worth roughly $200,000. If you teach for one more year, then the value of your pension benefits soars to more than $500,000: effectively, between salary and increased pension benefits, you’re being pad about $400,000 for that one year of teaching. Arnold wants school systems to “be able to negotiate retirement compensation for work that is not yet performed” — which is to say, to be able to pay you much less than $400,000 for that 30th year of teaching.

But that’s a very self-serving view of what’s going on in this pension scheme. Las Vegas teachers get their $500,000 package in return for 30 years of teaching, not in return for the 30th year of teaching. There’s a big difference. And it’s a difference that Arnold, for one, understands.

When a 25-year-old teacher joins the Las Vegas system, Arnold believes (and I agree with him) that the government should pay real money into its pension plan, in order to cover the actuarial costs that she’s going to qualify for in retirement. He doesn’t think that the government should drag its feet and wait until she’s 54 before it suddenly pays in an extra $350,000 or so: that’s not how pension plans work. Instead, they work by putting aside a certain amount of money every year, so that everybody in the system can receive, when they retire, the benefits guaranteed by the system. Indeed, when Arnold complains about pension plans being underfunded, what he means is that local governments aren’t putting enough money away to cover the sums which will be owed, in the future, to teachers who today are in their 20s or 30s. Those sums — and those funding shortfalls — are real, and substantial.

Arnold and I agree on what has been going on here: governments have promised juicy pension benefits in the future, in lieu of paying higher salaries in the present. Sometimes, they’ve failed to fully fund those benefits. But the promises are real.

Let’s make up some numbers for the sake of argument, and let’s ignore things like healthcare for the sake of simplification. Take a 25-year-old teacher on a salary of $50,000, where the government needs to make annual payments of another $9,000 per year in order to fully fund her pension. Effectively, what’s happened here is that the government and the unions have agreed on a total package worth $59,000 per year, of which $50,000 is salary and $9,000 is made up of pension promises. How much are those pension promises worth after ten years of service, in today’s dollars? The answer is about $125,000, if you assume the government’s investments grow at a real rate of 4% per year. The government has a liability to the teacher, which might be funded or might be unfunded, of roughly that amount. (In fact, the promise is worth more than $125,000, because of the effect of other teachers dropping out of the workforce before they reach ten years of service.)

If you ask Arnold, on the other hand, he’ll tell you that the teacher’s “benefits earned for work done to date” are basically zero — since if the teacher retired today, she would not be eligible for pretty much anything.

I disagree. I think that if the government has a liability — and Arnold is busy telling anybody who will listen that the government has a substantial liability, in this case — then the teacher has an equal and opposite asset. And it seems to me that the point of the Reed plan is to give the government the ability to take that liability, and — at least in the case of the teacher with ten years’ tenure — write it down to zero. Which would also have the effect of taking the teacher’s asset and writing it down to zero.

When you write down a future liability, you’re defaulting on your future obligations: that’s why I consider the Reed plan to be a means of reneging on existing promises.

Here’s another way of thinking about our hypothetical teacher: when she joins the school system, she’s granted a set of Restricted Pension Units, which vest over the course of 30 years. If she stays in the system until she’s 55, then those RPUs will be worth more than $500,000, in today’s money. But because of the way that money compounds, and because of the likelihood that she won’t stay in the system until she’s 55, the cost to the government of granting those RPUs, in year one, and also in any subsequent year, is only $9,000.

Nevertheless, those RPUs have been granted, and once granted, they belong to the teacher, not to the government. She can leave any time she likes, and leave most of her RPUs unvested. But that’s her choice, not the government’s. Unless the Reed initiative passes, in which case the government can essentially confiscate all of her unvested RPUs, and replace them with something else.

Now I agree with Arnold and McGee that there are better ways of designing pension plans, in a world where it’s not reasonable to expect teachers to stay in the same district for 30 years, and where it is reasonable to expect teachers with ten years’ service to have built up a meaningful retirement benefit, over the course of that decade, if they decide to move. I agree that if we were starting from scratch, we would design a plan which would look more like the grey upwardly-curving line in McGee’s charts, rather than the black back-loaded line.

But I disagree that if you’ve been teaching for ten years, then the pension promises that the government has made to you are, at this point, essentially worthless.

So here’s what I think should happen. First — and I agree with Arnold on this point — the government should make every effort to fully fund its existing and future obligations. Then, once those obligations are being fully funded, the government can start negotiating with the unions about ways in which to start offering choices to new teachers, and possibly even existing ones. If the government’s going to be spending $9,000 per year on your retirement benefits, where would you like that money to go? Would you like to join the existing defined-benefit plan? Or would you like to opt for something more like McGee’s smooth-accrual system?

The point is to ensure that everybody who has been promised something by the government has the right to demand that the government keep those promises. Not all governments keep all of their promises, but breaking promises is a serious thing: it’s called bankruptcy. We shouldn’t let cities and states get away with it by dint of a simple ballot initiative.

Update: John Arnold responds.

COMMENT

@BenWheeler, you have that very confused. The interest rate on munis is only relevant if the local government borrows the money to fund the pensions. If they FAIL to fund the pensions, then they are in essence borrowing from the pension fund at a rate equal to the assumed investment returns (typically 8%+). They are promising to cover a gap that is growing at that rate.

That exceptionally high implied interest rate is the reason why towns are floundering under this burden. What may originally have been a manageable obligation has doubled every 9 years (with continuing underfunding exacerbating the problem further). Carry that out over a few decades and you have a “debt” that is impossible to meet.

What they SHOULD do is float bonds to fund the pensions in full. The borrowing costs, as you observe, are much cheaper. And if the rating agencies complain about that, then perhaps they need to tighten their belt a bit? Hiding the obligations in underfunded pensions doesn’t make them any easier to afford.

Posted by TFF17 | Report as abusive

When financiers align themselves against Wall Street

Felix Salmon
Jan 13, 2014 16:25 UTC

It’s more than 18 months since Mortgage Resolution Partners (MRP) first came to general public attention, and since I wrote three substantial posts explaining exactly why, as the headline of the first post says, “using eminent domain for liens is a bad idea”. The idea is still a bad one, but it lives on — and now Shaila Dewan has delivered a 2,500-word piece in the NYT about its status in Richmond, California — the town where it is closest to being enacted.

