SUMMARY

The national Ways to Work program has improved the employment and education opportunities of low-income households across the United States. The model is similar to that used Mohammed Unus, who recently won the Nobel Prize for his small loan program in Bengladesh.

WAYS TO WORK PROGRAM

Economist Mohammed Unus recently won the Nobel Prize for his groundbreaking project that makes small loans available to the low-income residents of Bengladesh. In making the award, the Nobel Committee noted the importance of finding ways for people to break out of poverty. Unus’ Grameen Bank has developed an impressive record of assisting poor households to enter the mainstream of economic life in Bangladesh.

The applicability of the Unus model is not limited to low-income nations. The national Ways to Work program has been working for more than 20 years to bring low-income households across the United States into the economic mainstream. A principal strategy has been to provide loans, like Unus, to low-income households. Ways to Work helps households buy cars.

Why cars? Simply because in modern urban areas, whether in the United States, Western Europe or the low-income world, cars expand exponentially the geographical area in which people can search for employment. Research at the University of California, the Brookings Institution and the Progressive Policy Institute demonstrates that cars are crucial to obtaining better employment. The problem is, of course, that despite the romantic affection for transit, it is simply unable to provide mobility to much more than the downtown area, and that’s not where most of the jobs are.

A recent evaluation report looked at a representative sample of Ways to Work borrowers, and found the following:

Working families who have received Ways to Work loans have, on average, increased their incomes more than 40 percent in the first year.

More than 80 percent of the borrowers who were previously on cash grant public assistance programs saw their incomes rise so much that they were able to leave the public assistance programs.

Many of the borrowers indicated that having the car made it possible for them to complete education and training programs.

Demonstrating how success breeds success, one-third of borrowers have since been able to obtain new loans through conventional sources.

Finally, nearly all of the borrowers said that having a car increased the time they could spend with their families and improved their quality of life.

It may be time for the Nobel Committee to honor the model Ways to Work program.

Posted by Wendell Cox at 10:59 AM | Permalink

A Baltimore Sun editorial talks about transit, transit elections and reducing traffic congestion. What the Sun misses is that transit and traffic congestion are completely different subjects. No level of transit investment, anywhere in the world, has materially reduced traffic congestion.

A November 29 editorial in the Baltimore Sun illustrates the typical populist, and wrong, romanticism about mass transit. Noting that a voters in a number of jurisdictions around the country approved transit tax increases, the Sun said: “Growing traffic congestion, rising fuel prices, and concern over pollution have made the case for transit too difficult to ignore.”

Regrettably, there is a huge difference between the “case’ and the reality. The reality is that transit cannot reduce traffic congestion. The reality is that, at whatever level of investment, transit has not attracted sufficient numbers of drivers to materially reduce the share of urban travel by automobile.

A look less than 40 miles south of Baltimore proves the point. In the Washington, DC area, more than 100 miles of high-quality Metro has been built --- more than in any world urban area except for Seoul. Altogether, the miles of Metro built in Washington equal the total built in all of the other US urban areas. Yet what about traffic? Washington’s ranks fourth in the nation, and is close enough to challenge number two and three (transit rich Chicago and San Francisco) at any point. Over the past 20 years, traffic congestion has nearly tripled, despite the miles and millions of Metro.

The Sun goes on to cluelessly claim, “What works in Seattle, Denver and soon Salt Lake City and Kansas City, too, can work here - if it's given a chance.” This is the old “story from across the mountains,” which achieved its highest form when a well-known columnist suggested Cleveland as a model for St. Louis.

However, things are much different than the Sun perceives across the mountains. Here is how things “work”” Like in Baltimore, Seattle’s’ transit market share is less than 2.5 percent. Denver’s is less than 1.5 percent. It would take a miracle of massive proportions to get transit up to a 0.5 percent share in Salt Lake City and Kansas City. Further, no virtually urban area --- not in the United States and not in Western Europe --- even has plans that would materially reduce automobile use or traffic congestion. That, however, does not keep transit officials from promising the impossible in their pursuit of more money in elections. In the private sector, such behavior is subject to truth in advertising laws. In transit, it gains accolades.

Why is it that transit cannot reduce traffic congestion? It is simply that transit best serves the historical 19th century core of urban areas. For example, nearly 40 percent of downtown Washington commuters use transit for the work trip. However, downtown Washington accounts for less than 20 percent of the area’s employment. More than 80 percent of the destinations are outside downtown and outside the ability of transit to compete. This is why the large majority of travel in all American and Western European urban areas is by car and why there is no hope for this to be reversed. It is, as noted above, so hopeless that not even the planners can concoct a vision in which car travel would be reduced.

