January 2012

America: Where “High-Speed Rail” is Not High-Speed Rail

by Marc Scribner on November 11, 2010

in Economy, Mobility

Yesterday, Transportation Secretary Ray LaHood addressed a crowd of Midwest rail fans, saying, “Twenty-five years from now, because of the president’s vision, we will be connected by high-speed rail.” Despite delusional LaHood’s predictions, it is appearing increasingly likely that this will not be the case. And this isn’t just because incoming governors such as Wisconsin’s Scott Walker and Ohio’s John Kasich have promised to kill high-speed rail projects in their states. Nor is it because these projects are budget busters and will largely benefit a tiny, wealthy, vocal minority. No, it is because most of what LaHood and his backing coalition of enviro-extremists and rent-seeking businesses propose is not even high-speed rail.

In the Lexington Herald-Leader, CEI Vice President Iain Murray and I have an article debunking the patently false claims made by LaHood and his equally delusional backers. Here’s an excerpt:

In Western Europe, for instance, high-speed rail lines must reach a minimum of 125 miles per hour on upgraded track and 160 miles per hour for new track. China currently has trains that can reach speeds in excess of 260 miles per hour for limited stretches.

In contrast, only three of the United States’ eight new high-speed rail corridors that received funding will feature trains capable of reaching speeds in excess of 110 miles per hour. Embarrassingly, passenger trains in the 1940s regularly met or exceeded these speeds. Only California’s proposed high-speed rail corridor would resemble anything close to a “modern” European or Asian passenger rail line.

Conservative critics of the administration have accused it of trying to turn America into a Western European-style social democracy. A more apt comparison in this case would be the former Soviet bloc, where the “high-speed” bar was set even lower, at 100 miles per hour.

Yet even that is probably too fast for some of America’s proposed lines. For instance, trains traveling on the Charlotte-Raleigh leg of the planned Charlotte-Raleigh-Richmond-Washington “high-speed” corridor would top out at 90 miles per hour. Currently, the federal speed limit for trains traveling on Class 5 track is 80 miles per hour for freight and 90 for passenger rail — hardly the revolution in mobility the administration claims these projects represent.

Whole article here.

Product Bans Are More Dangerous than Four Loko

by Michelle Minton on November 11, 2010 · 7 comments

in Health and Illness, Nanny State, Personal Liberty, Precaution & Risk

How many people follow up a heavy night of drinking with some coffee? How many restaurants serve coffee and desert right after dinners where diners could have been pounding down the vino? How many folks put a little booze in their morning “cup of joe?” How many beer enthusiasts can’t get enough of those coffee stouts or a chocolate porters? All of these things mix alcohol and caffeine, yet we don’t hear lawmakers calling for these items and practices to be banned by the FDA. What we hear are calls from lawmakers across the country hysterically calling for the ban of alcoholic energy drinks like Four Loko.

Michigan was the first state to outright ban alcoholic energy drink Four Loko. They were followed by Washington on Wednesday when the state’s Liquor Control Board banned all similarly caffeinated malt liquor drinks. A bill to ban the drinks is pending in New Jersey, and a calls for a ban are coming from New York and Oregon as well. The Pennsylvania Liquor Control Commission recently asked its licensed sellers to voluntarily stop selling and promoting alcoholic energy drinks. At a city council meeting in Chicago, this week council members proposed a citywide ban of premixed alcoholic caffeinated drinks. This follows the hospitalization of several college students around the nation who reportedly drank the beverage Four Loko and became ill. A few died.

While these incidents are sad, it is no justification for governments to ban the product that most consumers have enjoyed without incident. There is zero scientific evidence that mixing caffeine and alcohol has deleterious effects and in fact there are many decades of evidence to the contrary. It is cheap and easy to drink (for most), which is one reason it is popular among young adults. Young adults are notorious for drinking to access and thus you have Four Loko in the hands of many students going overboard. Politicians are all too happy to use the demonization of a product as a quick and easy way to improve their approval ratings, but banning a product “for our own good” based purely on hysteria is a dangerous precedent to set.

