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...