Urban environmental concerns are often used as a justification for blocking new housing construction in major cities. New tall buildings may block out sunshine and impede others' views from their existing buildings. New housing may crowd out public gardens.

The net effect of these actions is to raise urban housing prices. I certainly believe that there are environmental "green city" benefits from such actions --- thus the demand for living in such areas increases but in addition, these actions constrain housing supply. If demand is increase and supply is restricted, prices will rise and newspapers such as the New York Times will be puzzled by the "housing affordability" crisis.

Take a look at the 3rd paragraph in this Times article. In fairness to Bette Midler, this is a "free market environmentalism" solution to protecting urban green space. She did not use the political process to achieve her goal but instead she won an auction.


October 30, 2005
Midler Embraces Passing of Time and Greening of a City
By JAMES BARRON

After showing off the community garden with the composting toilet, Bette Midler took stock of things. The conversation had turned to two numbers that figure in her life these days: 60, for the birthday that she is about to celebrate, and 10, the age of the New York Restoration Project, the nonprofit group she started to clean up parks.

She started with the birthday. "I was going to get really depressed, and I thought, 'So what?' Let's put a good face on it, because it's a really good face," she said, and laughed.

As for her work with the parks - which included arranging the purchase of 50 city-owned lots to keep the city from auctioning them off for housing - she knows all the things that people whisper when a celebrity takes up a cause like parks in neighborhoods she does not even live in. "There's a distinct possibility that it's vanity, but even if it were, so what?" she said. "The gardens stand as a testament to nature, and I love nature despite what she did to me."

The two numbers - 60 and 10 - will come up again tomorrow at the group's annual Hulaween gala at the Waldorf-Astoria. Besides celebrating the group's first decade, Ms. Midler will give an award for environmental work to the rock star Sting and his wife, Trudie Styler. Elton John will be at the celebration, which is also for Ms. Midler's 60th birthday, on Dec. 1.

Adrian Benepe, the parks commissioner, called her "a delightful and purposeful Pied Piper" and credited her and her group with tackling projects "no one else would think of taking on."

Ms. Midler's involvement has been hands-on. While visiting a park in Upper Manhattan, she chatted with groundskeepers and gardeners about tree limbs that had been knocked down by storms. "I think I'm doing what I was meant to do," she said. "This is the greatest thing I ever did in my life."

She and her group have removed 80,000 tons of garbage from neglected parks and lots over 10 years, and she helped haul away discarded tires and other junk. The group helped create Swindler Cove Park on the Harlem River, at the Harlem River Drive and 10th Avenue, and found a donor to underwrite a boathouse there. It also renovated a cafe in Fort Tryon Park.

Ms. Midler helped clean up freeways under California's adopt-a-highway plan when she lived in Los Angeles. When she moved back to New York in 1994, she said, she was troubled by how badly the parks had deteriorated. "I remember driving past Riverside Park and saying, 'What happened?' " she said. She remembers seeing discarded couches, other junk and homeless people.

She made some calls. One parks department employee told her, "I know you think Riverside isn't very nice, but let me show you something else." She said his inflection conveyed the message "If you think this is bad, let me show you worse."

Mr. Benepe remembered meeting her about that time. He had been a lower-ranking parks official, and he invited her to dinner at his apartment. He cooked - "I don't remember what," he said. "Probably seafood. As I recall, she was wearing overalls."

By then, groups like the Central Park Conservancy and the Prospect Park Alliance were looking after specific parks. Ms. Midler decided to set up a public-private partnership. "Until government gets it together, you can't allow everything to deteriorate," she said. "Until the government decides there is a different way to step in and raise money, we've got to."

Visiting a handful of parks and gardens in Manhattan one morning, she raced through a garden on East 114th Street near Pleasant Avenue, across 114th from Thomas Jefferson Park. The garden was restored with a $250,000 grant from Tiffany & Company, and John Loring, the Tiffany designer, created chairs and a statue with Jefferson's profile.

The garden is down the block from another, the Rodale Pleasant Park Community Garden. Rodale, the publisher of Prevention, Men's Health and other magazines, donated $250,000 for the garden and its rainwater collection system and composting toilet.

Ms. Midler contributes money to the group, but Julia Erickson, its executive director, said the amount was less than 1 percent of the group's $4.9 million annual budget, with the rest coming from donations from others. In 10 years, the New York Restoration Project has gone from 2 staff members working in an office at Rolling Stone magazine to 15 staff members in rented quarters.

