Pearl District and Housing

The Oregonian published a modest story highlighting the economic diversity of the Pearl District, a well known urban renewal project.  I was surprised at how many negative comments the story drew.  Apparently it tweaked some people's noses to learn that poor people can live in the Pearl.

There are a lot of reasons to like or dislike urban renewal, but let's look at the most basic consequence.  Urban renewal added housing.  Between 2000 and 2010 the two census tracts which most match the Pearl added more than 5,000 units of housing.  And it didn't add it willy-nilly, it was concentrated within an area of 0.72 square miles, most of it reclaimed from industrial and commercial use. 

Now consider what would happen without such concentrated development.  5,000 units equals 50 100-unit apartment buildings.  Given the problems the east side has shown accepting multi-unit housing, how would nimby leaders feel about 50 additional big buildings heading their way?  Or you could suppose that demand would have been met with suburban housing.  Assuming the same housing density as Beaverton that would require developing over 1,500 acres of land.

There are only so many ways of dealing with a rising population and a corresponding demand for housing.  Urban renewal has its flaws, but if you don't allow multi-family housing in existing neighborhoods and you don't want sprawl then reclaiming land from other uses (and the subsidies that go with it) is what is left. 

Market structure matters

This story shows how the exchange may succeed, but it also points to a problem.  If insurers are allowed to arbitrarily adjust their rates after filing (and after they've seen competing filed rates) there can be de facto collusion.  Insurers could initially file high and then go only as low as necessary to be competitive.  If they all play that strategy everyone files high and there's no need to go lower.  That's not what we want the exchange to do.

On the other hand it isn't plausible or desirable to say that insurers who want to lower their rates and who can bear the risk should be prevented from doing so.

I think the solution is to make such changes expensive.  If a company fudges filed rates the "error" should be widely publicized so as to create reputational damage.  Who wants to pay higher rates just because?  There should also be a financial hit, perhaps by the state contracting out for third party review at the filing company's expense.  Not only does it create a penalty to discourage such behavior, it's prudent since where there's one "error" there may be more.

And I have to add, I'm shocked... shocked that Providence had fat rates.

Great quote from Stephen Flynn

A few years ago I heard a really interesting podcast discussion with Stephen Flynn about the need to strengthen our infrastructure.  I finally got around to getting his book, and was immediately rewarded with this great passage.  From the introduction to The Edge of Disaster: Rebuilding a Resilient Nation,

Coming to grips with perils that can lead to catastrophic consequences is not about living in a perpetual state of fear.  We become fearful only when a sense of imminent danger is coupled with a feeling of powerlessness.  But there is no reason to doubt our ability to confront and manage these risks.  Every American generation has had to confront serious dangers, and they have always passed the test.  While we must be prepared to acknowledge that there are dark clouds on the horizon, it is vital that we not lose sight of our most important and endearing trait:  our sense of optimism about the future and our conviction that we can change it for the better.

Flynn wrote this back when George W Bush was still in office and troops were still dying in Iraq, but it is no less meaningful.  It might be even more meaningful now, looking at the dual tragedies of the Boston Marathon and the Texas fertilizer explosion, or the destruction wrought by Hurricane Sandy.  

We can quantize information of all types as never before.  With that data we can project risk.  It isn't something to be afraid of, nor is it something to ignore.  I think incorporating knowledge of risk, and deciding what warrants action and what does not, is a critical challenge for self government.

Book Review: The Activist

I picked up The Activist: John Marshall, Marbury V. Madison, and the Myth of Judicial Review as part of an informal study of American politics in the Adams/Jefferson years.  It was a much better read than I expected.  Ostensibly about the road to Marbury vs. Madison, Goldstone details the critical role of partisan machinations in early American politics. 

The Constitutional Convention was not expected to produce anything of significance and most participants attended meetings sporadically.  That the convention produced a new constitution reflected the skill and determination of a core of Federalists, particularly James Madison.  They had a specific agenda to strengthen the federal government at the expense of the states, there was nothing "bipartisan" about them.

Once the Constitution was passed it faced pitched ratification battles in the states, particularly in Virginia and New York.  Again those debates were anything but bipartisan, with anti-federalists striving desperately to derail the constitution or to approve it subject to amendment, which since it would require every other state to agree amounted to the same thing.

