The LA Times today has some fascinating stories and maps looking back at the events of 20 years ago and asking some big questions.  What are the lessons of the riots?  Has quality of life for African-Americans in Los Angeles improved since then?  Have race relations improved?  Who was to blame for the riots?  Did government fail to step up at that point in time?

As an eternal optimist, permit me to state some facts.  Crime is down in center city Los Angeles.  More people are walking and using public transit.  The City is investing in public transit and this will stimulate "new urbanism" along these transit corridors.  While Wendal Cox and and Joel Kotkin may not use these commute modes, there will be other people who will benefit from them.  It is  no accident that USC is flourishing right now.  I bet that home prices are much higher in real terms in Center City LA than they were 20 years ago.  This is the market test of progress.  Demand to live there is rising.   There is plenty of downtown LA that still needs rehabbing.  Downtown Los Angeles does still have a rundown look in many parts as you get close to City Hall.  Manhattan does not have such sections.  In Manhattan such property would be purchased, torn down and renovated but in Los Angeles these decaying buildings persist.  Why?  

The ongoing challenges?  Future employment growth?  It will likely be in the service sector.  Manufacturing jobs will not make a come back in LA.   The Los Angeles public schools aren't good.  Perhaps in the name of preserving public sector jobs, few tough decisions have been made to introduce more competition and to challenge the  teacher's unions to be willing to implement more innovative ways of improving K-12 education.  When we know "that we don't know" how to educate young people, we must experiment and scale up those ideas that appear to work.  Schools need more flexibility over hiring and firing and promotion of teachers and union rules inhibit such flexibility.  The same issues arise at LADWP and its provision of water and power for the metropolitan area.  This era of capitalism requires flexibility to adapt and public employers face work rules that inhibit such flexibility.    There are also tough issues of public sector pensions.  When the City of Los Angeles negotiates with public sector unions over compensation,  nobody at the table has a strong incentive to take into account that more generous retirement pension and health benefits will be paid by future generations.  These future generations are not currently voters and the current voters have little incentive to sit down and become outraged at the generous defined benefit plans that only become more generous as life expectancy increases and future health bills increase. Public sector union negotiators know this and this gives them a bargaining advantage.  In this age of big deficits, everyone seems to have forgotten that budgets must eventually balance.  Neither the Chinese nor future economic growth will bail us out.  At some point, somebody's taxes will rise to pay back the large state and national IOUs.

One tax that needs to be revised is California's Proposition 13.  Given the value of California real estate, it is imperative to tax it uniformly regardless of when a person purchased it.   A fair approach would be to have all property owners pay an annual payment of 1.5% of the current assessed value of a property.  This would generate a lot of revenue but this should be tied to public sector reform.  If old people can't afford this flow payment then they can sell a percentage of their home to a buyer who would finance this flow payment and the buyer would have a claim on future price appreciation. That's how asset markets work!

The LA Times has published a long obituary for my UCLA colleague Professor Rick Brown from the School of Public Health.  He was a national leader in creating new data sets such as the California Health Interview Survey.    For a taste of what types of questions were asked to individual respondents click here.   These data were useful for describing trends --- for example you could use them to estimate; "what share of 43 year old Hispanics in California have Type II diabetes?"   To see how he used these data in his own peer reviewed research, click here.  He was a very important scholar.  Data creation and sharing such data with the broader research community is a crucial public good.  I would guess that there are hundreds of peer reviewed published studies based on the data he created.

At the end of the obituary, the LA Times lists the set of politicians who Dr. Brown advised over the years.  They are all Democrats.   This lopsided distribution got me thinking.   Given that Schools of Public Health mainly focus on social justice, do any political conservatives choose to be students in such programs or to teach in such programs?  If such ideological sorting does take place (that liberals are vastly over-represented in both studying and teaching at Schools of Public Health), does this matter?  Does this lack of balance affect fund raising?  Does it lead to an over-reliance on the state and national government for funding?    When we think about a university's professional schools, does it matter if the Business School has a relatively large share of conservatives while the law school and School of Public Health have the opposite?   Is ideological balance important?  What is lost when an organization is "lopsided"?  I realize that these are touchy questions but as an intellectual, I have many questions.

As some of my readers know, I have published several papers recently on liberal/environmental ideology and its role in consumer choice.  The sexy stuff is my work that investigates the choice to drive a Prius or install solar panels but there is less sexy stuff such as day to day electricity consumption and modes of travel to work (i.e public transit).  A consistent theme in my work is that liberal environmentalists "walk the walk".  They are more likely to engage in voluntary restraint than political conservatives.  

I would hope that there will be an emerging economics and sociology literature studying career choice and ideology.  The broad research question here is to make progress on the causes and consequences of political ideology.  In this polarized age, this would appear to be an important question.

