Average Wages in Boom Towns Would Rise “Astounding” $8,775 If Zoning Laws Eased

(p. A13) Though some might expect areas populated by conservatives to be the most exclusionary, it is areas where highly educated liberals live that engage in the worst forms of economically exclusionary housing policy. Researchers writing in the Journal of Experimental Social Psychology in 2018 found that highly educated Americans have comparatively tolerant racial attitudes but hold “negative attitudes toward the less educated.” Americans with different levels of education all have biases, they wrote, but “the targets of prejudice are different.”

Exclusionary housing practices are a linchpin in the architecture of educational inequality in America. Because 73% of American school children attend neighborhood public schools, where you live typically determines the quality of schooling. Most people who are concerned about improving education naturally focus attention on what school boards and state education officials do, but it’s at least as important to focus on what the local and state officials running housing policy are up to.

For sixty years, researchers have found that the economic segregation of students. which is driven by housing policy, shapes educational opportunity even more powerfully than per pupil spending. In Montgomery County Maryland, for example, county officials pursued two strategies for raising the achievement of low-income students. In one program, starting in 2000, the school board spent $2,000 extra per pupil in high-poverty schools. In another, begun decades earlier, the county council enacted an “inclusionary zoning” law that to this day requires builders to set aside a portion of new developments for low-income families. Over time, as Heather Schwartz of RAND found in a 2010 study, what the housing authority did for students cut the math achievement gap between low-income and middle-class students in half, while the school board’s program had much less impact.

Zoning-induced housing costs also prevent workers from moving to places where they can make the highest wages, which is typically in coastal cities. Research shows that this barrier to mobility gravely damages American economic productivity, to say nothing of the aspirations of individuals and families. A 2018 study by Edward Glaeser and Joseph Gyourko, for example, found that “restrictive residential land-use regulation” had a price tag of “at least 2% of national output,” or about $400 billion. A 2019 study by Chang-Tai Hsieh and Enrico Moretti, found that if three high-productivity cities—New York, San Jose and San Francisco—relaxed restrictions on housing supply, more workers could move to them, and average wages nationally would rise an astounding $8,775.

When people do move to higher-wage regions, exclusionary zoning laws often force them to live in the far reaches of metropolitan areas. This means longer commutes, which are associated with higher blood pressure and divorce rates, and more miles on the road, which is bad for the environment.

For the full essay, see:

Richard D. Kahlenberg. “Only Zoning Reform Can Solve America’s Housing Crisis.” The Wall Street Journal (Saturday, June 24, 2023): A13.

(Note: the online version of the essay has the date June 22, 2023, and has the same title as the print version. The sentences in the penultimate paragraph quoted above (mentioning 2018 and 2019 papers) appear in the online, but not in the print, version of the essay.)

The essay quoted above is adapted from the book:

Kahlenberg, Richard D. Excluded: How Snob Zoning, Nimbyism, and Class Bias Build the Walls We Don’t. New York: PublicAffairs, 2023.

The Talented, Wealthy, Ambitious, and Hardworking Vote with Their Feet Against Communist China

(p. B12) Is China reopening to the world or turning inward again?

Many would argue the latter, but in one important way, the country is still going global: Residents appear to be leaving at a faster clip than they have in years, including a significant number of the wealthy and well-educated the nation needs to keep modernizing and investing.

. . .

Rebounding emigration is also striking in the context of a declining overall birthrate, and suggests that Beijing must do far more to convince talent, both domestic and foreign, that China is a good place to put down roots if it wants to avoid a steeper growth slowdown in the years ahead.

. . .

Rising net emigration also mirrors much smaller influxes of foreign talent in recent years—another trend that threatens to slow China’s climb up the technological ladder. Foreign residents of Shanghai and Beijing numbered just 163,954 and 62,812 in 2020, according to official data, down 21% and 42%, respectively, since 2010. The pandemic is clearly a major factor. But given the well-publicized rising tensions between China and the West, slowing growth and the rising risks of detention and investigation for what used to be considered routine business by foreigners in China, a portion of that decrease seems very likely to persist.

For much of the new millennium, China has been a place where the ambitious, hardworking and lucky could often get ahead. But in today’s China—more focused on security and control, less on growth—it is no longer clear how true that really is.

