The Katrina news and commentary keep piling up but some are worth repeating. This morning's WSJ (page B1, cannot link for non-subscibers) reports that: "At Wal-Mart, Emergency Plan Has Big Payoff ... The Federal Emergency Management Agency can learn some things from Wal-Mart Stores, Inc. On Wednesday, Aug. 24, when Katrina was reclassified to a storm from a tropical depression, Jason Jackson, the retailer's director of business continuity, started camping out in Wal-Mart's emergency command center. By Friday, when the hurricane touched down in Florida, he had been joined by 50 Wal-Mart managers and support personnel, ranging from trucking experts to loss-prevention specialists. On Sunday, before the storm made landfall on the Gulf Coast, Mr. Jackson ordered Wal-Mart warehouses to deliver a variety of emergency supplies, from generators to dry ice to bottled water, to designated staging areas so that company stores would be able to reopen quickly if disaster struck ..."
Yesterday's NY Times David Brooks piece is a nice complement. "The Best-Laid Plan: Too Bad It Flopped" looks at pre-Katrina planning, which Brooks finds to be impressive -- but reiterates the plain fact that there is only so much that government can do. Even well-meaning and competent officials (not to speak of the other) will not perform up to the level of a Wal-Mart.
Meanwhile in the LA Times, Niall Ferguson ("The Economic Hurricane") raises the sceptre that Katrina will plunge the U.S. (and the world?) into economic recession. No one knows and Murphy's Law can always kick in. Nevertheless, all doomsayers ought to carefully consider the Wal-Mart example -- as well as (drum roll) the perennially evoked and nevertheless widely neglected Econ 101.
Monday, September 12, 2005
Friday, September 09, 2005
Institutional Entrepreneur
Entrepreneurs make the world go round and insitutional entrepreneurs deserve special mention. Not only do they invent ways to overcome transactions costs and thereby expand property rights and the exchange economy but they also develop (and profit from) ways to overcome dumb policies.
I once blogged about the LifeSharers network, whereby precommitments by members make organ swaps possible.
Another example is in the current Forbes. "That's Hot" describes a way that one entrepreneur arbitrages electrical power between peak and off-peak in ways that skirt the official reluctance to do just that -- and thereby save and make money (all at the same time!).
"With the mercury peaking at 96 degrees, in New York's Central Park on an afternoon in late July, the city set a record for energy draw: 13 gigawatts. That is equal to the generating capacity of seven Hoover Dams.
"During spikes like this, New York's Consolidated Edison buys exensive energy from peak-usage power plants, sending the wholesale spot price of a kilowatt-hour of energy -- 3 cents on a cool day -- to $1 or higher. New Yorkers never notice the difference because the price they pay hardly varies on the hottest day of the year.
"The discombobulated pricing is a senseless waste and it might make Michael Gordon rich. His $12.5 million (sales) New York energy services shop, Consumer Powerline, is New York's largest " aggregator" of electricity savings contracts.
"Twice a year Gordon signs up huge office tenants ... to volunteer in advance to shut off nonessential lighting or turn down a building's chillers a bit on heavy usage days.
"When the New York State power grid is under stress, Con Ed calls in the favor with Gordon to ease demand -- and pays 50 cents a kilowatt hour for the energy he saves. That's half the price of juice on the spot market . In addition, Con Ed writes Gordon and his clients a check based on the avoided cost of building more peak-usage power plants. ... Such reductions stave off rate hikes for Gordon's clients. They saved $2.5 million in future electric bills that day ..."
Even when policy makers tremble from real deregulation, market participants still run circles around them -- to the benefit of all concerned, including the regulators. And I live in a world where the regulators are still looked to as the saviours. Good government is always just around the corner.
I once blogged about the LifeSharers network, whereby precommitments by members make organ swaps possible.
Another example is in the current Forbes. "That's Hot" describes a way that one entrepreneur arbitrages electrical power between peak and off-peak in ways that skirt the official reluctance to do just that -- and thereby save and make money (all at the same time!).
"With the mercury peaking at 96 degrees, in New York's Central Park on an afternoon in late July, the city set a record for energy draw: 13 gigawatts. That is equal to the generating capacity of seven Hoover Dams.
"During spikes like this, New York's Consolidated Edison buys exensive energy from peak-usage power plants, sending the wholesale spot price of a kilowatt-hour of energy -- 3 cents on a cool day -- to $1 or higher. New Yorkers never notice the difference because the price they pay hardly varies on the hottest day of the year.
"The discombobulated pricing is a senseless waste and it might make Michael Gordon rich. His $12.5 million (sales) New York energy services shop, Consumer Powerline, is New York's largest " aggregator" of electricity savings contracts.
"Twice a year Gordon signs up huge office tenants ... to volunteer in advance to shut off nonessential lighting or turn down a building's chillers a bit on heavy usage days.
"When the New York State power grid is under stress, Con Ed calls in the favor with Gordon to ease demand -- and pays 50 cents a kilowatt hour for the energy he saves. That's half the price of juice on the spot market . In addition, Con Ed writes Gordon and his clients a check based on the avoided cost of building more peak-usage power plants. ... Such reductions stave off rate hikes for Gordon's clients. They saved $2.5 million in future electric bills that day ..."
