Peak Car?

The economist has a nifty little discussion about the decline of the car in high income countries.  Here are two provocative graphs:

The first is a bit of an awkward stat: if folks are buying more cars the amount of work each has to do would presumably decline.  But the economist assures us that the trend remains if you look at total distance, distance per driver or total trips made. Also true is the fact that the youngsters are driving less: what once was a right of passage in the US is no longer - the percentage of teens with a driving license has declined dramatically since the early eighties (whew!).   On the other hand, older folks are driving in greater proportion (watch out!).  (Maybe road safety is a wash....)

All this makes me think of the criticism of the new streetcar line and the new MAX line - perhaps it is all justified, but the urban world in changing and the more we credibly commit to transit (read: fixed route transit) the more we may see such long term shifts in habits.  I am not ready to subscribe to this line of thinking but I am willing to consider it.

The Crisis in Comparison

Josh Lehner of the Oregon Office of Economic Analysis has a great post up on his blog that looks at US job losses in comparison to other financial crises (a opposed to previous US recessions).  It is a great post and has been picked up by The New York Times.  Go to Josh's post for the full story (and the NY Times for their take) but here are two provocative graphs.

The first is the now familiar job losses in this recession compared to post WWII recessions in the US courtesy of the NY Times:

Looks pretty grim, and it is, but you might be tempted to think we have done a pretty terrible job managing this crisis (and before you get partisan, both the Bush and Obama administrations, along with the non-partisan Fed chief, have managed this crisis), but if you compare our performance to other financial crises in the world you get a different picture.  Here is Josh's graph:

 Fascinating stuff Josh.

Portland Home Values on the Rise

The Case-Shiller July numbers are out and Portland, though far from being the best, is looking pretty good. Home values in the Portland area increased 1.2% between June and July and 3.2% from July 2011 to July 2012.  This puts Portland about middle of the pack.  The Wall Street Journal has a nice interactive graphic that is sortable by monthly and annual change.  

Given where long term interest rates are and the resulting amazingly low mortgage rates, the housing market is starting to look like it can finally sustain a rise in home values.

Fun With Apple Maps

Yes, it is buggy.  I tried it out on my way down to Corvallis yesterday and it insisted I needed to jog around the back of Barbur Foods to get onto I-5 south from Barbur Boulevard (even as I was entering I-5 it was still trying to re-route me).  Then on the way back the turn-by-turn directions feature was not working and I could not reset the "current position" to my current position.  Finally the traffic feature is minimal and pretty darn unhelpful and hard to see.

Unfortunately, once you upgrade to iOS6 you cannot recover Google Maps.

What is better about it than Google Maps?  Well, when it worked the turn-by-turn directions were great,  along with the 3D view.  The maps are clearer and easier to read than Google as well.  But I really miss Street View.  

You have to think that if Steve Jobs were still around, this would have NEVER seen the light of day until it was perfect.  Which is a really bad omen.  Time to sell Apple stock?

Sabbatical

I suppose now is a good a time as any to let you, dear reader, know that my first ever sabbatical has now commenced.  It has been 12 years since I joined the academy, but such was my enthusiasm to return to Oregon that I left the University of Colorado just as I was up for my first sabbatical - only to have my clock reset and to wait another 6 years.  Well that 6 years has ended and now I get to immerse myself in research.  What this means for this blog is probably a little less regular posting, but that trend has already started this summer so I imagine little noticeable changes.  More noticeable changes will occur when I travel to Brazil for extended periods - right now late October to late November and probably the entire first half of 2013 as I will be taking up a position as a Visiting Professor at the São Paulo School of Economics Fundação Getulio Vargas.

While there I will be engaged in a few research projects. The main one being the study of the impact of working as a child on academic performance. Another one is investigating the impact of microloans on recipient households.  I am also at the beginning stages of writing an intermediate microeconomics textbook that takes an applied policy approach for Pearson, a text which is designed to be delivered on-line and highly interactive.  So, I'll be plenty busy.  For now though this blog will plod along as always.  This fall has provided a number of interesting policy discussions and, though I have not been as engaged as in years past, I hope to chime in form time to time about them.

NOTE: This also means if you come looking for me in Corvallis, you will not find me.

Even Better Picture of the Day: OTTERS!

What else is there to say? Otters rock.

BENJAMIN BRINK/The Oregonian

From the Oregonian, news of Otter week at the Oregon Zoo and that Oregon Coast Aquarium.

Picture of the Day: Global Trade Falls

From the Wall Street Journal.  The crisis in Europe shows itself in trade data.

Oregon August Unemployment Rises to 8.9% but Strong Job Growth

Title kinda says it all:

A very good jobs number but another small increase in the unemployment rate.  Its the jobs that matter and this number is a good one led by strong gains in manufacturing and despite another loss in government jobs.