Like most of the discussion of this issue in the press, Dewan’s article fails to make what, to me, is the key distinction here — between seizing mortgages and seizing houses. Seizing houses where the owners are underwater on their mortgages is, at least in principle, a good idea. You buy the house in a short sale at a fair market value. All of the proceeds go to the mortgage lender. You then sell (or rent) the house back to its current owner, for a little more than you paid for it but a lot less than the mortgage was for. The homeowner now has equity again, and a much reduced mortgage, and the risk of foreclosure has gone down substantially. If municipal powers of eminent domain can help you do this, then by all means use them.

Disappointingly, that’s not what’s being proposed. Instead, the idea being shopped around various cities, including Richmond, is that MRP, along with the municipalities, will seize the mortgage under eminent domain. They will then issue a new mortgage to replace the old one, which gives the homeowner back some equity. There are lots of problems with this idea; they haven’t changed at all since 18 months ago. The main ones are, firstly, that the plan does nothing to address the problem of second liens; and, secondly, that the whole scheme is based on a huge lie. The plan only works if the mortgage can be seized for a price which is substantially less than the value of the property. But in fact, nearly all of these mortgages are worth substantially more than the value of the property; indeed, many of them are worth more than the face value of the mortgage. And so the eminent domain plan is not a plan to acquire property at fair market value; in fact, it’s a plan to gift mortgages to a private company, Mortgage Resolution Partners, at prices well below what those mortgages are actually worth.

Why doesn’t Dewan explain the issue this way? That’s easy: it’s because she’s a reporter, she’s reporting what she sees, and that’s simply not the way that the contours of the debate are drawn in the real world. If you travel to a town like Richmond, you don’t find a debate about the distinction between seizing mortgages and seizing houses; you don’t even find a debate about what the fair market value of a mortgage is, if the house in question is underwater. Instead, you find a simple face-off, between poor and angry locals, on the one hand, and well-funded corporate interests, on the other. In that situation, it’s hard not to sympathize — as Dewan clearly does — with the humans, especially when the corporations are churning out misinformation in the form of robocalls about the way the plan would give MRP the ability to “take houses on the cheap,” and bus in fraternity brothers from neighboring towns to demonstrate against a City Council vote.

The difference between the two sides is especially stark in Richmond, where the mayor, Gayle McLaughlin, is a member of the Green Party and an anti-Chevron activist who refused corporate campaign donations and is a veteran of tough fights against faceless corporate interests. And while MRP’s plan is self-serving and unlikely to make a huge amount of difference in any case, it’s easy to see why McLaughlin believes that something is better than nothing:

Homes in the city lost 66 percent of their value, on average, and are still worth less than half what they were at their peak, in January 2006. Some 16 percent of homeowners lost their homes in foreclosure, leaving so many scars on neighborhoods that the city began fining banks $1,000 a day if they failed to maintain their property; the city has collected $1.5 million so far.

This explains why the MRP scheme is still alive, despite the astonishing level of opposition it has managed to elicit. Indeed, it might be more accurate to say that the MRP scheme has managed to stay alive precisely because of the astonishing level of opposition it has managed to elicit. The banks and investors and realtors and financial-services industry groups who oppose MRP’s plan are exactly the people most to blame for the real-estate crisis which devastated towns like Richmond — which can itself seem to be a good prima facie reason to adopt any plan they’re complaining about.

MRP, here, is tapping into a deep vein of resentment and mistrust, and the financial services industry, with its heavy-handed opposition, is in many ways playing straight into MRP’s hand. The problem, for the industry, is that it really doesn’t have any constructive solutions to Richmond’s problems — and as a result, all it can offer is sticks without carrots. (When Richmond attempted a bond offering, to refinance old economic development bonds, it was met with no takers.) MRP itself, of course, is very much part of the financial-services industry, and would love to make an enormous amount of money from its scheme. But it’s not hard for MRP to persuade the likes of McLaughlin that it’s on her side — all it needs to do is point to the squeals of pain coming from banks, investors, and the like. If the plan is bad for them, it must be good for Richmond, right?

In that sense, what we’re seeing here is the current spate of bank prosecutions effectively being played out at the micro-local scale. (In Richmond, for instance, which has a population of more than 100,000 people, a mere 624 homes would be included in the scheme.) For prosecutors, attacking financiers is a move with all upside and no downside: whether you’re slapping JP Morgan with billions of dollars in fine or merely settling a silly case with Blackrock for $400,000, if you’re causing money to flow back to taxpayers from Wall Street then you’re generally perceived as doing god’s work. And the same phenomenon has opened up an opportunity for MRP — which is being supported by the likes of Evercore Partners and Westwood Capital — to paint itself as being on the side of the angels. Municipalities, however, should beware financiers spouting anti-Wall Street rhetoric. The MRP plan might be the only chance that a city like Richmond has to try to address its foreclosure crisis head-on. But that doesn’t make it a good idea.

The new era of the New York skyscraper

Felix Salmon
Dec 24, 2013 06:12 UTC

The first time I ever visited New York, the bus from JFK dropped me off in front of Grand Central Terminal. I looked up, and up, and up, at the Chrysler Building towering above me, and I immediately fell in love with a city which so exuberantly celebrated its height and size and weight. Much as I love Chicago, New York will always be the home of the skyscraper for me; no other city has such spectacular examples from all eras, ranging from the Brooklyn Bridge and the Woolworth and Flatiron buildings, through Lever House and the Seagram building, all the way to the newest towers rising both downtown, at the World Trade Center site, as well as uptown, along 57th Street. One of the most awe-inspiring architectural experiences in the world is to visit the little-known but truly amazing top room of the art deco BNY Mellon building at 1 Wall Street, with its three-storey-high silver ceilings and its unrivaled views to the north, south, east, and west.

In a sign of the times, that room — along with the rest of the building — might be for sale; one broker told Bloomberg that it “could be spectacular resi”. For corporations looking to squeeze a large number of people into a single building, super-tall towers don’t make a lot of sense: they waste too much space on service shafts. But for trophy-hunting billionaires, it seems that views are everything, these days — especially if the views in question are of Central Park. Build a high-ceilinged, full-floor, ultra-luxe apartment a thousand feet in the sky and even closer to Central Park South, and it seems that there’s almost no limit to how much you can charge for it.

