Transportation fantasyland in DC

I want to pass along this Wall Street Journal op-ed on some of crazy transportation goals starting to get traction in Congress. The main excerpt:

Messrs. Rockefeller and Lautenberg aim to "reduce per capita motor vehicle miles traveled on an annual basis." Mr. Oberstar wants to establish a federal "Office of Livability" to ensure that "States and metropolitan areas achieve progress towards national transportation-related greenhouse gas emissions reduction goals."

What does this mean? Most travel is not for its own sake. So reducing the total miles traveled -- whether the length or number of trips -- means people would have to reduce the activities they want and need to do. People would be "coerced," in effect, to live in less desirable places or work in less desirable jobs; shop in fewer and closer stores; see their doctor less frequently; visit fewer family members and friends.

There are three likely ways this could work. The cost of travel could be increased by raising the prices of vehicles or fuel; travel time could be increased by not expanding the highway system; or superior alternatives to the private car could be developed. The most likely way to increase the cost of travel would be by increasing fuel taxes perhaps to as much as $4 per gallon, as some have suggested.

Allowing congestion to increase travel times would be politically easier. In the name of "multimodal planning," for example, road-use taxes could be diverted, as Messrs. Rockefeller and Lautenberg suggest, to "increase the total usage of public transportation." But public transportation (where it's available) typically takes twice as long as automobile travel, so it's not practical for many Americans.

Moreover, public transportation (passenger rail services, subways, buses, light rail) requires heavy subsidies, while roads mostly pay for themselves through fuel taxes. Our roads would be even more self-sustaining if 20% of the federal fuel tax were not already diverted to public transit from the federal Highway Trust Fund. Messrs. Rockefeller, Lautenberg and Oberstar want to grab even more money from the trust fund.

Americans have always valued their independence and mobility. One way to reassert their rights would be to abolish the misnamed Highway Trust Fund, which finances highway construction and maintenance. Let the states decide what roads they need and how to finance them. The present system expires on Sept. 30 unless Congress reauthorizes it. Let it die.

Sen. Kay Bailey Hutchison (R., Texas) has in this regard introduced the "Highway Fairness and Reform Act of 2009," which would explicitly allow states to opt out of the federal financing system. A companion bill has been introduced in the House.

If a significant number of states opted out of the federal system, it would collapse and responsibility for roads would revert to the states. The vast majority of road users would benefit from such a change. And, if "livability" standards were deemed desirable, local preferences would determine them, rather than federal "greenhouse gas emissions reduction goals."

You go, Kay. As I've said before, the personal vehicle is now a permanent part of our culture, but the engine technology will evolve to meet climate or energy needs. Transit is not a realistic answer for the vast majority. But beyond that, the Feds really shouldn't be in the transportation game any more. They built the interstate system - now leave local transportation decisions and funding to the states. That includes high-speed rail, which can be done by consortiums of states if they really want it. But, as Reason recently pointed out, inter-city buses make far more sense:

As I've said many times before, I am a life-long rail fan who has ridden trains on four continents. As a transportation professional, however, it's incumbent on me to advocate meeting transportation needs in cost-effective ways. Before we spent tens of billions of taxpayer dollars on inter-city passenger rail, I think it behooves us to take a closer look at the potential of inter-city bus travel.


Besides considerably lower fares than Amtrak, much wider geographic coverage, and a much smaller carbon footprint, inter-city bus service has something else going for it: negligible cost to taxpayers. The Nathan study puts the federal subsidy per passenger mile (averaged over the 10 years from 1996 to 2005) at 0.1 cents. Amtrak's figure is 19.2 cents. Those numbers are consistent with federal subsidy figures in the 2005 U.S. DOT Bureau of Transportation Statistics report "Federal Subsidies to Passenger Transportation."

I rest my case.

He even mentioned some of the luxury bus services with wifi popping up around the country - especially in the northeast - that appeal to a different demographic from Greyhound. How come we can't get one of those for the Texas Triangle?

