January 2012

Why D.C. Metro Escalators Are Always Broken: Incentives Matter

by Kathryn Ciano on December 7, 2010 · 2 comments

in Employment, Labor, Mobility

For Washingtonians wondering why Metro is always on the fritz, check out my piece over at The Examiner about how WMATA unions pay employees to shirk rather than to work.

From Unsuck DC’s Metro:

According to a source intimately familiar with Metro’s escalators, twice a year, Metro maintenance personnel bid on the escalators for which they’ll be responsible. Workers with the most seniority get the first choices.
This is called the “pick” system, and it was referred to as a “critical” problem, albeit in a somewhat sugar coated way, in the recent report on Metro’s escalator woes.

I wrote:

People respond to incentives. Employees perform in the way they are paid to perform. WMATA employees paid to fix escalators will fix escalators. WMATA employees paid to sit tight til it’s her colleague’s turn to fix the escalator will do exactly that.

All of this misincentivization is, of course, compounded by the fact that WMATA employees enjoy fat union benefits, making it difficult to encourage any performance at all. Because employees paid to kowtow to union bosses while keeping their respective individual heads down — well, they’re certainly not going to fix elevators.

Or brakes, for that matter.

Image credit: afagen’s flickr photostream.

Allure of the Seas: A Nation of “Why Not?”

by Kathryn Ciano on December 7, 2010

in Economy, International

The newest, largest cruise ship in the world set sail on its maiden voyage this week. Crewmembers tout the Allure’s motto: “A Nation of Why Not.”

Royal Caribbean’s Allure of the Seas weighs  225,000 gross tons, consumes 4.7 million pounds of fresh water per day, and flaunts 1.6 million square feet of enclosed, air-conditioned space. At 1,187 feet long, the Allure of the Seas is precisely five centimeters longer than its sister ship, launched in 2009, the paradoxically-named Oasis of the Seas.

Writes The New York Times:

Royal Caribbean’s newest cruise ship, the Allure of the Seas, is not just big. It is the biggest cruise ship in the world, and as such it crashes magnificently against the tide of the zeitgeist: There is very little sustainable, small-batch, or boutique about it.

Sounds like just the vessel for CEI’s next cruise!

On board its ships, Royal Caribbean employs a staff composed almost entirely of non-Americans. The company itself is a Norwegian/American line based in Miami, Florida.

Globalization here goes beyond Adam Smith’s pencil; this is an illustration of worldwide mega-capitalism creating both the largest cruise ship in the world and the thousands of jobs required to staff it.

From crews nominally-employed by the WPA to dig and then fill holes to a cruise born of capitalism for entertainment: Jobs come from capitalism, not the government. Consider this your daily illustration of a classic economic point.

Image credit: Martin Nikolaj’s flickr photostream.

Pro-Trade Country Songs — Oak Ridge Boys Beat Brad Paisley

by John Berlau on December 7, 2010 · 1 comment

in Culture, International, Trade, Zeitgeist

Over at Cato@Liberty, David Boaz points to a post by Chris Cardiff on RootedinProsperity.com praising a song and video of country superstar Brad Paisley. Cardiff praises Paisley’s hit song “Welcome to the Future” for promoting ”technology-driven product innovation” and linking it to the more ”profound theme of social change.”

With a couple caveats, which I will get to in a minute, I share this praise. And Paisley has had clever songs before.  CEI President Fred Smith and I are both fans of another of his hits, “Alcohol,” in which Paisley interestingly narrates from the perspective of the beverage: “Since the day I left Milwaukee / Lynchburg, Bordeaux, France / Been makin’ the bars with lots of big money / and helpin’ white people dance. … You had some of the best times you’ll never remember with me, Alcohol.”

When I heard ”Welcome To the Future,” I thought some of the lyrics were kind of awkward – particularly the line, “Wake up, Martin Luther.” Paisley says this clearly referring to slain civil rights leader Martin Luther King, Jr., but leaves out “King”  presumably because “Luther” sort of rhymes with “future.” But the song doesn’t seem to realize that Martin Luther was a different person. And it’s a little disrespectful to want to ”wake up” anyone from the dead.

