Posts tagged ‘cars’

Globalization and Start-Ups

In a comment on this article about declining startup activity and the growing average size of businesses, a commenter wrote:

The high foreign trade deficit is also a barrier to the formation of small new companies. The annual trade deficit of the US is greater than the rate of GDP growth, which explains a lot of things. Probably more companies are being destroyed than created in the US. Legislate and reverse the foreign trade deficit and there will be a massive surge in small companies.

I wrote in return

As for wolf-dogs comment on the trade deficit, I think this is totally wrong. Most of the trade imbalance is with stuff like cars and steel which are unlikely startup businesses. The easy availability of Asian manufacturing sources for nearly anything you want to make or can dream up facilitates startups and entrepreneurship. My gut feel, just seeing what entrepreneurs around me are doing but not from any hard data, is that globalization and easy international sourcing is a net positive for small business formation.

I have never seen any data on this though.  Thoughts?

Me Then, Hillary Now: Progressives Are Too Conservative to Accept Capitalism

Coyote, in Forbes, December 2010 (excerpts):

My contention is that what drives most progressives, at a very fundamental level, is a deep conservatism.  Of course, most “progressives” would freak if they were called conservative, but what I mean by conservative in this context is not donate-to-Jesse-Helms capital-C Conservative but fearful of change and uncomfortable with uncertainty conservative.

Because capitalism is based so completely on individual decision-making, because its operation is inherently chaotic, and because its rewards can’t possibly be divided equally and still be “rewards”, progressives are hugely uncomfortable with it.  Ironically, though progressives want to posture at being “dynamic”, it turns out that capitalism is in fact too dynamic for them.  Industries rise and fall, jobs are won and lost, recessions give way to booms.  Progressives want comfort and certainty.  They want to lock things down the way they are. They want to know that such and such job will be there tomorrow and next decade, and will always pay at least X amount.  Which is why, in the end, progressives are all statists, because only a government with totalitarian powers can bring the order and certainty and control of individual decision-making that they crave..

Progressive elements in this country have always tried to freeze commerce, to lock this country’s economy down in its then-current patterns.  Progressives in the late 19th century were terrified the American economy was shifting from agriculture to industry.  They wanted to stop this, to cement in place patterns where 80-90% of Americans worked on farms.  I, for one, am glad they failed, since for all of the soft glow we have in this country around our notion of the family farmer, farming was and can still be a brutal, dawn to dusk endeavor that never really rewards the work people put into it....

I am sure, if asked, most  progressives would profess to desire iPod’s and cures for cancer.  But they want these without the incentives that drive men to invent them, and the disruption to current markets and competitors and employees that their introduction entails.  They want to end poverty without wealth creation, they want jobs without employers, they want cars without unemployment for buggy whip makers.

Hillary Clinton in July, 2015:  via Instapundit

In her first major economic policy address of the 2016 campaign, Democratic presidential frontrunner Hillary Clinton raised questions about the effect that companies like Uber and Airbnb are having on American workers. . . .

Later in the speech, Clinton vowed to “crack down on bosses who exploit employees by misclassifying them as contractors” — a possible reference to something like the recent California Labor Commission decision that threatens to undermine Uber’s business model.

To be sure, Clinton does not want to destroy the sharing economy. She acknowledged that “these trends are real” and “none is going away.” But she may believe that, with the right application of political muscle, the new economy can be forced to conform with the antiquated blue social model — that is, the midcentury vision of steady, regulated, unionized employment with generous benefits.

As we have argued again and again, this notion is unrealistic. Like it or not, this 1950s model of economic organization is breaking down, and has been for several decades, thanks to globalization, demographic changes, technological innovation, and other trends that simply cannot be reversed. Measures like the California decision are futile and counterproductive. We should treat the emergence of a more entrepreneurial, dynamic landscape as an opportunity to be engaged with productively, not a danger to be henpecked by regulations better suited to the last century.

Even Vox Can't Make A Very Strong Case For Streetcars

A reader sent me a link to this Vox article on streetcars.  What I thought was interesting is just how weak the case for streetcars is, even when made by folks are are presumably sympathetic to them.  This page is entitled "Why do cities want streeetcars."  The arguments are:

  • Tourists like them, because you can't get lost like you can on buses.  My response is, "so what."  Unless you are one of a very few unique cities, tourists are a trivial percentage of transit riders anyway.  Why build a huge system just to serve out-of-town visitors?  I would add that many of these same cities (e.g. Las Vegas) considering streetcars are the same ones banning Uber, which tourists REALLY love.
  • Developers like them.  Ahh, now we are getting somewhere.  So they are corporate welfare?  But not so fast, they are not even very good corporate welfare.  Because most of the studies they cite are total BS, of the same quality as studies that say sports stadium construction spurs all sorts of business.  In fact, most cities have linked huge tax abatement and subsidy programs to their streetcars, such that the development you get with the subsidy and the streetcar is about what you would expect from the subsidies alone.  Reminds me of the old joke that mimicked cereal commercials: "As part of a breakfast with juice, toast, and milk, Trix cereal has all the nutrition of juice, toast, and milk."
  • Good for the environment.  But even Vox asks, "as compared to what."  Since they are generally an alternative buses, as compared to buses that have little environmental advantage and often are worse (they have a lot more weight to drag around when empty).
  • The Obama Administration likes them.  LOL, that's a recommendation?  When you read the text, what they actually say is that mayors like the fact that the Obama Administration likes them, for it means the Feds will throw lots of Federal money at these projects to help mayors look good using other peoples' money
  • Jobs.  This is hilarious Keynesianism, trying to make the fact that streetcars are 10-100x more expensive than buses some sort of positive.  Because they are more inefficient, they employ more people!  One could make the exact same argument for banning mechanical harvesters and going back to scythes.   Left unquestioned, as Bastiat would tell us, is how many people that money would have employed if it had not been seized by the government for streetcar use.
  • Je ne sais quoi.  I kid you not, that is their final argument, that streetcars add that special something to a neighborhood.  In my mind, this is Vox's way of saying the same thing I did the other day -- that the streetcar's appeal is primarily based on class, in that middle and upper class folks don't want to ride on a bus with the masses.   The streetcar feels more upscale than buses.   The poor of course, for whom public transit is most vital, don't want to pay 10 times more for sexiness.  Oh, and watch this video of Washington streetcars blocking traffic and crunching parked cars and tell me what it is adding to the neighborhood.

Every argument I have ever been in on streetcars always boils down to something like "well, all the cool kids like them."  Once, after defending the US approach to rail (vs. Europe and Japan) as (correctly) focusing on productivity vs. sexiness, having gone into a lot of detail on the economics of freight vs. passengers, I got a one sentence answer from Joel Epstein of the HuffPo:  “You should get out of the country more often.”  That was it -- the cool cosmopolitan kids who vacation in Gstaad but never would be caught dead driving across Nebraska were all against me.

Oceania, Arizona

My little town that in the Phoenix area is apparently setting up surveillance cameras all over town, hidden in fake cacti.   This never once was discussed in any public meeting, and residents only found out about it when the cameras starting going up.