Amy T. Gavaris, the executive vice president, was initially hired as an assistant director. She said she was offered the job in the first minute of her job interview, with the executive director at the time, and did not meet Ms. Midler until later.

Ms. Erickson, who joined the group this year, met Ms. Midler early on and also met with board members, but she did not get the job until her final interview, with Ms. Midler, who conducted it by telephone from New Zealand, where she was performing.

"One thing that hasn't changed, as far as I can tell, is her involvement," said Brian Sahd, a vice president. "She sees something and she still says, 'Brian, we've got to weed.' "

Suppose that people trusted strangers in urban areas. In this case, people would be more likely to use public parks, public transit, and perhaps even be willing to send their children to public schools. Private clubs, private transit and private schools have a "selection" effect of excluding others. The demand for such "exclusivity" is higher when people don't trust the "Average Joe". In addition, when cities become more diverse due to immigration and rising income inequality, people are less likely to trust people who look "different" than themselves.

To link to sprawl, sprawl is single detached housing where there is literally a moat around each person's house. In a society with greater trust between people, there would be less demand for this moat. While its hard to test, my intuition tells me that the ecological footprint would be smaller in a more trusting city.

Co-ops represent high density living. The New York Times has an interesting piece on trust and monopoly power in "group living".


October 30, 2005
How a Co-op Lost Millions
By ALISON LEIGH COWAN

JACK HABER rues the day that he and other board members of 200 East 74th Street agreed to crank up the maintenance charges that homeowners in the building were assessed to keep the place running.

"What's clear to many inside and outside the building's white-brick walls is that the experience has been an opportunity to learn some hard-earned lessons about the perils of communal living and that their lessons may be applicable to others in a city where more than 300,000 residential units are held in co-op or condo form.

Topping the list of hazards, real estate lawyers say, is giving anyone sole signing authority over a common checkbook or bank account, something Mr. Kissel obtained after he became treasurer in the fall of 1995. Members of the co-op acknowledge being remiss but say they were relieved that someone with a knack for business had taken on the role. They didn't have time, they said, to oversee or second-guess him.

That mind-set is pervasive at many co-ops and condos. "Keep in mind that co-op boards are made up almost always of volunteers," said Aaron Shmulewitz, the real estate lawyer who ultimately helped board members at 200 East 74th Street root out where their money went. "If one co-op board member volunteers to assume a larger burden with regard to a large areas like financing, co-op board members are naturally going to be happy about that."

Resources for the Future will soon publish a book titled: "Zoned Out Regulation, Markets, and Choices in Transportation and Metropolitan Land Use" by Jonathan Levine. I'm not sure if Peter Gordon is going to love this book.

"The search for solutions to urban sprawl, congestion, and pollution has inspired a wealth of alternatives, including smart growth, New Urbanism, and transit-oriented development. Since 1970, researchers have sought to assess such alternatives by evaluating their transportation benefits. Implicit in research efforts, however, has been the presumption that, for these options to be given serious consideration as part of policy reform, science has to prove they will reduce auto use and increase transit, walking, or other physical activity. Zoned Out forcefully argues that the debate about transportation and land-use planning in the United States has been distorted by a myth--the myth that urban sprawl is the result of a free market. According to this myth, low-density, auto-dependent development dominates U.S. metropolitan areas simply because that is what Americans prefer.

Jonathan Levine confronts the free market myth by pointing out that land development is already one of the most regulated sectors of the U.S. economy. Noting that local governments use their regulatory powers to lower densities, segregate different types of land uses, and mandate large roadways and parking lots, he argues that the design template for urban sprawl is written into the land-use regulations of thousands of municipalities nationwide. These regulations and the skewed thinking that underlies current debate mean that policy innovation, market forces, and the compact-development alternatives they might produce are often "zoned out" of metropolitan areas.

