Posts tagged ‘new york’

Overhyped Things That Don't Disappoint: Hamilton

We went to visit family in Chicago and in the process saw Hamilton there.  While expensive, it was a lot cheaper than New York and having listened to the Broadway cast album many times, I think the cast in Chicago was very competitive with Broadway.  And it was fabulous.  Really.  I know there is a tendency if one spends a lot of money on an event to convince oneself it was worth the money, but it really was in this case.

In most musicals I walk out singing a particular song.  Out of Hamilton, I find myself singing about 8 songs.   I had one pre-show decision in which I am not sure if I did the right thing -- I had a choice of listening to the soundtrack in advance or seeing the musical fresh on the stage.  I chose the former, mainly because in several songs the lyrics are so clever and come so fast and furious that it take a number of listenings to really appreciate them.  But I probably missed something by not seeing it fresh and new on the stage.

I will say that this has got to be the most unlikely musical ever.  I can just see the pitch -- I want to do a musical in rap featuring Hamilton and Jefferson debating about Federal assumption of state debt.    Seriously, it sounds more like a lead in to a Leonard Pinth-Garnell sketch on Really Bad Musical Theater on SNL.  But it works.

Reversing Cause and Effect?

I hate to quibble about a paper that supports my preconceived notions, but I am bothered by this as linked by Tyler Cowen

We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply, effectively limiting the number of workers who have access to such high productivity. Using a spatial equilibrium model and data from 220 metropolitan areas we find that these constraints lowered aggregate US growth by more than 50% from 1964 to 2009.

Isn’t it possible that cause and effect are being reversed here? I accept that zoning in places like SF make it more expensive. I would have concluded that this higher cost of living allows only the most productive to live there — less productive folks can’t afford it. So the high average productivity of these cities might partially be a result of their higher costs, not because the zoning somehow increases productivity, but because the zoning creates a sorting process where only the most productive may enter, which brings up the averages.  So a reduction in zoning and living costs would cause the productivity numbers for the city to average down as lower-productivity earners can move in.

Interesting Timing

This last Sunday, September 11, on the same day Hillary Clinton's staff were struggling to erase concerns that Hilary was in poor health after her collapse in New York, PBS Masterpiece aired a nice little movie called "Churchill's Secret".  I recorded it but did not watch it last night, so only yesterday saw the connection:  the movie was about a major stroke Churchill suffered circa 1953, in the midst of his second stint as Prime Minister of the UK.   One subplot, and the reason for the title, was of Churchill's political staff working like crazy to (successfully) hide Churchill's stroke and incapacity from everyone -- media, the public, his own party.  I wonder if PBS, likely Clinton supporters to a person, regrets the timing?

BLM: OK, You Have Our Attention -- and Many of Us Are Sympathetic -- What in the Hell Do You Want Done?

Well, it appears that Black Lives Matters has moved on to climate activism, or whatever, but has mostly fallen off message on police accountability.  Protests in the vague hope of ending racism by closing busy highways and airports and kneeling during the National Anthem are going to get nothing done -- the solution to the problems that sparked the BLM movement are to be found in legislative efforts to create better police accountability measures and to roll back a number of egregious protections from accountability that exist in many union contracts.  The solution is not to throw blanket hate on police officers, many or most of whom are doing a good job, but to recognize that when we give officers unique powers to use force, they need extra accountability to go with those powers.  Today, most police have less accountability for their use of force than you and I do.

Unfortunately, doing that is hard.  It is a tough legislative slog that has to go local city by local city, with few national-level shortcuts available.  It faces opposition from Conservatives who tend to fetishize police, and from Liberals who are reluctant to challenge a public employees union.  And it requires that BLM translate their energy from disruption and attention-grabbing (which they are very good at) to policy and legislation, which they have shown no facility for.  They need to be working on model legislation and pushing that down to the local level.  This original plan actually looked pretty good, but apparently it has been rejected and gets little or no attention.

As a result, BLM seems to be stuck in a pointless do-loop of disruption and virtue-signalling.  I just want to scream at them, "OK, you have our attention -- and many of us are sympathetic -- what in the hell do you want done?"  Unfortunately, their current lists of goals have almost nothing to do with police accountability and appear to be a laundry list of progressive talking points.  It appears to be another radical organization that has been jacked by the Democratic establishment to push mainstream Democratic talking points.

Here is a good example, for a number of reasons.  In the past, the officer likely would have been believed and the woman might have been convicted of something.  I think this happens to people across the racial spectrum, but African-Americans have had a particularly hard time -- given both racist perceptions and lack of good counsel -- in these he-said-she-said cases with police.  Not to mention that African-Americans -- for a variety of reasons including racial profiling in things like New York's stop and frisk program to the tendency of poor black municipalities to fine the crap out of their citizens to generate revenue -- come in contact with police disproportionately more often.

I offered my plan to help African-Americans a number of times in the past:

  • Legalize drugs.  This would reduce the rents that attract the poor into dealing, would keep people out of jail, and reduce a lot of violent crime associated with narcotics traffic that kills investment and business creation in black neighborhoods.  It would also reduce the main excuse for petty harassment by police that falls disproportionately on young black men.  No it's not a good thing to have people addicted to strong narcotics but it is worse to be putting them in jail and having them shooting at each other.
  • Bring real accountability to police forces.  When I see stories of folks absurdly abused by police forces, I can almost always guess the race of the victim in advance.  I used to be a law-and-order Conservative that blindly trusted police statements about every encounter.  The advent of cell-phone video has proven this to be supremely naive.  No matter how trusted, you can't give any group a pass on accountability.
  • Eliminate the minimum wage   (compromise: eliminate the minimum wage before 25).  Originally passed for racist reasons, it still (if unintentionally) keeps young blacks from entering the work force.  Dropping out of high school does not hurt employment because kids learn job skills in high school (they don't); it hurts because finishing high school is a marker of responsibility and other desirable job traits.  Kids who drop out can overcome this, but only if they get a job where they can demonstrate these traits.  No one is going to take that chance at $10 or $15 an hour
  • Voucherize education.  It's not the middle class that is primarily the victim of awful public schools, it is poor blacks.  Middle and upper class parents have the political pull to get accountability.   It is no coincidence the best public schools are generally in middle and upper class neighborhoods.  Programs such as the one in DC that used to allow urban poor to escape failing schools need to be promoted.

Another Problem With the National Minimum Wage

Beyond the basic lunacy of attempting to help the poor by mandating that they sell their labor for more than most businesses are willing to pay, I am reminded of another problem with proposals for a higher national minimum wage.

This problem is related to one that is seldom discussed in the context of most economic statistics, and that is the differences in the cost of living in different parts of the country.   The Tax Foundation looks at the cost of living by state, showing the value of $100 ($100 is worth more in states with lower prices and cost of living, since one's money will go further).  Magenta states are lower cost of living, yellow states are higher.