But Cardiff is right that the video, which I had never seen before his post, really reinforces the song’s positive view of technology and commerce. It shows video conferencing and country music being sung in Japan and illustrates how trade has brought the world closer together.

Country music has always been a more politically conservative genre, and since Garth Brooks, it has largely abandoned the fatalism of most of the songs. (There was a joke about what happens when you play a country song backwards: you get your dog, your wife, and your truck back.) The “new country” has its good and bad points — a lot of the poetry has been lost and some of it just sounds like Top 40 with a twang — but hopefully we will see more of these types of songs that have a positive view of capitalism and the goods it brings us.

I still think the best country song promoting the virtues of free trade (really the only song that I know in any genre that promotes free trade so explicitly) is the Oak Ridge Boys’ “American Made” from the ’80s. They open with the line: “Seems everything I buy these days has a foreign name. From the kind of car I drive to my video game.”

But as the song progresses, it really becomes about how foreign goods enhance our lives without changing our national identity. The singer talks about how his sweetheart “looks good in her tight blue jeans” from Mexico and “loves wearing French perfume everywhere we go,” but “When it come to the lovin’ part, one thing is true, my baby’s genuine U.S.A., red, white, and blue.”

Here’s the audio. Someone should make a Paisley-like video to accompany this tune — featuring blue jeans, perfume, video games, and all the wonderful new foreign products since the ’80s.

And that is my discourse on country music and policy for the day. Comments are welcome.

Image credit: LakeviewEd’s flickr photostream.

Senator Grassley Supports Selective Tax Increases

by Brian McGraw on December 7, 2010 · 1 comment

in Energy, Ethanol

A press release from Senator Grassley (R-Iowa), “U.S. Sen Grassley: Tax revenue doesn’t grow on Christmas trees”:

The mid-term elections delivered a clear message. Americans want Washington to stop overspending and overtaxing the people of the United States.

As Iowa’s senior U.S. Senator, I’ve taken this grassroots message to the lame-duck session of Congress. Incredibly, some lawmakers seem to think that letting taxpayers keep more of their own money is like handing out “bonuses.”

Something tells me that Iowa families who are worried about less take-home pay in January don’t consider extending the current tax rates a bonus, a windfall or a handout.

Some lawmakers just don’t get it. Tax revenue comes from their constituents’ hard-earned money. It doesn’t grow on Christmas trees, no matter how fanciful the rhetoric gets about millionaires versus the unemployed. Call it a hunch. But I have a feeling the retired farmer and his family will have an even livelier discussion come New Year’s Eve if Washington doesn’t do the right thing and vote down the biggest dollar tax increase in U.S. history.

We agree that these taxes come from hard-earned money (refreshing to hear a politician say that!). Why is Grassley asking for our hard-earned tax dollars to be funneled into the ethanol industry? In a recent speech on the floor, Grassley stated:

On Tuesday this week, all of my Republican colleagues and I signed a letter to Majority Leader Reid stating that preventing a tax increase, meaning mostly income tax increases, and providing economic certainty, should be our top priority in the remaining days of this congress. I know that we all agree that we cannot and should not allow job-killing tax hikes during a recession. Unfortunately, those members who have called for ending the ethanol incentive have directly contradicted this pledge because a lapse in the credit will raise taxes, costing over 100,000 U.S. jobs at a time of near 10 percent unemployment. The taxpayer watchdog group, Americans for Tax Reform, considers the lapse of an existing tax credit for ethanol to be a tax hike.

Now is not the time to impose a gas tax hike on the American people. Now is not the time to send pink slips to more than 100,000 ethanol-related jobs.