From the point of view of skyscraper lovers, this is good news. The richest corporate tenants — the ones in the financial-services industry — tend to want large uninterrupted floor plates for their trading rooms, which often results in dull, uninspired architecture. The world’s plutocrats, by contrast, demand architecture of landmark status, something befitting any major new addition to the New York skyline. On top of that, the premium commanded by full-floor apartments means that the new towers tend to be very slender — and as a general rule, thinner towers tend to be more beautiful.

That said, the owners buying into these new towers are pretty unsympathetic. For all their riches, they tend to pay very little in the way of taxes, they don’t interact much with the rest of the city (if they did, they’d never want to live on 57th Street), and they generally leave their apartments empty for nearly all of the year.

This is a dynamic which has proved particularly damaging in the case of my native London, where street life in many central residential neighborhoods has diminished almost to the point of nonexistence: fewer and fewer people actually live in those places any more. It’s much less of a worry in New York: no one’s concerned about residential density on 57th Street being too low, and in any case the caprices of US Customs and Border Protection tend to scare away a lot of what the English call the non-doms.

Still, the critics are out. Jim Windolf spent 3,000 words and a very chilly day in Central Park bellyaching about the shadows these towers might cast in late fall; and now Michael Kimmelman has weighed in, saying that New York should not “consign its silhouette to private builders” and should instead force all new skyscrapers to run a gantlet of community groups and public review.

The fact is, of course, that all the best skyscrapers were built by private builders, often in the face of substantial public opposition. And public skyscrapers are generally worse, not better: just look at the original World Trade Center, built by the Port Authority of New York and New Jersey, with its destruction of Radio Row and Greenwich Street, its forbidding windswept plaza, and its inability to attract tenants for decades after it was built. In general, if the public is asked whether they want any new skyscraper, the answer will always be “no” — even as they love the iconic tall buildings they’ve lived with for years. (There was a general consensus that something should restore the skyline after the World Trade Center was demolished, but that’s the exception that proves the rule.)

Kimmelman, in particular, seems to think — with no real evidence to support him — that public review would improve the quality of architecture built — that it would allow the towers he likes (111 West 57th Street, 432 Park Avenue) while disallowing the towers he doesn’t like. The Nordstrom Tower, for example, features a cantilever which, Kimmeleman says, turns it into “a giant with one foot raised, poised to squash a poodle”). That’s certainly not the way I would describe the renderings we’ve seen so far. But no one likes a massive new building project going ahead in their neighborhood, especially not when they can turn the whole thing into a zero-sum game of proles versus plutocrats, as Windolf does. (“It struck me as unfair that, sometime next year, someone who paid $90 million for a glass-walled, floor-through residence will lounge in full sunshine while the old man will have less light of his own.”)

Skyscrapers are a perfect emblem of capitalism — they destroy what came before, in order to create something new. Sometimes the change is for the better, and sometimes it’s for the worse — but a city where nothing new gets built is a dead city, which might have nostalgic value to tourists, but which is never going to be a driver of global commerce.

New York is a mature city, where it’s already extremely expensive to build — the barriers to constructing new buildings are high enough, especially considering all the (entirely reasonable) preservation rules. Kimmelman and Windolf would add further hurdles still, concerning such things as shadows and view corridors. But neither makes much sense, in New York — a city which has been building long canyons of tall buildings for the best part of a century now. The only view corridors which make any sense, in Manhattan, are the big avenues — and ever since the Pan Am building went up, no one’s going to build in the middle of an avenue. And the official statement from the Central Park Conservancy, on the subject of shadows, seems exactly right to me:

Since the Park’s 1857 creation, numerous buildings have been established on its perimeter. Depending on the time and day of season, those buildings sometimes cast shadows. In the Conservancy’s 33-year experience of Park restoration and maintenance, these shadows have not significantly affected either the Park’s horticulture, which we are responsible for maintaining, or significantly impacted the experience of more than 40 million people who visit the Park annually.

Yes, the Conservancy is conflicted, here — its board includes major property developers. Still, the views of the New York skyline from Central Park are a large part of its perennial appeal — the varied street walls along the four perimeters, as well as the range of buildings visible beyond them. New York is and must be a living city, and right now it happens to have encountered a combination of special factors (an exuberant market, the rise of the billionaire class, the Central Park views, New York’s idiosyncratic zoning laws). These factors, says Carol Willis of Columbia University, have conspired to create special entities similar, in a way, to “rare flowers that can grow only in the Galapagos Islands” — specific architectural creatures native to Manhattan.

In a globalizing and homogenizing world, any kind of new architectural vernacular, unique to a certain city and a certain time, should in general be given the benefit of the doubt. I’m no great fan myself of Christian de Portzamparc’s One57 myself. But I do think that New York City is a city of skyscrapers; that it’s self-defeating for any city of skyscrapers to stop building such things; and that if you’re going to be building new skyscrapers, you’re never going to bat 1000. Better we have a living city with a couple of less-than-perfect buildings, than a stifled one governed by nostalgists and Nimbys.

COMMENT

The Old World Trade and the New World Trade are being built by the Port Authority in a relatively non-residential part of the city. Recently Extell put up One57 and a dangling crane created fear, inconvenience, a public hazard etc. As future residential skyscrapers would need to be even higher to extract the money from those oligarchs needing the ego boost the cons would surely outweigh the pros in allowing future record setting towers in densely populated places such as Central Park South, etc

I think this trend burns itself out in the worst way.

Posted by Sechel | Report as abusive

Why privately-financed public parks are a bad idea

Felix Salmon
Nov 22, 2013 01:21 UTC

If you want to find the most valuable land in the world, you have to look for two things. Firstly, find a rich, densely-populated city. Secondly, take a map of the middle of that city, and look for open space: parks, rivers, lakes. Look at the land bordering that open space, where offices and apartments can avail themselves of spectacular views — that’s where land is going to be the most expensive. Indeed, ultra-luxury condo developer Arthur Zeckendorf recently told the NYT that once he finishes the building he’s working on right now, he doesn’t have anything else in particular that he’d like to build: “We have looked at every single site in Manhattan, but we haven’t found one that meets our criteria to be on a park.”

