May
21
The Truth About Light Rail
Filed Under Uncategorized | 1 Comment
Coyoteblog posted this piece regarding the politically-correct (and supposedly economically stimulating) boondoggle of light rail:
When Phoenix was building its light rail system, I made the following two-part bet:
- I could take all the money spent on construction and easily buy a Prius for every single daily rider, with money to spare
- I could take the operating deficits for light rail and buy everyone gas to run their Prius 10,000 miles per year and still have money left over.
This bet has been tested in a number of cities, including LA and Albuquerque, and I have not lost yet. Now the numbers are in for Phoenix initial ridership, and I am winning the first half of my bet in a landslide.
The other day, Phoenix trumpeted that its daily ridership had reached 37,000 boardings per weekday. Since most of those people have two boardings per day (one each direction) we can think of this as 18,500 people making a round trip each day.
Well, if we bought each of these folks a brand new Prius III for $23,000 it would cost us just over $425 million. This is WAY less than the $1.4 billion we pay to move them by rail instead. We could have bought every regular rider a Prius and still have a billion dollars left over! And, having a Prius, they would be able to commute and get good gas mileage anywhere they wanted to go in Phoenix, rather than just a maximum of 20 miles on just one line. Sure, I suppose one could argue that light rail is still relatively new and will grow, but even if ridership triples, I still win the fist half of my bet. And as the system expands, my bet just looks better, as every single expansion proposal has been at a cost of $100 million a mile or more, more expensive than the first 20 miles.
Of course, buying everybody a Prius or, God forbid, just not spending the money in the first place, doesn’t give nearly the oppurtunity for self-congratulation on the part of local politicians and planning boards.
May
21
18-21 Year Olds: Smart Enough To Vote, Too Stupid For Credit Cards
Filed Under Economics | 2 Comments
This week the Senate passed legislation restricting credit card companies in their abilities to levy fees and raise interest rates. Intended to protect those who are harmed by such actions, the bill will only serve to punish responsible borrowers and restrict lending lower-income credit-card users. The companies will simply not take on the risk if not allowed to manage it economically.
There was another stipulation of the bill that puzzled me:
… the Senate bill requires those under 21 who seek a credit card to prove first that they can repay the money or that a parent or guardian is willing to pay off their debt if they default.
Essentially this is saying that people ages 18-21, while given the right to choose the Commander in Chief of the most powerful military in the world, are too stupid to read a credit card agreement. Such hypocricy is not uncommon on the left, who claim to be the voice of younger voters. Communism Now! interviewed Jesse Jackson about student loan debt. First he encouraged youths to get involved:
Students should begin rebelling and marching across the country. Students have accepted this as like normal. It’s normal, but it is not right. And it is a point of rebellion. So we’re urging students across America who want to reduce the rate and have more grants and less loans, let’s begin to have marches, use last year’s energy in the presidential campaign, demand a new deal.
President Obama wants students, in fact, to get a better deal. Were it not for his hit book, we’d have a president today with a student loan. His hit book allowed—he and Michelle both, a presidential—Harvard Law School graduates—were still owing on their loan until two years ago. So think about those who are in a less fortuitous circumstance. So I’m anxious to urge students around America, don’t just sit there and take that hit. Let’s fight back.
But then he underestimates the ability of these same people to take personal responsibility for their own finances:
Well, the students, you know, really are seduced into the loans. I was talking to students from Northwestern last week, and they’re just kind of signing off, you know, assuming when they get out of law school, they can kind of pay it back. But now, I mean, those jobs don’t exist, so they can’t pay it back. And they marry each other, which doubles the burden and their compounded interest, and so that’s a big piece of this.
That’s right, just “signing stuff.” They were “seduced.”
Whether it is college students or anyone else, when the government scorns personal responsibility, we all lose.
