Do or do not, there is no plan |

Cross-posted from  Do or do not, there is no plan


Do or do not, there is no plan


The local news sourceFinance and Commerce reports that

The Metropolitan Council will consider spending more than $740,000 to study building a transitway linking the Hiawatha light rail line and the proposed Southwest line. Possible routes include Lake Street and the Midtown Greenway.

This is the Midtown Greenway Streetcar.

We know how this story ends. We know this will be built. We know there will be a self-congratulatory ribbon cutting. We know politicians will declare it a success. We know it will lose money. We know it will be in the Greenway, not on Lake Street. We know it will be a streetcar or a bus that looks, smells, and operates like a streetcar. We know there will be rails or track over grass. The City will somehow find the money, it always does for supposed economic development projects like stadiums and convention centers.

It is already part of the Minneapolis Streetcar Plan completed five years ago. It will cost from $87 million to $115 million according to the more recent Funding Study, a number that sounds plausible for a mostly single tracked facility where there is no real land acquisition required.

There are no important environmental impacts, it is in a former railroad right-of-way.

The only thing we do not know is when, but I will guess June 22, 2024, 8:00 am for an opening date. I choose so far into the future, since for indiscernible reasons, construction cannot begin on one project until after the opening of the previous project. This comes after the opening of the SWLRT, and probably the Bottineau line as well, and probably the Streetcars in Phase 1 of the Minneapolis plan radiating from Downtown, so this is like number 5 or 6 in line for a set of 2-3 year construction projects.

This is kabuki.

Now far be it from me to suggest we shouldn’t do more transportation plans. Some of my favorite students are transportation planners. The market is tight, I know competent people searching for jobs (or better jobs). But how many times do we need to study the same thing?

Wouldn’t it be better to spend some resources and solve real problems. How much improvements to bus stops could you get for say $740,000?

Yes, yes, we need to do this to get federal funds, and so on. But if you really believe in the project, you can go through the morass of applying for federal dollars, drive up the cost of the project, and delay the benefits, or you can start construction now and get it done. That is what Tom Lowry did.

The answer is of course, in the lack of belief. We much prefer spinning wheels and waiting for Santa Claus than building things that are sufficiently locally valuable that they are worth locally paying for.


Linklist: April 9, 2012

David King: By This Logic, Perhaps the Whole Thing is Flawed:

“Second, Rail Authority Chairman Dan Richard explained omitting Anaheim based on the cost of travel time savings:

Electrifying and improving the Los Angeles to Orange County route would cost $6 billion and save only 10 minutes of travel time, said rail authority Chairman Dan Richard.
“Why would we do that, pay $600 million per minute?” he said in an interview Friday.

Let’s do the math here. The project is justified on travel time savings, and the Chairman has now said that $600 million per minute is too high a cost. At about $70 million, the current project needs to save more than two hours (116 minutes) to justify the expense if each minute is worth $600 million. Yet Richard says $600 is too high, but by how much? The current (new) business plan offers about 2 hour and 40 minute service from San Francisco to Los Angeles on some routes. (How travel times didn’t increase with the blended plan is still a bit of a mystery.) So, can you get from Union Station to San Francisco in less than or equal to 4:40 under current technologies? Yes you can. Flying is faster, even with airport hassles (Try Burbank to Oakland!). Driving is a bit longer, but is much more likely to get you exactly to your destination resulting in similar door to door times.”

AEI: A plea for beauty: a manifesto for a new urbanism :

“In her celebrated book The Death and Life of Great American Cities, which first appeared in 1961, Jane Jacobs argued that zoning, the concept on which the entire American planning system is based, is misconceived. Zoning leads to a disaggregation of the many functions of the city so that people live in one part, work in another, spend leisure time in a third, and shop in a fourth.[2] Whole swaths of the city are thereby deserted for large parts of the day, and the fruitful interaction of work and leisure never occurs.
Zoning contributes to the dereliction of the city when its local industries die and ensures that the central areas are not places of renewal, but at best museums and at worst vandalized spaces no one can use. In successful cities like Paris, New York, and Rome, workshops, apartments, offices, schools, churches, and theaters all stand side by side, with houses borrowing walls from whatever building has a boundary to spare.
The complaint against zoning is surely right. But it is not a complaint against planning. The great planning disasters, some of which have been studied by Peter Hall, owe their negative impact at least in part to their scale.[3] When the layout of a town is conceived from a master plan, the possibilities for disaster are legion.”

