OPEB funding

OPEB is bureaucrat-ese for "Other Post-Employment Benefits."

We'll be hearing about it more and more in Amherst Town Meeting, because "we" (past Town Meetings / Select Boards) have promised more than 90 million dollars in benefits that "we" didn't put aside money to pay.

Oops. That is more than the Town's total yearly budget.

Promised-to-pay benefits are a huge problem at the local, state, national, and international level. I don't know enough about politics to figure out what is likely to happen, and I suspect we'll see different towns/states/countries try different things-- some will bend or break their past promises, some will plug the hold by taking wealth from people they think can afford it (or who aren't politically powerful enough to complain much), and maybe some will figure out a way to grow their way out of the problem (millions of young immigrant workers paying taxes could push the problem another 40 years into the future).

What should Amherst do?

It is awfully tempting to do nothing. After all, every city and town in Massachusetts is facing a similar problem. It seems very likely that, at some point, either the State or Federal government will step in and fund some sort of bailout, wiping away Town debts by some combination of "breaking promises" and "redirecting wealth." They'll use lots of nicer sounding words, of course; it won't be a local/state government bailout, it will be "Medicare for All" or "Universal Health Security Accounts" or something.

If the Town of Amherst is responsible and tries to pay off those promises itself (which we've started doing, in a very small-so-far way) then we might just end up benefiting less from that future bailout.

Maybe the most responsible thing to do is to be irresponsible.

High Symbolism, Low Substance debate

Arnold Kling concisely expresses something I've been thinking about a lot lately:

The minimum wage issue is high on symbolism and low on substance.

It feels to me like 98% of the political debate I see is over issues that, in the grand scheme of things, don't really matter.

There are issues that people really, truly, care deeply about. That they get emotional about. That they organize around and march on Washington and make demands.

Abortion. Minimum Wage. Legalizing Marijuana. Children Being Abducted By Strangers. Student loans. Global warming. Peak Oil. Gay marriage. Israel. The Terrorist Threat.

All high symbolism, low substance.

Or, to put it another way: 100% solve any of those issues (in whatever direction your political leanings say they should be solved) and I think the world would look pretty much like it does now.  Slightly better, but not a lot better.

Immigration. Disease. Empowering Individuals / Disempowering Despots. Better Governance ("It's The System, Stupid"). Tolerance.

High substance, often low symbolism. I wish we spent more time talking about things that, if fixed, would make the world much better.

Fiscal Cliff: meh

Russ Roberts has had several thought-provoking tweets recently (he's @EconTalker on twitter).

Professor Roberts was my favorite economist even before he invited me to be on his podcast, because he is always rational and skeptical, especially about data or ideas that reinforce his own biases. Listen to a few episodes of EconTalk to hear what I mean.

Interesting tweet #1:

Fiscal cliff will lower federal spending from $3.8 trillion to $3.7 trillion. Oh the horror!

A 100-billion-dollar fiscal cliff sounds like disaster. 3.8 to 3.7... meh.  Lets see, the last time the Federal budget was 3.7 trillion dollars was... umm... well, according to the budget office, Federal spending this year is about 3.6 trillion dollars. So if we go over the Fiscal Cliff, the Federal government will be spending a bit more next year than this year.

Thought-provoking tweets numbers 2, 3, and 4:

A tax cut without a spending cut is not a tax cut. A tax increase with a spending cut is a tax cut.

Spending must be covered by either taxes today or taxes tomorrow (borrowing). So a tax cut w/o cutting spending is not a tax cut...

Spending is paid by taxes today or taxes tomorrow (debt). So a tax increase coupled w/spending cut is a tax cut. 

Politicians of both parties love to promise free lunches for everybody. ObamaCare will save us money! Taxpayers will make money on the auto and Wall Street bailouts! Tax cuts pay for themselves! Interest rates are Historically Low, so now is the time to borrow and spend even more!

I hate sounding like a grumpy old curmudgeon, but none of that is true. I still think:

...the best the government can do is create policies that will encourage and reward productive behavior, and then stand back and get out of the way. 

Amherst Homeowners: Mad as Hell!

This is the first house we owned, in Palo Alto, California.

It was tiny. 900 square feet and shaped like a bowling alley.

Taking a virtual walk down the street with Google Street View, I see that the house two doors down is much, much bigger than it used to be.

Which doesn't surprise me; while we were living there several little houses in the neighborhood were torn down and replaced by big, multi-million-dollar properties. Heck, according to zillow.com, that little 900 square foot house is worth just a little less than a million dollars today.

I wonder if Amherst will be like that in 20 years.

Today, the hot-button issue in Amherst isn't cute little cottages getting torn down and being replaced by McMansions, it is big old single-family houses getting turned into rentals for college students. Homeowners in neighborhoods near UMass are upset that their quiet family-friendly neighborhoods are slowly turning into absentee landlord slums.

Part of me wants to just say "I told you so." This is what you get when you do stupid stuff like refuse to allow high-density student rental housing to be built anywhere near anybody. Amherst Town Meeting members have been pretending that the students don't exist and that there is no shortage of rental housing in town for over 40 years.

