January 2012

Driving the Bus all the Way to the Bank

by Ivan Osorio on February 10, 2010

in Economy, Employment, Labor

Investment bankers and lawyers, move aside. If you want a truly high-powered salary, try driving a bus. Last year, the Madison, Wisconsin’s highest paid city employee was…a bus driver. The Wisconsin State-Journal reports:

Madison’s highest paid city government employee last year wasn’t the mayor. It wasn’t the police chief. It wasn’t even the head of Metro Transit.

It was bus driver John E. Nelson.

Nelson earned $159,258 in 2009, including $109,892 in overtime and other pay.

He and his colleague, driver Greg Tatman, who earned $125,598, were among the city’s top 20 earners for 2009, city records show.

They’re among the seven bus drivers who made more than $100,000 last year thanks to a union contract that lets the most senior drivers who have the highest base salaries get first crack at overtime.

Unfortunately, this isn’t a freak occurrence, but an egregious example of a nationwide problem. During the 1990s boom years, many state and local governments spent the additional tax revenues from increased economic activity nearly as fast as they came in. As a result, many state and local governments face severe budget problems today.

As the State-Journal notes, Madison has taken some steps to curtail overtime, but such baby steps will be hardly enough for cities that hope to avoid the fate of Vallejo, California, which declared bankruptcy in 2008. The salary escalator contract provisions that led to outlandish salaries in Madison and Vallejo — far beyond anything comparable in the private sector — have been codified in government employee unions’ collective bargaining agreements across the country.

For more on public sector unions, see here and here.

The Economics of Charging for Airline Amenities

by Ryan Young on February 9, 2010 · 2 comments

in Mobility, Odds & Ends, Zeitgeist

As of May 1, American Airlines will charge $8 to customers who want to use a blanket and pillow. JetBlue and US Airways already charge for them. This is only the latest example of a nickel-and-diming trend that has been going on for at least a decade. Passengers can also expect to be nicked for checked baggage, food, and drinks.

It’s also terrible PR. An unscientific CNN.com poll shows that 96 percent of passengers are unwilling to pay. More than that probably also harbor some resentment against the offending airlines.

Given how much customers resent extra charges, it is a mystery to me why airlines have so many of them. Why don’t they just include those expenses in their ticket prices? People don’t mind paying once. But if they have to take out their wallet a second or a third time, they often get angry. This anger is completely avoidable. Just put those extra nickels and dimes in the initial ticket price.

There has to be a reason why airlines so readily incur their customers’ wrath. My theory is that airlines think the nickel-and-dime approach can lower total costs. If people stick to carry-ons to avoid a checked baggage fee, that saves the airline some money. If they set the fees right, they’ll save more in labor costs than the forego in baggage fees.

Maybe they’re thinking the same theory applies to pillows and blankets. They’re on every seat in every flight. But most people don’t even use them. I rarely do. Seems like a waste of resources, doesn’t it? By only giving blankets to people who want them enough to pay for them, the airline has to buy fewer sets of pillows and blankets. It also has to clean fewer of them. If they’ve calculated correctly, this will result in a net savings. That means lower fares. And hopefully, more business.

I have no idea if this theory is correct. But it does make some sense.

But the fact remains that people are transaction-averse. Southwest Airlines has had great success with its concsious business strategy of keeping its nickel-and-diming to a minimum. While I personally prefer the Southwest approach, there seems to be room for both business models in the market. Time will tell if one eventually proves superior in giving people what they want. Even if it involves much grumbling, cursing, and reaching for wallets.

The Department of Pre-Regulation

by Richard Morrison on February 9, 2010 · 2 comments

in Video, Zeitgeist

[youtube:http://www.youtube.com/watch?v=vUpJLyVUSTo 285 234]

Audi Super Bowl Ad: Working Both Sides of Street? (Updated Feb. 10, 2010)

by Marlo Lewis on February 9, 2010 · 2 comments

in Global Warming, Nanny State

(Revised Feb. 10, 2010. My conclusion was rushed, because I wanted to leave the office before the snowstorm suspended bus service from D.C.-area metro stops. Revisions below are in italics.)

If you missed it Sunday, the Audi Super Bowl ad is on Youtube, and it’s a hoot. The ad promotes the Audi A3 TDI clean diesel. The main selling point, surprisingly, is not that this car, which won a “Green Car of the Year” award, is good for the planet, but that if you drive it, you won’t be hassled, bullied, and jailed by the “green police.”

The ad tries to work both sides of the street. It attempts to appeal to those who believe SUVs are destroying the planet – and those who resent eco-elitists and busybodies telling them how to live.

The hilarious South Park episode, “Smug Alert” (Season 10), frames the issue with which the Audi ad execs seem to be wrestling.

In the episode, clouds of smug from ”Toyonda Pious” sales in South Park, George Clooney’s acceptance speech at the 78th Academy Awards, and San Francisco’s pretensions as a progressive city all coverge, creating a “perfect smug storm” that threatens to destroy everything in its path. The citizens of South Park scrap their hybrids just in time to avoid annihilation, although thousands of homes are destroyed. However, it is too late to save San Francisco, which “disappears up its own @!*hole.”

At the end of the episode, Kyle, echoing the famous NRA slogan (“Guns don’t kill people, people do”), argues that hybrids are a good thing, it’s only when hybrid owners become smug and act like they’re better than everybody else that the danger arises. However, like the liberals who don’t want a gun in the house, fearing they might use it, the people of South Park decide they are not ready to own hybrids without becoming  smug — “it’s simply asking too much.”

