Tuesday, April 29, 2008

DC Public Transportation: The Purple Line, Please?

Normally, I post on international relations and development issues - because that's what I study. Today, I'm going to do something a little different - because I found a local issue that's really bugging me. So... welcome to the wonderful world of DC metro-area public transit.

Ever since I moved into the District, about 9 months ago, there have been two obvious oddities about our public transportation system:

First, look at the airports. Regan-National is on the yellow/blue line, and BWI receives regular bus service from greenbelt and MARC train service from Union Station. Yet Dulles, the "nice" airport - and probably the most international hub in DC - doesn't get convenient public transport service, despite being reasonably close to the metro area. And, in yet another brilliant maneuver by the federal government, Metro was just denied anticipated federal funding to expand a dedicated light rail line to Dulles airport. What was the reason? Because Metro doesn't have a dedicated revenue stream from the government - in fact, its the only subway system in the country to NOT have a dedicated stream for capital improvements and repair. So, we can't get special project funding because we don't have normal funding - behold the brilliant logic of federal bureaucrats!

Second, and the real point of this post, is that the DC metro is basically a "hub-and-spokes" model... without the hub. So, there are a number of excellent spokes to facilitate transport in and out of downtown, but nothing to help with travel that parallels the beltway. That requires knowledge of the bus system, which is nice, but also stops service much sooner than the metro on weekends and is very route-specific. So, the bus system is well-used, but somewhat inflexible and geared towards longer-term residents. What is missing is a loop around the outside in the suburbs - and the farther out on the system you go, the farther apart metro stations are, because the spokes diverge. For those who need a visual picture, check out this link. Essentially, to travel the "outer loop", you need to use the beltway or know the bus system and be willing to transfer buses. To be fair, I assumed the loop was missing because Maryland and Virginia didn't want to shoulder the costs originally (Note the added fun of Maryland-DC-Virginia cooperation needed for most of these projects).

Little did I know, until very recently, that plans have been bouncing around to close the Maryland half of this loop since at least 2003. The proposed "Purple Line" would be a light rail line connecting Bethesda, to Silver Spring, to College Park/U of Md, to New Carrollton - some of the most congested suburbs around DC. It would be clean, efficient, significantly improve traffic congestion at rush hour, and represent an entirely new public transit option for Maryland commuters - especially those who live and work in the suburbs, instead of downtown.

Well, leave it to special interests to mess things up, and politicians to come up with a brilliant idea hurting everyone but the special interest they want to please. The one "problem" with the purple line is that it would have to run through Columbia Country Club - home to all the wonderful elite of Chevy Chase. So, to appease the protests from club members, the town of Chevy Chase has proposed to replace the purple line with a new route for diesel buses. Ah, politics at its finest. We already have efficient, natural gas bus routes that are well-used... so rather than upgrade to a reliable and effective new metro line with more carrying capacity, why don't we go backwards and add one more bus route to be reserved for polluting and outdated buses. What inspired genius!

Wait - there's more! An interesting feature of the purple line is that it parallels the Maryland section of the capital crescent trail - a nice walking/biking trail going from the Potomac, out into Bethesda, and continuing on through Silver Spring and beyond. The capital crescent trail is an old rail trail - so this wasn't too odd of a proposal, since the route was already there and it would continue the original purpose of the trail. Now, for a significant part of the new bus route, the proposal suggests a two-lane bus only road that runs directly alongside the nice walking trail. To keep up with the carrying capacity of the purple line at rush hour - a bus, a diesel bus, would have to pass by every 30-45 seconds! What a nice atmosphere and wonderful way to show that, as part of the urban renewal programs in the nation's capital, we really are committed to reliable public transportation and city services!

If you want to know more, or find out how to complain or help, I suggest checking out the Montgomory County Action Committee for Transit. Their website for the purple line can be found here. Also, Maryland Governor O'Malley's e-mail is:

Monday, April 28, 2008

Crisis at the IMF?