As noted above, Grassley wants to keep taxes low for Americans. He should then encourage the expiration of the ethanol tax credit. The ethanol tax credit is paid for by American taxpayers in the form of a giant check taken from the general fund sent to oil blenders (though primarily benefiting the ethanol industry). Allowing its expiration would actually decrease the tax burden on Americans. It would only decrease the profitability of the small but very profitable ethanol industry, which is still guaranteed business via federal mandates. One would think that Grassley would comprehend this. Perhaps, similar to Al Gore’s recent admission, Grassley has a certain fondness for Iowa farmers — at the expense of the rest of the country.

Image credit: poetpic’s flickr photostream.

Morning Media Summary

by Lee Doren on December 7, 2010

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

Tech:

Sharpton: FCC should threaten radio stations carrying Rush [Video]:
“If the left can’t get Rush by reviving the Fairness Doctrine, maybe the race card will work . . .”

Australia’s Outback could get web via TV antenna:
“Researchers in Australia from the government science agency CSIRO have developed new technology that could achieve connection speeds to compete with the best: through the tangled piece of metal already attached to most roofs.”

Apple Lawyers Up for Patent Showdowns With Nokia:
“Steve Jobs made Apple Inc.’s iPhone one of the best-selling smartphones on the market with its touch screen, fast Web connection and access to more than 300,000 downloadable applications. Now he’s adding lawyers to the mix.”

Consumer Reports cell-service Ratings: AT&T is the worst carrier:
“AT&T is the lowest-scoring cell-phone carrier in the U.S., according to a satisfaction survey of 58,000 ConsumerReports.org readers. Of all the carriers rated, AT&T was the only one to drop significantly in overall satisfaction.”

SpaceX’s Dragon capsule, first privately owned spaceship, set to attempt launch into orbit:
“The future of the space travel will undergo a crucial test Tuesday when the first privately owned spaceship attempts a launch into orbit.”

Global Warming / Environment / Energy:

Rep. Upton urges President Obama to Open ANWR:
“Michigan Republican Rep. Fred Upton sent a letter Monday to President Obama urging him to allow drilling in the Arctic National Wildlife Refuge (ANWR). The letter comes on the 50th anniversary of ANWR’s establishment.”

Environmental groups call for U.S. to assist foreign nations in combating climate change:
“Two leading environmental groups are calling for increased government funding of international climate change initiatives.”

2004-2005: A New Vice-President:
“President Gore sat back and passed the time doing what second-term presidents do best: micromanaging their legacies.”

Insurance / Gambling:

France Online Gambling Market Expands With Addition Of Titan Poker:
“France has made big strides in its online gambling industry in 2010. This year, the French government opened its doors to online gambling regulation, something that previously had not been done in the country. Now, the government is moving all in.”

Health / Safety:

Aetna to Pay $500 Million for Health-Records Firm Medicity:
“Aetna Inc. agreed to acquire Medicity for about $500 million, boosting its presence in the electronic health-records sector.”

Economics:

Fed Forced to ‘quarantine’ 1b $100 bills after printing error makes them worthless:
“A printing problem with the new high-tech $100 bills has forced government printers to shut down production – and to quarantine more than one billion of the notes.”

Schwarzenegger to declare fiscal emergency:
“Gov. Arnold Schwarzenegger is scheduled to welcome the new Legislature on Monday by declaring a fiscal emergency and ordering it into a special session.”

TheDC Investigation: Universities encouraging students to receive welfare benefits:
“Many American colleges and universities are steering their students toward a new source of “financial aid”: food stamps.”

Net Job Effect of the Obama-Pelosi $814 Billion Stimulus: Zero:
“A new study by Daniel J. Wilson of the San Francisco Federal Reserve discovered that the net job effect of the $814 billion Obama-Pelosi Stimulus was zero jobs created or saved.”

Mark Levin: The tax deal is a bad deal:
“Levin has poured over the numbers and believes the GOP let themselves get stuck with nothing but the status quo and the Democrats got more taxes and tax credits. So basically it’s a bad deal all the way around:”

Legal:

Resolution to be introduced demanding all legislation cite Constitutional authorization:
“New Jersey Republican Rep. Scott Garrett plans to introduce a resolution in the House of Representatives Tuesday that would require all legislation to cite an enumerated power in the Constitution that grants authority for the bill’s mandate.”