$100 Map-state-01

I have written before that not taking this into account messes up our view of things like poverty and income by state.  Well-being of folks in high cost states like California and New York are often exaggerated, as is poverty in states like those in the deep south.

But another issue is that this large variation in cost of living changes the effective value of a minimum wage.  Based on these numbers, a $15 minimum wage in Washington DC becomes, effectively, a $20.43 minimum wage in Mississippi.  Employment effects are likely to be much worse in these lower costs states.  Since the higher cost states all vote Democrat in Presidential elections, and the lower cost states all vote Republican, one wonders if this is a bug or a feature of Democrat-proposed $15 minimum wage plans.

Why BLM and the Campus "Rape Culture" Movement Are A Lot Alike

Both BLM and the campus rape culture movement have a starting point in real problems.

On campus, and even in a few police precincts, women complaining about sexual assault would get patted on the head and sent on their way, their charges going largely investigated.  In part, oddly enough, I think the problem stems from the war on drugs -- for literally decades, campus police have helped to shelter their students from drug investigations and harassment from their local community police force.  I know they did so at Princeton when I was there.  So campus police forces really had a mission to keep their students out of jail and out of trouble.  This is A-OK with me on drugs, but it obviously leads to terrible results when we get to sexual assault.  So something needed to be done to have police forces, particularly ones on campus, take sexual assault charges seriously.

With police, officers have been sheltered from any real accountability for years.  We give the police the ability to use force and other powers that ordinary citizens don't possess, but instead of giving them more scrutiny and accountability to offset these powers, we give them less.  This has really been a bipartisan problem -- Conservatives tend to fetishize the police and want to assume by default that all police actions are justified.  The Left is more willing to be skeptical of police behavior, but they refuse to take on any public sector union and police unions have generally locked in their contracts any number of accountability-avoidance mechanisms.  So something needed to be done to bring accountability to police forces.

And with these quite justifiable and reasonable goals around which many of us could have coalesced into some sort of consensus, both protest efforts immediately overreached into crazy zones.

On campus, the reasonable demand for serious action in response to a sexual assault charge was abandoned in favor of the demand for immediate conviction without due process based on any sexual assault charge.  Oddly mirroring the conservative attitude towards police, activists said that alleged victims had to always believed, and demanded that universities punish anyone accused of sexual transgressions.  The result has become a toxic mess, and in some ways is a setback for justice, as activists have made it easier to get a rapist thrown out of school but perhaps harder to actually get thrown in jail.

With police, activists immediately eschewed the reasonable need for more police accountability and jumped to the contention that all police officers are racist and systematically abuse black citizens.  Their focus seems to be on police shootings, though I find the pattern of petty police harassment (through the war on drugs and programs like New York's stop and frisk) to be more problematic.  Just as in the campus rape debate, a reasonable need for more accountability and investigation of police shootings has morphed into a demand that police officers be treated as guilty by default in all shootings.

Each of these movements have made the problems more visible while simultaneously making these problems less likely to be solved.

I will add that I stick by my evaluation of BLM I wrote a while back.  I actually sort of liked a lot of their proposed plan, but I wrote (see particularly part in bold):

There is much that progressive and conservative groups could learn from each other.  Conservative groups (outside of anti-abortion folks) are loath to pursue the public demonstration and disruption tactics that can sometimes be helpful in getting one's issues on the public agenda.  The flip side is that public disruption seems to be all BLM knows how to do.  It can't seem to get beyond disruption, including the unfathomable recent threat to disrupt an upcoming marathon in the Twin Cities.   It could learn a lot from Conservative and libertarian groups like ALEC, that focus on creating model legislation and local success stories that can be copied in other places.  Many of the steps in BLM's plan cry out of model legislation and successful pilots/examples.


A Reliable Marker of Socialism: Politicians Accusing Private Individuals of "Hoarding"

When socialists destroy markets, shortages inevitably follow.  The current situation in Venezuela is a great example, where just about everything from food to toilet paper has disappeared off store shelves.   Rather than take a step back and say, "Wow, our policies sure have created a mess," socialists inevitably blame the shortages they created on private individuals.  Nothing says "I am a socialist" like a politician denouncing their citizens for hording.

Here is today's example from the state of New York.  New York has totally screwed up its real estate markets by making it nearly impossible to build new housing and putting rent controls on the housing that exists.  Which has inevitably led to shortages.  Which is of course blamed by politicians on individuals who are "hoarding"

State Assemblywoman Linda Rosenthal, one of the [anti Airbnb] bill's sponsors, disagrees, claiming that it targets "people or companies with multiple listings. There are so many units held by commercial operators, not individual tenants. They are bad actors who horde multiple units, driving up the cost of housing around them and across the city."

Is Trump Smart Because He is Rich? Or Rich Because He Is Smart? Is He Even Rich?

I told my wife a number of times that my guess is that Trump won't release his taxes because they don't show nearly enough income to justify his ego.  Time and again I see he and his cohorts and even the media throwing around eye-popping revenue numbers for him.  Well, I can tell you from long, sad experience that merely having large revenue numbers won't get you anywhere - they have to actually be higher than expenses to be meaningful.  I was a part of several early Internet startups that rode tens of millions of revenue right into liquidation.

Here is my hypothesis of what makes Trump rich:

  1. He started with family money.  No shame in that, lot's of people have done productive things with the capital accumulated by prior generations of their family.  But in Texas we used to have  a saying -- the best way to make a million dollars is to start with $10 million.  Is Trump's fortune larger today than it would have been if, say, he had just shoved all of dad's money into stocks?
  2. He has the political clout to swing real estate deals average people cannot.  Real estate in New York and Atlantic City is entirely driven by crony capitalism, and Trump is a master.  Let's say I have a piece of land that is worth X.  It would be worth X+Y if I could build the building I want on it, but I can't get the permissions I need.  Trump can, buys it for X, and then makes Y profit from his political pull.  The example of his getting his cronies in the Atlantic City government to condemn a woman's home so he could pave it over for limo parking is just the ugliest of many, many such examples.
  3. He extracts rents from investors, even when investors lose money.  I don't know if there is an economic name for this, but there should be.  Trump's investors, particularly his bondholders, have frequently lost millions on his real estate and casino investments -- both in his many bankruptcies and his frequent debt restructurings, which he brags about on the campaign trail.  These investments are losing money and going bankrupt, so they can't be generating free cash flow.  Somehow Trump is saddling investors with the losses AND extracting income for himself personally.  Steven Job's lifestyle was paid for by people who voluntarily bought iphones and valued them enough to pay more for them than it cost to make them.  I hypothesize that Trump's lifestyle is paid for out of invested capital, and not out of profits.  Which of course leaves open the question of why investors continue to sign up for this treatment.  I understand why donors give to the Clinton Foundation despite the fact that the Foundation does relatively little actual charity work -- donors are looking for influence with the Clintons.   But why do Trump investors keep dumping in more money?  Could it be charisma?  Certainly Trump has an excess.
  4. Trump's best investments seem to be ones where his charisma comes into play -- his TV shows come to mind.  Beyond the TV shows, there is a long string of business failures, from steaks and schools to casinos.

