The Wall Street Journal reminds us of the musical dénouement from The Life of Brian.

[In the] 1979 comedy from the Monty Python team, the hero ends up whistling the song “Always Look on the Bright Side of Life” despite having his hands nailed on each side of a cross.

It seems British Petroleum took that lesson to heart. Fortunately, the company found the bright side of the oil spill, which sounds a lot like Bastiat’s broken window fallacy. Planet BP, an online internal publication sent “reporters” to the gulf, and interviewed some locals who still love the big sunflower. From the WSJ:

“Much of the region’s [nonfishing boat] businesses — particularly the hotels — have been prospering because so many people have come here from BP and other oil emergency response teams,” another report says. Indeed, one tourist official in a local town makes it clear that “BP has always been a very great partner of ours here…We have always valued the business that BP sent us.”

Milton Friedman called this the most persistent economic fallacy in history. Moving money around isn’t the same as growing the economy. The broken window fallacy lauds simple currency exchanges to replace senseless destruction, instead of focusing on growing the total productivity. It’s like running in place, but believing you’ll win a race.

Senator Chris Dodd is sponsoring a bill to promote development of livable cities.  The Livable Communities Act is designed to coordinate federal policies on housing, transportation, energy, and the environment.  It would provide grants to cities to build in alignment with federal urban policy.

As Reuters explains:

Dodd described the bill as combining housing development, public transit, and infrastructure and land-use planning into one comprehensive approach to city development. Currently, many of those decisions are made separately from one another, and Dodd and others said the partitions have led to urban sprawl.

However, Dodd’s explanation of the causes of urban sprawl ignores the history of density restrictions, federal subsidies of highways and mortgages that have pushed and pulled many cities to their current states of sprawl.  His policy prescription does not address the types of challenges that cities pose.

Urban development is the essence of an economic problem, rather than an engineering problem.  Even a “coordinated” federal policy will not necessarily help urban development, which must be a ground-up process.  As Jane Jacobs explains, top-down funding for urban development is often “cataclysmic” because vital development must come from entrepreneurs rather than politicians, and must be supported by local residents.  Without an understanding of the hyper-local issues that impact block-by-block development, federal funding for urban development is likely to destroy blossoming vitality by diverting resources from their most valued uses.

Previous federal urban policies, such as Community Development Block Grants and Federal housing Administration loans have led to systemic problems in American cities such as concentrated poverty and urban sprawl.  The Livable Communities Act is likely to have similar, unforeseen consequences.

Neighborhood Effects blogger Bob Nelson had an op-ed in Friday’s Salt Lake Tribune arguing that Utah should offer to take control of federal lands in the state:

The largest area of Utah public land, 22.8 million acres, is managed by the Bureau of Land Management in the Interior Department. Another 8.1 million acres is in the national forest system managed by the U.S. Forest Service in the Agriculture Department. On these lands, the most important decisions concern matters such as the number of cows that will be allowed to graze, the levels of timber harvesting, the leasing of land for oil and gas drilling, the prevention and fighting of forest fires and the areas available to off-road recreational vehicles.

Except in Utah and other parts of the American West, where the federal government still holds about half the total land area, such matters are the responsibility of private land owners and of state and local governments. It is time to end this antiquated system which has failed the test of time. Despite the possession of hundreds of millions of acres of land, and vast oil and gas, coal and other valuable mineral resources, the federal lands proved to be a money-losing proposition.

Read the whole thing here.

In 2008, Bob wrote about how local control of federal lands in California can lead to more effective fire management. And, of course, Bob is the author of one of Neighborhood Effects’ all-time most-read posts, wherein he argued that the US Senate is obsolete.

Ed Glaeser writes in City Journal on his latest study, which suggests that cities emit less carbon than suburbs. (Full NBER paper with Matthew Kahn can be found here.) The top five cities (by emissions) are in California.

This sounds counterintuitive at first blush. But, Glaeser suggests, people who live in the suburbs drive more and consume more housing. The policy implication is make cities more affordable by loosening building restrictions:

If climate change is the major environmental challenge that we face, the state should actively encourage new construction, rather than push it toward other areas. True, increasing development in California might increase per-household carbon emissions within the state if the new development, following the current model, took place on the extreme edges of urban areas. A better path would be to ease restrictions in the urban cores of San Francisco, San Jose, Los Angeles, and San Diego. More building there would reduce average commute lengths and improve per-capita emissions. Higher densities could also justify more investment in new, low-emissions energy plants.

Similarly, limiting the height or growth of New York City skyscrapers incurs environmental costs. Building more apartments in Gotham will not only make the city more affordable; it will also reduce global warming.

Here’s Glaeser’s write-up at the New York Times Economix blog. Here’s Tyler Cowen on a previous, related study.