In the midst of the current food crisis in much of the developing world, the international financial institutions (i.e. the International Monetary Fund (IMF) and the World Bank) are trying to cast themselves as saviors of the developing world. Would that this were true - but the IFIs have never been the saving angels they see themselves to be. At best, the IMF exists to provide emergency budget and balance-of-payments support loans to beleaguered governments, and does so with minimal interference. At worst, the IMF attaches strict conditions to these loans, requiring developing countries to slash public expenditures targeted at poverty alleviation, liberalize volatile portfolio flows to countries without a well-developed banking sector, and helps banks negotiate full repayment on loans made to previous corrupt dictators (like Ferdinand Marcos in the Philippines, or Mobutu Sese Seku in Zaire (now the DRC)).

Fortunately, for all the talk from the IFIs following their semi-annual meetings earlier this month, the IMF is faced with a financial crisis of its own, and its influence is waning. When I was researching the Bank of the South last semester, I also sidetracked onto the IMF to see how their finances looked - and what is obvious is that nearly every country in South America has repaid the fund (with Argentina forcing creditors to accept only 30% of what they were owed, arguing against the fund's bad lending practices and conditionalities). In fact, countries across the globe are repaying the fund at an accelerated pace - even Turkey, which now holds around 40% of the IMF's portfolio, prompting The Economist to call it the "Turkish Monetary Fund." Regardless of the rhetoric, the decline of the international credit hierarchy and the clout of the IMF may end up being a welcome thing, so long as countries with viable and responsible governments retain access to sufficient credit to keep themselves afloat. None of this is to suggest that we are seeing the end of the IFIs, but their influence is, and will probably continue to be, significantly reduced.

A recent CEPR piece presents similar research and analysis in more detail, I highly recommend it.

India's Liberalization: Is it Helping Reduce Poverty?

So, I've spent the past two weeks under a very large rock, and its name is India. Now, the curious thing about India is that - regardless of the fact that its the world's largest democracy, or the most diverse country in the world, or any number of other things - they only started getting attention in the past five years or so. The economic logic behind that is simple: In 1991, India started opening its economy in response to a financial crisis, beginning a gradual but fairly steady process of liberalization in trade and investment, which has sped up since 2001. So, given lag time, its probably unsurprising that in the past two years India has suddenly joined China as a hotspot of international attention - especially with regard to investing and strategic policy - how to deal with the Elephant's rise.

What hasn't been done enough is an assessment of what the Indian reforms mean to the overall picture within the country (Note, there is one exception, a 2002 study by Jean Dreze and Amartya Sen). Have they helped or have they hurt? After all, liberalization is something of a double-edged sword: if properly harnessed it can bring in needed resources, but if improperly managed, policies often become prey to corporate special interests and countries waste all their resources trying to attract more investment. I spent the past two weeks writing a paper trying to explain what effects liberalization has had on the economic, social, and environmental development for India. Below are a few conclusions.

(1) Economics: Liberalization has been a great boon to overall indicators of economic growth and macroeconomic stability. The Indian government is in a much better position financially than they were 15 years ago, and has begun to accumulate significant international clout. The question is how effective they have been at converting this to social development.

(2) Inequality: Official poverty reduction indicators show continued progress, but the rate hasn't really changed since the 1980s. Plus, the rural-urban inequality divide, and inequality in the country overall, increased by around 20% (Gini coefficient) in the 1990s, and other reports suggest it has continued to increase in the 2000s. Agricultural wages improved by 5% per year in the 1980s, but only 2.5% per year in the 1990s. 60% of India is employed in agriculture - so this is not a good sign.

(3) Health and Education: India's public spending also seems to be co-opted by larger business interests. For example: India spends 2.6% of GDP on health and education combined, yet in the 2000s, spending on IT service infrastructure increased from 3.6% to 6.1% of GDP. India actually spends less on public health, as a percentage of national income, than sub-Saharan Africa, the rest of South Asia, East Asia, North America, or Europe. Mortality and enrollment figures also show that improvements in education and health have stagnated during the post-reform period.

