My son attends the UCLA Lab school. We are generally happy with his education but we would like to see him doing more math and having more homework. I voiced these opinions to another UCLA faculty member, whose child is in my son's class, and she told me that I'm not a progressive thinker. I'm hoping you are willing to defend me. Here is taste of her work --- http://mitpress.mit.edu/catalog/item/default.asp?ttype=2&tid=8211


Front Page Los Angeles Times
UCLA's Seeds school wants new branches in low-income areas.
By Carla Rivera, Los Angeles Times Staff Writer
January 28, 2008

Corinne A. Seeds University Elementary School at UCLA has a rich history of providing experimental teaching to students lucky enough to secure a spot at its wooded Westwood campus.

Now, the quasi-private, quasi-public-laboratory school is embarking on a mission to make its research-based programs more widely available by opening satellite campuses in low-income communities. Targeting South Los Angeles and the Pico-Union district near downtown, school leaders say they can more directly attack the educational challenges posed by poverty, lack of English fluency and achievement gaps on the part of racial and ethnic minorities.

The campuses would also add to an expanding array of educational choices, including charter and magnet schools open to families seeking remedies to low test scores, high drop-out rates and inadequate college readiness.

The 125-year-old Seeds school hopes to throw its multilingual programs, team teaching and technology-rich instruction into the mix. But it faces challenges in transferring a program that has thrived on the UCLA campus to communities where crime, decaying housing and social dysfunction pose significant roadblocks to learning. Local school districts and unions may also resent the prospect of an upstart taking their students and teachers.

But educators at UES, as it is known, are intent on becoming major players in the education debate.

"We are entering a crowded field, crowded with people who want to help but not crowded with people who have concrete answers that provide clear evidence of what would work," said Principal Jim Kennedy, who took over in July. "We're a major research university in Los Angeles and we need to be deeply engaged in that conversation."

The school, an arm of UCLA's Graduate School of Education and Information Studies, is not bound by the federal No Child Left Behind law, which requires rigorous standardized testing. Some testing is done for research and comparison and the school aligns its curriculum with state standards. Its students are high-performing: Sixth-graders scored in the 80th percentile in reading and the 79th in math compared with other sixth-graders across the country. Fifth-graders scored in the 85th percentile in reading and the 87th in math.

To give validity to research projects, the student body mirrors the state's racial, ethnic, gender and socioeconomic demographics.

The Westwood campus -- which charges $11,650 in tuition -- is in high demand, with 600 applications this year for 40 preschool openings and a handful of spots in other grades. More than half of its graduating sixth-graders move on to some of the area's leading private schools, and less than one-third attend public middle schools.

After its founding in 1882 at the site now occupied by the downtown public library, the school moved several times before finding a permanent home on the UCLA campus in 1947. Several of its buildings were designed by architect Richard Neutra.

In the late 1980s and early '90s, UCLA considered moving the campus to Santa Monica and turning it into a charter school, but parents vigorously fought to maintain the school's status and location.

The campus -- bisected by Stone Canyon Creek -- sprawls across several acres and includes groves of eucalyptus, oaks and redwoods, student playgrounds and picnic areas. The classrooms include walls of windows.

The school offers a progressive curriculum in which its 435 students -- ages 4 to 12 -- learn at their own pace. Textbooks are rarely used; instead, students choose literature and other books from baskets in every classroom. On any given day, a neuroscience professor might bring along a brain on a visit to a classroom of 9- and 10-year-olds.

On a recent day, the 12-year-olds in Scott Smith's social studies class used the Internet for a lesson, linking to a site projected on a large screen that showed Chinese scroll paintings. In the darkened room, some students sprawled on the floor.

"How many years did it take this guy to make this?" one boy asked. "They call this the Mona Lisa of Chinese painting," Smith responded.

Planning for the community classrooms is still in the early stages, but each school would accommodate 60 to 80 students and be organized like the Westwood campus, which eschews grades and groups students by age. Children from the community, ages 4 to 14, would be given priority for enrollment, with any extra spots assigned to students at random. Ultimately, the schools would each enroll about 200 students and offer support services and extended day care for families.

The schools will be funded entirely through private donations, said Kennedy, which won't affect the fees for students attending the Westwood campus. The new schools will charge tuition but also probably provide more partial or full financial aid for students.

Though the first new campus is not expected to open until September 2009, administrators this spring will begin hiring teachers -- many from the targeted communities -- to give them experience in their disciplines. Educators also plan to reach out to nearby public schools, providing them with teacher training and program support.

Not everyone is convinced of the need for a new educational model.

Joshua Pechthalt, a vice president of United Teachers Los Angeles, said he welcomed innovation but that if given the freedom, public schools can improve on their own.

"The effort to transform public education is going to happen within the public education arena," Pechthalt said. "Our contention is that if everybody stayed in the game and began to work together in a united way to make those changes, we'd get there a lot sooner."

Pechthalt said he doubted that the most skilled teachers would give up the lifetime benefits they've earned in public schools. (Seeds teachers are organized through UCLA's lecturers' union.)

Priscilla Wohlstetter, a professor of educational governance at USC, said new alternatives and more collaboration between schools will benefit everyone.

"It's the right kind of school to scale up because it's got a good track record," Wohlstetter said. "The idea of partnerships has taken off across the country in places like Chicago and Philadelphia, but Los Angeles has been slow to come to that realization."

Kennedy conceded there may be initial misgivings that the new campuses will draw talent away from public schools. He is setting up talks with Los Angeles Unified officials, including local district superintendents, on how the schools can work together.