In debunking the market myth, Levine articulates an important paradigm shift. Where people believe that current land-use development is governed by a free-market, any proposal for policy reform is seen as a market intervention and a limitation on consumer choice, and any proposal carries a high burden of scientific proof that it will be effective. Zoned Out reorients the debate by demonstrating that the burden of scientific proof that was the lynchpin of transportation and land-use debates has been misassigned, and that, far from impeding market forces or limiting consumer choice, policy reform that removes regulatory obstacles would enhance both. A groundbreaking work in urban planning, transportation and land-use policy, Zoned Out challenges a policy environment in which scientific uncertainty is used to reinforce the status quo."

http://www.rff.org/rff/rff_press/bookdetail.cfm?outputid=8695

JONATHAN LEVINE is certainly correct that equilibrium outcomes are a function of supply and demand. I have not read this book but my main empirical question for Levine would be: "There are over 300 major cities in the United States. Some of these cities are heavily influenced by powerful environmental groups, which European cities does he view as the "gold standard" of where the U.S should move to? What is his strongest empirical evidence that a large percentage of people would be willing to live in higher density, walking cities? There are certainly some people willing to live like this but how many? If there is such a demand for such cities, why aren't developers building them?

In defense of Levine, I do believe that as urban crime continues to fall that richer people will be more willing to live near strangers who do not look like them. The urban public schools are still the problem. Until urban public schools improve, I really don't see how the demand for "compact living" can soar except for gays and senior citizens and very young.

With everyone blogging about Ben Bernanke's virtues, I thought about going against the grain and asking why does the Fed need a boss who is an A+ academic economist? Robert Barro wrote a funny Wall Street Journal piece several years ago documenting that the economy grew the fastest when there was no economist as the head of the CEA.

Alan Greenspan, armed with a pre-Tom Sargent NYU PHD, has done quite well without having published in the AER, JPE or QJE. From taking a closer look at Economics Roundtable, I found a pretty good answer to my question posted at:
http://economistsview.typepad.com/economistsview/2005/10/bernanke_on_int.html

Still, I'm not completely convinced. Is it obvious that an academic star will make "better decisions" as the Fed Chair than some "Average Joe"? Does an academic star have more credibility with Wall Street? I've always wondered about what is the "credibility" production function? How many AER publications does a guy need before his word has some weight?

Switching gears and returning to my chosen topic of "environmental and urban economics", here is an interesting paper that examines the non-environmental consequences of dam construction in India. http://papers.nber.org/papers/W11711

Dams by Esther Duflo, Rohini Pande

NBER Working Paper No. 11711
Issued in October 2005
NBER Program(s): PE

Abstract

The construction of large dams is one of the most costly and controversial forms of public infrastructure investment in developing countries, but little is known about their impact. This paper studies the productivity and distributional effects of large dams in India. To account for endogenous placement of dams we use GIS data and the fact that river gradient affects a district's suitability for dams to provide instrumental variable estimates of their impact. We find that, in a district where a dam is built, agricultural production does not increase but poverty does. In contrast, districts located downstream from the dam benefit from increased irrigation and see agricultural production increase and poverty fall. Overall, our estimates suggest that large dam construction in India is a marginally cost-effective investment with significant distributional implications, and has, in aggregate, increased poverty.

At least when I read an earlier draft of this paper 6 months ago, it included no information on the environmental costs of dams. The authors are probably wise to avoid the non-market environmental valuation literature. For example:

If a dam turns a river into a lake, what are the recreational benefits and costs of this action? What are the ecological impacts of this action? How many fish perish because of this? How many ecosystems are affected? How are they affected?

What I like about this Dams paper is its credible IV strategy.

The world is urbanizing. I'm almost done writing a book on the environmental consequences of this trend. My "Green Cities" book explores whether urban growth mitigates or exacerbates local and global environmental indicators such as air pollution and greenhouse gas production.

I've thought about a variety of ways that urbanization affects the environment but today the New York Times has an article suggesting a pathway I hadn't thought about.

Dr. David Suzuki, a zoologist turned environmental activist, has this to say;
"Even though Canada has a lot of wilderness, 85 percent of us live in cities," he said. "We don't understand ecosystems."

He makes this point with anecdotes and examples anyone can understand. For example, he recalled, when he wanted to do a television program about air pollution, he waited for a smog alert day and took a film crew to a hospital emergency room. "It was packed with old people and children," he said. "What blew us away was how many of these people were being driven to the hospital in an S.U.V. Because they live in a shattered world, it never occurs to them that the way they live is creating the problem."

Dr. Suzuki said he used to urge people to think globally, act locally. "That was a mistake," he says today. "When people think globally, they feel helpless."

Instead, his Nature Challenge outlines 10 simple steps - like eating meatless meals one day a week or using nontoxic lawn products - and urges Canadians to commit to three of them."

