NewGeography.com blogs

Phillip Marlowe, Joe Friday, pack your bags. Your talents are needed elsewhere. The City of Angels is starting to live up to its namesake but the same cannot be said of the state’s agricultural communities.

Homicide has long been associated with the inner city, the worst crime suffered disproportionately by those who fare the worst. But the annual report on homicide released this month by the California Attorney General reveals that counties traditionally dominated by agriculture have the highest rates. Monterey, Merced, San Joaquin and Kern counties top the list where the largest city to be found is Bakersfield with under 350,000 residents. In fact, the counties that hold the state’s four largest cities, Los Angeles, San Jose, San Diego and San Francisco, are not even in the top ten. Alameda, Fresno and Contra Costa are the only arguably urban-dominated counties to be in the top ten and including Fresno on this list is a stretch.

Why is this the case? The city of Salinas in Monterey County has a horrible gang problem as does Fresno. Although most criminologists do not link murder to a poor economy, the Central Valley has suffered tremendously in recent years, causing one observer to call it “California’s Detroit .” Los Angeles, which had the state’s second highest murder rate in 2001, saw a precipitous drop in violent crime in the last decade under LAPD Chief Bill Bratton. It’s 2010 murder rate (5.9 homicides per 100,000 residents) was nearly half of the rate in 2001 (11).

Another eye-popper in the report was the incidence of homicide in the Hispanic community: Hispanics comprised nearly 45 percent of the state’s homicide victims and nearly 49 percent of those arrested for the crime (27 percent of victims were black and 18 percent were white for comparison).

Other interesting highlights of the report:

• The homicide rate went down for the fifth year in the row to a rate of 4.7 homicides per 100,000 residents – the lowest rate since 1966. Monterey and Merced both had rates of 10.
• Thirty-six percent of all homicides were gang-related. Another thirty-six percent occurred as a result of an argument.
• Whites who murder and are murdered tend to be older than other ethnic groups: 40 percent of white arrestees were age 40 or over, and 52 percent of white murder victims were over 40.
• For cases in which the cause of murder is known, 71 percent of homicides involve a firearm.

I came to report on the occupation of Zuccotti Park expecting it would pass in a matter of days, like the stillborn movements before it.

In spite of its self-celebrated cosmopolitanism, New York after 9/11 has become an arid environment for protest under Mayor Michael Bloomberg and Police Commissioner Ray Kelly. The press and the public yawned through the massive anti–Iraq War march in 2003 and the excessive police response to the 2004 RNC protesters (the city is still dealing with those lawsuits). Even after the Wall Street meltdown, an eerie silence prevailed.

Zuccotti was something else: a physical presence, symbolically charged by its location a stone’s throw from both Ground Zero and Wall Street, with no end date to wait out and no demand to be placated.

While the act of occupation had little to do with the broader complaint—at the core, unhealthy economic distribution perpetuated by increasingly unresponsive elected “representatives”—it proved a dramatic setting for airing them, and for bringing participants together. For one season the park took on a life of its own, before reverting to a place for “passive recreation.”

In the course of that season, though, the scene aged badly. With a big push from the Bloomberg administration and tabloid coverage fixated on civic order, Zuccotti Park descended from a new public commons to a fever dream.

I surveyed the scene for the first time about a week after it started. In that first of what became many such visits, I stayed from early afternoon through the next morning, listening to professors, students, union members, veterans, homeless women, eccentrics, lunatics, librarians, old colleagues from other newspapers, members of various working groups and even a neighbor from Brooklyn there to take it in.

Occupy Wall Street had yet to draw the high-profile NYPD abuses and errors—the pepper spraying and Brooklyn Bridge arrests—that would give them a shape and purpose they couldn’t sustain themselves. But amid the drum circles and music festival “model society” absurdity of the park, people who’d been at a loss until now about how to express an array of concerns sensed an opening.

I was less interested in the protest itself than in the creation within Zuccotti of the sort of freewheeling commons New York City has lost under this mayor, even as the Internet and mobile devices eroded what was left of a shared café culture.

