There’s an interesting discussion going on in the comments section at Greater Greater on whether, or how, taxis should be regulated. In part, the question hinges on how an area perceives the cab service — as purely a private business or as a piece of public infrastructure, akin to bus networks. There are good reasons to feel it’s at least somewhat the latter, and certainly there are characteristics of both, but for now, cabbies are private operators, so we’ll deal with them in that fashion.

There are really two regulatory questions, then. One concerns ease of entry; the other, pricing. If you restrict entry into the profession, then other things equal the cost of a cabbie and a cab ride will go up. That’s why cabbies prefer to restrict entry into the profession. You also reduce the quantity of service, with negative effects for riders. On New Year’s Eve, for instance, it’s impossible to get a cab. If anybody out there could act as a cabbie whenever they wanted, charging whatever they wanted, then catching a ride wouldn’t be a problem on such occasions.

There are obvious downsides to such a system, however. The biggest one is that riders don’t have very good information about the intentions or reliability of unregistered drivers. More importantly, riders are extremely vulnerable once in a cab. In many cities, then, we see illegal cabs operating, suggesting that registered cabs don’t fully meet the desired market for hired cab services. Authorities warn against using them on safety grounds, however, and it’s not clear whether free entry would unambiguously improve social welfare. What we can say, is that cab drivers and companies should not be placed in charge of determining rules for entry. In such a case, they clearly maintain market power and can excessively restrict the number of cabs out there.

For fares, there are also positives and negatives to regulation. On the negative side, set fares can lead to a net shortage or surplus of cabs at any given time, as well as a poor geographical distribution. These issues force regulators to add additional rules, concerning what destinations and riders must be served, lest those areas go chronically ignored. On the positive side, set fares reduce transaction costs and uncertainty, and meters provide security that the set fare is being adhered to (folks don’t like to feel as though they’re being cheated). It’s hard to know, but I suspect that those cost reductions significantly increase demand for cab services, such that in the total absence of government intervention you’d see private efforts to coordinate a fare structure (though that would also raise the prospect of market power and pricing).

I know the standard economic model would say first use no government, but given a cursory glance at the market, it’s not clear that much is to be gained from wholesale deregulation. So long as cab companies aren’t restricting entry and governments are looking for the minimum necessary requirements the market should operate in a pretty healthy manner, and fares are going to be largely coordinated anyway, so they may as well be standardised. If too few or too many cabs becomes a problem, the solution is simple — change the price.

I’m open to other interpretations, however.

It’s much more distressing that Congress is saying that the stimulus plan won’t make it to Obama’s desk until mid-February, at the earliest, than it is that 40% of the stimulus package may be tax cuts.

One thing that happens when you take a long break from writing is that you begin to lose your voice. One’s complaints grow too expansive to be properly related, and slowly congeal into a mute rage (or frustration or whatever). Such is the case with my thoughts on the latest turn in the McMillan Sand Filtration Plant redevelopment scheme. You see, there are 25 acres in the very heart of the District occupied by what used to be a filtration plant. It’s kind of neat looking, but it’s fenced off and unusable, and it constitutes a massive void in the grid between Bloomingdale, Columbia Heights, the Washington Hospital Center, and Catholic University.

Now, the city wants to develop it, and is planning to do so in a mixed-use fashion. Of course, some in the community are against this. Many are concerned about parking and traffic, particularly given development plans a bit north at the Armed Forces Retirement Home property. On the one hand, this is kind of silly. At present, the lack of walkable retail options around the property means that nearby residents often have to drive to shop, increasing traffic. A dense, walkable development would allow many more local trips to be taken on foot. On the other hand, they kind of have a point. The area isn’t served by transit (other than buses, and shuttles that stream from Brookland station, contributing to negative views of new development there), and the District government seems uninterested in solving this problem.

That’s all very annoying. But to get to mute rage, I had to see this. Let me quote the little mission statement thingey:

This site is dedicated to saving 25 acres of green space in the Bloomingdale neighborhood of Washington, DC. While people who say they care about the environment are outraged about drilling in the northern tundra of Alaska, there seems to be little concern for turning 25 acres of green space in the nation’s capital into concrete and asphalt. Once it is developed it will be lost forever.