May
15
Fascism in America
Filed Under Economics | Leave a Comment
Powerline featured internal memos and documents showing the way the feds under Bush pressured private entities to accept TARP money:
The document is unambiguous: “We plan to announce the program tomorrow–and–that your nine firms will be the initial participants. … This is a combined program (bank liability guarantee and capital purchase). Your firms need to agree to both. We don’t believe it is tenable to opt out because doing so would leave you vulnerable and exposed. If a capital infusion is not appealing, you should be aware that your regulator will require it in any circumstance.” So the regulators’ independence had already been compromised.
Note that these “talking points” also document Treasury’s willingness to misrepresent the condition of some of the financial institutions to the American people: “We will state clearly that you are healthy institutions, participating in order to support the U.S. economy.” That was certainly not true as to Merrill Lynch. But shortly thereafter, when Bank of America realized that Merrill Lynch’s condition was deteriorating rapidly and tried to back out of its purchase of that company, Treasury bullied BoA into going through with the deal by threatening to fire the bank’s entire Board of Directors–a move that transferred tens of billions of dollars of wealth from BoA shareholders to Merrill Lynch shareholders.
Follow the link to see the documents in question.
The days of Bushpaulsonobamageithner will be a dark chapter in the book of liberty indeed.
H/t: Instapundit.
May
8
Hanson On The Loss of GOP Appeal
Filed Under Conservatism | 1 Comment
This piece from Victor Davis Hanson is as encouraging as it is accurate. An excerpt:
The elections of 1964, 1976, and 1992 were all heralded as the beginnings of new permanent liberal majorities. In the first two cases, the inept governance of LBJ and Jimmy Carter ensured that Republicans were back in office in four years. Bill Clinton extended Democratic rule for eight years; but he did so without winning a majority of the votes in either election. Take Ross Perot out of the equation in 1992 — and perhaps even in 1996 — and Clinton might well not have won. Clinton survived Monica because no Americans were killed in his Balkans War, and because Dick Morris taught him the arts of triangulation, while the Republican Congress forced spending cuts that led finally to two years of budget surpluses. He left office popular, despite Monica, with balanced budgets and an assurance that the era of big government was over.
It is really an excellent piece, so be sure to read the whole thing.
Via Protein Wisdom, where Jeff adds:
Guess that’s why VDH has a wide audience, and I get banned from commenting at certain ostensibly conservative sites.
Well, that, and he’s not just some dude scribbling on free blogging software…
Don’t worry, Jeff. For both our sakes, blogging remains an important part of the punditocracy.
May
7
Thanks For Clarifying That
Filed Under Economics | Leave a Comment
The official website of the POTUS, whitehouse.gov has a blog up that details all the wonderful things that The One is doing to make our lives better. With Obama’s recent initiative to eliminate off-shore tax havens generating some feedback, the Obamablog sought to address it with a little Q&A in this post, including the following clarification:
kylekunkler: Ending deferral (when US already has 2nd highest corporate tax) will only hurt US MNCs and cost jobs! http://tinyurl.com/coofnd
Jason Furman: Kyle, you are correct that the United States has the second highest statutory tax rate in the world, the official rate published in the tax code. But the United States also has more loopholes and special tax preferences than many other countries. As a result, the United States has a much lower effective tax rate. If you look at corporate taxes as a share of GDP they are below those of most major economies. The result is a tax code that is complicated, inefficient and unfair. One of major causes of these problems is the way that we tax – or more often do not tax – the foreign earnings of American companies. The administration’s plan is intended as a major, first step in addressing this problem.
Oh, I get it. Thank you for clearing that up, Mr. Furman! While the United States is supposed to have the second highest rate (statutory), all the loopholes that Obama will get rid of are keeping the actual rate paid (effective) down. But no need to worry, Obama’s brilliant plan will get rid of all those loopholes and tax havens to make sure your fears are perfectly legitimate, Kyle. Thanks for asking!