Even when policy makers tremble from real deregulation, market participants still run circles around them -- to the benefit of all concerned, including the regulators. And I live in a world where the regulators are still looked to as the saviours. Good government is always just around the corner.
Sunday, September 04, 2005
Automobility
Randal O'Toole's "Vanishing Automobile" series is always enlightening. Here is the latest installment.
"LACK OF AUTOMOBILITY KEY TO NEW ORLEANS TRAGEDY"
"Those who fervently wish for car-free cities should take a closer look at New Orleans. The tragedy of New Orleans isn't primarily due to racism or government incompetence, though both played a role. The real cause is automobility -- or more precisely to the lack of it."The white people got out," declared the New York Times today. But, as the article in the Times makes clear, the people who got out were those with automobiles (http://tinyurl.com/adgjx). Those who stayed, regardless of color, were those who lacked autos.
"What made New Orleans more vulnerable to catastrophe than most U.S. cities is its low rate of auto ownership. According to the 2000 Census, nearly a third of New Orleans households do not own an automobile. This compares to less than 10 percent nationwide. There are significant differences by race: 35 percent of black households but only 15 percent of white households do not own an auto (see http://tinyurl.com/bpw4z). But in the end, it was auto ownership, not race, that made the difference between safety and disaster."The evacuation plan was really based on people driving out," an LSU professor told the Times. On Saturday and Sunday, August 27 and 28, when it appeared likely that Hurricane Katrina would strike New Orleans, those people who could simply got in their cars and drove away. The people who didn't have cars were left behind.Critics of autos love the term "auto dependent." But Katrina proved that the automobile is a liberator. It is those who don't own autos who are dependent -- dependent on the competence of government officials, dependent on charity, dependent on complex and sometimes uncaring institutions.As shown in the table below, the number of people killed by hurricanes in the U.S. steadily declined during the twentieth century. Economists commonly attribute such declines to increasing wealth. Wealth differences are also credited with the large number of disaster-related deaths in developing nations vs. developed nations. But what makes wealthier societies less vulnerable to natural disaster? There are several factors, but the most important is mobility.Number of Deaths Caused by Hurricanes in the U.S.
1900-1919 10,000
1920-1939 3,751
1940-1959 1,119
1960-1979 453
1980-1999 57
Source: Atlantic Oceanographic and Meteorological Laboratory. Number for 1900-1919 is estimated as the exact death toll from 1900 Galveston hurricane is unknown.
"People with access to autos can leave an area before it is flooded or hit with hurricanes, tornados, or other storms. When earthquakes or storms strike too suddenly to allow prior evacuation, people with autos can move away from areas that lack food, safe water, or other essentials.Numerous commentators have legitimately criticized the Federal Emergency Management Agency and other government agencies for failing to foresee the need for evacuation, failing to secure enough buses or other means of evacuation, and failing to get those buses to people who needed evacuation. But people who owned autos didn't need to rely on the competence of government planners to be safe from Katrina and flooding. They were able to save themselves by driving away. Most apparently found refuge with friends or in hotels many miles from the devastation. Meanwhile, those who didn't have autos were forced into high-density, crime-ridden refugee camps such as the Superdome and New Orleans Convention Center.Rather than help low-income people achieve greater mobility, New Orleans transportation planners decided years ago that their highest priority was to provide heavily subsidized streetcar rides for tourists. *
"In the late 1980s and 1990s, New Orleans spent at least $15 million converting an abandoned rail line into the 1.5-mile Riverfront Streetcar line. * In 2004, New Orleans opened the 3.6-mile Canal Street streetcar line at a cost of nearly $150 million. * New Orleans was planning to spend another $120 million on a Desire Street streetcar line.These tourist lines do nothing to help any local residents except for those who happen to own property along the line. The city was not deterred by its own analysis of the Desire line showing that each new rider on this line would cost taxpayers more than $20 (see table 7.2 on page 8 of http://tinyurl.com/9cnc2).About 26,000 low-income families in New Orleans don't own a car. If all the money spent on New Orleans streetcars from 1985 to the present had been spent instead on helping autoless low-income families achieve mobility, the city would have had more than $6,000 for each such family, enough to buy good used cars for all of them. Add the money the city wanted to spend on the Desire Street streetcar and you have enough to buy a brand-new car for every single autoless low-income family -- not a Lexus or BMW, certainly, but a functional source of transportation that would have allowed them to escape the current disaster.
"While I don't think that buying low-income families brand-new cars is the best use of our limited transportation resources, it would produce far greater benefits than building rail transit. Studies have found that unskilled workers who have a car are much more likely to have a job and will earn far more than workers who must depend on transit (see, for example, http://tinyurl.com/dlqq4). That is why numerous social service agencies have begun programs aimed at helping low-income families acquire their first car or maintain an existing one (see http://tinyurl.com/b75nc).Yet when I point out the comparative benefits of providing mobility to low-income people vs. building rail transit lines to suburban areas that already enjoy a high degree of mobility, rail advocates often respond, "We can't let poor people have cars. It would cause too much congestion." Yes, as the Soviet Union discovered, poverty is one way to prevent congestion (see http://ti.org/vaupdate53.html).
