Thursday, March 5, 2009

High-speed wreck

The Florida-Martin report, Ontario In the Creative Age, also promotes high-speed rail that would connect population centers in Ontario. According to the Toronto Star, the high-speed rail network would cost as high as $27 billion. As long as money doesn't grow on trees, it is unlikely that such funds be committed to infrastructure that is very likely to fail in getting commuters off the roads in Ontario.

I am not a big fan of high-speed rail in Canada. I believe there is very little current demand (and low potential for diversion from private automobile in future) for rail in the intercity travel market in Canada. I have reasons to be conservative about rail's potential in Canada. Consider that a trip does not begin or ends at the rail station. The time saved on high-speed rail may be spent on getting to and from rail stations because most intercity commuters now live in the suburbs and not within a walking distance of downtown train stations. Plus, the cost per trip of high-speed rail will be prohibitive when compared with the marginal cost of making the same trip by car. This is truer for families in the intercity travel market in Ontario who would always find commuting by car much cheaper than paying prohibitive costs of high-speed rail travel.

The fundamental question to ask is what high-speed rail would achieve in Canada. Professor Richard Florida appeared on CBC's program The Hour last night where he suggested that high-speed rail between Montréal and Toronto would make it possible to live in Montréal and work in Toronto. Prof. Florida finds a daily four-hour commute amusing and adds that many in the US are already doing it. For some reason I cannot warm up to this idea of a four hour daily commute, regardless of the speed. I believe most Canadians would rather avoid following in the footsteps of the Uber commuters who live in New York and work in Washington DC and make the daily commute by Bombardier's Acela. And if a two-hour commute between Montréal and Toronto is the desired objective, one can always fly, even from downtown Toronto.

Furthermore, the proponents of rail in Canada have kept many necessary details about their demands for infrastructure investments hidden from the Canadian taxpayers. My experience with getting access to data and details about proposals for investments in rail suggests that getting access to real investment details is easier said than done.

I have been trying for years in vain to have access to Via Rail's (uncensored) high-speed rail proposal (Via One) for the Quebec City-Windsor corridor. Even after going through the Access to Information Act, Transport Canada released a much censored version of the proposal that even hides the number of trips between Toronto and Montreal. Transport Canada's hands were tied by Via Rail that considers even the number of trips made between Montréal and Toronto by any mode as proprietary information.

While Canadians were being denied access to the Via's proposal that solicited over $3 billion of taxpayers' money under the then transportation Minister David Collinet, the American consultants, who studied the feasibility of the high-speed rail link, have been using the data and the results of the study to teach travel demand modeling in the United States. What I couldn't get from Transport Canada or Via Rail, I got it as attachments to an email from the US-based consultants.

Monday, March 2, 2009

A Floridian slip!

The Globe & Mail reported in February 2009 that Prof. Richard Florida, who the Canadian media have dubbed as the Urban Guru, lives on a secluded lot on a cul-de-sac. In his own words: "I have to say it being on a cul-de-sac overlooking a ravine was very attractive to me." He adds: "I thought how safe, how quiet, how perfect."

I am utterly confused. Richard Florida claims to be Jane Jacobs's disciple on all things urban. He invokes her memory in the op-ed pieces in Canadian newspapers as he sings the virtues of diversity, density and the hustle and bustle of urban squares. How does living on a secluded lot on a cul-de-sac reconcile with what he preaches?

Here are some details. The darling of urban planners lives in a 5000 square feet house on a secluded lot and considers cul-de-sacs perfect. And in case you missed reading Florida's $2.2 million report (a bargain at $150 per word) in which he asks for more creativity in Ontario. Here are some quotes for your reading pleasure:

"It is important to recognize that the history of economic development is a history of more intensive use of space. That may sound somewhat strange to those who think of suburbanization as sprawl."

"In this sense, suburbanization was a movement further along in the more intensive use of urban space."

"Today, the shift from suburbs and metropolitan areas to mega-regions composed of multiple cities and suburbs is the next step in the more intensive use of urban space beyond the previous period of metropolitanization and suburbanization."

"Just as suburbanization expanded the boundaries of where we live and work while increasing and intensifying the use of space, mega-regions take this one step further. The coming decades will thus likely see increasing densities and further clustering of industries, jobs, and innovations in a smaller number of mega-regions." Pp. 28

Given that Florida holds a PhD in urban planning from Columbia University, he must know that densities have been falling in North American cities. He must be comparing suburbs with rural areas to reach the above-mentioned conclusions. But compared to rural areas, any city would be dense by default! Or am I missing something?

Also, see Andrew Potters' assessment of the report in McLeans.


The complete text of Florida's views on what he chose for an abode are available at the Globe and Mail's website: An urbanist's retreat

Globe-trotting city theorist Richard Florida and wife Rana find a home to love perched on a Rosedale ravine byDEIRDRE KELLY, February 20, 2009.