Annie Mole: More 3D London Underground Cutaway Diagrams

Network Structure and City Size

Recently published: Levinson, David (2011) Network Structure and City Size. PLoS One PLoS ONE 7(1): e29721, January 12, 2012 [doi]

Network structure varies across cities. This variation may yield important knowledge about how the internal structure of the city affects its performance. This paper systematically compares a set of surface transportation network structure variables (connectivity, hierarchy, circuity, treeness, entropy, accessibility) across the 50 largest metropolitan areas in the United States. A set of scaling parameters are discovered to show how network size and structure vary with city size. These results suggest that larger cities are physically more inter-connected. Hypotheses are presented as to why this might obtain. This paper then consistently measures and ranks access to jobs across 50 US metropolitan areas. It uses that accessibility measure, along with network structure variables and city size to help explain journey-to-work time and auto mode share in those cities. A 1 percent increase in accessibility reduces average metropolitan commute times by about 90 seconds each way. A 1 percent increase in network connectivity reduces commute time by 0.1 percent. A 1 percent increase in accessibility results in a 0.0575 percent drop in auto mode share, while a 1 percent increase in treeness reduces auto mode share by 0.061 percent. Use of accessibility and network structure measures is important for planning and evaluating the performance of network investments and land use changes. Keywords: Connectivity, Network Structure, Transportation Geography, Network Science, City Size, Scaling Rules, Accessibility, Travel Behavior, Mode Share, Journey-to-Work

This paper has several features:

  1. The paper includes a ranking of 50 US cities by estimated accessibility (Table 3). This estimate is macroscopic, though I think quite plausible, and shows the variation in the 10 minute vs. 20 minute … vs. 60 minute and composite accessibilities. The composite numbers are more or less what you expect, but some small cities are quite fast, so have high 10 or 20 minute accessibilities by car. Lots of work remains to be done on this (both multiple modes and multiple points in time) but this should be a valuable metric.
  2. Larger cities are better connected. They are also more productive. This research suggests a hypothesis (which further research will need to test) that variations in network structure may explain variations of economic output. More connected cities are more efficient. It is not simply how many people are in the city (the classic economy of agglomeration argument) but how they are connected that affects their productivity.

I will also comment about the publication itself. It was published in PLoS One, a first for me. PLoS ONE is a newish, open content journal across part of the Public Library of Science family that aims to represent all fields of study. I did this as an experiment as much as anything. The paper is out less than 4 months after submission, and 2 months after revision. This is *fast*, much faster than for-profit publishers offer. The journal is interdisciplinary, and does not winnow for importance (letting the field do that), instead winnowing for quality of the work and its description. Everyone in the field knows how arbitrary publication is when paper is a constraint. This seems an improvement.

The New Minneapolis Plan

Stone Arch Bridge
Stone Arch Bridge

Crossposted at and
The Minneapolis Downtown Council recently released “Intersections” a plan for Downtown Minneapolis. I had nothing to do with this plan, and so am free to comment. The plan is organized according to 10 major initiatives for 2025, I will list and comment on them, occasionally with snark, in order [my comments in brackets]:

