Monday, February 9, 2015

Your debt and the government's debt. Why are they different?

There are some concepts that, even though they've been in circulation for many years, are still hard for most of us to wrap our minds around. Like Einstein's theory of relativity. Or how global warming makes winter storms. Or, especially recently, government debt. 

What's so strange about debt?

First there's debt that's intuitive. Most of us would probably say debt is OK when it allows us to do something that's long-term beneficial that we couldn't otherwise do. Like buy a car or a house. 

But when things get financially tough we all feel we should hold as little debt as possible. That's sound strategy for a person or a family. Even a city.

But countries are different. Just as how, in the theory of relativity, the normal rules of life break down when we approach light speed, so it is with money when you approach the  size of a country. At that large a scale, when things get financially tough, it's actually in the country's best interest to take on more debt, not less. 

Paul Krugman does a good job explaining why in a short article that contains no numbers and no graphs and very few wonky words,  Full disclosure: I studied economics and physics and I understood the theory of relativity (kind of) even before I understood the theory of government debt. I wish I had Krugman as a professor!

Monday, February 2, 2015

The urban density math of snow plowing

I caught this piece today that said 25% of Detroit's streets were plowed a day after the city's biggest snowfall since 1974. Whether or not that's good or bad here's another way to look at it.

Detroit has 1,884 miles of residential side streets and about 700,000 residents. That means every resident has to pay for about 14 feet of plowing.

New York City has 6,000 miles of streets and 8.4 million people. Even though that measure includes all roads, not just residential side streets, the fact that there are so many more people means big per capita savings. Each New York City resident only has to pay for 4 feet of plowing—over a 70% savings.

It's just a reminder of the uphill battle depopulated cities like Detroit have. The people leave but the streets don't go away.

Detroit can't copy New York's density but they might want to borrow one of its tricks that can create savings. The Big Apple owns very few plow trucks. Instead they just mostly stick plows on garbage trucks, like in the picture above.