That shift is epitomized by the increasing commercialization of public spaces like the generator-powered gift market at Union Square. But it left a hole that the occupiers briefly filled.

The handmade cardboard signs, the conversations with engaging strangers, the library, even the General Assembly all seemed like flashes of the participant city that’s hunkered down to wait out an unpopular mayor. Bloomberg has built an ever-expanding safe space for the very well-off at the expense of the rest of us, using his private fortune to encourage New Yorkers to simply leave the city’s civic life in his hands.

Problems in Zucotti stemmed in no small part from the massively disproportionate police response, intended in part to limit the size and scope of the protests by warning the economically marginal, the physically frail, and the meek about the bad things that might happen to those who participated.

That tactic backfired. As the occupation grew, the would-be political participants found themselves starved for space, overwhelmed by their own tents and by an excess of hangers-on, panhandlers and carnival-goers unsober in all senses. They were ringed by barricades and police officers, blinded by spotlights aimed into the park at all hours, and eyed at all times by dozens of NYPD cameras carried by officers and atop a 20-foot pole on an unmarked police truck.

“Just because you’re paranoid,” one Occupier said, sweeping her arm across the park, “doesn’t mean they’re not out to get you.”

The NYPD response was a far more significant disruption to the life of the city than the protesters themselves—for the first time since 9/11 penning off streets to those without IDs to prove they “belonged” there, erecting barricades that starved businesses of customers, sending so many officers to “protect” the demonstrably nonviolent marches that crime rates went up elsewhere.

In turn, the occupiers became fixated on the police department. At each march, rumors would swirl about brutality, arrests and reports that “they’re taking the park.” Crowds would at times work themselves into mobs, facing off with the NYPD as though they were in Oakland or Egypt. Yet they failed to notice—let alone respond to—the tactics used to manage them, like complicated penning schemes that broke bigger groups into smaller ones or tricked protesters into separating themselves from the rest of the city instead of showing they were just like everyone else.

After I reported that the police were exacerbating a split between participants and nonparticipants in Zuccotti by encouraging drunks and rowdies to head down there, the NYPD’s main mouthpiece issued a tepid denial. “Not true,” he said, without specifying what exactly wasn’t true, adding that those types would of course find their way there.

Explaining his decision to finally clear the park, Bloomberg pointed to the EMT who broke his leg on the sidewalk just outside the park (but inside the barriers separating the police from the protesters) a week earlier, in the middle of the night.

I was the only reporter on the scene when that happened. My colleagues had dispersed around the park to track a spate of seemingly contagious violent incidents on an especially ugly night.

Two very large OWS “community watch” members were patiently working to calm down and eject from the park a crazed 20-year-old, Joshua Ehrenberg, who I was told had punched his girlfriend in the face earlier that night. Just outside the barriers separating the sidewalk from the street, officers watched the crowd swelling around the scene.

The police ignored requests to move on as Ehrenberg kept playing to them, spitting out slogans of the occupation: “The process is being disrespected” since “the community hasn’t consented to this,” trying to get friends to form a human chain with him. As ever, the gawkers accused each other of being infiltrators and police agents.

As that scene played out, two huge men in still another fight emerged behind us, inside the park, throwing ineffective haymakers at each other, nearly toppling tents. One of the OWS security members left to try to handle that, while his partner finally asked the police, watching from outside the barriers, to come in and remove Ehrenberg.

Despite the invitation, the crowd swarmed around the entering officers, yelling “Pig!” and the like as the police carried the struggling, still slogan-shouting would-be Occupier out by his arms and legs.

An EMT there to take him for a psychiatric evaluation, walking backward just ahead of the swollen group of police, protesters and park campers, put his foot through the rungs of a ladder that for some reason was leaning against the sidewalk.

As he wailed in agony, the crowd gave no space—even as the police calmly asked them to give him room, pushing those who wouldn’t listen back with measured force.