NIMBYism and seniors tackle recession better

According to the Economist, parts of California that are home to seniors have tackled recession much better than the parts singing the creative class mantra. I'll look into Victoria to see if it holds true for Canada!

In the meanwhile, a $2.2 million report from the creativity Guru, Professor Richard Florida, has advised the Government of Ontario to invest more in creative jobs! Should we not first evaluate how the creative towns in the US have fared in recession before we jump on the creativity bandwagon?

Age and Californian cities

Gilded age

Feb 26th 2009 | SANTA BARBARA

From The Economist print edition

NIMBYs and old people make excellent defences against recession

THE lawns are green and well-tended. The swimming pools are filled with water, not mosquitoes. Steve Cushman, head of the local chamber of commerce, counts just 27 empty storefronts out of 410 along the city's main shopping street—a rate that many cities in California would envy. In the past year Santa Barbara County has seen a slight increase in employment. The secret to its health? Hostility to development and lack of youth.

Nowhere in California is immune to recession, but the oldest areas are proving most resistant. Of the ten counties with the lowest unemployment rates, nine, including Santa Barbara, contain an above-average proportion of people aged 65 or older. Youthful Los Angeles has shed almost a quarter-of-a-million jobs in the past year. Slightly older San Diego has lost a few thousand, while considerably older San Francisco has lost none. A map of the state's retirees (see above) could almost double as a map of economic resilience.

California's youngest regions are in its hot interior. In the middle years of this decade hundreds of thousands of families moved there in search of big, affordable houses. Unfortunately, many took on big, unaffordable mortgages to do it. Last month one in every 87 households in youthful, formerly fast-growing San Bernardino County received a foreclosure filing, according to California-based RealtyTrac. The housing crash has led such areas into an economic tailspin.

Santa Barbara has watched all this from the sidelines. In this slow-growth stronghold, anything other than a glacial pace of development is anathema. Mr Cushman says that only one block of flats for rent has been built in the region in the past 30 years. And some want to curtail growth further. Later this year the city will decide whether to reduce the maximum height of downtown buildings from 60ft to 40ft (18 metres to 12 metres). "We like Santa Barbara the way it is," says Marty Blum, the mayor.

This stuffy attitude has saved the city, together with others along the Pacific coast. Last month Santa Barbara County's foreclosure rate was just one in 298, well below the state average. Nor did the city build huge office parks which might now be vacant. As for industry, there was never much in the first place, "so there's just not much to lose," says Bill Watkins, an economist at the local branch of the University of California.

The diciest part of Santa Barbara's economy is the tourism business. Hotel receipts have dipped slightly this fiscal year as day-trippers from Los Angeles fasten their wallets. But much of the local economy is recession-proof. As well as the university, Santa Barbara has a large community college. It also has Cottage Hospital, which is being rebuilt—a job that will eventually employ up to 500 workers.

Health care is the only private-sector industry in California that accounted for job growth in 2008. Here, too, places benefit from having a fairly old population. The median age of people admitted to Santa Barbara's Cottage Hospital is 55—eight years older than UCLA Hospital in Los Angeles. Although hospitals complain it is too stingy, few sources of revenue are more stable than Medicare, which paid for 44% of Santa Barbara's patients in 2008.

In the past ten years, obedient to the findings of urban sociologists, American cities have tripped over themselves vying for young, creative people. They have revitalised downtowns and sponsored gay-pride parades. They might have been better off building retirement homes.


Sunday, March 1, 2009

Tobin's view on unemployment

As an engineer who enjoy studying economics, I have been ridiculed by those who think they know how the markets work. While during my graduate studies at the University of Toronto, I made a comment about the fact that no level of unemployment rate (i.e., greater than 0) should be accepted as the optimum rate. Economists in the room smirked. They later told me that it was okay for me to think like that because I was an engineer. Had I been an economist, I'd have understood the concept of the optimum unemployment rate.

Well, I wish I had read more of James Tobin who believed that the optimum unemployment rate was zero. Oliver Staley and Michael McKee writing for Bloomberg quoted Professor Joseph Stiglitz:

"As a young professor I did a paper where I analyzed the optimal unemployment rate," said Joseph Stiglitz, a professor at Columbia University in New York, who knew Tobin at Yale. "Tobin went livid over the idea. To him the optimal unemployment rate was zero."

You can read more about the Bloomberg article on Tobin by clicking HERE.

The trillion is the new billion

The current financial crisis has indeed created a hyperbole around the numbers being thrown around. Gone are the days when interventions would cost millions or billions. These are the days of trillion dollar interventions.

The link below is for the story from the BBC that explains the verbiage around trillions!