The article that the questioner cites is actually a very interesting one from Bloomberg, explaining one of the tactics that businesses use to avoid paying taxes:
Once the assets were in the haven, the U.S. parent company borrowed from the subsidiary. The interest payments were deductible in the U.S. and tax-free in the haven, the GAO said.
So the administration’s plan is to simply make this practice illegal or at least more difficult. But my main objections to that logic are:
- Companies will now have even more incentive to move their operations overseas altogether, as opposed to just a portion.
- Other countries may see this as a quasi-protectionist measure and attempt to restrict international trade.
- Just like the old laws, any attempt at government restriction will be easily manipulated by powerful and wealthy elites, like large corporations. The new laws will only hurt those not powerful enough to gain access. Such is the problem with big government.
Just because the government tries to restrict actors in the economy, like multinational corporations, from acting in their own self-interest does not mean that they will stop trying. As we can see, even with complicated laws in place, the companies still found a way around it. Whether it be regulations, taxes, fees, or counterproductive subsidies, government action will always force the private sector to allocate more resources to compliance and evasion (as the Bloomberg article illustrated) than to more worthwhile activities. And people wonder why productivity of American workers has declined over the years! Individuals are still working just as hard (if not harder), but at tasks like creative accounting and compliance that don’t produce anything like an assembly worker does.
P.S.: And that’s still not addressing the hypocrisy of an administration full of tax cheats shaming those who used legal channels to avoid paying taxes.
May
5
Jack Kemp 1935-2009
Filed Under Uncategorized | 1 Comment
“Pro football gave me a good perspective. When I entered the political arena, I had already been booed, cheered, cut, sold, traded, and hung in effigy.”
-Jack Kemp
On Saturday, former AFL-Champion Buffalo Bills QB, supply-side founding father, “compassionate conservative”, HUD Secretary, and GOP VP nominee (1996) Jack Kemp passed away at the age of 73. While he is gone, his message that free enterprise as liberator, equalizer, and force for good lives on. They sure don’t make ‘em like they used to. Well done, Jack. Go freedom, and go Bills!
May
1
The Problems With Health Care
Filed Under Healthcare | Leave a Comment
With the current economic recession possibly pushing more people into the ranks of the medically-uninsured, many Democrats will be looking to seize the opportunity to create an expanded government health care system. Whether this comes from mandates, expanding existing programs, a combination of the two, or the less-likely alternative of single-payer has yet to be seen.
Of course I oppose any measures that involve the government meddling with or providing health care. The purpose of government is to protect us from force and fraud. Providing health care does not fit under this umbrella. It’s that simple really.
At least to me.
Now there are some that believe that my point is wrong-headed because our fellow humans are entitled to health care. Of course I would love to see everyone’s medical needs taken care of. However, having the state force some people to pay for the needs of others is robbery. We need shoes, do we not? If you support hiring the state to force earners to pay for others’ health care, why not shoes?
In case my moral posturing hasn’t persuaded you against government run or subsidized health care, perhaps a consequentialist argument will suffice. The problem with access to health care is not so much in having enough money. Health-care, like education, has had a ton of money thrown at it over the years with little or no gains in return. In an excellent piece from Dan Boudreaux (who blogs at CafeHayek), we can see clearly how not allowing individual incentives to do their work, as they do in the free market, has led to a mess in healthcare. Dan begins by saying:
One of the cherished beliefs of many Americans today is that health care can be improved only through a collective effort. As a television talking head expressed it recently, “We all have to pull together to improve health care in this country.”
Nonsense.
Each of us has it within our power to improve our own health care.
To help explain the dynamics of the situation, Boudreaux offers up an analogy:
To see why, ask the following question posed by my George Mason University colleague Russell Roberts. If you go to dinner with a large group of strangers and you know that the bill will be split evenly, aren’t you more likely to order pricier dishes and drinks than you would order if you, and you alone, were responsible for picking up your full tab?