In press reports about the incident, a city spokesperson incorrectly claimed that the EMT was shoved or assaulted, while Occupation sources peddled the line that this was just one of those things, an unavoidable accident unrelated to the occupation.

Did he fall or was he pushed? Yes.

Would the Occupation movement—really, a moment—have collapsed under its own weight without the city’s heavy-handed help? Thanks to that help, we’ll never know.

This piece first appeared at City and State New York.

Finally astronomy has begun to keep up with the legendary television show, Star Trek. For decades, one of television's strongest fan bases has been aware of "M-Class" (Earth-like) planets, on which carbon based, and often-human like life can exists. More often than not, such life did indeed exist in Star Trek. Until this past week, however, there was no hard evidence that our "M-Class" planet, Earth, had any company.

That changed with the recent discovery of, Keplar-22b, which was discovered by a NASA team using the Keplar Space Telescope. The planet is described as the first of similar size to earth that has been found in the "goldilocks zone" of habitability relative to its sun.

Of course, Star Trek had many more M-Class planets. But the race may be on. Researchers intend to use their results to extrapolate an estimate of the share of M-Class planets. Star Trek's nearly half-century lead in this inventory could be at risk.

Former Illinois Governor Rod Blagojevich was sentenced today to 14 years in prison. Illinois will now have the dubious distinction of having two back-to-back Governors in jail at the same time. Could a more vigilant press have stopped the amazing political career of Rod Blagojevich? When you look into the background of the former Governor the tentacles of organized crime can’t be ignored.

Rod Blagojevich has been identified as a former associate of the Elmwood Park street crew of the Chicago Mob by Justice Department informant Robert Cooley. The allegations concern Blagojevich paying street tax to the Chicago Mob to operate a bookmaking operation. Former senior FBI agent James Wagner confirmed that Cooley told the FBI about Blagojevich in the 1980s. The Chicago Sun-Times and Chicago Tribune still haven’t reported on the Cooley allegations concerning Blagojevich. WLS-TV reporter Chuck Goudie has been most vocal in reporting on Blagojevich’s background.

Blagojevich was tried in room 2525 of the Dirkson Federal Building, the same room used for the massive Family Secrets Chicago Mob trial. It’s odd that Judge James Zagel was the federal judge in both cases. But, there’s more in common than the media has emphasized.

Blagojevich can’t help but be a little bitter. Former friend Eric Holder was supposed to help Blagojevich land a valuable casino in Rosemont, Il. Congressman Jesse Jackson Jr. is under an ethics cloud but is not going to be indicted for the Obama Senate seat deal. While Barack Obama claims to know nothing about Chicago corruption, as Joel Kotkin said recently: Illinois is a state of embarrassment.

During my college days, I had the opportunity to interview a local government official tasked with conducting various disaster response programs. North Dakota had, at the time, been dealing with severe flood issues for nearly a decade, and the interviewee had vast experience dealing with the ins and outs of working within the system to find mitigation solutions. Asked about the challenges of having to deal with a multitude of state and federal agencies, he informed me that the most vital contacts he had were at the federal level. His reasoning?

"That's where the money is."

Given the current political winds blowing from D.C., the conditions that spurred that view might be about to change in substantial ways.

With the recent failure of the "Super Committee" to find a deal on potential budget cuts and tax reforms, states may soon find themselves faced with a set of federal spending cuts to programs and services that undergird large parts of their economy. These automatic cuts, triggered in 2013 by the committee's failure, will total nearly $1.2 Trillion and be between domestic and defense expenditures. While many may laud such cuts as a way to help bring the federal budget back towards a semblance of order, it is worth noting that the impact on state economies moving forward could be substantial.

Federal spending, be it on defense, salaries for federal workers, infrastructure, or procurement makes up a sometimes major part of state economic activity. As outlined in a recent piece at stateline.com, some states have far greater exposure than others. In New Mexico, home to several major federal research institutions, over 12% of Gross State Product (GSP) is attributable to federal government spending. Virginia and Maryland, home to so many federal workers and contractors are even more economically dependent on federal spending, with 13.5% (MD) and 18.5% (VA) of their economies being due to federal activity. The spillover of cuts at the federal level can't help but impact on the overall economic health of such states. The impact will likely be felt throughout the nation as federal agencies find themselves forced to tighten their belts.