Naturally, the most expensive land in the world tends to attract the richest people in the world — the kind of people who are very good at marshaling money, and politicians, so that they can get what they want. Last year I wrote about John Paulson’s $100 million gift to Central Park — which is, of course, the park he lives next door to — and the way in which Central Park’s charitable status means that the US taxpayer is effectively chipping in a very large chunk of Paulson’s gift, possibly as much as half of it. Which is not an effective use of public funds.

Indeed, more generally, the big problem with the charitable-donation tax deduction is that it’s effectively a multi-billion-dollar tax expenditure on the rich, even as charitable donations by the majority of the US population don’t get subsidized at all. If it were abolished, or scaled back, the amount saved by the government would dwarf any reduction in charitable donations: in theory, the government could simply make up the entire shortfall and then some, and still come out ahead. As a rule, it’s always easier and cheaper for a government to subsidize something directly than it is to try to fiddle around with laws which have the same effect but don’t show up on the official accounts.

But those laws refuse to go away — and in the case of prime real estate next to urban open space, the situation is getting steadily worse, rather than better. The open space itself invariably is a public asset, which belongs to everybody — at least in theory. But you know how it goes: you move in somewhere, paying $10,000 per square foot for your spectacular view, and it doesn’t take long before you feel that it’s yours. You’ll donate money to it, you’ll improve it — and, since most philanthropy these days has a transactional element to it — you’ll expect a little something in return. Pretty soon, the public’s parks become rather less egalitarian than you might imagine. Here’s Benjamin Soskis:

For much of the twentieth century, the city’s public parks represented a robust vision of egalitarian, governmental support for the public welfare. But that vision, and that support, withered with the fiscal crisis of the nineteen-seventies, when city funding for parks was slashed dramatically. It has never recovered; no city agency has suffered as dramatic a drop in its workforce over the past four decades than the Parks Department. The fiscal crisis also inaugurated a shift toward private governance and administration, marked by the establishment of the Central Park Conservancy in 1980. The Conservancy, and others modelled after it, promised to provide an antidote to the messy and unpredictable city budgeting process. For the most part, they have proved an overwhelming success: Central Park and its well-endowed kin, neglected before the rise of the conservancies, look better than ever, and city residents of all classes continue to enjoy their offerings.

But such philanthropic arrangements are not without their critics. Some have worried about the general hazards of privatization—the risk of corruption, or conservancies abetting the exploitation of public parks by private interests. Others grew concerned that the private funding of certain flagship parks would sanction the erosion of public stewardship, leading to a two-tiered system in which certain green spaces flourish while the majority of the city’s nearly two thousand parks languish.

The exploitation of public parks by private interests is absolutely happening, and Alex Ulam has example after example, and doesn’t even mention the fiasco that was GoogaMooga, where a huge swathe of Prospect Park was effectively destroyed by a 2-day for-profit event, which paid the park a mere $75,000. He does mention this, though:

Damrosch Park, for example, a New York City park run by Lincoln Center for the Performing Arts, is closed off for seven to ten months every year for private events, such as Big Apple Circus and New York City’s Fashion Week. In addition to being regularly closed to the public, Damrosch Park has had 57 trees cut down and its distinctive granite benches removed to accommodate such events.

Behind all this, however, is something which is even more insidious. We now live in a world where rich people and big corporations actually get richer by donating tax-deductible money to supposedly public parks. The big news of the moment is that Hudson River Park, which has run out of money, is now going to be able to fund itself by selling its air rights to developers on the other side of the street. This is far from unprecedented: the High Line, a few blocks west, was funded in large part by a scheme where for every $50 you donated to the High Line Improvement Fund, you could add an extra square foot of floor area in any development you were building nearby. (Check out Appendix D on page 61 of this PDF.) Given that developers pay up to $600 per square foot for such rights, that was quite the bargain.

Meanwhile, on the other side of Manhattan, the Howard Hughes Corporation is proposing to build a 50-story tower right on the waterfront. And the principle that private money should pay to improve such sites seems to have become broadly accepted:

Catherine M. Hughes, chairwoman of Community Board 1, said she was glad to finally see the developer’s master plan, which appears to have met many of the community’s concerns. “We understand that in order for it to succeed and provide community amenities it needs to be economically viable,” she said.

In all of these cases, it would be cleaner, more transparent, and more efficient for the public sector to pay for the parks, while raising money through a simple auction of development rights if and when it thought that development in such areas was warranted. If lovely parks like the ones on the west side are public goods, then the public should pay for them — and if they increase property values, then the public should be able to reap the benefit by selling the newly-appreciated development rights. Instead, private developers acquire their development rights at unknown and unknowable cost, because it’s all hidden behind ostensibly charitable activity. (The development which includes that 50-story tower, for instance, will, we’re assured, “include a still-to-be-determined rescue plan for the financially ailing Seaport Museum”.) And development takes place not because it necessarily fits into any greater public plan, but just because it’s the only way that work gets done which has historically been the job of the city, rather than the private sector.

One bill, put forward by Daniel Squadron, a state senator from Brooklyn, would mandate that 20% of any charitable donation to Central Park or Prospect Park be used to support less glamorous parks in less glamorous neighborhoods. Whether such a bill would pass constitutional muster is unclear, but in any case it wouldn’t make much difference: there will always be ways around such things, especially when new parks are in large part being built by private-sector interests.

If the private sector is building parks like the High Line or the new Seaport, then those parks are going to be designed, from the very beginning, to privilege monied interests and rich-people preferences in general. (A visit to the High Line, any summer weekend, will confirm that the people who go there are decidedly well-heeled, the presence of large public housing projects very nearby notwithstanding.) He who pays the piper, calls the tune. Which is why, if we’re building public parks, the public should be paying for them. If we want to raise public income by selling development rights, that’s fine too. But let’s not conflate the two.