Some people, at least, seem to be voting with their feet.

For the full commentary, see:

Nathaniel Taplin. “HEARD ON THE STREET; China’s Brain Drain Threatens Its Future.” The Wall Street Journal (Thursday, July 6, 2023): B12.

(Note: ellipses added.)

(Note: the online version of the commentary has the date July 5, 2023, and has the same title as the print version.)

Latest High-Efficiency Air Conditioners Focus on Cutting Humidity

(p. B4) Air conditioners make people cooler and the world hotter. A slew of startups are launching new products to break that cycle.

. . .

Companies such as Blue Frontier, Transaera and Montana Technologies are raising money from investors including industry giant Carrier Global and Bill Gates’s Breakthrough Energy Ventures to develop more efficient technologies. Many of those efforts focus on the humidity rather than the heat, using new materials like liquid salt to dry out the air.

. . .

Blue Frontier aims to separate humidity and temperature control using a liquid salt solution that was developed with the National Renewable Energy Laboratory. The solution also stores energy, reducing consumption at peak times, when electricity grids are strained on hot days.

The salt solution is an industrial version of the little packets that absorb moisture to keep products dry during shipping. The solution is heated up, releasing water and boosting the concentration of salt, making it more absorbent. This can be done when electricity demand is low and effectively stores energy until cooling is needed.

When air conditioning is needed, the solution is brought in contact with air, absorbing water and removing humidity. The air is cooled within a component called a heat exchanger using a high-efficiency method to lower air temperature by exposing it to water. The dry air absorbs the water, lowering its temperature and the temperature of the heat exchanger. That air that absorbs the water becomes warm and humid and is moved outside. At the same time, air that moves through the chilled heat exchanger flows into the room that is being cooled.

After raising $20 million from investors including Breakthrough last year, Blue Frontier is trialing ACs for businesses. “Air conditioning could be a solution to the problem rather than being the problem,” Betts said.

. . .

“The climate problem is only going to get worse if we continue to add the same types of air conditioners to meet that demand,” said Sorin Grama, CEO of Transaera, which is developing a new AC using highly absorbent materials that remove humidity. The company raised $4.5 million from investors including Carrier last year and is currently making prototypes.

Grama co-founded Transaera with a Massachusetts Institute of Technology professor after working in India for a refrigeration company and seeing that air conditioners were too expensive for many consumers in the country.

For the full story, see:

Amrith Ramkumar. “Companies Race To Build a Better Air Conditioner.” The Wall Street Journal (Thursday, June 29, 2023): B4.

(Note: ellipses added.)

(Note: the online version of the story was updated June 28, 2023, and has the title “The Race to Build a Better Air Conditioner.”)

Local Chinese Governments Inflated Revenue Data with Fake Land Sales

(p. B6) China’s local government funding problems last year were even worse than most economists thought. At least $12 billion worse.

That is the boost Chinese local governments got to their revenues after a series of fictitious sales of land and other state-owned assets, according to the country’s national audit office. The disclosure means that even the official data, which showed a sharp drop in land sales and local government revenues last year, painted a more positive picture than was accurate.

Around 70 regions inflated their local fiscal revenues by selling state-owned assets and land to themselves, the national auditor said. Since these deals were done between local governments and their own entities, they didn’t actually raise revenue for local governments but simply moved money around.

For the full story, see:

Rebecca Feng and Cao Li. “Local Governments In China Used Fake Deals to Lift Sales.” The Wall Street Journal (Wednesday, June 28, 2023): B6.

(Note: the online version of the story has the date June 27, 2023, and has the title “Chinese Local Governments Used Fake Property Deals to Boost Revenues.”)

Affirmative Action Quotas Forced Admission of the Academically Unqualified

(p. A13) As Richard Sander and Stuart Taylor Jr. demonstrated in “Mismatch,” their 2012 book on affirmative action, there are very few black students in the top academic cohorts from which highly selective colleges draw most of their students. Black high-school seniors are one-tenth as likely to be in the top tenth of college applicants nationwide as nonblack applicants. The average black SAT score in 2022 was 926 on a 1600 point scale. The average Asian score was 1229 and the average white score was 1098.

. . .

