Silicon Valley's gentrification export

Airbnb, the DIY hotel service that was born in the crucible of the Bay Area's dystopan income divides and astronomical rents, is now spreading its way across the nation. Middle-class households now have the privilege to literally rent out their own beds in order to clear escalating rents in the nation's more fashionable/expensive vacation destinations.

Nick Schroeder, who recently took over the editorship of the Portland Phoenix, has a great feature story about the mixed blessings of the Airbnb phenomenon in this week's issue. He describes how Airbnb can help struggling artists make the rent. But he also points out that unaffordable rents are mainly the product of Portland's (or New York's, or San Francisco's) housing shortages — a problem that Airbnb is only making worse, as landlords convert erstwhile apartments where families used to live into informal, unlicensed hotels for well-heeled vacationers.

Meanwhile, in Next City, a possible solution is brewing in the other Portland, where they're considering an ordinance that would require the licensure and taxation of Airbnb rentals, with tax revenues going towards affordable housing funds.

Such a policy could, in theory, let struggling renters continue to rent out bedrooms when they need to — while also giving the city the means to ensure that there will be fewer struggling renters in the big picture.

The Chase Manhattan Bank of Cholera

You probably know that Aaron Burr murdered Alexander Hamilton in a duel. But I recently learned of Burr's surprising and grotesque role in some of New York City's worst plagues — including one we're still suffering through to this day.

My dad recently gave me a fascinating (but not online, unfortunately) medical history of New York City's water supply by Dr. David E. Gerber, from which I learned this:

"In 1799, New York City passed on the responsibility of constructing and maintaining a waterworks to the newly charted Manhattan Company. The company, the brainchild of the improbable team of Alexander Hamilton and Aaron Burr, received from the state legislature a mandate to supply New York City with 'pure and wholesome' water."

Left: Manhattan Company log pipes excavated in 2004 near Coenties Slip. Via New York City Walk (photographer unknown)

But the Manhattan Company was terrible at providing "pure and wholesome water." They employed cheap wooden pipes and instead of procuring fresh Bronx River water, as had been proposed by city officials, they dug wells on the outskirts of the growing city (near today's Greenwich Village) where the water supply quickly became polluted with the city's sewage, or dried up altogether from overuse.

So in spite of a $2 million charter from New York's state government, the growing city continuted to suffer from polluted water. In 1832, the very first year that cholera arrived in New York City (from Asia, via overseas trade), 3,515 New Yorkers died.

There was a reason why the Manhattan Company was so negligently, fatally incompetent at its purpose: it was run by some of the city's earliest investment bankers, including the murderer Aaron Burr.

At Burr's initiative, the Manhattan Company's charter was amended shortly before it took effect to allow the new company to spend its excess capital "in any way not inconsistent with the Constitution and laws of the United States."

The Legislature and Burr's business partner, Alexander Hamilton, seemed to believe that this would allow for additional, future waterworks. But Burr almost immediately exercised this clause to capitalize a new bank, using the money intended for waterworks to give out loans to New York merchants.

The Bowery Boys, the New York history podcasters, have an episode on the Croton Aqueduct that tells some of this same story, and they put it this way:

"There was a banking monopoly where you had the US Federal Bank [i.e., Alexander Hamilton's First Bank of the United States] and the Bank of New York, which was founded by Hamilton, Burr's rival and victim. Burr and his company got a $2 million contract from the state legislature to bring fresh water into New York City.

They decided to spend it thusly: $100,000 on waterworks and bringing fresh water into the city — so 1/20th of the total — and $1.9 million on creating a bank!"

Providing "pure and wholesome water" was just a distracting sideline. In fact, the more the Manhattan Company spent on public waterworks (there were no water meters back then, thus no reliable user-fee system, thus no profit motive), the less they had to spend on high-interest loans to New York City's merchant class.

Hamilton evidently didn't like the competition from a new bank in town: he left the Manhattan Company shortly after Burr capitalized his new bank with 1.9 million New York State taxpayer dollars.