Like it or hate it Four Loko ought to be defended right alongside the individual’s right to choose what he or she drinks and how much. If we let the government ban a product because it could potentially be abused, that opens the way for a limitless number of product bans “for our own good.” Personally, I think my interest is served best when I determine what’s good for me rather than self-righteous busybodies and power-hunger bureaucrats.

CEI saw this wave of misguided, manufactured outrage coming. Earlier this year, we published a study on alcohol energy drinks (AEDs) by Baylen Linnekin, “Extreme Refreshment Crackdown,” on FDA’s continued harassment of AED manufacturers and the lack of evidence supporting their alarmist claims.

Honeycomb House: A Fresh Foreclosure Horror

by Kathryn Ciano on November 11, 2010

in Economy, Legal, Regulation

Problems with empty, foreclosed, or otherwise house-poor homes no longer stop at suburban sprawl; now mosquito and wildcat infestations threaten to lower real estate values for your penny on the block. When folks who gambled past their means to stretch a mortgage to its limit can’t afford to maintain their houses, the infrastructure starts to crumble.

Check out this video of a bee-infested house where the walls are now completely filled with honeycomb.

Here’s honey dripping down from the hole in the wall for the electrical socket:

(Photo from KSBW, via BLDGBLOG)

If you’re thinking an apiary home might come with sweet side benefits, consider the tree house of horror that would be  a West Nile Virus-filled mosquito breeding ground of a swimming pool. Or an abandoned house filled with bobcats.

That’s exactly what happened in the last mortgage crisis of 2008. Southern California suffered a series of abandoned swimming pools becoming homes to thousands of mosquitoes and their disease-breeding larvae:

[N]eglected pools are breeding grounds for mosquitoes, which can carry diseases like West Nile virus. This at a time when the economic downturn has left local governments with less money to fight this potentially deadly foe, and legal obstacles posed by foreclosures and bank failures can slow what efforts are being made.

“We’re seeing a sharp spike in abandoned pools and the mosquito problems that are attendant to it. I haven’t seen it to any extent approaching this [previously],” said Joseph Conlon, technical adviser for the American Mosquito Control Association in Jacksonville. “In the past, we’ve had people abandon their home or go on vacation. It was just a case of bad neighbors. In this case, it’s driven economically.”

Or imagine calling animal patrol to report a “baby mountain lion” living in the house next door, only to discover that a family of bobcats has taken over the abandoned house.

Banks are doing the best they can to keep up with the problem. But banks are not real estate brokers; they cannot hold hundreds upon thousands of foreclosed, abandoned homes.

Allowing people to live in these homes doesn’t do them any favors, as they squat and wait out the bank (or the next market dip) without caring for their homes. But perhaps there’s some value to warm bodies keeping mirrors fogged around the house, rather than letting the state of nature creep back in.

Agree or disagree with lending practices, do watch the video clip; it’s fascinating to see the wild side creep back in around the cracks of civilization, and man battling beast like we’re in some kind of  Garcia Marquez novel!

Morning Media Summary

by Lee Doren on November 11, 2010

in Economy, Energy, Environment, International, Legal, Personal Liberty, Regulation

Tech:

Brumby promises every doctor in public hospitals an iPad:
“Victorian Premier, John Brumby, yesterday promised every doctor in the state’s public hospital system would be issued with an Apple iPad if his incumbent Labor Government was returned to power in the state’s upcoming election.”

Global Warming / Environment / Energy:

Walk Score Ranks The Most Walkable Cities In The U.S (Photos):
“It wasn’t just the botched technical decisions. BP and other companies’ management, communication and overconfidence in dealing with risk led to the Gulf of Mexico oil spill, investigators for the presidential commission said Tuesday.”

Gov. Christie says he’s skeptical that global warming is caused by humans:
“Gov. Chris Christie says he’s skeptical that humans are responsible for global warming.”

Insurance / Gambling:

Mobil gaming industry looks like safe bet:
“The market has been slow to develop, mainly due to the uncertainty about future regulation of remote gambling and online gambling. Some gaming companies, however, have begun offering mobile platforms in anticipation of growth in the segment.”

