Welcome back to Sunday reading. It’s been a pretty interesting week in New Zealand politics, if you’ve been reading. But that’s not what this is about, so we’re not going to talk about it.
Here’s a thought-provoking factoid about technological progress, from humanprogress.org:
As the BBC recently pointed out, our prehistoric ancestors needed to gather and chop “wood 10 hours a day for six days… [in order to] produce 1,000 lumen hours of light… That is the equivalent of one modern light bulb shining for just 54 minutes, although what you would actually get is many more hours of dim, flickering light instead.”
Even when better alternatives, such as candles, became available, it was still prohibitively expensive to light the house for the common person. Further, the first candles were produced from animal fat and not from the clean burning paraffin wax we use today, producing a flickering smelly flame.
It wasn’t until the 18th century that spermaceti candles, which were made from a waxy substance found in the head cavities of sperm whales, and were much less time-consuming to produce, became more readily available. But even then, reading light remained very expensive (not to mention terminal for the whales). George Washington calculated that five hours of reading per night cost him £8 yearly – well over $1,000 in today’s dollars.
The light bulb changed everything.
By 1900, 60 hours of work could provide 10 days of light. The light bulbs would burn 100 times as bright as a candle, steadily, and inodorously. By 1920, 60 hours of work could already pay for 5 months of stable light. By 1990, that increased to 10 years of light. Today? 52 years.
And progress has not stopped yet. LED lights continue to become cheaper and cheaper.
The amount of labor that once bought 54 minutes of light now buys 52 years of light. The cost has fallen by a factor of 500,000 and the quality of that light has transformed from unstable and risky to clean, safe, and controllable.
On a different note, if you’re looking for a great read on how zoning reform and rapid transit tie together to make a better, more equitable city, I’d recommend this recent essay by Dan Savage, in The Stranger, a Seattle paper. It’s interesting in part because Savage is best known as a sex advice columnist. That says something about the degree to which new urban thinking has permeated pretty widely across society.
The only thing worse than listening to suburbanites bitch about being stuck in traffic? Listening to local politicians pretend they can actually do something to Make Commutes Great Fast Again.
Way, way back in the ’50s and ’60s, people got it into their heads that they had a constitutional right to live in the suburbs and drive in or through the center of a city—to jobs, to stores, to stadiums, to hookers, to suburbs on the other side of the city—going seventy miles an hour. Our local politicians can’t bring themselves to tell these entitled shits the truth: It’s never going to be the 1960s around here again, when expressways were expressways, not parking lots. We can’t build our way out of this. We can only build alternatives to cars, aka mass transit. (Preferably rapid transit, which is grade-separated transit. Without taking lanes away from cars, which we aren’t going to do, BRT is not rapid transit. It’s an oxymoron.) Mayors and city council members and county council members in cities with with functioning mass transit systems don’t have to make serious faces and reassure entitled drivers that they’re gonna do something to speed up their commutes.
This is how a conversation between an elected official and an entitled suburbanite might go in New York or Chicago:
“My commute is awful! I sit in traffic for hours!”
“Then take the train.”
“I don’t want take the train.”
“Then sit in traffic, asshole.”
Sit in traffic or take rapid transit: those are your options, when you live, work, or play in or near a big, thriving urban center with a functional rapid transit system. New York, Chicago, Portland, D.C., London, Paris, Vienna. Complain about your commute and you’ll be told to pick one: traffic (that you and your car help create) or transit (that you and your taxes help subsidize). Politicians in cities with functional (that’s functional, not perfect) mass transit systems—where they still spend a lot of money maintaining roads—don’t have to waste billions of dollars on bullshit tunnels supposedly designed to “preserve capacity” but really intended to assuage the irrational anger of entitled drivers whose votes they need.
He also takes on gentrification and displacement:
Housing scarcity—exacerbated by the ridiculous amount of this city zoned for single-family housing—deserves as much blame for the displacement crisis as gentrification. More. And unlike gentrification (“a once in a lifetime tectonic shift in consumer preferences”), scarcity and single-family zoning are two things we can actually do something about. Rezone huge swaths of the city. Build more units of affordable housing, borrow the social housing model discussed in the Rick Jacobus’ piece I quote from above (“Why We Must Build“), do away with parking requirements, and—yes—let developers develop. (This is the point where someone jumps into comments to point out that I live in a big house on Capitol Hill. It’s true! And my house is worth a lot of money—a lot more than what we paid for it a dozen years ago. But the value of my house is tied to its scarcity. Want to cut the value of my property in half? Great! Join me in calling for a radical rezone of all of Capitol Hill—every single block—for multi-family housing, apartment blocks and towers. That’ll show me!)