Picture(s) of the Day: College Pays

From Catherine Rampell at the NY Times' Economix blog two nice graphics from the Hamilton Project that reminds us, once again, that while college is getting more expensive and student debt is on the rise, the investment you make in your own human capital is one of the best investments you can make.  The first looks at the proportion of income earners that have college degrees, some college, etc., broken up by income level:

The second confirms that in present value terms, the investment in your own human capital is better than a lot of other alternatives. Interestingly an associates degree is especially good:

Don't be persuaded by reports of debt burdens and college graduates working in coffee shops - over the lifetime, a college degree pays off big time.

Tax Reform in Oregon

I am following with some interest the latest foray in to state 'tax reform' by the governor.  I think it is a good time to repeat what I have said and documented in these pages many times: A sales tax will not provide revenue stability in any significant way.  This is not hard to see, just look across the Columbia and you will see a sales tax dependent state that is struggling with revenues as much or more than is Oregon.  No surprise this as income and consumption are very highly correlated.

What Oregon needs is fiscal stability not revenue stability.  Revenues will never be stable, but our budget can be stabilized through a sensible rainy-day fund.  Other states have them and benefit from them why can't we?  The answer is that whenever we talk about taxes both those that want taxes higher and those that want them lower start jumping in and saying they will withhold support of a rainy-day fund unless they demands are met.  This is stupid and destructive.  

But since still we are talking about tax reform, let's at least talk sensibly.  I don't know what to make of the tortured logic of the Oregonian editorial board this morning: 

But Oregon is much less tax friendly to small business. The gap arises in large part because of the way small businesses are structured and the way Oregon taxes the two most common types of corporate structure.

Traditional corporations pay corporate income or excise taxes. Those rates top out at 7.6 percent. Many small businesses are structured as what the Internal Revenue Service calls S corporations. These businesses do not pay corporate tax, but owners, whether a sole proprietor or shareholders, pay taxes at the personal income tax rate. Owners of sole proprietorships and partnerships also pay at the individual rate. In Oregon that rate tops out at 9.9 percent.

Um, what? If I am a small businessperson and my income comes from the revenues of my business, why should that income be taxed at a lower rate than someone who works for a third party? They say earlier that:

The amount of taxes paid by businesses varies widely, according to circumstances. For example, Oregon's lack of a sales tax improves its score in tax rankings, but sales taxes are a relatively small expense for many businesses.

But this is nonsense - if I am a small businessperson, I pay an income tax on the income I earn from my business, just like everyone else, but then I don't have to pay a consumption tax so my overall tax burden is quite modest, just like everyone else. Comparing the individual income tax rates to those of C class corporations makes little sense. Those corporations pay lower taxes, but their employees pay income taxes.

Which is really all to say that don't fall into the trap of thinking of a sales tax as that much different from an income tax, you have to think of these two together when thinking of the overall tax burden on individuals.

Soccernomics: Once More About the Pitch

Okay, since it is Friday, I am fried and the Big Game is tomorrow (and I am not referring to the Ducks versus Tennessee Tech), let's revisit one of my favorite topics: the tiny little field at Jeld-Wen.

This is a topic I have ranted about on numerous occasions.  My complaint was not just the size but the size and the turf combo that makes for particularly unattractive soccer.  I was complaining about this as the stadium was being renovated for the arrival of MLS, but soon after MLS came to Portland, comments about the field starting coming in waves: Bruce Arena, Peter Nowak, Robert Warzycha, Frank DeBoer, Dan Gargan, Ben Olsen.  The Timbers were defensive, touchy and not a little bit patronizing in response:

At 70 yards wide, 110 yards long, the pitch at JELD-WEN Field is FIFA certified and meets the governing body’s guidelines as well as those of MLS. Field dimensions are not fixed from one pitch to the next and are a bit like Major League Baseball ballparks in that sense.

The oldest club in English Premier League soccer, Stoke City, play in a stadium with exactly the same dimensions as JELD-WEN. Do other EPL teams complain that it is too small?

Um...why yes, they do.  Stoke didn't need such a small pitch, their stadium is very big, but they did it for strategic reasons so they could win by playing defensively.  This year, in response, the Premier League stopped Stoke from fiddling with their pitch size:

Whereas previously clubs had discretion about the size of their pitch (within quite broad parameters), now they all have to comply with the UEFA standard of 105m by 68m (which, in old money, equates to more or less 115 yards by 74 yds).

So it comes with quite a bit of happiness that the Timbers have announced that they plan to widen the field for next season.  

Portland general manager and interim coach Gavin Wilkinson said the team will widen the field at Jeld-Wen Field for the 2013 season.

The plan is to add two yards on each side of the field, bringing the dimensions to 74 yards-by-110 yards.

