Friday, April 01, 2005
Paying too much for roads
Just a few years ago, Dan Klein wrote about "Planning and the Two Coordinations," a timely piece because we hear again and again about the virtues of top-down coordination. Top-down planners may cede the point that North Koreans do not live nearly as well as South Koreans -- even that central planning is the problem -- but will usually suggest that some systems just cannot function without coordination from the top.The regular Congressional spending orgies over fuel tax moneys, highway trust funds and many thousands of resulting pork projects are usually justified by the logic that widespread networks must spring from centralized authority.
The latest to examine (explode) this idea is Gabriel Roth who authored Cato's Policy Analysis No. 538, "Liberating the Roads: Reforming U.S. Highway Policy."
Roth reminds readers that decentralization, federalism and choice worked well before the trust fund and can do the job again, and much better than the existing system.
Here is the executive summary:
Deliberations on reauthorizing the federal fuel tax dragged on through the summer of 2004 and were not completed in the 108th Congress. Whether the fuel tax and the transportation programs it funds should be renewed is the central question of this paper.
A federal role may have been necessary to finance the Interstate Highway System in 1956—the year the federal fuel tax was enacted—but the system is now complete. The Federal Highway Trust Fund was established specifically as a means to finance highway construction. It is now a slush fund for Congress to fund programs aimed at appeasing special interests and financing non highway projects. The power of Congress to finance road projects was supposed to sunset in 1972 but instead continues to this day. In addition, federal regulations increase construction costs and stifle innovative policy experiments in the states.
Before the federal government took on the role of financing highways in 20th century, that role was assumed entirely by state governments and, before that, the private sector. This study makes the case that there is no longer any role for the federal government in the construction and financing of roads. Significant reform must include phasing down the federal fuel tax and giving back to the states full responsibility for highway programs.
Thursday, March 31, 2005
On "horologic schizophrenia"
Those who, like anyone sensible, hate re-setting clocks twice a year (sooner than you think). This very enjoyable review of what appears to be a fun book may ease the pain. From today's WSJ "Bookshelf":Does Anyone Really Know What Time It Is?
By BILL KAUFFMAN March 31, 2005; Page D8
Spring ahead, fall back.
Oh, must we?
This weekend brings Daylight Saving Time, that puzzling ritual of mass clock-winding ill befitting freeborn Americans. And now, just in the nick of time -- OK, 86 years too late, but time is malleable -- comes novelist Michael Downing with "Spring Forward" (Shoemaker & Hoard, 202 pages, $23), a lively history aimed at debunking the "uncanny idea of falsifying clocks to delay the apparent time of sunset."
Ben Franklin proposed the conservation of daylight in a whimsical 1784 essay, but the real father of Daylight Saving Time was British architect and -- crucially -- golfer William Willett, who deplored "the waste of daylight" in a 1907 pamphlet. The British royal astronomer ridiculed Willett's plan, suggesting instead "that between the months of October and March the thermometer should be put up ten degrees."
The strange history -- and disturbing implications -- of Daylight Saving Time.
It took the exigencies of World War I to convince governments to adopt Daylight Saving Time. (The claim was that it would cut back on energy use, though evidence was scant.) The success of DST in Europe was not lost on the scheme's U.S. advocates. They "had long been dismissed as caddies for the interests of the leisure class," writes Mr. Downing, but now they "shifted the battle from the golf links to the trenches." Setting clocks ahead, they promised, would permit scarce resources to be shifted to munitions. "Daylight's proponents wrapped themselves in the flag, appropriated the war effort" and won. They painted their foes -- a "coalition of miners and farmers, Populists and Republicans, ministers and movie moguls" -- as, literally, the forces of darkness.
"From the first," notes Mr. Downing, "farmers opposed Daylight Saving, which was an urban idea of a good idea, hatched in London and cultivated in the cities of Europe and the northern United States." New York City-based merchants subsidized the DST campaign, though Broadway suffered when darkness -- and curtain rise -- was delayed.
