Monthly Archives: August 2010

You Can’t Make This Up

$150,045 of stimulus money is being spent to restore a bridge that doesn’t connect to any roads and ends in an 8-foot drop.

Stimulus backers claim that the project created 1.9 jobs. That’s $78,971.05 per job created. That’s not a very good deal. Especially considering that no jobs were created on net, because that $150,000 was taken away from somewhere else in the economy.

Without the stimulus, that money would have been spent in other ways. Given that most jobs cost less than $78,971 to create, it may well be that the bridge restoration project meant fewer jobs were created than if the government had just left the money where it was originally — your pocket.

Regulation of the Day 146: Airplane Child Seats

If you and your small child are flying away on a vacation, most airlines will let the child fly for free. If the child sits in your lap, you don’t have to pay for a second seat. But the National Transportation Safety Board doesn’t think that is safe.  Severe turbulence and rough landings kill a lap-child or two every decade.

That’s why NTSB wants to require all children to sit separately, comfortably ensconced in the child safety seats they use when riding in a car.

The NTSB’s intentions are laudable. They’re trying to make people safer. But intentions are not results. And this rule’s results would be exactly opposite its intentions. It would kill far more people than it would save.

That’s because making parents pay for an extra ticket raises the cost of flying. Many families will choose to drive instead. And remember, driving is much more dangerous than flying. According to CEI’s Sam Kazman, studies show that the extra driving in lieu of flying would kill about 50 people per decade, plus thousands more injuries.

Throwing away 50 lives to save one or two lives is a bad deal. It is literally death by regulation. That’s also why the FAA has repeatedly refused NTSB’s periodic demands to make parents pay more to fly. May they stand firm again.

See also today’s press release from Sam Kazman.

Government as Reverse Robin Hood

People who want government to redistribute income want to take it from the rich and give it to the poor. And there are programs that do that. But in practice most programs actually work in the opposite direction. More often than not, government is Robin Hood in reverse.

Via Patri Friedman, here’s a video of Milton Friedman explaining why that’s so.

Voting the Bums Back In

Many people think change is in the air. Voters are angry. And they want to throw the bums out. That’s the dominant narrative this election cycle. But at least during primary season, that narrative is fitting poorly with actual election results. Politico reports:

Six incumbents have lost this season: Sens. Arlen Specter (D-Pa.) and Bob Bennett (R-Utah) and Reps. Alan Mollohan (D-W.Va.), Bob Inglis (R-S.C.), Carolyn Kilpatrick (D-Mich.) and Parker Griffith (R-Ala.). Larry Sabato, a political scientist at the University of Virginia, pointed out in Arena that factoring for those losses translated into a 98.3 percent win rate for incumbents so far in 2010.

That 98.3 percent win rate will drop on Election Day. But probably not by much. Not even if one or both chambers switch parties. In 2008, incumbents running for re-election had a 94.9 percent success rate. In 2006, when Congress changed parties, the re-election rate was still right around 94 percent. The last time re-election rates went as low as 90 percent was in 1992 — nearly two decades ago.

The sad truth is that incumbents are safe. It doesn’t matter that Congress’ approval ratings are in the low teens. Voters just aren’t going to throw out very many bums. Voters may despise Congress as an institution, but most people have positive opinions of their own representative.

That’s why the average tenure in the House is more than 14 years, or seven terms. And most turnover isn’t from losing elections. It’s from retirement or running for other office, or death; for many, politics is literally a lifelong career.

So expect a lot of familiar faces to be sworn in when the 112th Congress convenes in January, even if power changes hands.

Though I will, of course, be very happy if events prove me wrong.

Why Government Layoffs Tripled in June

This graph from just-released Federal Reserve data caught my eye. It shows government layoffs and discharges from late 2000 through June of this year (raw data set downloadable here). Government jobs are remarkably stable. According to this BLS chart,government workers enjoy roughly three times the job security of private sector jobs. Government workers also compensated more than twice as well as the people who pay their salaries.