"We share common goals," Kennedy said. "We're there to be partners and I envision working together. We're not competitors."

The community classrooms have broad support from families and teachers, said Christopher Knight, an investment firm manager whose 12-year-old son attends UES and whose oldest son graduated three years ago.

"What Jim has pointed out to parents is that the addition of community-based classrooms is not going to detract from the quality of education here, and because of our research function it can only benefit," said Knight, who also heads the school's board of advisors. "This will be a great opportunity to show people what UES does."

The initiative is only one of the new ideas being developed by Kennedy, an energetic reformer who previously ran L.A. Unified's Magnolia Elementary School near downtown. He's also been principal at a San Fernando Valley math and science magnet school, supervised elementary math programs for L.A. Unified and taught math and research methods to teachers at Cal State Northridge. Kennedy holds a doctorate in educational leadership from UCLA and had hired several teachers from UCLA's teacher education program at Magnolia.

The Seeds schools provide all of the challenges of improving education for low-income families that he relished at Magnolia, but with more flexibility for him to implement his ideas on a wider scale, Kennedy said.

"I'm like a fish out of water in some ways," he said, "but very anxious to start making a difference."

carla.rivera@latimes.com

In democracies, the state is supposed to respond to the desires of "the people". Is this also the case in non-democracies? This case study below tells an interesting tale of of urban protest in the face of a new transit Mega-Project in Shanghai. There will be winners and losers from this project and the losers clearly want some Coasian compensation. Who has the property rights here? Is this a "takings"? How will the Chinese authorities respond; With tanks or with a $ transfer?


January 27, 2008
Plan to Extend Shanghai Rail Line Stirs Middle Class to Protest
By HOWARD W. FRENCH

SHANGHAI — Yang Yang, a 29-year-old saleswoman, had never imagined herself in the role of advocate.

But when she learned from her housing development’s electronic bulletin board of the city’s plans to extend Shanghai’s futuristic magnetic levitation, or maglev, train line within 30 yards of her house, she was angered about the effect on property values and began networking with other middle-class opponents both in her neighborhood and all along the planned train route.

Word of the antitrain sentiment quickly gathered momentum, and on Jan. 12, a sunny Saturday afternoon, Ms. Yang found herself in Shanghai’s most important public square with a few thousand other similarly disgruntled residents, many of them carrying signs and chanting slogans denouncing the train project, in one of the largest demonstrations this city has seen in recent years.

The citizens like Ms. Yang who marched on People’s Square are wary of calling their event and the antitrain movement a protest. Most even shy from the word “march,” preferring to speak instead of a “collective walk” to the square. But the coalescing of homeowners here around issues like property values, environmental safety, urban planning and how tax money is spent is seen as the strongest sign yet of rising resentment among China’s fast-growing middle class over a lack of say in decision making.

Ms. Yang said: “The money is from us, the taxpayers. Shanghai may be relatively rich, and it enjoys fast growth, but this is no justification for them spending the money collected from us on a pure prestige project.”

Many of the early opponents of the route extension seized upon objections cited in a protest last year that forced a retracing of the line in which people voiced fears about radiation from the train’s powerful electromagnets, but grievances have multiplied.

Beyond the voicing of deep-seated skepticism about the government’s priorities and about what many feel is the waste of taxpayers’ money, what most distinguishes this wave of demonstrations from other recent protests is a new insistence that the government seek the public’s consent in decisions that directly affect their lives.

“You could say this is a sign of a rising middle class and the awakening of a sense of real citizenship,” said Hu Xingdou, a professor of economics at Beijing Institute of Technology.

With its tradition of top-down decision making, secretive deliberations and little tolerance for dissent, the Chinese government has almost no practice of real popular consultation.

Recently, though, under President Hu Jintao’s policy of “harmonious development,” the state has made tentative efforts to solicit public opinion, but opponents of the maglev train and other critics say the Shanghai crisis has shown the government’s initiatives to be far too timid.

“Why are they so late to reveal their plans and why so secretly?” said Zhang Junying, 71, who lives along the projected train route.

He was referring to the government’s mention of the new route on an obscure environmental Web site in January, with an invitation for responses by letter or e-mail within two weeks. To many, the announcement seemed intended to attract as little attention as possible.

That discreet approach quickly backfired as word spread among residents that the government had only given them a two week window to stop the project. City offices were besieged by phone calls as well as by letter and e-mail writers. When the government did not respond, a protest movement was born.

Those who set out to change the government’s course through protests took encouragement from a smaller homeowner-led demonstration against the maglev train last year that resulted in a change of route, and an even more recent “people’s victory,” as it was called in the press, in the southern city of Xiamen, where civic mobilization forced the suspension of plans to build a large chemical plant in an urban area.

Xiamen officials have portrayed the suspension of the project as an example of the new, harmonious approach to government promoted by Beijing. But some observers say the Xiamen example, which is often cited by demonstrators here, complicates things for Shanghai’s leaders, and potentially for Beijing itself.

On the one hand, the outbreak of unrest, or even prolonged opposition in a city that functions as China’s international showcase would be unwelcome.

But if a citizens’ movement here did manage to force the government to reverse its plans, disgruntled citizens in cities all over China could take their cue from Shanghai.

“The Xiamen incident has served as a demonstration, and as people from other places learn from Xiamen, and new methods are put into place as they learn, then a snowball starts rolling and getting bigger and bigger,” said Liu Junning, a researcher at the Institute of Chinese Culture, who studies public opinion and popular movements.

