David v. Goliath III: Blanchard v. Glaeser “No one lives in the West”

The road less travelled

According to his bio, “Ed Glaeser is the Fred and Eleanor Glimp Professor of Economics at Harvard, where he also serves as Director of the Taubman Center for State and Local Government and the Rappaport Institute for Greater Boston. He studies the economics of cities, and has written scores of urban issues, including the growth of cities, segregation, crime, and housing markets. He has been particularly interested in the role that geographic proximity can play in creating knowledge and innovation. He received his Ph.D. from the University of Chicago in 1992 and has been at Harvard since then.” An obviously brilliant and esteemed urban economist, you’ll see why I find his article “Put Transit Where the People Are” so bizarre. From the article:

MASS TRANSIT needs mass to work: enough people must live and work near train stations and bus stops. Densely populated Eastern Massachusetts should therefore be a prime location for public transportation. . . Despite the difficulties trains face in urban Boston, the Obama administration is pushing a new transportation agenda that promises high-speed rail in unlikely spots like Alabama and Oklahoma.

Dr. Glaeser continues:

So far the Obama administration’s transportation spending has gone overwhelmingly to highways in states with plenty of roads relative to people. Per capita federal transportation spending in the 10 densest states, which include Massachusetts, is less than half of spending in the 10 least-dense states. This policy follows an established formula, but it makes little sense. Congestion problems are most severe in the dense areas that get less funding.

Ok - that sounds plausible. Cities that are more dense should get more funding. But here he comes again with his misreading of the west:

Now the administration wants Americans to envision high-speed rail lines in the wide-open spaces of Texas.

Ok. So I think we get it. He is convinced that there is no one in the west, and that there isn’t sufficient density in the west to build rail. That’s his first argument. So let’s dissect that.

Unless legendary urban historian Carl Abbott is wrong, here is the reality: the west is plenty dense. In his latest book, How Cities Won the West: Four Centuries of Urban Change in Western North America, Abbott writes:

“Densities of western cities are surprisingly high. It remains surprising to many people that Los Angeles is more densely populated than Detroit, Cleveland, or Pittsburgh. There were forty-nine metro areas in the United States with one million or more people in 2000. Ten of the twelve most densely populated were western - Las Vegas, Los Angeles, San Diego, San Francisco, Phoenix, Sacramento, Seattle, Portland, San Antonio, and Salt Lake City.” Pg 229-230.

So we’ve busted Harvard/East Coast myth number one. But then there’s Glaeser’s contention that cars and planes are preferred over public transportation choices out west:

There is a reason why 48 percent of Amtrak’s passengers travel on only two routes: the Northeast Corridor and the Los Angeles-San Diego line. For travelers in the less-dense areas between the coasts, cars beat trains for modest distances and planes win over long hauls.

Glaeser of course leaves out the fact that many Amtrak lines in the west aren’t in operation any longer (could this be a reason the other lines get all the traffic?). A particular noteworthy example is the Pioneer Line that formerly ran from Seattle, through Portland, Boise, Salt Lake, Denver, Omaha, and Chicago. So the issue of the availability of western rail lines aside, Carl Abbott once again can enlighten us on the transportation preferences issue:

“Sacramento, Los Angeles, Denver, Dallas, Salt Lake City, and Phoenix built more limited rail systems after 1990, although some of them continue to expand (as in Denver and Phoenix). One consequence is that four cities of the western U.S. ranked in the nation’s top ten for percentage of journey-to-work trips made by public transit, with San Francisco/Oakland comparable to Washington D.C., Honolulu comparable to Philadelphia, and Seattle and Portland comparable to Pittsburgh.” pg 225

So I think we’ve scuttled that argument. Funny, though, Glaeser wasn’t the only Harvard guy recently to write such an article. Robert Samuelson wrote one very similar not long after, decrying the proposed building of a rail corridor from Houston to New Orleans where no one lives (Houston is the fourth largest city in the United States, and the “Texas Triangle” of Houston, Dallas, and San Antonio accounts for 7% of U.S. GDP). But recall that only a minuscule percentage of Harvard grads ever take jobs out west, so perhaps these fellas have never been out here amongst the cowboys, Indians, and sagebrush.

There are so many issues one could cover here. Glaeser admits that more spending won’t relieve congestion in the Eastern corridors, yet calls for more spending in those corridors. Samuelson also claims that there is no economic gain to be had from building rail which is completely unbelievable because U.S. history since the 1850’s cannot even be understood without contemplating the development of the railroad.