  1. “Double Downtown’s residential population. Expand the residential population to 70,000 as a catalyst for driving Downtown’s next wave of business vitality, social improvement and cultural renewal.”
    [This seems like a good idea, the demand has been burgeoning for a couple of decades now, and with the Metrodome site coming available for productive uses again, there is an entire eastern side of downtown which could stand new housing. Demographics seem to be favorable for at least a modest return to downtown, and capturing another 1 percent of the region’s total population (or about 7% of its growth over the next 15 years) should be feasible.]
  2. “Transform Nicollet into a “Must-see” Destination. Extend and invigorate the original mall segment; establish “must-see” destinations along its route. Redesignate the Nicollet corridor as running from the Walker Art Center, through Loring Park to the Mississippi River, and ending at the foot of the Father Hennepin Bridge.”
    [Calling this the “Nicollet” corridor is just confusing, since the real Nicollet Ave does something different than passing the Walker. Perhaps the plan wants to change Nicollet to “Eat Street” officially. The residents may have a different view. In short, there must be a better name. As a physical entity, re-establishing the mall, and keeping private cars off of it, are both good things. I am not sure how many “Must-see” destinations need to be along it, since so many of the region’s best things are not. And really, “Must-see“? Is this Thursday Night 1990s NBC? The rest of the concept seems good, if a bit over-wrought, “iconic identity”, I would have gone with “main street”, though that I am sure is not sufficiently high-tech and resembles Sinclair Lewis a bit too much.]
  3. “Build Gateway park. A new linear park, stretching from the light rail station on 5th Street to the river, will constitute the new Nicollet’s north end.”
    [Good, and converting these parcels into parks drives up the value of the remaining developed blocks (a) by adding amenity and (b) by eliminating competition, good for existing building owners]
  4. “Create a consistently compelling Downtown experience.
    Deliver a consistently excellent pedestrian experience that inspires people to explore Downtown block after block, no matter the season or time of day—24/7/365.”
    [24/7, really? 4 am, you have 35,000 more residents, and you want street life? I don’t want people exploring my neighborhood at 4 am. Stuff closes. Stuff should close. Even transit doesn’t run 24/7 in some of the world’s biggest cities, or if it does, it is very scaled back. This may be aimed to contrast with St. Paul “The city that sleeps”.]
  5. ”Establish a downtown sports district that includes a new Vikings stadium.
    The district, centered around Target Field, will also include a renovated Target Center and the region’s busiest transit hub (the Transportation Interchange), all designed to maximize Downtown’s long-term entertainment value.”
    [This is the first really terrible idea in the plan. First why should a Vikings stadium exist. Second, why should it exist in Minnesota, since most people watch football on TV anyway, really they ought to play in a TV studio. Third, why don’t they use an existing brand new stadium, and enhance it if need be? It has to be cheaper to just give Zygi Wilf the money in foregone profits than subsidize a new stadium (The Cardinals play at University of Phoenix stadium [this is a joke]). Fourth, why should it exist downtown, when it is only used 8 games a year, and downtown real estate is apparently valuable (so the plan tells us), and everyone drives in and out without actually experiencing much of the city (The term “helicopter fans” might be appropriate). I realize there can be some cost savings with a few more hours of use for existing parking ramps and bars, but that is trivial compared to the wasted real estate (and subsidies, and opportunity costs). (I suspect this is about voicing support for the Vikings downtown rather than a real effort, but downtown Boosters cannot admit indifference.) Do stadiums really interact synergistically?]
  6. “Lead the nation in transportation options. Maintain and improve high capacity for commuters on our streets. Increase transit’s mode share for daytime commuters from 40 percent to 60 percent. Increase circulation within Downtown by installing a Downtown Circulator (whether streetcars or zero- emission buses) while intensifying regular transit service in close-in neighborhoods. Emphasize accessible, forward-leaning transportation technology. Improve pedestrian and bicycle mobility. Build the Transportation Interchange as the metro area’s primary transit hub. Secure stable, reliable transit funding for expanding and maintaining the system.”
    [The heart of downtown peak hour mode share for transit is about 40% for commute trips. This is the easiest to expand, and given the billions of dollars the region is spending on downtown-oriented rail transit, one would hope the share goes up, especially given there is no employment growth downtown. One can see why the downtown businesses interests advocate this spending, what is harder to see is why the rest of the region does. However, if transit is going to work anywhere in the region, it will be the downtowns and the University of Minnesota. This does fall short of the “doubling” of regional mode share the Metropolitan Council advocates though. Given the reduction in drivers to downtown due to increased transit, and due to the large number of nearby residents who can now walk or bike, what will we do with all the empty parking ramps. Maybe the Vikings can play Indoor Football on them.]
  7. “Create and sustain a green infrastructure—and showcase the riverfront.
    Establish and intensify the tree canopy throughout Downtown. Create green corridors that connect downtown districts and close-in neighborhoods. Enhance and emphasize the Riverfront as a world-class destination and Downtown’s green focal point. Beautify Downtown’s entry points, including freeway embankments, ramps and medians. Launch a Greening and Public Realm Conservancy to perpetuate the greening program.”
    [I like trees.]
  8. “Forge connections to the University of Minnesota. Leverage the Central Corridor’s light rail service to create a stronger link between campus and Downtown. Extend green corridors over the freeway trench that separates the CBD from the West Bank campus and establish a major new residential district on and around the Metrodome site. Generate business synergies that benefit both the U’s mission and Downtown’s prosperity.”
    [I like Air Rights too.]
  9. End street homelessness. Extend housing and outreach efforts so that the 300–500 people who sleep outside or in inhumane places have shelter, treatment and job training that keep them off the streets.
    [“We don’t want homeless people in Minneapolis” “We don’t want people to be homeless in Minneapolis”. Ok, call me unfeeling, but somehow I don’t think it is the lack of public services that leads the remaining 300-500 homeless to be homeless. From the point of view of Minneapolis as a whole, housing 300-500 people is approximately trivial if the issue is giving shelter. I am fairly confident there are that many vacant hotel units city wide on a random night. More to the point, We could build a shelter for that many people for something in the $10 million range (about $25 per person). Yet if we did that, we would still find 300-500 homeless people. Clearly that is not the real issue. Of course there should be some form of assistance for those who are simply down on their luck, I just think that this ignores the “choice” aspect of homelessness if we are not going to round them up and drug them like we once did (which I do not advocate). And perhaps they are just exploring the city 24/7.]
  10. Launch a Festival of Ideas and Civic Engagement. An annual festival will bring visitors, innovative thinking and civic energy to a city already noted for its citizen involvement. The festival will focus on creating a better future for all—locally, nationally and globally.
    [What a great original idea]

[Comment: The 345 MB version I have have 10377_PlanBook_forWeb.pdf has some production problems, duplicated pages, and pages out of place, but I did read all 111 pages of it (most were pictures). Otherwise, it is very attractive and fairly well written as planning documents go].

In defense of zoning

Hong Kong at Night
Hong Kong at Night

Crossposted at and

Zoning has been criticized by many of a libertarian bent as denying individual property owners the right to do what they want with their property. It has also been criticized by densificationists who declaim the damnably high rents induced by real density caps enabled by zoning. I discussed some of these issues relating to height limits yesterday. I am of a libertarian bent and I like density, so why do I, in principle, think zoning is a useful concept?