A well-known dissident author, Wang Lixiong, spoke far more cautiously. “The precedence of Xiamen could have the opposite effect for Shanghai,” he said. “The authorities might think they cannot encourage a pattern where compromise follows collective walking.”

Shanghai’s leaders seem mindful both of the stakes and of their limited room to maneuver. A recent editorial that was widely attributed to the city’s newly appointed Communist Party boss, Yu Zhengsheng, suggested the city would postpone any decisions on the train until tempers had cooled.

Behind the scenes, the government is working hard to break the back of the movement, sending scores of police officers to neighborhoods where meetings have been held, briefly arresting people who appear at gatherings to oppose the maglev, forcing them to erase digital photos they have taken of protests and to sign confessions. Demonstrators say they have been warned that if they are arrested a second time, they will be detained for 15 days. Others have been told by their employers that they will be fired if they participate in protests. News media coverage of the controversy has been banned.

The protesters seem to have anticipated many of the government’s responses, however, and the loose movement has configured itself in ways that make it difficult to suppress, using electronic bulletin boards and YouTube to post news of protests and keeping the protests publicly leaderless, to avoid having key people arrested.

Zhao Fang, 35, a housewife, suggested that the authorities were underestimating opposition to the project. She had no job to lose, she said, and would not be intimidated by the arrests. “They think we’ll only be strong and angry for a while and then we’ll cool down and become confused.”

My six year old son is a big fan of Senator Obama and does not particularly like Senator Clinton. These impressions were based on seeing both of them on TV. He also once had a snack at the UC GSB with Austan Goolsbee and he thinks that Austan would be a fine CEA Chair. He is confused about who Senator Clinton would choose to run the CEA. Somehow I doubt that it would be Robert Barro.

My son has evinced some Barro-esque world views. His progressive school (UCLA's UES) is encouraging the kids to bring in 100 pennies both to count coins and then the school will collect the money to give to less fortunate children. My son is angry about this second part. He has argued that we are renters who need money to buy a home and why do we have to give it away? While this selfish logic makes me a pinch uncomfortable, his following statement made me quite happy.

He argued that if every other kid in the class donates the money to give to the poor then it's no big deal if we contribute nothing. The child of two economists has figured out free riding with no explicit coaching from his Chicago Trained parents. I like his Nash equilibrium logic. While he says he wants to be an astronomer, I believe that his life course is now set. This 6 year old kid will soon make Robert Barro look like Robert Reich. We are hoping that "progress not regress" will not be his mantra.

There has been a huge rise in the number of children of economists becoming PHD economists. UCLA has Christian Hellwig but he represents just the tip of the iceberg. How do you explain this trend? Harvard's PHD program is filled with these "legacies".

What do sociologists do all day long? We know that some Columbia University sociologists study social networks and others write about their graduate student days embedded in a Chicago street gang. But what do UCLA sociologists do? By reading my recent campus email, I can now provide a partial answer.


Jan. 22, 2008

UCLA–Harvard study reveals strongest predictors for Oscar nominations


Analysis of nearly 20,000 films shows that odds favor dramas, female performers, big distributors



Meg Sullivan, msullivan@support.ucla.edu
(310) 825-1046



If you're an actor angling for an Academy Award nomination on Tuesday, you better hope you didn't leave the audience rolling in the aisles, suggests a new study from UCLA's California Center for Population Research.



"The odds of being nominated for an Academy Award are so much greater for performers who appear in dramas that — at least this time of year — it really pays to be a drama queen," said Gabriel Rossman, one of the study's two authors and an assistant professor of sociology at UCLA.



Albeit to a lesser degree, it also helps to have a major film distributor, prior Oscar nominations, a high spot in the pecking order in past movie credits, fewer films competing for attention and good collaborators. And it doesn't hurt to be a woman.



"A performer's odds of being nominated are largely set before the cameras even start rolling, back when the script was bought, the director was signed and the film was cast," said Nicole Esparza, the study's lead author and a Robert Wood Johnson Scholar in Health Policy Research at Harvard University. "It's surprising how many variables other than a performer's talent play a role in determining who gets nominated."



The 80th Academy Awards nominations are scheduled to be announced at 5:30 a.m. on Tuesday at the Academy's Samuel Goldwyn Theater in Beverly Hills.



Using Internet Movie Database (IMDb) records for every Oscar-eligible film made between the founding of the Academy of Motion Pictures Arts and Sciences in 1927 and 2005,

Esparza and Rossman looked for conditions that improved the odds of a performer getting the nod.



The researchers looked at number of Oscar-eligible films in any given year, the distributors and studios behind each performer's films, the film's tone or subject matter, the cast size, the sex of the performer, the performer's contacts within the industry, and past Oscar nominations among a film's cast, directors and writers.



The single greatest predictor of a nomination proved to be serious subject matter — or at least a film that was classified by IMDb as a drama, despite the possible presence of comedic elements. In examining IMDb records on 171,539 performances by 39,518 actors in 19,351 Oscar-eligible films, the researchers found that actors were nine times more likely to receive a nomination for their work in a drama than in a non-drama.



"In the entertainment industry, there's long been a sense that the nomination process prefers dramas, but I don't think anybody is aware of the magnitude of the effect," Rossman said.



The second strongest predictor of a nomination proved to be the number of films screened in any given year.



"It's better to be nominated in a year when fewer films were screened, because there's less competition come awards time," Rossman said.



Actresses, meanwhile, proved more than twice as likely to be nominated as actors for any given performance, making being female the study's third strongest predictor of a nomination, the authors say.