"New Orleans is in many ways a model for smart growth: high densities, low rates of auto ownership, investments in rail transit. This proved to be its downfall. While the city was vulnerable from being built below sea level, many cities above sea level have proven equally vulnerable to storms and flooding. In the end, New Orleans' people suffered primarily because so many lived without autos, thus making them overly dependent on the competence of government planners."
Randal O'Toole The Thoreau Institute rot@ti.org http://ti.org
"LACK OF AUTOMOBILITY KEY TO NEW ORLEANS TRAGEDY"
"Those who fervently wish for car-free cities should take a closer look at New Orleans. The tragedy of New Orleans isn't primarily due to racism or government incompetence, though both played a role. The real cause is automobility -- or more precisely to the lack of it."The white people got out," declared the New York Times today. But, as the article in the Times makes clear, the people who got out were those with automobiles (http://tinyurl.com/adgjx). Those who stayed, regardless of color, were those who lacked autos.
"What made New Orleans more vulnerable to catastrophe than most U.S. cities is its low rate of auto ownership. According to the 2000 Census, nearly a third of New Orleans households do not own an automobile. This compares to less than 10 percent nationwide. There are significant differences by race: 35 percent of black households but only 15 percent of white households do not own an auto (see http://tinyurl.com/bpw4z). But in the end, it was auto ownership, not race, that made the difference between safety and disaster."The evacuation plan was really based on people driving out," an LSU professor told the Times. On Saturday and Sunday, August 27 and 28, when it appeared likely that Hurricane Katrina would strike New Orleans, those people who could simply got in their cars and drove away. The people who didn't have cars were left behind.Critics of autos love the term "auto dependent." But Katrina proved that the automobile is a liberator. It is those who don't own autos who are dependent -- dependent on the competence of government officials, dependent on charity, dependent on complex and sometimes uncaring institutions.As shown in the table below, the number of people killed by hurricanes in the U.S. steadily declined during the twentieth century. Economists commonly attribute such declines to increasing wealth. Wealth differences are also credited with the large number of disaster-related deaths in developing nations vs. developed nations. But what makes wealthier societies less vulnerable to natural disaster? There are several factors, but the most important is mobility.Number of Deaths Caused by Hurricanes in the U.S.
1900-1919 10,000
1920-1939 3,751
1940-1959 1,119
1960-1979 453
1980-1999 57
Source: Atlantic Oceanographic and Meteorological Laboratory. Number for 1900-1919 is estimated as the exact death toll from 1900 Galveston hurricane is unknown.
"People with access to autos can leave an area before it is flooded or hit with hurricanes, tornados, or other storms. When earthquakes or storms strike too suddenly to allow prior evacuation, people with autos can move away from areas that lack food, safe water, or other essentials.Numerous commentators have legitimately criticized the Federal Emergency Management Agency and other government agencies for failing to foresee the need for evacuation, failing to secure enough buses or other means of evacuation, and failing to get those buses to people who needed evacuation. But people who owned autos didn't need to rely on the competence of government planners to be safe from Katrina and flooding. They were able to save themselves by driving away. Most apparently found refuge with friends or in hotels many miles from the devastation. Meanwhile, those who didn't have autos were forced into high-density, crime-ridden refugee camps such as the Superdome and New Orleans Convention Center.Rather than help low-income people achieve greater mobility, New Orleans transportation planners decided years ago that their highest priority was to provide heavily subsidized streetcar rides for tourists. *
"In the late 1980s and 1990s, New Orleans spent at least $15 million converting an abandoned rail line into the 1.5-mile Riverfront Streetcar line. * In 2004, New Orleans opened the 3.6-mile Canal Street streetcar line at a cost of nearly $150 million. * New Orleans was planning to spend another $120 million on a Desire Street streetcar line.These tourist lines do nothing to help any local residents except for those who happen to own property along the line. The city was not deterred by its own analysis of the Desire line showing that each new rider on this line would cost taxpayers more than $20 (see table 7.2 on page 8 of http://tinyurl.com/9cnc2).About 26,000 low-income families in New Orleans don't own a car. If all the money spent on New Orleans streetcars from 1985 to the present had been spent instead on helping autoless low-income families achieve mobility, the city would have had more than $6,000 for each such family, enough to buy good used cars for all of them. Add the money the city wanted to spend on the Desire Street streetcar and you have enough to buy a brand-new car for every single autoless low-income family -- not a Lexus or BMW, certainly, but a functional source of transportation that would have allowed them to escape the current disaster.
