What Forex says about cheap travel

The 2007-9 Financial Crisis turned Iceland into a major tourist destination, as a newly cheap currency combined with affordable flights and natural beauty. For anyone with plenty of time and a moderate amount of money, chasing the newly-cheap destination seems like a good travel strategy.

Since January 2020, here are the countries where the US dollar has gained the most vs the local currency:

Calculated using https://fx-rate.net/USD/?date_input=2020-01-01
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Flying the Friendly Skies (Today and in the Past)

It’s almost summer. About half the US population has at least one dose of a COVID vaccine. For many Americans that haven’t had their employment impacted by the pandemic, their bank accounts are flush with cash and they are ready to do one thing with that cash: travel. See family and friends. See something other than the inside of your own home.

And for many Americans traveling this summer, they will fly. The airlines, no doubt, will appreciate your business. At this time last year, the world had so radically shifted that Zoom’s market cap was bigger than the 7 largest airlines in the world. In May 2020, air passenger traffic in the US was less than 10% of traffic in 2019. Today, we’ve recovered a lot, but we are still only back to about two-thirds of normal levels. And since airplanes are just a marginal cost with wings, flying all their planes at close to full capacity is crucial for airlines to return to profitability. They really need you to fly the friendly skies this summer.

One of the reasons that so many Americans are able to fly in today is because flying is, compared to historical prices, very cheap.

How cheap is flying to today compared to the past? Let’s look at some historical price data for flights.

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If you are ever in Birmingham AL…

Alabama is not a top international tourist destination, and I’m not going to argue that it should be. However, if you are ever in Birmingham, AL…

The restaurant scene if amazing. There are really excellent James Beard award winning restaurants. You can find authentic Southern cooking and BBQ. This is one of the most affordable places to make a foodie weekend. BhamNow curates some good articles on local restaurant news.

Our most famous place is the Birmingham Civil Rights Institute. The struggle for civil rights put Birmingham on the map (I don’t mean in a good way).

Something to understand about the city is that it’s small and easy to get around by car. You can do lots of things in one day. You could quickly go from the Civil Rights Institute over to the Art Museum (free admission).

If you like history or big machines then you will appreciate being able to walk through Sloss Furnaces. This is what remains of a real 20th century blast furnace. Unlike the Art Museum, I would say come see it now before it gets demolished or closed.

Also related to the defunct iron and steel industry is the park around the giant Vulcan statue. The park offers a great view of the city. There is a small museum about digging iron ore out of Red Mountain and how people could die in the steel mills. At this point I will mention, for our international audience, that Birmingham was named after the city in England. We aspired to be the “Birmingham of America”.

If you want to hike Red Mountain, a giant network of hiking trails is just a 15-minute drive from the city. The dirt is red. You can tell this was a rich iron seam. Two other good hiking spots are Ruffner Mountain and Moss Rock Preserve. None of the mountains around here are dramatic, but these are nice places to go when the weather is good. You might want to hike so you can justify eating more.

For kids, I recommend Railroad Park. It’s a nice city park where freight trains go by regularly. Birmingham was not built around a river – it was built around a railroad. Close by is the McWane Science Center that has lots of hands-on exhibits for kids. I would not recommend McWane for adults, although their IMAX movie offerings could be of interest and the Pizitz Food Hall across the street is fun.

If you live in the American South and have not yet visited Birmingham for a weekend, then you are missing out! Of course there are many more things I could say about the city, but just what I listed above will keep you busy.

Dan Wang’s 2020 letter on China

Dan Wang is a writer who currently lives in Beijing. He’s released another long letter about what is going on in China. I’ll share the part that caught my attention.

Waiting politely in line is a pretty strong norm in America. I had heard from several sources that Chinese norms for waiting in an orderly line were weak. Here’s an update on that:

And for years, Xi has emphasized following clear rules of written procedure, under the rubric of “law-based governance.”  Since then, the state has improved regulatory systems, for example in setting clear standards for license approvals and in securities and antitrust regulation. The state has removed some of the arbitrary aspects of governance, thus bringing serious enforcement actions following the passage of relatively clear regulations. That has improved facts on the ground. Companies and lawyers tell me that a decade-long effort by the State Council to ease doing business has yielded real results. Obtaining business licenses no longer requires a relentless pace of wining and dining, and has instead become close to a matter of routine. I haven’t been able to verify this fact for myself, but one of my friends told me that the office of the National Development and Reform Commission used to be ringed by some of the fanciest restaurants in Beijing, offering mostly private rooms; many of these restaurants have now closed, following the professionalization of business approvals.

