Saturday, October 11, 2008
And the beat goes on
In today's LA Times, colleague Jim Moore argues that LA's Metrolink should die. It has killed enough people and the economic justification for its existence has never been made. But the Governor wants a "yes" vote on another high-speed rail boondoggle. Shikha Dalmia elaborates in today's WSJ ("California is Headed for a Real Fiscal Train Wreck").In today's WSJ, Peggy Noonan writes that both Presidential candidates are clueless on the market meltdown. Surprise!. Jonathan Macey writes that, "Letting markets work is messy and costly. Nevertheless, the only sensible way to deal with the current crisis is to force the companies who created the mess to bear at least some of the costs of their mistakes. Most of all, if the markets are to get back on track our regulators must an immediate stop of publicly demonizing the markets and work to restore confidence in the system."
Wednesday, October 08, 2008
Panic
There is all the talk of panic on Wall Street and panic on Main Street, but Lee Ohanian, writing in today's WSJ, reminds us of the problems caused by panic in Washington DC ("Good Policies Can Save the Economy ... Why we need lower tax rates and more skilled immigrants").Amity Shlaes (The Forgotten Man: A New History of the Great Depression) and Bob Higgs ("Regime Uncertainty ... Why the Great Depression Lasted So Long and Why Prosperity Resumed After the War") document how the hysterics in Washington turned a panic (of which we have had many) into the Great Depression.
This is a profound lesson for today's panic, but one which very few people (or candidates) even address.
Monday, October 06, 2008
Bad time for an election
Bob Higgs' summary (and critique) of journalists' and politicians' use of metaphors to describe the current economy is priceless. It's a shorthand; it communicates effortlessly; but it ain't deep. Higgs elaborates how it's lazy and obscures more than it illustrates. Both presidential candidates have savvy economists on their teams. But it's clear that they often ignore good economic advice. Who do they listen to last? A nearby politco? (Most of these people are lawyers.) Their own inner voice? Whoever sounds most like the inner voice? Do Obama-McCain naturally revert to Lou Dobbs-Bill O'Reilly populism? Tuesday's televised debate could be ugly if they each try to hog this road.
Sorry. Metaphors.
Sunday, October 05, 2008
All the wrong lessons
Today's NY Times includes "Pressured to Take More Risk, Fannie Reached Tipping Point ... Wall St.and Congress Fueled Fateful Choice." The longish article includes: "shortly after he became chief executive, Mr. Mudd traveled to the California offices of Angelo R. Mozilo, head of Countrywide Financial, then the nation's largest mortgage lender. Fannie had a longstanding and lucrative relationship with Countrywide, which sold more loans to Fannie than anyone else."The Times also includes "A Snarl of Regulation" along with a spaghetti diagram of who regulated what and whom. There is also "Goodbye To All That" which takes off from the sentiment of Steve Fraser, that "It's the beginning of the end of the era of infatuation with the free market."
We're going to hear a lot of this, in spite of evidence that we have anything but free markets in action. Extend the regulation and politicization that we have and extend that to trades that are currently unregulated? Why? Inept regulation and/or politicization will follow. More competition and fewer bailouts are out of vogue.
Market participants (even the specialists) in all fields are just people. They will do things right and they will make mistakes. Letting them reap rewards when right and letting them fail when wrong is the only known antidote. But that approach will surely recede as all of the wrong lessons are drawn on a daily basis.
Saturday, October 04, 2008
Whopper
Today's NY Times op-ed page includes most of the standard sneers at Sarah Palin's debate performance -- and personna. I did see the whole debate on TV and (surprise) both sides got away with stuff. That is apparently the way of modern American politics. But I thought that the true whopper of the evening was Joe Biden's story about Lebanon. In his patented style he informed the audience that when the U.S. and the French kicked Hezbollah out of Lebanon, he and Obama lobbied to put NATO forces into Lebanon to "fill the vacuum." Huh?
Neither moderator Ifill nor Palin nor the NY Times' writers (including Steven Pinker), nor any source that I had seen or heard, picked up on this one.
I now see that Michael Totten had the same reaction that I did ("Joe Biden's Alternate Universe").
But narratives are stubborn things. The wise and seasoned foreign policy "expert" vs. the unready hick from somewhere off the mental map is just too good and too comforting to let go -- even through 100 inches of NY Times op-ed column space.
Thursday, October 02, 2008
Two glimpses inside the sausage factory
In light of where I live and what I do, I have followed LA Times coverage of local boondoggles for many years. There has been some movement. For many years, bad projects were strenuously made to look good. In recent years, however, some problems (like huge costs) have been acknowledged. But as true boosters, the editors still find their way to an endorsement. Today's lead editorial ("Yes on state bonds") endorses Prop 1a, to fund a "High-speed rail line". Read it to appreciate the logic. There's something undeniably alluring about a bullet train -- the technology is so powerful, the speed so breathtaking, it makes quotidian trips seem exotic. Perhaps that's why proponents of Proposition 1a, which would authorize $9.95 billion in bonds for a high-speed rail line connecting Northern and Southern California, think it would be wildly successful. They predict the line could draw 117 million riders a year by 2030, compared with 3 million now taking the high-speed Amtrak train in the densely populated Boston-Washington corridor. And they say it will turn a billion-dollar profit by then even as it keeps ticket prices remarkably low.
The projections by the measure's opponents, led by the libertarian Reason Foundation in Los Angeles, are much less sanguine and more persuasive. If voters approve Proposition 1a, it seems close to a lead-pipe cinch that the California High-Speed Rail Authority will ask for many billions more in the coming decades, and the Legislature will have to scrape up many millions of dollars in operating subsidies.
And yet, we still think voters should give in to the measure's gleaming promise, because it's in their long-term interest. Weaning travelers from gas-powered, road-choking cars is critical to the state's health and competitiveness. A high-speed rail line would not only provide a cleaner and faster alternative to automobiles, it would encourage transit-friendly development.
The measure isn't as big a risk as it would be if the state were footing the entire bill. The "backbone" segment from Los Angeles to San Francisco is projected to cost $33 billion, with about 75% from federal and private sources. Until those funds are secured, the state won't issue most of its bonds. If the line never gets built, the state's losses will be well under $2 billion. That's not too much to wager on a visionary leap that would cement California's place as the nation's most forward-thinking state.
Speaking of pigs in pokes, Otto von Bismarck famously remarked that, "There are two things you don't want to see being made -- sausage and legislation." We now hear that the 3-page "bailout" bill has grown to a 450-page "package". Stuff happens from ingestion to egestion.
Tuesday, September 30, 2008
Shameless
Wilshire was once Los Angeles' main boulevard. Driving over its decrepit pavement these days is pure Third World. Try anything east of Beverly Hills, including its storied Miracle Mile. Deferred maintenance is the rule and it has long been policy to divert auto user fees to public transit. Not content with the waste and the damage done, there will now be a vote in California to invest billions on high-speed rail. The Baptists and bootleggers (see Bruce Yandle) for this one are greens and politicians. Demographia.com elaborates the gory details.