Residents were alarmed to see the cactus cameras popping up throughout the town over the last few days with no indication of what they were being used for as city officials refused to explain their purpose until all the cameras were installed.

Town leaders initially declined to even talk to local station Fox 10 about the cameras, with Paradise Valley Police saying they were “not prepared to make a statement at this time.” The network was similarly rebuffed when they attempted to get answers on license plate scanners that were being installed in traffic lights back in February.

Fox 10’s Jill Monier was eventually able to speak to Town Manager Kevin Burke, who admitted that the cameras were being used to “run license plates of cars against a hotlist database.”

When asked why officials had been secretive about the cameras, which are being placed on the perimeter of the town, Burke asserted that there was “nothing to hide” and that the cameras wouldn’t be activated until privacy concerns had been addressed.

“Shouldn’t that have been vetted before they even went up?” asked Monier, to which Burke responded, “It probably is fair.”

This appears to be part of the on-again-pretend-to-be-off-again DHS program to set up nationwide tracking of license plates.  Ugh.  Really gives a creepy Owrellian vibe to our town name of "Paradise Valley".  More good news:

The American Civil Liberties Union subsequently revealed that the cameras were also using facial recognition technology to record who was traveling in the vehicle “as part of an official exercise to build a database on people’s lives,” reported the Guardian.

Why Can't [X] Be Free

In the Warren Meyer style guide, any phrase like this one -- Why Can't Public Transit Be Free? -- would be reworded "Why Can't Other People Pay For My Transit" so as to be more accurate.  Because it clearly can never be free (short of an Iain Banks post-scarcity future world).  An even more generic title for this would be "why can't non-users pay for users' services?"

One other thought -- since when did "getting people out of their cars" become the goal of public transit?  Is that really a goal worth spending money on?   I understand that many transit advocates have this goal nowadays, but in the new systems being built (outside of New York) there is little or no energy reduction in moving people by transit.   And the cost per passenger mile of these system is much higher than for building more roads for more cars.   And it is no longer about mobility for poorer folks -- new light rails systems cost a fortune, and are built to appeal to professionals and the middle class, while crowding (due to their huge costs) buses that are the traditional source of mobility for the poor.

I get the sense that the argument for transit nowadays is almost aesthetic -- people find cars and roads and suburbs aesthetically distasteful, and want to replace them.  That would explain the focus on insanely expensive light rail systems, that look cool, over buses that actually move people for a reasonable cost.  I saw a great quote the other day, I wish I can remember who said it.  Something like, "Progressives aren't trying to create a rational world, they are trying to create Portland."

update:  Thanks to a reader, here is the actual quote (and source):  "The goal of progressivism is not to make the world rational; it’s to make the world Portland."

Want to Increase Infrastructure Money for Highways Immediately by 31%? Stop Diverting Highway Money to Transit

This DOT table, pointed out to me by Randal O'Toole, shows that money spent on highways could be increased immediately by over 30% if highway money was not diverted to transit and other uses.  About 13% of state gas tax revenues meant for highways are diverted to non-highway transit projects (e.g. light rail boondoggles).  Another 9.4% are diverted to general funds, and may not be applied to transportation projects at all.   The same table shows that if all state MVD receipts were used to support investments for cars rather than transit and general spending, money available for roads would increase 45% from those funds.

Transit projects should be supported by their own riders.  This will never happen, because they are so egregiously expensive per passenger-mile that no one would ride them if their trip were not subsidized by the rest of us**.  And I am exhausted with having folks argue that highways are "subsidized" because they require tax money beyond the gas taxes (which are essentially a user fee) when these extra tax monies for highways would be largely unneeded if the highway funds were used for highways.  The diversion to general funds is particularly troubling, since sleazy government officials are obviously trying to piggy-back off the popularity of highway infrastructure investment to generate a slush fund for activities taxpayers are less likely to support.

And please do not tell me that as a highway driver, investments in transit are doing me a favor by getting cars off the road.  Transit investments are so expensive per passenger mile that the same money spent getting a few cars off the road via transit would substantially increase road and highway capacities.  A dollar of highway investment carries at least an order of magnitude more passenger miles than a dollar of transit spending.

** I am always amazed that supporters of such transit projects call light rail projects "sustainable".  Forget for a minute that they seldom use less energy per passenger mile than driving.   Think about all the resources that go into them.  This at first seems like a hard problem -- how do we account for all the resources that go into transit vs. go into driving.  But then we realize it is actually easy, because we have a simple tool for valuing resource inputs:  price.  Prices are a great miracle.  They provide us with a sort of weighted average of the value and scarcity of the resources (both hard, like titanium, and soft, like labor and innovation) that go into a product.  So if light rail costs 10x or more per passenger mile than driving, as it often does, this means that it uses ten times the value of resource inputs as driving.  This is sustainable?  I do not think that word means what you think it means.

Great Moments in Bad Economic Policy

This article on bad bipartisan energy laws and regulations from Master Resource brought back some old memories of the 1970s.

Folks who are at all economically literate understand the role that government price controls (specifically price caps) had on gasoline shortages in the 1970s.  When there was a supply shock via the Arab oil embargo, prices were not allowed to rise to match supply and demand.  As in the case of all such price control situations, shortages and queuing resulted.

It is too bad in a way that most folks today can't really remember the gas lines of 1973 and again in 1978.  It was my job in 1978 as the new driver in the family to go wait in line for gas for all the family cars.  I wasted hours and hours sitting in gas lines. I wonder if anyone has every computed the economic value of the time lost to Americans sitting in gas lines because politicians did not want the price to rise by 20 cents.

A number of my friends who knew my dad was an Exxon executive were surprised at my waiting in lines, and wondered why we didn't get some sort of secret access to gas.  But my family waited in lines like everything else.

Well, almost like everyone else.  Because of my dad's position, we did have a bit of information most people did not have, at least in the first shock of 1973.  It was not a secret, it was just totally unreported in the media.  The key was the knowledge of a piece of Congressional legislation called the Emergency Petroleum Allocation Act of 1973.  It had an enormous impact on exacerbating the urban gas lines, but either out of a general ignorance or else a media/academic desire not to make government regulation look bad, it is as unknown today as it was unreported in 1973.

What the law did was this -- it mandated that oil companies distribute gasoline geographically in the US in the same proportion that it was sold in the prior year.  So if they sold x% in area Y last year before the embargo, x% must be distributed to area Y this year after the embargo.  I can't remember the exact concern, but Congress had some fear that oil companies would somehow respond to price signals in a way that caused gasoline allocations to hose someone somewhere.

Anyway, the effect was devastating, probably even worse than the effect of price controls.  The reason was that while Congress forced gasoline supply distribution patterns to remain the same as the prior year (in classic directive 10-289 style), demand patterns had changed a lot.  Specifically, with the fear that gas might not be available over the road and looming economic problems, people cancelled their summer long-distance driving trips.