Fall Town Meeting will debate several zoning articles that are meant to stop single-family homes from becoming multi-person rentals. I think they would be effective-- if a property management company needs to get a Special Permit to turn a single-family home into a multi-person rental then they won't bother buying any more single-family homes.

I don't know where the students would go; apartment complexes in Hadley or Sunderland or even further away, I suppose. Hopefully they'll be riding buses or driving non-polluting self-driving electric cars so we won't see more pollution or traffic accidents. And hopefully they'll stop and do a bit of shopping or eating once in a while, so fewer people living near downtown doesn't mean a less vibrant Town Center.

In the very short-term, I'd expect housing prices to go down a little bit, since property management companies won't be competing for houses any more. Less demand means lower prices.

But if I'm right, and if stricter zoning and rental regulations are effective in driving students out of residential neighborhoods, I think prices for properties near downtown and UMass will eventually rise, because it will make those neighborhoods a more pleasant place to live.

That neighborhood in Palo Alto is right next to Stanford University, and it was a great place to live, if you could afford it. Amherst is not the same, of course-- the main reason that little house is now worth a million dollars is because Google and Facebook and a gazillion other successful high-tech companies are nearby.

But I wouldn't be at all surprised to see Town Meeting debating regulations to limit an epidemic of "tear-down sales" 20 years from now.

One quarter of a micromort

Belated thanks to Roger Browne who responded to my last blog post and pointed out that there already is a standard unit of risk-- the micromort, which measures a one-in-a-million probability of death.

In the time it takes me to write this blog post, I've got something like a quarter of a micromort risk of dying from all causes. The average person racks up about 40 micromorts per day.

That's a pretty good benchmark! My little brain can understand numbers like one-quarter or 40.

There a great list of relative risks for various things on the wikipedia page for micromort. I've always wondered just how dangerous skydiving really is, and it isn't as dangerous as I thought. My risk of dying if I ever decided to jump out of an airplane (7 micromorts) would be about the same risk as sitting on the couch and watching TV for 4 hours.

Since I wrote my last blog post, we've had a hard frost, so my risk of dying from an Eastern Equine Encephalitis-infected mosquito is now zero micromorts.

I'm not sure what to think of the fact that while we were being warned about mosquitos here in Massachusetts, dying from fungus-tainted steroid shots manufactured here and administered by our doctors turned out to be a much higher risk. How much higher? I dunno. But I would if health officials and reporters started telling us how many micromorts of risk we're getting when we go outside for an hour during mosquito season or get a tainted injection from our doctor...

Standard unit of risk

The Massachusetts Department of Public Health has determined that Amherst is at "High" risk of mosquito-borne illnesses, and recommends that we all stay inside at dusk.

Yeah... but I like going outside at dusk.

The incentives for the Health Department are to exaggerate the risks, because when somebody gets Eastern Equine Encephalitis and dies they can (correctly) point to their High Risk Warning and say "not our fault, we told you so."

But maybe the risk really is high, and we ought to slather ourselves with DEET before walking downtown for dessert.

I wish there was a standard, easy-to-understand unit of risk, so the Heath Department could say something like "We estimate spending an evening in downtown Amherst with no mosquito repellant is 4-10 RUs (risk units)."

Where 1 risk unit is something we can all understand-- maybe "the risk associated with driving 100 miles on the highway."

Or "1 risk unit is the overall risk of dying in an accident in any given year."

I don't know what the right baseline would be; it doesn't really matter what is chosen, what matters is making it easy to compare the risks of things relative to each other.  The Health Department says we're at High risk... but High compared to what?

Self-driving cars

Sunset in Wyoming

I hate driving.

Not because I'm bad at it; like the vast majority of Americans, my driving skills are far above average. I just find it tedious and boring.

This summer we went on a bike trip in Colorado, and then did a big, 2,500-mile car trip through Utah, Idaho, Washington and Wyoming.

Some of that driving was interesting, with stunning scenery zooming by. But most of it was tedious and boring. We did it partly because I think long, boring car trips are a rite of passage for kids; I certainly remember being eleven years old, stuck in the back seat of the cars for hours on end, driving into the night and then staying in a boring hotel room.

My grandkids might never have the experience of being bored in the backseat of a car and having to deal with a tired and grumpy parent that has driven ten hours since breakfast. It looks like self-driving cars will happen in the next ten or twenty years.

I want to rent a self-driving RV for my next big road trip. I'd start my trip after dinnertime, tell it where I want to eat breakfast, and then sleep through all the boring, tedious driving.

I think self-driving cars will have big, unintended consequences. Maybe multi-hour commutes will be no big deal, and suburbs even farther away from city centers will be common.

Maybe weekend homes 8 or 10 hours away will become a lot more popular; sleep on the way there Friday night, sleep on the way home Sunday night.

They should be really bad news for airlines and high-speed rail, especially if special, "robot driver only" very-high-speed highways are built. If they make people fly less, they should be good for the environment-- although I expect the fuel saved from less flying will be balanced out by people travelling more overall.

Maybe we'll see lots of retired people becoming nomads, spending their money on gasoline instead of hotel rooms, spending nights in their Robobagos on the road, driving at 42 miles an hour in huge groups to get better gas mileage...

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PS: the driving-skills-above-average sentence is just there to catch people who post snarky comments before reading to the end of the post (yes, I know that sentence cannot be true).