Los Angeles Transportation: Fact and Fiction

For anyone in California out there or who has a familiarity with commuter life in L.A., I wanted to draw your attention to Freakonomics' latest series on facts and fiction about commuting in L.A.

Most people think of L.A. as the smoggiest, over-freewayed, crappiest-public-transportation-having quagmire in the world. Maybe so, but maybe not. Here's the last installment in the series (that also provides links to the previous articles) to let you know how things really are.

Enjoy.

Good Perspective on the Economy

The following is an excerpt from a recent article by professor, writer, etc. Gregg Easterbrook. I enjoyed it because it is a cry for perspective on the current financial situation, and I happen to wish that there was more of a cry for perspective from the media. I made the claim recently that this sort of down is just a part of modern economics and got called to the carpet for it by an old friend. Here's some additional reasoning for my position:

Gasoline Plentiful, Perspective Scarce: "Financial chaos is sweeping the world," a New York Times lead story said last week. I didn't notice any chaos in my part of the world -- every business was open, ATMs were working, goods and services were plentiful. There are economic problems to be sure. But chaos? Collapse? Next Depression? Please, media and political worlds, let's stop hyperventilating and show some perspective.

What is going on is a financial panic, not an economic collapse. Financial panics are no fun, especially for anyone who needs to cash out an asset right now for retirement, college and so on. But financial panics occur cyclically and are not necessarily devastating. The most recent financial panic was 1987, when the stock market fell 23 percent in a single day. Pundits and politicians instantly began talking about another Depression, about the "end of Wall Street." The 1987 panic had zero lasting economic consequences -- no recession began, and in less than two years, stocks had recouped all losses. (See John Gordon's excellent 2004 book on the history of financial panics, "An Empire of Wealth.") Perhaps a recession will be triggered by the current financial panic, but it may not necessarily be severe.

Politicians and pundits are competing to see who can act most panicked and use the most exaggerated claims about economic crisis -- yet the fundamentals of the U.S. economy are, in fact, strong. Productivity is high; innovation is high; the workforce is robust and well-educated; unemployment is troubling at 6.1 percent, but nothing compared to the recent past, such as 11.8 percent unemployment in 1992; there are no shortages of resources, energy or goods. Here, University of Chicago economist Casey Mulligan shows that return on capital is historically high; high returns on capital are associated with strong economies. Some Americans have significant problems with mortgages, and credit availability for business could become an issue if the multiple bank-stabilizing plans in progress don't work. But the likelihood is they will work. When the 1987 panic hit, people were afraid the economy would collapse; it didn't. This panic is global, enlarging the risks. But there's a good chance things will turn out fine.

Why has a credit-market problem expanded into a panic? One reason is the media and political systems are now programmed for panic mode. Everything's a crisis! Crises, after all, keep people's eyes glued to cable news shows, so the media have an interest in proclaiming crises. Crises make Washington seem more important, and can be used to justify giveaways to favored constituent groups, so Washington influence-peddlers have an interest in proclaiming crises.

An example of the exaggerated crisis claim is the assertion that Americans "lost" $2 trillion from their pension savings in the past month, while equities "lost" $8 trillion in value. "Investors Lose $8.4 Trillion of Wealth" read a Wall Street Journal headline last week. This confuses a loss with a decline. Unless you cashed out stocks or a 401(k) in the past month, you haven't "lost" anything. Nor have most investors "lost" money, let alone $8.4 trillion -- crisis-mongering is now so deeply ingrained in the media that even Wall Street Journal headline writers have forgotten basic economics. People who because of financial need have no choice but to cash out stocks right now are really harmed. Anyone who simply holds his or her ground with stocks takes no loss and is likely, although of course not certain, to come out ahead in the end. During the housing price bubble of 2003 to 2006, many Americans became much better off on paper, but never actually sold their homes, so it was all paper gains. Right now many Americans holdings stocks or retirement plans are much worse off on paper, but will be fine so long as they don't panic and sell. One of the distressing things about last week's media cries of doomsday is that they surely caused some average people to sell stocks or 401(k)'s in panic, taking losses they might have avoided by simply doing nothing. The financial shout-shows on cable tend to advise people to buy when the market is rising, sell when the market is falling -- the worst possible advice, and last week it was amplified by panic.