COMMENT

For those scholars among you, see Ill Fares the Land by Tony Jundt. Good reading on why private public partnerships are bad for the public. But on the specific topic of parks, it is important to note that when housing became the near-sole means to pay for Brooklyn Bridge Park, all year round recreation came out of the original master park plan. All recreational amenities were replaced by very costly to maintain landscaping.Why? Lawns sell condos but pools, ice rinks and indoor rec-centers do not. It took the community 8 years to get back 3 soccer fields and a seasonal recreational pier from the community’s original master plan. 8 years of constant and continuous advocacy (ne, fighting) with the Bloomberg “entity” that runs this non-designated “park”. If we were to dedicate just 1% of our tax revenue to public parks, all parks would be maintained to the level of these “private” parks. Remember when the Republican convention was held in NYC? Remember that a big section of Central Park was cordoned off for a Chase party? Remember that the democratic caucus wanted to use parts of the park for their event and were denied? These are historic facts – these Conservancies are a menace to open and transparent use of public lands. They should be abolished. And hopefully, under Mayor DeBlasio, they will and all parks folded back into the NYC Parks Dept. Think of all the money tax payers will save if there is just one entity running our parks? Certainly for Brooklyn Bridge Park we would save about $1Million in redundant public servant salaries and related expenses for their own building and benefits. That is on top of the Conservancy’s costs – publicly funded by City Council and State representative donations to run this redundant BBP Conservancy. The whole thing is a scam and the public loses – again, and again, and again.

Posted by JudithFrancis | Report as abusive

When should we aid Detroit?

Felix Salmon
Jul 29, 2013 11:00 UTC

John Cassidy and Steve Rattner agree that the destruction which has been visited upon Detroit, in recent decades, is at least as devastating, and as worthy of federal support, as the chaos which was wreaked by Hurricane Sandy in richer parts of the country.

Cassidy and Rattner disagree, however, on how they would like to spend Uncle Sam’s billions. Rattner, you won’t be surprised to hear, concentrates on financial engineering, and he singles out Detroit’s pension plans: he calls them “grossly underfunded” (which is highly debatable), and calls for “shared sacrifice by creditors, workers and other stakeholders”. Beyond that, he wishlist seems to consist simply of the “$1.25 billion in reinvestment spending that Detroit’s emergency manager, Kevyn Orr, has included in his proposed budget”.

Cassidy, on the other hand, goes further:

What is needed is a comprehensive and adequately funded plan to stabilize the city’s finances, repair its public infrastructure—almost half the street lights don’t work—and raze its semi-abandoned neighborhoods, consolidating its population into a smaller, more manageable area. (At the moment, Detroit sprawls across a hundred and thirty-nine square miles, more than Boston and San Francisco combined.)

What Cassidy is talking about here, under the happy euphemism of “consolidation”, is a massive program of destruction, displacement, and forced relocation — one affecting hundreds of thousands of families. It’s the kind of thing one can maybe imagine in China, or possibly even in New York City circa Robert Moses — but both of those examples involve acting with the tide, as it were, a government helping to expand cities which are growing fast and which will in any case require a vast new infrastructure.

In Detroit, by contrast, it’s much harder to orchestrate any kind of big rebuilding program: it’s much easier to tame and shape existing economic forces than it is to try to conjure them up from scratch. And while there is a certain degree of gentrification in downtown Detroit, it’s on such a small scale, compared to the city as a whole, that its role in any city-wide urban regeneration plan is always going to be limited.

Rattner is, depressingly, entirely correct when he says that “while logical, the potential for downsizing Detroit is limited because the city’s population didn’t flee from just one neighborhood”. Detroit is too big; it must get smaller; it can’t get smaller. That’s the real tragedy of Detroit, and it’s one that no amount of federal funds can solve.

It can seem heartless for Washington not to step in and help save Detroit. Cassidy’s plaint is clear and simple: “Shouldn’t one of America’s iconic cities be rebuilt, rather than picked apart? If so, it is going to require the leadership, and the financial support, of the federal government.” It’s infuriating to watch the government stand idly by as Detroit sinks into a fiscal and economic morass. But at the same time, the government should never act on the basis of “something must be done; this is something; therefore let’s just throw some money at the problem and hope for the best”. Whenever that happens, failure is pretty much guaranteed.

Over the long term, there are good reasons to be bullish on Detroit. North America is becoming increasingly urban, which should benefit all of its cities. Michigan, more broadly, is one of the few parts of the world which will see a real benefit from global climate change, and it needs a healthy Detroit to thrive. To the city’s east and west, both Toronto and Chicago are booming, and in general the big US border cities — Seattle, Detroit, maybe Buffalo — can’t help but benefit from Canada’s continued oil-fueled expansion.

But for the time being it’s hard to anticipate exactly how those forces are going to align to reshape Detroit. The city’s emergence from bankruptcy should absolutely be structured so that the city has every opportunity to grow and thrive over the long term. But it’s not necessarily the best possible time for the federal government to start providing the kind of “leadership” which, as far as I can tell, has been asked for by neither Detroit nor the state of Michigan.

The lesson of Japan’s fiscal mega-projects over the past 20 years or so is that even with effectively unlimited funds, it’s impossible for government alone to change the economic destiny of a major city. The federal government should absolutely keep a close eye on the economy of Detroit, and stand ready to help if and when such aid will have the greatest positive effect. I just find it hard to believe that right now is that time.

COMMENT

Washington cannot bail out Detroit. Discretionary spending is permanently sequestered, and bailing out Detroit is not high on John Boehner’s wish-list. Plus the Us has been “investing in our cities” for 50 years, and Detroit is the outcome. Paging Lyndon Johnson.

Posted by nixonfan | Report as abusive

Citibike: A victim of its own success

Felix Salmon
Jun 19, 2013 14:30 UTC

There’s good news on the CitiBike front. The big problem I wrote about on June 5 — the way in which entire stations would regularly go dark, refusing to dispense or accept bicycles — seems to have been solved. This is true anecdotally: I haven’t encountered it in the past few days, and neither has anybody I know. And WNYC has now published empirical data showing the same thing. Here’s their pretty interactive chart of stations which have been inactive for more than 4 hours straight between 8am and 8pm:

CitiBike isn’t talking — as WNYC puts it, “New York City continues its information blackout” on the subject of what on earth is going on with the scheme. Every so often it will release an upbeat statistic, but neither the press office nor the social-media presence is being remotely helpful when it comes to talking broadly and openly about what’s going on. Here’s the NYT, on June 11:

The Bloomberg administration has refused to quantify, or even elaborate on, the rash of problems plaguing its system, which has had technical errors of a magnitude never experienced by bike-share programs in other major American cities.

As a result, all we can do is hazard educated guesses. And my theory of what’s happening is actually the same as it was on June 5. My theory then was that the problem was the result of “some kind of failsafe mechanism which shuts down an entire station when some reasonably common thing happens”. Since then, not only do the stations seem to be much more reliable, but I’ve also — anecdotally — seen a significant rise in the number of docked bikes which feature a lit red LED, indicating that particular bike is not available to be rented.