Indifferent to the arguments of the daylight-mad Chambers of Commerce, cows proved unwilling to adjust their milking habits to the new time. Nevertheless, President Wilson smugly lectured husbandmen that the farmer's "life and methods are more easily adjusted, I venture to think, than are those of the manufacturer and the merchant."
Illinois Rep. Edward King charged that DST benefited "the pleasure-seekers, the swivel-chair ornaments, and the golf players" by giving them an extra hour of daylight for their decadent recreations. Critics referred to DST as "golf time." And indeed, Daylight Saving was a tremendous boon to golf, as duffers might stride the links till 9:30 of a summer night. President Wilson was "a genuinely fanatic golfer," but he hid the niblick under his hairshirt, emphasizing sacrifice rather than pleasure.
Farmers demanded, and got, DST repealed after the war. The battle over time shifted to the states and cities, with the populated East the stronghold of the time-shifters. In one act of chrono-tyranny, Connecticut made it illegal to display the wrong time on a wristwatch.
Yet as the perceptive Mr. Downing observes, the claim by DST foes that they were defending "God's time" was specious. God's time had been junked in 1883, when the railroad industry, frustrated by localized timekeeping, adopted Standard Time. Within minutes -- or months -- governments across the country reset their clocks accordingly. In the old laissez-faire America, cities kept their own time. If it was 11:32 in Buffalo it might be 11:41 in Albany, and so what? Is not variety the spice of life?
Not to the iron horse. Heaven forefend that states and cities might set their own times, wake to their own sunrises. Efficiency eclipsed the sun as the American timekeeper. The U.S. was divided into four standard time zones. Thus noon comes simultaneously to Detroit and Bangor, sun be damned.
Those who love daylight but dislike compulsion -- President Harding among them -- supported "voluntary" DST. That is: Wake up earlier! Make the day's events conform to the sun's time; in spring and summer, begin work, school and baseball games an hour earlier. Alas, noncompliance doomed this sunny compromise.
In 1942, FDR reimposed DST as a year-round measure. He called it "war time." Once again, peace brought repeal, and the states of the union tick-tocked, as Mr. Downing puts it, in "horologic schizophrenia," which also goes by the name of federalism. By 1965, 18 states observed DST, 12 did not, 18 more "halfheartedly participated," and contrarian North Dakota and Texas observed "daylight in reverse," winding their clocks back one hour. Calculating interstate airline and bus schedules was a job for savants.
But then uniformity rode in on her pale gray horse. Since 1966 we've sprung ahead when Washington says to, though Arizona, Hawaii and eastern Indiana stubbornly refuse to adopt Daylight Saving Time. For the rest of us, DST now runs from the first Sunday of April to the last Sunday of October, or seven months a year, "which means that Daylight Saving Time has become our Standard Time."
Stripped of its bogus efficiency arguments, Daylight Saving Time amounts to an extra hour for shopping and golf. Middle-class consumers are pitted against farmers -- and we know who has the numbers. By 2000, writes Mr. Downing, "the number of Americans living on farms was approximately equal to the number of Americans who were permanent residents of golf-course communities."
The bogeymen have trounced the dairymen. Spring ahead, and fore!
Mr. Kauffman's most recent book is "Dispatches From the Muckdog Gazette" (Henry Holt/Picador).
Wednesday, March 30, 2005
Intellectual gridlock
After complaining about the state of local roads and highways, LA Times correspondent Ralph Vartabedian manages the following: "Toll roads reduce congestion, not only by increasing road capacity but by reducing demand. If we want to do that, then why not slap tolls on every congested interstate with electronic meters? To me, that seems like bad capitalism. Roads are public goods and efficient open transportation has served our economy well for over 100 years."And the U.S. Census' American Community Survey has just been released. The Census Bureau reports that, "For the nation as a whole, the average daily commute to work lasted about 24.3 minutes in 2003." The nation's worst commute is in NYC (38.3 minutes) because of heavy transit use.
What can one say? 1) In spite of the absence of efficient pricing, we do pretty well (while people spend as much time complaining as they do commuting [to paraphrase a wise colleague]); and 2) We dismiss pricing and, instead, go for awful second-best policies, contriving and relying on strange logic streams, as the one cited above.