(4) Rural Poverty: Indian policies towards agriculture continue to be focused on providing subsidies and price supports to the wealthiest commercial farmers, hypothetically to ensure adequate foodgrain production. Yet the public food distribution system is overflowing with grain and unable or too corrupt to adequately distribute its surpluses - and year after year the system buys far more grain than is necessary. Yet most of the country continues to be undernourished. The government needs to expand work-for food programming, reduce price subsidies to give poor laborers (including many small farmers) access to cheaper food, target input subsidies to smaller farmers on a scaled basis, and provide agricultural extension services - but these reforms encounter well-connected and entrenched special interests from larger growers who have benefited from scaling-up and food processing in the 1990s (e.g Basmati rice exporters in Punjab).

(5) Environment: As might be expected, the industrial and commercial-farming nature of the Indian development model has had serious environmental repercussions - including overexploitation of groundwater; degradation of water quality from industrial waste, fertilizers, and pesticides; and air pollution in urban centers well in excess of WHO recommended safety limits. Mumbai is now the city with the fifth-most air pollution in the world - behind only the big 3 in China (Beijing, Shanghai, Tianjin) and Mexico City - not the most illustrious company!

In short, liberalization has flooded India with resources and new opportunities - but the government has been slow to adapt and harness those resources to promote socially and environmentally sustainable development (especially in rural areas).

I ended up suggesting the following general policies: (1) a shift in government expenditure from economic infrastructure towards expanded public health and education provisions, (2) convening a task force of experts in rural poverty to suggest how agricultural policy can be rationalized to target the improved welfare of marginal farmers and increased environmental sustainability, (3) enhancing and enforcing pollution laws and investing in clean technology promotion and public transport and (4) imposing targeted restrictions on the most volatile forms and sectors of foreign portfolio investment to guard against sudden capital flight (e.g. South Korea and Thailand in 1997-8).

The policies were intended to be a moderate, generally pragmatic framework to helping the government harness opportunities for its people. In any case, that's a "brief" summary of my life in the past two weeks. Thanks for reading :-).

Sunday, April 27, 2008

Quick update

Hey all,

Sorry I've been off for a while - I had a 40+ page paper due last week on India's economic liberalization and poverty reduction. Finals are wrapping up, so I should be back to posting regularly again soon.

On that note - I have a couple of ideas bouncing around for new posts - one is going to be a quick summary of my conclusions from the paper, the other a local DC discussion on public transportation.

Thanks for being patient.

Monday, April 14, 2008

Urban Legends and Heart Attack

Apparently an e-mail has been going around discussing coughing as a way to survive a heart attack if you are alone. Below is a message from a hospital saying the e-mail is simply an urban legend:

Here is information off REFUTING the recent URBAN LEGEND attributed to Rochester General Hospital/Via Health.
Important Notice: 'How to Survive a Heart Attack When Alone'

Hundreds of people around the country have been receiving an e-mail message entitled "How to Survive a Heart Attack When Alone." This article recommends a procedure to survive a heart attack in which the victim is advised to repeatedly cough at regular intervals until help arrives.

The source of information for this article was attributed to ViaHealth Rochester General Hospital. This article is being propagated on the Internet as individuals send it to friends and acquaintances - and then those recipients of the memo send it to their friends and acquaintances, and so on.

We can find no record that an article even resembling this was produced by Rochester General Hospital within the last 20 years. Furthermore, the medical information listed in the article can not be verified by current medical literature and is in no way condoned by this hospital’s medical staff. Also, both The Mended Hearts, Inc., a support organization for heart patients, and the American Heart Association have said that this information should not be forwarded or used by anyone.

Please help us combat the proliferation of this misinformation. We ask that you please send this e-mail to anyone who sent you the article, and please ask them to do the same.


Rich Sensenbach
Web Development Coordinator
ViaHealth Rochester General Hospital
(585) 922-2124

Friday, April 11, 2008

US Fearmongering and Venezuela: The Saga Continues

As I've mentioned before, the US government is notable for its somewhat imperialistic approach to Latin America. Even more remarkable is that the mainstream newsmedia tend to be implicit accomplices in anti-Latin American fearmongering, comparing "leftist" leaders with Fidel Castro when any connections are tenuous at best. Well, surprise, surprise... looks like we're at it again.