"At least in this case, being underrepresented on the job works in women's favor," said Esparza. "Because there are fewer female than male performers in films, and both are eligible for the same number of awards, actresses stand a better chance of being nominated than actors. It's a simple matter of arithmetic, but as far as I know, nobody has ever raised the point."



The higher a performer ranked in past movie credits, the more likely he or she was to be nominated. A history of high rankings in the movie-credit pecking order more than doubled the odds of a nomination, making pecking order in past credits the fourth strongest predictor, the researchers found.



"It turns out the performers with enough clout and respect from their peers to push themselves to the top of the credits also have enough clout and respect from their peers to be nominated for Oscars," Rossman said.

Having a major distributor also provided a boost. Coming in as the fifth most likely predictor, appearing in a film represented by a major film distributor nearly doubled a performer's chances of being nominated.



Having been nominated for an Oscar in the past also improved the odds of being nominated.



"This is an instance of what sociologists call the 'Matthew Effect,' after Matthew 25:29, in which Jesus says, 'For to everyone who has, more will be given and he will grow rich,'" Esparza said. "Just as the rich tend to get richer and popular Web sites get even more traffic, so do honors seem to pile onto those who have already been honored, be they scientists or movie stars."



Performers also got a lift when they appeared with previously nominated writers and directors — what the researchers dubbed the "Robert Forster Effect," after a prolific but undistinguished character actor who never received a nomination until he appeared in the 1997 film "Jackie Brown," which was written and directed by Oscar-winner Quentin Tarantino and co-starred Oscar-winner Robert De Niro and Oscar nominee Samuel L. Jackson.



"There's a very good reason that Academy Award acceptance speeches are so long — an actor's collaborators are responsible in no small measure for their achievements," Esparza said.



However, performing alongside previously nominated cast members proved to be a mixed bag. Appearing with past nominees did not improve the odds of being nominated as a leading performer, but it did improve the chances for performers in supporting roles.



"If there are other good people in the cast, they appear to be competition for the lead performer nomination," Rossman said. "But there's no downside if you're in a supporting role. Working with really good performers may elicit a better performance from you or it may simply bring attention to your previously unrecognized talents, but either way, working with good co-stars definitely helps you get a supporting nomination."



There were limits, however, to the value of contacts. The researchers were surprised to find how little influence industry ties had. Performers who had worked over the years with a wide array of Academy members were no more likely to earn a nod than those with fewer industry ties. This was even the case, the researcher found, during the height of the studio system, when studio heads allegedly ordered talent to vote in blocks for other studio talent.



"In all kinds of walks of life, conventional wisdom holds that it's not what you do but who you know," Esparza said. "And Hollywood may be no different, except when it comes to Academy Award nominations. Surprisingly, who you know doesn't make or break you at nomination time."

The complete study can be found at http://ccpr.ucla.edu/asp/ccpr_035_06.asp. G

Be careful what you wish for! I had hoped that the Journal of Economic Literature would review my Green Cities book and in the December 2007 issue they do. Ed Mills is a giant in Urban Economics. He is not one to hide his opinions. In this review I cite below, he gives me a good spanking. I can't say that I deserved it but I slightly enjoyed it! His review reminded me of his grumpy day to day talking style that I enjoy so much. His review displays his contempt for environmentalists. Unlike Dr. Mills, I believe that it is crucial to engage greens in a honest unemotional discussion of the issues. As Larry Summers learned in the case of his World Bank Pollution Haven memo, economists cause big problems for themselves when they address issues that are likely to trigger an emotional response without addressing the world view of their readers. I intentionally wrote my book in a way to diffuse such emotional responses to help focus attention on the "big issues" of urban growth's environmental consequences. My book is better than he portrays it and I'm a pinch surprised by his tone.

He does have a sharp way about him. I once attended a Brookings Institution Dinner where the Mayor of Washington D.C was the guest dinner speaker. The Mayor was surprised by Dr. Mills' sharp questions concerning his disfunctional public schools.

Here is the entire set of reviews and Dr Mills' review starts in the middle.
Ed Mills' Review of Green Cities

If I was allowed to reply to Ed's comments, I would make three points.

1. Unlike Ed Mills, I believe in Mary Poppins. Recall that she said that a spoonful of sugar makes the medicine go down. In the case of my book, the "medicine" is Chicago free market economics. My book is pro-capitalism and clearly focuses on harnessing incentives to achieve sustainable urban growth.

A "macho" in your face book would not receive the time of day from a non-economist who views himself as an "environmentalist". How does Dr. Mills believe that he will influence the next generation of liberal thinkers if he just makes fun of them? My approach is to meet them half way and discuss my own environmentalism and to use ideas commonly used in environmental studies (such as the ecological footprint).

2. Ed Mills read my book too quickly and missed its tone. He makes fun of me for quoting Jason DinAlt but permit me to quote from my own book.

"As Jason DinAlt argues, "The last thign the world needs is more Americans. The world just cannot afford what Americans do to the earth, air and water." If this argument is taken seriously , it suggests that environmentalists should support limits on immigration to the United States in order to reduce the world's ecological footprint."

Note that I carefully used the words "If this argument is taken seriously"... I was trying to show readers how ecologists think about these issues and what are the logical policy implications from adopting their views.

3. He makes fun of me saying that I like "greenbelts" in Boulder , Colorado but ignores my discussion of the Glaeser/Gyourko work on housing supply regulation and its unintended consequences. Despite his protests, I am a card carrying economist!