Scholars of federalism often refer to the period since the late 1970's as the era of "New Federalism." Beginning under President Carter, and embraced fully by the conservative movement during the 1980's, New Federalism was marked by increasing devolution of powers and responsibility to state governments and calls for states to be given more control over the reins when spending allotted federal dollars.

While states continue to play an important role in the system, actions taken over the past few years under the Bush and Obama administrations seemed to hearken back to the earlier, cooperative model of federalism, with the federal government taking on a more assertive role in working with and through state and local governments to provide stimulus, reform healthcare, and implement post 9/11 security initiatives. While state leaders might have chafed at the strings tied to certain lines of funding, the dollars provided offered states a way to backfill budget shortfalls during a time of economic stress.

With the demise of the Super Committee, continued calls for deeper spending cuts and gridlock over raising revenues are setting the table for a changed federal-state relationship. As federal agencies strike their tents on various programs and initiatives, states will find themselves receiving less direct federal largess and facing lower economic activity as federal dollars working their way through the local economy are reduced. Budget austerity may lead the federal government to increasingly leave the states to their own means- devolution by force, instead of by choice.

On November 18, President Obama signed into law a bundle of appropriation bills for FY 2012  including appropriations  for the U.S. Department of Transportation. The measure had been passed earlier in the House by a vote of 298-121 and in  the Senate by a vote of 70-30. 

The bill provides $39.14 billion in obligation limitation for the highway program, a reduction of almost $2 billion from FY 2011; however, an additional $1.66 billion is appropriated for highway-related "emergency relief." The transit program is funded at $10.31 billion (incl. $1.95 for New Starts), a $400 million increase from FY 2011, and Amtrak at $1.42 (incl. $466 million for operating expenses). The discretionary TIGER program is retained at $500 million, a slight decrease from FY 2011.

Conspicuously absent in the new budget is any funding for high-speed rail and the Intercity Passenger Rail Service program --- a fact cheered  by fiscal conservatives but mourned by boosters of high-speed rail and supporters of the California bullet train. The California High-Speed Rail Authority relies heavily on further federal funds to complete the project. According to its business plan, it expects $33-36 billion to come from the federal government. Failure by Congress to appropriate money for high-speed rail for a second year in a row makes the prospect of future federal support for the California rail project increasingly doubtful. 

Also refused any funding in the FY 2012 congressional transportation appropriation are two other Administration priorities:  the Livable Communities Initiative ($10 million requested in the President's budget); and the National Infrastructure Bank ($5 billion requested).  The conference committee action would seem to put an effective end to any further attempts to create the Bank, at least during the remainder of this session of Congress.      

Solvency of the Highway Trust Fund in Jeopardy
The congressional conferees have warned that the bill will deplete almost all resources from the Highway Trust Fund (HTF) by the end of fiscal year 2012.   "Without enactment of a new surface transportation authorization bill with large amounts of additional revenues this year," the report said, "the Highway Trust Fund will be unable to support a highway program in fiscal year 2013. The conferees strongly urge the committees of jurisdiction to enact surface transportation legislation that provides substantial long-term funding to continue the federal-aid highways program."

As Taxpayers for Common Sense (TCS) pointed out in a commentary, the appropriations committee is willing to acknowledge the problem, but quickly passes the buck to the authorizers to come up with more cash for future years.  But the authorizers aren't doing any better. The Senate Environment and Public Works (EPW) Committee passed a $109 billion reauthorization bill that would fund two years of transportation spending by essentially drawing the HTF balance down to zero (and still unable to identify the remaining  $12 billion in offsets). To House Transportation and Infrastructure Committee Chairman John Mica (R-FL) the implications of the Senate action are clear.  In a November 14 letter to Senate EPW Committee Chairman Barbara Boxer (D-CA)  he warns that the Senate bill will "essentially bankrupt the Highway Trust Fund and make it impossible to provide any funding for fiscal year 2014."