This post is cross posted at Houston Strategies


Fears of Stimulus Favoratism to Pro-Obama Counties is Overblown

A recent USA Today analysis of government disclosure and accounting records has revealed that counties that supported Obama last year have reaped more of the benefits of the stimulus package than those counties that supported Senator John McCain.

That federal aid, which amounts to around $17 billion, has been the first piece of the Obama administration’s stimulus package that can be tracked locally. The USA Today findings showed that Obama-counties received an average of $69 per person while McCain-counties received around $34.

While the disparity between the two looks bad on paper, it is not all that uncommon. As USA Today writes, “much of [the aid] has followed a well-worn path to places that regularly collect a bigger share of federal grants and contracts, guided by formulas that…leave little room for manipulation.”

The aid has gone to repairs for military bases, improvements in public housing and helping students to pay for college – all areas that eclipse political party lines. Additionally, about a third of the $17 billion allocated towards projects such as runway repaving and nuclear waste clean up has gone to counties that supported McCain.

It is far too soon to be drawing conclusions about a stimulus effort that favors Obama’s constituents. While we can keep an eye out for “political favoritism,” ensuring that the stimulus aid lands where it’s most needed (regardless of county) should be our first priority.

Here Come Wall Street’s Carbon Trading Wizards?

If you think that Wall Street’s vapor traders helped house the nation’s people then you are probably eagerly looking forward to how they will keep our environment clean. Under current “free-market” cap and trade proposals the same people who brought you the housing bubble and have contributed to wild swings in energy prices are eagerly anticipating their next vaporous bonanza. Senator Byron Dorgan of North Dakota, one of the few elected officials vigilant enough years ago to foresee the effects of financial deregulation, believes there is a better way. And his proposed solutions will reduce carbon emissions without leaving the future our environment in the hands of speculators – wizards though they may be. Let’s hope, as The Who was once proclaimed, we won’t get fooled again.

Bailout Success!!

“I guess the bailouts are working…for Goldman Sachs!” The Daily Show With Jon Stewart

Goldman Sachs reported $3.4 billion second quarter earnings. Mises Economics Blogger Peter Klein says these earnings are the result of political capitalism – earned in the “nebulous world of public-private interactions.” Klein points to an interesting perspective offered by The Streetwise Professor (Craig Pirrong at University of Houston): Moral Hazard. Goldman Sachs’ status as “too big to fail,” conferred on them by the United States Government, has allowed them to increase the money they put at risk of loss in one day’s trading by 33 percent since last May. Goldman received $10 billion in the TARP bailout on October 28, 2008; they returned the money on June 9, 2009. By April 2009, they had paid about $149 million in dividends on the Treasury’s investment – a negligible return. Goldman Sachs also will be receiving transaction fees for managing Treasury programs under contracts awarded to them during the Bailout and beyond. When Goldman Sachs changed its status to “bank” last year they also gained access to the FDIC safety net, which perversely provides incentives for banks to take risks by absorbing the consequences of losses.

To underscore the importance of cronies in capitalism, Goldman Sachs is on track to dole out bonuses equal to about $700,000 per employee – a 17 percent increase over 2006, when bonuses were sufficient to “immunize 40,000 impoverished children for a year … throw a birthday party for your daughter and one million of her closest friends … and still have enough left over to buy a different color Rolls Royce for each day of the week.”

Since employees of Goldman Sachs will one day be in charge of the U.S. Treasury, it only makes sense that the company has to keep them happy now – how else can they be assured of future access to capital? The House Oversight and Government Reform Committee seems to think that former Treasury Secretary Hank Paulson – himself a former Goldman Sachs bonus recipient – gave bailout money to his cronies after telling Congress the money was for Main Street homeowners.

If it isn’t clear by now that the United States Government is picking the winners and losers in this economy, the experience of CIT Group Inc. – a lender to small businesses that is being allowed to fail – should remove any doubts you may have had until now.