The Audi ad tells preening, greener-than-thou progressives ‘here is the car for you.’ At the same time, it lampoons the authoritarianism of green busybodies, allowing the rest of us to admire the car’s mpg rating without feeling we have to identify with Al Gore or the Sierra Club.

Or, at least, I think that’s the objective. Another way to put is the Audi folks want to have their cake and eat it. They want to be both green and independent of green.

My suspicion is it doesn’t work. Eco-activists are likely offended by the ad, whether because it mocks them or because it comes too near the mark of what life would be like in a society that heeds Al Gore’s injunction to make “rescue of the environment” the “central organizing principle for civilization.” On the other hand, people who resent officious bureaucrats may remember little about the ad except that Audi has something to do with “green police.”

Lastly, Audi is foolish if it expects to prosper under a green police state. The Audi A3 TDI gets above 40 mpg, but its fuel still comes from Big Oil. The Gorethodox won’t be satisfied until cars are all-electric, and the electricity comes from solar panels and wind turbines. Even if levened by tongue-in-cheek, greener-than-thou feeds the perception that global warming is a “planetary emergency” and government must restrict our liberties to save us from ourselves.

What do you think? Watch the Audi ad, and post a comment!

Ronald Coase — a recent video

by Fran Smith on February 9, 2010 · 1 comment

in Economy, Odds & Ends

ronald_coase21

Hadn’t seen this recent video of Ronald Coase from a University of Chicago School of Law conference last fall until it was posted by Peter Boettke.  Coase, now in his 100th year (his centennial birthday is in December), continues to be brilliant, modest and displays his sly sense of humor, as when he says he is puzzled by a speaker’s talk titled “Keynes and Coase” because he didn’t address any of Keynes’ main areas and he only met the man once when he shook his hand after being introduced by Keynes’ assistant.  There was a class system in England then, Coase said, and Keynes was an “old Etonian.” “He was one of them, not one of us.”

Regulation of the Day 113: Throwing Snowballs

by Ryan Young on February 9, 2010

in Regulation, Regulation of the Day

Two students at James Madison University in Virginia were charged with felonies for throwing snowballs at a snowplow and an unmarked police car. This is illegal in Harrisonburg, Virginia.

Talk about an over-reaction. Arrested and jailed. For throwing snowballs.

While being a jerk isn’t a crime, there is some safety risk when moving vehicles are involved. But this really seems like the kind of incident that is better settled with a talking-to instead of a jail cell.

Constructive criticism on my wind farms blog

by Michael Fumento on February 9, 2010

in Odds & Ends

Regarding yesterday’s blog post, “The objections to wind farms,” I received constructive criticism contained wholly in the subject line, which I repeat verbatim:

“The Objections to Wind Farms – you — a–r-e an idot.” [sic]

I stand duly chastened.

CA Judges Standing Firm on Condoms in Porn

by Michelle Minton on February 9, 2010

in Odds & Ends

Judges in California continue to surprise observers nationwide by repeatedly making rational decisions. At least, rational decisions about the adult film industry in the state. Over the last three months, Los Angeles County judges repeated denied petitions to force porn production companies to use condoms in all of their films.

As I wrote back in December not only is this mandate constitutionally questionable (hello, free speech issues), but it will not work and the end result will be the film industry continuing its exodus from CA to states with more loose regulations, such as Nevada.

The group pushing for the state-wide mandate is the AIDS Healthcare Foundation, which has a long standing history with the gay community. As I wrote in the LA Times, it is particularly surprising that the group pushing for regulation of sexual activities is an organization deeply familiar with the problems associated with government’s involvement in sexuality.

Let’s just hope that California judges continue to think with the heads and deny this mandate.

(Picture via boing boing)

Today is “Safer Internet Day”

by Wayne Crews on February 9, 2010

in Odds & Ends

No doubt you knew that already and had celebrations planned. If you're worried about your precious little nosepickers online, check out the Safer Internet Day website and the Family Online Safety Institute that's putting it together. It's an international group, and member companies include AT&T, Yahoo, Ning.

The "Think Before You Post" video gets the point across with a case of accidental icon "sexting":

Hey it happens to the best of us. Nice to see a private consortium taking the lead on an issue that regulators are wrestling to oversee. The EU has apparently contributed funding to the Safer Internet Day effort. Online child safety is a very important concern; I'd submit that politicians aren't the best guardians and overseers, and that with their funding may come sub-optimal regulations that some participants may regret. Privacy isn't a "thing" the political sector equipped to protect and a combination of technologies, evolving standards and endless parental involvement are required.

Sen. Shelby Lifts Holds

by Ryan Young on February 8, 2010 · 1 comment

in Politics as Usual, Zeitgeist

Sen. Richard Shelby, who placed holds on over 70 of President Obama’s nominees, has lifted all but three of them. Politico reports:

A spokesman for the senator said Monday that with attention brought to these two concerns, the political maneuver had “accomplished” its goal and was no longer necessary.

Translation: “We were getting too much bad publicity.”

The three holds that Sen. Shelby is keeping in place have directly to do with the Alabama-based pork projects that he believes will make him look good to the Alabama voters he will be facing in November. So, in a way, nothing has changed.

This brings up a legitimate question: can earmarking abuse sometimes be an agent for smaller government?

Few, if any, of President Obama’s appointees will work to decrease the size and scope of government. Now that their path is cleared, they will probably do net harm to taxpayers. This is the nature of government workers, whether Republican or Democratic.

Sen. Shelby’s motive for blocking them is despicable: stealing from taxpayers to improve his re-election prospects. But one wonders if those same taxpayers would have been better off if Sen. Shelby had stuck to his guns.

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