We've also fallen into panic because we pay way too much attention to stock prices. Ronald Reagan said, "Never confuse the stock market with the economy." Almost everyone is now making exactly that mistake. The stock market is not a barometer of the economy; it is a barometer of what people think stocks are worth. These are entirely separate things. What people think stocks are worth now depends on their guess about what stocks will be worth in the future, which is unknowable. You can only guess, and thus optimism feeds optimism while pessimism feeds pessimism.

There is no way the American economy became 8 percent less valuable between breakfast and morning coffee break Friday, then became 3 percent more valuable at lunchtime (that is, improved by 11 percent), then became 3 percent less valuable by afternoon teatime (that is, declined by 6 percent) -- to cite the actual Dow Jones Industrials swings from Friday. And the economy sure did not become 11 percent more valuable Monday. Such swings reflect panic or herd psychology, not the underlying economy, which changes over months and years, not single days. For the past few weeks pundits and Washington and London policy-makers have been staring at stock tickers as if they provided minute-by-minute readouts of economic health, which they do not. It's embarrassing to see White House and administration officials seemingly so poorly schooled in economic theory they are obsessing over stock-price movements, which they cannot control and in the short term should not even care about.

[+] Enlarge

AP Photo/Richard Drew

"It's a crisis! A calamity! The end of civilization! Say, is the limo with my champagne here yet?"

Consider this. On Black Monday in 1987, the market fell 23 percent. If you had invested $100 in a Dow Jones Index fund the following day, it would be $460 now, a 275 percent increase adjusting for inflation. That's after the big slide of the past month, and still excellent. So don't panic, just hold your stocks. And if you'd invested $100 in real estate in 1987, it would be $240 today, a 30 percent increase adjusting for inflation. That's after the housing price bubble burst. A 30 percent real gain in 20 years isn't a great investment -- until you consider that you lived in the house or condo during this time. To purchase and live in a dwelling, then come out ahead when you sell, is everyone's dream. Not only do stocks remain a good buy, America on average is still coming out ahead on the housing dream. (This example uses the Case Shiller Index for the whole country; because housing markets are local, some homeowners have lost substantial ground while others enjoyed significant appreciation.)

Economic problems are likely to be with us for awhile, but also likely to be resolved -- the 1987 panic and the 1997 Asian currency collapse both were repaired more quickly than predicted, with much less harm than forecast. Want to worry? Worry about the fact that the United States is borrowing, mainly from foreign investors and China, the money being used to fix our banks. The worse the national debt becomes -- $11 trillion now, and increasing owing to Washington giveaways -- the more the economy will soften over the long term. It's long-term borrowing, not short-term Wall Street mood swings, that ought to worry us, because the point may be reached where we can no longer solve problems by borrowing our way out. TMQ's former Brookings Institution colleague Peter Orszag, now director of the Congressional Budget Office, was on "Newshour" last week talking about the panic. Orszag is a wicked-smart economist -- for instance, he is careful to say pension holdings have declined, not been lost like most pundits are saying, as if there were no difference between decline and loss! The below exchange occurred with host Jeffrey Brown. Remember these words:

PETER ORSZAG: One thing we need to remember is we're lucky that we have the maneuvering room now to issue lots of additional Treasury securities and intervene aggressively to address this crisis.

JEFFREY BROWN: Wait a minute. Explain that. Lucky in what sense?

PETER ORSZAG: That people are still willing to lend to us. If in 20 or 30 years we continue on the same path, with rising health-care costs and rising budget deficits, we would reach a point where we wouldn't have that ability.

Used Car Ads and One Guy I Want to Punch in the Hereafter

So, I think that it's safe to say that there are a handful of people whom we're all eager to punch in the face when we all meet up in the hereafter. High on my list is whoever the guy is who first decided that all used car ads have to be obnoxious, belie all intelligence, and slightly resemble South American TV all around. This is the guy who decided that balloons, cameras with no filters, random farm animals, cowboy hats, cheesy graphics, clowns, and the sacrilegious butchering/parodying of beloved oldies and classic rock was the appropriate way to generate interest in checking out a used car lot this weekend? It genuinely raises my blood pressure.

I give you a man who made such ads great, Southern California's Cal Worthington:



What blows my mind is the stark contrast between used car advertising and new car advertising. As an example...



New car ads are, with few exceptions, clever, well-produced, often exciting, and at worst just not any more annoying than any other commercial. Smart dealerships just buy the rights to tack their dealer's name and location on a screen at the end of the manufacturer's commercial.

TV watchers of the world, unite! Change the channel and let's hope that the collective antipathy will change this horrific trend for future generations. But who am I kidding? As long as there are morons in the world, there will be plenty of marketing folk to pander to them and sell them stuff.