"While I don't think that buying low-income families brand-new cars is the best use of our limited transportation resources, it would produce far greater benefits than building rail transit. Studies have found that unskilled workers who have a car are much more likely to have a job and will earn far more than workers who must depend on transit (see, for example, http://tinyurl.com/dlqq4). That is why numerous social service agencies have begun programs aimed at helping low-income families acquire their first car or maintain an existing one (see http://tinyurl.com/b75nc).Yet when I point out the comparative benefits of providing mobility to low-income people vs. building rail transit lines to suburban areas that already enjoy a high degree of mobility, rail advocates often respond, "We can't let poor people have cars. It would cause too much congestion." Yes, as the Soviet Union discovered, poverty is one way to prevent congestion (see http://ti.org/vaupdate53.html).
"New Orleans is in many ways a model for smart growth: high densities, low rates of auto ownership, investments in rail transit. This proved to be its downfall. While the city was vulnerable from being built below sea level, many cities above sea level have proven equally vulnerable to storms and flooding. In the end, New Orleans' people suffered primarily because so many lived without autos, thus making them overly dependent on the competence of government planners."
Randal O'Toole The Thoreau Institute rot@ti.org http://ti.org
Saturday, September 03, 2005
Loss accounting
This morning's NY Times reports: "First Estimate Puts Storm's Economic Toll at $100 Billion". Like it or not, incomplete and point estimates are part of the landscape.
The $100 billion are estimated property losses (mainly structures) that will be revised upwards. Business interruption losses are seldom estimated but these will also be substantial. There is, of course, life and limb and related traumas that will one day also be estimated.
But no one really understands the long-term consequences. Will GDP growth be bumped down to a lower trend? Will civil society take a hit? Or will it be reborn in an aftermath of soul-searching?
After the 1994 Northridge earthquake, a $20 billion guess came down from Sacramento officialdom almost immediately. Insurers were eventually on the hook for $16 billion and the structure (and contents) replacement cost estimates have hovered around $35 billion. Our own research found another $6.5 billion of business interruption effects. Heonsoo Park's co-integration analysis (no link found) suggested no long-term economic effects.
The long-term resiliency of market economies is usually the (mostly unsung) good news. Disasters, however, have the effect of prompting politicians (and acolytes) to undermine markets. So we get more controls and more programs and bureaucracies. Talk about cures being worse than diseases.
In the same NY Times, Maureen Dowd writes: "Stuff happens. And when you combine limited government with incompetent government, lethal stuff happens." She and many other seemingly toilet trained adults believe that less limited but competent government is an option.
On the same page, John Tierney saved my morning by concluding: "Here's the bargain I'd offer New Orleans: the feds will spend the billions for your new levees but then you're on your own. You and others along the coast have to buy flood insurance the same way we all buy fire insurance -- from private companies that have more at stake than Wasington bureaucrats. Private flood insurance has come to seem quaint in America but in Britain it's the norm. If Americans paid premiums for living in risky areas, they'd think twice about building oceanfront villas. Voters and insurance companies would pressure local politicians to take care of the levees, prepare for the worst -- and stop waiting for the bumbling white knight from Washington."
The $100 billion are estimated property losses (mainly structures) that will be revised upwards. Business interruption losses are seldom estimated but these will also be substantial. There is, of course, life and limb and related traumas that will one day also be estimated.
But no one really understands the long-term consequences. Will GDP growth be bumped down to a lower trend? Will civil society take a hit? Or will it be reborn in an aftermath of soul-searching?
After the 1994 Northridge earthquake, a $20 billion guess came down from Sacramento officialdom almost immediately. Insurers were eventually on the hook for $16 billion and the structure (and contents) replacement cost estimates have hovered around $35 billion. Our own research found another $6.5 billion of business interruption effects. Heonsoo Park's co-integration analysis (no link found) suggested no long-term economic effects.
The long-term resiliency of market economies is usually the (mostly unsung) good news. Disasters, however, have the effect of prompting politicians (and acolytes) to undermine markets. So we get more controls and more programs and bureaucracies. Talk about cures being worse than diseases.
In the same NY Times, Maureen Dowd writes: "Stuff happens. And when you combine limited government with incompetent government, lethal stuff happens." She and many other seemingly toilet trained adults believe that less limited but competent government is an option.
On the same page, John Tierney saved my morning by concluding: "Here's the bargain I'd offer New Orleans: the feds will spend the billions for your new levees but then you're on your own. You and others along the coast have to buy flood insurance the same way we all buy fire insurance -- from private companies that have more at stake than Wasington bureaucrats. Private flood insurance has come to seem quaint in America but in Britain it's the norm. If Americans paid premiums for living in risky areas, they'd think twice about building oceanfront villas. Voters and insurance companies would pressure local politicians to take care of the levees, prepare for the worst -- and stop waiting for the bumbling white knight from Washington."
Wednesday, August 31, 2005
More than meets the eye?
There is always more than one theory.
My explanation of Hawaii's gasoline price controls, yesterday, was the standard political grandstanding story. R.S. Radford has another explanation, which brings with it an intriguing puzzle. R.S. sent the following (I quote with permission and I could not have posed it nearly as well):
"Hawaii's new gasoline price controls ... raise the most fascinating public-choice issues I've encountered in a long while. Surely it's a coincidence ... that these controls were trotted out barely two months after the Supreme Court's decision in Lingle v. Chevron? In Lingle, the Court upheld previous Hawaii regulations controling the rent gasoline producers (like Chevron) could charge the independent dealer-operators who lease producer-owned service stations.