Chicago police expand use of Tasers:
“A new report shows that Chicago police used Tasers to subdue nearly 700 offenders over 12 recent months, a dramatic increase that reflects the department’s decision earlier this year to expand its use of the weapons.”

Illinois sells $1.5 billion in tobacco bonds:
“The Governor’s Office of Management and Budget says Illinois has successfully sold $1.5 billion in tax-exempt tobacco revenue bonds — its first sale of such fiscal instruments.”

The Wikileaks sex files: How two one-night stands sparked a worldwide hunt for Julian Assange:
“But if extradition proceedings involving ¬Britain are successful, it could soon be rather more celebrated — by the U.S. government at least — as the place where Mr Assange made a ¬catastrophic error.”

Labor:

Hospital Workers to vote on deal:
“About 540 caregivers at Los Robles Hospital & Medical Center in Thousand Oaks will vote this week on a tentative agreement reached Saturday following a marathon negotiation session over the weekend.”

Transportation/ Land Use:

City Considers Eminent Domain to Save Job:
“When the Haskon Aerospace plant in Taunton, Mass. shut down in October 100 workers lost their jobs. Many had worked at the facility for decades, making seals and gaskets for aircraft.”

High-speed rail agency urged to rethink planning:
“California’s nascent high-speed rail program “needs a thorough reassessment” of how it is being planned and managed, a peer review group has concluded.”

Printing Money Troubles

by Ryan Young on December 7, 2010

in Economy

There is a lot of talk lately about the Fed’s quantitative easing policy, which is an indirect way of printing money, and also a huge mistake. It turns out the Fed can’t even print money the direct way without making mistakes. A new $100 bill that is harder to counterfeit has been rolling off the presses recently. 1.1 billion of them have been printed so far, at a cost of $120 million.

CNBC reports:

An official familiar with the situation told CNBC that 1.1 billion of the new bills have been printed, but they are unusable because of a creasing problem in which paper folds over during production, revealing a blank unlinked portion of the bill face.

A second person familiar with the situation said that at the height of the problem, as many as 30 percent of the bills rolling off the printing press included the flaw, leading to the production shut down.

The total face value of the unusable bills, $110 billion, represents more than ten percent of the entire supply of US currency on the planet, which a government source said is $930 billion in banknotes.

Coincidentally, these would be the first bills to feature Timothy Geithner’s signature.

Afternoon Links: December 6, 2010

by Nicole Ciandella on December 6, 2010

in Zeitgeist

1. How much does it cost to kill a terrorist?

2. A 52-year-old Canadian who moved to the U.S. when he was two is now being deported.

3. A Japanese ad shows girls using Google Images and a projector to “try on” clothes.

4. Michel Agger at Slate asks how we can use data to improve our lives.

5. A Florida man on trial for murder is getting a &125-a-day makeup job courtesy of the state to cover his Neo-Nazi tattoos. His lawyers successfully argued that the tattoos–which the man acquired in jail after his arrest–will prejudice the jury.

Fuzzy Math on Foreign Aid Shows Why Spending Cuts Are Difficult

by Ryan Young on December 6, 2010 · 1 comment

in Economy, International

According to a new poll, the average American thinks that 25 percent of the federal budget is spent on foreign aid (or, more accurately, government-to-government transfers). They would like it cut to about 10 percent.

The actual figure is under 1 percent.

As Aid Watch’s Laura Freschi points out, that means most Americans want to increase government-to-government transfers ten-fold from current levels while also cutting them in half.

That most people think like this is a major reason why cutting the federal government’s $3.5 trillion budget is so difficult. The issues that people get worked up about tend to be small potatoes, in budgetary terms.

Besides transfer payments to other governments, earmarks are another lightning-rod issue. But even if earmarks were abolished entirely, that’s only about 2 percent of the budget. It would put the smallest of dents in spending.

