Since this blog regularly covers issues ranging from intellectual property law to statistics, Rob Reid’s recent TED talk on “Copyright Math” seems particularly salient:
Category Archives: Business and Economy
Patents, infrastructure, and payouts
Joe Mullin at Ars Technica reports on a disturbing new trend, public sector patent-trolling:
Patent holders will file a lawsuit about anything under the sun these days, but a man named Martin Jones has embraced an alarming new strategy—suing cash-strapped American cities over their bus-tracking systems.
The most recent suit was filed last week, claiming that Portland’s TransitTracker system infringes a patent owned by ArrivalStar, the patent-holding company that enforces Jones’ patents. Two more, filed in February, claim that transit systems in Cleveland, Ohio and Monterey, California infringe three ArrivalStar patents.
While it appears that ArrivalStar may have a profitable run with this strategy, I have to believe that such suits will inevitably backfire. Patent trolling is already a big problem that is getting increasing scrutiny, and going after local political entities like cities and transit authorities is only going to increase the amount of unfavorable scrutiny.
“85% of economists agree that local and state governments should not subsidize professional sports”
The Freakonomics blog has a discussion about whether cities and states should help pay for professional sports arenas and the weight of academic evidence says no:
So we have two perspectives and one question: Do sports generate jobs and economic growth?
This is a question that has been addressed numerous times by economists. And these studies – summarized by economists Rob Baade and Victor Matheson — tend to reveal two answers. When the study is completed by paid consultants prior to the public money being spent, the benefits from sports are numerous are large. However, when independent researchers – who are not paid by professional sports teams or leagues – look for these benefits after the fact, evidence of more jobs and economic growth are hard to find…
Given these three effects, the empirical evidence suggests quite strongly that sports do not create many jobs or generate much economic growth. And such evidence has proven to be quite persuasive. In fact, a survey of economists by Gregory Mankiw noted that 85% of economists agree that local and state governments should not subsidize professional sports. Mankiw also notes that only five issues have more agreement among economists.
But with all of this evidence, why would the city of Sacramento recently vote to spend money to build a new arena so that the Sacramento Kings would stay in the city?
Such a story clearly suggests that the Kings used the threat of re-location to elicit a substantial subsidy from the people of Sacramento. Although the Kings do not have much economic impact on Sacramento, the Kings do make basketball fans happy. And if they departed, those same people would be very unhappy with Kevin Johnson. Consequently, the Mayor has an incentive to do what he can to keep the Kings in Sacramento (although it not entirely clear if making the non-basketball fans unhappy is good politics).
I think this is correct: no one want to be the politician that allows the popular local sports franchise to leave town. The stakes are even higher in places like Sacramento where the Kings are the only professional franchise so if they left, the city isn’t even on the professional sports map. A politician who let this happen might be punished by opponents and by voters (though they too would then have to go against all of the evidence from studies). I think this is similar logic to what happens in tax breaks debates like the one recently in Illinois: while it is hard to justify giving wealthy corporations a tax break to stay in Illinois, who wants to be the politician who let several thousand good jobs go to another state?
I also think that while this can be studied in economic terms, i.e., does helping to build a stadium lead to economic benefits for the city, or in political terms, this misses some of the point: having a sports team is also about status. It makes a city feel like a major league city. While perhaps we could argue that Sacramento has enough going on being the state capital of the country’s largest state, the average citizen might connect more to the sports team. When national TV crews come to televise a game, fans feel like they are being recognized (see this post as an example of this). With a sports teams, politicians and business people can take big wigs to games, signalling that their city is really part of the big time, even if the economic data doesn’t necessarily bear this out. While I am skeptical of arguments that people in Cleveland are worse off because their sports teams haven’t won, having a big sports team can mask other issues or at least help people ignore them. This is more difficult to measure than economic benefits but this cultural dimension still matters when these decisions are made.
(This post was prompted by part of a TrueHoop post from yesterday.)
Why two media sources ranking the world’s wealthiest people is a good thing
While Forbes had the corner on the market for years in compiling a ranking of the world’s richest people, there is now another option: this week Bloomberg released its Billionaires Index. One commentator thinks we don’t need both Forbes and Bloomberg examining this topic:
The Forbes list, available online today, is published every March. (Its companion, the “Forbes 400” list of richest Americans published in September.) It’s hard to not feel that Bloomberg’s outing takes some of the air out of Forbes usually-hyped cover story on who are the world’s richest people. This year’s edition proves unexciting not only because there were few shake-ups in the top spots from 2011’s list, but also because these rankings don’t appear all that different from Bloomberg’s.