I have a great respect for Ed Mills but I would like to see him write a better book!

I started to write the following editorial for submission to the Los Angeles Times. Rather send it there, I decided to shirk and publish it here. The gist of the idea is that California's home prices have soared in recent years and a 5% sales tax on the 500,000 homes that sell each year in the state would generate enough revenue to balance the budget. Would Henry George approve? Is this tax progressive? Is it distortionary? As a renter and as a UC employee, self interest motivates me to support this public policy. Note that Michigan or Missouri would be unlikely to be able to use my idea to balance their budget but California is special --- this state is paradise and the home owners who were smart enough to buy early would still get to keep 95% of their asset.

Should academics be writing editorials in the first place? Don't forget my editorial debut
greeneconomics.blogspot.com/2005/08/giving-hybrids-traction-veblen-status.html


Balance our State's Budget Through a Property Sales 5% Windfall Tax

by Matthew E. Kahn

Facing a state deficit of $14 billion dollars for the 2008 fiscal year, California may soon release convicts early from jail, prune down the size of its regulatory staff, close parks, and repudiate recent efforts to build up public education at the elementary and university level. Is this good public policy?

Assuming that it is unconstitutional to confiscate Britney Spears' or Paris Hilton's assets, there still remains a revenue source that can be tapped into. In case you haven't noticed, home prices in California have increased by xx% since 2000. While some of this growth may be due to home improvements, the bulk of this real estate appreciation was an unexpected windfall generated by a combination of low interest rates, low exchange rate, and a growing demand for living the California lifestyle and the supply side conditions such that it is difficult to buld new housing in the desirable areas in the state's leading cities.

I propose that home sellers must pay a 5% tax on capital gains from real estate sales. Suppose a Los Angeles household bought their home in 1982 for $55,000 and sold it in 2008 for $1.1 million. To calculate this household's windfall tax, the original sales price would be converted into 2008 dollars using an inflation adjustment. Given the consumer price index (CPI), measured in 2008 dollars this home was purchased for $210,000. This household would be taxed .05*(1.1-.210). Is this communism? The household is able to keep 95% of its capital gains. If the average house seller nets $500,000 then his tax bill will be $25,000. If 500,000 homes in the state are traded each year, then this tax would generate $12 billion dollars in revenue.

The Windfall Profits tax was first introduced in the 1970s as the price of gasoline soared and oil company profits sharply increased. These profits were viewed as "unearned". Is the situation different today?

Who would be the winners and losers from this proposition? People whose homes have appreciated the most would pay the bulk of this tax. In subprime areas of Riverside and San Bernardino, this tax would equal $0 while in Santa Monica or Brentwood the tax would add up to some revenue.

This tax would help to counter Proposition 13.
http://en.wikipedia.org/wiki/California_Proposition_13_(1978. Permit me to quote Wikipedia;

"The proposition's passage resulted in a cap on property tax rates in the state, reducing them by an average of 57%. In addition to lowering property taxes, the initiative also contained language requiring a two-thirds majority in both legislative houses for future increases in all state tax rates or amounts of revenue collected, including income tax rates. Proposition 13 received an enormous amount of publicity, not only in California, but throughout the United States.[1] Passage of the initiative presaged a "taxpayer revolt" throughout the country that is sometimes thought to have contributed to the election of Ronald Reagan to the presidency in 1980. However, of 30 anti-tax ballot measures that year, only 13 passed.[2]

A large contributor to Proposition 13 was the sentiment that older Californians should not be priced out of their homes through high taxes.[3] The proposition has been called the "third rail" (untouchable subject) of California politics and it is not politically popular for Sacramento lawmakers to attempt to change it.[3]"

Prop 13 protected households from rising property taxes but no symmetry , California has not asked incumbent home owners to sacrifice to keep the state going. In the absence of Prop 13, home owners would have paid higher property taxes as their asset appreciated. In the absence of the "Kahn Tax", such households enjoy the benefits of asset appreciation without paying "their share".

This New York Times Article highlights that armed with trillions of "petro-dollars" Saudi Arabia is getting ready to build some brown cities whose employment base will specialize in making plastics and other dirty manufacturing activity. This will be a fascinating test case of "Scale versus Composition versus technique" in determining urban environmental externalities. In english, how polluted will this city be?

The pictures of the city indicate a vision of a very dense New York City style city (rather than a sprawled Houston) --- the capital stock will all be brand new. Will it be clean? Or is the composition of industries (i.e plastics) and the raw scale of industrial activity such that this will be a nasty city and millions of people will live in close proximity to this nasty pollution?

Which educated people would want to live and work in such a city? How large will the wage premiums be to work there?

Here is a cite for the original Sim City
http://en.wikipedia.org/wiki/SimCity

This case study would seem to support Copeland and Taylor's view that pollution havens arise in nations armed with capital (The Factor endowment effect overrides the pollution haven effect). Do you agree?

New York Times
January 20, 2008
The Construction Site Called Saudi Arabia
By JAD MOUAWAD

RABIGH, Saudi Arabia — THE alarm bell sounded the end of the lunch break here one November afternoon, and suddenly thousands of workers — on foot, on bicycles and in buses — streamed in, seemingly from out of nowhere, and jolted this huge construction site to life.

Amid a forest of cranes, towers and beams rising from the desert, more than 38,000 workers from China, India, Turkey and beyond have been toiling for two years in unforgiving conditions — often in temperatures exceeding 100 degrees — to complete one of the world’s largest petrochemical plants in record time.

