Monthly Archives: March 2011

The possible shifts in the foundations of tax bases

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Governments are dependent on tax bases for revenue. Hopefully, the tax base meets financial expectations and if things are going well, the taxes bring increased revenues, leading to more spending (and saving?) possibilities. But what happens when tax bases decrease?

This is an issue facing a number of government bodies and a number of taxes are affected:

-I was reminded of this again by this piece (h/t Instapundit) which suggests that increasing income taxes on the rich may not work out in the long run as economic troubles can greatly affect the incomes of the rich.

-Property taxes are affected by the assessed value of properties. If property values are down, such as in this economic crisis where it appears housing prices will be depressed for quite a while, then tax revenue may go down. (Or they may not – can local communities really afford to have less money coming in through property taxes?)

-So called “vice taxes,” on things like cigarettes, may be self-defeating: as people smoke less, the revenue will slowly dry up.

-The gas tax will be interesting to watch in future years: as the government pushes for more electric vehicles and with higher gas prices, this could mean that less gasoline is purchased. Money to pay for new roads and maintenance will have to come from somewhere.

A couple of questions about these different taxes:

1. Is the uncertainty about tax revenues in the last few years really that different from other points in history? If not, what have people done in the past?

2. Might we expect to see some major changes in taxation in the coming years as governments look for different (perhaps more stable?) or more sources of revenue?

3. How are sales taxes or VATs affected by economic crises?

(The realm of taxes is not my area of expertise but I do know the importance of some of this to communities: limited or decreasing property and sales taxes lead to big issues with budgets which then affect services which then angers residents.)

A few comments by Joel (3/31/2011):

One way that cities and states are seeking to increase collection revenues is through enhanced sales tax enforcement.  As Amazon is finding out, for example, governments have their ways of pressuring online retailers.

Of course, to a certain extent, this is simply turning into an arms race, with businesses increasing their lobbying budgets and hiring more tax attorneys.

Battle in Winnetka over affordable housing plan

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The community of Winnetka, Illinois is a northern suburb of Chicago that is quite wealthy: the Census says the median household income is $201,650 (in 2009 inflation-adjusted dollars). The Chicago Tribune reports on a recent debate over a plan to introduce affordable housing to the wealthy suburb:

Winnetka’s plan calls for a land trust to provide for-sale and rental property to those who make far less than the median household income of $201,650.

Under Winnetka’s proposed plan, owner-occupied units must be affordable to households earning at least $75,000. Rentals must be affordable to those earning at least $45,000 or more. Current residents and senior citizens would receive priority.

A lot of suburban communities talk about affordable housing but few propose plans like this. It would be interesting to know how the local government was able to even put this plan forward.

The plan itself describes the change that has occurred in Winnetka over recent years as the community has become even more exclusive:

Over the past several decades, Winnetka has become less diverse in age and income, and it contains a more transient population, according to the plan. The report states that Winnetka lost much of its housing market diversity with the demolition of older, smaller homes that were replaced with larger, more expensive houses. Between 1980 and 2000, the village also lost 262 rental units — a 38 percent reduction — due to the conversion of downtown apartments into commercial offices.

Between 1990 and 2000, the number of homes valued at less than $500,000 declined to 975 from 2,004, according to the report.

“Winnetka’s housing stock increasingly serves only one kind of resident — a family at the peak of its earning years and with school-age children,” the report states.

It sounds like teardowns have become quite an issue.

There has been some vocal opposition to the plan:

“There is plenty of affordable housing in neighboring communities,” said Carry Buck, chairman of WHOA, or Winnetka Home Owners Association. “Most people in Winnetka are conservative and they do not want more involvement from government.”

In a 25-page publication mailed to Winnetka residents last week, the homeowners association called the village Plan Commission’s proposal un-American, predicting it will lower property values, attract criminals and force residents to subsidize those who rely on “hand-outs.”

While this language might be more blunt than what one might typically find in such NIMBY debates, there are plenty of suburbanites who hold such views. Anything that might lower property values or might detract from the community that they bought into is seen as a threat.