In the wake of last-month's standoff between Venezuela's Hugo Chavez and Colombia's Alvaro Uribe, over Uribe's unauthorized attack against FARC rebels based out of Ecuador (and over the express protests of Ecuadoran President Rafael Correa), it appears that even the standard label of "communist dictator" that the administration applies to President Chavez is now too tame. Instead, the administration now seeks to add Venezuela to a list of states accused of harboring terrorists, in this case based on rather scanty evidence taken from laptops confiscated by Colombian officials. Surprising, isn't it, that Colombian officials conveniently discovered incriminating evidence to aim at Venezuela so soon after a military showdown?

Although, it's probably even more unfortunate that, even after all the lies this administration has told us, we're still so willing to believe the standard line on Chavez.

Iraq: Surge, Costs, and Likely Results

Below are two articles from Foreign Policy on the current and evolving situation in Iraq:

First is a brief interview with Nobel Prize-winning Columbia economist Joseph Stiglitz who tends to be worth listening to, particularly for the well-balanced liberal perspective. According to his modeling, the real costs of the war could be in excess of $3 trillion. He also gives brief comments on Bear Stearns and the limits of monetary policy in stabilizing the US economy.

Second is an analysis of the likely effects of the vaunted surge - or lack thereof. The general argument - that a "positive" scenario for Iraq's medium-term future looks like Nigeria, and a "negative" scenario looks like Somalia or Sudan (admittedly, with more oil) - is a well-taken recognition of fundamental economic, political, and social realities as they relate to Iraq's level of development. Indeed, General Petraeus deserves some credit for holding the situation together as well as he has, though no military tactics can really change these realities. I should say that the one thing that may have helped would have been the proper management of development projects (e.g. the electricity grids in Baghdad, etc) - a task that the administration has seriously bungled. Of course, even that may only have had minimal impact, who knows?

Wednesday, April 2, 2008

Our Troubled Economy

The other day, one of my professors (an economist w/ the Dept. of the Interior) mentioned the media coverage around our current economic situation and suggested that we may be limited in what we can do about it right now. He also mentioned that most media analysis is incomplete, right now. Below is an attempt to piece together the causes of our current troubles based on his take and what I know from my political economy research (focusing on India/China right now, so somewhat applicable).

There seem to be four identifiable causes of our current economic woes. I have outlined these causes below along with problems regarding potential US actions to help the economy adjust.

(1) Spiking commodity prices - particularly in food (wheat and corn) and energy (oil prices), but also in other industrial commodities and heavy industry (steel prices have been gradually rising on balance for a few years now, for example, and other mined commodities like copper and zinc have shown similar price increases). Most of this is due to rising demand from China and India, with biodiesel production having some impact on the food markets. This has both slowed growth and driven increased inflation.
Problem: The devaluing dollar (see #2, below) means that some of these prices are only rising for the US, or rising by a substantially larger margin in the US than elsewhere. The reason is that many commodities (including oil) are dollar-denominated, so the falling dollar keeps prices lower in Europe, Canada, and Japan than they are here. These energy costs also spill over into other sectors (e.g. food costs from transportation) more in the US than abroad. Similarly, the US is still a net food exporter (though less than in the 1990s), so other countries also reap cheaper US food imports in their country - driving up demand for US agricultural goods and continuing to force prices up at home.

(2) Devaluing Dollar - the slumping dollar relative to the Euro, Yen, Pound Sterling, and Loonie (a good historic lookup tool can be found here) has been a long time in the making, as a result of sustained government efforts in the 80s to maintain a strong dollar coupled with a significant and mounting current account deficit sustained over many years (with a number of causes).
Problem: China, the country to which the US trade deficit is the largest, still habitually undervalues its currency relative to the dollar, as we are a major Chinese trade partner and China relies on export earnings to finance domestic industrial transformation. For many countries it would be difficult to keep this up as the dollar devalues, but the Chinese hold 22% of the world's total foreign exchange reserves and can continue to maintain this peg for a significant period of time. This may prolong the devaluation of the dollar relative to the other major currencies.