The citizens of New York suffered the Manhattan Company's filthy water until 1842,  when the City of New York finally opened an aqueduct from the Croton River, which provided public drinking water that was genuinely pure and wholesome, and does so to this day.

So New York eventually addressed its sanitation problems and cured its epidemics of cholera and yellow fever.

Unfortunately, Aaron Burr was only an early vector in New York City's raging plague of assholes who collect millions of dollars from the government in order to enrich themselves in the global banking casino.

In 1955, Aaron Burr's Bank of the Manhattan Company merged with the Chase National Bank to become Chase Manhattan. And in 2000, Chase Manhattan bought out the investment firm JP Morgan to become JP Morgan Chase, on whose website you can today download a short history that tells part of this very same story. This document includes some pictures of old wooden pipes and a quaintly threatening engraving (below) of their company's founding chief executive ballistically perforating the Founding Father on our $10 bill.

However, somehow JP Morgan Chase's PR department neglected to mention the part about all the cholera — hopefully they'll appreciate this addendum.

Where not to go swimming in Casco Bay

Tonight, Portland's City Council will vote on a 25-year plan to reduce the amount of sewage that gets dumped into Casco Bay during wet weather.

The green warning signs like the one pictured above (located next to the city's cruise ship dock) mark the locations of Portland's combined sewer overflow outlets. During wet weather, when millions of gallons of rainwater flow into storm drains and overwhelm sewer pipes, these outlets keep sewerage from backing up into the streets, by dumping it into local waterways instead (read all the details here).

These combined sewer outlets can be found in surprising places: there are three in the heart of the Old Port, the city's tourism district, including one right next to the outdoor dining area of the Portland Lobster Company, another at the busy ferry terminal, and a third next to the city's cruise ship berth. Along with a few more further down the waterfront, these outlets collectively dump 145 million gallons of sewage into Portland Harbor in a typical year.

Seventeen more outlets ringing Baxter Boulevard, a popular city park, dump over 400 million gallons of mixed sewage into the shallow, stagnant waters of Back Cove. By way of comparison, last year's BP oil spill in the Gulf of Mexico dumped about 210 million gallons of oil into the Gulf.

Nearly twenty years into the city's efforts to separate storm drains from toilet flushings, the city has managed to shut down ten CSO outlets, including the one located nearest to the city's East End Beach, as well as most of the outlets that had dumped into Capisic Brook in the city's western suburbs. But dozens of overflow outlets still remain. The map below shows where they all are (the handful of star icons represent former outlets that have been closed):

As disgusting as this problem is, solving it won't be cheap, quick, or easy. The City is looking at a range of strategies, from building new green infastructure that can absorb rainwater into the ground before it flows into storm drains, to building huge underground storage tanks that can expand the system's capacity to hold sewage without spewing it out into the harbor.

Altogether, the recommended projects will cost the city $170 million - about $2,500 for every individual resident of the city - over the course of 25 years. That would roughly double our sewer bills, and not even then would we have a sewer system that avoids dumping sewage into Casco Bay altogether (the engineers estimate that we'd still dump 87 million gallons a year, an 88% reduction over current levels).

A fair and effective way to pay this bill would ask property owners who contribute the most to the city's sewer overflows to pay a greater share, by charging a fee in proportion to the amount of sewage and stormwater their properties send into the pipes. A one-inch rainstorm on an acre of pavement sends 26,000 gallons of oil-soaked stormwater (the equivalent of 15,000 toilet flushes) down the drains, so the owner of a large parking lot ought to pay substantially more to fix our sewers than an apartment dweller or a homeowner with a rain-absorbing garden.

This wouldn't just be a fairer way to pay for the city's sewer upgrades - it would also encourage property owners to make their own small efforts to help relieve the amount of stormwater flowing into our sewers, whether by tearing up some pavement to install a rain garden, or by fitting in more housing units on smaller lots. Small efforts multiplied thousands of times across the city's watersheds could substantially reduce the impacts of Portland's sewer problems, and the costs of fixing them.