Highlights from 2012’s version: With $69 billion, Mexico’s Carlos Slim Helu ranks No. 1 again for the third year in the row. (The magazine also profiled him.) Helu was followed by another 1,225 billionaires, starting with Bill Gates, Warren Buffett, and Bernard Arnault (of Louis Vuitton fame), who were also two through four last year. But beside no one being knocked off the top of this year’s Forbes list, it’s markedly similar to how rich Bloomberg News told us these folks were. Here’s a side-by-side comparison, with Forbes on the left and Bloomberg on the right.
So there are slight differences. Bloomberg has Arnault one spot lower and places fashion mogul Amancio Ortega down to seventh. Bloomberg puts the Koch brothers in the top 10, whereas Forbes had them both pegged at 12th. But isn’t this hair-splitting? If anything, the discrepancies show how hard it is to measure rich people’s riches.
What today’s Forbes list shows more than anything is that we don’t need two billionaires lists reminding us how wealthy the wealthy are. If we had to choose one, we’d go with Bloomberg’s, since it’s updated daily instead of once a year. But we doubt that will stop Forbes from producing its longstanding annual issue as long folks keep buying it.
I disagree. Here is why: I think that having two media sources looking at this topic will actually give readers better information. With two publications tackling the subject, I hope this improves their measurement of wealth for both publications. Perhaps we could average the rankings across the publications to get a more accurate assessment of what is going on. In the end, two sets of people looking at the data is better than one. Because Bloomberg is updating this list daily, perhaps this will push Forbes to update their lists more frequently and move away from a magazine era schedule to an Internet era schedule. The two lists do have some differences and this is not inconsequential. Lots of people are interested in this list and I’m sure some of the people at the top of the list have some interest in where they rank. Of course, these differences can indicate “how hard it is to measure rich people’s riches” but this doesn’t mean we should just throw up our hands and go with one list. Just because these people are really wealthy doesn’t mean that we shouldn’t have more fine-grained analysis of their financial holdings. (This sometimes seems to happen quite a bit in sociology: we assume we know about the elites and so spend more time studying marginalized groups but we have fewer in-depth studies of the elites who do have a lot of influence in society.)
A second issue: Bloomberg obviously thinks there is a market for another list that is updated daily and so this is a market decision as well as a journalistic interest in updating this information more frequently. The Forbes list always gets a lot of attention and Bloomberg probably wants to draw away some of that market. I imagine there is enough room in the market for both lists to survive, particularly as the two could serve different markets. However, it will be interesting to see how the rest of the media responds to changes in the Bloomberg list: if someone moves up from #3 to #2 in the next few days, will there be news stories about it? Will journalists providing background information about the wealthy reference the Forbes or the Bloomberg list?
“Peer to peer” car sharing ramps up
I’ve talked before about how car sharing service Zipcar has freed my wife and me from needing to own a car. Unfortunately, similar non-ownership options aren’t available to most Americans for the simple reason that Zipcar’s fleet is mostly concentrated in urban centers and around college campuses. For many suburbanites, the prospect of an inexpensive, on-demand, by-the-hour car rental hasn’t been an actual prospect.
With RelayRides rolling out nationwide this week, however, that may be changing:
Companies like RelayRides…offer a different take on carsharing than the one established by Zipcar and its competitors. While those companies own fleets of cars, RelayRides is entirely peer-to-peer — if you have a car, then you can make it available for rental when you’re not using it. RelayRides says the average car owner makes $250 a month from the program.
Since it takes advantage of the cars already on the road, founder and chief community officer Shelby Clark argues that peer-to-peer carsharing can have a big impact — after all, a fleet-based company couldn’t simply declare one day that it’s launching nationally.
This is potentially very disruptive of Zipcar’s business model. RelayRides (and other challengers like Getaround) don’t have to go head-to-head with Zipcar in many parts of the country because those markets are utterly unserved. And even where RelayRides has to go head-to-head with Zipcar, their prices seem comparable. So long as the reservation process and pickup hassle is roughly the same, I know I would have no problem booking cars through RelayRides. My purchases within an active market for by-the-hour car rentals would simply be driven by normal consumer considerations like price, convenience, customer service, etc.
Indeed, this is the beauty of the free market, as Leigh Beadon over at Techdirt reminds us:
Nobody is immune—not even the last disruptor. Companies like Zipcar changed the game with their car-sharing services, but they are already facing new challengers….How big and how successful [RelayRides’] approach will become remains to be seen, but it’s a creative idea that makes a clear point: disruption can happen anywhere, to anyone. As the entertainment industry continues to fight progress, experts from every side of the debate love to make profound-sounding statements about how the internet has changed our media consumption habits, but that’s old news. From mobile-based taxi & limo services to the coming era of 3D printers and things like the Pirate Bay’s Physibles site, digital technologies are disrupting a lot of things, not just media.