Nothing shows the role of partisan considerations better than the career of James Madison.  He bested Patrick Henry in debate and got Virginia to ratify the constitution.  In retaliation Henry blocked him from a Senate appointment and recruited Monroe to run against Madison for a house seat.  Monroe drew popular support with his call for amendments to the constitution, enough to pose a serious threat to Madison.  Madison had spent all of the Constitutional Convention and the ratification debate in Virginia fighting off such amendments, but now in order to earn a seat he flip flopped and embraced amendments himself.  He switched from being among the most ardent Federalists, writing with Hamilton and Jay the seminal Federalist Papers, to being an anti-Federalist and ultimately Jefferson's right hand man. 

Madison was truly brilliant, understanding first that popular disdain for the Articles of Confederation created leeway for an aggressively Federalist constitution, and then in betting correctly that the political center was shifting south and west and that expansion territories would not be Federalist.

Goldstone shows how narrow partisan interests were attached to broader conflicts over the role and strength of the federal government.  The Judiciary Act of 1801 for instance served a narrow purpose by allowing Adams to pack the courts with Federalist judges, but it also expressed a political view that the Federal courts should have broad authority and required a broad presence.  Jefferson attacked the courts both because they were federalist and because he wanted to disable federal courts so that state courts would take more responsibility.

This was the context in which the Federalist John Marshall confronted Marbury vs. Madison.  Had he ruled for Marbury he almost certainly would have been impeached.  He struck a balance by ruling against Marbury using a selective reading of the constitution as pretext, and using the opinion to excoriate Jefferson for not delivering the commission.  This was the high art of politics, incorporating partisan calculations and the broader principle of constitutional review.

Ruling the Judiciary Act of 1789 unconstitutional was certainly a means to an end.  But how strongly did Marshall believe in the concept of judicial superiority, and the idea that the court stood above Congress?  He never again struck down an act of Congress and it wasn't until Dred Scott that another court would do so.  A question for further reading.

A letter to City Council on Parking Minimums

A letter to Portland CIty Council on proposed parking minimums:

City Council Members,

I'm writing to urge you to reject the proposed increases in parking minimums, or if enacted to allow neighborhoods to waive the requirements in return for alternative design considerations.

Parking minimums are terrible social policy.  They encourage the supply of premium, high-end housing both because larger units will push unit counts down and because more expensive units will more easily absorb the cost of parking.  That has consequences for economic and ethnic diversity.  The market for low-cost housing does not look like the market for high-end housing.  The minimums will in effect further segregate our city.

Parking minimums are terrible environmental policy.  They encourage the use of automobiles, both for apartment residents and for homeowners whose street parking is effectively subsidized.  Because our roads aren't getting any wider they will increase traffic and congestion, making our air more polluted.  Parking minimums discourage people from using alternate transit, rendering our sidewalks less active and less safe.  And because more buildings will have ground floor parking rather than retail they render our streetscapes uglier.

Finally, parking minimums have consequences for regional policy.  Encouraging high density elsewhere, such as urban growth boundary expansion areas, is untenable if we reject density in inner-city Portland.  One way or another housing demand will be met.  If it isn't met by urban housing it will be met by sprawl.

All this, for what purpose?  To protect who?  How many homes lack off-steet parking?  Where are they concentrated?  Virtually every home in my neighborhood has off-street parking, what purpose do minimums serve here?  That's not an idle question, I live [near an arterial street] and apartment development is not unlikely.  Why should those apartments be required to have parking?

Where homes do lack off-street parking why should their occupants be entitled to preferential treatment?  Why should such residents be protected from the consequences of their decision to live in a home without off-street parking?  If they should be protected why should that cost be born exclusively by renters in other buildings?  Why should the resident of a 500 square foot apartment pay for parking so that the resident of a three bedroom single family home doesn't have to?

As a matter of equity, as a matter of sustainability, and as a matter of basic common sense parking minimums should be rejected. 

But what should happen and what does happen aren't always the same.  With that in mind, if parking minimums are adopted I urge the council to include an amendment that would act as a breath of fresh air.  Allow a waiver of parking requirements if the presiding neighborhood association consents to one as part of a broader agreement  with developers on project design.  This flexibility would allow neighborhoods to determine their own best interest on a case by case basis, and it allows the possibility of creating particular amenities or features to meet a particular location's needs. 

If a location needs more parking lots, the neighborhood can sit on their hands and get that by default.  But for neighborhoods with different aspirations, such as a public plaza or seating area, or a lower building height, or a stoplight to improve pedestrian safety, the ability to grant a waiver on parking requirements creates a powerful incentive for developers to take those aspirations seriously.  Maybe a meeting of the minds will happen and maybe it won't.  But if a bargain is there to be struck why shouldn't the city bless it?