Health / Safety:

Bad news Jesse Jackson: Repealing ObamaCare would mean “creeping genocide”:
“I’m tempted to ask how this imbecile defines “genocide” based on the examples he gives in the clip, but frankly, I’d rather not know. Just remember this: Once, long ago, he used that word to describe abortion before conveniently turning pro-choice in time for his 1988 Democratic presidential campaign. That’s how seriously he takes this concept.”

Great news: FDA ready to require photos of corpses on cigarette packs:
“Don’t blame them. It was your elected representatives, in bipartisan fashion, who passed an anti-smoking statute last year requiring the FDA to impose more “graphic” health warnings on cigarette packaging. Evidently putting “you’ll get cancer” on the side of the carton is no longer deemed a sufficient deterrent to lighting one up, so now we’re actually going to thrust photos of putrefying flesh into smokers’ faces in hopes of steering them away. Coming soon, presumably: Mandating special flavor additives to ciggies so that you actually throw up while smoking.”

Economics:

Violence at Tory HQ overshadows student fees protest:
“Demonstrators stormed a building in Westminster housing the Conservative Party headquarters, smashed windows and got on to the roof.”

Deficit Panel’s Leaders Push Cuts:
“The leaders of a White House commission laid out a sweeping proposal to cut the federal budget deficit by hundreds of billions a year by targeting sacrosanct areas of U.S. tax and spending policy, such as Social Security benefits, middle-class tax breaks and defense spending.”

Rand Paul looking to make D.C. splash with Senate Tea Party Caucus:
“Kentucky Republican Senator-elect Rand Paul is already making waves in Washington, D.C. with plans to organize either a Senate or bicameral Tea Party Caucus.”

Panel Seeks Social Security Cuts and Tax Increases:
“The chairmen of President Obama’s bipartisan commission on reducing the national debt outlined a politically provocative and economically ambitious package of spending cuts and tax increases on Wednesday, igniting a debate that is likely to grip the country for years.”

Legal:

Justice, Denied:
“Under attorney general Eric Holder, the Obama Department of Justice (DOJ) is dangerously politicized, radically leftist, racialist, lawless, and at times corrupt. The good news is that it’s also often incompetent. This means the Holderites can bungle their leftist lawlessness so badly that even the most reticent of judges are obliged to smack them down.”

Terror chief tries to board plane with banned liquids:
“Britain’s anti-terror chief launched an astonishing attack on airport security staff after they stopped her taking a banned amount of liquid onto a plane.”

Tobacco settlement – a pinnacle of corporate government collusion – faces challenge in Supreme Court :
“The free-market Competitive Enterprise Institute (where I once served as a journalism fellow) filed a suit, arguing that the pact was unconstitutional. CEI has now filed a brief with the Supreme Court, asking the body to hear the group’s complaint.”

Tobacco Settlement Could Go to the Supreme Court:
“Now, thanks to the efforts of a pro-free market organization called the Competitive Enterprise Institute, the agreement may be headed to the United States Supreme Court because, the groups argues, it violates the Compact Clause of the U.S. Constitution.”
Labor:

BA Cabin Crew Ballot Called Off, Union Says:
“A vote on strike action now looks likely after members of the union refused to back a new deal put forward by the airline.”

California’s Largest State Worker Union Seals Deal With Schwarzenegger:
“On Tuesday, Service Employees International Union Local 1000 announced that its members had ratified a labor agreement expected to reduce state spending by about $400 million this year, the Sacramento Bee reports.”

Transportation/ Land Use:

Madison Mayor Not Giving Up On High-Speed Rail:
“The federal stimulus bill allocated $810 million for a Madison-to-Milwaukee line. But Walker wants to use the money for other purposes or give it back.”

Towards a Goal of Smaller Government

by Kathryn Ciano on November 11, 2010

in Deregulate to Stimulate, Economy, Odds & Ends

After Republicans swept the House in last Tuesday’s elections, President Obama took “full responsibility” for Democrats’ losses, saying: I’ve got to do a better job.