"It's something that would be a natural development for us as a team," said Wilkinson, who was named coach of the week by MLSSoccer.com after the Timbers 2-1 win against Vancouver Saturday.

"Coming in as an expansion team, we wanted a tighter area with which to play, to feed off the emotion."

The current field dimensions is one of the smallest in MLS and has drawn some criticism from opponents.

Wilkinson said the move is to help give the players more room for creativity and athleticism, but the plan was in motion before the search for a new coach had started.

It comes with quite a bit of consternation, however, that they have chosen to dissemble and make it sound like this was the plan all along and its all part of a long term scheme.  Bullshit.  They even made their practice fields the same small size (which really baffles as every other field they play on ion MLS is quite a bit larger - no wonder they can't win on the road).  What they have finally done is get over their defensiveness and listen to what a ton of very knowledgable people have been saying about their pitch.  I am sure they have not been listening to the ignorant people like me but I stick to my assertion that a small artificial pitch makes for unattractive soccer. I accept their apology.

Unfortunately they will only make it wider, not longer because they sunk the goalposts in concrete and I assume, until they replace the turf, moving them is not an option.  This is a shame, because the field needs to be bigger all around: 75 x 115 is ideal.  But it also goes to show how no one was thinking of a bigger field from the start.

Speaking of the pitch, it is a shame it has to be turf (and I have come around long ago to the notion that it does).  Watching the US national team in play in a similar sized field in Columbus just reminds one of the types of events that could take place in Portland if there was a grass field.  Maybe one day they'll figure it out.  

Fluoride in the Water - A Dissenting View

Well, perhaps not a dissent as I was opposed - but my opposition was not on the public health merits of fluoridation which I conceded, but more on the libertarian grounds of government intrusion where it is not welcome.

But as I mentioned very smart people can disagree and here is one that does.  Coert Olmsted e-mailed me and was thoughtful and polite and as his comment is too long for the normal comment process I told him I'd post it here:

I am a retired university scientist with a PhD in Applied Math, a 30 year professional career in scientific data analysis and decades of community involvement experience. I’ve actively worked the fluoridation issue for many years and consider myself to be a smart person. Some might even call me very smart. I am not, however, very, very smart – only very, very careful about information and very, very much into common sense, responsible medicine and the precaution principle.

To think that fluoridation is an innocuous topic and the policy decision to implement it a slam dunk is, to me, not very smart at all. About 2.5 years ago I studied the paper by Griffin, Jones & Tomar claiming that for every dollar spent on community water supply fluoridation (CWSF) there are $38 saved on avoided dental treatment costs. As a service to the Fairbanks Fluoridation Task Force appointed by Fairbanks (Alaska) Mayor Jerry Cleworth in 2010, I wrote and provided a review and critique of this peer reviewed study, reporting that their “secondary research is a tightly narrow examination of the strictly microeconomic effects of CWSF over selected sample communities. Like most industry oriented economic analysis, it examines as little data as possible which will still provide a computable cost-benefit number.”

 Furthermore they neglect any externalities associated with harmful side effects of fluoridation. In fact the authors justify ignoring these external costs because, in their words, “adverse effects resulting from water fluoridation exposure are negligible.” This is all the further they investigate possible negative side effects. A quantitative measure of how small is "negligible" is not given, nor is any reference to scholarly research on the subject provided. The only citation (#14) is to an unpublished internal US Public Health Service report: "US Department of Health and Human Services. Review of fluoride benefits and risks. Report of the ad hoc subcommitee on fluoride of the Committee to Coordinate Environmental Health and Related Programs. Washington, DC. US Public Health Service, 1991." 

There is no consideration whatsoever given to external costs associated with control and cleanup of accidental spills of silicofluorides nor health and administrative costs of responding to accidental overfeeds of fluoride into community water systems. These kinds of events are very costly, can be deadly, and are not at all infrequent.

Also unmentioned are the very significant costs of cosmetic and dental treatment for tooth damage due to dental fluorosis. It is officially acknowledged that CWSF significantly increases the incidence of dental fluorosis, but it remains an axiom of the pro-fluoridation community that dental fluorosis is primarily a "merely cosmetic" effect. No dental research is cited to justify this assumption, nor is any scientific source or argument advanced in its favor. It is, in fact, a policy axiom settled upon long ago by unidentified authorities within the public health professional sector. In my experience, this kind of information is called "folklore" by scholars and occurs at many levels, even in advanced applied mathematics. In the context of CWSF, however, it covers up major consequences.

To continue citing a narrowly derived and unqualified cost-benefit number as widely as possible, promoting it as a definitive result justifying the benefit of a major public health intervention policy, dismisses 20 years of very important research conducted at the highest level all over the world which shows incontestably that adverse effects of CWSF are far from “negligible”. But it is what can be expected from a CDC team working to back up their directors claim at the millennium that “CWSF is one of the 10 greatest accomplishments of 20th century public health in the USA.” When I hear top bureaucrats promulgating this kind of self-adulatory congratulation, I reach for the ‘mute’ button on the remote control.