If this measure is passed make it one that strengthens the hand of neighborhoods in pursuing their own interest, not one that binds them.

Liberal Portland?

I came across a comment on Portland Transit that got me thinking.  Written by a self-described opponent of density in the city, the author claimed that such opposition did not imply they were right-wingers.  As evidence, they pointed to the overwhelming popularity of the Democratic Party in neighborhoods which had also taken strong stands against density.  I think the answer to that is a well-worn disclaimer:  Past experience may not be indicative of future results.

Corey Robin described conservatism as,

… a deliberate, conscious effort to preserve or recall "those forms of experience which can no longer be had in an authentic way."  Conservatism "becomes conscious and reflective when  other ways of life and thought appear on the scene, against which it is compelled to take up arms in the ideological struggle."  Where the traditionalist can take objects of desire for granted- he can enjoy them as if they are at hand because they are at hand- the conservative cannot.  He seeks to enjoy them precisely as they are being- or have been- taken away.  If he hopes to enjoy them again, he must contest their divestment in the public realm…  As soon as those objects enter the medium of political speech, they cease to be items of lived experience and become incidents of an ideology.  They get wrapped in a narrative of loss- in which the revolutionary or reformist plays a necessary part- and presented in a program of recovery.  What was tacit becomes articulate, what was fluid becomes formal, what was practice becomes polemic.

Movements to erect barriers to ethnic and economic diversity in Portland (parking requirements), and to make living in and maintaining the past a condition of residency (neighborhood preservation districts), embody the essence of conservatism.  They are fear of the new, fear of strangers, and fear of change writ large.  If Portlanders embrace such causes I think a political shift to reflect conservative values is inevitable.   

To pick on the most vivid example, Amanda Fritz cannot continue demanding a housing density of 20 units per acre in urban growth boundary expansion areas where infrastructure and amenities are by definition non-existent, while at the same time fighting to preserve a density of less than 7 units per acre across most of inner east Portland.  Either she changes her tune or she destroys her credibility so much that functionally she says nothing at all.  Likewise if you think it is impossible to live without a car and therefore parking is necessary for a basic quality of life, why fund public transit at all?  A more effective use of public resources would be to ensure that everyone simply had a car.

One way or another, our political actions will align with our political values.  Our "talk" and our "walk" can't go in different directions indefinitely.

Arkansas Medicaid Expansion: An experiment in anti-coordination

I've seen a lot of talk about the decision to let Arkansas expand Medicaid by having people buy private insurance policies on the Exchange.  Much of the discussion focuses on cost, in that private policies cost much more per person than does Medicaid coverage.  That's a problem if you think we spend too much on health care.  But it may not be the worst one.

The Medicaid expansion population is people with incomes below 133% of the federal poverty level.  Per a KFF Brief this population has a household income distribution as follows (2013 FPL level for a single adult in parenthesis):

Less than half of FPL ($5,745)  - 49%
Between half and 100% of FPL ($11,490) - 30%
Between 100% and 133% of FPL ($15,282) - 21%

So Arkansas is telling a population, roughly half of whom make less than $6,000 a year, to go shop for insurance policies on the exchange.  Gee, I wonder what could go wrong.

• Are these people literate?  It's awful hard to shop for a policy when you can't read.
• Do they have homes?  How will they manage all the paperwork that goes with private insurance when they don't have a permanent mailing address?
•  Most important, will they understand their policies?  Understanding the basic terms and conditions, such as when emergency room use will be covered or which providers are in network or what kind of pre-authorization is required is critical to effectively using an insurance policy.  Mess that up and you are functionally uninsured. 

Using the exchanges to provide insurance for people in poverty strikes me as the worst of all worlds.  It inflates premiums in the exchange as community rating forces everyone else to pay for a sicker population, it soaks the nation with paying their full premiums since they have no money to pay it themselves, it hurts the Medicaid population as they'll put off care once they get a "shock" bill because they didn't understand their insurance, and it will soak hospitals when that population defaults to the local ER for safety net care which may or may not be reimbursed by insurance.

Oregon is investing a lot of resources into Coordinated Care, ensuring that the Medicaid population gets the most medically-effective and cost-effective care possible.  Arkansas, and states that follow them are embarking on a bold experiment in Anti-Coordination.  Instead of the hard work of aligning incentives, resources, and purpose they are closing their eyes and throwing money at the problem.  You don't need to be an actuary to guess how that will work out.