Tuesday, June 21, 2016


We know about confirmation bias. It is all too easy (even fun) to look for evidence that confirms our priors. Psychologists (and others) can explain. I guess.

Knowing all this, what can be done?  We can make an honest effort to consider the positions of those who are not like-minded. I have a lot of respect for Arnold Kling who wants to take "the most charitable view of those who disagree."

I have several times cited the LA Times' (30-plus-years late)  realization that the data on actual ridership undermine that newspapers' attachment to rail transit for Los Angeles. Hallelujah.

Not so fast. This morning's lead editorial regresses.  "Nearly 50 years ago, Los Angeles County voters rejected a half-cent sales tax proposal that would have built an 89-mile rail and bus network between downtown, Long Beach, the San Fernando Valley and Westwood, the San Gabriel Valley, and even a route to LAX. The Times Editorial Board at that time urged a no vote, saying “we are an automotive people, unlikely to change our habits.” Imagine if voters had said yes? How many hours of congestion might have been avoided? How much pollution might have been prevented? Now, five decades later, our habits will have to change, one way or another." Once again, here is what some of my friends said about that proposal at the time.

My previous post on "Not just the toadies" notes that many smart people resist evidence that does not satisfy them even if they found (and reported) that evidence. Confirmation bias is not so easily turned off. So can psychologists explain? Or are they subject to the same demons?


The usual suspects want more from the taxpayers.  The usual suspects spin the usual stories.  Here Moore and Rubin respond.

Tuesday, June 14, 2016

Passions and interests

I had heard about "tiny homes" but we are seeing more discussions, suggesting that there is a serious (still tiny)audience. The WSJ includes "West Texas Town Finds 'Tiny House' a Bit Too Earthy ... Luring eco-conscious builders to 120-square foot homes seemed like a great idea until plans for yurts, straw dwellings popped up; no anarchists, please."

Americans consume more living space than others. People like space and many policies and programs (no surprise) cater for that preference. But it seems that there are also some who want to go the other way. They want less space. This preference my be influenced by beliefs that we are running out of space. Cities, certainly and by definition, are places where we see various degrees of crowding. Some of these folk may be just plain old ascetic.

But where there is crowding of any sort, there are externalities, some of which may never be transacted. We get conflicts and the demand for rules. This may be zoning. Some find a way to come up with zoning codes. No politics without conflict; no conflict without some semblance of politics.

This is why the brief "tiny homes" story illustrates, that we are all environmentalists. The ambit and the scope of our environmentalism differs from person to person. Neighborhood externalities and the consequent environmental interests are universal. We even get NIMBY.

I care more about the block I live on than I do about a coal burning utility in India. I suspect many others feel the same way. But we are not very good at sorting out our sensibilities. Can we untangle our passions from out interests (Hirschman)?  It is easy (tempting) to wrap our own interests in a "greater good" story. Some of the Tiny House people are learning all about this.

Thursday, June 09, 2016

Not just the toadies

There used to be political economy. Then they split into political science and economic science (official title of the Nobel in economics). Scientism is the problem. Economics without the political context sounds pointless, as does politics without the economic context. Ask any historian.

The U.S. presidency looks like a lose-lose deal. Both major party candidates, polls show, have unusually high "negatives". So why have the markets not panicked? The U.S. dollar and the stock market remain strong. The explanation I like best is that U.S. institutions are strong enough to withstand whatever politics throws at them.

But riddle me this. How do intellectuals keep the faith keep the faith in spite of evidence they have assembled and published? This is the topic that James L. Payne tackles brilliantly in "Government Fails, Long Live Government!: The Rise of 'Failurism'" in the current Independent Review. This is gated for a few months but do get it, even buy the app.(!)

The evidence against the efficacy of government policies and programs has been piling up for some years. Payne cites the writings of E.J. Dionne, Philip K. Howard, Jonathan Rauch, Steven M. Gillon, Derek Bok, Thomas E. Mann, Norma J. Ornstein, Richard A. Clark, Paul C. Light, Lawrence Lessig, John J. DiIullio, Peter H. Schuck. All of them report government failures -- and go on embracing the idea that government can and will "solve" problems. Payne notes that, "[t]hese works of censure are remarkable in one odd respect, however: the authors remain steadfastly loyal to big government and suggest no significant reduction in its scope."

That old-time religion. Yes, the evidence has been piling up as never before but we still get Clinton-Sanders-Trump. It is not just the cheering toadies seen on the evening news but also some of our best and brightest.

Tuesday, June 07, 2016

Hope for change

It appears that Gary Johnson is on the ballot in all 50 states.

And when the major parties have seemingly settled on two unpopular/unsavory candidates, polls (same Wiki link) show that he is doing well for a third-party candidate. But the polls that matter are for the states (some at same Wiki link). If Johnson can keep just a few electoral votes from the Clinton-Trump combine, and neither one of them gets an Electoral College majority, the selection of the next president goes to the U.S. House of Representatives -- where each state has one vote.

