The Time I Called an Economist "Dude" RE: Caltrain

I've never really been called an "angry blogger" before today. Guess there is a first time for everything.

I hate arguing on twitter.  I don't think fighting in 140 characters is useful and it always just makes me mad and entrenched.  I do love twitter for sharing information, which I do very frequently as many of you reading this know.

But today I just couldn't help myself.  Right after yesterday's Caltrain post I was particularly incensed by Dr. Matthew E. Kahn, an economist who teaches at USC writing exactly what I was annoyed at the day before.  He made even more assertions that bothered me and I felt I needed to call him out on it.

@mattkahn1966 Also, Goog and FB riders take private buses. Perhaps you hadn't heard of them. Finally, why shouldn't we go after our own $$?

— The Overhead Wire (@theoverheadwire) March 14, 2017

To which he replied...

@theoverheadwire land value capture! Study some urban economics please.

— Matthew E. Kahn (@mattkahn1966) March 14, 2017

I don't expect Dr. Kahn to know where I've worked or who I am but considering my previous work on the subject I was a bit shocked by this dismissive response. I've put together parcel data over time in GIS to study the value changes in streetcar lines and have contributed to a number of papers on the subject of transit and value capture so no, I don't need to study urban economics.  I get the concept.

In fact, I understand value capture related to transit very well because of my colleagues that wrote exclusively about it at CTOD.  Case in point.

@theoverheadwire @mattkahn1966 value is already capitalized into the land, in one of the most unaffordable places to live. Capture what?

— nadine fogarty (@NadineFogarty) March 14, 2017

What Nadine is talking about has been discussed many times in her work. We know from the research that value can't be generated in significant amounts to pay for transit without vacant land to goose the increment.   

It seems as if people see Value Capture as a panacea when in reality it's a scrap that's constantly fought over.  Want affordable housing? Use Value Capture! Want new infrastructure for dense infill? Use Value Capture! Want new transit infrastructure? Use Value Capture!  And in his longer than 140 characters here is what Dr. Kahn said:

In truth, a simple Ricardian model of land would predict that the main beneficiaries will be land owners 10 to 15 miles from Silicon Valley whose land is close to the Caltrain stations.  As the train becomes faster, these suburbs will enjoy a sharp growth in housing values. A simple theory of land value capture would say that these land owners should be taxed and the collected revenue can pay for the train.   Why do the Federal tax payers get a bill while the local land owners of the land near the now faster train stations get a $ profit windfall as their asset appreciates in value?  

This ignores all the existing demands on value capture mentioned above, and that Caltrain already exists and development near it is virtually blocked.  Increases in value aren't going to come specifically from Caltrain investment, but rather from zoning restrictions. No one in? Lots of demand? Value up! That's not to say we shouldn't be trying to capture some value, but it's not going to be $2B worth of value created to pay for the line.

But here are some of his other arguments that are to me nonsense.

1.  There are 40 million people in California.  If we all pay for this "key project", then we will pay a one time fee of $16 dollars to invest in this durable capital. This is the immediate proof that California could fund this improvement on its own.

I think we already did pay for the slice of the project when we sent our money to the federal government as taxes.  In applying for funding through New Starts, we're getting our money back.  If you want devolution, say devolution.  If you think we shouldn't fund regional transportation at the federal level, then let us keep our gas taxes. But in the system AS IT CURRENTLY EXISTS, If we don't apply for that money, someone in another city will.  We don't build a lot of freeways here so we're not getting back federal money on the peninsula we're sending in for either gas or income tax.

So don't tell me we could pay for it ourselves.  Yeah. We can. But that's now how federal transportation funding works right now.  The theoretical in all of this bothers me as attack.  Because we aren't repealing Prop 13 anytime soon and the federal process for capital improvements isn't gone yet.  And it's going to be hard to kill it.  Theories are great.  But label them hopes and unicorn wishes.  Not analysis.

2. If the main beneficiaries are Silicon Valley workers, who will have a faster commute --- why don't Silicon Valley firms pay for this themselves?  Why don't the commuters pay a higher fee for the train? They can work away inside this sardine box and Facebook and Google's profits rise as their productive workers make progress.

It's not all silicon valley workers, and many of these riders don't work for Facebook or Google or the giants because those workers ride their tech buses to work. As public transit, it should be affordable to everyone to make the economy work.  Perhaps they need an employment tax like Portland uses for Tri-Met, but ultimately electrification and speeding up the train allowing more people to take it benefits the environment and people that can't afford a car. 

Silicon Valley is a rich region.  Why on either equity or efficiency grounds does it merit federal transport subsidies? If this project is so valuable, why hasn't the local region figured out a local funding strategy?  My theory is simple.  Since the local political leaders thought that Hilary Clinton would be elected President, they chose to delay the project until her team agreed to provide the subsidy.  The temptation of waiting for other people's money caused an inefficient delay in launching a productive project (the faster train). Now a game of "chicken" is playing out .  I'm sure that speeding up the train is a good public policy. Now, there is a fight over who pays for it.  The winners from the local public good improvement should pay!

Sure! Caltrain officials just were waiting for Hillary to win. This is what made me tweet because its a stupid assertion that doesn't even make sense.  The federal funding process of capital projects doesn't follow a political cycle.  It happens when it happens because of all the analysis that needs to be completed behind the scenes. 

And the FTA has been funding projects since 1991 through different administrations. How is it so hard to think that good projects that get rated highly in a very scrutinized process (more than highways ever will be) wouldn't be approved even in a new Republican administration.  Perhaps they should have thought better because of the asshole tendencies of Trump.  But it was the minority party in the State of California at the federal level that pulled this for political and not value reasons. 

So now according to Dr. Kahn I'm an angry blogger.  I guess I also wear pajamas and live in my parents basement instead of doing my actual work as a transportation and planning consultant, podcast host, and aggregator of news about cities.  Perhaps my 8 years working for a well known non-profit research organization counts for nothing too.  At least my blog allows comments.  I wouldn't want Dr. Kahn to be inundated with views that challenge his blog assertions.