Tuesday, March 29, 2005
Soft landings
"For the third time in five weeks, bond markets have weakened to face the bad, if not terrible news. They are cooling down, not melting down." This from "American bond markets: A sated appetite" in The Economist, March 26.Prices are supposed to move to clear markets and usually do. That's the good news. When prices move precipitously, for whatever reason, things can go bad. Soft landings vs hard landings -- and all the talk of "bubbles" that might "pop".
Comparative static analysis, by definition, has almost nothing to contribute. Whether dynamic analysis can be helpful is still unknown.
What is known is that in the world beyond economic theory, modern capital markets and modern information markets work to limit the frequency and the impacts of surpises. Once again, the real news is that spontaneous innovation and ingenuity are everyone's best bet.
Sunday, March 27, 2005
The U.S. image abroad
For all we know, historians will debate Ronald Reagan's role in the USSR's collapse for many years. Likewise, George W. Bush and the spread of democracy (and market-friendly governance) will be a topic of debate for some years. Either way, these two men are likely to have a place in history way beyond the fact that they were White House occupants.Bush has his critics and among his dumbest foreign policy initiatives, in my view, is putting Karen Hughes (or anyone) in charge of a campaign to burnish America's image overseas. International elites will always object to what we stand for. So what?
An LA Times (3/27/05) op-ed re modern Isreal notes: "It is fast-paced, cutting edge, daring and more than occasionally hedonistic. It is a cosmopolitan embrace of a modern state whose citizens yearn for worldliness, travel and openness."
Similar aspirations and yearnings can be found through of much of the of the world. What most young people want is clear. It is a modern Western lifestyle (warts and all, as they say). That's the way it is and that is why the West will keep on winning.
Having Karen Hughes or Margaret Tutweiler or anyone run a White House-based PR campaign has nothing to do with any of this. Rather, it misses the main point -- and risks doing much more harm than good.
Friday, March 25, 2005
Institutional entrepreneurs
Google Scholar cites 1,730 links to "Coase Theorem" but only 37 to "Institutional Entrepreneur", an economic agent celebrated in Anderson and Hill's The Not So Wild, Wild West, which I have cited admiringly before.Much has been written on what we should really get from the Coase Theoreom (or from the Prisoners' Dilemma, or from the Tragedy of the Commons, etc.). The most important take-away has to be about the remedial actions that are prompted, ones that expand property rights and exchange, usually by finding ways to lower transactions costs. These typically have profound welfare implications.
I enjoy growth theories that endogenize technological change. Again, we will long wonder what took so long? But even better is history through the prism of entrepreneurial actions with profound welfare consequences. Entrepreneurs that bring iPods and Blackberrys to market are to be admired but those that conceive and develop new property arrangements to overcome Prisoners Dilemma problems are even more attractive.
A similar class of heroes are those that develop technologies that overcome state-sanctioned monopolies. Satellite dishes sprouting in Third World backwaters give people new information options. Closer to home, I will soon replace cable with a satellite dish, overcoming the cozy arrangement hatched between local cable operators and the local city council.
Thursday, March 24, 2005
Vibrant places
Whether it is Richard Florida's "Creative Class" or Joel Kotkin's "Nerdistans" or David Brooks' "Patio Man", there is no question that evolving lifestyles beget new neighborhood types. As with all else new, these can be mixed blessings.Tom Kirkendall sent the pointer that the NY Times has discovered "Vibrant Cities Find One Thing Missing: Children". A prominent former President might even point out that it depends on the meaning of "vibrant."
"Portland is a great city that attracts a lot of educated people," the article quotes one resident. "But the real estate is becoming outrageously expensive. And then you get wealthy singles and wealthy retirees. What's missing are kids. And that feels really sterile to me."
"Sex and the City" is also vibrant. Fun for a short visit but few would want to live (it) there for any length of time. The Times piece focuses on the Pearl District of Portland. Portland boosters have taken to calling their city "The Intentional City". The Law of Unintended Consequences, however, remains in play.