In other words, it seems that when the system launched, a bad bike would cause a whole station to go dark; now, it just disables that particular bike. That’s a significant improvement in a short time, especially given that, as WNYC said on June 11, “it turns out the nation’s largest bike share is beta testing the entire software system”.

Which is not to say that everything is running perfectly. Here’s a screenshot of the official CitiBike map which I took yesterday late morning, showing all the empty bike stations in my neighborhood:

Not all of these fully-light-blue stations were completely empty: some of them, if you selected them individually, would show one or two bikes in them. But invariably those few bikes had red lights or were otherwise broken (flat tires, missing seats, that kind of thing).

This isn't a software problem. Rather, this is a problem common to all bikeshare schemes, but which is more extreme in NYC for various reasons. The East Village, for instance, is a largely residential neighborhood; lots of people want to bike from there, in the mornings, to go to work or just about their day, but few people want to bike to there, in the mornings. As a result, the bike stations empty out quickly.

This is a problem which can't be fixed by debugging software; indeed, it can't even be fixed by installing more bike stations. NYC's bikeshare scheme might not cover a huge amount of the city, but where it exists, it has the highest station density of any municipal bikeshare scheme in the world. And as station density increases, people are more likely to grab a convenient bike and ride it to somewhere more central -- even when they're just riding a few blocks to the nearest subway station.

In cities like London and Paris, that happens less frequently. In those cities, there's more of a distinction between the commercial center and the residential suburbs, and the bike stations are much more thinly scattered in residential neighborhoods than they are in NYC. As a result, they're less convenient, and you're unlikely to use them to travel to the nearest subway station, just because your closest bikeshare station is likely at your nearest subway station.

So while Paris might be able to get away with trucks bringing bikes back out to more distant stations from the center in the evenings, New York's CitiBike trucks are going to have to be much more active during the day, and especially during the mornings, shuttling bikes back to residential neighborhoods from commercial areas like Rockefeller Center where the bike racks fill up early on. That kind of thing is a significant ongoing expense, and it's unclear to what degree it's built into the CitiBike budget.

Citibank has signed its contract, now, and probably doesn't feel any particular need to throw more money at the scheme to make it better. But since the bike-share scheme is clearly extremely popular, maybe now's the time for the city itself to come in and provide a bit of cash to make things work as smoothly as possible. So far, CitiBike has cost NYC taxpayers nothing. It might be time for that to change.

Update: A tipster emails to say that the CitiBike server was crashing "several times per day" up until last week -- a problem which has now been solved. But the hardware is a different issue: apparently the batteries in the kiosks have all been replaced at least twice so far, and a lot of rides are failing to be closed out, forcing the operator to do so manually for all rides over an hour. (If you return your bike to the rack and it buzzes, but the light doesn't turn green, then it has not been properly returned, and anybody can just remove it from the station and pedal away.)

COMMENT

Every time I look at the map, all of the bikes are on the Lower East Side. Right now it looks like it would be hard to park a bike in Felix’s neighborhood.
Meanwhile, there’s nothing in Midtown between Lex and 7th.
Other bike shares periodically redistribute bikes. NYC better get savvy to that soon, or this is going to become the Lower East Side Commuter System.

Posted by RZ0 | Report as abusive

The one big problem with NYC’s bikeshare

Felix Salmon
Jun 5, 2013 20:17 UTC

New York’s bikeshare program has gotten off to a successful start — finally. It’s worth remembering that before it was delayed by Hurricane Sandy, it was delayed by something else: the failure of its operator to have the requisite software lined up. Cody Lyon has a good overview of the chaos behind the scenes. The company with the NYC contract, Alta Bicycle Share, won the contract on the strength of software developed by a company called 8D Technologies. But then Alta and its Canadian partner, PBSC, abruptly fired 8D and decided they could develop their own software in-house.

That decision was massively overoptimistic, and resulted in the original delay to the NYC rollout — as well as resulting in 8D suing Alta and PBSC for $26 million.

Big software projects almost never work very well, especially projects where there are as many different things which can go wrong as we have in the NYC bike-share program. And so when the CitiBike program launched, there was a certain amount of trepidation: would it actually work?

The answer, it seems, is that it does work; it just doesn’t work very well. Or, to be a bit more precise, when it works, it works fabulously. But when it doesn’t work — which is all too often — it doesn’t work at all.

I’m a massive fan of bikeshare plans in theory, and I warmly welcomed NYC’s CitiBike system in particular, after it launched. I ran into a couple of problems with stations not being able to dispense bikes, but I put that down to teething troubles, and didn’t think them worth mentioning.

Now, however, I’m worried that the problem of stations being able to neither receive nor dispense bikes is a big one, and that it’s not going to be fixed any time soon. I sent some detailed questions on this issue to both CitiBike and NYC’s department of transportation, and I’ll let you know if and when I hear back from them, but so far they seem to be suspiciously close-mouthed about what’s going on — which in turn makes me think that this is no easy-to-fix glitch.

There’s a set of interrelated problems here. On a hardware level, the docking stations don’t seem to be nearly as beautifully designed as the bikes themselves. The bikes ride smoothly and easily; by contrast, you need to give them a real shove to return them properly, and it’s hard to tell whether you’ve actually returned your bike or not. (You need to be paying attention to a small series of three LED lights, which aren’t always easy to see in direct sunlight; sometimes they’ll turn yellow, in which case the bike has been returned; sometimes they’ll turn green, in which case you need to wait for the light to turn off before the bike has been properly returned; and sometimes they won’t turn on at all, in which case the bike has not been returned.)

Anecdotally, a lot of people seem to be encountering “open rides”, where they think that they returned their bike, but the return isn’t registered in the system. That’s financially dangerous, of course: if you don’t return your bike, you’re liable for as much as $1,000. But I fear it’s also creating broader problems with the bikeshare stations. These can look fine on the official app, and on the website, showing plenty of open slots and bikes for rent. But when you get there, you find that you can’t successfully return a bike to any of the open slots, and you can’t successfully remove any of the bikes for rent.