The Tribune story suggests that an interfaith group is on the other side of the debate:

The lightning rod for complaints is the Interfaith Housing Center of the Northern Suburbs, a Winnetka-based nonprofit that supports the plan. The center, which advocates for fair and affordable housing and investigates housing discrimination complaints, is accused by WHOA of infiltrating village boards and commissions with “social engineers” who depend on federal funding.

Interfaith’s executive director, Gail Schechter, described the opposing arguments as absurd.

“Social engineering is what got us to look the way we do,” she said. “The way Winnetka looks today is not just pure market forces.”

Sociologists would tend to fall on this side: the suburbs were not just created by people voting with their dollars and feet. Rather, the whole suburban system is upheld by a massive system of government policy (building highways, promoting homeownership, tax breaks or incentives for developers and those with financial resourcse) and cultural values (emphasis on the single-family home and automobiles, an anti-urban bias, a desire to move away from problematic areas, etc.).

It will be interesting to see how this plays out. In my own research on suburban communities, I found such open debates (where each side clearly lays out their intentions and/or fears) to be relatively rare. Additionally, such debates are rarely just about particular development proposals; rather, they are about the broader character of the community. Here, it sounds like the debate is also about the image and status of Winnetka: is it just a upper-class suburb or should it be something different?

The predictive power of sociology and learning from the past

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In recent  years, the predictive element of social science has been discussed by a few people: how much can we use data from the past to predict the future? In an interview with Scientific American, a mathematical sociologist who works at Yahoo! Labs talks about our predictive abilities:

A big part of your book deals with the problem of ignoring failures—a selective reading of the past to draw erroneous conclusions, which reminds me of the old story about the skeptic who hears about sailors who survived a shipwreck supposedly because they’d prayed to the gods. The skeptic asked, “What about the people who prayed and perished?”
Right—if you look at successful companies or shipwrecked people, you don’t see the ones who didn’t make it. It’s what sociologists call “selection on the dependent variable,” or what in finance is called survivorship bias. If we collected all the data instead of just some of it, we could learn more from the past than we do. It’s also like Isaiah Berlin’s distinction between hedgehogs and foxes. The famous people in history were hedgehogs, because when those people win they win big, but there are lots of failed hedgehogs out there.

Other scholars have pointed out that ignoring this hidden history of failures can lead us to take bigger risks than we might had we seen the full distribution of past outcomes. What other problems do you see with our excessive focus on the successful end of the distribution?
It causes us to misattribute the causes of success and failure: by ignoring all the nonevents and focusing only on the things that succeed, we don’t just convince ourselves that things are more predictable than they are; we also conclude that these people deserved to succeed—they had to do something right, otherwise why were they successful? The answer is random chance, but that would cause us to look at them in a different light, and changes the nature of reward and punishment.

Interesting material and Watts’ just published book (Everything Is Obvious: *Once You Know the Answer)  sounds worthwhile. There are also some interesting thoughts later in the interview about how information in digital social networks doesn’t really get passed along through influential people.

I haven’t seen too much discussion within sociology about predictive abilities: how much do we suffer from these blind spots that Watts and others point out?

(As a reminder, Nassim Taleb, in his book Black Swan, has also written well on this subject.)

Pandora’s (copyright) box

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It’s no secret that copyright law is ridiculously complicated and in bad need of reform.  In case anyone needed reminding, paidContent covered Pandora’s CEO Joe Kennedy’s recent speech at the NARM music conference in San Francisco.  The article’s headings say it all:

  • “The complexity of international copyright limits Pandora’s business.”
  • “How huge damages in copyright law have skewed business relationships.”
  • “Our definition of ‘copies’ might need to change for the digital age.”

That’s a pretty good summary of precisely where copyright law has gone wrong.  Be sure to check out the full article.

An argument for expanding Detroit rather than contracting it

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In the last few years, a number of commentators have suggested contracting cities like Detroit or Youngstown. So it might seem strange to suggest expanding Detroit instead – but this idea is rooted in some interesting recent works:

I’ve come to learn my friend’s idea is a favorite thought experiment among a certain subset of Detroit-area urbanophiles. Sometimes they will reference David Rusk, the former Albuquerque mayor whose book Cities Without Suburbs makes the case for the economic vibrancy of “elastic” cities (like Houston, Austin, Seattle and Nashville) whose central hubs have the capability to annex or otherwise regionalize their surrounding suburbs into a unified metropolitan area.

