Austin Contrarian

CAFE math

From Marginal Revolution:

Via Andrew Sullivan, Eric dePlace notes that "You save more fuel switching from a 15 to 18 mpg car than switching from a 50 to 100 mpg car." And so you do. A 15 MPG car would require 1,000 gallons of gas to drive 15,000 miles while an 18MPG car could get it done in just 833 gallons. That saves 167 gallons of gasoline. By contrast, since a 50 MPG only uses 300 gallons to go 15,000 miles, upgrading to 100 MPG can't save that much gas -- the super-efficient car uses 150 gallons.

It's called "diminishing returns."  It's easy to see if you chart the number of gallons saved by improving a given gas mileage by 1 mpg, which I've done below (per 1,000 miles driven).

 

Improving gas mileage from 10 mpg to 11 mpg saves 9 gallons of gas per 1,000 miles (all else equal), while improving gas mileage from 50 mpg to 51 mpg saves just 0.4 gallons per 1,000 miles -- or just 4 gallons per year, if you drive 10,000 miles per year.

I think CAFE is a dumb piece of legislation for a bunch of reasons.  One is its focus on "fleet averages."  CAFE orders car makers to improve the average fleet gas mileage.  A car maker can do that by improving the fuel efficiency of its clunky SUVs.*  Or it can do that by improving the fuel efficiency of its already-efficient compacts.  (It can do both, of course.)  Increasing a 35 mpg vehicle's gas mileage by 10 mpg saves just 10% as much fuel as increasing a 15 mpg vehicle's gas mileage by 10 mpg.  These are perfectly equivalent methods of compliance under CAFE, though, so a car maker will choose whichever option (or combination of improvements) will cost it the least.

If you think this kind of legislation is a good thing, there's a simple fix:  mandate reduction in average "gallons per mile."  That would give a 1 mpg increase in a low-gas-mileage vehicle a lot more weight than a 1 mpg increase in a hybrid's gas mileage.  E.g., improving gas mileage from 15 mpg to 20 mpg is a 25% reduction in "gallons per mile," but improving gas mileage from 40 mpg to 45 mpg is just an 11% reduction in gallons per mile.  The car maker would have an incentive to make the improvements where they would make the most difference.

*Under the new CAFE standards, car makers will have to lump their SUVs with their passenger cars in calculating fleet averages.

Netiquette bleg

There's a blog I really like with great content on a subject that interests me.  The author, though, crams each post with irrelevant images.  I suppose he means to enliven his posts.  Instead, the images just distract from the content.  Badly.  (This isn't an Austin blogger or anyone who regularly comments on this blog.)

Can I say something? 

Marx on McMansions, and "No One Makes You Shop at Wal-Mart"

A house may be large or small; as long as the neighboring houses are likewise small, it satisfies all social requirement for a residence.  But let there arise next to the little house a palace, and the little house shrinks to a hut.  The little house now makes it clear that its inmate has no social position at all to maintain, or but a very insignificant one; and however high it may shoot up in the course of civilization, if the neighboring palace rises in equal or even in greater measure, the occupant of the relatively little house will always find himself more uncomfortable, more dissatisfied, more cramped within his four walls.

That's Marx from Wage Labour and Capital, as quoted in Tom Slee's No One Makes You Shop at Wal-Mart.  McMansions evidently were getting people worked up as far back as 1849.

By the way, if you want an enjoyable, leftist-ish critique of markets, I recommend Slee's book.  It's an attack on "MarketThink," his vaguely Orwellian term for the belief that markets and consumer choice always produce the best result.  (The title of the book is ironic -- the people who say such things are his targets.)  His main point is that everyone's choices are tangled together, so that each person's choice affects everyone else.  As a result, there's no guarantee that even perfectly rational individual choices will make you happy.

Slee sets up his share of straw men.  Still, his book is a clean, elegant exposition of different types of market failures.  Some of them are almost trite, such as the "tragedy of the commons"-type market failure that causes congested roads and littered parks.  Others are fresher.  When buyers can't get reliable information about product quality until they buy the product, low-quality products may drive high-quality products out of the marketplace.  This, he claims, explains why fast-food restaurants, with their predictable but mediocre food, drive higher-quality local restaurants out of business.  Network effects may force consumers to choose sub-optimal products -- e.g., business people use Microsoft Word because everyone else uses it, not because it is necessarily very good word processing software. 