Harvard’s own research in 2013 showed that the black share of its undergraduate population would drop from 10% to less than 1% if it admitted students according to academic skills only. Harvard has the pick of the black U.S. high-school population, but even it can’t fill its desired quota without double standards.

. . .

The result isn’t a benefit to these students but a burden. Research shows they are more likely to end up in the bottom of their classes, if not to drop out of college and professional education entirely. This academic mismatch doesn’t dispel racial stereotypes; it reinforces them.

For the full commentary, see:

Heather Mac Donald. “Racial Preferences Bred 50 Years of ‘Mismatch’.” The Wall Street Journal (Wednesday, July 11, 2023): A13.

(Note: ellipses added.)

(Note: the online version of the commentary was updated July 10, 2023, and has the title “Affirmative Action Bred 50 Years of ‘Mismatch’.”)

The affirmative action book cited in the passage quoted above is:

Sander, Richard, and Stuart Taylor, Jr. Mismatch: How Affirmative Action Hurts Students It’s Intended to Help, and Why Universities Won’t Admit It. New York: Basic Books, 2012.

“Harvard’s own research” from 2013 mentioned above was reported in Slate in 2018:

Mak, Aaron. “Admitting Bias; Harvard Had Proof Its Admissions Process Was Hurting Asian Americans. How Will Its Dean Explain Why He Did Nothing About It?” slate.com, Oct. 15, 2018.

United Airlines CEO Gave Up on Flying United Airlines

United Airlines had major flight cancellations on Sun., June 25, 2023, on the day we were to fly United through O’Hare airport on our way to a European trip. Stress, exhaustion, chaos. United Airlines chaos continued for days. My brain has not yet totally processed the story quoted below. My gut, on the other hand, wants the CEO of United Airlines to be fired.

(p. B11) United Airlines Chief Executive Scott Kirby apologized for taking a private jet from Teterboro Airport in New Jersey to Denver this week as his airline grappled with widespread weather disruptions.

“Taking a private jet was the wrong decision because it was insensitive to our customers who were waiting to get home,” Kirby said in a statement Friday. “I sincerely apologize to our customers and our team members who have been working around-the-clock for several days—often through severe weather—to take care of our customers.”

A United spokeswoman said Kirby took the flight Wednesday because he was unable to secure a seat on a commercial flight. The company didn’t pay for the private flight, she said.

Wednesday was a hectic day for United: The carrier canceled over 750 mainline flights, according to FlightAware, over a quarter of what it had scheduled. The night before, a long stretch of bad storms in New York led to logjams at the area’s airports, including United’s Newark hub.

Some travelers over the past week have been stranded for days while waiting for space on flights home, in some cases sleeping in the airport. Travelers said they spent hours waiting in line for assistance or to be reunited with checked bags.

For the full story, see:

Alison Sider. “United CEO Apologizes for Flying on Private Jet Amid Airline’s Cancellations.” The Wall Street Journal (Saturday, July 1, 2023): B11.

(Note: the online version of the story was updated June 30, 2023, and has the title “United Airlines CEO Apologizes for Taking Private Jet During Flight Disruptions.”)

Will Humans Flourish if Easements Restrict How Inherited Property Is Used?

My mentor at Wabash College, Ben Rogge, was a friend of Pierre Goodrich, the founder of Liberty Fund. They both were great admirers of Adam Smith. Adam Smith believed that inherited property should not be encumbered with restrictions on how future generations used the property. The practice is sometimes called ‘ruling with a dead hand.’ When Liberty Fund was proposed, Rogge suggested that it be set up so that all of the funds would be exhausted at some pre-established time after Goodrich’s death. On this one proposal, Rogge failed to convince Goodrich of the wisdom of Adam Smith’s advice.

Rogge was a supporter of Schumpeter’s idea that we flourish through creative destruction. Progress through creative destruction is harder to accomplish if inherited property is encumbered by ‘ruling with a dead hand.’ Rogge feared that as the decades passed, the inheritors of Liberty Fund would eventually, and substantially, diverge from Goodrich’s original values and hopes. Liberty Fund money helped Rogge make a movie on Adam Smith. Rogge sadly joked that eventually the inheritors of Liberty Fund would probably support making a movie on a famous socialist.

(I can’t remember the name of the socialist who Rogge jokingly mentioned, but I vaguely, vaguely think it might have been Ethel Rosenberg.)