Postscript:  To be fair, I will add that I have in the past been a fan of his hotel on the strip in Las Vegas.  The hotel provides a screaming good value (you can almost always get a huge discount off rack rate) for an exceptionally nice room in a good location -- and in a non-casino hotel to boot.  I used it for years as a low-cost location for manager meetings.  The staff there is great -- the only problem is one has to look past the tacky gold gilding on everything and the goofy Trump-branded swag in the gift shop.  I will add, though, apropos to this post, there is no way on God's green Earth that this hotel makes money, at least if it is paying all of its capital costs (it is possible there was a bankruptcy at one point where Trump said "you're fired" to the bondholders).  If you ever stay there, by the way, it has the best view of the strip in Vegas because it is right at a bend and can look straight down the street.  Ask for a high room on the south side.

Update:  LOL, looking at #3, I think we do already have a name for this phenomenon of extracting rents from investors even when the investments are losing money -- it is called a hedge fund.  Given that hedge funds generally do not consistently outperform the market and result in outsize compensation for their managers even when the fund loses money (pretty sure Chelsea Clinton's and her husband did not give back any of the management fees they pulled down despite their hedge fund tanking most of their investor's money).

Update #2:  Being a billionaire is no guarantee that one knows anything about even basic economics:  Nick Hanauer argues the way to prosperity is to impose a $28 minimum wage.

Government vs. Government, Gender War Edition

A while back I joked that the SJW's should stop the recent proposed rules to greatly expand corporate race and gender reporting (the current EEO-1 report) because the Feds only provide two categories (male and female) for gender.

As it turns out, this might actually be a real problem in New York

The NYCHRL [New York City Human Rights Law] requires employers[, landlords, and all businesses and professionals] to use an [employee’s, tenant’s, customer’s, or client’s] preferred name, pronoun and title (e.g., Ms./Mrs.) regardless of the individual’s sex assigned at birth, anatomy, gender, medical history, appearance, or the sex indicated on the individual’s identification.

Most individuals and many transgender people use female or male pronouns and titles. Some transgender and gender non-conforming people prefer to use pronouns other than he/him/his or she/her/hers, such as they/them/theirs or ze/hir. [Footnote: Ze and hir are popular gender-free pronouns preferred by some transgender and/or gender non-conforming individuals.] …

Examples of Violations

a. Intentional or repeated refusal to use an individual’s preferred name, pronoun or title. For example, repeatedly calling a transgender woman “him” or “Mr.” after she has made clear which pronouns and title she uses …

So the Feds require me to categorize an employee as a male or female but New York makes it illegal to do so if the employee does not want to be in one of those categories.   Hmmm.


2016 Presidential Election: Battle of the Crony Capitalists

I am not sure that many politicians are good on this score, but Hillary Clinton and Donald Trump are likely as bad as it gets on crony capitalism.  Forget their policy positions, which are steeped in government interventionism in the economy, but just look at their personal careers.  Each have a long history of taking advantage of political power to enrich themselves and their business associates.  I am not sure what Cruz meant when he said "New York values", but both Trump and Clinton are steeped in the New York political economy, where one builds a fortune through political connections rather than entrepreneurial vigor.   Want to build a new parking lot next to your casino or start up a new energy firm -- you don't bother with private investors or arms length transactions, you go to the government.

With that in mind, I particularly liked Don Buudreaux's quote of the day:

First, we labor under a ubiquitous threat of being shackled by crony capitalists.  [Adam] Smith wondered how internally stable a free market could be in the face of a tendency for its political infrastructure to decay into crony capitalism.  (The phrase “crony capitalism” is not Smith’s.  I use it to refer to various of Smith’s targets: mercantilists who lobby for tariffs and other trade barriers, monopolists who pay kings for a license to be free from competition altogether, and so on.)  Partnerships between big business and big government lead to big subsidies, monopolistic licensing practices, and tariffs.  These ways of compromising freedom have been and always will be touted as protecting the middle class, but their true purpose is (and almost always will be) to transfer wealth and power from ordinary citizens to well-connected elites

As A Reward for Introducing Price Competition into the Taxi Monopoly, Uber Gets Sued for Price Fixing

From Engadget:

After failing to get a class-action lawsuit dismissed, Uber CEO Travis Kalanick will go to court over price fixing claims. A US district court judge in New York ruled Kalanick has to face the class of passengers alleging that he conspired with drivers to set fares using an algorithm, including hiking rates during peak hours with so-called surge pricing. According to Reuters, district court judge Jed Rakoff ruled the plaintiffs "plausibly alleged a conspiracy" to fix pricing and that the class action could also pursue claims the set rates led to the demise other services, like Sidecar.

I guess this is the downside of calling all their drivers independent contractors -- it leads Uber potentially being vulnerable to accusations of price fixing among these contractors.  Of course, taxi cartels have been fixing prices for decades, but that is government-assisted price-fixing so I suppose that is OK.   It would be ironic that the first price competition introduced into the taxi business in decades is killed based on antitrust charges.

As with just about all modern anti-trust cases, this has little to do with consumer well-being and more about the well-being of supply chain participants (ie the drivers) and competitors (ie Sidecar and taxis).

My Friend Jon is Having a Bad Week

$10 million in diamonds get accidentally thrown away, then stolen out of the trash by the security guard.  

To me, this proves that crazy stuff can happy to anyone.  Jon is as bright and hard-working as anyone I know.  He is also entirely trustworthy and honorable in a business that often lacks these qualities.  The thief apparently sold one large stone, about 10 ct., to someone in the same building** who then cut it down to 9 ct. and resold it.  There would be no reason for a dealer to cut down an already cut stone, since it substantially reduced the value, unless he knew the stone to be stolen and was purposely trying to disguise the stone for resale.  Its like a thief robbing your house and selling your TV to your neighbor, who changes the label so you won't recognize it when you come over.


** all of the major diamond dealers in New York seem to work in just 2 buildings on Fifth Avenue.

Does Transit Save Energy?

This is one of those questions that seems like a no-brainer -- a bunch of people are sharing a ride, so they must be saving energy.  When asked this question, we all think of a full bus or train of people vs. the number of cars that would have carried the same people.