"As we know from the example of mobile home park rent control [in California] , the operative effect of this sort of legislation in general is to allow the renters to capitalize the market value of the regulations into the price of their leasehold when they sell it to a new tenant. But what made the regs at issue in Lingle different from the mobile home park context is that there is a dual revenue flow between Chevron (and other producers) and their dealer-lessees: the dealers pay rent on their stations, but they are obligated to buy all of their gasoline from the landlord-producer. Thus, theoretically, Chevron could have prevented its dealers from capitalizing the value of gas-station rent control by jacking up the wholesale price of gas by an offsetting amount. Now, of course, the new price controls -- which inexplicably cap only the wholesale price of gas -- strip the producers of this offsetting market power, clearing the way for dealers to start pocketing windfalls by selling their rent-controlled dealerships to third parties.
"So far, pretty obvious. The puzzling part is, who could have made this happen? Unlike California mobile home park residents, the Hawaii gasoline dealer lobby cannot be an important force in state politics, either numerically or financially. I mean (and I'm totally guessing here), how many gas dealerships are there in Hawaii? Thirty-five? And assuming such a lobby even exists, it would be going toe-to-toe in Gucci Gulch (or whatever they wear in Honolulu) against a counter-lobbying cabal of multinational corporations listed on the NYSE.
"Anyway, I'm stumped. Even if some local service station operator had broken into the legislature at midnight and slipped this bill into a stack of papers to be voted on the next day, you'd think Chevron, Exxon, et al, would have spotted it and blocked it. I'd be interested in any theories you might have, the more conspiratorial the better. The Truth Is Out There!"
Possible cabals in exotic settings are much more fun than one more poke at economic illiterates.
My explanation of Hawaii's gasoline price controls, yesterday, was the standard political grandstanding story. R.S. Radford has another explanation, which brings with it an intriguing puzzle. R.S. sent the following (I quote with permission and I could not have posed it nearly as well):
"Hawaii's new gasoline price controls ... raise the most fascinating public-choice issues I've encountered in a long while. Surely it's a coincidence ... that these controls were trotted out barely two months after the Supreme Court's decision in Lingle v. Chevron? In Lingle, the Court upheld previous Hawaii regulations controling the rent gasoline producers (like Chevron) could charge the independent dealer-operators who lease producer-owned service stations.
"As we know from the example of mobile home park rent control [in California] , the operative effect of this sort of legislation in general is to allow the renters to capitalize the market value of the regulations into the price of their leasehold when they sell it to a new tenant. But what made the regs at issue in Lingle different from the mobile home park context is that there is a dual revenue flow between Chevron (and other producers) and their dealer-lessees: the dealers pay rent on their stations, but they are obligated to buy all of their gasoline from the landlord-producer. Thus, theoretically, Chevron could have prevented its dealers from capitalizing the value of gas-station rent control by jacking up the wholesale price of gas by an offsetting amount. Now, of course, the new price controls -- which inexplicably cap only the wholesale price of gas -- strip the producers of this offsetting market power, clearing the way for dealers to start pocketing windfalls by selling their rent-controlled dealerships to third parties.
"So far, pretty obvious. The puzzling part is, who could have made this happen? Unlike California mobile home park residents, the Hawaii gasoline dealer lobby cannot be an important force in state politics, either numerically or financially. I mean (and I'm totally guessing here), how many gas dealerships are there in Hawaii? Thirty-five? And assuming such a lobby even exists, it would be going toe-to-toe in Gucci Gulch (or whatever they wear in Honolulu) against a counter-lobbying cabal of multinational corporations listed on the NYSE.
"Anyway, I'm stumped. Even if some local service station operator had broken into the legislature at midnight and slipped this bill into a stack of papers to be voted on the next day, you'd think Chevron, Exxon, et al, would have spotted it and blocked it. I'd be interested in any theories you might have, the more conspiratorial the better. The Truth Is Out There!"
Possible cabals in exotic settings are much more fun than one more poke at economic illiterates.
Tuesday, August 30, 2005
The more things change ...
In 1947, Humphrey Michell published "The Edict of Diocletian" in the Canadian Journal of Economics (no link to the article found). The paper begins, "In 301 A.D., the Emperor Diocletian, with whom were associated his three co-rulers, promulgated an edict which fixed for the whole Roman Empire maximum prices for commodities, freight rates, and wages. According to the evidence available, and it is certain that the whole edict has not been recovered, price 'ceilings' for over 900 commodities, 130 different grades of labour, and a considerable number of freight rates were fixed and severe punishment promised to all 'black market' operators who dared to sell above the maximum. So elaborate a price scheme was not tried again until 1,600 years had passed ..."