(I base the lines above on my memories of comments by Ben Rogge in conversations and lectures.)

(p. M1) “After me, there won’t be any others,” says Roland Reisley, absorbing what it means to be the last original occupant of a Frank Lloyd Wright house. Reisley is sitting in his hexagonal living room on a rocky hill near Pleasantville, N.Y.

. . .

(p. M4) Despite the house’s pristine condition, the one thing he can’t do is turn it into a museum. It is part of a Westchester County neighborhood laid out by Wright himself in the late 1940s. The community, which Wright named Usonia, never achieved its founders’ ambitions—to become a kind of exurban co-op where everything was owned in common—but it is still a tightly knit community of 47 homes with shared amenities such as a pool and tennis courts. “The residents would not agree to a museum,” Reisley says.

. . .

But if he can’t turn it into a museum, he can execute a preservation easement, a legal document that will prevent future owners from making changes to the house.

. . .

Asked why he hasn’t executed an easement yet, after talking about doing so for years, Reisley says he is “trying to find language that protects what’s important but allows for some reasonable changes to be made. I am going to do it,” Reisley says. “I just haven’t gotten around to doing it. I’m a procrastinator.”

Then, too, his only living child has expressed concerns. Robert Reisley, a 65-year-old entrepreneur and private-equity investor in Philadelphia, says, “I don’t have an issue with a preservation easement on the exterior of the house.” But he says it’s possible he and his wife, or one of their adult children, might want to live in the house. “We might need to make a few necessary changes to the interior. And we might not be able to get permission. That’s my hesitation.”

For example, he says, “The hallway to the bedrooms is very dark. Wright was practical. If we’d asked him, he would have said, ‘Put a skylight there.’ But Wright’s not around, and the conservancy might not allow it.”

. . .

In Minneapolis, the Olfelt house was on the market for two years before a local couple with grown children bought it for $1.2 million in the Spring of 2018. Several months later, they filed plans with the city to add a 1,500-square-foot, $2 million wing to the original 2,600-square-foot house and alter some of the original interiors.

. . .

The Juneks created a website, olfelthouse.info, to explain their intentions. “The impetus for the addition and the minimal interior renovations,” they wrote, “is to address the meager space allocated to the master bedroom, to expand the kitchen to accommodate a large multi-generation family, and to ensure that the home be comfortable, accessible, and safe for aging in place.” The renovation was designed by the New York architecture firm Thread Collective. Photos on the firm’s website show a dining room in a space that used to contain Wright’s tiny galley kitchen, and a spacious new kitchen in what used to be two children’s bedrooms. The addition, which contains a master-bedroom suite over a new garage, is visible mainly from the back of the house. “We have now been living in the house for three years, are very happy with the results of the project,” John Junek wrote in an email.

. . .

Robert and Mary Walton chose not to burden their six children with a preservation easement, the same choice made by Gerte Shavin, Bette Pappas, and the Olfelts. All of them died knowing they had no control over the future of their houses. “Its fate is entirely in the hands of the next owner,” Paul Olfelt told me in a phone message after vacating his house in 2017. Sounding emotional, he added, “I think we were good stewards of the house, and we assume that anyone who buys it will be the same.”

Reisley still has a chance to execute an easement. Will he? The easement would operate in perpetuity, and perpetuity, the 99-year-old homeowner says, “is a very long time.”

For the full story, see:

Fred A. Bernstein. “The Last Original Owner of a Frank Lloyd Wright House.” The Wall Street Journal (Wednesday, June 30, 2023): M1 & M4.

(Note: ellipses added.)

(Note: the online version of the story was updated June 27, 2023, and has the title “Frank Lloyd Wright Built 120 Homes Near the End of His Life. Just One Original Owner Remains.”)

Unsound Trucking Firm “Blew Through” $700 Million of Federal Covid “Bailout” Loan

(p. A4) The Treasury Department erred in giving a loan to a troubled trucking company as part of a 2020 Covid-19 rescue package and should refrain from similar sector-specific loan programs in the future, according to a new congressional report.

Yellow, a trucking company, received a $700 million loan from the Treasury Department as part of an aid program for private industries included in bipartisan legislation known as the Cares Act enacted early in the pandemic.

