The employment growth centers were in very suburban areas like the silicon valley, Phx and Vegas. Areas with large established central business districts like Cleveland, Detroit and Buffalo still continue having trouble attracting employers and employees to the CBD, even when they are much cheaper than sprawling areas like Phx, Houston and Dallas.

Internationally this is true as well. Central Paris continues to lose people. Carrefour became the second largest retailing group in the world, because lots of French folks like living in the burbs shopping at hypermarkets and that model traveled very well. If the Europeans are are still going nuts for suburbia at twice what we pay for gas. The limited increase in gas prices here isn’t going to turn that around.

There will always be some who like living in an urban area. But try parallel parking a minivan downtown. If you have more than two small children under five you need a minivan because you can’t put a car seat in the front passenger seat. Without a minivan, who is going to take the kids to soccer practice? Try finding a restaurant or a boutique you can change a diaper in an urban area or take a child to. The reason people go to Applebys isn’t the food, but that its so family friendly. If your 2 year old screams no one cares and their is food bland enough for your 6 year old who only eats hotdogs. Its also cheap enough to take your wife and kids and grandma there once a week. Low density living gives you space to grill in the back yard (cheaper than eating out) and a place for your dog to do its business.

Its those factors that make suburbia so popular world wide.

"…Life after peak oil: Following an initial period of painful adaptation, we can live happily and healthily in a world with high energy costs… living in such dense urban settings where destinations are walkable or bikeable, just as in pre-industrial cities (the city of London in 1801 had 100,000 inhabitants in one square mile). Homes will be much smaller, but instead of caverns of off-white sheet rock, we will spend our money in making much more attractive interiors. Nights will be darker. We will not have retail outlets lit up like the glare of the midday sun in Death Valley… Such a lifestyle is not only possible it will be much healthier. We are not biologically adapted to the suburban lifestyle…" http://www.sacbee.com/110/story/585637.html

"The energy intensity of the US economy (which is hard to change b/c it is based on a lot of investments — a "heavy" vehicle fleet, a dispersed housing stock) is the United States’ achilles heel."

I’m glad to see comments like this and those from NR quoted by Koteli, pointing to an increasing recognition of reality. Now, let reasoning flow free for a moment. If "a dispersed housing stock" is a liability, then more of that is good or bad? And if it’s bad, then a crash in residential building is good or bad? In other words, if you realize you’re in a hole, shouldn’t you stop digging?

I’d like to quote Kunstler at this point (with my quotes interspersed).

"Because the creation of suburbia was the greatest misallocation of resources in the history of the world, it has entailed a powerful psychology of previous investment – meaning, that we have put so much of our collective wealth into a particular infrastructure for daily life, that we can’t imagine changing it, or reforming it, or letting go of it. The psychology of previous investment is exactly what makes this way of life non-negotiable."

(And I relate the concept of "non-negotiable way of life" with the last point in PK’s post http://krugman.blogs.nytimes.com/2008/04/25/thoughts-on-oil/)

"The psychology of previous investment is, for us, a force too great to overcome. … We will blame other people who behave differently for the consequences of our own behavior. We will not understand the messages that reality is sending us, and we will drive ourselves crazy in the attempt to avoid hearing it."

(Actually the blame could go to people who try to behave LIKE Americans. How dare those billions of Asians want to have one car per family and actually drive them?)

"I haven’t changed my view of what is happening to us. We have run out our string of stunts and tricks in the money rackets. We’ve spent our legitimacy. The rest of the world will strive mightily to get free of their obligations to us, including their respect for the value of our currency."

(Kunstler is wrong here: respecting the value of the US dollar is obviously not an obligation of the rest of the world.)

"The meta-cycle of suburban development, including the "housing" and all its accessories in roads and chain stores, is hitting the wall of peak oil. The suburban build-out is over. This will come as an agonizing surprise to many. The failure to make infinite suburbanization the permanent basis for an economy will rock our society for years to come."

(And the failure to make infinite growth on a finite planet the permanent basis for ALL economies will rock the world for decades to come. Mind you, even so-called "steady state" economics is not an option at this point. There’s no way to stabilize economic activity at current levels, because there’s no way to stabilize fossil fuels production at current levels either.)

Gas tax follies

I’ve been on the road (actually doing a public dialog with Barney Frank on financial reform), so I’m just catching up. Anyway, John McCain has a really bad idea on gasoline, Hillary Clinton is emulating him (but with a twist that makes her plan pointless rather than evil), and Barack Obama, to his credit, says no.