The House might actually select an adult. I do not have high standards these days. Almost anyone but Clinton or Trump sounds pretty good.

This is not crazy. Clinton is being investigated by the FBI. Trump will not show his tax returns, torpedoes himself every chance he has, and has the national press corps on his case. What a time to be an investigative reporter. Two candidates with many skeletons in many closets.

A small number of voters in a small number of small states could then make a very big difference.

Thursday, June 02, 2016

View from The New Yorker

My friend Andrew K sends me to the New Yorker for their latest coverage of LA transit. Here is the bottom line:
If Angelenos are willing to give up the sanctity of their own four doors for a stranger’s Prius, it stands to reason that they would be open to trading the mobility of four wheels for the pleasures of public transit. And there are pleasures, despite the length of travel, the stops and starts, and the chewing gum caked into the ridges of the train’s linoleum floor. Foremost among them is the romance of boarding a train in the gritty underground and stepping off on a newly paved, sun-bathed platform, the Pacific glimmering in the distance.
Comparing Uber and transit is unfortunate. Uber raises billions of dollars from willing investors. Metro raises billions of dollars at the point of a gun (the power to tax). Uber offers door-to-door service with amazing reliability, etc. The list goes on.

Perhaps the writer is kidding about the "chewing gum caked to the ridges.. " and all the other lovable "gritty" stuff. It is the New Yorker. Look at all the movies that depict life in the big city, notably New York. All the people are pretty, the sidewalks are swept and the cars are all shiny. Gritty and all that may be very cool to a New Yorker writer but not so much for the rest of us.

The "democratization of luxury" is a very big deal in our lives. Uber's door-to-door service approximates what was once available to the wealthy. The charm of "grit" belongs in another universe.

Tuesday, May 31, 2016

What will you believe

This morning's WSJ includes "Nuns with Guns: The Strange Day-to-Day Struggles Between Bankers and Regulators ... Lenders are awash with new regulations, and growing armies of enforcers are forcing striking changes on bank's internal cultures ..." This type of thing, we are told many times, has little or no effect on the economy nor does it explain the slow recovery. But the accompanying graphic shows (corrected) near-25,000 pages of new Dodd-Frank rules.

I know that the free-lunch myth is a favorite among politicians and acolytes but it takes a special kind of willful blindness to wish away the costs of complying with near-25,000 pages of new rules. And this is just one law.

The 2016 Papers and Proceedings of the American Economic Review includes a helpful analysis by Ryan Decker and colleagues, "Declining Business Dynamism: What We Know and the Way Forward."  They report that "The evidence is consistent with the presence of adjustment frictions that are changing the payoff to business scale adjustments." Twenty-five thousand pages of new rules surely feed these adjustment frictions.

Why does Washington DC tilt towards the lower end of housing affordability? On the supply side, there is evidence of restrictive policies (Pendall, 2006). On the demand side, the no evidence for great weather is but there is evidence for job opportunities. Dodd-Frank is just one of many such opportunities. Trouble is that these are not the jobs that contribute to economic dynamism. In fact, they do the opposite.

Wednesday, May 25, 2016

LA's Expo Line extension

LA is not a transit town. Even the LA Times has figured this out. They show fewer riders now than when rail transit building began in 1985.  Billions have been spent to achieve this result, But we live in a bootleggers-and-Baptists world where costs and benefits (resource scarcity) are not a big deal.

I decided to test LA's new Expo Line extension this AM. It was a fine-weather LA morning and I was carrying minimal gear. I walked past my parked car and kept walking to the nearest Expo station, about 2 miles away. I am a 10,000-steps-a-day man anyway, so no problem. The walk to the station took just over 40 minutes. The senior fare was $1.75. (A transit pass would have made this less.)

The train arrived 10 minutes late. They have only been in service less than a week.

I got a seat and was able to read. The ride was smooth. The car that I was in was filled with passengers most of the way. Late arrival explained some of this.

One reason to do my experiment is that the train does stop at USC's doorstep, my destination. Total door-to-door trip time for me was 87 minutes. The median morning drive-time for me (over many trials over many years) is about 25 minutes,  So, I "lost" about an hour this AM. This is not that bad considering that one of the trip ends is exactly at the station where I alighted.

Assuming it's similar on the way home, at the margin, will I give up 2 hours a day, every day? LA is not a transit town.

Full disclosure, as an emeritus, I get free parking (looking at you, Prof Shoup) and save that $12/day outlay, Still, 2 hours a day?