The key issue turns out to be occupancy -- how full is the train or bus.   And it turns out that occupancy is probably lower than most people think.  That is because everyone rides on buses or trains as they commute -- they are going in the direction of most people's travel at the time of day they travel, so the transit is totally full.  But no one thinks about those trains having to go back the other direction, usually mostly empty.   As a result, we get to this fact, from the National Transit Database as synthesized by Randal O'Toole.

2014 Energy Use per Passenger Mile

  • Transit:  3141 BTU
  • Driving:  3144 BTU

Valley Metro Rail here in Phoenix does better, at a reported 1885 BTU per passenger mile.   As reported many times here on this site, the cost of building this rail line, now well over one and a half billion dollars, would easily have bought every round trip rider a new Prius, with a lot of money left over.   This would have saved more energy as well.  Buses in Phoenix are averaging just over 6000 BTU per passenger mile.


Cargo Cult Regulation -- How Much Effect Did Card and Krueger Have on New York's Fast Food Minimum Wage Ruling?

New York is proposing a $15 minimum wage for any fast-food restaurants that are part of a national chain with 30 or more stores.  How this survives any sort of equal protection test is beyond me -- if I own a restaurant and call it "coyote's place" I don't have to pay $15, but if I own a single restaurant where I pay franchise fees to McDonald's, I do.

Let's leave the inevitable court challenges on fairness aside.  Of all the possible industries, I wonder why the focus on just fast food and on just large franchises.  Some of it is obviously mindless Progressive soak the rich thinking, and some of it is a liberal distaste for any foods that are not kale.  Is it just because the fast food workers have been the most vocal?  If so, that is pretty lame the the government is merely focusing on the squeaky wheel, a real indictment of any pretensions technocratic politicians have to legislating intelligently.

But I wonder if it is something else.  Pick a progressive on the street, and in the unlikely event they can name any economic study, that study will probably be Card and Krueger's study of the effect of a minimum wage increase in New Jersey.   Sixty bazillion studies have confirmed what most of us know in our bones to be true, that raising the price of labor decreases demand for that labor.  Card and Krueger said it did not -- and that a minimum wage increase may have even increased demand for labor -- which pretty much has made it the economic bible of the Progressive Left.

What intrigues me is that Card and Krueger specifically looked at the effect of the minimum wage on large chain fast food stores.  In this study (I will explain the likely reason in a moment) they found that when the minimum wage increased for all businesses in New Jersey, the employment at large chain fast food restaurants went up.

So I wonder if the Progressives making this ruling in New York thought to themselves -- "we want to raise the minimum wage.  Well, the one place where we KNOW it will have no negative effect from Card and Krueger is on large fast food chains, so...."

By the way, there are a lot of critiques of Card & Krueger's study.  The most powerful in my mind is that when a minimum wage is raised, often the largest volume and highest productivity companies in any given business will absorb it the best.  One explanation of the Card & Krueger result is that the minimum wage slammed employment in small ma and pa restaurants, driving business to the larger volume restaurants and chains.  As a whole, in this theory, the industry saw a net loss in employment and a shift in employment from smaller to larger firms.  By measuring only the effect on larger firms, Card and Krueger completely missed what was going on.

What Happens to Poverty and Other State Economic Stats When One Finally Takes Into Account Different State Cost of Living Levels

This is really interesting, and I suppose not surprisingly, quite under-reported.  It appears the blue state model is even worse than we thought for combating poverty.  Not only does it suppress economic growth, but it also tends to raise prices of housing and other necesities

The familiar official [poverty] measure is more than 50 years old, and is showing its age. It has two huge shortcomings: it considers the cost of living to be the same in the 48 contiguous states (a patently ridiculous proposition when considering that the average rent in San Francisco in the first quarter of 2015 was $3,458 vs. $867 in Houston), and it doesn’t account for in-kind benefits, such as Section Eight housing subsidies and Electronic Benefit Transfer cards (food stamps).

Thus, the federal government’s main poverty gauge undercounts material poverty levels in high-cost states such as California, New York, and Hawaii, while over-counting true poverty in much of the low-cost Midwest and South.

Responding to concerns from Congress, advocates for the poor, and academics, some 20 years ago the U.S. Census Bureau began developing an alternative measure of poverty to address weaknesses in the official measure. The Census Bureau’s new, more comprehensive Supplemental Poverty Measure (SPM) is the result....

The authors use this data to compare Texas and California

Official Poverty Measure Rate, 2011-2013 Supplemental Poverty Measure (SPM) Rate, 2011-2013
California 16.0% 23.4%
Texas 17.2% 15.9%
National Average 14.9% 15.9%

The share of minorities in California and Texas is about 50 percent higher than in the nation as a whole, triple that of Wisconsin or Minnesota, more than quadruple that of Iowa, and about six-and-a-half times that of New Hampshire. Thus, it is an illuminating measure the wellbeing of America’s four largest racial or ethnic groups in the two most-populous states that one-fifth of Americans call home. The table below shows the average SPM for four years, 2010 to 2013, for these four groups.

White, non-Hispanic SPM Rate, 2010-13 Black, non-Hispanic SPM Rate, 2010-13 Hispanic SPM Rate, 2010-13 Asian SPM Rate,2010-13
California 14.8% 30.1% 33.7% 17.9%
Texas 9.7% 19.9% 22.7% 14.1%
National Average 10.8% 24.7% 27.7% 17.1%

I guess its time for a disparate impact suit against California!

In a related bit of data, here is the real value of $100 in each state (higher is better) which is sort of the inverse of cost of living.  States with higher costs of living will have lower numbers

$100 Map

Leading to this interesting outcome:

$100 Chart


Obama Thinks The Free Market Killed Neighborhood Diversity. In Fact, It Was the New Deal

Here is a very telling paragraph from the HUD's new proposed fair housing rule

Despite the existing obligation to AFFH, in too many communities, the Fair Housing Act has not had the impact it intended — housing choices continue to be constrained through housing discrimination, the operation of housing markets, investment choices by holders of capital, the history and geography of regions, and patterns of development and the built environment.

So, they list "discrimination" as a problem, but then look at the other four items they list as problems.  These can all be summarized as "the normal operation of free markets, property rights, and individual choice."

Oddly missing from this list of causes is what many historians consider to be the #1 cause of lack of neighborhood diversity and ghetto-ization:  The Federal Government and the New Deal.  New Deal rules essentially forced the concentration of blacks into just a few neighborhoods.   The biggest unmixing of races in New York can be seen between 1930 and 1950.   Blacks in Brooklyn went from fairly evenly mixed to concentrated in Bed-Stuy, all directly attributable to New Deal rules.   Basically, ever since then, we have just been living with the consequences.  Via NPR in an interview with Richard Rothstein

On how the New Deal's Public Works Administration led to the creation of segregated ghettos

Its policy was that public housing could be used only to house people of the same race as the neighborhood in which it was located, but, in fact, most of the public housing that was built in the early years was built in integrated neighborhoods, which they razed and then built segregated public housing in those neighborhoods. So public housing created racial segregation where none existed before. That was one of the chief policies.