There actually is something we can do about gentrification and displacement. We can’t stop it. Snark can’t halt tectonic shifts. The thing we can do? It’s the same thing we can do about about traffic: build a truly regional, truly rapid transit system. A comprehensive regional rapid transit system will make displacement—being forced to move from one neighborhood to another by economic forces beyond the control of our local elected officials—less devastating and less isolating for those who will inevitably be impacted.
But not all cities are facing the same challenges. Some are shrinking, not growing, as the economic forces that spun them into existence dissipate. This isn’t just happening in the American Rustbelt and north of England: As a Financial Times report by Kate Allen shows, it’s a global phenomenon:
The city of Yichun in north-east China’s Heilongjiang region grew in just decades from a scrubby outpost near the Russian border to a boom town, thanks to its staple industry: logging. More recently Yichun has begun to struggle; its population fell by 111,000 between 2005 and 2015 according to UN data. Decades of unsustainable deforestation had taken its toll.
The city is now classified as one of China’s “resource-depleted” cities, and the lack of ground cover means that it suffers from devastating floods.
Yichun is not alone in its economic struggles. Last year China announced a five-year financial support package for its north-eastern rust belt to help the “resource-depleted” cities cope with bankruptcies and cover environmental clean-up costs.
Yichun’s economic rise mirrored the booms that previous generations of industrialising cities have enjoyed, stretching right back to the first cases of industrial revolution in places such as the cotton towns of north-west England.
Yet some emerging cities, such as Yichun, have begun to catch up with their counterparts in the developed world in another way, too: their economies have peaked and they are deindustrialising.
Here’s a map. The entire article is fantastic:
Locally, Dunedin has been deindustrialialising, first rapidly in the 1980s and 1990s and then gradually with the slow trickle out of long-established manufacturing businesses. In The Spinoff, Peter Newport reports some local views on the future of Dunedin after the closure of the Cadbury plant. (Other than Dunedinites switching to Whittakers.)
In terms of having a relationship with a city, Dunedin is my first love. But now, on frequent visits, I worry a lot that this Edinburgh of the South is losing her charm, looking tired and losing her way. To me, this gorgeous stone-clad stunner of a city is looking dangerously close to drifting backwards rather than forging forwards. It’s a very fine line.
And that dangerous word I really feel so nervous about using is: Dour. It’s so powerful because it sounds and looks like what it means. Relentlessly severe, stern or gloomy in manner or appearance. It’s a truly awe-inspiring word of Scottish Gaelic origin.
But don’t worry. This is a love story that will probably have a happy ending. But first here’s the problem.
Dunedin has really bad weather, if you like warmth and sun. It’s great weather if you like romantic sea mists, driving Gothic rain or winds that would make even a sturdy wooden sail boat creak and groan. It’s weather to drink whisky to.
The tiny airport is a very long way from the city and even a Thursday night in Dunedin can look like someone’s deployed one of those freaky neutron bombs that kill people but leave buildings intact. The moody red reflection of slightly old-fashioned neon signs in the slick, wet streets completes the impression of a place where you might not want to schedule your next company celebration or family holiday. I well remember my car getting locked into a parking building that closed at 6.00 pm.
That doesn’t mean, however, that the city is without hope. Quite the contrary. It’s just not likely to come from where you might have expected it. To navigate to the good news and how Dunedin is going to get to that great future that we all want the city to find I spoke to some of the key players in town. They were all wonderfully honest, direct and insightful. They left me feeling that things are going to be OK. Perhaps even better than OK…
Go on and read the whole thing. It’s an interesting on-the-ground perspective on the forces that the Financial Times conveyed in charts and maps.
Since we’re talking disruption, here’s an interesting chart: On average, European right-wing populism (or, if we’re not being PC, fascism) didn’t change after the global financial crisis. The countries with stronger fascist tendencies beforehand tended to be more fascist after the fact. Interesting.
Cool chart from Larry Bartels. pic.twitter.com/ohu74fw6SD
— Matthew Yglesias (@mattyglesias) June 22, 2017
On a different note, I think everyone in the transport world is trying to figure out what’s happening to Uber. They have disrupted the taxi market and promised to disrupt travel in general. But is it sustainable, both in terms of corporate culture and financial performance? I am increasingly skeptical that they will survive, let alone justify their current $70bn valuation. Ride-hailing apps will continue to have a role, but Uber’s wilder promises may not come true.
In the Houston Chronicle, Chris Tomlinson offers a pithy take on the whole shebang:
Uber’s financial situation needs attention as urgently as the behavioral problems.
At the last capital raise, Uber claimed to be worth $70 billion, an absurd number for a company that owns little more than some software and a huge data set. The company lost $2.8 billion last year and another $708 million in the first quarter of 2017. There is currently no CEO or COO in place to stop the bleeding.