Everyone stayed home and didn't drive the Interstates cross-country.  So there was little demand for gas at the stations that served these routes.  But by law, oil companies had to keep delivering gasoline to these typically rural stations.  So as urban drivers fumed sitting in gas lines for hours and hours, many rural locations were awash in gas.  Populist Congressmen berated oil companies in the press for the urban gas shortages and lines, all while it was their stupid, ill-considered laws that created a lot of the problem.

So this was the fact that should have been public, but was not: That instead of sitting in urban gas lines for four hours, one could drive 30 minutes into the countryside and find it much easier.  Which is what we did, a number of times.

By the way, it was about this time that I read Hedrick Smith's great book "The Russians."  It was, for the time, a nearly unique look at the life of ordinary Russians under Soviet communism.  I wish the book were still in print (I would love to see one of the free market think tanks do a reissue, at least on Kindle).  Anyway, about 80% of the book seemed to be about how individual Russians dealt with constant shortages and ubiquitous queuing.  It seemed that a lot of the innovation in the general populace was channeled into just these concerns.  What a waste.  Dealing with the 1970s gas lines and shortages is about the closest I have ever come to the life described in that book.

An Example of Broken Discourse

Apparently there is a daily pill called Truvada that can help reduce (but apparently not prevent) the transmission of HIV through unprotected sex.   Many public health agencies are promoting its use.

Apparently there is also at least one skeptic, a man named Michael Weinstein, who fears the pill may not be as effective as advertised, but more importantly is concerned that the pill's existence will reduce the use of condoms among at-risk men.

As I read the article (and I know zero about it on my own)  the ranking in terms of effectiveness is:  condoms+Truvada > condoms > Truvada > nothing.

The amazing thing to me is how broken the dialog about these issues appears to be.  Truvada supporters claim that there is a consensus on Truvada and that Weinstein is alone in his criticism, and that he is as bad as a "climate-change denialist" (eek!)

Weinstein claims that many others believe as he does but have been silenced by intimidation by the Truvada supporters.  Further, he argues that public officials who support Truvada are all paid off by the drug makers in one way or another.

Jeez, this all sounds so familiar to this veteran of the climate wars that it is just amazing.  And the real tragedy of this broken discourse is that both sides have a totally valid argument.  I have no doubt that Truvada provides incremental protection (even Weinstein's clinic proscribes it).  On the other hand, it is fairly "settled science" in the safety world that an easier-to-use protection method can actually reduce total safety by undercutting a parallel protection mechanism -- the drop in seat belt use after air bags were added to cars is a classic example.    Weinstein argues that Truvada use will reduce use of condoms, and thus undermine safety.  Truvada supporters argue that condom use is so low already, even after 30 years of education efforts, that the drug is better.  Essentially, Weinstein sees the baseline as men who use condoms and worry about them getting worse.  The other side sees the baseline as men who don't use condoms and argues the drug makes things better.

It is a shame to see two groups of people who likely are motivated by good intentions devolve into name-calling and ad hominem attacks.   Just read the quotes in the article - no one in the debate seems to acknowledge that the other side includes people of good will who simply disagree.

If You Like Federal Curbs on School Bake Sales, You Are Going to Love the Results of Obamacare

From George Will, the logic behind what I call the health care Trojan Horse

Washington’s response to the menace of school bake sales illustrates progressivism’s ratchet: The federal government subsidizes school lunches, so it must control the lunches’ contents, which validates regulation of what it calls “competitive foods,” such as vending machine snacks. Hence the need to close the bake sale loophole, through which sugary cupcakes might sneak: Foods sold at fundraising bake sales must, with some exceptions, conform to federal standards.

So if school lunch programs are a platform for so much micro-regulation, how much regulation do you think the government takeover of healthcare will justify?  If government is paying most of the health care bills, then any activity that might affect your health is then logically subject to government regulation, if for no other reason than to protect against additional costs.  Motorcycle helmet laws have been justified for years on this logic that helmetless riders impose additional costs on government health programs.  Well, if that works for motorcycling, why shouldn't government be heavily regulating skiing?  Or for that matter, why should it allow people to drive cars at all?  Perhaps we should have to get government approval before every car trip to make sure it is not "frivolous" and creating future health care costs through accident risk.

Or how about that most costly-to-health-care activity of all: sex.  Sex spreads expensive diseases.  It can lead to expensive procedures like abortion.  And of course it can lead to costly pregnancies and, worst of all, new lives that have to be maintained for another 80 years by the government health care system.  If funding school lunch programs leads logically to banning cupcake sales at schools, why won't Obamacare lead logically to micro-regulation of our every activity?

Racial Profiling in Ferguson

The Washington Post has numbers on the much higher rate at which blacks are stopped and/or searched in Ferguson vs. whites.  By itself, while that is a useful pointer to a discrimination issue, someone might argue that blacks in the area commit more crimes per capita and thus warrant more stops.

There is one bit of data in the Post's numbers that can be used to partially address this.  The data says that blacks have their cars searched much more frequently than whites.   Blacks have their cars searched 12.13% of stops while whites have their cars searched only 6.85% of stops.  But this understates the disparity, since blacks are stopped at a higher rates than whites.    Taking the disparity in stops in to account, blacks are searched at a rate 6 times higher than for whites.

The interesting part is in the data on contraband hit rate, ie the rate that searches uncover something illicit.  The contraband hit rate for white car searches is 57% higher than for black car searches.  In other words, it is more likely searches of white cars will yield something illegal.  Which tends to undercut the argument that the greater rate of black car searches is somehow justified.

By the way, I want to highlight one other figure.  Black cars are stopped at about a 6x higher rate for "equipment" deficiencies than whites.  Nitpicky regulations on car conditions (in Arizona your licence plate frame cannot cover any part of the word "Arizona" on the licence plate) are the great bugaboo of the poor and a nearly unlimited warrant for the police to stop minorities.  Mexicans here in Phoenix will tell me "woe to the Mexican who drives around here with a broken tail light -- he will be pulled over 3 times a day to have his immigration status checked".  In Phoenix, at least, stops for equipment issues are roughly the equivalent of pulling someone over for "driving while brown."  Even beyond the open-ended warrant these silly violations give the police, the fines and court costs create meaningful indebtedness problems for the poor which are hard to overcome.

(As a mostly irrelevant aside, I worked essentially in one corner of Ferguson in the Emerson Electric headquarters for a couple of years.  Like many of the inner ring of suburbs in St Louis, this is not a wildly prosperous area but it also is not Somalia.  Driving at night I was much more nervous in the neighborhoods both due south and due East of Ferguson).

Update:  Via Zero Hedge

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Michael Munger: The "State" As A Unicorn

Michael Munger has one of the most useful articles I have read in a very long time.  As illustrated by the Venn diagram I posted a while back showing the heavy overlap between the Tea Party and Occupy Wall Street, we have much more concurrence in the diagnosis of problems than in the prescriptions for solutions.   Munger gets at the heart of why many people go wrong in these prescriptions

When I am discussing the state with my colleagues at Duke, it's not long before I realize that, for them, almost without exception, the State is a unicorn. I come from the Public Choice tradition, which tends to emphasize consequentialist arguments more than natural rights, and so the distinction is particularly important for me. My friends generally dislike politicians, find democracy messy and distasteful, and object to the brutality and coercive excesses of foreign wars, the war on drugs, and the spying of the NSA. 