This is not a vandalism issue — there is no indication, at any of these stations, that they have been deliberately crippled, and the NYC DOT’s Seth Solomonow tells me that “a quick inspection can address” the problem. Basically, if a technician goes out there and resets the station, the problem is solved. But there doesn’t seem to be a way to reset the station remotely, and it’s not at all clear whether CitiBike HQ even knows when a station isn’t working, unless and until someone calls them to report the issue.

But the issue does seem to be widespread. I’ve managed 15 successful trips so far, plus one trip where I had to return a bike to the same station I rented it from, since I only wanted to bike a couple of blocks and all the stations I tried to return it to, closer to my destination, weren’t working. (CitiBike should in theory be great at turning a 15-minute walk into a 5-minute bike ride, but that doesn’t work if you can’t be sure that you’ll be able to return the bike at the other end.) I’d say that roughly half the trips so far have been trouble-free at both the beginning and the end, while on the worst one I encountered four different broken stations (two at the beginning, and two at the end) before finding stations which were working.

I’m certain that this is not me doing it wrong, or some idiosyncratic issue with my keyfob: it works fine when it works, and when it doesn’t work no one else can remove or return bikes either.

I’m not certain, however, that Alta and PBSC are on top of this problem and know how they’re going to fix it. They’ve had an extra year to get this right, but if the app doesn’t know when a station isn’t working, my guess is that the system as a whole doesn’t know that either. And that’s going to be hard to fix. What’s more, if there’s some kind of failsafe mechanism which shuts down an entire station when some reasonably common thing happens, that mechanism is likely baked into the system and will also be hard to patch with some kind of simple software update.

I’ve been using the CitiBike system a lot, since it launched, because right now I don’t have a bike of my own: mine was stolen despite being locked securely to an official bike rack. I’ve been thinking that maybe what I should do is just use my bike for trips which don’t involve parking it on the street, and use CitiBike instead for all other trips. But in order to do that, I’ll need a reasonable amount of predictability to the system: if the app tells me that there are bikes nearby, I’ll need to be sure that I can use one — and also that I’ll be able to return it to a station near my destination. If I have to build in an extra 15 minutes or so just in case the bike stations aren’t working, that makes the entire system much less convenient.

I have a theory that one of the reasons for the bonkers opposition to NYC’s bikeshare is precisely that it is so convenient. The Driven Elite used to be able to feel superior to everybody else just because being driven around the city was easier and quicker than than any other form of transportation. Their ability to ignore the subway is really quite impressive: one of the themes running through Too Big To Fail was senior bankers turning up late to emergency meetings at the NY Fed because they had been stuck in traffic when taking the subway would have been much quicker. But it’s harder to ignore bikers who are happily riding past your car and getting to where they want to be so much faster than you are. And because the likes of Dorothy Rabinowitz would never be seen dead on a bike, they’re railing against the evolution of their city into something great which they feel excluded from.

Bikeshare is all about being convenient at the margin: being able to leave your house that much later, and arrive at your destination that much earlier, because the bikes are just sitting there waiting for you to use them. If you can’t be sure that you’re going to be able to rent one of the bikes, because the system is glitchy and often entire stations just don’t work, or if you’re worried that the stations near your destination won’t accept returns, then all that convenience simply disappears. So this is a very important issue. I hope it gets fixed soon, but I have to admit I’m a little bit pessimistic.

COMMENT

A hard shove is NOT needed to dock the bike; trying to apply brute force will likely only frustrate. The locking plate on the bike just needs to be correctly aligned with the receptacle on the dock, which often requires the front of the bike to be lifted slightly off the ground. The same principle applied for docking in the Taipei bike share system; only there, the physical parts were more clearly visible.

Posted by HappyBiker | Report as abusive

Why America’s population density is falling

Felix Salmon
May 4, 2013 18:14 UTC

I’m not sure why it took me until yesterday to find Paul Krugman’s post from April 16 about population density, where he found a very odd fact buried in a new Census report. We know that the population of the US is rising, and we know that the population of the US is also becoming increasingly urban. As a result, urban density — the number of people per square mile — has to be going up.

And yet, if you calculate density the right way, weighting by population rather than by land area, you find something very odd: density is actually going down.

041613krugman2-blog480.png

In the US as a whole, population-weighted population density fell by 16 people per square mile between 2000 and 2010, while in metropolitan areas it fell by an enormous 405 people per square mile. What could be going on? The best answer, I think, comes from David Schleicher, a George Mason professor who’s an expert on the political economy of urban areas.

If you look at property and land prices in America’s cities, they rose impressively between 2000 and 2010, the property bubble and crash nothwithstanding. Cities are increasingly attractive and expensive places to live; that’s a trend which isn’t going away any time soon. And historically, when urban property values rise, it doesn’t take long for property developers to pounce on the trend. New buildings rise; whole neighborhoods get rezoned. With billions of dollars at stake, politically-connected developers normally find a way to get what they want somehow.

That’s exactly what has happened in, say, Miami, where shiny new condos rise in lockstep with property values. But note something important about Miami: those condos are being bought largely by foreigners, who have little if any political clout in the city. In most US cities, by contrast, rising property values in recent years have meant something different: a rise in the number of politically-powerful groups and individuals moving back into the city from the suburbs.

These rich and powerful have two important effects on urban density. Firstly, they decrease density just by moving to the city: they do that by dint of the fact that they live in larger homes with smaller families. My apartment in New York’s East Village, for instance, is in a 1920s tenement building, which was converted into condos in 1984. During the condo conversion, the old layout, of four apartments per floor, was scrapped in favor of a new layout with only two apartments per floor. But the number of people per apartment didn’t go up. And if the conversion were to take place today, the building would almost certainly be converted into “full-floor luxury residences”, with a keyed elevator opening directly into monster spaces. Again, without any discernible increase in the number of people per apartment.

Rich people like to maximize the amount of space they live in, whether they’re buying suburban McMansions or downtown lofts. As a result, higher property prices in dense urban areas are prone to making those areas less dense — at least until the developers come along.

This is where the second important effect of the rich-and-powerful comes into play. These people tend to fall on the spectrum somewhere between NIMBY (Not In My Back Yard) and BANANA (Build Absolutely Nothing Anywhere Near Anything). Just look at the vitriol hurled by carless Soho residents, for instance, at New York’s new bike-sharing stations. As urban areas become increasingly affluent, filled with wealthy politicians and their wealthier donors, it becomes harder and harder for developers to procure the zoning changes and construction permits they need in order to keep on producing new residential inventory.

