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.

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.

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…

View post on imgur.com

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.

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23 comments

    1. Paris- Bordeaux ? The section to Tours has been open since 1990. The extension to Bordeaux was done by a private finance- not the state- and will charge tolls for the train usage.
      The cost comparisons will be out too, if you only count the total distance Paris Bordeaux.
      The numbers I have seen give total costs at 9 bill euros, as the TGV swap in and out of the high speed line to access the city centres
      Much the same goes for the other line, its an extension of the existing TGV from Le Mans
      to Rennes

  1. The other great thing about the French TGV system is that by having consistent policy and a steady supply of work it is not that expensive and has made their rail industry much more efficient. Whereas NZ has no policy to fund rail or a consistent program of work the way the RONS program exists for road builders. (Sorry no, its for motorists!). Overall France spends about 0.7% of GDP on transport infrastructure investment. NZ spends 1.0 to 1.2% of GDP on transport infrastructure investment, mainly on new motorways. Hard to see how they are better value.

    1. Also it’s worth noting that the economic geometry of France, pretty much spokes radiating out from the hub of Paris, is less than ideal for the easy provision of a rail network. Unlike say the UK or Italy, both of which are much more linear (though Italy doesn’t have topography on it side, but that’s another matter). The Spanish have more to come on line too. But of course it is China that blows everyone out of the park.

      Asia/Europe v North America = Trains and electricity v planes and oil

  2. Wow too. So much to think about. This post is a request for more info about high speed rail. The French Eurostar is impressive and perfect competition for internal flights. I’m assuming the recent lines to Bordeaux and to the west are similar. Are they ‘green field’ tracks or serious upgrades to existing tracks. The latter would be cheaper but depend on the quality that they started with.
    My father was involved in the electrification of the west coast line from London to Scotland – the higher speeds needed curves straightening and the ballast deepening. The abortive attempt to develop the even faster high speed rail (over 150mph from memory) was killed by the cost of the upgrades and of course the lack of commitment from the government.
    I lay in bed at night dreaming of a high speed rail from Hamilton to Auckland and on to Whangarei. But it is a dream. To make sense high speed rail needs a large population and a comparatively short distance; so New York – Chicago or Auckland – Wellington will never compete with flights.

    The British could develop the excellent lines laid by Robert Stevenson from London to Birmingham about the period the Treaty of Waitangi was signed but as a newcomer it does seem that rail in NZ was done on a shoe string with no thought for the future.
    [Future planning did occur in NZ; I heard that the engineer on the Harbour Bridge was told to reduce the size to four lanes but he quietly left the piers strong enough to hold eight – does anyone have any other examples to cheer me up?]

  3. Some people quote the cost of PT and high speed trains.
    Obama was roundly criticized by the Republicans and others that H.S. rail would be a complete waste of money.
    I think that some resist spending $3 billion or more on PT but rarely comment about the always increasing $100″s billions spent on guns.

    1. I think one of the articles regarding the Iraq/Afghan wars was the overall cost was more than it would have cost to build a whole US HSR network.

  4. Yes, high-speed rail must be a competitive and greatly more environmentally better alternative to air travel. Easier to have a higher frequency & effectively faster travel time than air as it currently stands?

    1. The HSR in California is supposed to be comparable in time to flying between LA and SF, but that’s only if you assume HSR will have no security. With a train at that speed, a bomb would be just as deadly as in the air so I have to assume it would have airport-style screening.

      1. “With a train at that speed, a bomb would be just as deadly as in the air”

        I think not. Aircraft are pressurised, of light construction and operating at altitude. High-speed trains are not.

        1. True, but irrelevant. It’s still an enclosed vehicle travelling bloody fast, taking a very long time to stop.

          I’ve not taken a high speed train outside of China (and then only once), however even in Shenzhen they have airport like security. We weren’t able to simply purchase a ticket on the day (needed to book 14+ days in advance) and needed to show either a passport or Home Return Permit to collect the ticket. Armed police all over the unsecured passenger hall. Proper international airport security screening to enter the secured passenger hall. We returned via domestic air, with _less_ security…

          Admittedly China is a special case, due to terrorism threats – However that’s in an incredibly low risk part of China.

          The question will become not if there is security, but what level of security will be present.

          Of course, for the sake of argument we’re ignoring the “proper security vs security theatre” argument.

          1. There is currently no “airport style” security on European high-speed rail (except for Eurostar, which incorporates stringent border control).

            On TGV or ICE you can just walk on, even where your journey may cross to another country. Not sure about AVE, but would be surprised if that were any different.

            I confess to feeling a twinge of concern, during a recent high-speed journey from Germany to France. Was the muslim woman sitting opposite me and reading the Qu’ran for the entire journey just an innocent member of the travelling public, or was she a radical with a bomb in the bag she had with her? Happily nothing untoward occurred, but there was no screening that I could see to prevent that possibility.