While it’s true that the President and all politicians need to do a better job, I argue at The Washington Examiner that government is not about mobilizing up against two walls, but rather about staying true to some set of tenets.

One of the themes this election was a big step towards smaller government:

What politicians should have learned from the midterms is: This is not about you! This is about us!

Government is a collective tool that helps insure against the worst case scenario. Through government citizens fund minimal public goods like national defense, inasmuch as it’s necessary to keep interference out of people’s private lives.

By making governance about them – what they can pass, what they can do, how much of our lives they, the politicians, can touch – they forget that in this country it is government’s powers that are enumerated and citizens’ rights that are only marginally curtailed.

In the Nov. 2010 midterms Tea Partiers won big. The Tea Party is not a true political party, but rather a contract to keep politicians in line. At least five of the Tea Party’s eight tenets explicitly contradict what Obama has accomplished in his first two years in office.

Take note, political types. The times are changing, and your constituents are tired of your old pork-stuffing ways!

Joe Biden’s Weak Case for Government Meddling

by Ryan Young on November 10, 2010

in Economy

Joe Biden believes that government played a large role in the success of railroads in the 19th century. In this video, Don Boudreaux points out that that isn’t actually true. There were four transcontinental railroads. Three of them received subsidies. The fourth was the Great Northern Railway, founded by Canadian immigrant James J. Hill. He alone rejected any special government favors.

All three subsidized railroads went into receivership. Hill’s Great Northern Railway remained solvent, and is still in business today as BNSF Railway.

The Washington Version of Spending Cuts

by Ryan Young on November 10, 2010

in Economy

Here’s a letter I sent to Politico:

Editor, Politico:

The title of your November 10 article, “Panel leaders propose Social Security cuts,” is inaccurate. A cut is when spending goes down. Social Security spending will go up if Erskine Bowles and Alan Simpson’s recommendations are enacted. They would increase spending at a slower rate than under current policy. But it would still increase.

An increase is not a cut. Not even in Washington.

Ryan Young
Fellow in Regulatory Studies
Competitive Enterprise Institute

Afternoon Links: November 10, 2010

by Nicole Ciandella on November 10, 2010

in Zeitgeist

1. A virtual Japanese pop-star performs “live” in front of crowds in the form of a 3D hologram.

2. Jill Priluck on why “the U.S. needs a new visa for foreigners who want to start businesses here.”

3. The latest in shocking discoveries: “Women who want to calm down their husbands after a stressful day at the office should serve him a big steak, scientists said today.”

4. A notorious Russian prison is installing sun beds for inmates.

5. Republicans like The Amazing Race; Democrats prefer Mad Men.

[Photo Credit: 39 Thanksgiving Day's Giving Day Project DIVA presents Hatsune Miku via SeyrenLK]

Confessions of a Gasoline Call Girl

by Brian McGraw on November 10, 2010 · 3 comments

in Energy, Ethanol

Marc J. Rauch, Executive Vice President/Co-Publisher of The Auto Channel, posted a lengthy diatribe on the American Petroleum Institute’s recent lawsuit on the EPA’s approval of E15 blends in newer vehicles. Read it here, and note the title: “Gasoline Whores File Frivolous Lawsuit in Attempt to Derail American Energy Independence.” He is mad.

The lawsuit itself is not all that interesting. What is interesting, I think, is how willfully blind the author is to a number of realities that put the successes of the ethanol industry into perspective. He addresses a number of organizations that provided public comments on the EPA decision:

Grocery Manufacturers Association Vice President for Federal Affairs Scott Faber said: “We were disappointed in the Administration’s decision to allow more ethanol in gasoline before truly sustainable advanced biofuels are commercially available.

