Elite futures

Candidate Barak Obama is the one with the fancy resume and the devotion of "elites" here and abroad.

He now states that the effects of any new drilling for oil will not be felt for about 20 years. But just a couple of weeks ago, he and many other elites were all over "the speculators" for pushing up prices at the pump via their nefarious actions on oil futures markets.

Elites ought to be held to a higher standard.

But can they fix potholes?

Becker-Posner do their usually thorough job discussing the arguments for and against government involvement in fast food choices. They include discussions of possible external costs.

But, thorough as they are, their discussion does not quite touch the logic of the LA City Council. This morning's LA Times includes "Council bans new fast-food outlets ... Officials want to bring eateries with healthier fare to South L.A. ... Councilwoamn Jan Perry, who as pushed for a moratorium for six years, said the initiative would give the city time to craft measures to lure sit-down restaurants serving healthier food to a part of the city that desparately wants more of them."

No externalities here. When and where people "desparately want more" of something (and less of something else), that's a job for local government.

Dueling forecasts

Here is a climate change report from a respected source: "A 50% rise in global greenhouse gas emissions by 2050, higher temperatures, with more droughts and storms harming people, crops and buildings, more animal and plant species becoming extinct under expanding farmland and urban sprawl, dwindling natural resources; a billion more people living in water stressed areas by 2030, with more pollution, disease and premature deaths ahead. This 'worst-case' scenario set out by he OECD Environmental Outlook, should be enough to grab everyone's attention." How could it not?

The current Forbes includes "Sun Worshippers" and includes industry forecasts of total solar power costs per watt for 2015, suggesting that it will be drop by more than 50%.

Most of us are not in the forecasting business, but we still have to decide which of the two 50% scenarios to bet on. The latter is probably the safer bet. The joker, of course, is the prospect of ever more energy policy and the like.

You too can live like Al Gore

Google "democratization of luxury" and you get 4330 hits. This morning's LA Times mentions a new private aircraft that will sell for $139,000 ("Built for just plane fun ... Icon's A5 is meant to be flown more places by more people").

Today's WSJ has a section on cities, including an interview with Ed Glaeser. Responding to a question on higher gasoline prices, he says, "I would be very surprised to see a wholesale change in the nature of American urban development."

Heard this song before

Last Thursday, the LA Times ran an op-ed by LA Mayor Antonio Villaraigosa, "Why you want this tax hike" (italics in original) to pay for transportation projects, mostly transit, specifically mostly rail transit.

It's an old story, "it would pump $32.1 billion in construction funding alone into our economy and create more than 210,000 jobs." But we have heard this song before and what is left unsaid is the awful performance that similar measures have resulted in. Similar half-penny sales taxes were passed by LA county voters in 1980 and 1990.

Transit in LA hit a high-water mark in 1985 because the 1980 half-penny sales tax hike was used to drop bus fares and transit ridership in the county shot up, to 497-million annual boardings, from a low of 354-million in 1982. But bus fares were raised in 1985 to bank money for rail. Since then, we have kicked more people off the buses than new rail has served. In fact, transit use declined steadily, to 364-million annual boardings in 1996, climbing back since then to reach near-1985 levels (496-million boardings) in2007. When 2008 is over, we will have surpassed 1985.

But in 22 years, the county's population grew by 21 percent, mostly at the low-income immigrant end, transit's natural audience. Had we just stayed at 1985 transit use levels, we would have served 1.6 billion more transit users over the 26-year period. Had we been fortunate enough to have transit use grow at the same rate that the county's population, we would have served 3.3 billion more transit riders.

And had official ridership promises been realized ... had pigs ever mastered flying ...

Predictable failure

Socialism had a hold on the imagination of perhaps most thinking people a hundred years ago. Those days are gone and markets are now taken seriously -- even though as many as 100 U. of Chicago faculty think of Milton Friedman as just an ideologue.

Interestingly, cities are still the exception where faith in central planning/industrial policy is as strong as ever. This cannot work. Carl Close shows as much in his examination of San Francisco's Fillmore District.

Ready for prime time?

Interesting debate between the candidates' economists.

Semi-legalization in California

While much has been written about the drug culture, the gray area created by California's pot legalization has (to my knowledge) received little attention in the popular press. This week's New Yorker includes the excellent "Dr. Kush: How medical marijuana is transforming the pot industry."

Legalization is an appealing idea and when opponents dissatisfied with the "theory" ask for examples, there are few available. The Dr. Kush story is helpful. Some readers may not find the (depicted) characters that populate the transformed pot industry appealing, but that's not relevant. There are many subcultures that we may or may not have a passing acquaintance with, but we can seemingly all get along if and when there is decriminalization.

Besides the people described in the story are more sympathetic than the ones we see when we tune in Cops.

Who knew?

Sunday's LA Times includes "Uncle Sam's speciality loan program worth a look". The piece mentions that "Two little-known federal lending programs may hold the answer for cash-strapped home buyers. For financing which you don't have to put up cash of your own, even for closing costs, consider the U.S. Department of Agriculuture's Rural Development Program. Or if you're buying a fixer upper, the Federal Housing Administration has a loan form you. ... And don't let the term 'rural' fool you."

