UP Links 12 February 2013

Brandon Fuller Brandon Fuller

Time to Replace the Term Congestion Pricing?

After last week’s post on the public perception problem facing congestion pricing, Jarrett Walker of the Human Transit blog (and book) replied that part of the problem is the very termcongestion pricing. Walker believes the term carries a punitive connotation, and also finds it inaccurate. After all, drivers aren’t paying for congestion; they’re paying to avoid it.

The Plague of Cheap Parking

Drivers view off-street and on-street parking in radically different ways, because they emerge from opposite spheres — private and public — that carry different expectations. Parking garages are built at great cost by an entrepreneur. And as the quotation from “The Godfather” goes, “Certainly, he can present a bill for such services. After all, we are not Communists.”

On-street public parking, in contrast, is created in communal spaces and maintained by tax dollars. The instinct that common property should be accessible for free is deep-seeded; a 1937 legal challenge objected to parking meters as “a fee for the free use of the streets, which is a right of all citizens.” But that instinct is wrong. Just because something is publicly provided doesn’t mean that it should be free, or only $1.25 per hour. If a commodity is as scarce as land in Boston, we need a fair way of allocating it.

Want a Secure Border? Reform Immigration First

For decades, “securing our borders” has been the rallying cry among many Americans concerned about illegal immigration. The blueprint on immigration reform recently released by a bipartisan Senate group states that the path to legalized status for the estimated 11 million undocumented immigrants in the U.S. is “contingent upon our success in securing our borders and addressing visa overstays.” This sentiment is echoed by conservatives in the House and in many statehouses, particularly in the Southwest.

Unfortunately, this formulation has it exactly backward. To achieve a secure border, we must first have effective immigration reform.

Trapped Factors: New Working Paper from Bloom, Romer, Terry, and Van Reenen

When will reducing trade barriers against a low wage country cause innovation to increase in high wage regions like the US or EU? We develop a model where factors of production have costs of adjustment and so are partially “trapped” in producing old goods. Trade liberalization with a low wage country reduces the profitability of old goods and so the opportunity cost of innovating falls. Interestingly, the “China shock” is more likely to induce innovation than liberalization with high wage countries. These implications are consistent with a range of recent empirical evidence on the impact of China and offers a new mechanism for positive welfare effects of trade liberalization over and above the standard benefits of specialization and market expansion. Calibrations of our model to the recent experience of the US with China suggests that there will be faster long-run growth through innovation in the US and that, in the short run, this is magnified by the trapped factor effect.

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