The result is that the normal state of affairs — where powerful individuals get trumped by even more powerful construction-industry inevitabilities — is turned on its head, to the point at which new construction can no longer keep up with the de-densification endemic to gentrification. Bloggers may rail against this state of affairs — both Ryan Avent and Matt Yglesias have written at great length about how important it is to allow new buildings to rise within urban areas — but ultimately the natural conservatism of the rich is winning out, across the nation. If you want to move to a city where density is going up rather than down, you might just have to move to Miami. Or China.

COMMENT

Numerical measurements are bound to seem paradoxical if they are misnamed. “Population-weighted population density” is no doubt a useful statistic, but it is not a population density in the ordinary sense. This measure could very well be called the “crowding index.”

To illustrate this, consider a sparsely-populated rural region that has only one big shopping mall. During the day, some of the regional residents work in the mall, and many others shop there. People living outside the region seldom either shop or work there.

The result? During working hours, the “population-weighted population density” of the entire region shoots far above its value when the mall is closed.

You might say the whole region becomes more crowded Monday through Friday, but I, for one, would not like to say it becomes more dense.

Posted by Ralphooo | Report as abusive

How roads could beat rail

Felix Salmon
Jan 24, 2013 17:24 UTC

The best conference panels, like the best blog posts, are the ones which change your mind. And while I haven’t done a U-turn on anything, after yesterday’s panel on smart cars I’m now thinking very differently about the relative merits of various ways of improving how we move around where we live and travel. While I’ve generally been a fan of just about any alternative to the automobile, now I’m not so sure: I think that smart car technology is improving impressively, to the point at which it could be the most promising solution, especially in developed parts of the world like California.

One reason is simply fiscal. Projects like the self-driving car, and the Sartre platooning project in Europe, move the costs of new technology onto companies (Google) and individuals (people buying smart cars). As such, while the total amount of money spent might well be enormous, the money doesn’t need to be spent up-front by any state or national government. That stands in stark contrast, of course, to rail projects, which cost billions of dollars up front; if they ever do pay for themselves, they do so only very slowly.

It makes perfect sense for dense urban areas to invest in subway systems, of course — as China is doing; India should follow suit. A pedestrian-friendly city with a great bike-path network and a fast subway system is basically any urbanist’s dream, both energy-efficient and reasonably low-tech. But between cities and suburbs, or between cities, you need other ways of getting around. And here there are real choices to be made, between rail and roads. Or rather, given that roads are necessary, do you build roads and railways, or can you solve all your problems with roads alone?

China of course is happily blasting new railways through the country as part of its massive national-infrastructure project. But the more developed a country becomes, the more expensive and time-consuming any new rail line will be. And if you’re looking out say 20 years, there’s a pretty strong case to be made that the kind of efficiency that we can get today only on rail lines will in future be available on roads as well — with significantly greater comfort and convenience for passengers.

Right now, technology is arguably making roads and cars more dangerous. Drivers are notoriously bad judges of their own driving ability, and they’re increasingly being distracted by devices — not just text messages, any more, but fully-fledged emails, social-media alerts, and even videos. What’s more, when car manufacturers roll out things like stay-in-lane technology, that just makes drivers feel even safer, so they feel as though they have some kind of permission to spend even more time on their phones, and less time paying attention to the highway. The results can be disastrous.

But once we make it all the way into a platoon, or in a self-driving car, then at that point we become significantly safer than even the safest human driver. While we’re very bad judges of our own driving ability, we’re actually incredibly good at intuiting how safe our driver is when we’re a passenger. And the experience of people in self-driving cars is that after no more than about 10 minutes, they relax, feel very safe, and are very happy letting the car take them where they want to go. They even relax so much, I’m told, that they lose the desire to speed — maybe because they know that they’re getting where they’re going, and in the meantime can lose themselves in their phones.

If and when self-driving cars really start taking off, it’s easy to see where the road leads. Firstly, they probably won’t be operated on the owner-occupier model that we use for cars today, where we have to leave our cars parked for 97% of their lives just so that we know they’re going to be available for us when we need them. Given driverless cars’ ability to come pick you up whenever you need one, it makes much more sense to just join a network of such things, giving you the same ability to drive your car when you’re at home, or in a far-flung city, or whenever you might normally take a taxi. And the consequence of that is much less need for parking (right now there are more than three parking spots for every car), and therefore the freeing up of lots of space currently given over to parking spots.

What’s more, the capacity of all that freed-up space will be much greater than the capacity of our current roads. Put enough platoons and self-driving cars onto the road, and it’s entirely conceivable that the number of vehicle-miles driven per hour, on any given stretch of road, could double from its current level, even without any increase in the speed limit. Then, take account of the fact that vehicle mileage will continue to improve. The result is that with existing dumb roads, we could wind up moving more people more miles for less total energy expenditure in cars — even when most of those cars continue to have just one person in them — than by forcing those people to cluster together and take huge, heavy trains instead.

This vision creates a dilemma, when we start facing choices about building rail lines or new suburbs. We’re not in a self-driving-car utopia yet, and the transportation problems we have are both real and solvable using rail. So do we use the tools we have, or do we wait and hope that future technology will solve our problems in a more efficient way?

And the question of building infrastructure applies to cars, too: do we just allow the auto industry to build ever more efficient gas-powered vehicles, which will eventually become self-driving, or do we spend billions of dollars building out an infrastructure capable of supporting and recharging electric cars wanting to travel substantial distances? Again, whatever solutions we put in now could end up being obsolete surprisingly quickly.

So while I’m convinced that now is an excellent time for the US to embark on a substantial round of infrastructure investment, I’m less convinced that we should be investing in rail in particular. A smart electricity grid, definitely. Improvements on existing bridges and tunnels, absolutely, including that new tunnel to New Jersey. But I’m less convinced about things like a high-speed rail link between San Francisco and LA. Especially so long as there aren’t any self-driving cars to pick up passengers when they arrive.

COMMENT

Mr. Salmon,

At the beginning of your essay, you said that “the best blog posts…are the ones which change your mind.”

Based upon that criterion, this piece is an abject failure.

To put it another way: if your view of our collective transport future, replete with its burgeoning suburbs, is accurate, I hope I’m dead before it arrives.

Sincerely,
Garl B. Latham

Posted by gblatham | Report as abusive
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