But their solution is, without exception, to expand the power of "the State." That seems literally insane to me—a non sequitur of such monstrous proportions that I had trouble taking it seriously.

Then I realized that they want a kind of unicorn, a State that has the properties, motivations, knowledge, and abilities that they can imagine for it. When I finally realized that we were talking past each other, I felt kind of dumb. Because essentially this very realization—that people who favor expansion of government imagine a State different from the one possible in the physical world—has been a core part of the argument made by classical liberals for at least three hundred years....

He follows with this useful test

But they may not immediately see why "the State" that they can imagine is a unicorn. So, to help them, I propose what I (immodestly) call "the Munger test."  

  1. Go ahead, make your argument for what you want the State to do, and what you want the State to be in charge of.
  2. Then, go back and look at your statement. Everywhere you said "the State" delete that phrase and replace it with "politicians I actually know, running in electoral systems with voters and interest groups that actually exist."
  3. If you still believe your statement, then we have something to talk about.

This leads to loads of fun, believe me. When someone says, "The State should be in charge of hundreds of thousands of heavily armed troops, with the authority to use that coercive power," ask them to take out the unicorn ("The State") and replace it with George W. Bush. How do you like it now?

If someone says, "The State should be able to choose subsidies and taxes to change the incentives people face in deciding what energy sources to use," ask them to remove "The State" and replace it with "senators from states that rely on coal, oil, or corn ethanol for income." Still sound like a good idea?

How about, "The State should make rules for regulating sales of high performance electric cars." Now, the switch: "Representatives from Michigan and other states that produce parts for internal combustion engines should be in charge of regulating Tesla Motors."  Gosh, maybe not …

Hat tip:  Don Boudreaux

I spent most of the Bush years asking Conservatives a similar question -- you may be fine when "your guy" has this power, but would you be happy if Al Gore or Nancy Pelosi had it.  And of course I have spent most of the Obama years asking Liberals whether they would be comfortable if George Bush or Rick Perry had similar powers to what Obama has claimed for himself.  Because they will.

I said something similar here, though less elegantly.  I concluded in part:

Technocratic idealists ALWAYS lose control of the game.  It may feel good at first when the trains start running on time, but the technocrats are soon swept away by the thugs, and the patina of idealism is swept away, and only fascism is left.  Interestingly, the technocrats always cry "our only mistake was letting those other guys take control".  No, the mistake was accepting the right to use force on another man.  Everything after that was inevitable.

I am Pretty Sure Bastiat Figured This Out 150 Years Ago: Cash For Clunkers Even Worse Than First Thought

From the WSJ

In a National Bureau of Economic Research working paper this month, economists at Texas A&M return to Cash for Clunkers, the 2009 stimulus fillip that dispensed vouchers worth as much as $4,500 if people turned in their old cars for destruction and bought a new set of wheels. Mark Hoekstra, Steven Puller and Jeremy West report their "striking" finding that the $3 billion program's two-month run subtracted between $2.6 billion and $4 billion from the auto industry.

The irony is that the goals were to help Detroit through the recession by subsidizing sales and to please the green lobby by putting more fuel-efficient cars on the road. By pulling forward purchases that consumers would make later anyway, the Obama Administration also hoped to add to GDP. Christina Romer, then chair of the Council of Economic Advisers, called Cash for Clunkers "very nearly the best possible countercyclical fiscal policy in an economy suffering from temporarily low aggregate demand."

The A&M economists had the elegant idea of comparing the buying behavior of Texas drivers who owned cars that barely qualified for cash (those that got 18 miles per gallon of gas or less) and those that barely did not (19 mph). Using state DMV sales records, this counterfactual allowed them to isolate the effects of the Cash for Clunkers incentives and show what would have happened without the program.

The two groups were equally likely to purchase a new vehicle over the nine month period that started with Cash for Clunkers, so the subsidy did not create any extra auto business. But in order to meet the fuel efficiency mandate, consumers who got the subsidy were induced to purchase smaller vehicle models with less horsepower that cost on average $2,500 to $3,000 less than those bought by their ineligible peers. The clunkers bought more Corollas, and everybody else more Chevys.

Extrapolated nationally, auto revenues may have plunged by more than what the government spent. And any environmental benefits cannot be justified under the federal social cost of carbon estimate of $33 a ton. Prior research from 2009 and 2013 has shown that the program cost between $237 and $288 a carbon ton.

Courts Have Become the Temple of Junk Science

If the Left is really as passionate as they say they are about taking on people and institutions who are anti-science, then they should be dedicating themselves to rethinking the current tort system.  Toyota may be facing $5 billion in settlements due to a defect that government reports and independent studies say is not there.

And recall NHTSA's performance during the furor almost four years ago over alleged runaway Toyotas. Its then-overseer, Transportation Secretary Ray LaHood, happily participated in congressional hearings designed to flog for the benefit of trial lawyers the idea of a hidden bug in Toyota's electronic throttle control.

When the agency much more quietly came out with a report a year later debunking the idea of an electronic defect, notice how little good it did Toyota. The car maker still found it necessary to cough up $1.2 billion to satisfy owners who claimed their cars lost value in the media frenzy over a non-defect. Toyota has also seen the tide turning against it lately as it resists a deluge of accident claims.

At first, opposing lawyers were hesitant to emphasize an invisible defect that government research suggested didn't exist. That was a tactical error on their part. In an Oklahoma trial last month involving an 82-year-old woman driver, jurors awarded $3 million in compensatory damages and were ready to assign punitive damages in a complaint focused on a hypothetical bug when Toyota abruptly settled on undisclosed terms.

In another closely-watched trial set to begin in California in March, an 83-year-old female driver (who has since died from unrelated causes) testified in a deposition that she stepped on the brake instead of the gas. The judge has already ruled that if the jury decides to believe her testimony, it is entitled to infer the existence of a defect that nobody can find.

These cases, out of some 300 pending, were chosen for a reason. Study after study, including one last year by the University of North Carolina Highway Safety Research Center, finds that elderly female drivers are inordinately prone to "pedal misapplication." If Toyota can't prevail in these cases, the company might be wise to run up the white flag and seek a global settlement that some estimate at upwards of $5 billion—quite a sum for a non-defect.

@kdrum Missing the Point. Doctors May Control the Cartel, but Government Gives it Power.

The other day, Kevin Drum wrote a post wondering why we had so few doctors per capital in the United States and observing, reasonably, that this might be one reason to explain why physician compensation rates were higher here than in other countries.

He and Matt Yglesisus argued that this smaller number of doctors and higher compensation rates were due to a physician-operated cartel.  This is a proposition I and most libertarians would agree with.  In fact I, and many others apparently, wrote to him saying yes there is a cartel, but ironically it owed its existence to government interventionism in the economy and health care.  In a true free market, such a cartel would only have value so long as it added value to consumers.