At the same time, the mindless preoccupation with transit and its futility outside the urban core is accompanied by a misunderstanding of the role that the automobile has and will continue to play. Research indicates that the superior mobility of the automobile is one of the reasons that affluence has spread so widely in American and Western European urban areas. Around the country, programs to get cars to low-income households are increasing their incomes by significantly increasing the geography of their jobs options --- despite decades of talk about transit and “reverse commuting,” it simply has not happened to a material degree. There is a simple reason. It cannot.

Any genuinely interested in solving the transportation problems of the modern urban area will do well to discard the rhetoric and look at the reality. Transit can play an important role in a few markets, like the nation’s strongest downtowns and door-to-door transportation service for the physically disabled. However, no volume of political “throw away” lines or editorial rhetoric will change the fact that transit has little or no role to play outside these niche markets.

Posted by Wendell Cox at 06:27 AM | Permalink

Maps

HIGHLIGHTS
Fully access controlled (freeway standard)
Principally toll roads
Planned length in 2020: 85,000 kilometers (53,000 miles)
Planned length in 2010: 65,000 kilometers (40,000 miles)
Completed by 2005: 41,000 kilometers (25,500 miles)
Does not include separately constructed urban freeways

COMPARISON TO THE UNITED STATES
Original US Interstate System: Approximately 65,000 kilometers (40,000 miles)
Total US Freeway Length: 2005: 90,000 kilometers (56,000 miles)

Posted by Wendell Cox at 08:07 PM | Permalink

Britain’s "smart growth" urban planning laws are taking their toll. In just 5 years, the share of younger households purchasing their own homes has fallen 15 percent.

Britain’s "smart growth" urban planning laws are taking their toll. In 2004, the Barker Report, commissioned by Deputy Prime Minister John Prescott, found that housing prices had been increasing at more than double the continental European rate for 30 years. The report cited the United Kingdom’s overly restrictive land use regulations as a principal cause. Earlier this year, our Second Annual Demographia International Housing Affordability Survey rated 12 of 14 UK housing markets as “severely unaffordable,” and found the median house price in London to be 6.9 times the median household income, more than double the 3.0 or less that would be registered by a market in balance with the economy.

We also reported that the average new house size to slightly larger than a communist East German flat, built on a lot 1/6th the size of the average US lot.

Now, England’s Department for Communities and Local Government reports that a strong downward trend in home ownership by younger households. In its Survey of English Housing Provisional Results: 2005/2006, the Department found that in only five years, there was a 15 percent drop in households under 30 years of age buying homes (from 40 percent to 34 percent). Given the importance of home ownership to middle-income wealth creation, this is an ominous development.

Consistent with the thesis of my recent book War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life government policy is poised to reduce home ownership rates and make Britain a poorer place.

Minority Home Ownership Far Below White Rate

At the same time, the Department reported that Non-White home ownership rates trail that of Whites. Non-White home ownership stood at 50 percent in 2006, compared to 72 percent for whites. The Black home ownership rate is approximately one-half the White rate, at 37 percent. This minority disadvantage mirrors data in the United States and New Zealand. Moreover, as smart growth planning laws worsen housing affordability, the gap between White and minority home ownership can be expected to widen.

Posted by Wendell Cox at 02:01 PM | Permalink

A cadre of Western urban planners has descended on China offering advice. Chinese officials are admonished “not to repeat our mistakes.” The mistakes, they explain are urban sprawl (a pejorative term for suburbanization) and automobile use. Chinese officials who visit the West must marvel as for the mistakes at the myopia of our planners after witnessing the high standard of living, which is something they would like to replicate. For good reason, they are largely ignoring the bankrupt advice they are receiving from the Western planners.

Introduction

China is experiencing unprecedented economic growth. Over the past two decades, living standards have risen seven fold. Gross domestic product per capita still remains below high-income world standards, at one-sixth that of the US level. Nonetheless, there is great regional disparity, with incomes in east coast urban areas up to three times that of urban areas in the central and western regions.

Like many developing nations, China remains more rural than urban. According to United Nations data, China’s population was only 40 percent urban in 2000. This compares to urban rates of over 70 percent in many high-income nations. People are moving in large numbers from rural areas to the urban areas, following the pattern of development that has occurred virtually wherever incomes have risen markedly. Opportunities are much greater in the large and expanding urban labor markets, and the standard of living is better in urban areas than in rural areas. The United Nations estimates that by 2030, 60 percent of the Chinese population will live in urban areas. This represents a staggering migration --- the movement of 340,000,000 people --- a population greater than that of the United States and Canada.

Already, China has very large urban areas. Shanghai, Shenzhen and Beijing have 10,000,000 or more residents. A number of other urban areas have approximately 5,000,000 people, such as Guangzhou, Wuhan, Tianjin, Shenyang and Dongguan. There are more than 25 additional urban areas with populations above 1,000,000 See Demographia World Urban Areas.

The Western Planners

Not surprisingly, a cadre of Western urban planners has descended on China offering advice. Chinese officials are admonished “not to repeat our mistakes.” The mistakes, they explain are urban sprawl (a pejorative term for suburbanization) and automobile use.