On the Federal Housing Administration's overtly racist policies in the 1930s, '40s and '50s

The second policy, which was probably even more effective in segregating metropolitan areas, was the Federal Housing Administration, which financed mass production builders of subdivisions starting in the '30s and then going on to the '40s and '50s in which those mass production builders, places like Levittown [New York] for example, and Nassau County in New York and in every metropolitan area in the country, the Federal Housing Administration gave builders like Levitt concessionary loans through banks because they guaranteed loans at lower interest rates for banks that the developers could use to build these subdivisions on the condition that no homes in those subdivisions be sold to African-Americans.

Postscript:  Here is how the Ken Burns New York documentary series explained it, though the source page is no longer available:

Government policies began in the 1930s with the New Deal's Federal Mortgage and Loans Program. The government, along with banks and insurance programs, undertook a policy to lower the value of urban housing in order to create a market for the single-family residences they built outside the city.

The Home Owners' Loan Corporation, a federal government initiative established during the early years of the New Deal went into Brooklyn and mapped the population of all 66 neighborhoods in the Borough, block by block, noting on their maps the location of the residence of every black, Latino, Jewish, Italian, Irish, and Polish family they could find. Then they assigned ratings to each neighborhood based on its ethnic makeup. They distributed the demographic maps to banks and held the banks to a certain standard when loaning money for homes and rental. If the ratings went down, the value of housing property went down.

From the perspective of a white city dweller, nothing that you had done personally had altered the value of your home, and your neighborhood had not changed either. The decline in your property's value came simply because, unless the people who wanted to move to your neighborhood were black, the banks would no longer lend people the money needed to move there. And, because of this government initiative, the more black people moved into your neighborhood, the more the value of your property fell.

The Home Owners' Loan Corporation finished their work in the 1940s. In the 1930s when it started, black Brooklynites were the least physically segregated group in the borough. By 1950 they were the most segregated group; all were concentrated in the Bedford-Stuyvesant neighborhood, which became the largest black ghetto in the United States. After the Home Owners Loan Corp began working with local banks in Brooklyn, it worked with them in Manhattan, the Bronx, and Queens.

The state also got involved in redlining. (Initially, redlining literally meant the physical process of drawing on maps red lines through neighborhoods that were to be refused loans and insurance policies based on income or race. Redlining has come to mean, more generally, refusing to serve a particular neighborhood because of income or race.) State officials created their own map of Brooklyn. They too mapped out the city block by block. But this time they looked for only black and Latino individuals.

This site has some redlining maps, including one of Brooklyn, prepared by the Feds.  Remember, this is not some evil Conservative business CABAL, these are Roosevelt Democrats making these maps.  This site adds:

While the HOLC was a fairly short-lived New Deal agency, the influence of its security maps lived on in the Federal Housing Authority (FHA) and the GI Bill dispensing Veteran’s Administration (VA). Both of these government organizations, which set the standard that private lenders followed, refused to back bank mortgages that did not adhere to HOLC’s security maps. On the one hand FHA and VA backed loans were an enormous boon to those who qualified for them. Millions of Americans received mortgages that they otherwise would not have qualified for. But FHA-backed mortgages were not available to all. Racial minorities could not get loans for property improvements in their own neighborhoods—seen as credit risks—and were denied mortgages to purchase property in other areas for fear that their presence would extend the red line into a new community. Levittown, the poster-child of the new suburban America, only allowed whites to purchase homes. Thus HOLC policies and private developers increased home ownership and stability for white Americans while simultaneously creating and enforcing racial segregation.

The exclusionary structures of the postwar economy pushed African Americans and other minorities to protest. Over time the federal government attempted to rectify the racial segregation created, or at least facilitated, in part by its own policies. In 1948, the U.S. Supreme Court case Shelley v. Kraemer struck down explicitly racial neighborhood housing covenants, making it illegal to explicitly consider race when selling a house. It would be years, however, until housing acts passed in the 1960s could provide some federal muscle to complement grassroots attempts to ensure equal access.


The New York Times Retro Report

I had not seen this feature before, but I wanted to give the New York Times some kudos for its "retro report" which apparently looks at past news articles and predictions and wonders what happened to those issues since.  This report is on the failure of Paul Ehrlich's Population Bomb predictions.  It is the kind of feature I have wanted to see in the press for a long time.  Good for them.

Sort of.  They fairly ably demonstrate that this 1970's-era doomster prediction was overblown, but then simply substitute a new one: over-consumption.  Ironically, the "over-consumption" doom predictions are based on the exact same false assumptions that led to the population bomb fiasco, namely an overly static view of the world that gives little or no credit to market mechanisms and innovation combined with an ideological bias that opposes things like technological progress, increased wealth, and free exchange.  The modern "over-consumption" meme shares with the Population Bomb the assumption that the world has a fixed carrying capacity, that we have or will soon exceed this capacity, and that actions of man can do nothing to change this capacity.

In essence, the over-consumption doom scenario is essentially identical to the Population Bomb.  In essence, then, the New York Times ably debunks a failed prediction and then renews that prediction under a new name.

Is This Supposed to Be Irony?

John Hinderaker had an article titled "THE TIMES GOES KNOW-NOTHING ON IMMIGRATION".  In it, he criticizes the New York Times' for being too supportive of open immigration.  He proceeds to point out what he believes to be serious negatives of immigration.

I won't go back to my defenses of immigration today.  But I did find his article title ironic.  Was it purposefully so?  I can't imagine that it was.  The word "Know-Nothing" is most associated in American History with the Know Nothing party, formerly the Native American party (meaning "native" white folks, not indigenous peoples).  As you might guess from the name, their main rallying cry was to limit or stop immigration -- at the time their ire was mainly aimed at the Irish.

This is obviously ironic because from historical use, it is Hinderaker that is going know-nothing, not the Times.   And further ironic because the Irish, whom the Know Nothings wanted to keep out, now are considered by most Conservatives to be part of the backbone of America that is being threatened by all these new immigrants.  Most of the arguments he uses against immigrants are virtually identical to those used, and since proven incorrect, by the Know Nothings in the 19th century.

Postscript:  The term Know-Nothing, if I remember right, came not because they were ignorant, but because they tended to be very secretive.  When asked about their party, they would answer that they know nothing (this works best for those who watched Hogan's Heroes and can say this in a sergeant Schultz voice; if you are too young for Hogan's Heroes, then imitating Ygritte in GOT is acceptable).