But just so all you Harvard guys are clear: yes - there are folks out west. Really. To close with a last fact from Carl Abbott:

“In the 2000 census of the United States, western metropolitan areas took eight of the top twenty slots. These eight super-cities - Los Angeles, the San Francisco Bay metropolis, Dallas/Fort Worth, Houston, Seattle, Phoenix, San Antonio and Denver - all had more than two million residents.” pg 9

And that, my dear Harvard friends, is like your own motto says, “veritas.”

David v. Goliath II: Blanchard v. Nelson on growth along the Snake River Plain

At the NewWest.net planning conference in June of this year, Professor Arthur (Chris) Nelson of the University of Utah raised some eyebrows when he outlined his predictions for the U.S. housing market over the coming decades, and his thoughts on what that meant for Idaho.

USC Professor Richard Green openly disagreed with Nelson’s projections as did BoDo developer Mark Rivers. The Calculated Risk blog also had some critiques, but nothing major.

Nelson’s analysis indicated that Idaho’s population would fill in along the Snake River Plain from it’s western edge in Ontario, OR, over to the eastern side of Idaho ending at Rexburg. For me it’s not how many people will move here, but where they will actually settle. Though Nelson believes growth will fill in along the I-84 corridor, evidence seems to contradict him indicating that growth will instead occur between the Wasatch Front, and move north to Rexburg - skipping the Boise Valley all together. There are good reasons for this.

Wealth is already leaving the Boise Valley for eastern Idaho and the Wasatch Front.

IRS data from 2006 and 2007 show positive migration to Ada County within Idaho. However, those migrating to Ada County from other parts of the state had average adjusted gross incomes of $33,337 annually, while those leaving Ada County for other parts of the state had annual incomes of $40,582. In total, residents worth $139 million moved to Ada County, and residents worth a total of $154 million moved out. That is a loss of $15 million in gross income for Ada County, to other parts of Idaho.

Additionally, in that same period, half of the top ten cities to which Boiseans moved were along the I-15 corridor with Provo, UT ranking first; Salt Lake City (2); Idaho Falls (5); Ogden, UT (7); and Pocatello (8). The more stable economic climate of eastern Idaho and Utah is but one reason why Boiseans are leaving.

There are strong sociocultural linkages between eastern Idaho and Utah.

It used to be said that Idaho had two capitals: Spokane, and Salt Lake City. Indeed, Coeur D’ Alene, ID is part of a two-state metropolitan statistical area (MSA) that includes Spokane and Coeur D’ Alene, and the Logan, UT MSA includes counties in southern Idaho. But physical proximity is not the only connection. The Church of Jesus Christ of Latter Day Saints exudes a strong cultural presence along the Wasatch Front and Eastern Idaho. With the presence of the new Temple in Rexburg and a growing BYU-Idaho campus there as well, the cultural linkages between eastern Idaho and Utah are only getting stronger.

Gaps in the transportation system separate the Boise Valley from eastern Idaho, and eastern Idaho from Utah. The gap between Utah and eastern Idaho, however, is shrinking more quickly.

Traffic patterns along Idaho’s highway system (seen below) show a consistent level of traffic between Ontario, OR and Heyburn, ID. Traffic drops off significantly, though, between Heyburn and American Falls. Traffic flows again pick up significantly between American Falls and Rexburg.

Lower traffic counts also show up on I-84 heading south out of Heyburn, and on I-15 heading south out of Pocatello, much like the reduced counts between Heyburn and American Falls. In this day and age of regional employment exchange will eastern Idaho ultimately align itself along I-84, or I-15?

If America’s foremost planners with the America2050 project have their way, the Pioneer rail line - which runs from Seattle to Chicago by way of Boise and Salt Lake City - will one day run again. But that line also contains another important spur: the link from Salt Lake City to Pocatello. As gas prices rise, airlines will offer fewer flights meaning Boise will inevitably end up with less air service in favor of airlines servicing larger airports such as Salt Lake and Denver. The rail link between Salt Lake and Pocatello, which also mirrors the west coast’s chief north-south land route between Mexico and Canada (CANAMEX) will exert strong pressure on the region to further develop in a north-south manner, and not throughout the Snake River Plain.

With white-collar job growth flat or shrinking in the Boise Valley and the economy in eastern Idaho more stable, strong sociocultural linkages between eastern Idaho and Utah, and a developing transportation network between eastern Idaho and Utah, evidence seems to suggest that the north-south corridor along I-15, rather than the east-west corridor along I-84 seems better poised for long-term economic and population growth. Alas, only time will tell.

Blanchard v. Florida: Why Patents per Capita is a Poor Economic Indicator

I am not the first person to question assumptions Richard Florida made in his path-breaking book Rise of the Creative Class, and I will not be the last. That is how science works. One scholars lays out a theory and his evidence, and others begin testing that theory and that evidence. So this is not an attempt to hammer Professor Florida’s research, which is clearly one of the most important economic development theories of the last decade. What I hope to do here is show that the research has limitations and economic developers using it should be aware of that.