Many small cities with populations 10,000-25,000 are in metro areas and qualify. The piece points readers to this site to test their eligibility.

Fannie and Freddie may live or die. But there will always be ways for politicians to spread the moral hazard. And when chickens come home to roost, they will connect all the wrong dots and blame everyone but themselves.

Ratchet in California

Twenty years ago, Robert Higgs spelled out a government size-and-scope ratchet effect.

Today's LA Times and WSJ include discussions (here and here) of the latest realizations of the effect in California government. Both pieces are worth looking at. Markets may be positive sum, but policial economy is not. And when the chickens do come home to roost, new programs are proposed to solve old program-created problems.

Imagine

When Greg Mankiw, rather than John Lennon does it ("What if the Candidates Pandered to Economists?", in today's NY Times), he mentions these: support free trade, oppose farm subsidies, leave oil companies and speculators alone, tax the use of energy, raise the retirement age, invite more skilled immigrants, legalize drug policy, raise funds for economic research. Mankiw imagines that these are the ones that economists agree on.

But I can also imagine that most economists agree on the merits of openness and competition. Government monopolies should not be the rule or the law. Government provision, for example in education, communications, space exploration, mail delivery, infrastructure, (and many others) should never preempt private provision. Rather, it should compete with private options. If government can do it better, that can be discovered in the marketplace.

Ideas matter

In terms of stimulating ideas per page, few papers that I know come close to "The Economic Consequences of Legal Origins" by Rafael La Porta, Florencio Lopez-de-Salines and Andrei Schleifer, in the June, 2008, Journal of Economic Literature.

As the title suggests, legal origins matter a lot. Common law traditions beat civil law traditions when it comes to explaining institutions that beget prosperity. Teasing a result of such profundity from a complex historical record is a real achievement. What Hayek wrote about in 1960 (and Smith in 1776) can now be tested and corroborated with modern data and methods.

Economics and history enrich each other. And the the law-and-economics approach along with new data run through modern statistical rules of evidence make a compelling story.

More dense than smart

More on my June 18th blog. The Census Bureau's Demographic Trends in the 20th Century (page 33, Figure 1-15) shows that the share of Americans living in the suburbs grew in every decade. Central cities' share was 31.4% in 1970, 30% in 1980, 31.3% in 1990 and 30.3% in 2000. Over these years, the central cities were expanding by annexing and the census bureau was steadily enlarging the set of places called "central cities". One cannot look at this trend and spot the gas price hikes of the late 1970s and early 1980s (see page 374 of Blackman and Baumol in Henderson, 2008).

But as in the morning's WSJ ("With Gas Over $4, Cities Explore Whether It's Smart to Be Dense"), there is always a chorus predicting that this time people will move back to the central cities.

Public intellectual

Robert Reich is a public intellectual, interviewed in today's NY Times by Deborah Solomon. Among his responses is this: "... public transit has been the poor child of infrastructure spending in America."

This is beyond silly and easy to check. The quickest check is at Demographia, where Reich and others can find that in 2006 road and highway subsidies per passenger mile were $0.010 while transit subsidies per passenger-mile were $0.686. These are averages. At the margin, we build rail transit that gets much bigger subsidies.

Outsized and ineffectual transit subsidies have been in effect for over 40 years. Most politicians and reporters don't care and neither do many public intellectuals.

American red meats on the 4th

Not only is red wine consumption healthy, but it should be taken with red meat to mitigate some of meat's toxic effects. This from The Economist (July 5) "Of sommeliers and stomachs ... Red wine exercises benefits before it enters the bloodstream."



What little red meat I cosnsume these days is bison meat. It's as easy to get online as the beef.

Brad Hill points me to PERC research on bison ranching ("Bisonomics"). It seems that Ted Turner does it better than the native Americans ever did. European settlers replaced the bison herds that had long been roaming North America with cattle. In hindsight, that may have not been necessary. It seems that we have finally learned bison ranching. And bison steak is less toxic than the steaks and hamburgers we had grown up with.

And which red wines go best with bison burgers? Not surprisingly, Malbecs and a few others do very well.

Lucky or good?

I like to define wisdom as the acceptance of coincidence. We are disposed to make snap judgements rather than to follow the statistical rules of evidence. We have a problem with randomness in that it is not in our second nature. Indeed, Nassim Nicholas Taleb has written Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (which I blogged about some months back).

Going over much the same ground is Leonard Mlodinow in The Drunkard's Walk: How Randomness Rules Our Lives. I liked the latter much better. Towards the end, the author writes that nothing beats being lucky and good. Even better:

I wrote this book in the belief that we can reorganize
our thinking in the face of uncertainty. We can improve our skill at
decision making and tame some of the biases that lead us to make poor
judgments and poor choices. We can seek to understand people's
qualities or the qualities of a situation quite apart from the results they
attain, and we can learn to judge decisions by the spectrum of potential
outcomes they might have produced rather than by the particular result that actually occurred.