Hedging for the End of Civilization, Part I

Tell me, would you trade 22 pounds of gold for this shoddily-built suburban confinement unit?

(creative Commons-licenced photo by David Shankbone, via his Flickr page).

Ever since the global financial crisis of 2008, when our mirage of real estate wealth dissolved faster than a mold-infested McMansion, and thousands of major employers looked into their bank accounts and realized that they wouldn't meet the weekend payroll without a bailout, it's become apparent to most people that "money" is only as valuable as everyone else thinks it is.

The paper bills we carry in our wallets are ultimately just paper. But they're valuable to us as a convenience of modern society: a means of exchange whose value we all agree on by consensus.

A few weeks ago, This American Life broadcast another great show from the economist-reporters at Planet Money all about the fiction of money. It made the point that money's value is a collective act of faith: we all trust that every store, bank, and employer will be more or less in agreement about the value of our dollar bills.

But societies have lost faith in the value of their currencies before - many, many times. When it happens, people are forced to rely on theft and barter in order to feed themselves. Faith in money is closely bound with the cohesion of civilization itself. If people can't trust their neighbors to value their currency, then they are less likely to trust their neighbors in general.

So far, because money is convenient and civilization is important to people, societies have invariably come back to trust money once again - no matter how badly it burned them before. It helps that, for the last century, the United States Dollar has lorded over everything as the world's papal currency. It's been the one kind of money that everyone could have faith in and rely on. Even when pesos and rubles collapsed, Argentines and Russians could still use tattered U. S. dollar bills as a trusted means of exchange.

But recently, the world has been questioning even its faith in the dollar. Which is not to say that anyone is losing faith in money: they're just looking for a new idol. And guess what it's made of?

In the past five years, the price of gold has more than doubled. Right-wing radio propagandists are making "money" hand over fist by sowing doubt in their followers' faith in dollars, and selling them overpriced gold as a "safe" alternative.

Gold has always been used as currency. It's compact, relatively rare, and impossible to counterfeit. It's still widely used as a reserve for the world's national treasuries - here's a great field report on Manhattan's Federal Reserve Bank gold vault, where 7,000 tons of gold are stored under the streets of the financial district in order to shore up our faith in the financial stability of national governments.

But if we're questioning our faith in the value of dollars, shouldn't we also question our faith in the value of gold? At the end of the day, it's just a shiny metal. Gold can't feed anyone, or generate energy. Just like paper bills, it's only valuable if lots of other people think that it's valuable. And if we really come to a circumstance where the dollar collapses and the world's economy comes crashing down, I can't see how a gold brick is going to do anyone a damned bit of good, unless you're using it to smash windows in a looting spree.

I don't consider that a realistic possiblity by any means, but it's an interesting thought experiment to consider what kinds of currencies would actually be valuable in that kind of situation. How about solar panels? If the dollar collapses, then utilities would lose the means to buy up supplies of natural gas and other fuels from overseas. Blackouts could become widespread. Homegrown electricity would be more valuable than gold in such a situation.

So if there's a real risk of that happening, then solar panels should be very, very valuable for anyone who's hedging their investments against the end of civilization, right?

Well, that's not happening: solar panels are actually getting less expensive, largely thanks to improved technology.

This tells us two things:

1. The market doesn't seriously expect civilization and the dollar to collapse. And, as a corollary: the price of gold, which has more than doubled in four years, is an asset bubble just like McMansions and stock in Pets.com. Instead of a real estate craze or an internet craze, we're going through an Apocalypse craze.
   
2. Glenn Beck's listeners would be much better off if they started buying bought renewable energy while it's still cheap, instead of overpriced gold coins.

Cities aren't wasting money, they're wasting space.

Portland, like most governments in America these days, is in the middle of a big budget shortfall. They're cutting school programs, raising bus fares, and laying off social workers. The city's main source of revenue is a 1.8% property tax, which is already high by Maine standards - the city can't raise it much further without sending more development and investment into the suburbs, and sending more homeowners into foreclosure.