By the end of the year, this massive city of steel at the edge of the Red Sea will take its place as a cog of globalization: plastics produced here will be used to make televisions in Japan, cellphones in China and thousands of other products to be sold in the United States and Europe. Construction costs at the plant, which spreads over eight square miles, have doubled to $10 billion because of shortages in materials and labor. The amount of steel being used is 10 times the weight of the Eiffel Tower.

“I’ve worked on many big things in my life, but I’ve never worked on anything this big,” an American project manager mused during a bus tour of the project, called Petro Rabigh, a joint venture of the state-run oil company Saudi Aramco and Sumitomo Chemical of Japan.

Size isn’t the only consideration. The project is Saudi Arabia’s boldest bet yet that this oil-rich kingdom can transform itself into an industrial powerhouse. The plant is part of a $500 billion investment program to build new cities, create millions of jobs and diversify the economy away from petroleum exports over the next two decades.

“The Saudi economy was in idle mode for 20 years,” said John Sfakianakis, the chief economist at SABB, formerly known as the Saudi British Bank, who is based in Riyadh, the Saudi capital. “Today, the feeling here is, ‘We’ve won the lottery; let’s not waste it.’ ”

The kingdom’s lofty economic goals would have been unthinkable without the surge in energy prices that has filled the coffers of oil producers. Oil prices have quadrupled since 2002 and reached $100 a barrel in New York this month.

Persian Gulf countries earned $1.5 trillion in oil revenue from 2002 to 2006, twice as much as in the previous five-year period, according to the Institute of International Finance, a global association of banks that is based in Washington. As the top exporter, Saudi Arabia has been the main beneficiary.

Despite all the recent headlines about Middle East investors bailing out troubled American banks like Citigroup, a growing share of today’s petrodollars are staying at home to finance megaprojects like Petro Rabigh, analysts say. That money is financing the biggest economic boom in a generation, helping to build not only the high-rises of Dubai, where the world’s tallest tower is going up, but also telecommunications networks, roads and universities throughout the Middle East.

Abu Dhabi is planning to spend close to $1 billion for a new museum with the help of the Louvre, in Paris. Dubai’s latest grandiose idea is to build a small-scale replica of the French city of Lyon, complete with residential housing, a museum, a culinary school and a soccer club.

In Saudi Arabia, Riyadh looks like a boom town: sprawling over 40 miles, it is teeming with shopping malls, electronics stores and luxury boutiques. But while times are good today, many Saudis realize that their country is locked in a race against time to create industries that produce more than just oil in order to keep a young and growing population employed. The kingdom, which has a population of 24.5 million, including nearly 7 million foreigners, has what one analyst called a “human time bomb.” About 40 percent of Saudis are under 15, and because the country has one of the world’s highest birth rates, the population is expected to reach nearly 40 million by 2025.

“It has been a social, and therefore a political, imperative of the Saudi government to develop the economy and to create employment opportunities,” said Timothy S. Gray, the chief executive of HSBC Saudi Arabia.

That could well mean that higher oil prices are here to stay. One paradox of modern-day Saudi Arabia is that while it seeks to reduce the importance of petroleum to its economy, it needs those exports more than ever.

TO be sure, the region’s economies are too small to absorb all the oil riches on their own. Too much money is chasing too few assets, analysts say, forcing oil producers to invest some of their revenue abroad and diversify their holdings, either through opaque state-owned investment funds or through direct private investments.

Last year, for example, a fund controlled by the government of Abu Dhabi bought a stake in Citigroup for $7.5 billion, while another run by Dubai’s ruler bought a large share in Sony, the Japanese consumer electronics giant. Sabic, a major Saudi petrochemical company, bought the plastics division of General Electric for $11.6 billion, and the Kuwait Petroleum Corporation bought half of Dow Chemical’s commodity-plastics unit for $9.5 billion.

In recent weeks, other big banks plagued by losses from the mortgage crisis, like Merrill Lynch and Morgan Stanley, have raised tens of billions of dollars from a variety of Middle Eastern and Asian funds, including ones from Kuwait or Saudi Arabia.

According to data compiled by Bloomberg News, overseas investments by Persian Gulf countries reached a record $75 billion in 2007. Arms deals, a time-worn way of recycling petrodollars, remain popular in the region; the United States is pushing for a $20 billion weapons sale to Saudi Arabia, for example. But while oil-rich states are still buying American Treasury bonds or military hardware from the West, analysts say the more significant trend is for a growing share of their investments to be pumped into local projects.

“The vision is to turn the kingdom into a major industrial power by 2020,” said Jean-François Seznec, a professor at Georgetown University who is a specialist in industrial policies in the Persian Gulf. “A billion dollars here and a billion there, and soon you’re talking about real money.”

Projects like Petro Rabigh, Mr. Seznec said, will allow Saudi Arabia to become one of the top three chemical producers in the world within a few years. Unlike Kuwait or Abu Dhabi, Saudi Arabia does not have a sovereign fund responsible for investing the country’s petroleum riches.

Ali Al-Naimi, the kingdom’s energy minister and one of the grand architects of Saudi industrial policy, summed up the country’s goals at the dedication ceremony for Petro Rabigh in 2006.

“I would like to highlight the fact that the Petro Rabigh project is part of a bigger picture,” Mr. Naimi said at the time. “This strategy includes expanding the base of the Saudi economy, diversifying national income sources, attracting international investments and reaping the direct and indirect benefits that these types of projects will accrue to the Saudi citizen.”