For most of the last decade, government workers had as small as a 1-in-200 chance of getting fired or laid off in a given month. This stability mostly held up even during recessions, which are marked as the shaded areas in the graph.

But notice the big spike that happened this June. The economy is out of recession. But times are still tough. And government deficits are at record highs. Is the sudden jump in layoffs and discharges due to government cutting spending to avoid fiscal disaster?

I’d guess not. June was when large numbers of temporary census workers finished their jobs. Still, for one shining second, I thought that Washington had come to its senses.

Graphs and Narratives

There are a lot of stories that can explain this graph that Eli Dourado created from BEA data. But not all of them are true. Eli, a fine economist who I went to grad school with, shows why one of them is not true.

Take a minute to see why.

Great Men (and Women)

“Great men have two lives; one which occurs while they work on this earth; a second which begins at the day of their death and continues as long as their ideas and conceptions remain powerful.”

-Adolph A. Berle

Berle wrote those words a bout FDR. I read them in a biography of Pericles. May they also apply to great thinkers from John Locke to Adam Smith Charles Darwin to F.A. Hayek, all the way on down to today’s bright lights of liberalism who are alive and well.

Justice Kagan, Please Be a Judicial Activist

Over at the Daily Caller, I explain why newly-minted Justice Kagan should be a judicial activist — but not in the way most people use the term. True judicial activism doesn’t mean legislating from the bench. It means standing up to the executive and legislature and striking down unconstitutional laws. Unfortunately, Justice Kagan seems like she would rather defer to the branches that gave her her new job:

There is a reason why the Supreme Court is filled with Justices eager to defer to the political branches. It’s because the political branches get to pick who sits on the bench. No president would nominate a judge who might nullify his administration’s signature achievements. No Senator would vote to confirm a judge who might strike down an important bill that she wrote. There is a selection bias favoring judicial passivists.

But there is light at the end of the tunnel:

Justice Kagan was nominated and confirmed because of her judicial passivism. But now that she’s in, she’s in for life. She can stand up for the judicial branch if she wants to. If a case comes before her involving a law that is clearly unconstitutional, her rightful duty is to strike it down.

In many cases, it’s as easy as just saying no.

The Deflating Quality of Economic Journalism

Cato’s Jagadeesh Gokhale with an example of the current state of economic journalism:

[NPR reporter Adam] Davidson: “Ladies and gentlemen, I have an amazing investment opportunity for you. Give me $100, just a hundred, and in one year I promise it will be worth 93 bucks. We call it the deflation special.”

My reaction: No, sir! Under deflation, $100 today would increase in value to $107 (assuming your implicit rate of deflation). Help! Stop the car! …Wait, I’m the one driving…what just happened?

Davidson: “All right, seriously, nobody is giving anybody a hundred bucks just so they can lose seven.”

My reaction: No, no, please, please take my money! I’d give you a million dollars if I had that amount. I really would!

It gets worse from there. Davidson completely misunderstands the effects of deflation — and thousands of listeners take him at his word. No wonder public understanding of economics is so poor.

People spend little time learning about economics in the first place because of rational ignorance. Compounding the problem is that in the little time they do spend learning — usually from economically untrained journalists — they get incorrect information from people who know not of what they speak.

I previously wrote about the troubled relationship between economics and journalism here and here.

Rest in Peace, Manuel Ayau

Sad news from Guatemala. Manuel “Muso” Ayau died this morning at 85 from cancer. He founded Universidad Francisco Marroquin, one of the top schools in all of Central America. UFM is also one of the region’s few bastions of liberalism, and has done much to promote human freedom in a part of the world that has far too little of it.

Don Boudreaux, who knew him well, remembers him over at Cafe Hayek. He also links to a profile he wrote about Ayau to celebrate his 80th birthday. Well worth the few minutes it takes to read it.

Ayau was a remarkable man, and I regret never getting the chance to meet him. Condolences to his family, friends, and admirers.