To its credit, the Senate Environment and Public Works Committee recognized the precarious state of the Trust Fund and took steps to impose spending controls to prevent the Fund from falling into insolvency.  The Senate bill provides (in section 4001) for mandatory reductions in the obligation limitation should the Trust Fund  balances in the Highway Account, as estimated by the CBO, fall below a certain pre-determined level (for example, in the event gas tax revenues fail to match expectations). The designated triggers are $2 billion at the end of FY 2012 and $1 billion at the end of FY 2013. In other words, the Senate EPW committee has wisely provided for a mechanism to reduce highway expenditures below the authorized  $109 billion level in order to prevent the Trust Fund from going bankrupt.

The House, for its part, is exploring a different way to fund a longer-term, five-year reauthorization. On November 17, Speaker Boehner announced he will unveil in December a combined transportation and energy bill, dubbed the "American Energy & Infrastructure Jobs Act,"  (HR 7). The bill  would authorize expanded offshore gas and oil exploration and dedicate royalties from such exploration to "infrastructure repair and improvement" focused on roads and bridges. 

However, many questions have been raised about this approach. Several lawmakers ---  notably, Rep. Nick Rahall (D-WV), Ranking Member of the House Transportation and Infrastructure Committee, Sen Barbara Boxer (D-CA) chairman of  of the Senate Environment and Public Works Committee  and Sen. James Inhofe (R-OK) the committee's ranking member---have criticized the aproach as problematical and potentially miring the bill in controversy. They allege that  the royalties the House is counting upon would fall billions of dollars short of filling the gap in needed revenue  (the gap is estimated at approximately $75-80 billion over five years). They further allege that the revenue stream from the royalties would not be available in time to fund the measure. 

Other critics have pointed out that states in whose jurisdiction drilling may occur, will assert a claim to a lion portion of the royalties. Also, using oil royalties to pay for transportation would essentially destroy the principle of a trust fund supported by highway user fees.  For all the above reasons, the House proposal is likely to meet with a skeptical reception in the Senate.

As the TCS memorandum aptly concluded,  in the end it's a big game of "kick the can." The appropriators kick the can to the authorizers. The authorizers kick the can down the road a couple of years or rely on speculative and uncertain revenue that may or may not materialize. In the meantime, the fate of the Trust Fund continues to hang in a precarious balance, victim of Congressional indecision and new fiscal imperatives.    
 
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Note: the NewsBriefs can also be accessed at www.infrastructureUSA.org

A listing of all recent NewsBriefs can be found at www.innobriefs.com

Yesterday’s Daily Telegraph contained an interesting article on the increasing number of Australians departing Australia permanently:

Upon reading this article, I decided to crunch the numbers to determine how Australia’s migration numbers are tracking. The below chart shows the permanent arrivals vs permanent departures numbers alluded to in the above article. The ratio of arrivals to departures is also shown:

As you can see, the number of net permanent arrivals into Australia – around 45,000 for the 12 months to September 2011 – is well below the long-run average (around 65,000). The ratio of arrivals to departures is also in long-term decline and currently sits at a 35-year low of 1.5 times.

However, the broader net overseas migration (NOM) statistics published by the Australian Bureau of Statistics, which measures in/out migration of anyone residing/leaving Australia for a period of 12 months or more (rather than permanently), paints a different picture.

According to these statistics, NOM is still above long-term trends, but has declined sharply from the peak level seen in the year to September 2008, from around 315,000 to 170,000:

With the decline in NOM, Australia’s population growth has also fallen significantly, from a peak of just under 470,000 in the year to September 2008 to just under 320,000. The share of population growth coming from immigration has also fallen over the same period from a peak of 67% to 54%.

Finally, in percentage terms, it appears that Australia’s population growth and immigration are returning to average levels after surging in the 3 years to 2008:

With the ABS scheduled to release the June quarter NOM data in mid-December, it will be interesting to see whether Australia’s NOM mirrors the permanent arrivals/departures figures and registers another fall.