But Treasury had to skirt the program’s rules to make the loan, the report said. The agency designated Yellow—then known as YRC Worldwide—as critical to national security even though the company didn’t meet the standard for that designation, the report said.

. . .

In exchange for the loan, Treasury received a roughly 30% stake in the company.

. . .

At the time of the loan the company was rated noninvestment grade by Moody’s Investors Service and was at risk of bankruptcy, according to the report.

. . .

In recent months, Yellow has again suffered from the broader freight slowdown.

. . .

Teamsters President Sean O’Brien said the union is abiding by the terms of its contract with the company.

“After decades of gross mismanagement, Yellow blew through a $700 million bailout from the federal government, and now it wants workers to foot the bill,” O’Brien said in a statement.

For the full story, see:

David Harrison. “Treasury Faulted for Loan to Troubled Trucking Firm.” The Wall Street Journal (Wednesday, June 28, 2023): A4.

(Note: ellipses added.)

(Note: the online version of the story was updated June 27, 2023, and has the title “Treasury Shouldn’t Have Given Pandemic Aid to Trucking Company, Report Finds.”)

As Worms Return to Arctic, Some Life Forms Will Thrive and Others Will Not

(p. A1) Worms are on the move, and people are nervous.

That’s because they’re taking over territory in the Far North that’s been wormless since the last ice age.

. . .

Because of changes in the chemistry and physics of the ground, grasses and shrubby plants tend to thrive, taking over from tundra mosses and lichens. That’s good news for the lemmings and voles that favor such plants, according to Hanna Jonsson, an ecology researcher at Umea University. But probably not good for other herbivores that might not adapt easily to a change in available food.

For the full story, see:

Sofia Quaglia. “Worms Haven’t Lived in the Arctic Since the Last Ice Age. But Now, They’re Back.” The New York Times (Saturday, July 15, 2023): A10.

(Note: ellipsis added.)

(Note: the online version of the story has the date July 14, 2023, and has the title “Some Squirmy Stowaways Got to the Arctic. And They Like It There.”)

Federal Trade Commission (FTC) Seeks to Bury Merging Firms in Paperwork

(p. A13) The Federal Trade Commission is trying to make it harder for companies to merge by burying them in paperwork. The FTC’s proposed overhaul of a critical part of the U.S. merger review process would increase the average time to prepare a merger filing from 37 hours to 144. According to the agency’s calculations, that’s roughly $350 million in added costs for an estimated 7,100 filings a year, which would be a boon for lawyers but a burden for businesses.

The one-size-fits-all proposal to add dozens of hours of paperwork per deal—regardless of competitive concerns—is an overreach by the FTC and the Justice Department’s antitrust division that will disproportionately chill investments at the lower end of the reporting threshold.

For the full commentary, see:

Christopher Williams and Henry Hauser. “Antitrust Officials Pile on the Paperwork.” The Wall Street Journal (Wednesday, July 5, 2023): A13.

(Note: the online version of the commentary has the date July 4, 2023, and has the same title as the print version.)

Portland Feels “Unsafe” and “There’s Trash Everywhere”

(p. A3) PORTLAND, Ore.—Mark Rogers has made a list of things he misses about Portland—its vegan restaurants, Powell’s bookstore, public transit—and the things he doesn’t—having his things stolen, stepping in human excrement, extreme politics.

The 44-year-old artist moved across the country to Fort Wayne, Ind., last year.

“I don’t want to talk trash about my home city even though there’s trash everywhere,” Rogers said.

. . .

Andrea Lamprecht, 50, a cardiac nurse, said she was chased by a homeless man while out on a jog in her Alameda neighborhood on the east side of Portland, where the median home price hovers around $1 million.

She and her husband, Derek Lamprecht, an orthopedic surgeon, had raised their children in Portland. The chasing incident contributed to the couple’s decision to move to a quiet rural area about 10 miles outside the city in 2021. “It never felt unsafe before,” said Derek Lamprecht. “The character of the city changed.”

For the full story, see:

Zusha Elinson. “Disenchanted Portland Residents Leave the City.” The Wall Street Journal (Thursday, June 29, 2023): A3.

(Note: ellipsis added.)

(Note: the online version of the story has the date June 28, 2023, and has the title “Portland Is Losing Its Residents.”)