Welcome back to Sunday reading.
This week I wanted to highlight a few important comments from Yonah Freemark (The Transit Politic). Yonah’s been having a look at the high cost to build infrastructure in the US, and the consequences that has for the quality of more or less everything in American cities.
— Yonah Freemark (@yfreemark) July 3, 2017
He took a more in-depth look at high-speed rail in an article entitled: “A generational failure: As the US fantasizes, the rest of the world builds a new transport system“:
Tomorrow, two high-speed rail lines open in France, providing new corridors for trains to slice through the countryside at 200 mph (320 km/h). One is a 302-kilometer link that will connect Paris to Bordeaux in the southwest part of the country. The other is a 182-kilometer line connecting Paris to western France. They’ll provide riders the equivalent of linking Washington, D.C. to Charlotte in just over two hours (versus an eight-hour Amtrak trip today), or Dallas to San Marcos in less than an hour and a half (versus a seven-and-a-half-hour Amtrak trip).
What’s remarkable about the completion of these projects is not so much their scale (though at €7.8 billion and €3.4 billion, respectively, they’re hardly a drop in the bucket), nor the improvements in connectivity they’ll provide (though they’ll slash travel times in western France for millions of riders every year). What’s remarkable about them is, frankly, just how unremarkable they are; for people in most of the world’s wealthy countries, high-speed rail services of this sort have become commonplace.
The U.S., of course, is the world’s notable exception. Over the past thirty years, almost two dozen countries have built up networks of collectively thousands of miles for trains traveling at least 150 mph. Since 1976, for example, France, Germany, Italy, and Spain slowly but steadily built up large networks, under varying political and economic environments (Japan had started opening such lines in 1964; see the bottom of the post for a similar graph including China). Americans upgraded a route between Boston and New York and created 34 miles of track capable of such speeds.
In the past, New Zealand has looked to the US for transport planning ideas – hence commissioning American motorway planners to design Auckland’s transport networks. There is very little value in doing that in the future: the new ideas, and the dynamism to implement and experiment, are now coming from elsewhere.
But there are a few trends in the US that are worth keeping an eye on. One important trend is the disruption of mall-based retail, department stores, and big-box stores by online shopping. In the US, that is starting to hollow out suburban labour markets and prompt a rethink of retail space. Noah Smith reports:
Think of any suburban area you know. It consists mainly of houses, some apartment complexes, low-rise offices and strip-mall shopping centers filled with retail and restaurants. Now imagine if half the stores vanished, leaving large sections of every strip mall boarded up. First of all, the restaurants and bars that remained in the shopping centers would lose a lot of their customers. As of now, many people drive to shopping centers so they can do their eating and retail shopping in one place — with retail gone, the fixed costs of driving to the local strip mall are the same, but the benefit is much lower. That would hit the bottom line of food and drink establishments.
Even worse, the empty, semi-abandoned strip malls could become centers of suburban blight. Vacant properties draw drugs and crime, cause fires, increase local violence and reduce property values in the surrounding areas. The retail apocalypse could make many suburbs look like they just suffered an actual apocalypse.
The decline of physical retail will thus force the U.S. to rethink its entire idea of what a city is for. Why do people live near each other, if not to shop at the same places?
However, it’s not all bad, provided that people are willing to rethink how suburban town centres work: Less driving and buying bulky goods; more walking around and dining:
So even if physical retail dwindles, urban and suburban living will not vanish. It will just change. Towns and cities across the country will have to consolidate into a more compact form, to eliminate the gaps left by vanishing retailers — in other words, sprawl will have to be reduced. Strip malls will still exist, but they’ll be fewer in number. And preference for pedestrian-friendly streets will probably increase, since walking around is nicer when going out to eat than when buying a new vacuum cleaner.
Rebuilding the suburbs will mean a lot of spending at the local and state level. But perhaps that’s not such a bad thing. Working-class Americans need jobs, and this sort of epic construction project would create a lot of them. If the retail apocalypse leads to a suburban renaissance, maybe it’s something to be relished rather than feared.
Street design standards will have to change.
While every motorist comfort factor is designed into this road, this lady has to mount a curb just to push a button pic.twitter.com/5r4QwRSXrj
— Don Kostelec (@KostelecPlan) August 16, 2016
On the topic, Diana Budds (Fast Company Design) writes about the science on urban design:
To shed more light on the role of design in civic life, CfAD surveyed over 5,000 people from 26 different communities–and different socioeconomic groups and races–across the United States to quantify how urban design makes them feel. The researchers conducted photo-based experiments, showing respondents images of the same public space with minor changes–like different signs and more greenery–in order to go beyond anecdotal associations and toward causality about the impact of different interventions. It’s a step forward in establishing urban design as essential–and not merely “nice to have.”
The results–published under the title The Assembly Civic Engagement Survey, or ACES–is one of the the first empirical research studies to do so. It found that simple interventions can make a big difference in how people perceive their cities. Here are three takeaways:
The Surprising Impact Of Seating
The study found that more public benches make people feel more satisfied with their cities. Communities that think they have adequate public seating were 9% more satisfied with police, and trusted government 7% more than communities that felt their seating was inadequate. Meanwhile, an adequate number benches in public spaces was connected to 10% higher civic trust and 4% higher public participation.
