Saturday, July 17, 2004
The Courts and Class Warfare
Much is made of U.S.-Europe contrasts. One difference that matters is the importance of class warfare rhetoric and the politics of envy. These have had a much smaller role in U.S. politics. Many Americans are too busy aspiring to even vote. Among those who do vote, envy and redistribution are seldom majority issues. Not so in the U.S. courts (and probably law schools). Outsized liability claims and tort proceedings that seek transfers from "deep pockets" are class warfare in action.
Fred L. Smith, Jr., writing in the latest Forbes, calls attention to the fact that, "Activists want companies to list potential environmental liabilities on balance sheets. This is full disclosure gone berserk. ... I can envision, for instance, an oil company like Royal Dutch/Shell, as supplier of fuels that supposedly contribute to global warming, would have to report potential environmental liabilities ..."
Striking a blow for "the environment" and against "corporate America" has a better chance in our courts than at the ballot box. Reason #995 to think seriously about tort reform. Especially now, with a skilled tort lawyer on the November ballot .
Friday, July 16, 2004
Money Not Well Spent
Ken Orski's Innovation Briefs have been the best source of informed news and commentary on the state of federal transportation programs for many years Ken's latest reporting has been about the status of the six-year Surface Transportation reauthorization bill now in House-Senate conference. There is, of course, more politics than transportation involved. Competing versions of the bill, ranging from $256 billion to $375 billion have been considered at one time or another. This is big-time pork. WSJ editorials have cited as many as 3,000 earmarks for pet projects that involve special favors for individual Congress members. More earmarks than members.
There is little reason, of course, for a federal role in any of this -- other than to provide the politicians with a cash flow. It is not surprising that we keep spending more and getting less. Sound familiar?
Altshuler and Luberoff report that in the years 1980-2000, U.S. urban vehicle miles traveled grew by 95% while available urban highways increased by 37% .
It is not that taxpayers have been stingy. Comparing the two years, annual expenditures on highways (all levels of government) are up 77% in constant dollars.
Wendell Cox reports that in the 20-year time span, $565.2 billion of highway user fees have been collected by the feds but almost 15% went to transit. And how did transit do in those 20 years? Commuting by transit kept falling, down to 4.7% in 2000, from 6.4% in 1980. In fact, transit commuting even dropped in absolute numbers. Down to 6.07 million annual boardings in 2000, from 6.18 million annual boardings in 1980.
Transit advocates keep saying that they want a "balanced" transportation system. So do we all. But what we get is a highly politicized and pathetically wasteful system.
Thursday, July 15, 2004
Money
The most recent Independent Review includes two articles about macro-economic policy that can keep one awake all night. Imagine that. Mark Thornton, in "Who Predicted the Bubble? Who Predicted the Crash" looks for pre-2000 economic commentary and finds that it was mainly the Austrians, who worried about easy credit and boom-bust consequences who got it right. Thornton notes the irony that it is the Austrians who most aver the forecasting game.
"Did Greenspan Deserve Support for Another Term?" by Joseph T. Salerno argues that The Maestro has been wrong all along -- and disingenuous enough to successfully cover his tracks most of the time -- enough to keep getting re appointed.
Salerno's story is worse than any FRB nightmare that a Milton Friedman could ever have had. And Friedman famously wrote in a recent WSJ op-ed that the Fed was now finally getting it right.
Proof that Milton is not an Austrian. Not that he ever claimed to be one -- but one could hope.
Tuesday, July 13, 2004
Limits to Growth
Limits to growth thinking is usually a bad idea but popular in many circles. Population control was a natural for China 20 years ago because it takes a communist economy to give credence to the Malthusian view of the world. Economic and political failures can be disregarded if demographics are highlighted instead. "Too many mouths to feed," is a convenient way to change the subject.
The Chinese one-child rule is responsible for what James Q. Wilson, reviewing Bare Branches by Valerie M. Hudson and Andrea M. den Boer, reports as 41 million Chinese men without women. I have not read the book under review but I have read the account of the same problem in Paul Rubin's Darwinian Politics. Rubin warns of the threat of social calamities -- and increasingly authoritarian rule as a presumed reaction.
Chinese prosperity would, under other circumstances, produce political liberalization. The fly in the ointment is central planning's awful sex-imbalance legacy.
The social engineering impulse is usually a bad idea and usually has awful consequences. The two books cited seem to suggest that the worst is yet to come.
Monday, July 12, 2004
Games To Be Gamed
If there is a game to be gamed, it is very likely that some will come along to game it. So it was with California's (anything-but) deregulation and Enron traders -- and so it is with real estate development, especially in California.
Jerry Taylor recounts the California electricity story in Friday's WSJ: "California's restructured electricity market was, in fact, the furthest thing from a capitalist jungle imaginable. The government forced electric utilities to sell of their power plants and discouraged them from buying electricity outside of a complicated state-managed spot market. Furthermore, the electric utilities were forced to open their power lines to anyone who wanted to use them -- like Enron -- under tightly regulated terms and conditions. The day-to-day management of the grid was likewise taken from the utilities and given to state regulators. While wholesale electricity prices were deregulated, retail prices remained tightly controlled ... It shouldn't come as a surprise to learn that companies like Enron figured out how to game the system ..."
Right on schedule, this morning's news includes: "Kerry, Edwards Seek to Make Campaign Issue of Enron Case."
Also, this morning, the lead WSJ story reports: "For Many Low-Income Workers, High gasoline Prices Take a Toll ... Commuters on Tight Budgets Pay Big Chunk of Earnings Driving to Far-Flung Jobs." The accompanying story quotes Brookings' Bruce Katz, lamenting that, "We've always known that sprawl has a cost." The anti-sprawl mantra, of course, includes the implausible idea that more top-down "regional land use planning" would somehow improve things.
The same WSJ story notes that, "A proposal for a light-rail system that would serve the far-flung areas of the Tampa region has languished on the drawing board for several years." Having seen how this plan actually puts rail transit through cow pastures, I can only hope that the plan continues to languish. The article does quote the University of South Florida's Steve Polzin as noting that sprawl's job dispersion might also offer relief to many commuters.
The punchline comes in an op-ed in this morning's LA Times by Cal Poly Pomona's emeritus history professor Ralph E. Shaffer, "A Legal Rip-Off at the Heart of Glendale." Connecting a few dots, Prof Shaffer notes that, "Those Enron tape recordings in which energy traders giggled about gouging California's electricity ratepayers was the height of audacity, but what's about to happen in Glendale, and has already happened in other cities throughout California, runs a close second." Shaffer is concerned about developer Rick Caruso "muscling in on Glendale," and seeking a significant redevelopment subsidy from the City.
Having invited politics into land use decisions that are best left to the market (even insisting that we install even more of it via regional land use planning), the high-minded complain when the game they set up is actually being gamed.
Whenever politicians set up games, some will come along to game them -- and the demagogues will be shocked (shocked!).