Goodbye DNC!!

I have to take a moment to express my happiness that the DNC has left Denver. Leaning the other way politically, it's already tough enough to deal with the litany of bumper stickers spouting left-wing paraphernalia from the back of the many 10+ year-old Suburu Outbacks you'll find here without having to co-exist with a convention celebrating the most extreme version of left-wing politics.

Though I had to put that obligatory dig in, my beef with the DNC probably had as much to do with my dislike for big events that aren't nearly as entertaining as they might be made out to be. For example, while everyone else seemed to enjoy the Winter Olympics' arrival in Utah, I fled the state since half of my apartment complex's available parking was appropriated by the ever-popular women's' ice hockey venue nearby. So, although I seem to be in the minority here, I was more than happy to stay as far away from downtown as possible during last week's festivities.

I find conventions to be a curious thing. Even though the biggest non-story of the primaries almost (but not really) happened with the near roll call vote to appease Hillaryland out there, the conventions never serve the purpose that they traditionally had--to elect the party's candidate. Instead, you get a few days of ego-stroking, glad-handing, and general schmoozing as people who are already way too excited about politics work themselves into a frenzy of extremely way too excitedness. I guess I could see some value in a trickle-down effect of some sort where these extremely way too excited folk get sufficiently pumped up to motivate some of the more apathetic of our populace, but I'm not sure that actually happens.

We'll see how the RNC pans out. I think that if they had any guts they'd bag the whole thing and tell everyone who bought a ticket to Minnesota to head down to New Orleans to start cleaning up. Apart from being a much more noble way of spending time and money, can you argue with the political capital they'd gain from that kind of service-minded, "let's forget all this crap and just get to work" mentality that would show? Nominating a woman was probably about as extreme as the Republicans are willing to get this year, though.

Speaking of which, I have to say that was a gutsy move. I'm impressed. Palin seems like a strong-minded individual and a good check against Obama. I'm not sure what her presence will actually be worth in the long run, but if McCain represents the establishment with his long tenure in the Senate and Obama is running as the fresh-faced voice of change, then Palin's as good a counterpart as any. I'm eager to learn a bit more about her.

WARNING: NERDISH REFERENCE FORTHCOMING

At a glance, Palin slightly resembles Mary McDowell (Dances with Wolves's Stands with a Fist) who plays the inexperienced-cabinet-member-who's-forced-to-assume-the-presidency-after-disaster-strikes in TV's Battlestar Galactica. Scary analogy, there, for those of you who know the show (Good first season that went downhill shortly thereafter, by the way, sort of a-la Friday Night Lights). Let's hope that her career doesn't go the same way, not because she wouldn't do a good enough job, but because that would mean something terrible happened.

Media Fascination with New York

So what is with the pop culture fascination with destroying New York, anyway? New York is easily America's favorite city to see destroyed in disaster movies, and you'd think that in a post-9/11 world this would be particularly distasteful. Yet, the destruction goes on.

New York is destroyed at least in the following: "Independence Day," "Escape from New York," "I Am Legend," "The Day After Tomorrow," "Cloverfield," "Planet of the Apes," "A.I.," "Sky Captain and the World of Tomorrow," "Godzilla" (1998), "King Kong" (any year), "War of the Worlds," (Tom Cruise version and original Orson Welles broadcast).

What's more, New York is among the favorite settings for chick flicks. Granted, one of the top rules of chick flicks is that the heroine must have a dream job working for a) an advertising firm, b) a design firm, or c) in print media of some form, though print media about a) or b) is the ideal chick flick dream job. And since that's the case, New York becomes a logical target. (Think "Hitch," "How to Lose a Guy in 10 Days," or "The Devil Wears Prada.")

I find this particularly surprising having grown up in Southern California and been exposed all my life to how important the film industry is there. People forget how many jobs that Hollywood provides and how reliant media outlets there are on celebrity information and news. Could it be, that L.A. may have a bit of envy for New York and a strange fascination with their speedy, in-your-face, stressed out ways that are so at odds with Southern California's mellow roots? I'm not sure.

And I suppose it's not such a bad thing. New York's a fun place to visit, and I suppose it would be a fun place to live for a short time. But still, there are a lot of great cities in the U.S. to say nothing of the world. Plus, I can't imagine how much it costs to film in New York compared to nearly any other city, so if anyone has a take as to why we like to see New York blown up and/or glamorized in the media, I'd love to hear it.