While the survey doesn’t say that more benches somehow equates to more trusting citizens, having more places to sit can make buildings feel more welcoming and open–having a tangible effect on how people perceive their cities and police…
On a completely different note, Seattle recently raised its minimum wage to US$15/hour, or around NZ$20.50, which was a big step up on their previous minimum wage. Several new studies investigate whether or not the minimum wage hike has affected employment in the city, with slightly different results: one found that it had lowered employment among low-wage restaurant workers, and one found that it had no measurable effect. Chris Auld provides “a simple, non-technical to the dueling Seattle minimum wage studies” – well worth reading if you’re interested in the topic or curious about the empirical methodologies that economists use to study tricky policy questions:
We will never be able to “prove” what the effect of the minimum wage was: that’s not the way statistics work in general, and in a case study like `what was the effect of the 2015 increase in minimum wages on employment in Seattle?’ the best we can hope for is to bring some suggestive evidence to the table.
How did the researchers attempt to estimate the effect of Seattle’s minimum wage, given these issues? It may at first glance seem easy: we just look to see whether employment in Seattle went up or down after the minimum wage increased. This intuition is what many skeptics have in mind when they critique the UW study’s finding of negative effects on employment: employment in Seattle rose during 2015 and 2016, so the UW study must be wrong, they claim.
The problem with this argument is that employment rises or falls for many reasons other than the level of the minimum wage. Suppose for the sake of argument that Seattle actually created, say, 10,000 net low-wage jobs following the increase in the minimum wage. The causal effect of the minimum wage on employment is not, then, +10,000, it’s 10,000 minus the number of jobs which would have been created if the minimum wage were not in place. If 15,000 would have been created without the minimum wage hike and 10,000 were created with the hike, then the minimum wage hike actually destroyed 5,000 jobs, even though 10,000 jobs were created after the policy went into place.
To illustrate this point with the Seattle data, consider this graph:
In the absence of the minimum wage hike, the graph above might have looked more or less the same but with a slightly steeper increase in employment starting in 2015. This possibility is illustrated on the graph by “counterfactual Seattle.” The red line shows actual employment. The blue line shows what might have happened if Seattle hadn’t increased the minimum wage (entirely made up, assuming a causal effect of the minimum wage of zero in the month implement rising linearly in magnitude to negative two percent two years later). If we knew, somehow, that the real world was just like the graph, that is, we somehow knew that employment would have followed the blue path if counterfactually Seattle hadn’t hiked its minimum wage, we would conclude that the minimum wage hike decreased employment even though employment in our world actually rose following the hike.
Taken together, the studies probably indicate that the minimum wage hike had a small negative effect on employment for a small subset of all workers. But one question they leave unanswered is: How much should we care about this? Does a small negative impact on employment in one part of the economy outweigh a wage hike for most remaining workers?
To close out the week, an interesting New York Times article about economic geography, trade, and electricity prices. Binyamin Appelbaum investigates why Iceland exports so much aluminium:
REYDARFJORDUR, Iceland — Where did the United States’ aluminum smelters go?
More than 30 of the giant factories once dotted the American landscape, sucking down huge amounts of electricity to produce the metal for car parts, beer cans and aluminum foil. Now there are just five smelters — all facing an uncertain future.
President Trump blames China for flooding global markets with subsidized aluminum. In April, he ordered the Commerce Department to consider quotas or tariffs to shelter American producers from foreign competition. He promised a revival that would create jobs for “lots of wonderful American workers.”
But the jobs, for the most part, didn’t go to China. American aluminum was in decline long before Chinese production began to grow. The more complicated truth is on display here, on Iceland’s remote eastern shore.
A generation ago, this hamlet was a herring town, a place where almost everyone made a living from the sea. Today, people work on the flats of the spectacular fjord, where America’s largest aluminum company operates its newest smelter.
Alcoa, formerly the Aluminum Company of America, and another American company, Century Aluminum, have opened factories like this in Iceland, and closed factories in the United States, for a simple reason: Electricity is much cheaper here.
This year, tiny Iceland is on pace to make more aluminum than the United States. So are its fellow hydropower superpowers, Canada and Norway.
The article nicely highlights why globalisation of supply chains can’t be unwound without causing additional economic pain. If the US put tariffs on imported aluminium, it wouldn’t necessarily cause firms to re-open smelters in the US. Instead, it might cause manufacturers that use imported aluminium to move offshore:
the aluminum industry does not want to bring back the jobs that have moved to Canada and Iceland and other countries where American companies now have operations. The domestic industry is increasingly focused on turning aluminum into parts and products, a business that depends on the flow of trade. Bauxite may be mined and refined in Jamaica, shipped to northern Quebec for smelting, then hammered into car parts in Alcoa, Tenn.
That’s it for the week! Enjoy the weekend.