The takeaway from the census stories was that Detroit plummeted to 19th place on the U.S. city-size list, behind Austin, Jacksonville and Columbus (Columbus!). But the Detroit metropolitan area — which we’ll define, for these purposes, as Wayne, Oakland and Macomb counties — still retains a population of nearly four million. If our territorial-expansion fantasia could have been magically enacted with even two-thirds of this figure, the Greater Detroitopolis would easily vault past Chicago to become the third-largest city in the U.S., behind New York and Los Angeles. This would translate into more state and national clout (and allocated funds, many of which are based on population) and eliminate the need for much of the wasteful duplicate spending inherent in maintaining dozens of tiny separate municipalities, especially at a time when many of these suburban communities have announced their own cutbacks. (In February, the westside suburb of Allen Park announced plans to eliminate its entire fire department.)

Super-sizing Detroit could also translate to better policy. When Indianapolis enacted a similar “Unigov” city-suburbs merger in the late Sixties (under Republican mayor Dick Lugar), the region experienced economic growth (and the benefits of economy of scale), AAA municipal bond-ratings and a broader, more stable tax base. The same could happen in metropolitan Detroit, which sorely needs to attract young people and entrepreneurs in order to fill the void left by the region’s dwindling manufacturing base. Elastic cities are less segregated and have fewer of the problems associated with concentrated areas of poverty. And though sprawl wouldn’t necessarily be reigned in, the region could finally adopt a sensible transportation policy to unite its businesses and residential areas. At the moment, suburban Detroit maintains its own bus system, separate from the city’s, and a planned $150 million light rail project, slated to run from downtown Detroit up the main thoroughfare of Woodward Avenue, would nonsensically stop at 8 Mile Road, the suburban border. That’s a formula to limit, not maximize, growth.

David Rusk, the former mayor of Albuquerque, has written several books (Cities Without Suburbs and Inside Game/Outside Game) about this subject. Rusk’s argument in both books revolves around this idea of “elasticity” which is the ability for cities to expand their boundaries. According to Rusk, more modern cities (particularly those in the South and West) have been able to annex more land compared to older cities like New York City, Chicago, and Detroit. With more land, Rusk argues these cities have lower rates of residential segregation, a broader tax base, and more beneficial outcomes.

Of course, these plans are not easy to implement. The trick is convincing suburbs that they should vote for annexation by the large city. Why would wealthier Detroit suburbs want to become part of the City of Detroit? Historically, such annexations in Midwest and Northeastern cities stopped in the early 1900s as suburbs no longer needed the city services big cities offered and the city was increasingly viewed as a dirty, problematic place.

The last city I recall reading about (in The American Suburb by Jon Teaford) that was able to successfully do this was Louisville, Kentucky. Teaford described how the city was able to convince the suburbs that the annexation would improve the city’s business standing, particularly through having a larger population.

The Atlantic piece suggests this annexation would be difficult to implement:

Michigan Governor Rick Snyder’s benign proposal to ease the ability of state counties to merge into loose metropolitan authorities has been a non-starter in the Detroit area. “I don’t think anyone would support it,” Wayne County Executive Robert Ficano told the Detroit News.

With a decreasing population (a “staggering 25% in ten years”), Detroit will have to make some decision about moving forward.

How recorded music might limit social action

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iPod headphones are ubiquitous on college campuses and many other places. What effect such devices and more broadly, recorded music, might have on modern society is explored in this essay that includes references to sociologists Sudhir Venkatesh and Pierre Bourdieu:

Two years ago, at the nadir of the financial crisis, the urban sociologist Sudhir Venkatesh wondered aloud in the New York Times why no mass protests had arisen against what was clearly a criminal coup by the banks. Where were the pitchforks, the tar, the feathers? Where, more importantly, were the crowds? Venkatesh’s answer was the iPod: “In public spaces, serendipitous interaction is needed to create the ‘mob mentality.’ Most iPod-like devices separate citizens from one another; you can’t join someone in a movement if you can’t hear the participants. Congrats Mr. Jobs for impeding social change.” Venkatesh’s suggestion was glib, tossed off—yet it was also a rare reminder, from the quasi-left, of how urban life has been changed by recording technologies.