IF I understand what Dr. Suzuki is saying he is suggesting that urbanites are "disconnected" from nature. This sounds like a testable proposition. My son and I enjoy watching his videos that show "where our food comes from". As a lifelong urbanite, this was news to me.

While Dr. Suzuki's general point has some merit to it, farmers are major polluters in the United States. Ample Nitrogen use, chemical fertilizer and disposing of animal waste. I have not seen an analysis of who has a larger day to day "ecological footprint"; the urbanite or the farmer?

In the mid-1990s, Al Gore and Larry Summers debated the merits and fairness of exporting trash to Africa. Could people in Africa be made better off if the United States sent them money and garbage? This issue is back in the news.

It is interesting to compare garbage to dirty manufacturing. Environmentalists have argued that in a globalized world economy a “race to the bottom” would take place such that poor nations with lax regulation would specialize in exporting dirty goods. While this argument is intuitive, the environmentalists ignored that dirty industries tend to be capital intensive. Relative to making sneakers or blue jeans, it takes more capital to get an oil refinery or a steel mill up and going. In fact, the Factor Endowment Hypothesis posits that Richer nations will be the pollution havens!

While dirty manufacturing may not locate in poor nations, garbage is already produced. It only needs to be shipped somewhere. There is no reason except for high shipping costs for why poor nations would not end up with the world’s garbage. Intuitively, if proximity to garbage is undesirable then richer people will be willing to pay poorer people to “outsource” their trash. Economists have celebrated the gains to trade since before Adam Smith. Al Gore was offended that the African poor might suffer this extra injustice.

There are really two separate issues here. First, what is a “fair distribution of income”? Second, conditional on the distribution of income have the gains to trade been exhausted? For those of you who didn’t sleep through all of your economics lectures, is the capitalist equilibrium a pareto optimum? Most students display the ambition to be a benevolent social planner who get to choose the income distribution.

Here is today’s New York Times:

October 24, 2005
Poor Nations Are Littered With Old PC's, Report Says
By LAURIE J. FLYNN

Much of the used computer equipment sent from the United States to developing countries for use in homes, schools and businesses is often neither usable nor repairable, creating enormous environmental problems in some of the world's poorest places, according to a report to be issued today by an environmental organization.
The report, titled "The Digital Dump: Exporting Reuse and Abuse to Africa," says that the unusable equipment is being donated or sold to developing nations by recycling businesses in the United States as a way to dodge the expense of having to recycle it properly. While the report, written by the Basel Action Network, based in Seattle, focuses on Nigeria, in western Africa, it says the situation is similar throughout much of the developing world.

"Too often, justifications of 'building bridges over the digital divide' are used as excuses to obscure and ignore the fact that these bridges double as toxic waste pipelines," says the report. As a result, Nigeria and other developing nations are carrying a disproportionate burden of the world's toxic waste from technology products, according to Jim Puckett, coordinator of the group.

According to the National Safety Council, more than 63 million computers in the United States will become obsolete in 2005. An average computer monitor can contain as much as eight pounds of lead, along with plastics laden with flame retardants and cadmium, all of which can be harmful to the environment and to humans.
In 2002, the Basel Action Network was co-author of a report that said 50 percent to 80 percent of electronics waste collected for recycling in the United States was being disassembled and recycled under largely unregulated, unhealthy conditions in China, India, Pakistan and other developing countries. The new report contends that Americans may be lulled into thinking their old computers are being put to good use.
At the Nigerian port of Lagos, the new report says, an estimated 500 containers of used electronic equipment enter the country each month, each one carrying about 800 computers, for a total of about 400,000 used computers a month. The majority of the equipment arriving in Lagos, the report says, is unusable and neither economically repairable or resalable. "Nigerians are telling us they are getting as much as 75 percent junk that is not repairable," Mr. Puckett said. He said that Nigeria, like most developing countries, could only accommodate functioning used equipment.
The environmental group visited Lagos, where it found that despite growing technology industries, the country lacked an infrastructure for electronics recycling. This means that the imported equipment often ends up in landfills, where toxins in the equipment can pollute the groundwater and create unhealthy conditions.
Mr. Puckett said the group had identified 30 recyclers in the United States who had agreed not to export electronic waste to developing countries. "We are trying to get it to be common practice that you have to test what you send and label it," he said.
Mr. Puckett also said his group was trying to enforce the Basel Convention, a United Nations treaty intended to limit the trade of hazardous waste. The United States is the only developed country that has not ratified the treaty.