The picture of irony

The crape myrtle in front of my house:

Richard Florida says the Internet hurts place-based interaction

I usually agree with Richard Florida's perspective on urban issues, but not here, where he argues that technology (particularly the Internet) tends to curb our interaction with our own neighborhoods and cities: 

If I'm writing this blog (something I love to do), I'm not mixing and mingling on the street, if I order my groceries from an on-line store, I'm less likely to go to the store.  All of these things lessen and limit human interaction.  Of course, they increase the efficient allocation of time. But they also limit real, human contact, and the chance of random happenstance interactions. Heck, my GPS makes it less likely I'll ask for directions; my on-line catalogue and reviews give me little need to ask a shop-owner for advice. Technology makes me more house-bound (something I sort of like) and yes more efficient at work. I can go to the office less, the store less. I can "work" more, interacting with people and commerice on-line.  My main source of human energy are my walks in the ravine. As beautiful as it is, it's certainly not Hudson Street. The internet and the social media, for all the great things they bring, damp down human interaction and certainly limit the chances of random connections. I'm a big fan of all this, don't get me wrong, but I think the effects on places, cities and communities cut several ways.

Face-to-face communication may be richer, but interaction online is still human interaction no matter how one defines it.  The alternative to interaction online is frequently not face-to-face interaction, but none at all.  For example, I'm interested in land-use issues, but my wife just rolls her eyes whenever I bring them up; if I put the TV on the City Council channel, she'll just get up and leave the room.  My two-year-old cares about urban issues only when they involve trains.  My co-workers, at least the ones I see regularly, don't care either.  Without blogs, I wouldn't talk to anyone about this stuff; I would be interacting a lot less than I am.  (And how much more random could the connections you make online be?)   

Plus, it's not like I spent my time before blogs hanging over the fence gossiping with neighbors.  The time I spend online is mostly time I used to spend watching TV or reading.  I go out about as often as before, I just spend my time inside differently. 

But even if the Internet reduces "place-based" interaction, is that necessarily a bad thing?  Don't get me wrong:  face-to-face communication is valuable, and most people crave it to one degree or another.  But there's also a lot of drudgery in having to interact with people just because they're at hand. One of the good things about growing up was getting more control over whom I had to interact with.  I had no freedom at all when I was in elementary school.  Whom I walked to school or shared classes with was dictated by place -- whomever happened to live nearby -- rather than congeniality.  Things were a bit better in junior high and high school when I got a little say over class scheduling and extra-curricular activities, and thus some control over whom I associated with.  Things got even better in college and, for me, better yet in law school and work.

Online interaction is just an extension and intensification of this happy trend.  I interact with people who share my interests, if not my opinions.  I "bump" into strangers who have interesting points of view.  I'm exposed to things that I never knew existed.  If that means one fewer conversation about the weather now and then, that's fine with me.

Update:  Richard Florida's rebuttal.

The McMansion ordinance as an anti-gentrification tool

The Organization for Central East Austin Neighborhoods (OCEAN) wants to drop the McMansion ordinance's guaranteed minimum home size of 2,300 sq. ft. for Central East Austin lots:

Over the years, Rudolph Williams has watched house sizes grow in Central East Austin. More and more, two- and three-story houses are replacing the one-story, 1,500-square-foot houses typical of the area.

Although the city clamped down on home sizes in proportion to lot sizes last year, he has been working to tighten the rules even more for the smaller lots in his area — those less than 5,750 square feet — as a way to protect the area's character, culture, diversity and history.

. . .

Currently, the rules say that on lots of all sizes, a property owner can build a residential structure that is 2,300 square feet or has a floor area that is 40 percent of the area of the lot, whichever is greater.

The neighborhoods organization wants to remove the 2,300 square feet allowance for lots less than 5,750 square feet. So on a lot that's 5,000 square feet, the biggest house could be 2,000 square feet.

The article implies that OCEAN's main concern is gentrification:

Limiting the size of houses on smaller lots would help reduce tear-downs of rental units, the primary affordable housing option for low-income people in Central East Austin neighborhoods, and force developers to build smaller, Williams said.

However, the change wouldn't be effective alone, Williams said. It must come with other protections from local government and school authorities, such as tax relief for renters and increased homestead protection for poor homeowners, he said.

"We're at a tipping point right now. Can we create a neighborhood where rich and poor can live together?" Williams asked. "Or will this be another gentrification story? Another Clarksville?"

Gentrification is a complex issue.  I don't want to tackle it here.  But if you think you need to adopt anti-gentrification measures, I question whether you should start by stripping equity from the small lot owners.

Given the prices in Central East Austin, the loss of 300 buildable square feet would probably be worth $10,000-$20,000 to the small-lot owners (lots with around 5,000 sq. ft.).  Eliminating the McMansion minimum would hurt them and no one else.  It would not penalize the owners of lots that have already been redeveloped -- i.e., the yuppies living in spanking new $300,000 homes.   

I haven't been to a single OCEAN neighborhood association meeting.  Perhaps the people who would be adversely affected by this uniformly support it (in the hope of lower taxes, for example).  But I'm always skeptical of plans that would put all of the burden on a small minority, particularly a minority that had the least to begin with.  Neighborhood groups aren't as homogeneous as they sometimes claim to be.  The City Council should do its due diligence this time:  Before ordering small-lot owners to fight gentrification on behalf of everyone else, it should make sure they are volunteers rather than conscripts. 