Later in the essay, Bourdieu is presented as the anti-Adorno, the sociologist who argued that music doesn’t help prompt revolutionary action but rather is indicative (and helps reinforce) class differences:

In the mid-1960s, [Bourdieu] conducted a giant survey of French musical tastes, and what do you know? The haute bourgeoisie loved The Well-Tempered Clavier; the upwardly mobile got high on “jazzy” classics like “Rhapsody in Blue”; while the working class dug what the higher reaches thought of as schmaltzy trash, the “Blue Danube” waltz and Petula Clark. Bourdieu drew the conclusion that judgments of taste reinforce forms of social inequality, as individuals imagine themselves to possess superior or inferior spirit and perceptiveness, when really they just like what their class inheritance has taught them to. Distinction appeared in English in 1984, cresting the high tide of the culture wars about to hit the universities. Adorno had felt that advanced art-music was doing the work of revolution. Are you kidding, Herr Professor? might have been Bourdieu’s response. And thus was Adorno dethroned, all his passionate arguments about history as expressed in musical form recast as moves in the game of taste, while his dismissal of jazz became practically the most famous cultural mistake of the 20th century.

This is an interesting analysis. Sociologists of culture have been very interested in music in recent decades. One line of research has insights into “omnivore” behavior, those high-status people who claim to like all sorts of music. (See an example of this sort of analysis here.)

But this essay seems to tap into a larger debate about technologies beyond just recorded music: do computers, laptops, iPods, cell phones and smart phones, Facebook memberships, and other digital technologies serve to keep us separated from each other or do they enhance and deepen human relationships?

A proposal to rid European Union cities of cars by 2050

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The European Commission, part of the European Union, recently proposed getting rid of “conventionally fueled cars” in all EU cities by 2050:

Top of the EU’s list to cut climate change emissions is a target of “zero” for the number of petrol and diesel-driven cars and lorries in the EU’s future cities.

Siim Kallas, the EU transport commission, insisted that Brussels directives and new taxation of fuel would be used to force people out of their cars and onto “alternative” means of transport.

“That means no more conventionally fuelled cars in our city centres,” he said. “Action will follow, legislation, real action to change behaviour.”

The Association of British Drivers rejected the proposal to ban cars as economically disastrous and as a “crazy” restriction on mobility.

“I suggest that he goes and finds himself a space in the local mental asylum,” said Hugh Bladon, a spokesman for the BDA.

“If he wants to bring everywhere to a grinding halt and to plunge us into a new dark age, he is on the right track. We have to keep things moving. The man is off his rocker.”

Mr Kallas has denied that the EU plan to cut car use by half over the next 20 years, before a total ban in 2050, will limit personal mobility or reduce Europe’s economic competitiveness.

This would be a radical change, even in countries with lower rates of car ownership and more mass transit use compared to the United States. I can only imagine the outcry if such a plan were introduced in the United States.

It is interesting to see that one British commentator brings up mobility and the economy. I would think mobility is more of a proxy for freedom, the ability for an individual citizen to hop into a car and drive wherever they want. This idea is particular prevalent in America where freedom is paramount and the suburbs are built around this idea of driving where one wants. I’m not sure about the economic issue: surely, cars and related industries (gas, maintenance, insurance, etc.) are an important part of the economy. But I am more skeptical that such a ban would lead to a “new dark age.”

Head in the cloud

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Amazon launched its Cloud Player yesterday which, as Wired explains,

can stream your music library to any web browser or Android mobile device. Cloud Player also allows you to download files and create playlists through its web-based interface.

So Amazon lets you store your music on a remote hard drive and stream it to local devices?  Sounds pretty straightforward.  Of course, the record labels don’t think so.  From Ars Technica:

We wondered aloud how Amazon managed to strike such an impressive licensing deal with the record labels, given the fact that Apple seems to still be working out the details for its own digital locker service. It turns out that Amazon hasn’t struck a deal, and seems to be hoping that the record companies will be the ones to blink.