The Face of Cronyism

Via Reason:

Billionaire John Catsimatidis is NY: Geraldo Rivera Hosts Wife Erica's 40th Birthday Partyworking to slip a biofuel mandate that would add $150 million to New Yorkers’ heat expenses into the state budget just as a company he owns completes construction of the largest biofuel plant in the region.

The New York Post reports that Catsimatidis’ lobbyists are putting the pressure on State senators to slip a provision that would require all heating oil sold in New York to contain “2 percent or more of soybean oil and/or spent vegetable oils.”

He is a close friend of the Clintons.  Expect a total crony feeding fest should Hillary get elected President,

Sorry, But All You Internet Users Appear to Be Idiots

I am just amazed at how many otherwise smart people are rooting for the government to regulate the Internet:

According to a pair of new reports from the Wall Street Journal and the New York Times, the FCC chairman Tom Wheeler will soon do what some net neutrality advocates have been clamoring for for ages: Try to officially reclassify internet service as a telecommunications service under Title II of the Telecommunications Act. That'd effectively put internet access in the same bucket as landline telephone service, which is treated as a public utility in the United States, and would basically ban the paid prioritization of certain web sites and services over others....

We -- along with many of you -- will be watching the outcome of that vote with bated breath. For that matter, so will representatives and head honchoes of the country's internet service providers. A vote in favor of reclassification means that all of those companies will eventually have to deal with way more intense regulatory scrutiny, and do away with plans to treat some web-centric companies with deep pockets as first-class citizens of the internet while the rest of us wait longer for other stuff to load.

So, out of the fear in the last sentence, that some people will get better service than others -- something that, oh by the way, has never really happened so is entirely hypothetical -- you are urging on a regulatory regime originally designed for land-line phone companies, a technology that basically went unchanged for decades at a time.  The phones that were in my home at my birth in 1962 were identical to the one in my dorm room when AT&T was broken up in 1982.  Jesus, we are turning the Internet into a public utility -- name three innovations from an American public utility in the last 40 years.  Name one.

And all you free-speech advocates, do you really think the Feds won't use this as a back-door to online censorship?  We are talking about the same agency that went into a tizzy when Janet Jackson may have accidentally on purpose shown a nipple on TV.  All that is good with TV today-- The Sopranos, Game of Thrones, Arrested Development, etc. etc. etc. results mainly from the fact that cable is able to avoid exactly the kind of freaking regulation you want to impose on the Internet.

Here is my official notice -- you have been warned, time and again.  There will be no allowing future statements of "I didn't mean that" or "I didn't expect that" or "that's not what I intended."   There is no saying that you only wanted this one little change, that you didn't buy into all the other mess that is coming.   You let the regulatory camel's nose in the tent and the entire camel is coming inside.  I guarantee it.

Update:   Apparently the 1934 Telecommunications Act imposes a legal obligation on phone carriers to complete calls no matter who they are from.  Sounds familiar, huh?  Just like net neutrality.  It turns out this law is one of the major barriers preventing phone companies from offering innovative services to block spam calls.

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."

Everyone Gets Wealthier, Minorities and Women Hardest Hit

It is hard to look at this data and see anything but a positive story, but apparently the New York Times and the rest of the media only see tragedy.  If there is no problem, there is no justification for increased government power, therefore there must be a problem.


(I am presuming this is in real dollars rather than nominal, but God forbid that the NYT ever makes such things clear).  They do manage to show a slight negative recent trend in the growth of the percentage of low income Americans, but only by cherry-picking the dates of comparison to the peaks and troughs of the last two business cycles.  Overall I would read the story as middle and lower class are moving into upper income brackets, but the Times headlines it as "Middle Class Shrinks Further as More Fall Out Instead of Climbing Up," illustrated with a classic empathy-inducing sad-mom photo.

By the way, since more rich people fall than middle class, it would seem to make sense to discuss instead the falling fortunes of rich people, but of course the NYT has no desire to write that article.

Let's Make Employment of Low-Skill Labor Profitable Again

Brink Lindsey of Cato is gathering academic essays on the topic "If you could wave a magic wand and make one or two policy or institutional changes to brighten the U.S. economy’s long-term growth prospects, what would you change and why?"  I am by no means in the distinguished academic company that were invited to contribute, but I thought it was an interesting topic.  Here is my (uninvited) contribution.

The question of skills and the American workforce is typically tackled in only one direction:  that we need more high-skilled workers to meet the challenge of emerging industries and business models that are increasingly driven by technology.  A recent report by the OECD, and as summarized in the New York Times, is a typical example of this concern.  As Eduardo Porter writes in the Times:

To believe an exhaustive new report by the Organization for Economic Cooperation and Development, the skill level of the American labor force is not merely slipping in comparison to that of its peers around the world, it has fallen dangerously behind.

The report is based on assessments of literacy, math skills and problem-solving using information technology that were performed on about 160,000 people age 16 to 65 in 22 advanced nations of the O.E.C.D., plus Russia and Cyprus. Five thousand Americans were assessed. The results are disheartening....

“Unless there is a significant change of direction,” the report notes, “the work force skills of other O.E.C.D. countries will overtake those of the U.S. just at the moment when all O.E.C.D. countries will be facing (and indeed are already facing) major and fast-increasing competitive challenges from emerging economies.”

A lot of head scratching goes on as to why, when the income premium is so high for gaining skills, there are not more people seeking to gain them.  School systems are often blamed, which is fair in part (if I were to be given a second magic wand to wave, it would be to break up the senescent government school monopoly with some kind of school choice system).   But a large portion of the population apparently does not take advantage of the educational opportunities that do exist.  Why is that?

When one says "job skills," people often think of things like programming machine tools or writing Java code.  But for new or unskilled workers -- the very workers we worry are trapped in poverty in our cities -- even basic things we take for granted like showing up on-time reliably and working as a team with others represent skills that have to be learned. CEO Jeff Bezos, despite his Princeton education, still learned many of his first real-world job skills working at McDonald's.  In fact, back in the 1970's, a survey found that 10% of Fortune 500 CEO's had their first work experience at McDonald's.

Part of what we call "the cycle of poverty" is due not just to a lack of skills, but to a lack of understanding of or appreciation for such skills that can cross generations.   Children of parents with few skills or little education can go on to achieve great things -- that is the American dream after all.  But in most of these cases, kids who are successful have parents who were, if not educated, at least knowledgeable about the importance of education, reliability, and teamwork -- understanding they often gained via what we call unskilled work.   The experience gained from unskilled work is a bridge to future success, both in this generation and the next.