Buy the sky and sell the sky

Economics talks about negative externalities, the outcome of a transaction between two parties that negatively affects a third. The classic example is air pollution. A has a factory making parts for B, but the factory pollutes the commons (the air), and C is harmed. The best theoretical solutions are either to have enforceable property rights (eliminating the commons), or establish appropriate prices for pollution, or to somehow internalize the costs by having the same person control both the production and consumption of the externality (e.g. the pollution and the air). Since we neither but nor sell the sky, nor even rent it, we must look for some other alternatives.

But regulate the land

Regulation is a second best solution. As I have suggested previously, Zoning, like other regulations, aims to achieve what could not be achieved through property ownership or monetary prices. Those solutions often fail for a variety of reasons, but the dominant is transaction costs. It is not costless to impose prices, and it is often impractical to create enforceable ownership of commons like the air. Even if there are clear property rights, enforcement might be expensive if it must go through the court system. Try to prove whose pollution made you sick and you can see the difficulty.

On economies of externalities and zoning

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

Zoning is a specific form of regulation aimed at restricting certain land uses in certain places, because of the negative externalities they create that are difficult to address via property rights or prices. While historically these externalities where flying shards of rock from gravel pits, more recently they are concerned with air pollution, smells, litter, street congestion, on-street parking, and other public service crowding. One might argue whether these items are truly externalities. No one owns the on-street parking in front of their home, they don’t have a legal right to it (unless there is a permit system). But the custom is that they do have that expectation. Tacit rules exist. Even if these are not “technical externalities”, they are still “pecuniary externalities“. Upzoning drives up effective costs in markets (or commons) for road space, parking space, park space, school enrollment space, etc. by making that space scarcer. That some or all of these ought to be private goods is not a relevant rebuttal, as they are not now private goods, and until they are (and maybe after) the losses remain.

Pillsbury A Mill
Pillsbury A Mill

The neighbors (the NIMBYs) don’t want more development than they bargained for. When they bought their current property, there was a set of laws on the books regulating development on other properties. While legally I don’t generally have a property right in someone else’s lack of property rights, I have an expectation of policy continuity, and paid something for that expectation when I bought my own property. When someone else tries to rezone their property, (or the government proposes it), they may harm me. I may have more local air pollution, more malodorous neighbors, more broken beer bottles on my front lawn from inebriated friends of the nearby youthful renters who are otherwise undoubtedly good people except when they themselves are drunk at 2 am on a Saturday morning, more traffic on the roads (and thus more time in traffic), more strange cars in front of my house, more crowding in public school, and so on. While there may be great social benefits to this arrangement, either through lowered costs of public service delivery or greater economic productivity associated with the huddled masses, there are quite likely higher private costs similarly associated for at least some.
It is not enough that everyone might be better off. Unless some form of compensation is given to the neighbors from the great benefits such up-zoning entails, there is no reason for them to be in favor.
Zoning creates this Economy of Externality by reducing suboptimal spatial adjacencies that experience suggests generate negative effects. Recall that externalities require not just a polluter but also a pollutee. If no one is in the woods is to hear, the drunk partier did not create a noise externality. If you don’t move next to my kosher pig farm, you will not by bothered by its smell. If you do not live next to the gravel pit, its flying shards will matter not.
[Minneapolis has seen these problems with the Pillsbury A Mill project, which has been downscaled both due to local complaints and market conditions].

Compensating for Tacit Rights

This is not to say any particular zoning regulation is appropriate, efficient, or equitable. It is to say there is a ‘fact on the ground’ that has created a set of tacit rights that ought not be blithely unseated without expecting to provide compensation from the putative gains by rezoning or dezoning to those for whom this implicit contract between the public and private owners has been made. There are lots of options for providing these economic side payments. There has been some preliminary discussion about side payment in research on congestion pricing, but this needs to go much farther. This can be applied for all types of transportation investments and land uses at various scales. There will always be arguments about price, but if the neighbors ask too much, status quo ante prevails (the developer won’t develop). If the land use revolutionaries offer too little, the status quo ante prevails (the local politics will not permit approval). If there were truly gains from trade, there should be a core to this transaction. The logic of the ultimatum game might be informative.
We need to enable the neighbors to be winners too if we want them to support changing zoning and other land use regulations.