The trip home was better. The train arrived on schedule and I happened to arrive at the station just as it pulled in. So that was about 20 minutes less than the AM (when I would have had a 10 min wait had the train been on schedule). But the afternoon walk was uphill and, being later in the day, more tiring. Marginals are not supposed to be fixed. So averaging the 60 minutes added to my normal commute in the AM and about 35 minutes added in the PM, the marginal time cost per day is just over 1.5 hours. 

Sunday, May 22, 2016

Policy uncertainty blob

Many economists (here, for example) are baffled by the Obama administration's new overtime pay regulations. I am baffled that they are baffled. The political campaign to date has shown pretty clearly that the electorate is ignorant of basic economic common sense. The thinnest rhetoric that it's all about "helping people" works. Anything that can be promoted as "helping" anyone, who can without any serious effort be shown to be a victim of something or other, can be sold as a winning policy proposal -- to just enough of the electorate (and media).

Any bargain that I choose to strike with anyone is between me and the other party. If no force or fraud is involved, it's on my shoulders. If I agree to the deal it is because I have decided (as only I can) that it's my best option under the circumstances. (David Henderson lays it out.) I can always dream of better options but that's irrelevant. So Secretary of Labor Tom Perez can go on the PBS News Hour and explain it all as common sense "helping people" -- along with a finger-wagging Joe Biden to back it all up with a stern "mark my words". Case closed.

The blob is growing fast and hard to assess. Last Friday, Holman Jenkins cited the latest: "The Competitive Enterprise Institute finds that, last year, Congress passed a mere 114 laws and federal agencies issued a whopping 3,410 regulations. At 80,260 pages, last year’s Federal Register was the third fattest in history."

Slow recovery? That has absolutely nothing to do with it. It's actually all about "secular stagnation." So bring on more regs and rules that can be sold as "helping people". Just don't think about the policy uncertainty.

Thursday, May 19, 2016

Social media electorate

Matt Ridley reminds his readers that genetically modified foods are safe. He cites a recent meta-analysis that reiterates the point. Yet the EU still rejects them. Food manufacturers here and there are busy stamping "No GMO inside" on the labels of foods they are selling. Our more-educated-than-ever public is apparently prone to hysteria.

Today's WSJ cites Gwyneth Paltrow's views on detox ("Gwyneth Paltrow and Science"). Daniel Henninger writes about "Trump and Bernie" and guesses that their ideas resonate in an age when most people are informed via social media. "The Trump and Sanders phenomena have more in common with Facebook communities than with the two political parties. Maybe that's the future. Criticizing them, we've all learned, violates the social bond." Old-school Hillary Clinton is forced to try to stay in the game by trying to out-Bern Bernie -- and even to promise (threaten) to bring Bill back into the White House.

There is lots of head-scratching over what goes with the electorate in 2016. Henninger's is an interesting one. New technologies are usually mixed blessings. The networked world is a great thing but it appears to have put the electorate in a trance. Will our new politics find a way to cope with tax reform, regulatory reform, terror from non-state actors? 

There are many places on Earth that can be (have been) ruined by their political leaders. Here, at home, we can select awful leaders but we always survive them.

Saturday, May 14, 2016

A feature, not a bug

The WSJ's car guy, Dan Neil, writes about "Commute to Thrill ... A new wave of electric-powered rides -- scooters, long boards, unicylces -- is ready to whisk you from your mass-transit stop to your final destination ..."  He notes rail transit's last-mile problem.  Actually, it's a first-and-last-mile problem. The piece is Manahattan-centric; in the rest of America it would be last-and-first-several-mile-problem. Or call it fatal flaw problem.

Right on cue, today's LA Times writes about LA's about-to-open latest light-rail extension, "The Expo Line is finally coming to the Westside, but limited parking raises concerns." The Times (in spite of having recently noted rail's woeful 25 years in LA, see their chart) coverage does include some memorable lines. Here is one: "In planning documents for the Expo Line, officials said they expected commuters will drive into surrounding neighborhoods to find street parking at every station." This stuff passes all of the mandated environmental reviews. Most of these neighborhoods have posted one- or two-hour limits as well as once-per-week street cleaning/tow-away warnings. Often more. Not to mention that some neighborhood residents or business who might have some things to say.

It gets better. "The goal, urbanists say, is to change land-use patterns near stations over time, adding apartment buildings and office complexes along rapid transit corridors that would make it easier for people to get to work, run errands and go out to dinner without a car." So lack of parking is a feature, not a bug. It's a vital part of a grand New Urbanist strategy.

And we hear that some in the public are cynical about what their betters do all day.


DC's Metro problem. Different but similar.

Wednesday, May 11, 2016

Not a 'Libertarian Moment'

Less than two years ago, the NY Times asked "Has the 'Libertarian Moment' Finally Arrived?" I know the answer. The answer has arrived loud and clear via Hillary and Bernie and Donald and their many followers. Perhaps these three have more in common than sets them apart.