The Reality of the West

And, as for the mistakes of the West, Chinese officials who visit the United States, Western Europe, Canada or Australia must wonder at the disconnect between the wasteland described by Western planners and the unparalleled quality of life enjoyed by people in the West.

It is not a mistake that the automobile has created mobile urban areas in which employers and employees have far greater choices and labor markets are more efficient. It is not a mistake that housing built on inexpensive land on the periphery of urban areas has made it possible for so many millions to build up financial equity in their own homes. Nor is it a mistake that nearbly inexpensive land has been developed by retailers and other businesses who are, as a result, able to provide lower prices than would otherwise be possible.

The West has achieved its unparalleled affluence because it was largely able to accomplish all of this before the planners were in a position to impose their wills that would have prevented suburbanization and the expansion of mobility. The planners would have imposed greenbelts and urban growth boundaries, making it impossible for low cost housing to be developed. Western nations would now be principally inhabited by renters rather than homeowners. Employees would be limited to those few places they could get on foot or public transport, rather than the whole urban area that the automobile has opened up. There would be less wealth and it would be less broadly distributed. The planners would not have allowed the “big-box” stores on the urban fringe, and as a result people would have had to pay higher prices with their smaller incomes.

China: Ignoring the Western Planners

Indeed, for any who might wish for China to stumble in its competition with the West, it is hard to imagine a more promising strategy than to export Western planning ideas, if not the planners themselves, to China. China would do well to ignore the Western planners, whose advice would retard the growth of the economy and spread of wealth. To China’s credit, the “fools gold” of Western urban planning principles is largely being ignored.

Posted by Wendell Cox at 01:55 PM | Permalink

India's Tata Motors plans to market a $2,200 car that could make it possible for millions of households to obtain personal mobility and its economic advantages.

A growing body of research indicates a strong relationship between mobility and household income. Throughout the high-income world, the automobile and other motorized forms of personal mobility (such as the motorcycle or the auto-rickshaw) provide the greatest mobility, making it possible for their users to travel from their residences to jobs throughout the urban area. This works best in high-income world urban areas where there motorized personal mobility are much more widely available. Non-motorized transport (such as walking and bicycles), despite its romantic appeal to some, simply cannot provide mobility throughout the modern urban area because it is too slow.

Medium-income and low-income urban areas will need much better mobility for their incomes to increase (along with the even more important issues of rule of law and property rights). It thus comes as good news that India’s Tata Motors is developing a “1 lakh” ($2,200) car. “Lakh” is an Indian term meaning 100,000. Thus a 1 lakh car is a 100,000 rupee car. This translates into approximately $2,200. Currently, Tata’s lowest price car is approximately $7,000.

Obviously the 1 lakh car will not have all of the features that would be expected of a Japanese, American or European economy car. However, it will provide the same basic need --- mobility throughout the urban area. It is expected that the 1 lakh car will be on the market by 2008. This revolutionary development has great potential to facilitate the economic advance of millions of households in India and in low-income and middle-income export markets.

Posted by Wendell Cox at 12:17 PM | Permalink

So the so-called founder of the web (certainly more credentials than Al Gore in that department), Tim Berners Lee, is playing the Pandora card. Oh no. Horrors. The web might be a source for misinformation.

Net Neutrality is starting to look more and more like a collectivist block committee environment in which non-conformists can be banned without violating the principle.

Posted by Brian Bishop at 09:25 AM | Permalink

After years of fighting against the reigning mantra of elite academe that we are living in 'The Matrix', i.e. that the concepts of science and rationality are artificial 'constructs' designed to preserve the existing social order in which we are all slaves duped into thinking we have some freedom from our roober baron masters, I have to concede I have finally run up against just such a thing.

While the sun in the sky is not a construct, and perhaps noon is not a construct if it is defined as the time that the sun is directly overhead, the time that our clocks say is decidely a cultural con job. Forgetting the arbitrary idea of rebooting our circadian rhythms twice a year going on and off of daylight savings time (which could be easily fixed by my proposal for adopting daylight savings time year round), the fundamental 'construct' that gives rise to the debate in the first place is time zones.

The sun is not directly overhead at all places in the time zone at noon, even on standard time. Indeed the sun actually rises and sets more or less an hour earlier at the leading edge of each time zone than at the trailing edge. (That was the best thing I noted about living in Michigan, the trailing edge of the eastern time zone, compared to Rhode Island, out there on the eastern front of eastern time). We order our lives around an agreed time for the efficacy it provides to us all. But is this an evil capitalist plot?

Added to this fundamental question of the hegemony of the hourglass is whether daylight savings time is yet another plot to further separate the haves and the have nots. If you were to listen to the anti-Daylight Savings Time ravings of Michael Downing, you might think so.

Posted by Brian Bishop at 07:23 AM | Permalink