The Commanding Heights

Marin Civic Center
Marin Civic Center

Reihan Salam at NRO questions the Kotkin hypothesis, asking: “Are people choosing low-density metropolitan areas — or did rising prices in high-density metropolitan areas [like Marin County, in the Bay Area pictured -ed.] drive the population shift?”
What is cause, and what is effect, is not immediately obvious. There are trade-offs. High-density areas are naturally more expensive (due to greater demand, otherwise they would not be high-density). High-density areas are also typically formed by physical constraint, meaning less supply. They are also more regulated due to their higher density. Density naturally produces more regulation because density naturally produces more externalities [See tomorrow’s post]. Even expensive metro areas have inexpensive housing in places, it just tends to be either lower quality, or in less desirable neighborhoods.
I wrote Height limits produce a positive externality recently, to which the technology/urbanist/libertarian blogger Timothy Lee tweeted (but I took more than a month to respond to, since I don’t live on Twitter), and I replied (this is reformatted for presentation, but I think captures what was said in the right sequence)…:

You don’t think there’s a shortage of space near multi-line transit stops like Metro Center and Gallery Place/Chinatown?

The higher you build there, the shorter you build elsewhere. There is plenty of land in DC that could be denser at less than 10 stories.

why does taller buildings one place mean shorter buildings elsewhere? There is a region-wide housing shortage.

Regional demand is largely fixed. Someone who can’t get in block X will be far more likely to locate in block Y than Charlotte.

you don’t think real estate prices affect migration between metro areas?

not much. People have jobs before they migrate. Firms locate for lots of reasons, but a shortage of hsg in a small dtwn no.
there is plenty of moderately priced real estate in metro DC, SFO and elsewhere, how else could poor people live there?
Only if the savings on the labor costs outweigh the savings on economies of agglomeration. This indicates few e of a.

I recommend…

I read Avent and Glaeser, I believe they overstate e of a. The more important point is full social costs. New dev. should pay.

Firms move to save on labor costs (which are connected to housing costs) all the time.

If everyone paid full social cost, (and compensated losers) build away. In the absence of FSC pricing, we regulate.

Clearly Twitter is not a good way to have an academic discussion. Blogs are much, much better. There are several points wrapped up in this:

  • Empirical questions about Intra-urban vs. Inter-urban migration
  • The rights of the property owner vs. the rights of the community
  • Economic productivity (positive externalities?) vs. Pollution/Congestion etc. (negative externalities)
  • Empirical questions about the scarcity of land
  • Empirical questions about what constitutes good urban form
  • Empirical questions about the need to be downtown or simply in the metro area [plenty of suburbs even in DC would be happy to accommodate growth]
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

In short, I think height limits are not the dominant issue in any US metropolitan areas. This is not to say that regulation does not matter at all, as there are lots of regulations beyond height limits, but that its effect is limited. I discussed this previously in Zoning and Externalities.
If there is value, where are the side payments from otherwise rejected developers? My perhaps cynical view, ‘No side payments, no evidence of super-normal social profits, no evidence of huge value being lost’. While the developer may be losing potential profits, society is not, as those who are negatively affected are not being given compensation to offset the negative effects they would receive were the project to go forward. I realize there are transactions costs limiting the ease of implementing side payments, but surely some institution could arise to facilitate this.
I also wrote on the Limits to agglomeration, suggesting that agglomeration economies arguments are overstated, and in fact it is agglomeration externalities that create density, not (or not so much) vice versa.
DC and New York are both edge cases, being political and financial capitals respectively, both of which at least historically generated important economies of agglomeration.
One of the critical problems here, as with much research is the difference between marginal and average effects. E.g. Clearly transportation matters. If there were no transportation there would be no economic activity. However, that does not mean that a marginal increase in transportation supply will have a significant, or even positive, effect on economic activity, that depends on context. The network is mature, the marginal returns to new investment now are much lower than the historical average returns. Similarly, the marginal returns to density might be much smaller than average returns. Cities exist for a reason. That reason is economies of agglomeration in various forms. That said, where cities are continuing to grow, those economies must be valuable. Where suburbs are growing, the daily face-to-face inter-firm interactions emerging from the classical 19th and early 20th century transit-based downtown has declined relative to the need to be within auto-commuting distance of places that are to be dealt with on a short-term basis. When new cities grow, new patterns of economic activity are forming, and these may be more valuable than incremental changes to mature cities.
All of which is to say cities and their economies are dynamic, and the first order factor is the underlying market economics, while regulations (which are themselves the product of political market preferences) are second order effects.

Is transport too expensive?

Lisa responds to my earlier post in: Is transport too expensive? The Transportationist gets us thinking
To reduce her excellent post, she has 4 hypotheses to add to my 8:
9) The highest demand areas for maintenance and new stock occur in places that are expensive.
10) Project creep.
11) Envy is a much bigger problem in public works than in personal life,
12) Benefit cost is only as good as the integrity of the data and the analysts, and the whole process is too easy to roll.
In the comments to my original post,
Dick Mudge (I think) added another, which is
13) Federal funds favor capital-heavy technologies and investments.
“knowing home” writes:
14) Transportation planners also must demonstrate their projects will address potential peak traffic 20 years down the road, when it is assumed congestion will have increased dramatically.
PWG writes:
15) Planners and engineers are paid as percentage of total project cost
16) Materials are scarcer (and thus more expensive)
17) Regulations like ADA and environmental protection are driving up costs
*Updated 12/3* David King adds two more via FB:
18) Formula spending reduces the incentive or need to worry much about costs. This is obviously related to many of the other hypotheses already considered but I think deserves it’s own number.
19) What Chuck Marohn said about the State Aid system: “In short, large sums of money are collected at the state and federal levels for transportation and then a portion of that money is transferred back to local governments for transportation. Along with the money comes requirements that dictate how that money is to be used. These include engineering requirements for things such as lane width, degree of road curvature and design speed and planning requirements for things like maintaining a hierarchical road network. (Knowing this can actually make you a touch sympathetic, on a personal level, to the ridiculous engineer bear.)”