If creative destruction made us rich, it also unleashed the passions that mobilized most primary voters. The three remaining candidates want to "protect American workers." Status quo wins votes these days.

I look out my window at a construction site just across the street and quickly realize that if the immigrants working there were somehow removed, the site would be deserted. The project and countless others would remain unfinished. We are today further away from reformed migration than ever.

Not long ago, the economist Giovanni Peri wrote, "From 1990-2010, scientists and engineers admitted by the H-1B visa program added $615 billion to the economy".  And Congress has seen fit to cap that program at a miserly 65,000 + 20,000 (see here for explanation). And, although directed to scientists and engineers, the program does nothing for my construction friends across the street. And the New Yorker recently reported that Donald Trump's bride (yes, an immigrant) was admitted to the U.S. under the H-1B program. No, she is neither a scientist nor an engineer.

Fine tuning and social engineering are hard work. Politicians have no way to know which talents are most "needed" when and where. Labor markets do that. But the "moment" when we would let free people (employees and employers) agree to who gets hired when, where and how has not arrived. In fact, it is receding with every speech and rally involving Hillary, Bernie, Donald.

Friday, May 06, 2016

What to do?

When people don’t want to talk about the weather, many ask if I prefer Clinton or Trump.  It’s interesting that “none of the above” strikes many as odd.  “You have to vote”. "What if everyone had that attitude?" “It’s a precious right and a civic duty.” Young people learn about “democracy” and "majority rule"from a very early age.” But the fact that there is much more to it is seldom taught. The franchise recognizes the dignity of the individual and this is a great thing. But there are downsides that are on display every day – especially this election season.

Imagine buying cars the way we buy governments. Ten thousand people would get together and agree to vote, each for the car he preferred. Whichever car won, each of the ten thousand would have to buy it. It would not pay any of us to make any effort to find out which car was best; whatever I decide, my car is being picked for me by other members of the group. Under such institutions, the quality of cars would quickly decline. ...  David Friedman, The Machinery of Freedom (1995).

What can be done? Smaller government is my only answer. How do we get there? Re-charter every agency and every law every x years. Will the third-party candidate (whoever he/she is) please campaign on this platform so that it can at least have a shot at being discussed? The right candidate could bring it up before Charlie Rose and his audience. That would be a start.

Sunday, May 01, 2016


JFK was no fool. He knew all about close elections and the importance of (somehow) lining up votes. In 1962, he issued an executive order that paved the way for the emergence of public sector unions. This has paid off spectacularly for Democratic Party candidates ever since. Trouble is that (see Francis Fukuyama cited in a previous post) it harmed the quality of public administration in the U.S.

Failed public policies (of which there are now many) are forever "underfunded." Political candidates feast on the "need" for more funding. More funding usually happens and the programs still underperform.  This can go on for long while. Most voters pay little attention to deficits and unfunded liabilities.

This year's big political issue is inequality. The 50+ year War on Poverty has not done the job and is surely underfunded.

But there is another possibility. Some people remain poor because they make poor lifetsyle choices. Pointing this out brings on the "blaming the victim" chorus -- and undermines the "need for more funding" refrain.

Christine Rosen's "Lifestyles of the Not-Rich and Unequal" makes the point. "Liberal handwringing about inequality obscures an endemic cultural NIMBYism. A racially diverse but economically homogeneous private school for little Jasper is heaven -- but a playdate with a kid whose parents didn't go to college and might own a gun? Awkward." Read the whole thing. Not only do we have the inequality thing wrong but the same for the diversity thing. Narratives!

What to do? You may want to dust off Charles Murray's Coming Apart.


Wendell Cox thinks that Washington DC's Metro is not in trouble because it has been underfunded.

Wednesday, April 27, 2016

Confidence soup

Holman Jenkins writes about "The Auto Emissions Crackup ... 'sophisticated state failure'" It's not just VW.  He mentions nine other auto-makers that have been forced to issue recalls (or worse) for similar emissions tests tampering. Could it have been any other way?

Prostitution and hard drugs have been "illicit" and illegal for some time. Enforcement has failed. Prohibition re alcohol consumption in the U.S. had to be rescinded via Constitutional amendment. Unenforced/unenforceable laws and standards are not hard to find. But vote-hungry politicians enact them anyway. Posturing is often involved.

In the auto emissions case, political posturing gives us impossible standards and automakers can cheat or go out of business. "Sophisticated state failure" sounds about right.

The slow recovery (here and abroad) strongly suggests that risk-taking has retreated in the face of policy-inspired uncertainty. Paul Krugman mocks all this as the "confidence fairy".  Alberto Alesina responds (in part) on Econtalk.  So is people's confidence way down?  It's fair to say that in desperation more and  more voters are ready to gamble on unusual candidates for high office (previous post). That looks like a desperation move. Call it confidence fairy. Call it turtle soup.


Abysmal GDP growth.

Regulation is not free