On the face of it, it looks pretty hopeless. But in fact, City Hall has millions of dollars in costs that, out of pure neglect, it's been hiding off of its balance sheets. They're not in the schools, or in homeless shelters.

They're the opportunity costs of the city's acres of parking lots.

Here's an example - the East End School has a half-acre off-street lot on North Street. It's got gorgeous views of Back Cove and Casco Bay, it's across the street from the community gardens, it's a desirable neighborhood - and we're using this space only 15% of the time, for private vehicle storage during school days. This is self-evidently stupid, isn't it? And yet, there it is.

What if, instead, we made those few drivers park in the abundant on-street spaces on North Street and the Eastern Promenade (or walk, or take the bus), then sold this half-acre on the open market, no strings attached? Even in this economy, such a desirable location would fetch a lot of money - probably at least $400,000, which happens to be roughly 5% of the school system's budget shortfall this year.

And that's not all. If this half-acre of hilltop land goes to the private sector, it's all but certain that some developer will want to build something there. Most likely it would be homes, which is something our city needs more of. Let's assume they build 8 townhomes for $210,000 each. Then the city will collect 1.8% every year in property taxes - or about $30,000 in new revenue total. That's enough to cover the entire East End School's annual supplies budget.

And another thing: if we sell a pointless parking lot on the open market, the East End School will save a few thousand dollars every year in avoided pavement maintenance and plowing costs. It would become somebody else's problem, instead of the taxpayers'.

What do you think would make the teachers at the East End School happier? Having very convenient off-street parking, or having their jobs and a reasonable number of kids in their classes?

This is just one single parking lot. There's also Reiche School's 1/4 acre parking lot on Brackett Street in the West End, the 1/2 acre of parking at the corner of Stevens and Pleasant Ave (the very center of Deering Center), and the huge 6 acre front lawn of the PACTS school on Allen Avenue. Selling all this land could recoup 1/3rd of the school budget cuts this year, and start generating new property taxes immediately for future years, and trim the school system's property maintenance costs.

And that's just the school system. The public Housing Authority is hoarding acres of parking lots in the West End and East Bayside. Redeveloping those lots wouldn't just mend the budget, it would also start to mend those neighborhoods' ugly scars of urban renewal, by providing new homeownership opportunities and a measure of economic diversity.

But the biggest opportunity is the city's parking management itself. By charging below-market rates for parking on the city's streets and in its garages, the tiny little Parking office might rank as one of the most expensive in City Hall: it's hiding tens of millions of dollars from the city's balance sheets, from unaccounted parking subsidies to lost tax revenues. Our city's parking manager could have worked for Bernie Madoff.

So, I ask you again: what's more important? Solvent schools, a social safety net, and decent public services, funded by the development of new housing opportunities?

Or free parking?

2 out of 3 presidential candidates endorse Jackass Egalitarianism

Two thirds of our presidential candidates are now pandering to the electorate with promises of a gas tax "holiday" - a temporary moritorium on federal fuel tax collection that "would shave 18.4 cents off the per-gallon price of gas and 24.4 cents off diesel," according to the Dallas Morning News. To put that savings in perspective, gas prices have risen 42 cents since January.

Of course, by artificially and temporarily subsidizing a lower price for gasoline, you'll be encouraging people to buy more of it, which increases demand, which will lead to even higher gas prices when the "holiday" ends. It's kind of like offering a junkie free crack on Mondays for a limited time only.

There's an approximately 67% chance that this douchebag will be your next Secretary of Energy.

In an economist's ideal world, gradually rising gas prices will gradually make people reduce their consumption until prices cease to rise anymore. Some commodities experts estimate that this may happen when the price of gas tops out at about $10 a gallon (see this New York Sun article).

But if the government meddles in the meantime, Americans won't be as inclined to conserve, which means that gas prices will continue to rise, and at a faster rate than they would without the tax "holiday." And when the "holiday" invariably ends, motorists will be whammied with a sudden 20 cent jump in prices. A summer-long gas tax holiday seems like a great way to guarantee $5 a gallon gasoline just in time for the fall hurricane season.

