Today’s guest is Alain Bertaud, author of Order Without Design: How Markets Shape Cities. Alain discusses his extensive experience in urban planning: When he was first trained as a planner, urban planning was thought of as an offshoot of architecture. In this conception, cities are just large buildings that need to be laid out and designed by a skilled architect.

Through his experience, Alain came around to thinking of cities not as large buildings to be designed, but as markets. He argues that planners are too focused on what happens on private property and not focused enough on what happens on public streets and roadways. He argues that urban economics has many useful insights for urban planners and that economists should be integrated into urban planning teams.

The publisher’s description of the book follows:

Urban planning is a craft learned through practice. Planners make rapid decisions that have an immediate impact on the ground—the width of streets, the minimum size of land parcels, the heights of buildings. The language they use to describe their objectives is qualitative—”sustainable,” “livable,” “resilient”—often with no link to measurable outcomes. Urban economics, on the other hand, is a quantitative science, based on theories, models, and empirical evidence largely developed in academic settings. In this book, the eminent urban planner Alain Bertaud argues that applying the theories of urban economics to the practice of urban planning would greatly improve both the productivity of cities and the welfare of urban citizens.

Bertaud explains that markets provide the indispensable mechanism for cities’ development. He cites the experience of cities without markets for land or labor in pre-reform China and Russia; this “urban planners’ dream” created inefficiencies and waste. Drawing on five decades of urban planning experience in forty cities around the world, Bertaud links cities’ productivity to the size of their labor markets; argues that the design of infrastructure and markets can complement each other; examines the spatial distribution of land prices and densities; stresses the importance of mobility and affordability; and critiques the land use regulations in a number of cities that aim at redesigning existing cities instead of just trying to alleviate clear negative externalities. Bertaud concludes by describing the new role that joint teams of urban planners and economists could play to improve the way cities are managed.

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Ben Powell joins the podcast today to discuss his new book, Socialism Sucks: Two Economists Drink Their Way Through the Unfree World, coauthored with Robert Lawson.

The book is a combination of economic analysis and Anthony-Bourdain-style travel diary.

Do We Have to Say It Again? Socialism Sucks!

Apparently we do. Because today millions of Americans—young and old—are flocking to the socialist banner and chanting, “What do we want? Socialism—the economic system that has impoverished people everywhere and resulted in the deaths of tens of millions! And when do we want it? Now!”

Really?

Most people seem somehow to have missed Economics 101 and don’t understand that socialism isn’t nice, cuddly government that takes care of everything for you so that you can remain an adolescent forever. No, we’ve seen it tried over and over again with catastrophic consequences.

Luckily, two semi-sober economists have toured the socialist world so you don’t have to. And they’ve come back with this stunning report: Socialism Sucks!

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Today’s guest is Edward J. Lopez of Western Carolina University. We discuss his book, Madmen, Intellectuals, and Academic Scribblers: The Economic Engine of Political Change, which was co-authored with Wayne Leighton.

Does major political reform require a crisis? When do new ideas emerge in politics? How can one person make a difference?

In short: how and when does political change happen? Madmen, Intellectuals, and Academic Scribblers tackles these big questions, arguing that ideas and entrepreneurship are the key ingredients in any episode of political change. Authors Wayne A. Leighton and Edward J. López begin with the first lesson in economics — incentives matter — and artfully explain how the lesson applies throughout political life. Incentives explain why democracies often generate policies that impose net costs on society, and why these inefficient policies persist for years.

Yet beneficial reform does sometimes occur. So Madmen goes beyond incentives to offer a framework in which political change channels its way from ideas in society, through society’s shared institutions (i.e., its rules of the game) , which in turn shape incentives. This type of change is seldom easy, because new ideas for shaping the rules of the game must overcome two forces in society: widely shared beliefs and powerfully vested interests. Yet at certain political moments – perhaps during a crisis, but not always – shared beliefs and vested interests begin to weaken, and the opportunity for reform emerges. Within this framework, Madmen shows why certain inefficient policies eventually get repealed (e.g., airline rate and route regulation), while others endure (e.g., sugar subsidies and tariffs).

Links

In the course of the conversation, Ed mentions Thomas Hazlett’s work on the radio spectrum and Tina Rosenberg’s discussion of Iranian kidney markets on Econtalk.

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Vincent Geloso returns to the podcast today to discuss his paper, “Markets for Rebellions? The Rebellions of 1837-38 in Lower Canada”. The paper discusses the idea that political upheaval and even violent rebellion can be more likely in areas with a high degree of market access.

In 1837-38, the British colonies of Upper and Lower Canada rebelled. The rebellion was most virulent in the latter of the two colonies. Historians have argued that economic consideration were marginal in explaining the causes of the rebellions. To make this claim, they argue that the areas that rebelled in Lower Canada were among the richest in the colony, and the least likely to be motivated by economic factors. In this paper, we use the census of 1831 and databases of rebellious events to question this claim. We argue that the rich areas were more prone to rebellion because they were where markets were most developed. These well-developed markets allowed for cheaper coordination of seditious elements while also increasing the wealth (i.e. the rent) over which to fight.