Today,  I participated in democracy and actually showed up for jury duty. I want to maintain the USA's "inclusive institutions".    That said, I must admit that I was a pinch nervous when the jury pool was told that 25 names would be named at random to serve on a 16 day trial.  Jurors are paid $15 per day. At that wage (not including transportation costs --- I don't drive),  I would still prefer to teach my UCLA class and get some research done. If the LA Courts paid $17 a day,  I would be just indifferent.

After we were discharged early, I chose to have an adventure.  I live 12 miles West of the city courthouse.  As a leading thinker (self proclaimed) about urban public transit, I thought that it was time for me to take my first ride on a Los Angeles subway.  I paid $1.5 for my ticket knowing that the subway would end 7 miles from my Westwood home.

Here is a picture taken at 1230pm Friday on the westbound subway line.


Do you see many humans waiting for the train with me?  Once I was dropped off at the Wilshire and Western stop in Koreatown. I started to walk west.  I saw many beautiful 5,000 square foot homes just north of Wilshire in Hancock Park.  I then passed a middle school with a distinctive sign.



Is this what Sunstein and Thaler meant as a "nudge"?   My son will soon be a teenager an I wonder whether this information provision would change his behavior.    Less guns, less crime?

So,  I've served my county and I promise I won't leave Westwood until I'm called for jury duty again.

Janet Maslin's review of Mark Kurlansky's new book is worth reading.  I have read Kulansky's Salt and Cod. In his new book titled "Birdseye: The Adventures of a Curious Man’, he writes about one of the fathers of frozen food.  Mark and I were on a USC Book Festival panel together last year.


Here is a photo of me, Mark and a young fan of Mark's.  




and here is the C-SPAN video of our crazed USC event.  


How is Birdseye relevant for climate change adaptation?  Here is a quote from Janet M. 
"But it indeed coaxes readers to re-examine everyday miracles like frozen food, and to imagine where places with no indigenous produce would be without them. It emphasizes the many steps that went into developing such a simple-seeming process."


While I don't eat frozen food,  this storage technology (like dried fruit) offers us a technology for guaranteeing that we have some tasty things to eat even when weather shocks do take place.  If you don't have access to a freezer, you face more variability with respect to your daily consumption.  Climate change increases the volatility of shocks to climate and this makes agricultural output more volatile.  You can smooth your consumption by trading with someone who produces under different climate conditions (so if it is rainy somewhere in Europe but there is no rain in Phoenix then the Phoenix consumer can import from Europe) --- or the U.S farmer can grow some output when she is able to and then freeze it and eat it later.   Trade at a point in time or freezing and storage over time are two different strategies for coping with climate shocks.    Clarence Birdseye is a hero to me because his ingenuity helps us to adapt to climate change.

This NY Times OP-ED reminds us that we can't forget about "time to build" when contemplating models of investment and long run economic growth.   Both NYU and Columbia are land locked.  Columbia has a plan to build in parts of the city (north of 130th street to the west) that used to be nasty.  In the Columbia case, few are concerned that "historic" areas will suffer because of its expansion.   NYU has a plan to knock down parts of Greenwich Village to vastly scale up its operations.  The opposition is howling and some of the opponents might surprise you.

You might have guessed that a neo-classical economics department would support a university's effort to grow and become even more elite.  After all, Paul Romer is now a NYU economist and he started the modern economic growth literature focused on the role of human capital externalities and increasing returns.  But, the NY Times article says that the NYU econ department has unanimously agreed to oppose this project.   What explains this? If the typical faculty member is age 50 and this project will take 20 years to complete then with any sort of discounting at all (especially if there are hyperbolic discounters on their faculty) then they will veto this shock to their short term and medium term quality of life.   Do the faculty who live in Silver Towers have the property rights to block this expansion? How will they be compensated for "progress"?   As the son of a well known NYU faculty member, this topic interests me.  As an urban economist who is interested in urban renewal and as a scholar who has been interested in NIMBYism in liberal areas, this is quite a case study.

UPDATE:  Here is a NY Times letter from NYU President John Sexton. He supports his plan!

I would also like to present a statement that NYU Professor Mitchell Moss made to the CITY PLANNING COMMISSION , CITY OF NEW YORK on APRIL 25, 2012

I have been on jury duty all week.  This has caused me some anxiety because I am teaching this quarter and I have many responsibilities related to research, advising and teaching.  Peter Gordon told me that information technology (IT) has greatly reduced the inefficiency caused by our democracy.  In the "bad old days", those on jury duty had to go to City Hall (10 miles away and plenty of traffic congestion to get downtown) and sit and wait to be called.  In this new IT age, each potential juror is given a PIN # and calls in the day before to see if we must report the next day.  Think of how much time this saves.  Suppose there are two million adults in Los Angeles county who are at risk of being called for jury duty.  You are expected to serve one week a year; so 2 million divided by 50 is 40000.  Suppose that 400 jurors are needed each day so that with replacement; each weekly juror has a 400/40000 probability of being selected= 1 in 100 chance.   So, the 99% of the population was commuting in and back for no reason.  IT has eliminated this wasteful commuting.