Unlike 301 A.D., we now have a fairly solid body of economic analysis along with corroborating experience that price controls are simply crackpot. If price does not ration, something else will -- and the something else can be distasteful (arbitrary allocations) as well as costly (deadweight losses). But this improved state of knowledge matters very little because, following natural disasters and/or price rises that inconvenience the many (as in oil), like clockwork, politicians cannot resist temptation and jump into the breach to "do something" about prices.
People not only get the politicians but also the newspapers they deserve. On prices, they all seem to be on the same page. This morning's LA Times includes: "California Watches Hawaii's Effort to Cap Prices."
It is as though a rare and noteworthy experiment is in progress.
Unlike 301 A.D., we now have a fairly solid body of economic analysis along with corroborating experience that price controls are simply crackpot. If price does not ration, something else will -- and the something else can be distasteful (arbitrary allocations) as well as costly (deadweight losses). But this improved state of knowledge matters very little because, following natural disasters and/or price rises that inconvenience the many (as in oil), like clockwork, politicians cannot resist temptation and jump into the breach to "do something" about prices.
People not only get the politicians but also the newspapers they deserve. On prices, they all seem to be on the same page. This morning's LA Times includes: "California Watches Hawaii's Effort to Cap Prices."
It is as though a rare and noteworthy experiment is in progress.
Monday, August 29, 2005
Sorting out
This morning's WSJ coverage of the Jackson Hole monetary policy confab cites Prinecton's Ricardo Reis and Alan Blinder, praising Alan Greenspan as "the greatest central banker who ever lived."
I have several times alluded to remarkable praise for Greenspan's monetary policies from, of all people, Milton Friedman. Part is the normal retirement well-wishing, part surely has merit. Historians will sort it out.
Historians are, of course, still sorting out the monetary history of the U.S., the causes of the Great Depression (I like the "Murphy's Law" explanation), and the 20th-century romance with top-down economic planning, part of Brink Lindsey's "Industrial Counterrevolution" (explained in his Against the Dead Hand).
If we are now emerging from the central planning optimism of the IC, then money managers' increasing sophistication is a part of this cycle. Richard Timberlake's "Gold Standard and the Real Bills Doctrine in U.S. Monetary Policy" (in the recent Econ Journal Watch) appears to be an important part of the sorting out. Economists' understanding of monetary policy and gold standards (real and imagined) helps us to better understand and learn from the monetary mistakes that have been made.
Consider this remark by the author: "A true gold standard provides an economy with a set of rules precsribing the conditions for the supply of common money. Once the rules are in place, the system works on the principles of a spontaneous order. Human design is limited to the framework for the standard, and must refrain from meddling with the ultimate product -- the quantities of both base and common money."
We live and learn.
I have several times alluded to remarkable praise for Greenspan's monetary policies from, of all people, Milton Friedman. Part is the normal retirement well-wishing, part surely has merit. Historians will sort it out.
Historians are, of course, still sorting out the monetary history of the U.S., the causes of the Great Depression (I like the "Murphy's Law" explanation), and the 20th-century romance with top-down economic planning, part of Brink Lindsey's "Industrial Counterrevolution" (explained in his Against the Dead Hand).
If we are now emerging from the central planning optimism of the IC, then money managers' increasing sophistication is a part of this cycle. Richard Timberlake's "Gold Standard and the Real Bills Doctrine in U.S. Monetary Policy" (in the recent Econ Journal Watch) appears to be an important part of the sorting out. Economists' understanding of monetary policy and gold standards (real and imagined) helps us to better understand and learn from the monetary mistakes that have been made.
Consider this remark by the author: "A true gold standard provides an economy with a set of rules precsribing the conditions for the supply of common money. Once the rules are in place, the system works on the principles of a spontaneous order. Human design is limited to the framework for the standard, and must refrain from meddling with the ultimate product -- the quantities of both base and common money."
We live and learn.
Sunday, August 28, 2005
Going where (almost) no man (or woman) has gone before
It's all so obvious -- once someone has done it. Networks can be fitted to many things, including webs of ideas and legal opinions.
The Economist ("Statistical modelling: The wisdom of Hercules") reports on legal research by Prof. Seth Handler that involves plotting networks that link large numbers of Supreme Court decisions, in order to detect patterns of precedent. Webs and central nodes emerge.
The research shows, not surprisingly, that the legal landscape changes in the 20th century. Cited work by James Fowler and Sangick Jeon reveals that, " ... before the American Civil War, the most authoritative cases involved freedom of contract. After the war and until the 1930s, when Roosevelt's New Deal was enacted, these were replaced by cases dealing with balance of power to regulate commerce between Congress and the states. Finally, around the second world war, as the Supreme Court shifted its focus to civil liberties, the most important cases became those concerning freedom of speech. According to the model, civil rights opinions remain ascendant today."
Along the way, the reliance on precedent decisions, the analysis shows, experienced a "precipitous drop." Yes, they do legislate from the bench.
The Economist ("Statistical modelling: The wisdom of Hercules") reports on legal research by Prof. Seth Handler that involves plotting networks that link large numbers of Supreme Court decisions, in order to detect patterns of precedent. Webs and central nodes emerge.