Entitlement spending is the single largest driver of current and future deficits. That’s where the battle is. Aid spending and earmarks are not threatening to bankrupt the country. Social Security and Medicare are. And those programs are extremely popular. No politician with an eye on 2012 would be willing to cut them.

The government has made promises it can’t possibly keep. But most people refuse to believe that. So they don’t. As a guarding mechanism, they instead make grand assumptions about how much things like transfer payments to other governments and earmarks cost.

Seattle Land-Use Regulation Liberalization Redux

by Marc Scribner on December 6, 2010 · 1 comment

in Mobility, Property Rights

Stephen Smith of Market Urbanism responds to my response to his question, asking if I thought Seattle’s proposed land-use liberalization bill was a positive development. I admitted that it was, but offered some major caveats with respect to Seattle’s land-use regime: namely, that the bill doesn’t address Seattle’s major land-use problems.

Smith is opposed to urban growth boundaries, such as the one in King County, Washington, yet doesn’t seem to believe they’re all that harmful — at least when compared to density restrictions. I respectfully disagree, but Smith claims I offer no evidence to support my claim that sprawl restrictions are harmful. I did, however, point to a Wendell Cox piece that highlights University of Washington economist Theo Eicher’s research on Seattle land-use regulations and home prices, which found that these distortions — particularly growth management plans — added $203,000 to the median price of a Seattle house. If Smith wants to argue that minimum parking requirements distort real estate markets more than onerous growth management schemes, he is welcome to do so. He just shouldn’t expect to find a lot of empirical support for such a claim.

But what really irks Smith is my so-called “war on drivers” rhetoric, where I argue that measures that seek to make driving more difficult, such as traffic calming and “transit-oriented development,” disproportionately harm the working poor. He speaks favorably of traffic calming as a means to protect pedestrians and cyclists. Of course, studies have found that due to increased congestion and slower EMS response times, traffic calming can kill far more people than it saves. One method of traffic calming — opening one-way streets to bidirectional traffic — is actually associated with more car-pedestrian collisions. And there’s the impact on goods delivery, where walking, cycling, and transit play a less-than-trivial role.

He then brings up the health impact of less driving. So, ignoring the fact that many families — particularly those with children — cannot reasonably substitute driving for transit, walking, or cycling, I’d be interested to know how transit, etc. significantly benefits health. There would appear to be two health impact scenarios to consider: (1) less driving improves air quality, which in turn benefits cardiovascular health, and (2) less driving equals more walking/cycling, which in turn reduces obesity and its myriad associated health problems. On the first one, it would seem that adjusting fuel economy standards (not that I’m endorsing CAFE) and reducing congestion would be more sensible means to achieve this goal than throwing automobility under the bus. On the second, there is next to no evidence supporting this contention. Obesity tends to be correlated with poverty, not urban walkability or “livability.”

To his final point, that I somehow implicitly endorsed the status quo financing mechanisms of local roads (which is primarily through general revenue funds), I can only say while I am strongly in favor of user fees for these thoroughfares just like I am for highways, I don’t see how redirecting public funds to bolster less efficient modes of transportation is a good thing.

Image credit: jhf’s flickr photostream.

Morning Media Summary

by Lee Doren on December 6, 2010

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

Tech:

Wave Goodbye to Internet Freedom:
“The Federal Communications Commission (FCC) is poised to add the Internet to its portfolio of regulated industries. The agency’s chairman, Julius Genachowski, announced Wednesday that he circulated draft rules he says will “preserve the freedom and openness of the Internet.” No statement could better reflect the gulf between the rhetoric and the reality of Obama administration policies.”

China Officials Ordered Google Hack After Finding Unflattering Search Results, Cables Show:
“Contacts told American diplomats that hacking attacks against Google were ordered by China’s top ruling body and a senior leader demanded action after finding search results that were critical of him, leaked U.S. government memos show.”

Global Warming / Environment / Energy:

Ted Turner upset that Obama didn’t do enough about Climate Change:
““We would have an energy climate change bill in the United States if President Obama had made that his top priority and brought that to the American people and Congress first rather than the health-care bill,” Turner, founder of Time Warner Inc.’s CNN, said today at a conference in Cancun, Mexico. “But he didn’t, and I think it was a big mistake.””