Drum seems to have missed the point.  In this post, he reacts to themany commenters who said that government power was at the heart of the cartel by saying no, it's not the government because doctors control the nuts and bolts decisions of the cartel.  Look!  Doctors are in all the key positions in the key organizations that control the cartel!

Well, no sh*t.  Of course they are.   Just as lawyers occupy all the key slots in the ABA.  But neither the ABA nor these doctors cartels would have nearly the power that they have if it were not for government laws that give them that power (e.g. giving the ABA and AMA monopoly power over licensing and school credentialing).  I had never heard of the RUC before, which apparently controls internship slots, but its ability to exercise this control seems pretty tied to the billions in government money of which it controls the distribution.

Let's get out of medicine for a second.  I am sure Best Buy wishes it had some mechanism to control new entrants into its business.  Theoretically (and it may have even done this) it could form the Association of Bricks and Mortar Electronics Retailers (ABMER).  It could even stake a position that it did not think consumers should shop at upstarts who are not ABMER members.  Take that Amazon!  Of course, without any particular value proposition to do so, consumers are likely to ignore the ABMER and go buy at Amazon.com anyway.

Such cartel schemes are tried all the time, and generally fail (the one exception I wonder about is the Visa/Mastercard consortium, but that is for another post).  Anyway, the only way the ABMER would really work is if some sort of government licensing law were passed that required anyone selling consumer electronics to be ABMER members.  And my guess is that the ABMER might not invite Amazon.com to join.  All of a sudden, Amazon is out of the electronics business.  Or maybe it just gets forced to deliver all its product through Best Buy stores, for a fee of course.

Crazy stupid, huh?  The government would never write licensing laws to protect a small group of incumbent retailers, right?  Well, tell that to Elon Musk.  Tesla has been trying for years to bring its cars to consumers in innovative ways, but have time and again run up against state auto dealership laws that effectively force all cars to be sold through the state dealer cartel.  Or you can talk to California wine growers, who have tried for years to sell directly to consumers in other states but get forced into selling through the state liquor wholesaler cartels.

All these cartels are controlled and manned by the industry, but they are enforced -- they are given their teeth -- by the government.

Here are a few off-the-top-of-my-head examples of cartel actions in the medical field admittedly initiated and supported and administered by doctors, that are enforced by state and federal law:

  • Certificate of need laws prevent hospitals from expanding or adding new equipment without government permission.  The boards in this process are usually stacked with the most powerful local hospitals, who use the law to prevent competition and keep prices high.  This is a great example where Drum could say that the decisions are essentially being made by hospitals.  Yes they are, but they only have the power to do so because the government that grants them this licensing power over competitive capacity.  Without this government backing, new hospitals would just laugh at them.
  • Government licensing laws let the AMA effectively write the criteria for licencing doctors, which are kept really stringent to keep the supply low.  Even if I wanted to only put in stitches all day to busted up kids, I would still have to go through 8 years of medical school and residency. Drum and Yglesias focus on the the number of medical schools and residencies.  I do not know if these are an issue or not.  But what clearly is an issue is the fact that one has to endure 8 expensive years or more just to be able to hand out birth control or stitch up a skinned knee.
  • Government licensing laws help doctors fight a constant rearguard action against nurse practitioners and other less expensively trained folks who could easily do half or more of what doctors do today.
  • The FDA and prescription drug law not only helps pharma companies keep profits up, but also increases business to doctors as people have to have a prescription for certain drugs they could easily buy on their own (e.g birth control pills, antibiotics).
  • The government limits immigration and thus labor mobility, reducing the ability of doctors from other countries to move here.

I am sure there are more.

There is no denying that in the middle of every industry cartel are insiders who are maneuvering to increase the rents of the incumbent players.  In fact, I am sure that every industry has participants who dream about getting off the competitive treadmill and creating a nice industry cartel, and would be the first to sign up.  But none of these dreams are ever going to happen unless they are enabled by the coercive power of government.

Of course, the consistent answer is, well, we just have the wrong guys running things.  If we had the right guys, it would work great.  But this kind of co-option always happens.   Look at taxis and liquor license holders and the entire banking sector.  Five years ago I would bet that progressives thought they finally had that right guy in the administration.  And look what has happened.  Banking cronyism is as strong as ever.  Obama's signature health legislation is full of crony giveaways.  In 6 months the health insurers are going to be running the entire PPACA infrastructure to their own benefit.

update:  This post is verging on the "is cronyism capitalism's fault" argument.  Rather than go into that again, it is here.

Update #2:  Related

Arkansas orthodontist Ben Burris was hauled in front of the state dental board in September after dentists in northeast Arkansas complained that he was offering dental cleanings to the general public in his Braces by Burris orthodontics clinics. The price for dental cleanings was $98 for an adult and $68 for a child, which Burris has said is about half of what dentists in northeast Arkansas typically charge.

Burris said most of the patients who need cleanings don’t have a dentist, but are checked by one of the three orthodontists in his clinic. Also, Burris said he offered the service because it was good for his business and good for the public. Some of his competitors “have gone absolutely ballistic” over the price and complained to the board, Burris said.

MP: Of course, the Arkansas dental cartel has no basis to complain directly about the low prices for dental cleaning at Braces by Burris clinics, so they are instead complaining that the clinic’s low-cost teeth cleaning services violate the states Dental Practice Act, which prohibits orthodontists and other specialists from practicing “outside their specialty.”

Schools Increasingly Constitution-Free Zones

Reason rightly highlights this story about a kid in Georgia facing 10 years in jail because his school found his fishing tackle box in his car and in it was, gasp, his fishing knife.

But what the local news story fails to make a point about is the absurdly low bar school officials have to clear to search student's cars.

Williams, a senior at Allatoona High School, became the subject of a warrantless search after a fellow student told a campus police officer that he or she saw smoke rising from Williams’ car in the student parking lot and it smelled like marijuana. An assistant principal searched the car and did not find any marijuana but did find a pocket knife in the center console, enough to get Williams suspended for 10 days and possibly expelled, while facing felony criminal charges.

Smoke was rising from the car?  Really?  Like Spiccoli's van in Fast Times for Ridgemont High?  I am sure glad this kind of administrative lawlessness was not allowed when I was in school.  I wouldn't be surprised if the original student report to the school wasn't a pure fabrication out of spite against this student.

Still Open, But....

Our concession operations on Federal lands are still mostly open today (we had two US Forest Service local offices ask us to close, but these are both offices that have a tradition of interpreting the rules in odd ways).

By all the rules, being open to the public is the right decision.  We are tenants on US Forest Service land and operate entirely outside of the government budget, receiving no money from the government and we employ no government workers.  No government employee has a duty station in any of the parks we operate.   There is no more reason to close our operations than to, say, ban cars from Federal highways during a shutdown.