The answer is surely “yes.” Let’s say that you’d be content to order the pork chop priced at $15, but would get even greater enjoyment from ordering the rack of lamb priced at $25. If you alone were responsible for your tab, you’d order the lamb only if it is worth to you at least the extra $10 that it costs. So suppose that you value the lamb by only $8 more than you value the pork chop. In that case, you’d order the pork chop. You wouldn’t spend an extra $10 to get extra satisfaction worth only $8.
But if the bill is evenly shared among, say, 10 diners (yourself and nine others), then if you order the lamb, your share of the higher bill will be only $1. That’s $10 split evenly 10 ways. You’ll order the lamb.
You might think that this sharing arrangement is good. After all, in this example, the cost to you of getting something you valued more (the lamb rather than the pork chop) was reduced. It became sensible for you to order the lamb.
Look more deeply, though. What happened is that society (here, the 10 diners) was led to supply something that wasn’t worth its cost. The lamb was worth to you only an additional $8, but to make it available to you, society spent $10. Ten dollars were used to raise the welfare of society by only $8. (You’re a member of society, so any improvement in your welfare counts as an improvement in the welfare of society.) That’s a waste of $2.
You are better off, but the group is worse off.
Now look even more deeply. Everyone at the table faces the same incentives that you face. You’re not the only person who will order excessively costly dishes and drinks. Everyone will. The entire table over-consumes. The total bill is higher — even your share is higher — than it would have been had the bill not been split evenly. Resources are wasted.
Such sharing of our medical-care bill takes place now on a massive scale. It is impossible to see how expanding this sharing will reduce the bill.
Make sure to read the whole thing. I realize I quoted more than half of it, but the point made is important. I illustrated the point back in March here.
Megan McArlde warns against expecting any kind of Utopian solution to health care, while also noting the similarities between healthcare and education:
What you will see–what you do see, among specialists who are monitored for their success rates on procedures–is what liberals complain about with insurance companies: physicians will compete to get rid of their sicker patients. Pay for office visits, and you will get a lot of unnecessary office visits. As David Cutler once told me, it’s no coincidence that health care and education are the two fields where outcomes are hardest to monitor, and where costs are growing uncontrollably.
I’ve tried my best to make the point that socialized health care is not only wrong, but ineffective. But what about the unintended consequences? I’ve warned many times on this blog that once you allow the government into bed, it’ll start taking all the covers. There are strings attached:
Access to healthcare is one of many very important issues to which the left in this country have a never-ending list of government solutions. However, we as citizens need to be aware of the strings attached when we accept such bribes. Whether it is universal healthcare, or light rail from stimulus funds, there is no such thing as a free lunch.
Maybe New Zealanders should join gay Mexicans in voting Republican. The following from Cato @ Liberty illustrates an important point:
One of the factors considered by New Zealand in ruling on applications from would-be immigrants is health. If you are fat — and thus at risk for various health conditions — forget it!
The 51-year-old, who has not been named, argued that her 52 inch waistline was no obstacle to her work as a nurse, which involved 60-hour weeks.
She was offered a job in a home and hospital for the elderly in a provincial town in New Zealand, documents from the country’s Residence Review Board said, and applied for residence in March 2008. But officials rejected the argument that 10 years’ experience as a nurse meant she should be allowed to live there — even though there is a shortage of qualified nurses.
The woman decided to move to New Zealand after a holiday in 2007 and wanted to set up home there with her husband, a crane driver, and her daughter who planned to work in a shop.
But medical advisors calculated that with a weight of 21 stone and height of 5ft 1in, her body mass index (BMI) was 55.2, putting her at a high risk of developing health problems.
This isn’t the first time New Zealand has turned down an applicant for health reasons. Adds the Telegraph:
In 2007, a British man who moved to New Zealand was told his wife was too overweight to join him.
Socialism, in all of its forms and degrees, not only is wrong from the perspective of rights, but it is ineffective and only serves to grossly expand the powers of the state.