  5. “The Surprising Impact Of Seating” – looking at the stats I’d say surprisingly low impact. However for GoldCard holders a friendly clean public seat is most welcome even if it has no effect on our attitudes to the police. They are also very adult with a pre-school child friendly. Third group are students with heavy books waiting for buses.

  6. Minimum wage is a political issue. But rather meaningless to discuss in New Zealand with our downsized labour inspectorate and a large chunk of our immigration policy intertwined with ‘widespread worker exploitation’ (see Auckland universities Prof Christina Stringer’s devastating report).

      1. Heidi: I hate to disagree with such an obviously kind and intelligent person but you may have missed the recent article in the Herald about NZs failure to get its anti-slavery legislation to catch up with Australia and the UK. You can check the anti-slavery Index website and NZ doesn’t look too bad until you see the estimated number of slaves has increased by a third in the last few years. This is a critical moral issue for all New Zealanders.
        Wage rates are a fairly ordinary moral issue in comparison and you can be like the Swiss and have no minimum (they had a referendum) and not actually wreck your society (nb no minimum makes the employment of the mentally handicapped easier).
        My local Indian restaurant was prosecuted for paying $3 per hour! Sort that out and then decide on a minimum. (BTW I like the ‘living wage’ myself but it is something that is debatable. Unlike slavery.)

        1. Obviously that’s awful and we need to do something about it. Why does that mean we can’t also talk about the minimum wage?

          1. Of course you can talk about min wage. But a means of ensuring that it is being actually being paid is essential otherwise you are wasting your time.

            OK some worker exploitation will always occur but it is the word ‘widespread’ that should be a awake up call. There are businesses willing to cheat and giving them the ability to threaten employees with lose of right to reside in NZ is the root of the problem.
            It can be controlled by Andrew Little’s policy of increasing our labour inspectorate (reduced under our current gov) and they should concentrate on small businesses that employ non-citizens. Since most of us are unwilling to endure exploitation it applies mainly to workers from countries poorer than NZ who also have less than a graduate degree and are the principal candidate on their immigration visa. Some are exploited before they reach NZ by corrupt foreign agents and many never achieve permanent residency. Simply tweaking our rules and making them clear would improve matters considerably.
            Read the report – among the many cases in different trades it contains things like women being told to enter the sex trade to repay their airfares to NZ.

          2. Nice to come online and see a compliment. 🙂 Thanks for the reference to the report, Bob. It does make grisly reading, and confirms anecdotal information: I know a young person who was employed at an upmarket bakery only if she enrolled for the dole, with the bakery “topping up her hourly wage by $3”. I know a young person who had been working in restaurants, but the under-the-counter wages paid to people willing to accept them – around $5/hour – meant he was powerless to ask for more.

            You’re welcome to give me something to read and consider about how stopping the minimum wage might help in reducing slavery.

            Paying less than the living wage puts children in poverty, which shackles them with avoidable problems for a long time. Even the living wage has been worked out as the bare minimum required to be able to contribute to society IF you are in a 4-person household, with 1.5 jobs AND your accommodation costs are those of an average NZ rented dwelling. So a single parent living in Auckland cannot support children on the living wage. Let alone the minimum wage.

            So it seems to me that slavery and low wages are two parallel consequences of greed that should be approached at the same time. In horticulture – which has been my area of research for the last few years – low wages and the seasonal worker scheme keep a constant destabilising influence in the market that undermine businesses that treat workers well.

            I absolutely agree the government needs to increase its labour inspectorate.

  7. Thanks for the link to the ACES study. Some more interesting tidbits include:

    -respondents living near parks with few entrances or parks surrounded by busy streets report diminished levels of civic trust and appreciation. (This fits with my observation.)
    -the simple presence of a community garden is associated with increased levels of civic trust and stewardship, regardless of the level of maintenance of the community garden. Whereas playgrounds need to be well maintained to be associated with increased levels of civic trust and stewardship.

    Because of the size of the survey, it will be useful. It is a pity it did not cover these variables (although I’m hopeful that there will be more large surveys like this, of course):

    -harsh geometry, sharp lines of architecture in public plazas, etc, which smaller studies have shown are associated with less civic trust.
    -the need for large and small parks, related of course to proximity.
    -the need for different types of parks. I’m aware that many autistic people need a very ordered, low-sensory garden, whereas other people have need for high-sensory gardens. And for the majority of people, we benefit from being able to choose between different sorts of parks.

    1. Thanks for the summary. I’ve decided to check it out myself to see how the allowed for variables such as wealth/poverty, time of day, population density, diversity, traffic, local newspapers reporting incidents, etc.
      As a dedicated grump old guy on this website I have to admit to really appreciating the maintenance of small civic gardens in North Shore – superb plantings in Northcote and Highbury retail centres for example.

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