But this road to success breaks down without that initial unskilled job.   Without a first, relatively simple job it is almost impossible to gain more sophisticated and lucrative work.  And kids with parents who have little or no experience working are more likely to inherit their parent's cynicism about the lack of opportunity than they are to get any push to do well in school, to work hard, or to learn to cooperate with others.

Unfortunately, there seem to be fewer and fewer opportunities for unskilled workers to find a job.  As I mentioned earlier, economists scratch their heads and wonder why there are not more skilled workers despite high rewards for gaining such skills.  I am not an economist, I am a business school grad.   We don't worry about explaining structural imbalances so much as look for the profitable opportunities they might present.  So a question we business folks might ask instead is:  If there are so many under-employed unskilled workers rattling around in the economy, why aren't entrepreneurs crafting business models to exploit this fact?

A few months back, I was at my Harvard Business School 25th reunion.  Over the weekend, they had dozens of lectures and programs on what is being researched and taught nowadays at the school.  I can't remember a single new business model discussed that relied on unskilled workers.

Is this just the way it is now?  Have the Internet and computers and robotics and complex genomics made unskilled work obsolete?  I don't think so.  I have been running a business for over a decade that employs more than 300 people in unskilled positions.  I will confess that the other day I came home tired from work and told my wife, "Honey, in my next company, I have to find a business that doesn't require employees."  But that despair doesn't come from a lack of opportunities to deliver value to customers with relatively unskilled labor.  And it doesn't come from any inherent issues I might have running a large people-driven service company -- in fact, I will say there has been absolutely nothing in my business life that has been more rewarding than seeing a person who has never had anything but unskilled jobs discover that they can become managers and learn more complex tasks.

The reason for my despair comes from a single source:  the government is making it increasingly difficult and costly to hire unskilled workers, while simultaneously creating a culture among new workers that short-circuits their ability to make progress.

The costs that government taxes and rules add to labor have been discussed many times, but usually individually.  Their impact is clearer when we discuss them as a whole.  Let's take California, because that state is one I know well.  To begin, the minimum wage is $9 (going to $10 an hour in 2016).  To that we have to add taxes and workers compensation premiums, both of which are high because because California does little to police fraud in unemployment and injury claims.  For us, these add another $3.15 an hour.  We also now have to add in the Obamacare employer mandate, which at a minimum of $3000 per full-time employee (accepting the penalty is cheaper than paying for health care) adds another $1.50 an hour.  And the new California paid sick leave mandate adds another 45 cents an hour.  So, looking just at core requirements, we are already up to a minimum of $14.10 an hour, less than 2/3 of which actually shows up in the employee's paycheck.

But these direct costs don't even begin cover the additional fixed costs of hiring employees.  We pay a payroll company thousands of dollars a year to make sure that regulations on taxes and paychecks are followed.  We spend so much time making sure our written plans and documentation on safety meet the requirements of OSHA and its California state equivalent that we barely have the capacity to actually focus on safety.  In California we have to have complex systems in place to make sure our employees don't work through their lunch break, that they have the right sort of chair and that they sit in them frequently enough, that they follow all the right procedures when the temperature outside goes over 85 degrees, that they get paid for sick leave and get their job back after extended medical leave.... the list goes on and on.

In a smaller company, we don't have lawyers and a large human resource staff.  In fact, we tend to have little staff at all.  If some new compliance issue arises -- which happens about every day the California legislature is in session -- the owner (me) has to figure out a solution.  In one year I literally spent more personal time on compliance with a single regulatory issue -- implementing increasingly detailed and draconian procedures so I could prove to the State of California that my employees were not working over their 30 minute lunch breaks -- than I did thinking about expanding the business or getting new contracts.

Towards the end of last year I was making a speech to a group of business school students, and someone asked me what my biggest accomplishment had been over the prior year.  I told them it was probably getting the company down from hundreds of full-time workers to less than 50, converting everyone to part-time.  And it was a huge effort, involving new systems and a number of capital investments to accommodate more staff working fewer hours.  And it had a huge payout, saving us hundreds of thousands of dollars a year in Obamacare penalties and compliance costs.  But come on!  How depressing is it that my biggest business accomplishment was not growing the business or coming up with a new customer service but in cutting the working hours for good employees?  But that is the reality of trying to run a service business today.  The business couldn't be profitable until we'd adjusted our practices to these new regulations, so there was no point in even thinking about growth until we had done so.

Labor-based business models that work at a $7 or $8 total labor cost may well not work at $15, and they certainly are not going to grow very fast if the people responsible for seeking out growth opportunities are instead consumed in a morass of legal compliance issues.  But there is perhaps an even more damaging impact of government interventions, and that is to the culture of work.  I will confess in advance I don't have comprehensive data to prove my hypothesis, but let me tell a couple of stories.

Until 2010, we never had an employee sue us.  We had over 8 years hiring 350 seasonal workers a year, mostly older retired folks, without any sort of legal issues.  Since 2010, we have had eight employee suits threatened or filed, all of which we have won but at a legal cost of $20-$25 thousand each (truly Pyrrhic victories).  So what changed around 2010?  Well, our work force composition changed a lot.  Before that time, we typically hired older retired folks, because the seasonal nature of the job is simply not very appropriate for a younger person trying to support themselves without other means (like retirement or Social Security).   However, after 2009 when a lot of younger folks were losing their traditional jobs, they began applying to our company.  Our work force shifted younger, which actually excited me because I felt it would help us in attracting a younger demographic to the campgrounds we operate.    But all eight of these legal actions were by these new, younger employees.  I asked one person who was suing us over what was a trivial slight, really a misunderstanding, why they did not just call me (my personal number is in their employee handbook) to fix it.  They said that if I had fixed it, they would have lost the opportunity to sue.

I mentioned earlier that we had struggled to comply with California meal break law.   The problem was that my workers needed extra money, and so begged me to be able to work through lunch so they could earn a half-hour more pay each day.  They said they would sign a paper saying they had agreed to this.  Little did I know that this was a strategy devised by a local attorney who understood meal break litigation better than I.  What he knew, but I didn't, was that based on new case law, a company had to get the employee's signature every day, not just once, to avoid the meal break penalties.  The attorney advised them they could get the money for working lunch AND they could sue later for more money (which he would get a cut of).  Which is exactly what they did, waiting until November to sue so they could get some extra money to pay for Christmas bills.  This is why -- believe it or not -- it is now a firing offense at our company to work through lunch in California.

Hopefully you see my concern.   I fear that we have trained a whole generation that the way one gets ahead is not to work hard and gain new skills but to seek out and exploit opportunities to file lawsuits.  That the way to work in an organization is not to learn to manage the inevitable frictions that result from different sorts of people working together but to sue at the first hint that you have been dissed.  As an aside, I think this sort of litigiousness, both of employees and customers, is yet another reason employers are reluctant to hire low-skilled employees.  If as a business owner one is absolutely liable for any knuckle-headed thing your most junior employee might utter, no matter how clear you are in your policies and actions that such behavior is not tolerated, then how likely are you to hire a high-school dropout with no work experience?