This piece originally appeared at Macrobusiness.

Leith van Onselen writes daily as the Unconventional Economist at MacroBusiness Australia. He has held positions at the Australian Treasury, Victorian Treasury and currently works at a leading financial services company. Follow him @leithVO.

A business plan released on November 1 by the the California High-Speed Rail Authority (CHSRA), has placed the price tag for the LA-SF bullet train project at $98 billion--- trippling the $33 billion estimate provided in 2008 in the voter-approved Proposition 1A. At the same time, the date of project completion has been pushed back by 13 years -- from 2020 to 2033.

California state legislators who must soon decide whether to proceed with the high-speed rail project are facing an increasingly skeptical climate of opinion.  A growing body of their colleagues who formerly supported the rail authority, including state Senators Alan Lowenthal, Joe Simitian and Mark DeSaulnier, have been shocked by the new estimate and have begun to question the wisdom of proceeding with the project. Other legislators intend to go further. State Sen. Doug LaMalfa said he will sponsor a bill to put the voter-approved rail project back on the ballot. House Majority Whip Kevin McCarthy announced that he will introduce legislation that would freeze federal funding for the project for one year so that congressional auditors can review its viability.

At the federal level, chances of further funding for the California project are judged to be negligible, with Congress having virtually zeroed out high-speed rail funds in the FY 2012 federal budget.

At the same time, the bullet train is rapidly losing public support. Nearly two-thirds of California's likely voters would, if given a chance, stop the project according to a recent opinion survey. Organized opposition within the state is widespread. Public interest groups and watchdog coalitions such as  Californians Advocating Responsible Rail Design (CARRD), the Community Coalition on High-Speed Rail, the California Rail Foundation, and the Planning and Conservation League have repeatedly challenged the Authority's cost estimates, ridership projections and rail alignments. They have testified against the project in public hearings and taken the Authority to court. Recently, they scored a legal victory when a state judge ruled that the Authority has to reopen and revise its environmental analysis of a controversial alignment.

A team of respected independent experts, comprising Stanford economist Alain Enthoven, former World Bank analyst William Grindley and financial consultant William Warren, have reinforced the growing feeling of doubt about the project's viability by challenging the rail authority's assumptions and pointing out the flaws in its business  plan. 

Finally, at both the national and state levels, the bullet train project is receiving an increasingly skeptical press scrutiny. Nearly every newspaper in the state (with the exception of the LA Times and SF Chronicle) has turned critical.  News services, notably California Watch (founded by the Center for Investigative Reporting) and investigative reporters, such as SF Examiner's Kathy Hamilton, Mercury News' Mike Rosenberg and OC Register's Steve Greenhut are providing incisive critical analysis to counter the steady flow of publicity generated by the Authority and its supporters. 

Critical commentaries in mainstream press vastly outnumber favorable stories. Here are three examples:

The Train to Neverland
The Wall Street Journal , November 12, 2011

California's high-speed rail system is going nowhere fast
The Washington Post, November 13, 2011

High-Speed rail depends on $55B in federal funds
California Watch, November 12, 2011 (by Ron Campbell and Lance Williams)

Ken Orski has worked professionally in the field of transportation for over 30 years.

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Note: the NewsBriefs can also be accessed at www.infrastructureUSA.org
A listing of all recent NewsBriefs can be found at www.innobriefs.com

When analysing the US housing bubble, four states stand-out for the way in which home values rose into the stratosphere before crashing and burning: California, Nevada, Florida and Arizona (see below chart).

Since I covered three markets were covered in previous posts at Macrobusiness (see above links), I now want to analyse the Arizona housing market – with particular emphasis on its largest city, Phoenix – to determine why prices bubbled and then burst in such a violent manner.