Why doesn’t cutting the gas tax this summer make sense? It’s Econ 101 tax incidence theory: if the supply of a good is more or less unresponsive to the price, the price to consumers will always rise until the quantity demanded falls to match the quantity supplied. Cut taxes, and all that happens is that the pretax price rises by the same amount. The McCain gas tax plan is a giveaway to oil companies, disguised as a gift to consumers.

Is the supply of gasoline really fixed? For this coming summer, it is. Refineries normally run flat out in the summer, the season of peak driving. Any elasticity in the supply comes earlier in the year, when refiners decide how much to put in inventories. The McCain/Clinton gas tax proposal comes too late for that. So it’s Econ 101: the tax cut really goes to the oil companies.

The Clinton twist is that she proposes paying for the revenue loss with an excess profits tax on oil companies. In one pocket, out the other. So it’s pointless, not evil. But it is pointless, and disappointing.

"Once oil really gets scarce, its use as a military tool trumps all else. Countries without it will be defenceless."

Even our great Nouriel Roubini, now in the top 100 intellectuals list (congratulations!), the man who was on the right track on housing and the crisis as P. Krugman dixit, with your help, Brad (I personally think you deserve a higher position that lots of the names in that list), is beginning to say some things more clearly:

"Some of these BW2 economies – especially the GCC – are not likely to abandon their pegs any time soon for political reasons: they get the effective security blanket of the US military support in their volatile region and the last thing the US wants is to have them abandon their dollar pegs, a move that could then lead them to abandon the US dollar as the unit of account for oil pricing."

or

““Peak oil and peak resources arguments would point out that longer term demand – driven by Chindia and other emerging markets – will grow much faster than supply; so this price increase is both fundamental and likely to persist over time."

As a factor of course!

Some months ago, I pasted here the link of a good researcher of military oil expenses and energy needs. I got his blog in a comment in TOD. It’s worth a look and a reading:

http://karbuz.blogspot.com/

On the other hand it’s depressing to read G. Mankiw smiling from reading a NYT article about ms clinton’s "Gas Tax Holiday", and making a clever comment:

“I don’t know any prominent economist who favours this McCain-Clinton proposal. More common is the reaction of a friend of mine (a veteran of the Clinton administration) who calls the idea "ludicrous."

Maybe, that’s the reason Krugman is silent in his blog the last two days…

When you have to support an economist “of the other side of the fence”, and see at the same time the democrat candidates… spraying hate on the opponent…, isn’t it time to send your passport to Washington D.C.?

Any hope?

The 800 military bases around the world and, the half of the budget (directly or shaded in interests of previous debt and injurees, etc.) used from the USamerican tax payers’ money, in financing the US military Corporation , would welcome a lot of clever analysis and research from good economists inside the USA.

But USA democracy doesn’t go so far, does it?

When Hillary says she supports the 18.4 cents a gallon tax exemption of "hard-hit middle-class families and older Americans who have proven to be the bedrock of her support. She has accused Mr. Obama of being out of touch with ordinary Americans who are struggling to meet their mortgages and gas up their cars and trucks."

I’d say do you call populist to Hugo Chavez?

If $18 bucks of tax exemption/moth is enough to a get a vote in this democracy-of-the-world USA, with its or her great universities, clever and mixed populations, what’s the difference with a banana-republic?

Oh, yeah, you have nukes, lots of military, lots of people in jail, and lots of debt…

But you are the bosses of the world, as far as it survives, spreading debt, military democracy and arms!

Sorry for the long rant,

Thank you for your good work,

And forgive me those attacks (I smoke and my blood pressure gets to high with some readings; not yours -:).

"…’all of these bubbles are not truly separate, but instead represent different facets of a single Great Boom of unprecedented size and duration… globalization either will succeed and humanity will achieve a degree of freedom and prosperity that can scarcely be imagined, or globalization will fail and capitalism or even humanity itself may come to an end. The real alternative to good globalization is world war… the Great Boom, taken as a whole, either is not a bubble at all, or it is the final and greatest bubble in history’… changing small probabilities of total collapse — is screwing around with asset prices to an unprecedented degree…" http://www.marginalrevolution.com/marginalrevolution/2008/04/peter-thiel-on.html