This is just remarkable. Obviously, there is no grasp of of the effect of constraints on urban housing supply on suburban and exurban land use — no sense that households unhoused in dense areas will instead despoil more land in greenfield developments. There’s also no sense of irony. The GOP wants to drill in Alaska to unearth oil, needed to fuel automobiles, needed to maintain a drivable way of life, because there are insufficient quantities of dense, walkable, urban developments in this country, such as that proposed for the McMillan site. Sigh.

So, er, I’m going to try and get back to blogging. A few housekeeping items:

1) Occasionally, good comments get stuck in my spam filter, and I have to go and get them out. During my hiatus, I stopped checking the filter, and I now return to find it full of hundreds of pieces of spam. I’ve therefore just deleted them all. If you had a legitimate comment waiting in the queue, you will be wanting to resubmit it.

2) I have a public Twitter feed, and I’ve recently noted lots of new people starting to follow it. You can all follow it, if you want, but I must warn you that I was never much good at Twittering in any case, and as part of an effort to simplify my life a little I’m only going to tweet on rare occasions, like when really strange things happen. I spend most days blogging from my couch, so tweeting may be quite rare indeed.

Ok, then.

I never know how best to commingle personal information and the usual blogginess at this site, but I should probably let you know about this one thing, since it will affect blogging for at least the next two weeks. Last Thursday, as I was heading to a friend’s house to play poker, something sort of misfired in my brain, knocking me out (I think) and giving me some serious temporary amnesia. The docs aren’t sure if it was a seizure or a mini-stroke or something else, but they do feel pretty confident that it wasn’t anything really serious, or likely to re-occur, or likely to cause permanent damage.

They did keep asking me if I’d been under a lot of stress recently, and while I said no, I guess it’s not actually clear to me what a lot of stress is, and maybe stress sufficient to induce cranial meltdowns counts as “a lot.” Whether or not that’s the proximate cause, I figure it might be a good idea to take the last fortnight of the year and unplug a little bit. So I hope you all have happy and restful holidays, and we’ll see if we can’t get this going again, maybe a bit mellower, in the new year.

PS - Those state population estimates are out now. The District gained 4,000 folks last year, and continues to gain on Vermont. Watch out, Vermont.

Matt reads some commentary on America’s trade deficit and wonders what is to be done, saying the question is too hard for him, which I doubt. But let me offer my thoughts. The dynamics creating current global imbalances aren’t that hard to understand — basically, we’re talking Bretton Woods II. Emerging markets have figured out that export-oriented development is a pretty reliable route to catch-up growth, and they achieve this growth in part by subsidizing American consumption. Basically, they buy American debt, which helps us borrow and which holds down the value of their currencies against the dollar, giving them an additional export boost.

This has been the global financial system, in a nutshell, for a couple of decades, but things intensified over the past ten years. In the wake of the Asian financial crisis, emerging markets determined that the best way to protect themselves in a world of capital mobility was to build up massive foreign exchange reserves, which meant buying up developed nation debt and supporting the imbalances. Rising oil prices and Gulf nation dollar pegs also contributed. Massive amounts of money went into the reserves of commodity exporters. We got this global savings glut, which made it really cheap to borrow, and really cheap to buy foreign imports. And that’s just what we did. At home, the resulting overvalued currency encouraged investment in domestic non-tradeables, like real estate. This is a familiar story.

Now, when emerging markets, like China, have red hot economies, it’s not too hard to see how to unwind these imbalances. China should let its currency appreciate gradually. That would take some pressure off of export industries and boost domestic consumption (in China). A growing consumer sector in places like China would allow emerging markets to grow without being entirely dependent on export growth, and would also allow America’s economy to balance itself out a bit. Meanwhile, America should work do reduce its deficit, given slowing reserve growth, to prevent interest rates from rising.

This happened a little bit. China allowed its currency to appreciate some against the dollar. Problem was, the dollar was also falling against everything else, so Chinese exports just began flowing to Europe. China also moved a little too slowly to adjust its currency for a couple of reasons — it has a lot of rural workers to employ, for one thing, and so it’s nervous about maintaining export growth, and it has a lot of American debt for another, so it really can’t afford a total collapse in the value of the dollar. America didn’t much help with the rebalancing either. Import growth this year was basically entirely cancelled out by growth in our petroleum deficit. We bring in a lot of oil, I’m sure you’re aware.

