WaPo has columnists who often see the world as it is: Warren Brown in one. Another is Steven Pearlstein who appears in the Business section. Today – 14 November – Pearlstein tosses a touchdown pass in overtime with “Toward a new International Capitalism.”
For anyone interested in the 20 nation-state “summit” about to launch in the Federal District or the future of Virginia’s economy needs to understand Pearlstein’s perspective.
For EMR the most important thought is buried in the next to last paragraph:
“While product and labor markets work remarkably well when they are left open and lightly-regulated, experience has now demonstrate that a different approach needs to be taken toward financial markets, which suffer from imperfect information, and abundance of moral hazard and a tendency toward herd behavior and speculative excess.”
Wait a minute!
While those comments are on target with respect to “financial” markets what about land markets, built environment markets and infrastructure markets? Taken together these three can be called “the settlement pattern market” because they shape human settlement patterns.
No one with hands on experience in these markets could claim they do not “suffer from imperfect information, and abundance of moral hazard and a tendency toward herd behavior and speculative excess.”
Is the real estate market just a side light? Is it not the mortgage sector of this market that is driving the Global financial meltdown?
What about Autonomobiles? Are they just “products” or are they right behind “Wrong Size House in Wrong Location” as a driver of settlement pattern dysfunction?
What a huge blind spot Pearlstein has exposed! We explore this blind spot that is common among economist in The Shape of the Future.
Pearlstein provides a useful context with which come to understand the importance and topography of the complex market that most directly impacts human settlement patterns.
At the federal, state and municipal levels Agencies have done an terrible job of managing the settlement pattern market. See “The Role of Municipal Planning in the Creation of Dysfunctional Human Settlement Patterns,” 23 January 2002.
Housing and Autonomobiles have been subsidized by Agencies to jump start the economy with every recession since the Great Depression. And every time the settlement pattern has become more dysfunctional as documented by the Mobility and Access Crisis and the Affordable and Accessible Housing Crisis.
Why not evolve intelligent management of four markets: Labor, Goods and Services, Finance and Settlement Pattern? That will be important at the Global and continental scales but even more important at the Regional scale. The nation-state has a role to play but it is the Region where the rubber needs to meet the road. That has been the focus in the EU.
The folks governance practitioners that Jim Bacon calls Euro Weenies have been reluctant to harp on the dysfunctional settlement patterns in the US of A because the more sustainable patterns and densities of land use give the Euro’s a competitive advantage.
Perhaps in the context that Pearlstein outlines they will speak up over the weekend.
EMR
Friday, November 14, 2008
Wednesday, November 12, 2008
Congestion Tax + Gas Tax + National Sales Tax
Prices send signals and taxes can influence behavior. So what are we to make of a proposal like this?
Now that's real money. But let's stop for a moment and ask: if such an idea, in whole or in pieces, is adopted by the new administration, what would its effect be upon entities like VDOT?
I suppose, considering that the idea has been floated by the association representing road builders like VDOT, that they have taken into account the distortions such national taxes might impose on their local funding mechanisms. At least one would hope so.
...the American Association of State Highway and Transportation Officials (AASHTO) last month submitted a detailed $544 billion transportation re-authorization proposal designed to encourage the new administration to shore-up the domestic economy with heavy spending on infrastructure projects.
The new programs would be paid for with massive new tax hikes, including a per-mile driving tax that would begin with “proof of concept” trials as early as 2010. The tax would initially be one cent per mile to generate an estimated $32.4b a year. An extra one cent per gallon in the federal gasoline tax would generate another $1.8b, and a national sales tax on cars of one percent would generate $7.6b.
Now that's real money. But let's stop for a moment and ask: if such an idea, in whole or in pieces, is adopted by the new administration, what would its effect be upon entities like VDOT?
I suppose, considering that the idea has been floated by the association representing road builders like VDOT, that they have taken into account the distortions such national taxes might impose on their local funding mechanisms. At least one would hope so.
Sunday, November 09, 2008
WRONG SIZE HOUSE, WRONG LOCATION
On 31 October CNNMoney.com reported that First American CoreLogic had found 7.5-million home mortgages already “underwater” and another 2.1-million that were on the brink. The International Herald Tribune story cited in EMR’s post “WaPo and IHT Housing and Mortgage Coverage,” 29 October on this Blog pegged the potential for underwater mortgages by 2010 at 19-million.
The CoreLogic report provides underwater numbers by state:
An astounding 49.8% of all mortgages in Nevada are underwater – talk about gambling...
An equally astounding 4.1 million underwater mortgages are in the top five states. These states include Florida and California, two jurisdictions that are often mentioned as leaders in the propagation of dysfunctional settlement patterns at Regional scale.