The research shows, not surprisingly, that the legal landscape changes in the 20th century. Cited work by James Fowler and Sangick Jeon reveals that, " ... before the American Civil War, the most authoritative cases involved freedom of contract. After the war and until the 1930s, when Roosevelt's New Deal was enacted, these were replaced by cases dealing with balance of power to regulate commerce between Congress and the states. Finally, around the second world war, as the Supreme Court shifted its focus to civil liberties, the most important cases became those concerning freedom of speech. According to the model, civil rights opinions remain ascendant today."
Along the way, the reliance on precedent decisions, the analysis shows, experienced a "precipitous drop." Yes, they do legislate from the bench.
Thursday, August 25, 2005
Unintended self-parody (more)
You try to run a serious blog and this stuff comes along. And just when I had thought that public libraries were going to have trouble keeping up with e-books, cheaper retail prices of books and reading rooms at the local bookstore.
From today's WSJ:
"Not a Swedish Joke"
"If you find yourself in Malmo, Sweden, and happen to see a homosexual, an imam and a gypsy walk into a bar, it's not a joke. These are just some of the people who can be borrowed -- yes, borrowed -- from the local library for a 45-minute chat in a nearby pub as part of an effort to fight discrimination.
"Ullah Brohed pioneered the 'Living Library' project earlier this month. 'You sometimes hear people's prejudices and you realize that they are just uninformed,' she says. And since a library exists to educate, she decided to give Swedish bigots the opportunity to come face to face with the prejudice of their choice. The Malmo library also offers a Danish man (since some Swedes and Danes don't get along too well) and, to our great embarrassment, even a journalist. 'Maybe not all journalists are know-it-all and sensationalist,' Ms. Brohed says.
"Inspired by this example, a library in the Dutch city of Almelo plans to start its own human lending program next month. 'The customers can rent a veiled Muslim woman and finally ask her all the questions they would never dare to ask if they met her on the street,' says the director, Jan Krol. Of course, Mr. Krol must adopt his offerings to local tastes. So apart from the usual suspects -- a gay man, a Muslim and a gypsy -- there will also be a politician, a hard-drug user, a gay woman and a German (that World War II episode).
"Given the daily reports of widespread anti-Americanism in Europe, we are surprised that neither Mr. Krol nor Ms. Brohed has a Yank in stock. Should Americans ever become available in libraries in, say, Paris or Berlin, even Jacques Chirac and Gerhard Schröder could check them out."
From today's WSJ:
"Not a Swedish Joke"
"If you find yourself in Malmo, Sweden, and happen to see a homosexual, an imam and a gypsy walk into a bar, it's not a joke. These are just some of the people who can be borrowed -- yes, borrowed -- from the local library for a 45-minute chat in a nearby pub as part of an effort to fight discrimination.
"Ullah Brohed pioneered the 'Living Library' project earlier this month. 'You sometimes hear people's prejudices and you realize that they are just uninformed,' she says. And since a library exists to educate, she decided to give Swedish bigots the opportunity to come face to face with the prejudice of their choice. The Malmo library also offers a Danish man (since some Swedes and Danes don't get along too well) and, to our great embarrassment, even a journalist. 'Maybe not all journalists are know-it-all and sensationalist,' Ms. Brohed says.
"Inspired by this example, a library in the Dutch city of Almelo plans to start its own human lending program next month. 'The customers can rent a veiled Muslim woman and finally ask her all the questions they would never dare to ask if they met her on the street,' says the director, Jan Krol. Of course, Mr. Krol must adopt his offerings to local tastes. So apart from the usual suspects -- a gay man, a Muslim and a gypsy -- there will also be a politician, a hard-drug user, a gay woman and a German (that World War II episode).
"Given the daily reports of widespread anti-Americanism in Europe, we are surprised that neither Mr. Krol nor Ms. Brohed has a Yank in stock. Should Americans ever become available in libraries in, say, Paris or Berlin, even Jacques Chirac and Gerhard Schröder could check them out."
Monday, August 22, 2005
Public service
Now that the California redistricting initiative (Proposition 77, which would take that authority from the politicians) is back on the Fall ballot, a momentous battle is underway. Dan Walters explains.
It's the Governator in his favorite posture, in an uphill fight, up against politicians from both political parties who are not gridlocked on this one, having joined hands to save their jobs. And they are supported by almost any lobby in sight. The left-leaning ones have been the most outraged, some expressing the fear that this will "hurt the working man."
When the re-election of California legislature incumbents hits 100% while the approval ratings of the same people hovers between 20% and 30%, disenfranchisement by high-tech redistricting is suspect.
For the next few weeks, there will be a great stretching sound heard from around the state as partisans invent story lines to protect their fiefdoms.
And they love to refer to it as "public service."
It's the Governator in his favorite posture, in an uphill fight, up against politicians from both political parties who are not gridlocked on this one, having joined hands to save their jobs. And they are supported by almost any lobby in sight. The left-leaning ones have been the most outraged, some expressing the fear that this will "hurt the working man."