Is it any surprise that most entrepreneurs are pursuing business models where they leverage revenues via technology and a relatively small, high-skill workforce?  Uber and Lyft at first seem to buck this trend, with their thousands of drivers.  But in fact they prove the rule.  Uber and Lyft are very very careful to define themselves and their service in a way that all those drivers don't work for them.  I would go so far to say that if Uber were forced to actually put all of those drivers on their payroll, and deal with they myriad of labor compliance issues, their model would fall apart

We cannot address the skill gap unless people have entry level, low-skill-tolerant jobs to take the first steps up the ladder of success.  If the government continues on its current course, it will become impossible to run a business that employs unskilled workers.  The value of the work performed will simply not justify the cost.  We may be concerned about income inequality today, but if we kill off the profitability of employing unskilled workers, then we are going to be left with a true two-class society -- those with high-skill jobs and those on government assistance --and few options for moving from one to the other.

This is a GOOD Sign for the United States

Thomas Friedman, and many others, think it is a sign of America's decline and some sort of failure of government will that other countries are building super-massive showcase infrastructure projects while we are not.  They would take this chart as a sign of decline:


I disagree.  This is a sign of growing maturity on the part of the United States.  Many of these super-tall building projects make little economic sense, but are completed to validate the prestige of emerging nations, like teenage boys comparing penis sizes.  Grown men are beyond that behavior, just as are grown-up nations.  I discussed this in the context of rail a while back at Forbes.  In that case, it seems everyone thinks the US is behind in rail, because it does not have sexy bullet trains.  But in fact we have a far more developed freight network than any other country, and shift of transport to rail makes a much larger positive economic and environmental impact for cargo than for rail.  It comes down to what you care about -- prestige or actual performance.   Again choosing performance over prestige is a sign of maturity.**

The US had a phase just like China's, when we were emerging as a world economic and political power, and had a first generation of successful business pioneers who were unsure how to put their stamp on the world.  So they competed at building tall buildings.   Many of the tallest were not even private efforts.  The Empire State Building was a crony enterprise from start to finish, and ended up sitting empty for years.  The World Trade Center project (WTC) was a complete government boondoggle, built by a public agency at the behest of the Rockefeller family, who wanted to protect its investments in lower Manhattan.  That building also sat nearly empty for years.   By the way, the Ken Burns New York documentary series added a special extra episode at the end after 9/11 on the history of the WTC and really digs in to the awful crony and bureaucratic history of that project.  Though Burns likely did not think of it that way, it could as easily be a documentary of public choice theory.  His coverage earlier in that series of Robert Moses (featuring a lot of Robert Caro) is also excellent.

** I have always wondered if you could take this model further, and predict that once-great nations in decline (at least in decline relative to their earlier position) might not re-engage with such prestige projects, much like an aging male seeking out the young second wife and buying a Porche.

Update:  Here is part of what I wrote on US vs. European and Japanese railroading, which I think is an absolutely awesome example of where the triumphalists like Friedman go wrong:

In particular, both Friedman and Epstein think we need to build more high speed passenger trains.  This is exactly the kind of gauzy non-fact-based wishful thinking that makes me extremely pleased that these folks do not have the dictatorial powers they long for.   High speed rail is a terrible investment, a black hole for pouring away money, that has little net impact on efficiency or pollution.   But rail is a powerful example because it demonstrates exactly how this bias for high-profile triumphal projects causes people to miss the obvious.

Which is this:  The US rail system, unlike nearly every other system in the world, was built (mostly) by private individuals with private capital.  It is operated privately, and runs without taxpayer subsidies.    And, it is by farthe greatest rail system in the world.  It has by far the cheapest rates in the world (1/2 of China’s, 1/8 of Germany’s).  But here is the real key:  it is almost all freight.

As a percentage, far more freight moves in the US by rail (vs. truck) than almost any other country in the world.  Europe and Japan are not even close.  Specifically, about 40% of US freight moves by rail, vs. just 10% or so in Europe and less than 5% in Japan.   As a result, far more of European and Japanese freight jams up the highways in trucks than in the United States.  For example, the percentage of freight that hits the roads in Japan is nearly double that of the US.

You see, passenger rail is sexy and pretty and visible.  You can build grand stations and entertain visiting dignitaries on your high-speed trains.  This is why statist governments have invested so much in passenger rail — not to be more efficient, but to awe their citizens and foreign observers.

But there is little efficiency improvement in moving passengers by rail vs. other modes.   Most of the energy consumed goes into hauling not the passengers themselves, but the weight of increasingly plush rail cars.  Trains have to be really, really full all the time to make for a net energy savings for high-speed rail vs. cars or even planes, and they seldom are full.  I had a lovely trip on the high speed rail last summer between London and Paris and back through the Chunnel — especially nice because my son and I had the rail car entirely to ourselves both ways.

The real rail efficiency comes from moving freight.  As compared to passenger rail, more of the total energy budget is used moving the actual freight rather than the cars themselves.  Freight is far more efficient to move by rail than by road, but only the US moves a substantial amount of its freight by rail.    One reason for this is that freight and high-speed passenger traffic have a variety of problems sharing the same rails, so systems that are optimized for one tend to struggle serving the other.

Freight is boring and un-sexy.  Its not a government function in the US.  So intellectuals tend to ignore it, even though it is the far more important, from and energy and environmental standpoint, portion of transport to put on the rails.  In fact, the US would actually probably have even a higher rail modal percentage if the US government had not enforced a regulatory regime (until the Staggers Act) that favored trucks over rail.   If the government really had been asleep the last century, we would be further along.

Media Notices America's Grievous Shortage of Laws

Noting that the United States is currently experiencing a drastic shortage of laws, America's media (example, but many others) have finally begun to chastise the recent Congress for being, as described by the Huffington Post,  "pretty close" to "the least productive ever."  Like fishes cast ashore flopping on the beach dying for lack of oxygen, Americans are desperately begging for more laws and for more things to be made a criminal offense, and Congress is shamefully ignoring them.

Said one man interviewed on the streets of New York, "there are barely 4000 criminal offenses outlined in the Federal code.  No wonder we have so much anarchy.  We need a lot more crimes and Congress is not cooperating."

A local business woman echoed these thoughts: "With only 80,000 pages in the Federal Register, I often don't know what I should be doing.  Sometimes I go a quarter of an hour in my business making decisions for which there is absolutely no Federal guidance.  It's criminal Congress is shirking its responsibility to tell me what to do."

Said everyone, "there ought to be a law..."