Much of the equipment being shipped to Africa and other developing areas is from recyclers in the United States, who typically get the used equipment free from businesses, government agencies and communities and ship it abroad for repair, sale or to be dismantled using low-cost labor.

Scrap Computers, a recycler in Phoenix, has eight warehouses across the United States to store collected electronics before they are shipped to foreign destinations, and Graham Wollaston, the company's president, says he is opening new warehouses at the rate of one a month. Mr. Wollaston, who describes his company as a "giant sorting operation," said there was a reuse for virtually every component of old electronic devices: old televisions are turned into fish tanks for Malaysia, and a silicon glass shortage has created huge demand for old monitors, which are turned into new ones. "There's no such thing as a third-world landfill," Mr. Wollaston said. "If you were to put an old computer on the street, it would be taken apart for the parts."
Mr. Wollaston said the system was largely working, though he conceded that some recyclers dump useless equipment in various developing nations, most notably China. "One of the problems the industry faces is a lack of certification as to where it's all going," he said. He says his company tests all equipment destined for developing nations.

The Environmental Protection Agency concedes that "inappropriate practices" have occurred in the industry, but said it did not think the problem should be addressed by stopping all exports.

"E.P.A. has been working with the Organization for Economic Cooperation and Development countries for the last several years on development of a program that would provide much greater assurance that exports of recyclable materials will be environmentally sound," Tom Dunne, of the agency's Office of Solid Waste and Emergency Response, wrote in an e-mail message.

Today the New York Times published a pro-gas tax editorial. I agree with almost all of its substance except I’m confused by its first sentence. “There's no serious disagreement that two major crises of our time are terrorism and global warming.” Is there a crisis with respect to either of these issues? Both pose risks to our day to day life but does this equal a crisis?

I could see that policy activists would like people to believe that these are “crisis issues” because this would increase the likelihood that innovative policies will be adopted as the public clamors for Congress to “do something”. I’m not sure why the Times engages in this overheated rhetoric. Do their editors really get so breathless as they think about day to day life? Or do they think that their enthusiastic cheerleading will make some Scarsdale Mom write a letter to her Representative?

There are costs and benefits of fighting terrorism using our scarce resources. There are costs and benefits of mitigating greenhouse gas production using our scarce resources. Ideally, these decisions could be approached in Spock from Star Trek logical way rather than turning to Dr. McCoy.

Gas Taxes: Lesser Evil, Greater Good
October 24, 2005
Editorial

“There's no serious disagreement that two major crises of our time are terrorism and global warming. Now, however, the energy risks so apparent in the aftermath of Hurricane Katrina have created both the urgency and the political opportunity for the nation's leaders to respond appropriately. The government must capitalize on the end of the era of perpetually cheap gas, and it must do so in a way that makes America less vulnerable to all manner of threats - terrorist, environmental and economic.
The best solution is to increase the federal gasoline tax, in order to keep the price of gas near its post-Katrina highs of $3-plus a gallon. That would put a dent in gas-guzzling behavior, as has already been seen in the dramatic drop in the sale of sport-utility vehicles. And it would help cure oil dependency in the long run, as automakers and other manufacturers responded to consumer demand for fuel-efficient products.”

The Editorial was also weak with respect to the efficiency costs of gas taxes. Do high gas prices cause recessions? Or was this past historical relationship a statistical artifact?

Hurricane Katrina will offer an excellent test of George Akerlof’s work on adverse selection in the used car market. Over 500,000 vehicles in the New Orleans area were flooded. Used car buyers beware! You may be purchasing a “biohazard”. What will be the equilibrium?

The New York Times reports:

“Since the hurricane struck on Aug. 29, auto clubs and law enforcement officials have warned consumers to scrutinize used cars for water damage and investigate their histories. Because a damaged car's title can be "washed"- varying state laws make it relatively easy to obtain a clean title in one state for a vehicle branded with a "flood" or "salvage" title in another - such warnings are routine after major storms.