“[W]e do not need a license to store music in Cloud Drive,” Griffin added in an e-mail to Ars. “The functionality of saving MP3s to Cloud Drive is the same as if a customer were to save their music to an external hard drive or even iTunes.”

That’s certainly not what the music industry seems to think, though—at least in regards to Cloud Player. In an interview with Reuters, Sony Music spokesperson Liz Young said the company hoped for a license deal but that it was keeping its “legal options open.”

Amazon certainly has made a gutsy play here.  The major labels are currently embroiled in a lawsuit against MP3tunes for providing essentially the same service as Amazon.  According to an amici curiae brief (PDF) in that case, the primary legal issue turns on whether or not Internet streaming necessarily constitutes a “public performance” (which would violate copyright owners’ rights unless licensed).  There is a powerful argument that it does not:

MP3tunes does not transmit music to the general public, nor to all of its subscribers. A particular work in a particular locker will only be transmitted to a user who has placed it there—in other words, after he or she has averred to MP3tunes that she either legally owns the file and have uploaded it to her locker, or that she has legal authorization to access the file on the Web and has sideloaded it into her locker. The subset of MP3tunes users who have uploaded or sideloaded any one particular track (and thus have stated to MP3tunes that they are authorized to do so) still falls far short of the “public” required by the transmit clause.

Of course, the simple fact that it has become necessary to make this legal argument illustrates just how broken copyright law is.  The statute is long, complicated, and muddled enough to lend at least some plausibility to virtually any argument imaginable.  Even an argument claiming that storing one’s own music on a private, password-protected server for convenience violates the letter (if not the spirit) of copyright law.

Stay tuned…

Updated 3/31/2011: Ars Technica has a follow-up piece today that quotes from their interview with MP3tunes’ CEO Michael Robertson (bio from his blog):

The word “streaming” and the word “download” are nowhere in copyright law.  It may be a very logical, common sense position, but all that matters is what the law says. Can you store your own music? Can you listen from anywhere? What if your wife or kids want to listen to it? All those things are completely unchartered [sic] territory.

Of course, as we routinely point out around here, “logic” and “common sense” have absolutely nothing to do with the current state of U.S. copyright law.

Light installation at Cabrini-Green to mark demolition of final building

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Amidst news of Target’s interest in building a store on the former site of the Cabrini-Green housing project, the Chicago Tribune reports that there is a special light installation at the last building to be demolished (and whose last resident left several months ago):

Marked for demolition beginning Wednesday is the last-standing building of the infamous Cabrini-Green public housing complex. But thanks to a light installation orchestrated by artist Jan Tichy, the structure at 1230 N. Burling St. will remain aglow with 134 white LED lights — one installed in each of its vacated apartments — for the four-week duration of its razing. The light installation was completed Monday, in time for Tichy and the Chicago Housing Authority to flip the “on” switch at 7 p.m.

Here is more information on the project from the gallery that represents Tichy:

From January to March 2011, together with over 20 students from the School of the Art Institute of Chicago, Tichy held two and three-day workshops with local youth at Cabrini Connections, Marwen, After School Matters Creative Writing Program at Gallery 37 and ThaBrigade Stamps – Cabrini Green Marching Band. In the workshops, students were introduced to public art and light art, and brainstorming sessions and group activities were held on the concepts of Home, Public Housing, Community and Demolition. The youth were then charged with the task of writing poems or texts that addressed the concepts above. Employing a computer program developed by SAIC students that translates sound into light, the youth performed their texts for recording, creating unique light patterns. These light patterns define each of the 134 LED lights at the high-rise. Thus, the youth’s voices literally “tell” their stories through light.

As a component of Project Cabrini Green, live-feed footage from the site will be projected at the Museum of Contemporary Art at street-level, on the corner of Pearson and Mies Van der Rohe streets behind the museum’s glass façade, thereby rendering it visible at night. A voice/light-activated model of the high-rise will accompany the installation, and the youth participant’s written texts and audio content will be available. Tricia Van Eck, Associate Curator, is the organizing curator of the installation at the Museum of Contemporary Art.

The youth’s texts, the audio content, and the live-feed video will also be available on the project website.

Read more about the project in the New York Times or at Project Cabrini Green.

I wonder if there are plans for a more permanent exhibit or marker of the public housing project.