The two states with the lowest percentage of underwater mortgages were New York and Hawaii.
In New York State (4.4% of mortgages underwater) one factor may reflect Rockefeller administration concern for settlement patterns forty years ago – we did not call it that at the time but that is what was a primary concern as it had been in 1926. Modest rates of Regional growth over the past 40 years in most New Urban Regions that fall all or part with in New York State also helps. Hyper growth yields hyper dysfunction. (Connecticut, New Jersey and Pennsylvania which also have territory in the New York New Urban Region are also in the bottom 10 of underwater mortgages). Another factor is aggressive pursuit of mortgage, insurance and other venues for Enterprise fraud by New York State.
In the number two state, Hawaii (5.6% of mortgages underwater), the settlement patterns are nearly as useful as those of Western Europe for demonstrating the principles of intelligent settlement patterns. This is in spite of real estate churn and flux due to Asian investing. (If they could just get a robust shared-vehicle system up and running in the Oahu New Urban Region...)
EMR uses the terminology “Wrong Size House, Wrong Location” as shorthand for the Affordable and Accessible Housing Crisis and the root cause of the mortgage meltdown. So far it has been ‘Wrong Location’ more than ‘Wrong Size House’ that has shown up in the foreclosure data.
The reason appears to be that a reluctance on the part of mortgagors to foreclose on Big houses in poor locations. The reason may be that in the current market they can not be resold. There are buyers for less expensive dwellings. Frequently the notice of foreclosure sale is followed by a notice of a resale for about the same price – some even higher than the foreclosure price.
That fact indicates special impacts on Households with low Institutional Capacity. Foreclosures of cheap houses in poor locations appear to have an especially big impact on minority homeowners. In the Subregional press, Hispanic surnames are much more frequent in foreclosure notices than in the population in general. Antidotal evidence suggests flight from the inhospitable environment created by Prince William County resulted in imprudent debts.
Prince William’s target may have started out to be ‘illegals’ but the impact appears not to be confined to illegals by any stretch.
Of the 25 counties with the highest rates of increase in Hispanics from 2000 to 2007 in the entire US of A six are in the Virginia portion of the National Capital Subregion. Three are adjacent to Prince William County and two others are not far away.
EMR has stated that those components of urban settlement where SYNERGY has identified high percentages of foreclosure are orphan subdivisions in dysfunctional locations vis a vis Jobs / Services / Amenity.
The pictures used to illustrate MainStream Media coverage of the mortgage meltdown look like poster children for settlement pattern dysfunction but that is not a statistically valid guide.
State-wide and municipal / Planning District data can misleadingly mask what is happening in the organic components of a New Urban Region.
Here is an exercise for those who have any doubt about the Wrong Location part of the Wrong Size House / Wrong Location paradigm:
Locate Cluster-scale, Neighborhood-scale and Village-scale urban agglomerations with high percentages of foreclosures. Then determine, based on Google Maps or other resources, if these places are in components of urban settlement that have any chance of becoming contributors to the evolution of Balanced Communities.
EMR
The CoreLogic report provides underwater numbers by state:
An astounding 49.8% of all mortgages in Nevada are underwater – talk about gambling...
An equally astounding 4.1 million underwater mortgages are in the top five states. These states include Florida and California, two jurisdictions that are often mentioned as leaders in the propagation of dysfunctional settlement patterns at Regional scale.
The two states with the lowest percentage of underwater mortgages were New York and Hawaii.
In New York State (4.4% of mortgages underwater) one factor may reflect Rockefeller administration concern for settlement patterns forty years ago – we did not call it that at the time but that is what was a primary concern as it had been in 1926. Modest rates of Regional growth over the past 40 years in most New Urban Regions that fall all or part with in New York State also helps. Hyper growth yields hyper dysfunction. (Connecticut, New Jersey and Pennsylvania which also have territory in the New York New Urban Region are also in the bottom 10 of underwater mortgages). Another factor is aggressive pursuit of mortgage, insurance and other venues for Enterprise fraud by New York State.
In the number two state, Hawaii (5.6% of mortgages underwater), the settlement patterns are nearly as useful as those of Western Europe for demonstrating the principles of intelligent settlement patterns. This is in spite of real estate churn and flux due to Asian investing. (If they could just get a robust shared-vehicle system up and running in the Oahu New Urban Region...)
EMR uses the terminology “Wrong Size House, Wrong Location” as shorthand for the Affordable and Accessible Housing Crisis and the root cause of the mortgage meltdown. So far it has been ‘Wrong Location’ more than ‘Wrong Size House’ that has shown up in the foreclosure data.
The reason appears to be that a reluctance on the part of mortgagors to foreclose on Big houses in poor locations. The reason may be that in the current market they can not be resold. There are buyers for less expensive dwellings. Frequently the notice of foreclosure sale is followed by a notice of a resale for about the same price – some even higher than the foreclosure price.