However, apparently we have been told by several local folks in the Forest Service that the higher ups (this tends to mean folks up in the Administration) are re-evaluating our status.  I do not know what is going on today, but in the past this has often meant that the administration is considering closing us to make the government closure as painful as possible.  After all, as I have written here and here, parks closures seem to be one of the few things anyone notices in a government shut down.

Update:  Our most recent guidance:  "1.  The Forest Service is allowing concessionaires to continue to operate as long as no Forest Service personnel is needed to ensure safety."  It looks like we may have to close a few sites that are dependent on USFS operated water systems, but otherwise most of our locations will be open.  I am hoping to get out a press release and update our web site but things are still fluid this morning.

Update #2:  Definitely still open everywhere but in one location (Laguna Mountain, CA) where we depend on a USFS-operated water system that will close.  no closure press release 2013

Bringing Skepticism (and Math) to Electric Vehicle Fuel Numbers

Frequent readers of this blog will know that I am enormously skeptical of most fuel and efficiency numbers for electric vehicles.  Electric vehicles can be quite efficient, and I personally really enjoy the driving feel of an electric car, but most of the numbers published for them, including by the government, are garbage.  I have previously written a series of articles challenging the EPA's MPGe methodology for electric cars.

In just a bit, I am going to challenge some numbers in a recent WSJ article on electric vehicles, but first let me give you an idea of why I don't trust many people on this topic.  Below is a statement from Fueleconomy.gov, which bills itself as the official government source for fuel economy information (this is a public information, not a marketing site).  In reference to electric vehicles, it writes this:

Energy efficient. Electric vehicles convert about 59–62% of the electrical energy from the grid to power at the wheels—conventional gasoline vehicles only convert about 17–21% of the energy stored in gasoline to power at the wheels

The implication, then, is that electric vehicles are 3x more energy efficient than cars with gasoline engines.  I hope engineers and scientists can see immediately why this statement is total crap, but for the rest, here is the problem in short:  Electricity has to be produced, often from a fossil fuel.  That step, of converting the potential energy in the fuel to use-able work, is the least efficient step of the entire fuel to work process.  Even in the most modern of plants it runs less than a 50% conversion efficiency.   So the numbers for the gasoline cars include this inefficient step, but for the electric vehicle it has been shuffled off stage, back to the power plant which is left out of the calculation.

Today I want to investigate this statement, which startled me:

Factor in the $200 a month he reckons he isn't paying for gasoline to fill up his hulking SUV, and Mr. Beisel says "suddenly the [Nissan Leaf] puts $2,000 in my pocket."

Yes, he pays for electricity to charge the Leaf's 24-kilowatt-hour battery—but not much. "In March, I spent $14.94 to charge the car" and a bit less than that in April, he says.

This implies that on a cost-per-mile basis, the EV is over 13x more efficient than gasoline cars.  Is this a fair comparison?  For those who do not want to read a lot of math, I will preview the answer:  the difference in fuel cost per mile is at best 2x, and is driven not by using less fossil fuel (the electric car likely uses a bit more, when you go all the way back to the power plant) but achieves its savings by using lower cost, less-refined fossil fuels  (e.g. natural gas in a large power plant instead of gasoline in a car).

Let's start with his estimate of $14.94.  Assuming that is the purchased power into his vehicle charger, that the charger efficiency is 90%, and the cost per KwH in Atlanta is around $0.11, this implies that 122.24 use-able KwH are going into the car.  Using an estimate of 3.3 miles per KwH for the Leaf, we get 403 miles driven per month or 3.7 cents per mile in electricity costs.  This is very good, and nothing I write should imply that the Leaf is not an efficient vehicle.  But its efficiency advantage is over-hyped.

Now let's take his $200 a month for his Ford Expedition, which has an MPG around 15.  Based on fuel prices in Atlanta of $3.50 a gallon, this implies 57 gallons per month and 857 miles driven.  The cost is 23.3 cents per mile.

Already we see one difference -- the miles driven assumptions are different.  Either he, like a lot of people, don't have a reliable memory for how much he spent on gas, or he has changed his driving habits with the electric car (not unlikely given the shorter range).  Either way, the total dollar costs he quotes are apples and oranges.  The better comparison is 23.3 cents per mile for the Expedition vs. 3.7 cents a mile for the Leaf, a difference of about 6x.  Still substantial, but already less than half the 13x difference implied by the article.

But we can go further, because in a Nissan Leaf, he has a very different car from the Ford Expedition.  It is much smaller, can carry fewer passengers and less cargo, cannot tow anything, and has only 25% of the Expedition's range.   With an electric motor, it offers a very different driving experience.   A better comparison would be to a Toyota Prius, the c version of which gets 50MPG.  It is similar in most of these categories except that it has a much longer range, but we can't fix that comparison, so just keep that difference in mind.

Let's look at the Prius for the same distances we calculated with his Leaf, about 403 miles.   That would require 8.1 gallons in a Prius at $3.50, which would be $28.20 in total or 7 cents a mile.  Note that while the Leaf still is better, the difference has been reduced to just under 2x.  Perhaps more importantly, the annual fuel savings has been reduced from over $2200 vs. the Expedition that drove twice as many miles to $159 a year vs. the Prius driving the same number of miles.  So the tradeoff is $159 a year savings but with much limited range  (forgetting for a moment all the government crony-candy that comes with the electric car).

$159 is likely a real savings but could be swamped by differences in long-term operating costs.  The Prius has a gasoline engine to maintain which the Leaf does not, though Toyota has gotten those things pretty reliable.  On the other hand the Leaf has a far larger battery pack than the Prius, and there are real concerns that this pack (which costs about $15,000 to manufacture) may have to be replaced long before the rest of the car is at end of life.  Replacing a full battery pack after even 10 years would add about $1200 (based on discounted values at 8%) a year to operating costs, swamping the fuel cost advantage.

Also note that a 2x difference in fuel costs per mile does not imply a 2x difference in fuel efficiency.  Gasoline is very expensive vs. other fuels on a cost per BTU basis, due to taxes that are especially high for gasoline, blending requirements, refining intensity, etc.)  Gasoline, as one person once said to me way back when I worked at a refinery, is the Filet Mignon of the barrel of oil -- if you can find a car that will feed on rump steak instead, you will save a lot of money even if it eats the same amount of meat.    A lot of marginal electric production (and it is the margin we care about for new loads like electric cars) is natural gas, which is perhaps a third (or less) the cost of gasoline per BTU.   My guess is that the key driver of this 2x cost per mile difference is not using less fuel per se, but the ability to use a less expensive, less-refined fuel.

Taking a different approach to the same problem, based on the wells-to-wheels methodology described in my Forbes article (which in turn was taken directly from the DOE), the Nissan Leaf has a real eMPG of about 42 (36.5% of the published 115), less than the Prius's at 50.  This confirms the findings above, that for fossil fuel generated electricity, the Leaf uses a bit more fossil fuels than the Prius but likely uses much less expensive fuels, so is cheaper to drive.  If the marginal electrical fuel is natural gas, the Leaf also likely generates a bit less CO2.