** Updated 12/5 ** The Economist writes about the UK:
20) Stop/start investment and
21) Poor commissioning.
“Since the competition for infrastructure investment is global, not national, Britain faces a further problem: project costs are “excessively high”, according to Infrastructure UK, a Treasury body charged with helping the private sector invest. That is partly because regulation tends to be rigorous and planning onerous. But Infrastructure UK reckons stop-start investment and poor commissioning are also to blame. It hopes that laying a pipeline of projects now will help to cut costs by £2 billion to £3 billion a year.”

*** Updated 12/6***

22) Stephen Smith posits another reason for high costs, “starchitecture”, when he argues Good Transit Is Ugly Transit – Forbes: “As always though, America must be the exception. Spain would never spend $3.8 billion on a single starchitect-studded station, but its own Santiago Calatrava was happy to build one if New York was footing the bill. Calatrava’s original design called for an enormous bird-like World Trade Center PATH station whose walls would open up in a sort of flapping motion, but it was scaled back for security and cost reasons. The wings were clipped and evolution was set back a few hundred million years – the bird will now be a ”slender stegosaurus.” Even the originally projected $2.2 billion cost would have been more than Paris spent on its entire new 9 km-long Métro Line 14.”

I will add another couple:
23) Separation of design and build. We know design/build saves money, yet this is not standard practice, but instead is innovative. In addition to driving up costs, dividing responsibility, it extends construction time.
24) Doing construction on facilities still in operation. Aside from the rare bridge, it is unnecessary to keep facilities opening and operating while doing construction. This reduces construction space, reducing time, increases set-up/break-down costs, and otherwise adds to total costs. Construction is much faster (and thus cheaper) if rebuilding could be done on a closed facility. See the London Underground as the classic example of the high cost of doing construction only at night and weekends, but keeping the line in operation. The system as a whole must be reliable, meaning I can get from here to there, but that does not mean every segment must be open 24/7/365. One reason the reconstruction of the I-35W bridge was so fast as that they contractors did not need to worry about existing traffic, (and it was design/build).

**** Updated 12/8 ****
David King posts some in the comments (25-27), and mailed some others(28-32), which I renumber for consistency:
“This list was timely for me. I covered Cost-Benefit Analysis in my transport course today and went through these 19 hypotheses, and my students came up with a couple of new ones:
25)Union work rules (not wages)that inhibit productivity gains through new technologies. See this this story.
26) Fragmented governance leads to large and meandering projects rather than centralized projects. Politicians have to “share the wealth” of projects. This is perhaps a cause of “project creep.”
27)Environmental Impact Statements (Reports) lead to “lock-in” effects where a complete EIS is a determining characteristic of a project’s viability rather than some other type of analysis. Since EISs can take years to complete, having one ready is a big deal.”
“28) Public-private partnerships trade additional up front costs for faster construction. See this story.
29) Open government/costs of democracy. The planning process is required by law to bring in as many stakeholders as possible. This has (potentially) led to transportation investment being sought and justified for non-transportation concerns. Transportation investment is now used for social, moral and economic goals that are not directly related to mobility.
30) Marketplace had a story today that climate change adaptation is increasing the costs of projects.”
Michael Iacono gives me the
31) Ratchet Effect: Interest groups are attracted to a particular public issue and pressure the legislative body to increase spending on that issue, but make it impossible to decrease spending on the issue.

***** Updated 12/9 *****
32) Wikipedia identifies “Baumol’s cost disease (also known as the Baumol Effect) is a phenomenon described by William J. Baumol and William G. Bowen in the 1960s. It involves a rise of salaries in jobs that have experienced no increase of labor productivity in response to rising salaries in other jobs which did experience such labor productivity growth. This goes against the theory in classical economics that wages are always closely tied to labor productivity changes.
The rise of wages in jobs without productivity gains is caused by the necessity to compete for employees with jobs that did experience gains and hence can naturally pay higher salaries, just as classical economics predicts. For instance, if the banking industry pays its bankers 19th century style salaries, the bankers may decide to quit and get a job at an automobile factory where salaries are commensurate to high labor productivity. Hence, bankers’ salaries are increased not due to labor productivity increases in the banking industry, but rather due to productivity and wage increases in other industries.” [Since fewer employees are needed in the now more productive industries, the relative labor costs of the unproductive industries rises].