…

The Auto Channel’s response: Truly sustainable advanced biofuels? Humans have been making alcohol for thousands of years from nearly any plant they could find, what’s more sustainable than that. Advanced biofuels? That’s okay, too, once they’re ready, but why wait for cheaper fuel prices, oil independence and a cleaner environment when we have perfectly good truly sustainable biofuels right now – of which ethanol is only one alternative. By the way Mr. Faber, I challenge you to name what projected biofuels you’re referring to. I think you don’t know. I think you are reading/writing off a prepared script.

TAC is correct when he says that humans have been making biofuels for hundreds of years. Cellulosic ethanol was first developed in 1898. But the ability to create biofuels in a laboratory is different than being able to produce them in an economically and commercially viable manner. Despite 30 years of federal subsidies, corn ethanol has been unable to compete in a serious way with petroleum. The same is true (and even more true) of cellulosic ethanol. There just isn’t a whole lot of energy in plants, and it requires a lot of energy to extract them and make them usable. It’s possible that some technological breakthrough will change this, but it is by no means guaranteed. Congress can’t mandate a cure for cancer, yet when it comes to biofuels they seem to believe they can bend reality.

National Council of Chain Restaurants Vice President Scott Vinson said:“This challenge to the EPA’s decision is necessary to reduce the strain that ethanol production from corn has placed on U.S. agriculture. The EPA’s decision will lead to an ever higher proportion of the nation’s corn crop being diverted to fuel use, raising prices for participants in the food chain and consumers. Already supported by market-distorting mandates, tax credits and import tariffs, ethanol demand for corn has been singled out as the preferred use for U.S agricultural production long enough. Corn is an extremely important commodity used in feeding the world, and it’s about time we reverse the trend of burning more and more of it as fuel.”

TACH’s reply: Mr. Vinson, what script are you reading from? Why don’t you question the government subsidies and allotments that the oil/gasoline industry has been receiving for more than 100 years? Why don’t you question the billions of dollars of our money that is spent to protect enemy regimes and their oil? Oh, by the way, the world isn’t fed by eating corn; wheat is your huckleberry. Wake up and smell the grease, buddy.

Do the oil and gas industries receive subsidies? This is a “yes, but” moment. They receive certain tax breaks – an example is the oil depletion allowance that allow them to pay less tax (relative to other industries) based off of the way in which capital investment is deducted from the net amount of income they generate. This seems to infuriate the average American. But what few realize is that as a percentage of profits, the oil industry still pays significantly more tax than other industries in the United States. As the Tax Foundation explains:
In addition to income taxes, the table below shows that Exxon paid or remitted $20 billion in various sales taxes, excise taxes, severance taxes, and property taxes. This brings the total amount of taxes the company paid or remitted to $29.3 billion, nearly three times the net profits it earned for shareholders.

The oil industry certainly pays its “fair” share of taxes, where fair is defined as a much larger percentage of income than other industries.

National Turkey Federation President Joel Brandenberger said: “In trying so hard to rush out an E15 rule before Election Day, EPA completely disregarded the legitimate scientific concerns surrounding E15 and the potentially disastrous impact of diverting even more corn from food and feed to fuel. We believe the agency ignored the law as well, and we are confident the court will agree.”

TACH’s response: There are no legitimate scientific concerns regarding the use of ethanol. Ethanol is a proven engine fuel used around the world. It has been so used since the earliest automobiles in the mid 1800′s. Until lies such as the ones that you spout about ethanol were created by gasoline interests, ethanol was the preferred fuel of choice by people in the know. Contemporary studies and research continually prove that ethanol hasn’t suddenly become bad: It’s as good and safe as it always was.

Ah yes, it was those evil conniving gasoline interests of the 19th century that ruined ethanol’s chance at becoming the preferred fuel of the “people in the know.” I’m going to assume “people in the know” were people who liked walking everywhere. I’m sure the fact that petroleum was incredibly easy to produce in mass quantities compared to ethanol didn’t have anything to do with petroleum’s adoption. The bolded sentence above alone pretty much shows you how detached from reality Rauch is.

Snack Food Association President and CEO Jim McCarthy said: “In addition to failing to follow the spirit of the Clean Air Act, the EPA has made a decision that will adversely impact our food supply and ultimately cost American consumers greatly.”