So gas tax holidays invariably lead to nasty gas price hangovers. Even I, who am no fan of happy motoring, find this policy a bit sadistic - especially since the prime beneficiaries of high prices and unrelenting oil consumption are companies like ExxonMobil, pulling in eleven-digit profits.

At the same time, the federal government's highway fund will lose billions of dollars for every month of gas tax vacationing - which also means that the federal capacity to fund new highway and road projects will wither away just as rapidly. The national highway trust fund is already running short of money to pay for big new freeway projects, so this could make it even more unlikely that the federal government will be able to afford to pay for new freeways and highways in the future. Fine by me!

Last night, a bunch of Maine truckers drove their rigs 800 miles to protest in D.C. At about 10 miles to the gallon, each truck spent over $300 for the one-way trip (not including engine wear and the opportunity costs of lost revenue). It probably wouldn't make them feel any better to point out that they could have spent less than half the money for a train or bus ride to Washington...

John Tierney calls for carbon etiquette

My feelings towards John Tierney, the science columnist for the New York Times, are similar to my feelings for The Economist and some of my favorite bloggers (like Tory Gattis in Houston): I may disagree with them often, but I also know where they stand and can count on them to present interesting arguments.

I'm really fond of this tagline from Tierney's blog, the TierneyLab:

The Lab's work is guided by two founding principles:

1. Just because an idea appeals to a lot of people doesn't mean it's wrong.


2. But that's a good working theory.

In other words, he loves poking at what he considers to be "conventional wisdom."

Unfortunately, Tierney also considers a lot of global warming science to be "conventional wisdom" - and as a result he can seem like a pretty conventional fossil-fuels apologist when he begins to talk up fringe viewpoints as legitimate points of debate.

Still, he's coming around, and he has good ideas. In his column in this week's Science Times, he discusses a hot topic in psychological economics these days: humans' failure to adequately acknowledge and plan for cataclysmic risks like climate change (see also this post from a couple weeks ago).

Carbon taxes, Tierney argues, won't be able to change most people's behavior: even if our electric bills did reflect the true price of generation, including global warming costs, there's a good chance that most people would keep on using as much electricity as ever, since the consequence of receiving and paying the bill is too far removed from the act of switching on your plasma television.

I'll grant that this might be true for individual households, but big firms and landlords - factories, office buildings, retail centers, etc. - tend to make more informed economic decisions and probably would adjust their consumption appropriately. Still, households are a significant source of carbon emissions, so it is a valid point.

Tierney suggests that the appropriate incentive for households might not be prices, but small psychological "nudges" toward a targeted social norm:

A study in California showed that when the monthly electric bill listed the average consumption in the neighborhood, the people in above-average households significantly decreased their consumption.

Meanwhile, the people with the below-average bills reacted by significantly increasing their consumption — not exactly the goal of the project.

That reaction was avoided when the bill featured a little drawing along with the numbers: a smiling face on a below-average bill or a frowning face on an above-average bill. After that simple nudge, the heavy users made even bigger cuts in consumption, while the light users remained frugal...

I’d like to see a new green fad for electronic jewelry with real-time displays of carbon footprints. These could be mood rings, bracelets, lapel pins or anything else that could change color depending on how much electricity you use, how much gasoline your car burns, how much you travel.

Here's my favorite part about this idea:

Besides putting the enthusiasm of greens to practical use, this fashion statement might also inject some realism into the debate about global warming. Once you start keeping track of all the energy you use, you begin to see the difficulties of making drastic reductions — and the difference between effective actions and ritual displays.

Installing a solar-powered hot-water heater or a windmill at your place in the country is not going to erase the carbon footprint of maintaining and traveling to a second home. Recycling glass bottles and avoiding plastic bags at the grocery store will not offset your car’s emissions.

Switching to a Prius will not undo the effects of frequent air travel. A couple of international trips can be worse for your carbon footprint than driving a Hummer for a year. If the delegates to future conferences on climate change are expected to wear illuminated symbols of their energy consumption, they won’t be visiting any more spots like Bali.

