Tuesday, April 28, 2009

New York has a Beautiful Capitol

It is Empire State Plaza that is the problem.

A second category occurs to me: bad buildings by great architects. John Portman's Westin Peachtree Hotel in Atlanta would be one; I.M. Pei's Hoffman Hall on the USC campus might be another. And while it is heresy to say so, I am not crazy about H.H. Richardson's Sever Hall on the Harvard Campus.

As a number of commentators noted, college campuses are fertile ground for finding bad buildings. Mather House at Harvard is really appalling, as is most of the MIT campus (Kresge Auditorium being an important exception). Cal Tech, on the other hand, is very nice.

The campus of the University of British Columbia is perhaps the most outstanding example of a clash between breathtakingly ugly buildings and breathtakingly beautiful surroundings.

The most beautiful campuses I have seen in the US are Indiana U and the University of Virginia (thank you Mr. Jefferson). Elon University, a small school in North Carolina, has a very attractive campus. UC-Santa Barbara has such amazing surroundings, it is hard to believe anyone gets any work done there.

Missing Pontiac

I am in general not sentimental about General Motors. The company made very bad cars for a very long time. I once asked a friend who worked there why, as a research project, they didn't just buy Camries, take them apart, and try to put them back together again. He said they did--the taking apart, anyway. They never could figure it out.

But my first car was a 1973 Pontiac Grand Am. My parents gave it to me as a college graduation present in 1980. On a good day, the car got something like 16 mpg on the highway, because it had a 6.3 liter V-8 engine. But boy, could it go fast! It also handled really well.

I drove across the country a couple of times in it, and it was a great car in the city, because it was a bit of a beater, so the Mercedes and BMWs around me knew they had a lot more to lose than I were something unfortunate to happen if they cut me off.

So I have warm and fuzzy feelings about the Pontiac brand. On the other hand, I never later went out and bought one...

A slight brightening of mood in Atlanta

The ULI meetings were in Atlanta last week. This is entirely impressionistic, but it seemed that people were in a far better mood than they were at the Miami meeting last fall. People seemed very down at that meeting--they were much more upbeat in Atlanta, reporting that they were actually doing some deals. Perhaps another green shoot...

I like Atlanta (particularly Mid-town and the Arts area) quite a lot. I know of no city with more trees than Atlanta, and in the spring, it is very lovely.

Tuesday, April 21, 2009

Five buildings that should not have been built

These are my monuments to architectural incompetence and/or excess:

Number 5: University of Wisconsin-Madison Humanities Building

Credit: http://img101.imageshack.us/img101/7577/dsc00115ol7.jpg

The ugliest building on the campus where I studied and worked for 19 years. A spectacular example of the 60's brutality school; a building that only a concrete thinker could appreciate. Perhaps the most ironically named building I know. UW is planning on tearing the building down, at which point the FBI building in Washington will take its place as the ugliest building of the type (although they are all ugly).

Number 4: Empire State Plaza, Albany, New York

Better known as "(Nelson) Rockefeller's Last Erection." Enough said.

Number 3: Principal Insurance Building, Des Moines, Iowa

This building is not so bad--it is not distinguished, but not so bad.

It is, however, excessive. Land in Des Moines is more or less free. High-rise construction is expensive, in part because high rise buildings need deep footings, and in part because rentable area is reduced by elevators. The reason for high-rises in New York and Hong Kong is that land is so expensive, the benefits of economizing on land outweigh the costs of the expensive improvements.

Credit: http://en.wikipedia.org/wiki/File:Photo_801grand_north-eastside_des_moines_usa_2007-06-15.jpg#file

Number 2: Petronis Towers, Kuala Lumpur

Credit: http://upload.wikimedia.org/wikipedia/commons/8/85/Petronas_Panorama_II.jpg

It was 30 percent empty when it opened. It looks like a very large pair of binoculars. I generally like Pelli's work, but...