But Katrina's automotive losses were hardly routine. Cars that sat in sewage- and fuel-contaminated floodwaters in New Orleans could pose unprecedented risks to anyone who handles the vehicles or their parts, according to the Coordinating Committee for Automotive Repair, a nonprofit organization that provides advice on pollution prevention and worker health and safety issues to segments of the auto industry, including repair businesses. “

AS ALL ECONOMISTS KNOW, the adverse selection problem arises due to asymmetric information. Information technology is “leveling the playing field”.
Consumers can research whether a vehicle was ever registered in counties declared a federal emergency disaster area by entering the VIN at www.carfax.com/flood. At the Web site of the National Insurance Crime Bureau, www.nicb.org, one can enter a car's 17-digit vehicle identification number, or VIN, to find out whether it is among the 60,000 listed so far in a database of vehicles damaged by Hurricanes Katrina or Rita.
http://www.nytimes.com/2005/10/17/automobiles/17CARS.html?pagewanted=print

Its interesting to contrast homes and cars. The soggy homes cannot be cheaply exported and sold on the national market while the cars can be.

Risk perception plays a key role in economic decision making both for consumers and producers. Post 9/11, people were afraid to fly and the airlines lost billions. Since the Chernobyl nuclear accident in 1986, people have been afraid to live and work near "Ground Zero".

The New York Times today reports on an effort to "reclaim" land near this disaster's epicenter.

Nearly a quarter of Belarus, including some of its prime farmland, remains radioactive to some degree. Belarus'government is making an effort to put the contaminated lands back to good use.

"The farm, no longer known as the Karl Marx collective but still state-owned, reopened two years ago with the millions of dollars' worth of harvesters, tractors and other equipment provided by President Aleksandr G. Lukashenko's government.

A year before that the checkpoints that once restricted access to this region, 150 miles from Chernobyl, disappeared. Families began returning. Some had never left; all needed jobs.

A scientific study released in September by seven United Nations agencies and the World Bank concluded that Chernobyl's lasting effects on health and the environment had not proved as dire as first predicted. It recommended that the authorities in Russia, Ukraine and Belarus take steps to reverse psychological trauma caused by Chernobyl, encouraging investment and redevelopment.

Lands where agriculture was banned or severely restricted can be safe for growing crops again, the report said, using techniques to minimize the absorption of radioactive particles into produce."

IT will interest me whether agricultural products grown near the Chernobyl site will be sold in export markets. If so, will they sell for a lower price? Will consumers trust that the product is "safe"? The experts say it is safe but will consumers trust their judgement?

In the United States, there has been an interesting hedonic real estate literature that has examined home price dynamics before after a toxic waste site (a Superfund site) has been cleaned up. They counter-factual question is whether post-clean up do home prices converge back to what they "would have been" in the absence of the clean up. If people do not trust government to get the job done then even after a clean up, we would predict that home prices near the affected Superfund area would sell for a price discount because of this lack of confidence in government. (See the work of Kathy Kiel).

Foreign Affairs Magazine has made the wise move of displacing one more piece about Kissinger and actually allows an economist to speak his piece. In reviewing Ben Friedman's new book, Joe Stiglitz reveals himself to be an ethical economist. As a Chicago Economist, I was impressed.

"In short, the debate should not be centered on whether one is in favor of growth or against it. The question should be, are there policies that can promote what might be called moral growth -- growth that is sustainable, that increases living standards not just today but for future generations as well, and that leads to a more tolerant, open society? Also, what can be done to ensure that the benefits of growth are shared equitably, creating a society with more social justice and solidarity rather than one with deep rifts and cleavages of the kind that became so apparent in New Orleans in the aftermath of Hurricane Katrina?"

http://www.foreignaffairs.org/20051101fareviewessay84612/joseph-e-stiglitz/the-ethical-economist.html

I am not smart enough to answer Joe Stiglitz's challenge. But, Stiglitz is smart enough to answer his own riddle. I would like to ask Prof. Stiglitz; "If you were President of the United States, what micro and macro policies would you enact to achieve your goal of moral growth?"

Is Bill Gates, a profit maximizer who redistributes billions, contributing to moral growth?

Is the World Bank contributing to moral growth?

It seems to me that we would need a lot more information concerning how consumers and producers respond to incentive effects (such as taxes and subsidies) before one could justify that the "equity benefits" of certain proposals would be worth the efficiency costs.

I would like to ask Prof. Stiglitz whether there has ever been a time period in U.S history when we have achieved "moral growth". Is it the 1990s? Is it the 1960s? What was going right then that has changed today? Is it simply Republican Rule?

Will the Democrats in 2008 run on Stiglitz's platform?