David King Identifies:
33) Transit investment isn’t realizing any productivity gains from labor.
Thanks to the Tappan Zee Bridge replacement NY papers and blogs have been arguing about infrastructure investment as stimulus. This report from Smart Growth America, for instance, states that every dollar spent on public transportation yields 70% more jobs than a dollar spent on highways.
This is used to bolster the argument that we should spend more on transit, but I think there is an alternative explanation which is that we are much, much better at building roads than at building transit. As labor is a large proportion of total cost, transit investment has not realized productivity gains that have occurred in road building. This could be explained in part by lack of competition, low levels of total investment haven’t brought new producers into the market, or a number of other reasons. I don’t think the relatively high number of jobs per dollar spent necessarily means that transit investment is more virtuous. It may just be more inefficient. This is a problem with treating transport investment as industrial policy.
34) Utilities have little incentive to minimize the costs and disruptions from moving and upgrading service, and there are far more utilities now than there used to be. The UK once considered charging utilities rent for road space when doing subterranean work, though nothing happened. Christian Wolmar mentioned this in this post:
griffin1108 in the comments on the Washington Post article identifies:
35) Experience: “I think the reason has to do with experience and competence. We have no high speed rail lines, so any high speed rail line built in the US will be a “one off”. Same applies to subways and light rail. If you don’t do something regularly, you never develop an expertise that will reduce costs because you are constantly reinventing the wheel. The US has become a “stupid” country. We are paying the price for being stupid.”
David in the comments of John Bedell’s Blog identifies 3 items:
36) Ethos, training and prestige: “I suspect that two other explanations might be more apt: first, the kinds of ethos, training, and prestige that go with bureaucratic jobs in Germany and Japan,”
37) Government power: “and, second, the ability of government in those places to run roughshod over local resistance, property claims, special interest complaints, and lawsuits.”
38) Legal system: “I wonder if there aren’t also different laws applying to things like bond issues and insurance.”

So we are now at 17 19 21 24 31 38hypotheses. Martin Luther had 95, so we may close in on that.

Transportation costs too much

Marq 2 Transitway in Minneapolis
Marq 2 Transitway in Minneapolis

Crossposted at and
When I was growing up (in suburban Maryland), there was an ad on local TV from Crown Books. Founder Robert Haft asserted “books cost too much”, which led him to create Crown Books, and helped put independent booksellers out of business decades before Amazon became villain #1 among the literati.

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

Transportation costs too much.
Yet unlike independent booksellers, we weep not for the independent contractors and businesses that charge so much for transportation infrastructure, equipment, and operations.

  • Signalized intersections (~$175K),
  • buses (~$400K),
  • roundabouts (~$300K),
  • loop detectors (~$5K) (ed. installed),
  • diamond interchanges (~$9M),
  • bridges to nowhere Houlton, Wisconsin (~$668M),
  • light rail lines (~$1.4B),
  • high-speed rail lines (~$100B), etc.

are just some of the all quite pricey elements of transportation in early 21st century America. It sure seems like we should be able to build this cheaper. Think about it, $175K for 12 lightbulbs on a timer. What’s going wrong?
I have several hypotheses (please add others in the comments):

  1. Standards have risen. Our obsession with safety, features, environmental protection, and quality drive up the cost. Engineering design is often 20% of project costs. If only we would tolerate a few more deaths, a bus without AC, pollution, and frequent breakdowns, our initial costs would be lower. But when do reasonable investments become gold plating? Does the firetruck really need to do a 360 degree turn on the cul-de-sac, or can it back out?
  2. Principal-agent problem. Public works agencies are spending Other People’s Money, and so are less motivated to get value for dollar than an individual consumer on their own. This principal-agent problem prevails in lots of organizations, but especially so in public works where the bias is not to have a failure. There was an old saying in business, no one ever got fired for buying IBM. The same holds in public works, where rocking the boat with new or innovative technologies is not sufficiently rewarded.
  3. Thin markets. There is no or eBay for public works. I cannot go on Amazon and buy a transit bus or an interchange. The internet has not driven down prices in this field the way it has in so many others. As a result a few vendors can collude or orchestrate higher prices than would be faced in a more competitive market.
  4. There are in-sufficient economies of scale. When everything is bespoke, there is no opportunity for standardization and economies of scale. While many rail against cookie-cutter design, it is only with cookie-cutters that we get lots of cookies.
  5. Projects are scoped wrong. We have investments that don’t match actual demands. And this is not just for megaprojects. We have big buses serving few passengers. We have overgrown highways. We have a fear of building too small and having congestion or crowding so we build too big.
  6. Benefits are concentrated, costs are diffuse. As a result, the known beneficiaries lobby hard for projects, but not just to build it, but to build it in a way that is expensive. Costs are diffuse, it is seldom worth the taxpayer’s time to oppose a project just because of its costs, which are spread among millions of other taxpayers.
  7. Decision-makers are remote. Remote actors cannot have precise information about local conditions, and in the absence of a free market in transportation (there is generally one buyer, who is generally a government agency), prices are not clear. As a result these remote actors misallocate because they are misinformed. This notion derives from the Economic calculation problem and Hayek’s Fatal Conceit.
  8. No one actually does B/C analysis. A recent headline in the San Jose Mercury News says:Bay Area transportation projects to be judged on benefits vs. costs – :