(3) Post-war Transition - much of the growth in the past few years has been stimulated by significant wartime deficit spending by the government. We are now entering a period of scaling back as a result of somewhat lower conflict in Iraq, and potentially scaling back the troops. The shift from wartime to peacetime triggers frictional unemployment because labor cannot always immediately transfer between activities (see the Bureau of Labor Statistics "Recent Months" output, I focused on 2003-8 and used the chart output, but data goes back to 1996). Notice that the unemployment rate reached a low right as the Democrats consolidated power in Congress and started taking action against the President's war spending (Mid-2006 to Early 2007).
Problem: The war cannot be sustained indefinitely, and wartime spending can trigger inflation anyway. However, there is a limit to what Congress can do to accelerate the process given the lack of cooperation between the White House and the Hill. We're unlikely to see expansions to unemployment insurance or increases in domestic social spending or investment initiatives until the next administration, whoever that ends up being, because of the animosity between Congress and the Executive. Plus, in the current deadlock, the government is strapped for the cash to send a significant stimulus package.

(4) Housing Bubble Burst - This has been in the news a lot lately - and is a combination of outdated regulatory frameworks, trends towards market speculation - especially in real estate (remember the Asian Crisis in 97-98 as an example - both the Thai and Korean real estate bubbles burst), and investors that were bamboozled by supposed "risk-diversification" instruments that were over-hyped at best (risk is part of investment, it doesn't go away just because a mortgage has been fragmented and repackaged with other mortgages). Predatory lending practices probably also played a role (though this is likely exaggerated and sensationalized in the media - it makes a good story). Similarly, the US tendency towards not saving and acquiring credit card debt makes consumers and homeowners more vulnerable, and expands the problems in credit/finance markets.
Problem: The Fed is starting to run out of options. Somewhere between a base interest rate of 1-2%, we hit a "liquidity trap" where fed funds reductions don't do much to stimulate the markets. The current Federal Funds rate is at 2.25%, which means the Fed has about 75 basis points of wiggle room. Beyond that, it can help negotiate bail-outs of major firms to rescue the system from collapse and buy up some of the subprime securities to reduce the risk of many investments in the financial system (it has started to do both). Even these last-ditch responses from an activist Fed will, in all likelihood, only have mild-moderate effect. The Japanese central bank tried similar moves during the 1990s but eventually was forced to wait out the recession as it was unable to rescue all the institutions needing bailouts (here there is a moral hazard question regarding how much the Fed should do to rescue sinking institutions, with some arguing the Japanese tried too many generous bail-outs). Given the historical perspective on similar crises, it's likely that the Fed's actions will only moderate the crisis somewhat.

So - I've tried to lay out the causes and challenges of the current crisis. It might be worth noting that (1) and (3) bear some similarity to Carter-era stagflation. (4) is similar to financial crises in the 1990s in Japan and then SE Asia (which spread to Russia, Mexico, Argentina, etc.). (2) is a more unique element, at least for the US, as far as I know - partly because of the hoarding of exchange reserves that happened in East Asia following the 1997-8 crisis.

The question then is what we can do about it - which is a complicated issue in itself, and I'm not going to try to answer it here, since most economists seem confused.

Tuesday, April 1, 2008

Raul Castro is not an idiot...

Major newspapers today are reporting that the Cuban government is taking some fairly bold moves to re-orient itself and remove many of the more onerous restrictions the government had imposed over the years - including moves to give farmers greater autonomy over what is grown, allowing Cubans to use tourist facilities (for the few who can afford it), and allowing the sale of computers, cell phones, electric scooters, microwaves, and even car rentals.

Assuredly, the reception to such reforms will be lukewarm in the United States, but they may signal changing winds in Cuba - particularly since they come at a time when Cuba is not forced into these reforms and enjoys the support of many left-leaning leaders in Latin America. At the very least, these seemingly inconsequential reforms mean a great deal in the everyday life of ordinary Cubans. Raul Castro is not his brother, he's a pragmatic goal-oriented socialist, rather than the ideologue that Fidel is/was.