Jane Jacobs Saw Spontaneous Cities Work Better Than Planned Cities

Jane Jacobs died on Tues., April 25, 2006 at the age of 89.  ("Jane Jacobs, Author and Activist, Dies."  The Wall Street Journal  (Tues., April 25, 2006), online edition.)

 

Jacobs’s ideas came from the heart.  Her foray into urban theory was partly inspired by the failed urban renewal efforts of the post-World War II era that displaced tens of thousands of poor and minority residents and resulted in the isolation or destruction of previously vibrant neighborhoods in New York, Chicago, Pittsburgh and elsewhere.

Fundamentally, there is little difference behind the social engineering mentality of those who wrought the disaster of postwar urban renewal and the mindset of today’s planners trying to regulate away suburbia in hopes of master-planned urban living for everyone.

More and more, these planners are calling for the centralization of land-use control under state and regional governments, usurping the American tradition of local control over development.  In the view of many planners, this command-and-control bureaucracy is needed because municipal planning is too "uncoordinated" to achieve "societally beneficial" goals like open-space preservation, mass transit and urban densification.

But if they go back and reread "Death and Life," they’ll find Jacobs rightly asking, "How is bigger administration, with labyrinths nobody can comprehend or navigate, an improvement over crazy-quilt township and suburban governments?"

She went on to ridicule the idea of regionalism as "escapism from intellectual helplessness" predicated on the delusion that the problems planners are unable to solve at the local level will somehow be more easily addressed on a larger-scale, concluding that "no other expertise can substitute for locality knowledge in planning."

Politicians and planners would do well to commemorate Jacobs by revisiting her work.  Despite the best efforts of well-intentioned planners, you can’t "create" a vibrant city or neighborhood.  The best cities and neighborhoods just happen, and the best thing we can do is to step out of the way of innovators and entrepreneurs.

 

For the full commentary, see:

LEONARD GILROY.  "Urban Planners Are Blind To What Jane Jacobs Really Saw."  The Wall Street Journal  (Tues., May 2, 2006):  D8.

 

The reference to Jacobs’ most important book is:

Jacobs, Jane.  The Death and Life of Great American Cities.  New York:  Random House, 1961.

 

 DeathAndLifeOfGreatAmericanCitiesBK.jpg Source of book image: http://archives.cnn.com/2000/books/news/11/23/jane.jacobs.ap/

Doctors Erect Barriers to Keep Out Competition

RadiologistBangalore.jpg A Bangalore radiologist.  One of three radiologists in India known to be reading U.S. scans.  Each of the three has a U.S. degree, as required by U.S. law.  Source of image:  http://www.nytimes.com/2006/04/19/business/19leonhardt.html?_r=1&oref=slogin

 

(p. C1) Radiologists seem like just the sort of workers who should be scared.  Computer networks can now send an electronic image to India faster than a messenger can take it from one hospital floor to another.  Often, those images are taken during emergencies at night, when radiologists here are sleeping and radiologists in India are not.

There also happens to be a shortage of radiologists in the United States.  Sophisticated new M.R.I. and CT machines can detect tiny tumors that once would have gone unnoticed, and doctors are ordering a lot more scans as a result.

When I talked this week to E. Stephen Amis Jr., the head of the radiology department at Montefiore Medical Center in the Bronx, he had just finished looking at some of the 700 images that had been produced by a single abdominal CT exam.  "We were just taking pictures of big, thick slabs of the body 20 years ago," Dr. Amis said.  "Now we’re taking thinner and thinner slices."

Economically, in other words, ra-(p. C6)diology has a lot in common with industries that are outsourcing jobs.  It has high labor costs, it’s growing rapidly and it’s portable.

Politically, though, radiology could not be more different.  Unlike software engineers, textile workers or credit card customer service employees, doctors have enough political power to erect trade barriers, and they have built some very effective ones.

To practice medicine in this country, doctors are generally required to have done their training here.  Otherwise, it is extremely difficult to be certified by a board of other doctors or be licensed by a state government.  The three radiologists Mr. Levy found in Bangalore did their residencies at Baylor, Yale and the University of Massachusetts before returning home to India.

"No profession I know of has as much power to self-regulate as doctors do," Mr. Levy said.

So even if the world’s most talented radiologist happened to have trained in India, there would be no test he could take to prove his mettle here.  It’s as if the law required cars sold here to have been made by the graduates of an American high school.

Much as the United Automobile Workers might love such a law, Americans would never tolerate it, because it would drive up the price of cars and keep us from enjoying innovations that happened to come from overseas.  But isn’t that precisely what health care protectionism does?  It keeps out competition.