High rents and the lack of politics
Forbes recently published a two part interview with law professor David Schleicher discussing his recent paper City Unplanning. Schleicher discusses the perversity of zoning restrictions and begins by noting that, in many cases, rents and rental units available have nothing to do with each other:
In a number of big cities, new housing starts seem uncorrelated or only weakly correlated with housing prices and the result of increasing demand while holding supply steady is that price went up fast. The average cost of a Manhattan apartment is now over $1.4 million and the average monthly rent is over $3,300.
The only explanation is that zoning rules stop supply from increasing in the face of rising demand.
Effectively, Schleicher argues that new developments in big cities are subject to a form of NIMBYism which is effective to the extent it is apolitical:
Local legislators may prefer more development than we have now to less, but have stronger preferences for stopping development in their districts because these projects would hurt homeowners in their neighborhoods—either directly through things like increased traffic or indirectly through increasing the supply of housing, harming the value of existing houses.
This is a prisoner’s dilemma and absent a political party to organize the vote in local legislatures, one-by-one votes on projects will result in “defect” results, or situations where every legislator builds coalitions to block projects in their own district and nothing gets built [emphasis added].
I couldn’t quite understand Schleicher’s point from the interview, but it is much better explained in the full paper:
Importantly, most cities do not have competitive party politics – they either have formally nonpartisan elections and/or are entirely dominated by one party that rarely takes local-issue specific stances. Absent partisan competition, there is little debate over citywide issues in local legislative races and there is no party leadership to organize the legislature, making the procedural rules governing the manner in which the legislature considers land use issues far more important. The content of the land use procedure generates what one might call “localist” policy-making: seriatim [i.e., one-off] decisions about individual developments or rezonings in which the preferences of the most affected local residents are privileged against more weakly-held citywide preferences about housing.
It’s an intriguing thesis positively, but I’m not sure what I think of Schleicher’s point normatively. Local voters generally do seem to prefer NIMBY outcomes in order to avoid threats (e.g., increased traffic, lowered property values) to their existing assets (i.e., homes and businesses). But if local voters achieve this result through the mechanics of “weak” local politics, isn’t that an example of the political system “working”?
Put another way, high rents may be undesirable, but they are largely an outsider problem. Current residents (insiders who can vote) first and foremost want to protect themselves from the problematic vicissitudes of new development (which will, if it is built, be populated with outsiders who obviously cannot vote unless it is built and they take up residence). If current residents/voters achieve this goal through voting for “apolitical” council members, (1) isn’t this actually a highly political choice, and (2) isn’t this precisely how voting and elections are designed to work?
NASA on Vegas and sprawl
NASA recently posted a video on Flikr showing 28 years of development in Las Vegas as seen from space:
When Landsat 5 launched on March 1, 1972, Las Vegas was a smaller city. This image series, done in honor of the satellite’s 28th birthday, shows the desert city’s massive growth spurt since 1972. The outward expansion of the city is shown in a false-color [i.e., red = green space like parks and golf courses] time lapse of data from all the Landsat satellites.
Pedestrians in a world of driverless cars
Many bloggers are starting to tease out the social and infrastructure implications of driverless cars, including David Alpert over at the Atlantic:
[Driverless cars] will bring many changes, but when it comes to the car’s role in the city, they may just intensify current tensions.
David suggests that new technology will simply exacerbate current trends by “trigger[ing] a whole new round of pressure to further redesign intersections for the throughput of vehicles above all else”:
If autonomous cars travel much faster than today’s cars and operate closer to other vehicles and obstacles, as we see in the [University of] Texas team’s simulation , then they may well kill more pedestrians. Or, perhaps the computers controlling them will respond so quickly that they can avoid hitting any pedestrian, even one who steps out in front of a car.
In that case, we might see a small number of people taking advantage of that to cross through traffic, knowing the cars can’t kill him. That will slow the cars down, and their drivers will start lobbying for even greater restrictions on pedestrians, like fences preventing midblock crossings.
Our metropolitan areas could then look, more and more, like zoos for humans interlaced with pathways for the dominant species, the robot car.
Personally, I think one of these scenarios (i.e., “travel much faster…[and] kill more pedestrians”) is unlikely. Initially, driverless cars will almost certainly be much more expensive than equivalent conventional vehicles. A car that is both (1) more expensive and (2) more dangerous seems unlikely to sell well, to say nothing of the likelihood that such lawsuit-magnets would be sued utterly out of existence. To catch on with a mass market, driverless cars will at least need to uphold safety’s current status quo.
As far as David’s second fear (“metropolitan areas [that] look, more and more, like zoos for humans”), I’m unclear how much that differs from current development patterns. While there are plenty of examples of “walkable” cities, much of contemporary American infrastructure is extremely unfriendly to pedestrians, cyclists, and other non-car users. To the extent that cars dominate today’s roads, a move to driverless cars seems only to continue, rather than augment, that trend.