In Rise of the Creative Class Florida uses the oft used indicator “patents per capita” as a proxy for a city’s capacity for innovation. That metric shows that Boise is #1 in the United States in patents per capita, and regional leaders and economic developers make decisions based upon what they THINK that metric means. But “patents per capita” as an indicator isn’t only not useful, it’s not helpful - in fact it’s harmful. Here’s why.

Patents are a negative right.

What does that mean? As my colleague David Gabrieli, the former director of licensing at Amazon.com points out, it means that patents don’t grant the right to commercialize an invention, it grants the patent holder the right to exclude everyone else from commercializing that invention or innovation unless granted a license from the patent holder. That is very different. Many companies simply make tweaks to products and technologies they already control and file for patents to build their “patent portfolio.” For example if ACME technologies has a patent on LED technology it is in the company’s best interest to file as many patents as possible in that field to 1) keep competitors at bay, 2) strengthen its ability to sue suspected infringers, and 3) to maximize the profits available from licensing deals on said patent. A patent is no guarantee that anyone will commercialize anything so if it is economic development or economic potential you are trying to measure, this is the wrong metric.

A current patent report is five year old information.

A patent application takes YEARS to go through the process, so by the time we get the Stoel Rives Patent Report for Idaho, the information we are looking at is for patents that were filed as many as a half-dozen years ago. Is any of that technology even current anymore? We don’t know that. But what we do know for sure is that the even the most recent report showing awarded patents is not a valid indicator of current capacity because it is measuring past activity.

On to the Florida specific critique:

Florida’s analysis doesn’t throw out the outliers.

Let’s say that we accept the idea that ‘patents per capita’ is a valid measure of a City’s ability (although it isn’t). But if it were, we’d still need the numbers to be calculated in a reliable manner and they aren’t. let me illustrate. Let’s say that I am a mortgage broker and I have three men in a room that I want to qualify to purchase homes in a fancy new gated subdivision, and the data I have says that the average (arithmetic mean) income of the three is $366,000. Exciting news! Or is it? What if I told you that one of the men earned $1,000,000 per year, and the other two each earned $50,000 per year. Hmmm. That’s not so good - the only guy that can qualify on anything more than a 1976 single wide is the millionaire. Point of the story is that the “mean” income statistic is almost totally useless. Same with the “patents per capita” statistic. It’s simply patents awarded divided by Boise’s population - an arithmetic mean - and in Boise’s calculation you’ve got a couple millionaires (Micron and HP) and a whole bunch of poor people.

The fact is, Micron and HP account for nearly 70% of all patent activity in Boise. Aside from that there isn’t much going on on the patent front. So if we want a reliable gauge of the overall innovation potential in the Boise Valley we HAVE to throw out the outliers - Micron and HP.

Patents per capita is a bogus way to measure innovation capacity because too many people equate innovation with commercialization - and patents are not a valid measure of commercialization potential. I’d like to see Professor Florida’s crew get rid of that metric in future editions of Rise of the Creative Class, but they probably won’t. But they could spend some time throwing the outliers out and refactoring the analysis to paint at least a reliable picture of a city’s supposed innovation potential. The problem with leaving the analysis as-is, is that people listen to Professor Florida’s ideas, and well they should - Rise is one of the most discussed and implemented pieces of social science to come out in a long time. Because of that it is critical that the numbers reflect actuality and not give cities a false impression of innovation capacity.

For Boise, the message should be clear: read Florida and believe the hype about having more patents per capita than any city in America, or acknowledge that HP and Micron are carrying all the weight around here and get to work developing some new sectors. That hype won’t pay the bills, and patents per capita is no measure of a city’s ability to innovate.

Killer of Giants: Megafrontier takes on the world’s leading scholars

I’m launching a new series where I challenge the ideas of the most preeminent scholars in the world. No, I’m not gonna fight guys like Paul Krugman who aren’t really scholars anymore, I mean the real intellectual heavyweights - the people whose reasoning is beyond reproach.

Next week I’ll take on Richard Florida and the metrics behind his Creative Class Index, specifically how he measures “innovation.” After that I’m gonna tee up famous Harvard economist Edward Glaeser and his views of where we should build rail, and finally I’ll take on reknowned urbanist Chris Nelson about where growth might actually occur on the Snake River Plain.

You don’t get to be a thought-leader by being wrong often and these guys are the best of the best. So, let’s have some fun, and create some conversation. If you find something of interest out there by one of the nation’s leading intellectuals, send it my way and we’ll see what kind of debate we can get going.