Note:  I inadvertently published an earlier, very rough draft below the fold.  (There wasn't supposed to be a "fold.")  Sorry for the gibberish.

Sales taxes vs. property taxes

From Todd Hill at Burnt Orange Report:

Yesterday at a fundraiser in Weatherford, Republican Phil King let it be known that the Texas House has formed a committee to figure out how to abolish the use of personal property taxes to support public education and instead transition to a regressive sales tax.   

. . .

King had this to say to the Weatherford Democrat:

"I am absolutely convinced that my constituents, and frankly, the voters across Texas would rather pay a sales tax when they purchase something than a property tax for the rest of their life," King said speaking by phone Wednesday.

I agree that this is a horrible idea, but not necessarily with Todd's reasons:

A sales tax is a tax on the poor and middle class, plain and simple.  The majority of middle class and poor Texans spend the majority of their taxable income on goods and services.  Considering the heavy tax burdens, and current economic burdens already on this class of Texans, a sales tax would certainly crush what remains of this core block of constituents.  You can't lay the future of Texas public education on the unpredictable peaks and valley's of an economy.  This move would cripple the foundation of Texas public education, which the majority of Texas children attend. 

Is a sales tax necessarily more regressive than a property tax?  Depending on the homeowner's equity and interest rate, property taxes may account for 25% or more of annual housing costs.  Someone who pays 30% of gross income on housing thus may pay 7.5% of his gross income in property tax.  Lower-income households, who often spend much more than 30% of their gross income on housing, are hit even harder.  (Renters pay the property tax, too -- it's just folded into their rent.)

Someone spending 30% of gross income on housing would be lucky to have 50% of gross income left to spend on taxable goods.  Even if the sales tax were jacked up to 10%, such a person would pay just 5% of gross income in sales tax.  Also, sales taxes are more easily avoided than property taxes.

On the other hands, cutting property taxes probably would cause property values to rise.  Current homeowners would benefit at the expense of renters/future homeowners. 

Still, It's not clear to me that sales taxes are more regressive than property taxes.   

This is still a horrible idea for two other reasons.

First, sales taxes mean state funding.  State funding means state control.  Schools have an incentive to be more responsive to students and parents when they are subject to local control.  (They're already subject to too much state and federal control.)

Second, slashing property taxes and raising sales taxes creates perverse incentives for cities and towns.  New residential development becomes a financial burden because it does not pay its own way through property taxes.  Cities become overly dependent on retail, causing them to fight each other for shopping centers while shutting out new homes.  That's arguably what Proposition 13 did to California.  In fact, there's a good argument that Proposition 13 accounts for much of the anti-growth sentiment in that state, which in turn has caused the crippling home prices out there.  I doubt those spending 40% of their gross income on interest-only mortgages are reveling in their low property taxes.   

Vertical Mixed Use: Not everyone is a grown up

The first public Vertical Mixed Use hearing last Thursday turned into something of a love fest.  And why not?  The two central Austin neighborhoods whose applications were up for vote -- Bouldin Creek and Travis Heights/St. Edwards -- asked to opt exactly one tract out of the VMU district.  These neighborhoods honored the VMU bargain:  "Put density on the transit corridors, not in the neighborhood interiors."   Councilmember McCracken, VMU's daddy, even gushed, "I think anytime you hear anymore that neighborhoods don't support density it's a bum rap . . ."

Let's not get ahead of ourselves.  Plenty of neighborhoods have no intention of honoring the VMU bargain.  And the fact is that last February Council gave them a sharp little knife to cut out the density they don't want when it authorized them to opt individual tracts out of the VMU district.  As originally enacted, the ordinance put all commercially-zoned property on core transit corridors into the VMU district.  This was one of the ordinance's best features:  neighborhoods got the chance to customize the VMU incentives, but they couldn't opt properties out of the district completely. 

Now the truly intransigent neighborhoods have the chance to opt out big chunks of real estate.  Sure, they need Council's permission, but it will be a lot harder to deny a specific neighborhood application than it would have been to vote down that "technical" amendment back in February. 

And how will Council ever have time to pass judgment on all of these individual opt out requests?  It faces potentially hundreds of individual zoning cases triggered by neighborhood opt-out applications.  Just because the first two neighborhoods honored the spirit of the ordinance does not mean that Council is off the hook.   

The Zilker Neighborhood Association's VMU application (pdf) is a perfect example of the trouble headed Council's way.  By my count, ZNA has asked to opt more than 70 eligible tracts out of the VMU district.

ZNA has offered various justifications for opting out these tracts, mostly bogus, in my opinion.  Things like "neighborhood character preservation" (read "iconic preservation"); "infrastructure capacity"; environmental protection (water quality, trees and "scenic view sheds"); prevention of VMU "creep" and compatibility; and preservation of small local businesses.

There will be plenty of time to debate these but for now I just want to illustrate the scope of ZNA's opt-out request, and the job facing Council.  I have charted ZNA's opt-out requests below the jump.