The trend to modernize and develop the economy is not entirely new, of course. Saudi Arabia has been trying to diversify itself for over two decades. It famously tried to make the desert bloom in the 1970s and ’80s by investing heavily in water desalinization plants and growing crops.

But a long period of low oil prices, from the mid-1980s through the 1990s, stalled much of its effort. The government still relies on petroleum exports for 90 percent of its revenue; oil sales account for half of the country’s gross domestic product.

The current level of oil prices has given the country’s industrialization strategy a new spring, allowing the government to improve its finances while investing in large infrastructure projects. The Saudi G.D.P. has doubled in the last five years. Not counting oil, economic growth has been 4 percent to 6 percent a year since 2002.

Oil has not been the only engine of growth. The country’s private sector has also thrived and now accounts for 45 percent of the economy, compared with just 20 percent about 20 years ago. Since the 1990s, the share of private Saudi money invested at home has doubled, and now represents about 20 percent of total holdings, according to SABB.

“There is a lot of money looking for investment opportunities,” said Mr. Gray at HSBC.

The financial turnaround has been spectacular. In 1999, the Saudi government’s debt amounted to 120 percent of G.D.P. That number has dropped to less than 20 percent as the government paid back its obligations and put its finances in order.

Last year, the government recorded a budget surplus of $48 billion, five times the surplus of 2003. This year, it has built its biggest budget to date around a conservative estimate of oil prices of $45 a barrel; that will almost certainly yield a substantial surplus at the end of the year.

All of that is a far cry from the 1990s, when oil averaged $20 a barrel, thanks mostly to Saudi concerns at the time to keep oil prices low.

One of the most noticeable illustrations of the industrialization push is a plan championed by King Abdullah, the 83-year-old Saudi monarch, to build six new cities throughout the country — including the King Abdullah Economic City on the western coast, near the city of Rabigh; the Knowledge Economic City, near Medina; and the Prince Abdulaziz bin Mousaed Economic City, in the north.

The intent is to create industrial centers that double as housing and commercial hubs for the country’s young and growing population. The Saudi Arabian General Investment Authority, a government agency, expects these cities to add $150 billion to the country’s G.D.P. by 2020, create one million new jobs and be home to as many as five million people.

Drawings of these new towns depict a cross of the futuristic “Blade Runner” and traditional Arabic design. But the new cities are also expected to become new industrial centers that focus on four main sectors: petrochemicals, aluminum, steel and fertilizers.

According to SABB, these cities together will have four times the geographical area of Hong Kong, three times the population of Dubai, and an economic output equal to Singapore’s. Other plans include building four refineries, two petrochemical plants and a modern graduate-level university with an endowment of $10 billion.

THE frenzied growth of the economy has had some serious downsides. Inflation has been rampant in the last year; food prices and rents have risen sharply. Traffic jams in Riyadh and other Saudi cities have become a constant affliction, while real estate values have soared and the construction sector is strained by a lack of workers.

The stock market, meanwhile, has yet to recover from its collapse two years ago. From 2000 to early 2006, the local Tadawul stock index surged from 2,000 points to a peak of 19,870, a return of almost 900 percent. But the overvalued market went into a panicky free fall that caused it to lose two-thirds of its value in a matter of months.

After being flat for most of 2007, the market has recovered in the last quarter, gaining more than 40 percent. Still, its value is only about half that of its peak two years ago.

One reason for the partial rebound was anticipation of the sale of shares in Petro Rabigh earlier this month. For the first time, Saudi investors had a chance to buy a major asset linked to Aramco. The initial public offering, for 25 percent of Petro Rabigh, raised $1.23 billion and was the largest stock sale in Saudi history. The stock is expected to begin trading at the end of the month.

The project itself is still about a year away from completion. Once in operation, it will produce 2.4 million tons of plastics a year. This venture, along with dozens of other megaprojects, will firmly anchor Saudi Arabia as one of the world’s top suppliers of chemical products as well as oil.

“Saudi Aramco has a vision of itself as Exxon Mobil,” Mr. Seznec of Georgetown said, “except much bigger.”

In past blog entries, I have talked about the environmental benefits of sprawl. When people live at low density, this creates a moat effect reducing contagion and exposure risk. I am well aware that people consume more resources when they live a low density. You can read this paper (http://mek1966.googlepages.com/kahn_jpam.pdf) if you don't believe me!

Ed Glaeser and I are writing a paper right now where we will rank U.S cities with respect to their greenhouse gas emissions per-capita and dense cities will rank higher both due to transport and residential energy consumption.

This article highlights another "Green City" benefit of density. Scavengers face lower transaction and transport costs in a big city and less "garbage" ends up in landfills.

This article highlights the efficiency of this market as low value of time guys (i.e bums) sort through the NYC trash and find "gold" and sell it back to the used book stores. So as long as you don't smell the book you are reading (I hope you are not near sighted), this is an efficient market with few negative environmental consequences. In a sprawled city such efficiency would not be possible because the bums do not have cars to drive the book store to drop off the loot they found at 3am in your garbage can.


NY Times
January 18, 2008
Big City
Their House to Yours, via the Trash
By SUSAN DOMINUS
By 9:15 most mornings, Thomas Germain, a ruddy-faced man in a yellow slicker, is pushing his oversize black wheeled suitcase down 12th Street in the direction of the Strand Bookstore on Broadway. Sometimes, the suitcase is stuffed full of books; sometimes the books fill a box or two or three that he balances carefully on top of it, a mass of swaying literature he rolls all the way from Greenwich Village or SoHo or Stuyvesant Town.

