" /> Stylized Facts: May 2012 Archives

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May 27, 2012

Walkable value

Until the 1990s, exclusive suburban homes that were accessible only by car cost more, per square foot, than other kinds of American housing. Now, however, these suburbs have become overbuilt, and housing values have fallen. Today, the most valuable real estate lies in walkable urban locations. Many of these now pricey places were slums just 30 years ago.


Mariela Alfonzo and I just released a Brookings Institution study that measures values of commercial and residential real estate in the Washington, D.C., metropolitan area, which includes the surrounding suburbs in Virginia and Maryland. Our research shows that real estate values increase as neighborhoods became more walkable, where everyday needs, including working, can be met by walking, transit or biking. There is a five-step "ladder" of walkability, from least to most walkable. On average, each step up the walkability ladder adds $9 per square foot to annual office rents, $7 per square foot to retail rents, more than $300 per month to apartment rents and nearly $82 per square foot to home values.

May 15, 2012


A midwestern grain farmer said that he and his friends are nothing more than the pipeline by which money flows from Cargill to Monsanto.

Cargill pays them every year for corn or soy or whatever.
They pay Monsanto every year for seeds and fertilizer.

May 12, 2012

Doing and thinking: the same thing ?

There are barriers in our society erected by a false dichotomy between practical work and theoretical reflection. If someone develops early on a skill at repairing cars, she may falsely assume that she will not be adept at literary analysis or theorem proving. This robs not only her of opportunities but also society of a potentially important contributor to literary analysis or mathematics. The reward structure of society also assumes it, reflected in both the pay and the cost of pursuing what are thought of as the theoretical pursuits. The supposed distinction also operates on an everyday level. If one spends one's time repairing cars, one may think that one does not have the appropriate capacities to evaluate the arguments of economic "experts" on television. One might then feel alienated from such discussions and find one's sense of alienation reflected in the angry rhetoric of propagandists.

The distinction between the practical and the theoretical is used to warehouse society into groups. It alienates and divides. It is fortunate, then, that it is nothing more than a fiction.

-- Jason Stanley

May 7, 2012

Douthat on the defensive conservatism of progressives in power

On the one hand, its public policy agenda is essentially a defense of existing arrangements no matter their effectiveness or sustainability, apparently premised on the assumption that American women can't make cost-benefit calculations or indeed do basic math. In addition to ignoring the taxes that will be required of its businesswoman heroine across her working life, "The Life of Julia" hails a program (Head Start) that may not work at all, touts education spending that hasn't done much for high school test scores or cut college costs, and never mentions that on the Obama administration's own budget trajectory, neither Medicare nor Social Security will be able to make good on its promises once today's 20-something Julias retire.

At the same time, the slide show's vision of the individual's relationship to the state seems designed to vindicate every conservative critique of the Obama-era Democratic Party. The liberalism of "the Life of Julia" doesn't envision government spending the way an older liberalism did -- as a backstop for otherwise self-sufficient working families, providing insurance against job loss, decrepitude and catastrophic illness. It offers a more sweeping vision of government's place in society, in which the individual depends on the state at every stage of life, and no decision -- personal, educational, entrepreneurial, sexual -- can be contemplated without the promise that it will be somehow subsidized by Washington.

-- Ross Douthat

May 5, 2012

Financial healing

One of the guests raised his hand; he knew how to solve the problem. The president had won plaudits for his speech on race during the last campaign, the guest noted. It was a soaring address that acknowledged white resentment and urged national unity. What if Obama gave a similarly healing speech about class and inequality? What if he urged an end to attacks on the rich? Around the table, some people shook their heads in disbelief.

"Most people in the financial world," a top Obama donor later told me, "do not understand how most of America feels about them." But they think they understand how the president's inner circle feels about them. "This administration has a more contemptuous view of big money and of Wall Street than any administration in 40 years," the donor said. "And it shows."

Even if they didn't agree with Obama on everything in 2008, many in the financial industry looked at him then and saw a reflection of their imagined best selves: brainy, self-made, above the mewlings and histrionics of partisan politics. He seemed like the kind of Democrat even white-shoe Republican bankers and libertarian hedge-funders could get behind, and many of them did. "There is a growing belief on Wall Street that Barack Obama has the capacity to lead us out of this wilderness," Jim Cramer, the financial journalist, wrote several weeks before Election Day.

Obama far outraised his Republican rival, John McCain, on Wall Street -- around $16 million to $9 million -- and Goldman Sachs executives sent Obama more money than employees of any other company in the world. But four years, one recession and a host of battles -- over financial regulation and the nomination of Elizabeth Warren, over Dodd-Frank and the Buffett Rule -- have taken their toll. Some on Wall Street are apoplectic. One former supporter, Dan Loeb, compared Obama to Nero; the president's enemies insinuated worse. In 2010, Stephen A. Schwarzman, a founder of Blackstone, said that an Obama proposal to raise taxes on "carried interest" -- the main source of income for most private-equity managers -- reminded him of "when Hitler invaded Poland in 1939."

Messina traveled to New York again to meet with 30 or so Obama supporters at the Core Club, a members-only establishment in Midtown that caters to the hedge-fund crowd. In a brief presentation, Messina thanked those who had been supportive, described the campaign's plans for 2012 and offered his impressions of the president's likely opponent, Romney. According to several people in the room, he closed with an appeal to the executives for help, asking them to consider signing on as hosts for the small dinner, now scheduled for March 1 (they had just locked in that date). "We want it to be a big success," Messina told the room.

Mindich, the former Goldman whiz kid, had a question. If Romney were the nominee, Mindich asked, how would the Obama campaign go after him? Would it attack his record at Bain Capital? Would it attack the private-equity industry?

Near him sat Blackstone's James, who, just a few weeks earlier, had called attacks on private equity "vicious . . . inaccurate and unfair." Mindich and James are friends, and some in the room speculated that Mindich's question was for James's benefit.