Contraband bulbs

Sen. Ethan Strimling, my neighbor and representative in the Maine senate, has proposed legislation that would ban most types of incandescent lightbulbs - the kind that Thomas Alva Edison invented 130 years ago - by 2010, as a way to hasten our transition to more efficient light sources. Here's a Portland Press Herald article on the subject.

I think this is a decent enough idea, although, as I'll soon explain, I also think that there are much more effective ways to deal with greenhouse gas pollution. But first, consider that if everyone in the whole state switched their lights to compact fluorescents, or even more efficient LEDs, ratepayers could save over $40 billion on electric bills every year, and we might reduce annual CO2 pollution by almost half a trillion pounds (source).

But at the same time, if I look at this from an economist's point of view, banning light bulbs begins to look like a clumsy and ineffective way to deal with global warming. The light bulbs are only an indirect cause of greenhouse gas emissions from fossil-fuel burning power plants: few people would quibble with an incandescent light hooked up to a solar panel. Besides that, General Electric claims that it's working on developing a super-efficient incandescent bulb that would be as efficient as a CFL - and, presumably, not have any toxic mercury inside, as CFLs do. If we ban incandescents, we'd block off this avenue of "green" research and development.

Sometimes it seems to me as though the old light bulbs are being used as a political scapegoat, while we fritter away more effective opportunities to deal with the global warming's root causes. It's noteworthy that the recently-passed 2007 federal energy bill, which was widely criticized for its political pandering and failure to support truly renewable energy, also included a goal of phasing out incandescents by 2020. It came off then as a whimpering assurance that our Congress was trying their best, even though we all knew that the effort was completely inadequate.

So, here's how I would improve Senator Strimling's bill: instead of banning a certain type of light bulb, let's harness the free market to promote energy efficiency everywhere. Here's one way we might do it: get rid of the sales tax on light bulbs, then replace it with a wattage tax.

Let's say we decide on a two cent-per-watt tax for bulbs. Then a 50 watt incandescent would cost an extra $1.00 to the consumer, while a 11 watt CFL, generating an equivalent amount of light, will only cost an extra $0.22 cents (plus a deposit). This would make most CFLs cheaper and more salable than their incandescent competitors on the shelf, which, in turn, would give General Electric and any other light bulb manufacturers a stronger incentive to produce more efficient bulbs, no matter what kind of technology they might use.

The state could take this idea even further by dedicating a portion of the tax revenues to weatherization programs for low-income households, to developing renewable power sources, or to promoting other forms of energy efficiency. This strategy is similar to the one public health advocates have taken with cigarettes: instead of banning them, tax them and use the proceeds for something useful.

Who knows, though - it might be a nightmare to administrate, with tax collectors poring over hardware stores' inventories to figure out the bill. But if they could figure out a way to make it work, it would give Mainers an elegant path to take towards better efficiency.

Crucifying Mankind on a Cross of Corn

This is William Jennings Bryan, the 1890s Democratic Party presidential candidate who might be most famous for his populist rant against the gold monetary standard, the "Cross of Gold" speech.

In Bryan's day, the "gold standard" meant that anyone could trade in a dollar for a specific amount of gold at the national treasury. Since the amount of gold in the world was fixed, there wasn't any inflation to speak of: a dollar was always worth the same amount of gold, no matter what. Meanwhile, America's farmers were struggling with debt as they bought new industrial-age farm equipment.

Bryan and his fellow populists understood that by getting rid of the gold standard and printing more money, inflation would rise and the costs of farmers' loans would be reduced significantly. If you've got a 5% bank loan, but inflation is also 5%, then the real interest rate is zero. Better still, if the inflation rate rises up to 10%, then the bank is effectively paying you a 5% rate of return - which would really screw those fat cat industrialists. Here's the last line from Bryan's famous speech, which he delivered hundreds of times across the nation:

"Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold."

And the toilers and the producing masses in the crowd went wild.