Al Gore’s climate group shrinking:
“One of Al Gore’s campaigns to save the planet has scaled back its field operations since climate legislation failed earlier this year in Congress. ”

What happened to the ‘warmest year on record’: The truth is global warming has halted:
“A year ago tomorrow, just before the opening of the UN Copenhagen world climate summit, the British Meteorological Office issued a confident prediction. The mean world temperature for 2010, it announced, ‘is expected to be 14.58C, the warmest on record’ – a deeply worrying 0.58C above the 19611990 average. ”

WikiLeaks cables reveal how US manipulated climate accord:
“Hidden behind the save-the-world rhetoric of the global climate change negotiations lies the mucky realpolitik: money and threats buy political support; spying and cyberwarfare are used to seek out leverage.”

Insurance / Gambling:

Social gambling up for debate again in SC:
“Some South Carolina legislators say they’ll try again to legalize games of poker between friends and church raffle tickets.”

Health / Safety:

Attorney general to sue over health care reform:
“Wisconsin’s attorney general is working on a legal challenge to the constitutionality of the federal health care reform law.”

Economics:

Do we need a “repeal amendment”?:
“A couple of months ago, Randy Barnett at Cato proposed a new amendment to the Constitution that would give the states the power to repeal acts of Congress. It’s certainly an intriguing notion, if for no other reason than to note the hysterical reaction to it. Dana Milbank, Dahlia Lithwick, and Jeff Sesol manage to ignore the fact that the same document has been amended a number of times (seventeen since its initial adoption, most recently in 1992) to accuse conservatives of hypocrisy in proposing another change. Glenn Reynolds disposed with this notion with brevity earlier in the week, noting that the amendment process is actually part of the Constitution, and a lot more legitimate than muttering about “living documents,” emanations, and penumbras. There is no need for such logic-defying rewriting of the document to absorb issues like abortion and campaign finance restrictions when (a) the document’s own brevity speaks clearly enough on the limit of federal powers, and (b) the amendment process is available to those who wish to change or add to the Constitution. All it will take is two-thirds of Congress and three-quarters of the states to pass and ratify it.”

Is Keynesianism dead?:
“Investors Business Daily titles its editorial today, “Keynesianism, RIP,” declaring the government-spending stimulus philosophy discredited in the wake of the 19th consecutive month of 9% or higher unemployment rates. IBD wants Barack Obama to put aside his “stubborn pride” (and his economic team) and start working with Republicans on policies that will truly stimulate the economy. But is the death certificate for Keynesianism premature?”

No end in sight to U.S. economic crisis as ‘scariest jobs chart ever’ shows post-recession unemployment is at its worst since WWII:
“As US unemployment jumped to 9.8 per cent, it is a chart to chill the bones of any job hunter.”

Venezuela’s Chavez blames capitalism for deluges:
“President Hugo Chavez blamed “criminal” capitalism on Sunday for global climate phenomena including incessant rains that have brought chaos to Venezuela, killing 32 people and leaving 70,000 homeless.”

Legal:

NY Sen. Seeks Bill to Deter Body Scan Image Misuse:
“A New York senator wants to make it illegal for anyone to distribute or record images produced by full-body scanners at airports.”

Your Tobacco Settlement Funds at Works:
“Who knew that thermal-pane windows and museum exhibits helped out tobacco farmers? Apparently they do, since they’ve been bankrolled by a fund that’s supposed to help rural, tobacco-dependent communities in south and southwest Virginia.”

Labor:

Proposed Rule Implements Annual Funding Notice Requirement for Pension Plans:
“The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) announced a proposed rule to implement the annual funding notice requirement under section 101(f) of the Employee Retirement Income Security Act (ERISA).”

Transportation/ Land Use:

Discussions on downtown high speed rail track begins:
“Mention the words “high speed rail” to some San Jose residents and business owners, and the image of an ugly aerial track comes to mind.”

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