Number 1: Burj Dubai

Credit: http://upload.wikimedia.org/wikipedia/commons/b/b8/BurjDubaiJI3.jpg

Dubai puts the rest of the world (including perhaps even Vegas) to shame when it comes to excess. Burj Dubai is the tallest building in the world. Construction was halted before completion because of financial consideration. According to the Dubai newspaper The National, rents in Dubai are plummeting. Perhaps it is because one project has dramatically increase the amount of available space for rent.

I referred above to the low cost of land in Des Moines. Dubai is in the desert; when one flies into its (beautiful) airport, one sees empty land in every direction. Dubai is not Hong Kong.

Monday, April 20, 2009

What is the Matter with Pasadena?

In today's Pasadena Star News (my hometown newspaper):

PASADENA - Low-density proponents and affordable-housing advocates could clash today as the city kicks off a series of meetings on whether to ease rules restricting second dwellings.

Residents can speak about the rules governing so-called "granny flats," smaller units typically built at the rear of properties. An existing ordinance prohibits such secondary units, unless the lot is 15,000 square feet or larger.

That restriction means most homeowners in Pasadena cannot build a second unit on their properties.

Affordable-housing advocates believe easing or lifting the restriction could increase the city's stock of low-income housing. But neighborhood groups oppose the changes in principal, fearing increased density and traffic, said Henry Sherrod, head of the Pasadena Neighborhood Coalition.

"In general, we think it is not a good idea. It's not the number of bodies the units would add - it is the number of cars...There are just not enough places for people to park already," he said.

Officials last discussed the ordinance in December, when the city was working on its state-mandated housing element, which is part of the General Plan.

Then, affordable-housing advocates argued that allowing additional units would be a boon to the city's low-income residents and to families looking for affordable housing for older relatives.

The city is behind in its state-mandated quota of low-income housing units by just over 1,000

By comparison, Pasadena has about three times the amount of market-rate housing than it needs, according to state estimates.

Such phenomena as bans on granny flats explain why housing costs more than it should. Fear mongering limits the supply and configuration of housing. While opponents to such housing solutions as granny flats raise issues such as parking, the fact is that many just don't want low income people in their neighborhood, despite the fact that there is no evidence that housing low income people actually reduces property values (The NYU group has done some very good work showing that the opposite can be true).

Wednesday, April 15, 2009

The Legacy of Pruitt-Igoe

Pruitt-Igoe in St. Louis was perhaps America's most notorious public housing project:

(Picture from http://www.defensiblespace.com/book/illustrations.htm).

The project was completed in 1955, and was so horrible, it was torn down in 1972. here is what the space it occupied looks like now:

It is the green space in the middle. 27 years ago, 2870 apartments were torn down. Nothing has replaced it.

Given St. Louis' economic struggles, such emptiness is perhaps inevitable. Nevertheless, it is also striking.

Saturday, April 11, 2009

Hollywood Mystery Solved

Two things (ok more than two things, but two things for now) about LA puzzle me. The first thing is that men who constantly have stubble on their chin are considered attractive here. The second thing is they constantly have that stubble.

I think I figured out how they do it. Last Christmas, my daughters gave me a Norelco electric shaver. It is very nice, but I had been neglecting its upkeep recently, and so the blades got kind of clogged up with clippings. If one shaves with a clogged Norelco shaver, one gets perfect Hollywood stubble!

BTW, after seeing the results, I cleaned out the razor and shaved again. A couple of years ago, while on vacation, I went a few days without shaving. My daughters told me I looked awful.

Bill Heisel of the LA Times worries about us not learning.

He writes to me:

Do homes for $1 sound too good to be true? An LA Times investigation found that the federal program aimed at turning foreclosed homes into affordable housing has resulted in low income families becoming buried in debt, homes being flipped for exorbitant profits and, worse yet, more foreclosures. Now the federal government is talking about doing something very similar with the latest round of stimulus spending. You can read about it here.

One quick comment: HUD is hiring some very competent people. Shaun Donovan, Raphael Bostic and David Stevens are all very good.