The United States wouldn't officially abandon the gold standard in 1971, although expanding government indebtedness during the world wars and an emerging global economy had made the gold standard all but meaningless, and inflation more and more common, long before then.

But now we have a new problem: agribusinesses (the big conglomerates that bought out Bryan's farmers when they succumbed to bankruptcy) are making money hand over fist while the rest of us pay for $5 gallons of milk. The rising prices of groceries have led some journalists to coin the term "agflation." : inflation in agricultural commodities. As many have noted, a major factor in "agflation" has been increasing demand for corn thanks to rising fuel prices and ethanol subsidies.

Ethanol refineries now consume 1/5th of our corn. Since corn also feeds livestock, sweetens your Fruit Loops, and greases your fries, the hundreds of groceries that contain corn or animal products are getting more expensive as a direct result of ethanol production. At the same time, farmers eager to profit from expensive corn are planting less of other crops, which means that everything else is more expensive as a result of diminished supply.

Now that people are beginning to think of corn not only as a staple source of food energy, but also as an alternative source of transportation energy, this old-fashioned commodity is taking on a big role in our global economy. The gold standard may be long gone, but now we've got something like a corn standard.

The United States doesn't usually include food or fuel prices in its inflation measures, so "agflation" hasn't translated into the more usual "inflation" quite yet. But it is putting the screws to low-income households that spend a higher percentage of their incomes on food and gasoline. What would William Jennings Bryan make of our the twenty-first century toiling masses being crucified on this new Cross of Corn?

Hot stocks

Investments in green technology are increasing. Seems like good news - a sign that our markets are responding to $3/gallon gasoline and the warnings of the Nobel-prizewinning IPCC. But what are we to make of the fact that investments in security and weapons industries are also increasing, and at a much faster rate? Naomi Klein has an idea in an essay in today's Guardian:

"There are two distinct business models that can respond to our climate and energy crisis. We can develop policies and technologies to get us off this disastrous course. Or we can develop policies and technologies to protect us from those we have enraged through resource wars and displaced through climate change, while simultaneously shielding ourselves from the worst of both war and weather."

And so, professional money-movers like Douglas Lloyd of Venture Business Research "see this [defense and weapons industries] as a more attractive sector, as many do, than clean energy."

For all of our reverence for the free market and its "invisible hand", people often forget that these markets are man-made, and they function according to rules we make. Just as the market needed new rules and frameworks to respond to huge monopolies at the turn of the last century, the market needs new frameworks (like a global commodity price on carbon emissions) to respond to the global climate crisis now.

If we can't accomplish that, we might as well follow the venture capitalists' example and trade our rooftop solar panels for rooftop artillery batteries.

The Sensible Transportation Policy Act

The Maine Turnpike in 2015..

Did you know that Maine's Department of Transportation and the Turnpike Authority are required by law to "reduce the State's reliance of foreign oil and promote... energy-efficient forms of transportation"? And that they must give "preference to... other transportation modes before increasing highway capacity through road building activities"?

The Sensible Transportation Policy Act, passed in 1991, says all of this and more. It's a brilliantly progressive law. Too bad our transportation planners habitually break it.

After sixteen years of "sensible transportation," Maine has more roads, more freeway lanes, more traffic, and more pollutants from incinerated foreign oil, but state investments in bike/ped facilities and transit are virtually unchanged (i.e., virtually zero). Sure, we've got a train to Boston and a few scattered bike paths. But compare those investments (wildly successful in spite of their small scale) to the expenditures on new roads. We'll spend $50 million on the Gorham Bypass alone, even though it's going to generate more traffic and congestion in Standish and Westbrook, while energy-efficient, foreign-oil-independent sidewalks and bike routes scrape by with $750,000 a year.

The Maine Turnpike Authority is now looking to widen their freeway to six lanes through the Portland area. So far, environmental groups across the state are letting this one go without so much as a whimper (most of their leaders drive the same road, after all). But the Turnpike Authority is fabulously rich with toll revenues. What if we actually enforced the Sensible Transportation Policy Act, and told the Authority that they may only widen I-95 if they provide regional commuter bus service? Or a bike/pedestrian path running parallel to the freeway to connect the Maine Mall area to Portland, Westbrook, and West Falmouth?