By 9:30, he’s often sitting outside the Strand, waiting for the store to open, drinking a breakfast of Budweiser with his friend Brian Martin, who’s pushed and pulled his own collection of books to the same destination in a large, teetering grocery cart.

The men are regulars at the Strand, book-scavenging semipros who help the city’s best-known used-book store keep its shelves stocked. They have no overhead, no employees and no boss. They also have no home. What they have is experience, and a fitful sense of industry.

“Perseverance,” Mr. Germain, said one recent Monday. “Other people fail at this because they don’t persevere.”

For them, that means rising from their street-side slumber around 3 a.m. to start sifting through recycling bins outside people’s homes or in front of buildings. (For the record, paperbacks are recyclable; the city requires the covers to be removed from hardcovers before they can be recycled, a request that for booklovers is tantamount to asking 10-year-old girls to rip Barbie’s head off before discarding her in the trash.)

The two 50-ish men — Tommy Books and Leprechaun , they call themselves — are often the first people waiting on the Strand’s bookselling line, a queue also populated by N.Y.U. students, genteel booklovers moving to smaller apartments, frugal cleaner-outers, and a fair number of down-and-out fellow book scavengers, many of whom live on the street.

Hundreds of men and a smaller number of women eke out a living scavenging books in Manhattan, according to Mitchell Duneier, author of “Sidewalk,” a book about the subculture of sidewalk book scavengers and vendors. Some of them sell their books on the street; others, the less entrepreneurial, or the more impatient, go for the surefire cash at the Strand.

When the store opened that Monday morning, Tommy Books and Leprechaun each in turn emptied their boxes onto the counter, where Neil Winokur, a Strand employee, quickly sorted them into two piles. An incomplete encyclopedia got rejected, as did Donna Tartt’s “Secret History.” (Too many on the market.) An hour or two later, another scavenger scored a hit selling the store a supply of children’s books, but had no luck with Newt Gingrich’s “Winning the Future” (“No one buys him here,” said Mr. Winokur).

Around lunchtime, Neil Harrison, another regular who’s lived mostly on the street, showed up with a stash of leather-bound 19th-century books, their marbleized covers aswirl with greens and blues. He said that a building superintendent had allowed him to clear out a storage area used by a man who had died whose family did not want the books. Mr. Harrison didn’t know the authors — Thackeray, Gibbon — but he knew enough to know that the books had value.

Sure enough, the books went straight to the third floor, where book preservationists would clean them up and eventually offer them for sale. “Six hundred,” Mr. Winokur told him (he thought the store could sell the Thackeray volumes for between $1,000 and $1,500). When he heard the number, Mr. Harrison crossed himself, then whooped. He peeled off a $20 to give a clerk as a tip; he left and came back five minutes later to hand Mr. Winokur $20, paying back some money he’d borrowed from the store the week before.

Is there any other industry in which such high-quality goods regularly make their way to consumers via a trash bin? Stand in the bookselling line at the Strand and the store starts to feel less like a dusty bastion of erudition and more like a messy, mulchy place where old ideas struggle to find new life.

Even in better days than these for books, the economy of publishing was bloated, based on guesswork, mercurial taste and the talents of people whose keenest interests rarely included making money. Book recycling in Manhattan is just the opposite, a perfectly efficient system with no fat at all: So many discarded books go from someone’s garbage to a scavenger to a bookseller and, often enough, land gently in someone else’s home. Feel guilty, if you must, for never finishing Tony Judt’s “Postwar: A History of Europe since 1945;” but don’t feel guilty for chucking it. It will most likely live to haunt someone else’s bedside table. It will find a new home.

Tommy Books and Leprechaun would like a new home themselves, they said. Also, a van.

E-mail: susan.dominus@nytimes.com

UCLA's Economics Faculty Recruiting is in high gear. We made good progress on senior recruiting in the fall and now we are in the middle of junior recruiting. There are a large number of talks taking place so there are endless 1/2 hour meetings, lunches, dinners, talks. Yesterday, I attended two job talks (one in public policy and the other in Economics).

You have to be a little bit envious of Harvard and MIT. Each of these heavyweights may have 6 job talks, vote 4 offers and hire 2 or 3. That's much less work for a department and everyone can be a "good citizen" because there are relatively few talks in total taking place.

I have learned some economics from the candidates coming through. I feel for them. They are nervous and hopeful. They wear bad suits. They refuse to tell the truth about the strange habits of their thesis advisers. Without gossip, what's the point of meeting? I'm kidding. UCLA knows that junior recruiting is a key part of building up the department and keeping the place young and active. Junior people are the reason that UC Berkeley has thrived.

Its interesting that I haven't seen any of the other bloggers blogging about "JoB talk season". Does it bore them? Or are they afraid they may reveal their school's secret strategy of cracking the "ToP 10". It would interest me who in the Profession has a good eye for predicting who will be a Star and which Stars are unable to pinpoint the young future stars?

My wife has pointed out to me that it is now easy to figure out who other schools are bringing in. I must admit that I keep an eye on Washington University in St. Louis to see who they think they may lure. I'm also watching out to see who Tufts will hire to replace me. Is there a perfect substitute for such an astute blogger?

In environmental economics today, it feels like there are 30 open Endowed Chairs and much less supply. I suggest that you enter my field and arbitrage these rents.

The Chronicle of Higher Education offers more insights than simply providing academic gossip about which Dean from which state school is moving to the Ivy League. I suggest that you read through this; Chronicle of Higher Education Piece on Sustainability