For each day this week I haven't been called in to perform my civic duty.  Somebody must have told the LA Court about what type of person I am.

What have I done with my windfall of extra time? I have held extra office hours, and I have spoken to colleagues.  I had my first "In and Out" burger today as an old friend who is an economist at a big hedge fund was in town for the Milken Conference.   He wanted to eat there so I paid for our $11 power lunch.

My co-author Siqi Zheng sent me two revised chapters of our book manuscript and I will sit down and edit that.  I submitted a paper to a journal and I finished editing a new paper with Nils Kok and John Quigley that I will blog about in the near future.   I even had a couple of new ideas that I typed into my rolling file of random thoughts.  So, the point of this boring post is simple;  there is a cost of jury duty.  Is there a social benefit?  The LA Court tries to convince you of the importance of participating in our democracy.  I'm not allowed to link the orientation video that I watched but this video will give you a taste.  I bet that most economists would embrace comparative advantage and would say that we should be able to contract with somebody else to take our place.

As a fan and reader of "Why Nations Fail", I have a question for Daron and Jim.   I know that "inclusive institutions" are good.   Given this point, where do the authors stand on California's direct democracy and its initiative process?   Do the Cambridge guys believe in "people power"?

Here is the current California voting slate of initiatives for 2012.   If "we" (the voters of California) have the chance to vote to kill off High Speed Rail and to kill off the University of California,  does such participatory democracy foster my favorite state's long run growth?  My old friend John Matsusaka is a fan of such initiatives as he has argued that they act as a check on growth of the public sector (see his QJE paper).    and his JPE paper.

Gary Becker has posted a blog entry on U.S manufacturing trends.  Harvard's William Julius Wilson has long argued that manufacturing offered "good jobs" for low skill workers.  Labor economists such as Derek Neal have quantified the losses to workers who transition from the manufacturing industry to the service sector.

To quote Becker; "Still, if past trends continue, the share of American jobs in manufacturing will probably be lower in the future than it was even as late as 2007.  New and exciting technologies, like 3D printing, may bring back some manufacturing output to the United States since labor costs will be a lower fraction of the total cost of manufactured products based on these new technologies. However, these technologies are unlikely to offer many jobs since they are generally labor-saving, not labor-using, but the jobs will require skilled and better paid workers."

Allsyia Finley provides Joel Kotkin plenty of space to give California greens a beat down.   The WSJ also offers a sequel as Arthur Laffer breaks out his napkin to provide another round of "Laffer Curve" advice for California with its proposed 13.3% state tax rate.   It is sunny, blue skies and 72 degrees today and I'm going to the beach.  I hope to see Kotkin and Laffer there.  

UPDATE:  A basic idea from economics is that when "supply is inelastic" that you can tax this input without it moving to another sector.  In English, if quality of life in California is unique, then wacky state policy will lead to less exodus than what would happen if Michigan pursued similar policies.   California's unique asset is its quality of life and given that celebrities gravitate here (because of the quality of life), there is a synergistic effect. Over the last week, I have spotted Michael Jackson's daughter Paris shopping at the same supermarket as me and last night I ate dinner 8 feet away from Denzel Washington.  He didn't recognize me so symmetry doesn't always hold in the model. He was wearing a UCLA sweatsuit --- so I appreciated his loyalty for my current team.   So, my point is that Kotkin and Laffer are correct about their debate points but wrong about their big points.  They need to read up on differentiated products and cases when locations are substitutes but not close substitutes.  Market power matters and Sacramento knows this.

  

Tomorrow will be an exciting day at UCLA Econ.  Leah Boustan and Dora Costa have organized an impressive economic history conference  that will bring Ed Glaeser, Dave Donaldson, and Jean-Laurent Rosenthal to campus.  UCLA's own Chris Dipple will also present.   Now that I have retired from active research, I can sit and listen and think about what these scholars are up to.  I plant to light a pipe and put on my Sherlock Holmes hat and sit there and think about what is being said.   On Saturday, I will go to USC to participate in an urban economics conference.   At USC, I will bring my pipe and my Sherlock Holmes hat and I will sit and listen and think.  A new stage of my career has started and I will try to be the "wise man" and say less and simply look wise.