    “”Talk to any business person about not having a benefits-vs.-cost discussion and they’ll say, ‘Duh, you mean you don’t do that?’ ” said the commission’s executive director, Steve Heminger. “They insist on it, but in the transportation profession it is not all that common. … This levels the playing field.””

    Heminger was appointed executive director in 2001 and hired in 1993, and only *now* they are doing benefit/cost analysis. At any rate, looking at the ratios presented in the story, they are clearly doing it wrong. Whether it is common or not I will leave to politicians or political scientists, however it has been the textbook procedure for a very long time. I suppose it is progress to at least acknowledge using B/C analysis even if the implementation is flawed

We are simultaneously spending too much and not spending enough. Because we mis-prioritize where the money is spent, we have inadequate resources for other things. We cut corners.
My favorite example is the bus stop sign which says “bus stop”. While this is better than no bus stop sign, or one that said “Buses Don’t Stop Here”, it is still quite uninformative, it doesn’t say which bus stops here, when it stops, where it is going, what is the frequency, when it operates. Why don’t we have better bus service operations? In part because the scarce resources that could be devoted to that are instead spent on expensive new capital investments that serve a much smaller fraction of the population.
We can all think of things that we would like the transportation system to do, that are technically feasible, but it doesn’t, because resources are scarce. They are scarce because of misallocation.
The costs of gold plating are several. Money spent on project X cannot be spent on project Y. This is the monetary opportunity cost of misallocation. Land devoted to project X cannot be devoted to project Y. More land also means greater distances to traverse. This is a spatial opportunity cost.
There is a tension between the risk of gold plating (focus on benefits to the exclusion of cost) and of corner cutting (focusing on costs to the exclusion of benefits). But there is available to us a balance, building something which maximizes the difference between benefits and costs, not just looking at benefits or costs. Insufficient attention is placed on the trade-off, too much on the ends by advocates of one side or the other.
When we are out-of-balance, people distrust that their tax money is wisely spent. If people see lots of examples of mis-expenditure, they will cut how much they are willing to allocate to transportation. Mis-expenditure thus causes the system to deteriorate in two ways. First it reduces inputs to the system, money that could be spent. Second it allocates money away from genuine public needs (starting with adequate maintenance and operation of existing facilities) and towards unnecessary wants, thereby increasing unmet needs.
We need to break this cycle of distrust if we want to adequately fund transportation needs (not wants). This requires institutional changes in how transportation services are provided. Asking the same people for more money is unlikely to be very successful. As has been mis-attributed to Benjamin Franklin: Insanity: doing the same thing over and over again and expecting different results.

Imaginary Futuristic B******t

John Gruber @ Daring Fireball does not like vision videos: The Type of Companies That Publish Future Concept Videos:

DeVilla isn’t the only one who accused me of Apple-biased hypocrisy regarding my stance on Microsoft’s “Future Visions” vs. Apple’s “Knowledge Navigator”. It is true that when I linked to Andy Baio’s post about “Knowledge Navigator” a few weeks ago, I didn’t add any commentary.
But the exact same criticism I have for Microsoft today applies to 1987 Apple. “Knowledge Navigator” encapsulates everything that was wrong with Apple in 1987. Their coolest products were imaginary futuristic bullshit. The mindset and priorities of Apple’s executive leadership in 1987 led the company to lose what was then an enormous usability and user experience lead over the rest of the industry, and eventually drove the company to the precipice of bankruptcy. That 1987 Apple was a broken company is so painfully obvious from today’s vantage point that I didn’t think it needed to be mentioned.” [links and emphasis added]

This applies to planning as well, which is very much about “imaginary futuristic bullshit” which most people either (a) can’t grasp, (b) dislike, (c) naively believe religiously, or (d) find underwhelming.
I think you need both a vision to shape direction and concrete incremental decisions to move you in that direction. Whether a vision helps or hinders incrementalism depends on the vision and who it is pitched to. (The classic argument of “Perfect being the enemy of the Good” often delays useful projects to the point nothing is accomplished). I am sure Steve Jobs had an internal vision, but he did not want to reveal it before it was ready. He was dealing with private goods.
Public works on the other hand cannot really be sprung on the public anymore. Hence visions, and plans.
A major downside is getting locked into a bad vision, a misguided line on the map, or a poor investment strategy because the vision or plan became an implicit contract. Unlike vision videos, which if wrong or distracting can easily be discarded, the plan somehow becomes permanent.