Electric Vehicle Welfare Queen

No, we are not talking today about Elon Musk (though the name fits) but about this electric car buyer profiled in the WSJ:

Bronson Beisel, 46, says he was looking last fall for an alternative to driving his gas-guzzling Ford Expedition sport utility around suburban Atlanta, when he saw a discounted lease offer for an all-electric Nissan Leaf. With $1,000 down, Mr. Beisel says he got a two-year lease for total out-of-pocket payments of $7,009, a deal that reflects a $7,500 federal tax credit.

As a resident of Georgia, Mr. Beisel is also eligible for a $5,000 subsidy from the state government. Now, he says, his out-of-pocket costs for 24 months in the Leaf are just over $2,000. Factor in the $200 a month he reckons he isn't paying for gasoline to fill up his hulking SUV, and Mr. Beisel says "suddenly the car puts $2,000 in my pocket."

Yes, he pays for electricity to charge the Leaf's 24-kilowatt-hour battery—but not much. "In March, I spent $14.94 to charge the car" and a bit less than that in April, he says. He also got an electric car-charging station installed at his house for no upfront cost.

"It's like a two-year test drive, free," he says.

I hope you all enjoy Mr. Beisel's smug pride a driving a car using your money.

In my next post, I am going to dive deeper in the operating cost numbers here.  By the article, Mr. Beisel has cut his monthly fuel costs from $200 to $14.94, a savings of over 90%.  If these numbers are real, why the hell do we have to subsidize these cars?  Well, while it turns out that while the Leaf is a nice efficient vehicle, these numbers are way off.  Stay tuned.

Tesla Actually Strikes a Blow Against the Corporate State

Tesla Motors and Elon Musk, the folks who seem to perennially have their hands out for special government favors and taxpayer money, may have actually struck a small blow against the corporate state:

Tesla Motors Inc. says it’s won another round in its fight with established car dealers who want to stop the company from selling its electric luxury cars directly to consumers.

Tesla CEO Elon Musk says, via Twitter, that a New York judge has tossed out a suit brought by New York auto dealers who challenged Tesla’s direct sales model as a violation of the state’s franchise laws.

Mr. Musk spent Wednesday in Texas making the case for a legislative proposal to change the law to allow direct sales of electric vehicles by U.S.-based manufacturers.  Texas car dealers have opposed the measure, saying it would open the door for other car makers to sell electric cars direct to customers –  which could undermine the value of their franchises.

Government protections of middle men in the auto business (states generally do the same in the liquor business) are a classic example of crony capitalism.  Car dealers tend to have a lot of sway with politicians, not to mention with local media for who they are generally the largest advertisers, so they are able to engineer special privileges for themselves.  Congrats to Tesla for taking this on.

Precautionary Principle in One Chart

The ultimate argument I get to my climate talk, when all other opposition fails, is that the precautionary principle should rule for CO2.  By their interpretation, this means that we should do everything possible to abate CO2 even if the risk of catastrophe is minor since the magnitude of the potential catastrophe is so great.

The problem is that this presupposes there are no harms, or opportunity costs, on the other end of the scale.  In fact, while CO2 may have only a small chance of catastrophe, Bill McKibben's desire to reduce fossil fuel use by 95% has a near certain probability of gutting the world economy and locking billions into poverty.  Here is one illustration I just crafted for my new presentation.  As usual, click to enlarge:

precautionary-principle

 

A large number of people seem to assume that our use of fossil fuels is an arbitrary choice among essentially comparable options (or worse, a sinister choice forced on us by the evil oil cabal).  In fact, fossil fuels have a number of traits that make them uniquely irreplaceable, at least with current technologies.  For example, gasoline has an absolutely enormous energy content per pound of fuel.  Most vehicles - space shuttles, and more recently electric cars - must dedicate an enormous percentage of their power production just to moving the weight of their fuel.  Not so in gasoline engine cars, something those who are working with electric cars must face every day.

By the way, if you want to see the kick-off of version 3.0 of my climate presentation, it will be at my son's school, Amherst College, this Thursday at 7PM.  More here.

Update: By the way,  I was careful in the chart to say the two " are correlated".  I actually do not think one causes the other.  In this case, I think there are a third, and fourth, and fifth (etc.)  factors that cause both.  For example, economic development leads to (and depends on) increased fossil fuel use and CO2 emissions, and it leads to longer lives.

When I use this slide, my point is to get folks thinking about Bill McKibben's plea to reduce fossil fuel use by 95%.  I was looking for one slide to say, hey, maybe if CO2 emissions go away, some other stuff goes away with it.  Like technology, hospitals, agriculture, development ... and long lives.   McKibben paints this picture of virtually costless energy transformation, which is naive to the point of being malpractice committed against the poor of developing nations.

Why Yes, I Am Confident in My Masculinity

This weekend I will be running (with my daughter) in the Disney Princess Half Marathon in Orlando.

Last weekend she and I went to the fabric store, bought a bunch of tulle (new word for me) and made her a tutu to run in.  Tested it out running 6 miles.  I think she found it liberating to run all around town in a tutu and a tiara.  Got lots of honks from cars that passed.

I will post a picture when I have one.  I will run in costume too, but don't expect too much.  I am a person who cuts off the end of my shoelaces when running distances to reduce weight, so my costume is not elaborate.

Update: Got my hair cut today. Another ounce shaved off

Corporate DNA

Almost exactly seven years ago (amazing how long I have been blogging) I wrote an extended piece about how hard it is to change corporate DNA.  I was writing about GM but also used Wal-Mart as an example.  Part of this piece read:

A corporation has physical plant (like factories) and workers of various skill levels who have productive potential.  These physical and human assets are overlaid with what we generally shortcut as "management" but which includes not just the actual humans currently managing the company but the organization approach, the culture, the management processes, its systems, the traditions, its contracts, its unions, the intellectual property, etc. etc.  In fact, by calling all this summed together "management", we falsely create the impression that it can easily be changed out, by firing the overpaid bums and getting new smarter guys.  This is not the case - Just ask Ross Perot.  You could fire the top 20 guys at GM and replace them all with the consensus all-brilliant team and I still am not sure they could fix it.

All these management factors, from the managers themselves to process to history to culture could better be called the corporate DNA*.  And DNA is very hard to change.  Walmart may be freaking brilliant at what they do, but demand that they change tomorrow to an upscale retailer marketing fashion products to teenage girls, and I don't think they would ever get there.  Its just too much change in the DNA.  Yeah, you could hire some ex Merry-go-round** executives, but you still have a culture aimed at big box low prices, a logistics system and infrastructure aimed at doing same, absolutely no history or knowledge of fashion, etc. etc.  I would bet you any amount of money I could get to the GAP faster starting from scratch than starting from Walmart.  For example, many folks (like me) greatly prefer Target over Walmart because Target is a slightly nicer, more relaxing place to shop.  And even this small difference may ultimately confound Walmart.  Even this very incremental need to add some aesthetics to their experience may overtax their DNA.