TACH’s response: Hey, we love a candy bar and potato chips as much as the next person. But now some guy who represents an industry that might just be the biggest demon in the world is telling us about the environment and product costs! If there’s only 6 cents worth of corn in a $4.00 box of corn flakes, I shudder to think of how much we are getting ripped off on a $4.00 bag of tortilla chips.

But, the number one reason why the lawsuit and entire opposition to e15 is so off base: We don’t need corn to make ethanol, there are plenty of other agricultural products and by-products that can be used, and many of them do not require chemical fertilization or the use of “valuable” farm land. The whole issue of corn’s use for ethanol is irrelevant.

There really aren’t very many products available right now that are (1) scalable and (2) can compete with gasoline at its current prices. Corn ethanol is kind of close, but there are still problems with market penetration – automobile manufacturers aren’t going to produce E85 vehicles unless there is significant long term (non government mandated) demand for it, and with oil prices where they are now there isn’t significant demand for it.

Furthermore, imagine the amount of farmland required to produce 210 billion gallons of ethanol (about 17 times what was produced in 2009), which is the equivalent of the ~140 billion gallons of gasoline the U.S. uses each year. This would have significant negative effects on agricultural markets

You can wave all of these problems away if you don’t care about people taking you seriously, but to produce 210 billion gallons of ethanol from anything will require a lot of “valuable” farmland. Note also how he puts “valuable” in quotations as if the idea that farmland has value (and that value is taken away from it when it’s being put towards less productive use) is some sort of conspiracy concocted by gasoline-interest to keep ethanol down.

Finally, he ends with a good\evil list, where rent-seekers are all placed into the “hero” category and the “evil villain” category ranges from API to Hugo Chavez. He placed himself in the hero category — is Marc Rauch a serious person?

The evil villains:
American Petroleum Institute
National Petrochemical & Refiners Association
OPEC
All gasoline companies
EnergyTribune.com
FollowtheScience.com
Prism Public Affairs
Jerry Taylor and the CATO Institute
David Fridley
The aforementioned coalition members
Hugo Chavez
Mahmoud Ahmadinejad

The heroes
David Blume & Tom Harvey
Ted Chipner & Ohio Biosystems
American Coalition for Ethanol
Growth Energy
Ethanol Today Magazine
Renewable Fuel Association
Anne Korin & the Institute for the Analysis of Global Security
Dave & Steve Vander Griend & ICM, Inc.
POET
Tom Waterman and Ethanol Monitor Magazine
Edwin Black
My business partner Bob Gordon, me and everyone at The Auto Channel

Adam Smith on Lotteries

by Ryan Young on November 10, 2010

in Economy, Odds & Ends, Precaution & Risk

In many places, lotteries are the only legal form of gambling. And even then, only the government is allowed to run them. This may be because lottery profit margins are often 30 percent or more. Casinos average about 5 percent. Lotteries are the worst possible deal for gamblers.

Why do people still play lotteries, then? It’s because humans have an inherent cognitive bias to overestimate the odds of success, and underestimate the odds of failure. This is a useful cognitive defect, because it encourages risk-taking. It was evolutionarily useful back in our hunter-gatherer days. And it remains so today; there would be far less entrepreneurship if people saw odds more clearly. But there are drawbacks. Lotteries are among them.

I didn’t know there were state-run lotteries in 1776, but apparently there were, because Adam Smith explains what a bad deal they are in The Wealth of Nations:

The world neither ever saw, nor ever will see, a perfectly fair lottery; or one in which the whole gain compensated the whole loss; because the undertaker could make nothing by it. In the state lotteries the tickets are not really worth the price…

Many people think that buying more tickets improves one’s odds of winning. But Smith saw that this was not a wise strategy:

There is not, however, a more certain proposition in mathematics, than that the more tickets you adventure upon, the more likely you are to be a loser. Adventure upon all the tickets in the lottery, and you lose for certain; and the greater the number of your tickets the nearer you approach to this certainty.

(Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 124-25.)

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