The Economist has an interesting article on the world’s largest city:
Tokyo is now the world’s largest city, with 37m residents in the metropolitan area and 14m in the city proper. It is also one of the world’s most liveable, with punctual public transport, safe neighbourhoods, clean streets and more restaurants and Michelin stars than any other. In the liveability index of the Economist Intelligence Unit, our sister group, Tokyo comes joint fourth, but its population is larger than the combined populations of the others (Adelaide, Auckland, Osaka and Wellington). “It’s possible to have a liveable city at any scale—Tokyo proves that,” says Gabriel Metcalf, at Committee for Sydney, an Australian think-tank.
The article discusses the role of planning:
Tokyo’s liveability is a product of planning’s successes but also its failures, argues Jordan Sand of Georgetown University. One success was public transport. After the Meiji restoration, the government put rail ahead of roads, expanding networks through the city and then underground. Even as large firms in America built headquarters in suburbs, in Japan they clustered around transport hubs, incentivising the use of trains and subways, says Okata Junichiro of the University of Tokyo. That helped make Tokyo polycentric, with many hubs, not one.
What the article doesn’t say is that the transit system is surprisingly decentralized. While Tokyo’s largest operator (JR East) is government owned, the metro area is served by 48 different commuter rail operators. Of the 158 rail lines in the Tokyo area, no fewer than 55 are run by private operators.
You may recall that Japan’s postwar boom occurred partly because firms like Honda ignored the diktats of government planners (who wanted them to stick to motorcycles.) Something similar happened with urban planning:
Around those hubs grew dense, mixed-use neighbourhoods. That was the planning “failure”. After the war, city planners sought to impose zoning as in the West, as they had after the Great Kanto Earthquake of 1923. But the government’s resources were too limited and Tokyo’s growth too rapid to control the process. Japan instead developed lax zoning codes, which allow pretty much anything to be built, rather than prescribing what is permitted. Historically, this model “was part of a modernist ethos to separate functions, to say work happens here, living happens here”, explains Mohsen Mostafavi of Harvard’s Graduate School of Design.
For those interested in urban planning, I found this video on Tokyo’s lax zoning rules to be quite interesting:
READER COMMENTS
Stéphane Couvreur
May 3 2022 at 4:55am
Regarding the carbon tax at 23:20, I am not surprised that a government official speaks of this instrument as her preferred option to reduce carbon emissions. What I find more surprising is the lack of reaction of economists, who could argue that cap-and-trade is preferable. There can be a reasonable debate about this claim, of course, but I believe cap-and-trade to be preferable because:
1) it doesn’t have the word “tax” in the title and generates no revenue for the governement (provided that the quotas are allocated for free),
2) as a consequence of 1), there is no need to redistribute the receipts from the carbon tax as is standard with a Pigouvian tax,
3)
Jon Leonard
May 6 2022 at 5:36pm
A key difference between a carbon tax and a cap-and-trade system is how they handle errors in forecasting. That is, under a tax system it is easier for individual businesses to adjust if the overall target was chosen incorrectly. Under a cap-and-trade regime, the total amount of pollution is pre-determined; this either pollutes more than necessary if the cap is “too high”, or stifles the economy more than necessary if the cap is “too low”. As in many cases in economics, the central plan can be suboptimal.
Stéphane Couvreur
May 3 2022 at 5:08am
(Oops!)
3) as a consequence of 2), there are fewer opportunities of rent-seeking and buying constituencies with the said tax receipts.
I have seen no economist making those points. Nordhaus prefers the tax because, as he writes in an endnote, quotas are more susceptible to cause corruption in developing countries. Sumner considers “foolish” the idea of allocating the quotas for free in a cap-and-trade system (I don’t understand why, cf. opportunity cost). Harford considers that a tax or a cap-and-trade are almost equivalent and points to Weitzman’s 1974 “Prices vs quantities” article. Levitt fears that firms would be better at distorting politically the allocation procedure in a cap-and-trade system than with a tax.
Do you have an opinion on the subject, David?
Best regards,
Stéphane
David Henderson
May 3 2022 at 7:03pm
Stephane,
I have two opinions.
First, either the tax or the cap and trade opens things to rent seeking. Your point #3 applies, but you didn’t mention the extensive fight that would go on as various firms, individuals, and governments pushed for more than their pro-rata share of permits. It’s hard for me to judge which is worse.
Second, your point about not getting revenue for the government is a good one. They’re likely to waste a lot of it. In my ideal world, which I think is highly unlikely, given the political system, the revenue would go to reducing the federal debt or reducing the most distorting taxes, dollar for dollar. Those are likely to be taxes on capital. But the political pressure would be strongly against that and in favor of giving each person and household a check. So the chance to either pay down the debt or reduce distorting taxes would be wasted.
A bigger point, in my view, is that there’s not much justification at this point for either. Remember that the goal is to “solve” global warming, not to reduce carbon usage per se. Reducing carbon usage is one way to do so, but there’s virtually no evidence that it’s the least-cost way. I think that some form of geo-engineering is likely to be substantially less costly.
Stéphane Couvreur
May 4 2022 at 1:07am
Thanks a lot for this long and thoughtful response.
A quick reaction:
Your third and bigger point is entirely right. No system solves for the optimal trade-off between reduction and adaptation. I will keep this in mind.
As for the first point, as long as there is some emission reduction, I believe cap-and-trade offers fewer opportunities for rent-seeking. Here’s why:
– it can be organized to be a one-time thing, so the rent-seeking contest occurs only once, initially, whereas the fight for the carbon tax receipts can go on forever;
– there is not much in it for bureaucrats, whose task would be to monitor emissions and not to regulate or collect a tax, so there’s a chance they will be more impartial.
Going back to your third point, I agree that cap-and-trade is far from “perfect” in any meaning of the word. Most economist I’ve heard criticizing it had a very different argument: “The price of tradable permits turns out to be too volatile to encourage firms to invest in carbon reduction technology”, they say (sic).
Your answer is implicitly that adaptation is better than reduction. This makes a lot more sense. It was also David Friedman’s answer.
Stéphane
David Henderson
May 5 2022 at 10:41pm
You’re welcome.
Good point about one-time.