Tuesday, April 07, 2009

Adam Smith on Roads

From Chapter 11 of the Wealth of Nations:

Good roads, canals, and navigable rivers, by diminishing the expense of carriage, put the remote parts of the country more nearly upon a level with those in the neighbourhood of the town. They are upon that account the greatest of all improvements. They encourage the cultivation of the remote, which must always be the most extensive circle of the country. They are advantageous to the town, by breaking down the monopoly of the country in its neighbourhood. They are advantageous even to that part of the country. Though they introduce some rival commodities into the old market, they open many new markets to its produce. Monopoly, besides, is a great enemy to good management, which can never be universally established but in consequence of that free and universal competition which forces everybody to have recourse to it for the sake of self-defence. It is not more than fifty years ago that some of the counties in the neighbourhood of London petitioned the Parliament against the extension of the turnpike roads into the remoter counties. Those remoter counties, they pretended, from the cheapness of labour, would be able to sell their grass and corn cheaper in the London market than themselves, and would thereby reduce their rents, and ruin their cultivation. Their rents, however, have risen, and their cultivation has been improved since that time.

Two Questions about Macroeconomics

I am not a macroeconomist. One of the reasons for this, I suppose, is that I was taught a lot of rational expectations overlapping generations stuff in graduate school and while I found it elegant, I did not believe it. The reason I didn't believe it is because the models are rejected by data: for instance, when households get short term changes in income, they seem to change their consumption behavior somewhat.

Nevertheless, there are two macro issues that puzzle me. The first is how to think about the size of the money supply. For example, while M1 and M2 are increasing, the shadow bank sector (i.e., securities financed debt) has dramatically decreased. It seems to me that this effectively reduces the size of the money supply, although I am not sure by how much.

The second is that Ricardian equivalence types seem to have an underlying assumption that government can't invest in positive NPV opportunities. For instance, Robert Lucas argues that if the government borrows $100 million to build a bridge, household will know they have a future tax liability of $100 million, reduce their spending accordingly, and therefore offset the stimulative impact of the bridge.

But what if the cost to borrow for the bridge is 3 percent and the bridge's IRR is 5%? Then doesn't the bridge stimulate spending for the simple reason that it is a good investment? The federal government has made, it seems to me, some very good investments. Hoover Dam is one. Rural electrification is another. The interstate highway system. The Golden Gate Bridge. The New York City subway system. [update: yes, these last two were largely a local projects. But still...] I could continue...

I do worry about bridges to nowhere. But many macroeconomists seem to believe in the hearts that public goods don't exist, and that there is nothing government can do better than the private sector. I think it is here that macro takes its cues more from religion than science.

Friday, April 03, 2009


My second favorite NFL team is the Philadelphia Eagles. I have two reasons for liking the Eagles. First, the University of Pennsylvania, when it was kind enough to invite me to be a visiting professor there, rescued me from Freddie Mac. Second, while I always liked Donovan McNabb, I came to especially like him when Rush Limbaugh opined on ESPN that McNabb was overrated because he was black. It was the very first thing Rush had to say when commenting on the NFL--not that the man has a race obsession or anything.

I thought about this over the past weekend when an op-ed piece in the LA Times challenged liberals to listen to Rush for a day before making a judgment about him. Many years ago, thinking that it was important to understand the points of view of others, I tried listening to Rush, and could never last more than five minutes, because that is how long it took before I concluded that he was either a racist or a sexist.

But I continue to think that it is important to get out of the cocoon and find out what the rest of the world is thinking. And no, David Brooks doesn't count.

I therefore from time-to-time read The Corner on the National Review's web site; I watch O' Reilly on occasion; I read Mickey Kaus (although I think I like to read him much the way I liked to pick at scabs as a child) and I read the Wall Street Journal editorial page every day.

I just can't do the WSJ editorial page anymore. On the one hand, it accused Eric Holder of politicizing the justice department because the department came to the conclusion that giving residents of the District of Columbia the basic human right of voting for congressional representation to be Constitutional (I know reps are supposed to come from the states, but that is in the original. The 14th amendment has a little item called the equal protection clause). On the other hand, it also accused Eric Holder of being political because his justice department overturned the Bush Administration's prosecution of a Republican Senator. You would think that they might grudgingly admit that occasionally Holder just tries to do the right thing.

Program Note

I will tonight be on Nightly Business Report on PBS talking about the California housing market.