And now it’s really hard to adjust. China simply can’t afford to do anything to weaken its export industries, which are suffering heavily as global demand collapses. Even if they did, it’s a bit much to ask unemployed Chinese factory workers to save the global economy by boosting their consumer spending. Commodity exporters aren’t in a position to help either; increasingly they’re fighting to stay afloat as falling oil prices have gutted budgets. And America could (and may) try to help by goosing consumer spending, but then we enter recovery with the same imbalance problem as before.

What people are leaning toward, I think, is an American stimulus that focuses on government investment as much as possible, and pressure on emerging markets to spend as much on stimulus as they can afford to (and to focus more on private consumption). The primary goal is to try and close the global output gap. But an important second goal is to try not to exacerbate imbalances in the process, and even to work toward reducing them, if possible.

But frankly, I have no confidence that we’ll be able to craft a lasting global system to replace Bretton Woods II without specific institutional agreements. We’re going to have to fix the imbalances via summit, in other words.

Brad DeLong:

It is somewhat remarkable how much many of the recipes the foodies are now recommending resemble those eaten in the years of dearth before the coming of the Black Death…

That’s the most badass thing ever said about oats.

Some enterprising folks are digging into his record — see the Wire (I think I prefer this to TOW) for a good rundown. He’s not bad, and I think it’s important to note the role expectations played in this choice. I wrote in an email yesterday that I supposed we could be happy he wasn’t a raging highwayman, kind of grudgingly. But taking a step back, it’s really a big deal that the DOT isn’t going to be run by a raging highwayman.

This is not the sexiest, most visionary appointment, but perhaps that’s not what’s needed in this slot. One assumes that Obama will spell out LaHood’s role pretty clearly, and depending on what that role is, he might do just fine. If it’s stategic bigthink, then we may wind up very disappointed. If it’s turning cranks and explaining to his Republican pals that rail is good for growth, well, we do need those folks.

So now that the original shock has passed, I’d say I remain cautiously optimistic. The people are important, but how Obama uses the people is most important. And that variable remains unknown so far.

Over at Greater Greater, Dave Murphy takes a nice long look at the wretched stretch of pavement that is New York Avenue, east of downtown. A number of bloggers wrote last week to complain about the freeway signs that hang over the street at the I-395 interchange, and it basically gets worse from there. It’s unsafe for pedestrians, though given the wasteland around the road, it’s unclear who’d be walking along the road in the first place. Jim Abdo has, rather heroically, made plans to redevelop some of the decrepit lots near the Mt Olivet Cemetery, but the amount of really dreadfully underused land along the street is stunning.

There’s a lot that could be done to help the road. Basically, you terminate the freeway at 295 or at South Dakota Avenue. West of there, the road should have just two driving lanes, with the rest reserved for streetcars. Restore the grid, improve the streetscape, and so on.

As Dave points out, however, there are a lot of cars and trucks (and Chinatown buses) that use the road and which would be pretty upset at the shift. He offers a couple of ideas, none of which is all that appealing (as he admits). This isn’t that hard, though, in my opinion. The city is already working toward closing down the I-395 spur up to New York Avenue. May as well finish the job. Close the spur, heavily toll the I-295 link to the SE-SW Freeway in order to reduce congestion, and let everyone who doesn’t want to pay that toll take the Beltway, which will itself have HOT lanes before too long.

Of course, I’d rather take it a step further and terminate I-395 north at the 14th Street Bridge, thereby allowing us to tear down the SE-SW Freeway and connect downtown to all the nice investment and the riverfront south of Eye Street. Again, folks will worry about how all the cars coming into the city will manage, but the answer is to congestion price downtown, and to use all of these tolls to build streetcars and circulators for the center and improved commuter rail for the commuters.

The cost of carving up suburban land with freeways is relatively small; in such cases, connectivity and walkability are a joke anyway, and entirely automobile based. But in dense, walkable urban places, at grade freeways (or near-freeways) are extremely costly. There’s just not a very good reason for the city to choke its streets and air, and devalue its land, to cater to commuters who could much more efficiently be brought in on higher capacity modes. Or who could live in the sparkling new developments that would grow up along an improved New York Avenue.

Adam Doster says there’s confirmation of the LaHood appointment. That’s…disappointing. It’s possible that Obama wants him for GOP outreach, or that the bold moves will come elsewhere — out of another department or a national infrastructure bank. And we don’t yet know who’ll be running the FTA, or what resources they’ll have. But this does seem to be strongly at odds with the adminstration’s language on energy, environmental, and transportation issues.