That fact indicates special impacts on Households with low Institutional Capacity. Foreclosures of cheap houses in poor locations appear to have an especially big impact on minority homeowners. In the Subregional press, Hispanic surnames are much more frequent in foreclosure notices than in the population in general. Antidotal evidence suggests flight from the inhospitable environment created by Prince William County resulted in imprudent debts.
Prince William’s target may have started out to be ‘illegals’ but the impact appears not to be confined to illegals by any stretch.
Of the 25 counties with the highest rates of increase in Hispanics from 2000 to 2007 in the entire US of A six are in the Virginia portion of the National Capital Subregion. Three are adjacent to Prince William County and two others are not far away.
EMR has stated that those components of urban settlement where SYNERGY has identified high percentages of foreclosure are orphan subdivisions in dysfunctional locations vis a vis Jobs / Services / Amenity.
The pictures used to illustrate MainStream Media coverage of the mortgage meltdown look like poster children for settlement pattern dysfunction but that is not a statistically valid guide.
State-wide and municipal / Planning District data can misleadingly mask what is happening in the organic components of a New Urban Region.
Here is an exercise for those who have any doubt about the Wrong Location part of the Wrong Size House / Wrong Location paradigm:
Locate Cluster-scale, Neighborhood-scale and Village-scale urban agglomerations with high percentages of foreclosures. Then determine, based on Google Maps or other resources, if these places are in components of urban settlement that have any chance of becoming contributors to the evolution of Balanced Communities.
EMR
Henrico Nixes Regional Transportation Boondoggle
Henrico County has spurned one of the worst public policy ideas in Richmond history: creation of a regional transportation authority to fund regional transportation improvements. Not entirely for the right reasons, mind you. But I'll take a victory any way I can get it: Without Henrico, a regional authority would be rump organization that could accomplish little and do little harm.
As proposed, the Central Virginia Transportation Authority would provide a way to raise more than $108 million annually for transportation road projects through the collection of new and increased taxes and fees, reports the Times-Dispatch. Melodi Martin quotes Henrico County Manager Virgil R. Hazelett as saying that Henrico's position came down to two things -- that the state should remain responsible for its transportation system and that now isn't the time to increase taxes for residents.
Poor logic on both counts. Metropolitan regions should take a regional approach to transportation planning and funding, rather than gaming the system politically to get other regions to pay for their improvements. As for the time not being right to raise taxes, the time is never right.
Here's the real problem with the transportation authority: To be effective, a regional transportation authority needs to synchronize transportation improvements with land use policies. If a regional authority makes transportation investment decisions in a land-use vacuum, it won't do any better job than the state does. But there is no mechanism in the proposal -- at least, not as described in the press accounts -- for coordinating transportation and land use planning, much less for the more esoteric idea of creating balanced and contiguous communities inside a clear edge.
Furthermore, there appears to be no mechanism to ensure that users pay for the improvements they demand. As this proposal appears to be structured (and I confess that I have not seen a copy of it), the transportation authority would simply raise taxes on those too politically impotent to resist, perpetuate dysfunctional human settlement patterns (which are worse, believe it or not, than sprawling Northern Virginia or Hampton Roads) and further undermine Richmond's regional competitiveness.
As proposed, the Central Virginia Transportation Authority would provide a way to raise more than $108 million annually for transportation road projects through the collection of new and increased taxes and fees, reports the Times-Dispatch. Melodi Martin quotes Henrico County Manager Virgil R. Hazelett as saying that Henrico's position came down to two things -- that the state should remain responsible for its transportation system and that now isn't the time to increase taxes for residents.
Poor logic on both counts. Metropolitan regions should take a regional approach to transportation planning and funding, rather than gaming the system politically to get other regions to pay for their improvements. As for the time not being right to raise taxes, the time is never right.
Here's the real problem with the transportation authority: To be effective, a regional transportation authority needs to synchronize transportation improvements with land use policies. If a regional authority makes transportation investment decisions in a land-use vacuum, it won't do any better job than the state does. But there is no mechanism in the proposal -- at least, not as described in the press accounts -- for coordinating transportation and land use planning, much less for the more esoteric idea of creating balanced and contiguous communities inside a clear edge.
Furthermore, there appears to be no mechanism to ensure that users pay for the improvements they demand. As this proposal appears to be structured (and I confess that I have not seen a copy of it), the transportation authority would simply raise taxes on those too politically impotent to resist, perpetuate dysfunctional human settlement patterns (which are worse, believe it or not, than sprawling Northern Virginia or Hampton Roads) and further undermine Richmond's regional competitiveness.
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