So fluoridation does not “make policy sense”, and it amounts to willful ignorance to say, “sure, everybody else does it.” In fact fluoridated communities make up a small fraction of the world population. In India and China it is regarded as a high crime to fluoridate public drinking water. In Europe less than 2% of the population is served by CWSF. In Sweden the practice was prohibited decades ago and a very, very smart man there, Arvid Carlsson, 2000 Noble winner for Medicine, explains very clearly and persuasively why he strongly advised his government against CWSF.

I also find it incongruous that a provider of “Beeronomic” analysis would have no objection to CWSF. After all, Portland is one of the major centers of successful American craft brewing. At least two national breweries, Olympia and Coors, have made the core of their advertising campaigns a focus on the purity of their water supplies. Surely there is a lesson there. Martinellis went to considerable expense digging a well recently when their home town, Watsonville, CA, became fluoridated. They knew it would hurt their national market share in new water based beverage products.

To anyone interested, I can provide many documents and references for all the above assertions. 

Sincerely,
Coert Olmsted, PhD

Professional Data Analyst

Scientific Advisor, Fluoride Free Fairbanks
C.Olmsted@post.harvard.edu

As a note, is incorrect to say I have no objection, in fact the point of my post was to object and mostly along the libertarian cry of 'leave our wonderful water alone.'I will say, however, that I remain convinced by the scientific evidence that there are net positive effects of fluoridation.

The Beer Distributor as Agent Model of Craft Beer

Ooops, that was a first - accidentally posted to the wrong blog.  Go here to read the sudsy stuff.

Fluoride in the Water

I have watched, with some amusement, the debate over fluoridating Portland's drinking water.  It amuses me because when the topic was brought up by Commissioner Leonard I knew what was in store, having lived through a similar debate in Ithaca, NY.  What I knew from the Ithaca experience is that very, very smart people can disagree on fluoridation and that very, very smart people can get apoplectic about such a seemingly innocuous topic.

From a pure public policy perspective, it is pretty close to a slam dunk, the public health benefit far outweighs the cost.  But the idea that you would put something in the water is jarring to people, forcing them to ingest something rather than leaving them the choice is where a lot of people draw the line on government intervention.

And I think that those in charge ignore this sentiment at their peril.  The way that the fluoridation proposal has been handled seems to me a bit heavy handed.  Sure, fluoridation makes policy sense, sure everyone else does it, but Portlanders have a particular affection for their water - it is one of the real benefits of living in this city, pure Bull Run water delivered unadulterated to our homes. There are lots of things government could do, but we should be prudent it what government does do, especially when it entails something so intrusive.

I, for one, have no problem with fluoride in the water and see the public health benefit from such a policy.  But I, were I a city councilperson, would hesitate to vote for fluoridation.  Providing fluoride tablets, fluoride toothpaste, education about fluoride, sure, but I think we must be judicious about the intrusion of government in people's lives. If it were not Portland and its pristine water perhaps I would feel differently, but it is easy to understand why people don't want to mess with the natural environment with which we in the Northwest are blessed.

US Unemployment fell to 8.1% in August

...but (you knew there was going to be a but) the number of new jobs added was a pathetic 96,000.

Not good.

Kaushik Basu Named New World Bank Chief Economist

Still sick - ugh! But cheered up considerably by the news the the World Bank has named Kaushik Basu and their new Chief Economist.  Kaushik, as some readers my remember, was my dissertation committee chair at Cornell, is a co-author of two of my research papers, is a good friend and was and is an incredible mentor to me.  I still consider the opportunity to study under Kaushik the most fortunate thing to happen to me professionally, he is an exceptionally thoughtful, intelligent and creative economist.  But more importantly he is a wonderful human being - caring, curious, funny and compassionate.  Both sets of traits will serve the Bank - and the world - very well.

Southern Hemisphere Blues

I suppose when you travel to South America in the heart of their winter you should expect to be exposed to various bugs.  But São Paulo was so incredibly lovely - mid 70's temperatures, sunny, breezy and no humidity to speak of, as good as you could hope for in other words - that one tended to forget it was winter.  [Though the unsettled feeling among locals was that this weather was not a good sign in general]

Anyway it so happened that I caught one king-hell of a flu virus to which I apparently have no resistance and have thus been laid low these last four days...and counting.  And by low I mean sub-terrainian: fever, aches, nasty sinus pain, coughing, nausea, you name it.  I haven't been this sick in decades.  I hope to rally to take my kids to their first day of school tomorrow but it looks unlikely.

Less likely still is any blogging for the time being.  Sorry.