The gendered tasks you do at work can affect the gendered work you do at home
A new study in the American Journal of Sociology looks at what men who work in female-dominated careers do at home:
When stacked up against men who have jobs where men and women are equally represented, men in gender-atypical jobs put in an extra hour each week on typically male housework. What’s more, these men’s wives stick to female-typed tasks, spending about four hours more each week cooking dinner, vacuuming or throwing in a load of laundry. Meanwhile, women who work in male-centric professions also tend to pursue more female-typed housework but not with the same consistency as men in female-dominated arenas — perhaps because they perceive it as less of a threat to their femininity. (It should also be noted that a different study in the Journal of Family Psychology found that doing housework after a day on the job isn’t good for anyone, regardless of gender.)
What’s going on here? It seems to be a manifestation of what sociologists call the “neutralization of gender deviance.” Or, in plainspeak, “men are trying to bolster their masculinity at home,” says Daniel Schneider, the study’s author and a doctoral student in sociology and social policy at Princeton University…
Truth be told, Schneider was surprised by the findings. He’d expected to discover that men in gender-typical jobs — a mechanic, for example — would spend more time at home working on car or home maintenance. By that logic, he also anticipated that men in male-atypical jobs would come home and do more cooking and cleaning-type housework typically associated with women.
But humans don’t always make sense. “The market and home are really intertwined and influence each other,” says Schneider. “But they are not necessarily intertwined in a rational way. Instead, they’re intertwined in a way that’s about cultural salience and the meaning of gender.”
In other words: gender norms and expectations influence how people act. If we were to interview men who work in more female fields, would they be able to describe this process discovered in survey data? Also, I wonder if this is tied to the amount of time people spend at work.
More broadly, this is a reminder that what happens in our career or at the workplace has an influence on other areas of our life. On one hand, perhaps this seems fairly obvious: our culture is one where people are defined by their occupation and what they do. As I tell my students, when you meet people as an adult, the first or one of the first questions you tend to be asked is, “what do you do [for work, a living]?” These puts a lot of pressure on individuals to have meaningful jobs. On the other hand, we tend to act like we can compartmentalize work and home. This goes back into history as there was a separation of home and work only in the Industrial Revolution as jobs moved out of the household or close by to larger factories and offices owned by corporations. While technology may have blurred the lines in recent decades, we still tend to have strong physical and mental boundaries between home and work.
Considering how much time full-time workers put into their jobs today, it should be little surprise that it is hard to keep these spheres apart. At the same time, specifying how it affects other areas of our lives is worth considering.
Making Iranian oil as unpopular as the McMansion
Here is an argument that compares McMansions to Iranian oil:
The United States would like to perform a magic trick, and our economy might depend on its success. The illusion? We want the world to think Iran’s oil is practically a Las Vegas McMansion.
Now, nobody is going to confuse a barrel of crude with a four story desert abode. Las Vegas houses have been widely shunned and practically unsellable. As a result, their prices have plummeted for the few remaining buyers. We want the same thing to happen to Iran’s oil: We want it to become so unpopular that Iran is forced to sell it only at a significant discount.
Perhaps it seems odd that the United State should hope Iran sells any of its oil. After all, we’re using sanctions to turn Tehran into a pariah within the global financial system, making it next to impossible for them to actually export crude, with the hope that it will force the country’s leaders to drop their nuclear program. But you can’t cut the world’s fifth largest oil producer entirely out of the global petroleum market and not expect prices to surge even more than they already have.
Instead, our government wants Iran to keep shipping oil to some of its major customers — but for cheap. “Policymakers need to ensure that they are not creating an embargo of Iranian oil but, instead, implementing these sanctions so that Iranian oil becomes a distressed asset,” Foundation for the Defense of Democracies Executive Director Mark Dubowitz, who advised Congress while it drafted the sanctions legislation, told Bloomberg today.
An unusual comparison. I can see the general point: we want Iranian oil to stay in the market but we don’t want Iran to benefit from being able to sell it for high prices. So we need Iranian oil to carry a stigma so that the price has to be dropped.
But the comparison breaks down if you think this through to the end. Most critics would argue that McMansions shouldn’t be built in the first place. At this point, we can’t stop Iran from producing oil but we can effect how it is sold, similar to the ways in which McMansions have publicly been denigrated. However, we have more control over McMansions: if we really wanted to as a country, we could ban the construction of McMansions (though this would most likely have to happen at the local level).This makes me wonder if McMansions could ever be considered okay or even popular. If I remember correctly, the New Urbanist authors of Suburban Nation suggested McMansions might be acceptable if they were modified slightly to fit into traditional looking neighborhoods that encouraged civic participation. This particular comparison ties the popularity of the McMansions to their price; so they would be acceptable as long as they are cheap? Perhaps then the housing could be considered affordable housing, not just the province of the wealthy or nouveau riche, even if critics are correct in suggesting that such houses are poorly built, poorly designed, and are often in sterile neighborhoods.
Legally Sociable 