The lived experience of being in Beijing has improved in parallel. I remember what a nightmare it was to buy a high-speed rail ticket for the first time years ago, which involved lots of yelling and multiple people cutting in line. Today, I purchase one on my phone, with no need to obtain a paper ticket, and the lines to board are more or less orderly.

China is changing.

Incidentally, I tried to start a company when I was about 19 in New Jersey. Applying for a tax ID number for my sole proprietorship was quick and easy. All I had to do was fill out a form and pay a small fixed fee to some government office.

Number of Nice Days

I’m relatively new to Birmingham, Alabama. I was nervous about moving to a place with famously long hot humid summers. My intuition since moving here is that there are many days throughout the year when, at some point in the day, the weather is nice for doing something outside with my kids.

Yesterday, Sunday, was very nice. To have such a nice warm sunny day in mid-December is strange to me. I grew up further north where Decembers are chilly. Here is a picture of a neighbor’s son enjoying the summer-like feel of this technically-winter day. This picture was taken at noon.

Although I am grateful for this particular day, I also think about the hot summer days when noon is a time to hide indoors with air conditioning. Is it nice here? How can that question be answered scientifically?

There is actually a great map of answers, available on several websites, credited to Brian Brettschneider, thanks to data from Iowa State.

This map confirmed my intuition. My old life in New Jersey was in the dark green zone, and my new life in Alabama is one level better, in terms of how many “nice” days you can expect in a year.

If you don’t have climate control, then you might be more worried about weather extremes. If you are lucky enough to have a regulated indoor environment, then a nice place to live is largely a question of how many days you get when it’s nice to “go out”.

This map accounts for “nice days”. I wonder if New Jersey would seem closer to Alabama if the measure changed to “nice daylight hours”. Yesterday was beautiful, but it was dark by 5pm. When I get time, I’m going to make a map of where in the lower 48 you can enjoy dinner outside after work many times per year (and why is it Southern California?).

Saving the Chattanooga pedestrian bridge

If you aren’t from the Southeast, you might not know that Chattanooga is a fun city. I recommend it as a place to spend a day, with or without kids. The aquarium and Lookout Mountain attractions are fun.

The riverfront downtown area is booming (in a low height building restriction kind of way). Developers are building fancy new townhomes near the Walnut Street pedestrian bridge. The middle of the bridge offers lovely views of the river and mountains.

I noticed a sign saying that residents had “fought” to save the bridge from being demolished. Sometimes, it seems like a bad idea for residents to fight to save a historic structure. Insisting that a house built in 1890 must remain as it looked in 1890 can stifle the growth of a city. This instance seems different to me. The story of this beautiful bridge is an example of having a vision, clever city planning, and providing public goods through a mix of private and government funds.

The bridge was closed to motor vehicles in 1978. It’s not hard to imagine why a bridge built before automobiles could become unsafe for modern traffic by 1980.

I’ll quote the American Planning Association for the rest of the story:

The Tennessee Department of Transportation recommended demolishing the bridge, but Chattanooga’s then-Mayor Pat Rose suggested another idea: use it for pedestrians only. Rose and Ron Littlefield, AICP, the city’s Public Works Commissioner, kept the idea alive by hiring local architects … to develop a study for restoring the bridge.

Under the auspices of the not-for-profit organization Chattanooga Venture, a committee was formed to determine whether the bridge could and should be restored. Once it was determined a rehabilitated bridge could support pedestrian traffic, the local community rallied behind saving the bridge. Helping transfer the $2.5 million in federal funds originally designated for demolition to rehabilitation were former Chattanooga Mayor Gene Roberts, former U.S. Representative Marilyn Lloyd and former Sen. Al Gore. Local fundraising efforts secured the additional $2 million needed to restore the bridge.