The United States Government passed an additional $12.1 billion to Goldman Sachs through the AIG bailout – money that won’t be returned unless AIG succeeds. To assure their success, AIG is preparing to pay millions of dollars more in bonuses to their executives this year under the premise that a contract is a contract and must be honored (unless it’s a UAW contract, of course.) JP Morgan Chase reported better than expected earnings; even Bank of America, still reeling from the Merrill Lynch merger and extensive mortgage losses in California, earned $3.2 billion in the second quarter of 2009. Citigroup reported $4.28 billion profit in the second quarter.

With government money and government protection coming at them from all sides, it’s a wonder all the big banks and big bank employees aren’t rolling in dollar bills by now.

No Bailout of Small Businesses

CIT Group Inc. acknowledged today that “policy makers” turned down their request for aid. It’s always sad when a company fails and goes into bankruptcy – people lose their jobs, all the vendor companies that sell them products suffer from the loss of business, etc. But what makes this one especially sad is that CIT, according to Bloomberg News, “specializes in loans to smaller firms, counting 1 million enterprises, including 300,000 retailers, among its customers.”

This news comes on the heels of an appearance by former Secretary of Treasury Hank Paulson before the House Committee on Oversight and Government Reform. Summing up after the hearing, Chairman Edolphus Towns (D-NY) admitted that Congress turned over complete authority to Paulson in the Bailout last fall (Troubled Assets Relief Program, TARP): “with no accountability, no checks and balances.” The result is “seemingly arbitrary decision-making.”

Representatives at the hearing repeatedly accused Paulson of deceiving Congress by telling them (and everyone else) that the bailout money would be used to help homeowners. In the end, it was as if the previous administration pillaged the U. S. Treasury on their way out of town.

In the third of a series of hearings designed around the Bank of America merger with Merrill Lynch, Paulson told the Committee that he had the authority to remove Ken Lewis as head of the bank if he didn’t go through with the merger.

Rep. Jim Jordan (R-OH) said there was “a pattern of deception.” He asked specifically, when did Paulson know that he was going to give the money to the banks – which he did on October 13 – after telling Congress on October 3 that he was going to use it to buy up bad mortgages? Paulson’s response was that he believed Congress knew they were giving him flexibility to do whatever he wanted – so he did.

The question now is this: did Paulson pick and choose among his friends to decide who got a bailout? Special Inspector General Neil Barofsky will report to the House Oversight Committee next week with the release of his quarterly report to Congress on the use of TARP funds. Recall that Barofsky’s office is the only one with the authority to initiate criminal prosecutions. Maybe Paulson is still on his list.

High life on New York's High Line

Last month, an old elevated train track on Manhattan's west side was re-opened to the public as a public park. The High Line was a 1.5-mile stretch of track constructed in the 1930s to carry freight trains. The last train ran on the platform in 1980 and the space has been the subject of battles ever since between park-minded preservationists and residents who wanted to tear down the steel monstrosity with no apparent function.

It is a great thing the preservationists won. The High Line is a magnificent and inspiring park, a one-of-a-kind public space with views of the Hudson River that shows a great respect for the industrial history of the surrounding uber-hip Meatpacking District. It manages to feel both modern and classic at once, with moveable wooden chez lounges that look like they could belong by the pool at a W Hotel sliding along the original tracks at places. Gardens are planted along the walkway and amidst the old tracks making it a perfect place to stroll, visit and view the west side of the city.

The first phase of the park runs from Gansevoort Street to 20th Street with the second phase slated to open next year extending all the way to 30th Street. The Promenade Plantee in Paris was the first elevated garden to be transformed into a public space but the bug is catching on and other projects are planned in St. Louis, Philadelphia, Jersey City and Chicago.

To get to the High Line, get off the subway at the 14th Street and 8th Avenue station and walk west towards the river. You will not be disappointed, even it rains like the day I visited.

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It's Not the Economy Stupid: Crime Still Dropping in L.A.

Unemployment may be at 11.4% in LA County, pundits may mock the dysfunctional state budget system, but crime is still dropping from already historic lows in the City of Los Angeles.