Uber is popular because it operates in most major cities and its cheap. But the company’s investors are subsidizing every ride a customer takes because the fare only covers a fraction of the costs. The only way the company could make a profit without raising rates is to get rid of human drivers.
Since autonomous taxis are still a decade away, and raising rates will drive away customers, Uber’s investors need to find someone else to cover the company’s losses. That means taking the company public with an initial public offering. To attract new investors, Uber needed to get rid of Kalanick so that is operates more like a company worth $70 billion.
Now I understand that supporters believe the $70 billion valuation represents Uber’s potential to revolutionize personal transportation in the future. But no one can make the case that if Uber’s assets were liquidated tomorrow, it would be worth more than Ford, General Motors or Toyota.
To close with something controversial, Satyajit Das (Bloomberg View) writes that “the old are eating the young: around the world, a generational divide is worsening“. The rhetoric is emotional but the numbers are stark:
A significant proportion of recent economic growth has relied on borrowed money — today standing at a dizzying 325 percent of global gross domestic product. Debt allows society to accelerate consumption, as borrowings are used to purchase something today against the promise of future repayment. Unfunded entitlements to social services, health care and pensions increase those liabilities. The bill for these commitments will soon become unsustainable, as demographic changes make it more difficult to meet.
Degradation of the environment results in future costs, too: either rehabilitation expenses or irreversible changes that affect living standards or quality of life. Profligate use of mispriced non-renewable natural resources denies these commodities to future generations or increases their cost.
The prevailing approach to dealing with these problems exacerbates generational tensions. The central strategy is “kicking the can down the road” or “extend and pretend,” avoiding crucial decisions that would reduce current living standards, eschewing necessary sacrifices, and deferring problems with associated costs into the future.
Rather than reducing high borrowing levels, policy makers use financial engineering, such as quantitative easing and ultra-low or negative interest rates, to maintain them, hoping that a return to growth and just the right amount of inflation will lead to a recovery and allow the debt to be reduced. Rather than acknowledging that the planet simply can’t support more than 10 billion people all aspiring to American or European lifestyles, they have made only limited efforts to reduce resource intensity. Even modest attempts to deal with environmental damage are resisted, as evidenced by the recent fracas over the Paris climate agreement. Short-term gains are pursued at the expense of costs which aren’t evident immediately but will emerge later.
This growing burden on future generations can be measured. Rising dependency ratios — or the number of retirees per employed worker — provide one useful metric. In 1970, in the U.S., there were 5.3 workers for every retired person. By 2010 this had fallen to 4.5, and it’s expected to decline to 2.6 by 2050. In Germany, the number of workers per retiree will decrease to 1.6 in 2050, down from 4.1 in 1970. In Japan, the oldest society to have ever existed, the ratio will decrease to 1.2 in 2050, from 8.5 in 1970. Even as spending commitments grow, in other words, there will be fewer and fewer productive adults around to fund them.
Budgetary analysis presents a similarly dire outlook. In a 2010 research paper, entitled “Ask Not Whether Governments Will Default, But How,” Arnaud Mares of Morgan Stanley analyzed national solvency, or the difference between actual and potential government revenue, on one hand, and existing debt levels and future commitments on the other. The study found that by this measure the net worth of the U.S. was negative 800 percent of its GDP; that is, its future tax revenue was less than committed obligations by an amount equivalent to eight times the value of all goods and services America produces in a year. The net worth of European countries ranged from about negative 250 percent (Italy) to negative 1,800 percent (Greece). For Germany, France and the U.K., the approximate figures were negative 500 percent, negative 600 percent and negative 1,000 percent of GDP. In effect, these states have mortgaged themselves beyond their capacity to easily repay.
As a young person, it’s hard not to feel aggrieved at this injustice. I’m not necessarily that worried about the fiscal burden – tax rates were higher in the 1950s and 1960s, and that wasn’t a dystopia. But I stay up nights worrying about the damage we’re doing to our climate and the damage to our democracies caused by older voters’ embrace of terrible ideas like Donald Trump and Brexit.
So here’s a recommendation if you’re an older person looking to make responsible decisions about things with long-term ramifications. Rather than focusing on what you think would be best, ask some young people what they think would be best. And then follow their advice, even if you don’t personally agree.
Because here’s the truth: Young people are generally better educated, not because old people are stupid but because educational attainment has generally increased over the past 50 years. We’re more financially prudent, as shown by our higher savings rates. And we’re acutely aware of the problems that we’re going to inherit from older generations, and – by and large – voting or campaigning to prevent them before they happen.
That’s it for the week. Enjoy!