The ice cream and coffee shop at the beginning of the bridge has a menu in English, Spanish, French, Chinese, and Russian. That’s pretty cosmopolitan for the American South. The lovely historic bridge really draws a crowd.

Bullfighting with cars and economic development

In Ecuador we bullfight with cars, literally. It’s not a game, its the name we give to the strategy we use when we cross the street. As in a bullfight, you stand on the edge of the curb, waiting for the car/bull to pass and then run behind the passing car to succesfully cross the street.

This is true no matter what the right of way legislation says (pedestrians have the right of way, de jure, in Ecuador as elsewhere), and as such is a very useful example to teach the difference between law and legistlation when talking about institutions. Although the actual phrase has fallen out of fashion lately, along with the falling popularity of bullfights (cue nostalgic music for dying traditions), the strategy remains as strong as ever.

Both pedestrians and drivers are familiar enough with the strategy that it is not uncommon to see pedestrians motioning angrily at the innocent driver that stops at a crosswalk, usually a foreigner, so that the car can pass and they can safely cross the street. Drivers speed up at crosswalks where people are waiting to cross, not in attempt to run them over, but as a courtesy, so as to get out of pedestrian’s way faster (at least many people I’ve talked to have shamefully confessed that is why they do this!). When a driver does stop at a crosswalk to give the people on the sidewalk the right of way there is a marked delay and drivers and pedestrians are incovenienced by the delay.

From conversations I have had with people from other developing nations, the strategy used by drivers and pedestrians to cross the street is nearly identical to bullfighting with cars we use in Ecuador. Although it’s not the best possible strategy for coordinating street crossing, it is an effective strategy that allows for social coordination since everyone knows that game that is being played. It is an institution of the developing world.

Moving to the US for my undergraduate degree, many years ago, I packed this institutional baggage along with me, which led me to be late for the first class of the semester. When I arrived at the crosswalk in front of a big red brick building in Boston’s suburbs, a car pulled up to the stop sign and stopped. My mind was lost thinking about what college in the US would be like, as I patiently waited at the edge of the curb for the car to pass so that I could bullfight the car to cross the street. A sudden honk of the horn startled me as I looked around to see an angry driver waving for me to cross the street. Partly because I was startled, but also because I was used to bullfighting with cars, instead of jumping out immediatly to cross, my feet began to do an akward one-step-forward one-step-back shuffle. It wasn’t until I made eye contact with the now exasperated driver, that I was confident enough I wouldn’t be run over to gathered my courage, break out of my developing-country meet developed-country shuffle, and finally cross the street.

Talking to a classmate from Central America later that day, he told me that he was all too familiar with what had happened to me, and with the one-step-forward one-step-back shuffle being discovered by tourists, immigrants, and foreing students all over the developing world. Many years later I have informally confirmed the shuffle still exists in conversations with students that have traveled abroad to the US and Europe.

When I tell this story in class, the question of how to switch to the obviously superior institutions of the US and Europe for street crossing, where pedestrians have the right of way, de jure and de facto always comes up. For institutional change to succeed without pedestrian bloodshed, the new institution would need to become common knowledge rather quickly. In more technical language, bullfighting with cars is the equilibrium now in the developing world, and we know a better equilibrium exists, but the path to the new equilibrium is difficult to traverse.

When I ask what students would do to change to this superior equilibrium, the most common first response is very economic in orientation. Increase monitoring and impose larger fines they say. But given the costs of these policies in an already poor and corrupt institutional environment, I doubt this is necesarily the path to superior institutions, for street crossing or anything else. This is especially true when we consider the relative cost effectiveness of changing this institution vs. other potential institutional investments in the developing world.

I also doubt that larger fines and increased monitoring are the main reasons that superior institutions for street crossing have emerged in the developed world. I have rarely seen police monitoring crosswalks (with the excpetion of school crossings) in the US and Europe, and while fear of punishment is definately an important influence, I don’t know how heavily the expectation of punishment weighs on the minds of drivers in developed countries.

Institutions are important for development but we know very little about how to change them. More thoughtfull students also suggest that a superior institutional arrangement could be reached by convincing people to change their perceived payoffs of playing different strategies. The hard and long process of social entrepreneurship, seems more effective and conducive to robust success.