Transit and bike/ped amenities like these would barely dent the Turnpike's budget, and they'd also provide fabulous enhancements to regional mobility. Instead of serving suburban commuters and weekend vacationers, the Turnpike could serve more of the people who actually live in greater Portland. There are already rumblings of these demands from local bike and pedestrian advocacy groups in Portland. The bigger environmental organizations may not yet be on our side, but at least the law is.

Photo: the riverfront bike path in Hoboken, New Jersey.
Budget figures from PACTS Destination Tomorrow plan

No such thing as free parking

The image above is a satellite image of downtown Portland, with surface parking lots (solid red) and parking garages (shaded red). Congress Street runs diagonally through the picture. This does not include on-street parking or parking garages that occupy the first level of larger office buildings (like One City Center).

Consider these quick facts:

The construction cost of one parking spot in an above-ground garage is $20,000. The land cost for one surface parking spot is about $2,500.

The City of Portland provides hundreds of acres of rent-free real estate for automobile storage on its streets. Many of the city's homeless live in cars, because Portland has reserved much more of its land and money for free parking than for affordable housing.

Portland taxpayers, businesses, and consumers pay the true costs of parking. Commuters from Standish, Windham, and other outlying communities generally don't pay for them, even though they use the majority of parking infrastructure.

It needs further research, but it's my educated guess that subsidies for free parking exceed subsidies for affordable housing by one or two orders of magnitude.

It comes down to this: like almost every city in the nation, Portland has Socialized Parking. Every developer who wants to do business in the city has to meet Stakhanovite parking production quotas. From each taxpayer according to his means, to each motorist according to his auto-addiction.

Click the link above to learn more about the book The High Cost of Free Parking, by Donald Shoup.

What's wrong with the property tax

Taxes aren't just for raising money: they also serve to discourage activities that are undesirable to the public by raising their prices. A government subsidy, on the other hand, can be thought of as a "negative tax", something that encourages certain purchases and investments for the public good. Thus we have high taxes on things like cigarettes and booze, and low taxes and subsidies for things like affordable housing and some types of health care.

So what about property taxes? The property tax is almost always thought of exclusively as a fundraising tool for local municipalities. But a tax of its magnitude will inevitably have a big economic effect, by effectively increasing the costs of landownership. Thus, the property tax acts as an incentive for big landowners (say, farmers and woodlot proprietors) to subdivide and sell off their land in smaller parcels.

The property tax made a certain amount of sense in colonial times, when the amount of land a family owned was a good measure of how rich they were. And in some cases, the value of a property might still be a good indicator of wealth (if, for example, an appraiser values a big McMansion on five acres as worth more than a working farm on a hundred). But other taxes - like an income tax, gasoline tax on commuting, or - best of all - a progressive consumption tax would be more effective and fair.

In more ways than one, property taxes are too expensive for New England.

TABOR tabled

A little over two years ago, I wrote this op-ed piece about Carol Palesky's first tax-cap proposal.

Voters rejected the second tax-reform referendum in as many years yesterday. And for a second time, we'll wait expectantly for our state legislature to take up the crucial issue of tax reform.

After the failure of the 1% tax cap in 2004, most people expected the Governor and the legislature to jump on the issue of tax relief. There have been a few initiatives, like the effort to regionalize services and to transfer more school funding to the state, but the near-success of TABOR tesifies to how unsatisfactory the results have been thus far.

Today's Press Herald argues that the voters who rejected TABOR were concerned more with this specific initiative than with tax reform in general, and that the next legislature will be expected to make Maine's tax system more equitable.

Only 37% of voters approved Question 1 in 2004. Last night, 46% of voters said "yes" to TABOR. If the legislature doesn't act quickly, we'll have another citizen-led effort to hack the state budget in 2008 - and the third time's the charm.