Corporate DNA acts as a value multiplier.  The best corporate DNA has a multiplier greater than one, meaning that it increases the value of the people and physical assets in the corporation.  When I was at a company called Emerson Electric (an industrial conglomerate, not the consumer electronics guys) they were famous in the business world for having a corporate DNA that added value to certain types of industrial companies through cost reduction and intelligent investment.  Emerson's management, though, was always aware of the limits of their DNA, and paid careful attention to where their DNA would have a multiplier effect and where it would not.  Every company that has ever grown rapidly has had a DNA that provided a multiplier greater than one... for a while.

But things change.  Sometimes that change is slow, like a creeping climate change, or sometimes it is rapid, like the dinosaur-killing comet.  DNA that was robust no longer matches what the market needs, or some other entity with better DNA comes along and out-competes you.  When this happens, when a corporation becomes senescent, when its DNA is out of date, then its multiplier slips below one.  The corporation is killing the value of its assets.  Smart people are made stupid by a bad organization and systems and culture.  In the case of GM, hordes of brilliant engineers teamed with highly-skilled production workers and modern robotic manufacturing plants are turning out cars no one wants, at prices no one wants to pay.

Changing your DNA is tough.  It is sometimes possible, with the right managers and a crisis mentality, to evolve DNA over a period of 20-30 years.  One could argue that GE did this, avoiding becoming an old-industry dinosaur.  GM has had a 30 year window (dating from the mid-seventies oil price rise and influx of imported cars) to make a change, and it has not been enough.  GM's DNA was programmed to make big, ugly (IMO) cars, and that is what it has continued to do.  If its leaders were not able or willing to change its DNA over the last 30 years, no one, no matter how brilliant, is going to do it in the next 2-3.

Megan McArdle makes some very similar points as I about Wal-Mart and how hard it is to change corporate DNA.  I recommend you read the whole thing.

Why We May Be Bailing Out Chrysler Again

I work in a small, four-story suburban office building.  I have seen our fire drills and can look out at our parking lot, and I would be surprised if there are 200 people in the building.    A few months ago some division of Chrysler moved in and took a bunch of the space.   A lot still remains empty (which is why I am here -- cheap!)

The Chrysler folks put a sign downstairs a few days ago saying that they would be hosting a luncheon for the building.  Great, I thought, a free hot dog and some fruit salad.  Imagine my shock when I saw this when I arrived today:

Chrysler sent three full semi-trailers, one of cars and two of convention-type booths and displays, plus a whole crew of people to set this up, all for a lunch in our building with less than 200 people.  I thought maybe that we were just getting a preview of a larger public event, but I am looking out my window now and they are tearing down again.  Crazy.

One thing that even many libertarians get wrong:  Wasting money is not unique to government entities.  Private and public entities can become senescent, and grow bureaucracies that lose focus on what they are supposed to be doing.  The difference between the private and the pubic sphere, though, is that for private companies, markets eventually enforce discipline (either forcing change or killing off the bloated entity).   There is no similar mechanism for state agencies short of perhaps absolute bankruptcy, and Greece is proving even that is not enough to force change.

Of course, when the government gives large private entities with political pull special protections and bailouts, then no such accountability is enforced.  The same people are operating the company with the same false assumptions and unlearned lessons.

Demand at Price = $0

These two articles were back to back in my feed reader this morning.  First, Joe Biden argues that medical procedures should be free if you feel you need one

“Everyone knows, everyone in this room knows that President Obama has increased the benefits available to people on Medicare by the action he took,” Biden said. “You are now able to go get a wellness exam, and guys, if you conclude you need a colonoscopy because of the feeling you had or you need a breast health examination, you don’t have to pay a co-pay for that.”

And then I got this from China

As part of its 8 day Golden Week celebration, China's central planners decided to do a good thing for the people and remove all tolls from expressways. That was the populist explanation. The fundamental one was that this act would somehow spur the economy. Alas, while the same people may have saved some transit money in the process, what they did not save was on transit times. As South China Morning Post reports, millions were promptly stuck in traffic jams as a result of the politburo's generosity. From SCMP: "A bid by authorities tostimulate the economy by suspending road tolls for the "golden week" holiday brought huge tailbacks across the mainland yesterday as almost 86 million travelers took to the roads. That's 13.3 per cent more than on the first day of the National Day holiday last year." And then the fun began.

"One traveller blogged that he could only move 200 metres in an hour on the Zhengzhou to Shijiazhuang expressway in Henan province. Others said the queue of cars on the Guangzhou to Shenzhen expressway was 40 kilometres long. All roads leading out of Guangdong were jammed, with cars moving at about a kilometre an hour in front of some toll gates. Provincial traffic-management authorities estimated traffic on expressways would increase by 40 to 80 per cent compared with the same period last year, the Shenzhen Special Zone Daily reported. The People's Daily reported dozens of accidents on 24 highways across the mainland, further aggravating the congestion."

Since the government still keeps hammering down doctor supply, through enforcement of tough licensing procedures and through price caps (that keep getting cut) on doctor visits, we should soon be seeing the equivalent of this highway traffic jam in medicine.  Which is why every socialized medicine country in the world has queues and why their citizens keep flying to the US for treatment.

Rename the Chevy Volt to the Chevy Bastiat

Quick - in your last fill up, how much did you pay for gas?  About how many gallons did you use?

If you are like most people, you can probably come pretty close to this.  I paid somewhere just north of $4.00 for about 18 gallons.

OK, second set of questions:  On your last electric bill, how much did you pay per KwH?  How many KwH did it take to run your dishwasher last night?

Don't know?  I don't think you are alone.  I don't know the answers to the last questions.   Part of the reason is that gas prices are posted on every corner, and we stare at a dial showing us fuel used every time we fill up.  There is nothing comparable for electricity -- particularly for an electric car.

I understand some inherent appeals to electric cars.  They are fun to drive, kind of quiet and stealthy like KIT from Knight Rider.  They are really torquy and have nice acceleration.  There is no transmission and gear changing.  All cool and awesome reasons to buy an electric car.

However, my sense is that the main appeal of electric cars is that because we don't see the fuel price on the corner, and because we don't stare at a spinning dial as electrons are flowed into the car, we pretend it is not costing us anything to fill up.  Out of sight is out of mind.  Heck, even experienced car guys who should know better take this attitude.  Popular Mechanics editor Jim Meigs wrote to Glenn Reynolds, re: the Volt:

Others might like the notion of going a month or two without filling the tank

This drives me crazy.  Of COURSE you are filling the freaking tank.  You are just filling the lead-acid (or lithium-ion) one with electrons rather than filling the hollow steel one with hydrocarbon molecules.  The only difference is that you don't stand there watching the meter spin.   But that should not mean that we pretend we are not filling the car and paying a cost to do so.

By the way, if you have read me before, you know I also have a problem with the EPA equivalent mileage standards for electric cars, which basically inflate the numbers by a factor of three by ignoring the second law of thermodynamics.  This fraudulent mileage number, combined with the EPA's crazy-high new mileage standards, represents an implicit subsidy, almost a mandate, for electric cars that gets little attention.  And that will have zero effect on energy usage because the numbers are gamed.