 

For the full story, see:

Leonhardt, David.   "Political Clout in the Age of Outsourcing."  The New York Times  (Weds., April 19, 2006):  C1 & C4.

Remembrances of Galbraith (and Buckley and Demsetz and Drucker)


John Kenneth Galbraith passed away a couple of days ago, on Sat., April 29, 2006 at the age of 97.   (see:  "Economist, Writer Galbraith Dies at 97."  Omaha World-Herald (Sun., April 30, 2006):  11A)

I remember at a Republican Convention in Miami (1968 I think) when one of the networks had the late Frank Reynolds sitting with Galbraith and William F. Buckley, Jr., to provide occasional commentary on the scene.  On this occasion, Galbraith was going on and on about how all of the Republicans had arrived at the convention in their yachts.  Buckley sat by, nodding, in uncharacteristic silence.  Finally, with a few seconds until they needed to break away, Buckley slowly and deliberately drawled at Galbraith something like the following:  ‘And John, when you visit your friends in Hyannis Port, I trust that you find the accommodations adequate?’   As they cut to commercial, you could hear Reynolds, and others in the background, convulsed in laughter.

Actually Buckley and Galbraith were friends, for several years skiing together in Europe.  Apparently Galbraith was an indifferent and very slow skier, leading Buckley to observe that Galbraith looked as though he was skiing up the slope backwards.   (I read this many years ago, but, alas, do not remember where.)

 

David Levy and I once wrote a paper in which we measured the writing quality of articles by many important economists.  When we presented the paper to the meetings of the American Economic Association, Galbraith was the discussant of our paper.  For his comments, he basically recycled an old paper he had written on writing economics, and showed no signs of having read our paper.  But he did seem to enjoy our mentioning that by our measures, he turned out to be one of the best writers in the profession.  My memory is that at one point, just before or just after the formal proceedings, he actually patted me on the back.

 

Galbraith wrote many books.  One that I enjoyed, and learned from, was his account of the stock market crash of 1929.

 

Perhaps his most famous book was The New Industrial State, in which he argues that some of the larger firms in the United States form what he called the "technostructure."  The technostructure firms were widely held, by many stock owners, few of whom had the incentive or power, to closely monitor whether the firms’ managers were serving the stock owners by maximizing profits.  As a result, the technostructure firms’ managers were free to pursue other goals, such as their own power.  (Galbraith was OK with the assumption that firms outside the technostructure were maximizing profits.)  

Harold Demsetz tested this hypothesis by comparing the rate of profit of firms in and out of the technostructure, reasoning that if technostructure firms were not maximizing profits, we would expect their profits to be lower than those of other firms.  He found that there was no difference between the rate of profits of the so-called ‘technostructure’ firms, and the non-technostructure firms.  Demsetz’s conclusion was that there was no distinguishable technostructure, and no new industrial state. 

I tell my classes that if we don’t throw entrepreneurs such as Michael Milken in prison, they can provide us with the means to keep CEOs pursuing shareholder value (profits) as their goal.  The way it would work would be that if CEOs start pursuing something else, their firm’s stock price falls, and the firm becomes an attractive take-over target for someone like Milken.

I also point out that if firms maximize profits, a lot of rich people benefit, but that a lot of average people benefit too—Drucker emphasized that roughly half of the value of stock equity in the United States is held by worker pension funds.

 

I did not agree with Galbraith’s efforts to grow the government, but he was witty, and urbane, and intelligent.  The intellectual scene was more interesting, and fun, with him than without him.  He will be missed. 

 

Some references to publications mentioned in, or supporting, the discussion above:

Demsetz, Harold. "Where Is the New Industrial State?" Economic Inquiry 12, no. 1 (1974): 1-12.

Diamond, Arthur M., Jr., and David M. Levy. "The Metrics of Style: Adam Smith Teaches Efficient Rhetoric." Economic Inquiry 32, no. 1 (1994): 138-45.

Drucker, Peter Ferdinand. The Unseen Revolution:  How Pension Fund Socialism Came to America. 1st ed: Harpercollins, 1976.

Galbraith, John Kenneth. The Great Crash 1929. Houghton Mifflin Co., 1961.

Galbraith, John Kenneth. The New Industrial State. Houghton Mifflin, 1967.

Kornbluth, Jesse. Highly Confident: The Crime and Punishment of Michael Milken. William Morrow & Co., 1992.

 

 NewIndustrialStateBK.jpg     Source of book image: http://www.whatihaveread.net/biblio/book_1458.html