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Tooday’s guest is Jennifer Murtazashvili of the University of Pittsburgh. We discuss her book, Informal Order and the State in Afghanistan.

Despite vast efforts to build the state, profound political order in rural Afghanistan is maintained by self-governing, customary organizations. Informal Order and the State in Afghanistan explores the rules governing these organizations to explain why they can provide public goods. Instead of withering during decades of conflict, customary authority adapted to become more responsive and deliberative. Drawing on hundreds of interviews and observations from dozens of villages across Afghanistan, and statistical analysis of nationally representative surveys, Jennifer Brick Murtazashvili demonstrates that such authority enhances citizen support for democracy, enabling the rule of law by providing citizens with a bulwark of defence against predatory state officials. Contrary to conventional wisdom, it shows that ‘traditional’ order does not impede the development of the state because even the most independent-minded communities see a need for a central government – but question its effectiveness when it attempts to rule them directly and without substantive consultation.

Our conversation dives deep into the modern history of Afghanistan, including its 1978 communist revolution and subsequent Soviet invasion.

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Today’s guest is Randall Holcombe of Florida State University. Our discussion today focuses on his book, Political Capitalism: How Economic and Political Power Is Made and Maintained.

Problems associated with cronyism, corporatism, and policies that favor the elite over the masses have received increasing attention in recent years. Political Capitalism explains that what people often view as the result of corruption and unethical behavior are symptoms of a distinct system of political economy. The symptoms of political capitalism are often viewed as the result of government intervention in a market economy, or as attributes of a capitalist economy itself. Randall G. Holcombe combines well-established theories in economics and the social sciences to show that political capitalism is not a mixed economy, or government intervention in a market economy, or some intermediate step between capitalism and socialism. After developing the economic theory of political capitalism, Holcombe goes on to explain how changes in political ideology have facilitated the growth of political capitalism, and what can be done to redirect public policy back toward the public interest.

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Today’s guest is Arvind Panagariya of Columbia University. We discuss his book, Free Trade and Prosperity: How Openness Helps Developing Countries Grow Richer and Combat Poverty.

Free Trade and Prosperity offers the first full-scale defense of pro-free-trade policies with developing countries at its center. Arvind Panagariya, a professor at Columbia University and former top economic advisor to the government of India, supplies a historically informed analysis of many longstanding but flawed arguments for protection. He starts with an insightful overview of the positive case for free trade, and then closely examines the various contentions of protectionists. One protectionist argument is that “infant” industries need time to grow and become competitive, and thus should be sheltered. Other arguments are that emerging markets are especially prone to coordination failures, they are in need of diversification of their production structures, and they suffer from market imperfections. The panoply of protectionist arguments, including those for import substitution industrialization, fails when subject to close logical and empirical scrutiny.

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Today’s guest is Robert Krol of California State University. Our topic is a recent policy paper he wrote for The Center for Growth and Opportunity at Utah State University entitled Can we Build our way out of Urban Traffic Congestion?

This paper examines the impact of highway expansion on congestion. Because highway expansion lowers travel times, expanded highways attract additional vehicle traffic—so-called induced travel. The empirical evidence indicates that the magnitude of induced travel is economically significant. Some researchers find cases where, despite highway expansion, congestion changes very little owing to high levels of induced travel. These results suggest that costly highway expansion will increase access, which is beneficial to a community, but highway expansion is generally an inefficient solution to the high time costs of urban congestion. Instead, variable tolling of some or all lanes could manage traffic flows efficiently and reduce congestion.

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Today’s guest is Vlad Tarko of Dickinson College. We discuss the life and work of Elinor Ostrom, the 2009 winner of the Nobel Prize in economics. Vlad is the author of Elinor Ostrom: An intellectual biography.

We discuss Elinor Ostrom’s work on polycentric governance, the management of common-pool resources, and policing. We also discuss the continuing work scholars are doing in this research area, including Vlad’s new book Public Governance and the Classical-Liberal Perspective: Political Economy Foundations co-authored with Paul Dragos Aligica and Pete Boettke.

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My guest today is Matthew Curtis, founder of the startup Vice Lotteries. Vice Lotteries is a new startup that aims to challenge state governments’ legal monopolies over lotteries.

State lotteries are amazingly and bizarrely unethical. They drain billions of dollars out of communities, primarily poor ones. Lottery spending has increased substantially over the past decades, with the average lotto player spending $600 per year, and many spending significantly more than that.

Vice Lotteries aims to create a more ethical alternative to state lotteries, allowing people to have the fun of gambling without losing significant amounts of money. From the Vice Lotteries website:

Vice Lotteries was founded with one purpose: Allow our customers to enjoy gambling while saving money. With Vice Lotteries, you can enjoy the tremendous pleasure of tossing the dice without losing your ability to afford all the other things in life that you love.

However, it is currently illegal to run a private lottery. Before Vice Lotteries can start operating, they need to win one of the multiple lawsuits they are filing in state courts to challenge state lotteries.

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