According to statistics released by the LAPD yesterday, homicides are down a third compared to the first half of last year with violent crime down 6% and assaults down 8%.

It seems to be received wisdom - I'll call it pop criminology - that a spike in criminal activity always accompanies an economic crisis and a drop in employment. The recent movie "Public Enemies" milks this association most explicitly, and it may have been more true in the Depression. Overall, however, this is not the case in the U.S. these days and the numbers for property crime in LA also show a decrease: auto thefts fell 17% and property crime 7% overall compared to Jan. 1-June 30, 2008.

Obviously, the relationship between crime and economic hardship is more complex and requires critical thinking about a host of sociological factors to attempt to explain the causality of crime. But these numbers, and similar findings in other cities, should debunk the common assertion that economic downturns correlate with criminal resurgence.

The forthcoming book, "When Brute Force Fails" by UCLA Professor Mark Kleiman is an important contribution to the subject which I look forward to reading. It should be read by pop criminologists and criminologists alike.

For those of you who have incredible interest in the subject, the LA Times Homicide Blog is an interesting resource. Increasingly, strapped papers like the L.A. Times (which recently discontinued its California section, merging it into the main section) are putting content like this on-line.

Unemployment Rising in Washington, DC

In the past month, Washington D.C. has experienced both an increase in number of jobs as well as an increase in unemployment, according to the Washington Post.

The city’s unemployment rate rose from 9.9 in April to 10.7 percent in May – far surpassing the national average of 9.4 percent – despite gaining about 1,400 jobs primarily with the federal government.

The District is often considered to be immune to such job market fluctuations because of steady government employment. But as Alice Rivlin, senior fellow at the Brookings Institution, points out, “[D.C.] has plenty of jobs, mostly high-skill jobs that require education beyond high school.”

The high-paid, higher-skill jobs created within the government are often times given to those not living in the city – Virginia’s unemployment rate: 7.1 percent, Maryland’s: 7.2 percent.

Job loss has also disproportionately affected the city’s African American population. The predominately white and affluent Ward 3 had an unemployment rate of 2.5 percent in April, far better than the largely poor and black Ward 8, where the rate was 23.3 percent.

Independence Day Greetings from New Zealand

To my friends and colleagues in the US, it must be easy for Americans, in these times, to think that no one elsewhere in the world thinks about the principle on which America was founded. But many of us do.

These Jacquie Lawson cards are created in England and you will see that she uses the 4th July cards to pass on some information to her subscribers. (She would be well aware that most Americans would be well aware of the contents of the Archives.) So when we say, "we are thinking of you" we mean that in both the personal and historical sense.

The Anglo American tradition lives on, and at times like this we remember that American history is also British history. Queen Elizabeth the First, James Watt, and Adam Smith are part of our common heritage.

View 4th of July ecard


Go to Oklahoma, Young Man

One of the great migrations of Americans was from Dust Bowl Oklahoma to California during the Great Depression. People came from all over the parched plains to California; South Dakotans, Nebraskans, Oklahomans and others. But only one group had a name. No one called them Dakoties, nor Nebies, but they did call them “Okies.” Their legacy was spread by John Steinbeck’s Grapes of Wrath. Indeed, so many came to California that it enacted an “anti-Okie” law, which was duly set aside by the United States Supreme Court (Edwards v. the People of California).

How things change. A Sacramento Bee article reports on the migration of Californians to, of all places Oklahoma and nearby states. For decades, Oklahoma has been the ultimate of “flyover country,” one of the last places people on the coast would think of moving to. Yet, as I pointed out in 2005, Oklahoma has become more competitive, at least partially because its advantages in housing costs and hassle free commuting. Moreover, it’s more than Californians. Seattle, which lost home-grown Boeing to Chicago some years ago, lost its NBA “Supersonics” to Oklahoma City last year. Having spent most of my life on the coast, I never would have imagined that Oklahoma City would become competitive with California and Seattle. But it has.