In the lead-up to the crash, Phoenix’s economy was booming. New jobs were being added at a fast pace and per capita incomes were growing strongly:

With confidence riding high on the back of seemingly solid fundamentals and rising asset prices, along with easy access to credit, Arizona households borrowed heavily. Per capita debt accumulation surged in the mid-2000s to levels far in excess of the national average:

But Phoenix was living on borrowed time. With the national economy turning south in the wake of the sub-prime crisis and the collapse of Lehman Brothers, Phoenix home prices, which had already been falling gradually, began to slide fast. After home prices peaked in May 2006, it took another 18 months before Phoenix’s unemployment rate began rising:

The rest is history. Home prices continued falling, unemployment kept rising, and nominal per capita incomes fell for the first time in at least 40 years.

And the pain is widespread, with around one in seven mortgages 90 days in arrears – well in excess of the national average:

So what went wrong? Could anything have been done differently to prevent the housing bubble/bust?

Certainly, if credit was less readily available, households would have been constrained in their ability to bid-up prices. But easy credit was only part of the problem. Another key driver of the rampant price escalation and then collapse was the way in which land was supplied for housing.

Throughout the 2000s, Arizona was one of the fastest growing metropolitan area in the United States with more than 1,000,000 population (see below chart).

However, despite there being ample developable land on the urban fringe to accomodate this population growth, the actual quantity of land available for development was heavily restricted on two counts:

On the second point – the lack of available land for development – the below graphics highlight the land supply situation in Phoenix.

First, a pie diagram, extracted from the Arizona State Land Department Annual Report, showing how only 17.5% of land in Arizona is privately owned:

Second, a map showing the lack of developable land around Phoenix:

There is evidence that the Arizona State Land Department, whose mission is to “optimize economic return for the Trust beneficiaries”, heavily restricted sales of land to the market in an effort to maximise revenues, causing builders and developers to bid-up land price in period auctions to ensure their supply of land for construction (called ‘land banking’).

Whereas the price of land for housing sold for around $40,000 per acre immediately prior to the bubble, at the peak average land prices fetched nearly $200,000 (see below chart).

And with the state rationing the supply of fringe land, average residential land prices rose throughout Arizona:

Obviously, this land price inflation was a principal cause of the house price escalation as well as the delayed supply response to the rapidly growing population and rising house prices (see below chart).

Had land around Phoenix been freely available for development, developers would likely not have paid such high prices for the land sold by the state government and Phoenix home prices would never have risen to such heights or crashed as violently.

Phoenix is yet another example of where excessive government interference in the supply of land has combined with easy credit to create a speculative bubble followed by a painful bust.

This piece originally appeared at Macrobusiness.

Leith van Onselen writes daily as the Unconventional Economist at MacroBusiness Australia. He has held positions at the Australian Treasury, Victorian Treasury and currently works at a leading financial services company. Follow him @leithVO.

Andy Kunz of the U.S. High Speed Rail Association commented to Fox Business News on the recently announced record ridership on Amtrak that, "At the very least, the increased demand offers another sign travelers are getting fed up with soaring airline fares and fight cancellations."  In the article, which read more like an Amtrak or high speed rail press release than a news story, reporter Jennifer Booton made what Gulliver, in The Economist, called "a fairly convincing argument that Americans are turning to trains as an alternative to driving and air travel." The Economist should have known better.

Yes, Amtrak ridership is up and airline patronage has been up and down in recent years. But, trains as an alternative to air travel? In fact, Amtrak's ridership is so small that distinguishing between the bottom of the graph below and the Amtrak ridership is difficult (see Figure). While Amtrak ridership rose five percent last year, the same number of new airline passengers would have constituted only 0.06 percent increase (or nearly 1/100th the impact on Amtrak). Amtrak's ridership is so low that the monthly change (increase or decrease) in airline patronage has exceeded  total 2011 Amtrak ridership in 120 of the last 125 months.

Booton and Gulliver may imagine business travelers abandoning frequent airline service to board trains slower than cars that run once daily. Or perhaps they imagine faux-high speed rail service that will still be too slow or too infrequent. Airline executives aren't losing sleep over potential losses to trains.