When the re-election of California legislature incumbents hits 100% while the approval ratings of the same people hovers between 20% and 30%, disenfranchisement by high-tech redistricting is suspect.
For the next few weeks, there will be a great stretching sound heard from around the state as partisans invent story lines to protect their fiefdoms.
And they love to refer to it as "public service."
Sunday, August 21, 2005
Rip Van Winkle investing
"If you're so smart, why aren't you rich?" This is the epithet that is especially irksome to economists, who are supposed to have some understanding of the economic tides.
Today's NY Times reports ("Be Warned: Mr. Bubble's Worried Again") that Yale's Robert Shiller went public with his "irrational exuberance" call in 1996 -- and the stock market collapsed less than four years later. He made the famous call when the NASDAQ Composite was near the 1,000 mark. We now know that it rose to over 5,200 in early 2000 and then fell precipitously. It is now back near 2135. Rip Van Winkle's $1 million dollars left in a NASDAQ Compsite index fund when Schiller made the call would have more than doubled in less than nine years and Rip, wiping the sleep from his eyes, would not be all that disappointed.
Van Winkle's peers, on the other hand, might have listened to Shiller and moved into ten-year Treasuries which were earning approximately 6.5%at the time -- and would be about one-half million dollars poorer than Rip today. Many others would have bailed when the NASDAQ hit bottom two years ago and would really be in bad shape.
Economic forecasting is no walk in the park. Even for economists.
Today's NY Times reports ("Be Warned: Mr. Bubble's Worried Again") that Yale's Robert Shiller went public with his "irrational exuberance" call in 1996 -- and the stock market collapsed less than four years later. He made the famous call when the NASDAQ Composite was near the 1,000 mark. We now know that it rose to over 5,200 in early 2000 and then fell precipitously. It is now back near 2135. Rip Van Winkle's $1 million dollars left in a NASDAQ Compsite index fund when Schiller made the call would have more than doubled in less than nine years and Rip, wiping the sleep from his eyes, would not be all that disappointed.
Van Winkle's peers, on the other hand, might have listened to Shiller and moved into ten-year Treasuries which were earning approximately 6.5%at the time -- and would be about one-half million dollars poorer than Rip today. Many others would have bailed when the NASDAQ hit bottom two years ago and would really be in bad shape.
Economic forecasting is no walk in the park. Even for economists.
Thursday, August 18, 2005
Crazies, here, there and ...
Columnist Max Boot recently wrote, "Hamastan? Gaza pullout worth the risk ...For almost 40 years, the conceit has been growing around the world that Palestinian terrorism can be explained and even excused by Israeli occupation of the West Bank and Gaza Strip. This was always a dubious proposition in light of the fact that Arabs have been fighting Israel since its formation in 1948, not since its conquest by those territories in 1967. The PLO began its attacks while the West Bank was still part of Jordan and gthe Gaza Strip was part of Egypt."
Actually, there is a mountain of such conceits. Thomas Friedman once suggested that each side has to find the fortitude to "face down its crazies" to break the logjam. One side is now doing just that and Friedman and all those who cling to even-handedness -- and substitute mythical symmetry for analysis will have to regroup.
Symmetry is a stretch and it is dubious that anyone on the Arab side will soon face down their crazies. In fact, the nuts are often the ones in charge.
It has been suggested and debated that democracies do not make war on democracies. In that debate, the bar was set high by the suggestion that there were no exceptions. Excellent odds would not be bad. When will there be democracy on the other side?
If not in our lives, then a combination of walls, regroupings and focused offense may be all that is left. This seems to be the policy. It has, of course, to be wrapped in hopeful rhetoric. The plan, after all, must also face down the crazies among friends and international elite opinion.
Actually, there is a mountain of such conceits. Thomas Friedman once suggested that each side has to find the fortitude to "face down its crazies" to break the logjam. One side is now doing just that and Friedman and all those who cling to even-handedness -- and substitute mythical symmetry for analysis will have to regroup.
Symmetry is a stretch and it is dubious that anyone on the Arab side will soon face down their crazies. In fact, the nuts are often the ones in charge.
It has been suggested and debated that democracies do not make war on democracies. In that debate, the bar was set high by the suggestion that there were no exceptions. Excellent odds would not be bad. When will there be democracy on the other side?
If not in our lives, then a combination of walls, regroupings and focused offense may be all that is left. This seems to be the policy. It has, of course, to be wrapped in hopeful rhetoric. The plan, after all, must also face down the crazies among friends and international elite opinion.
Tuesday, August 16, 2005
Not just bowling alone
The Census Bureau has just released Examining American Household Composition: 1990 and 2000. The report makes interesting reading, although the lead sentence may cause some heartburn: "Householders living alone had become the most common specific household structure in 2000, ..." Yes, almost 26% were living alone but all the rest lived with someone else. It is just that the way that the remaining 74% are carved up does not give rise to a single category that tops 26%. I guess that Census tabulators want to make the news too.
One thing that the bad news bears seldom acknowledge is that more people now live alone because they can. Children in poorer times and places stayed with parents (and grandparents and others) because a separate household was not affordable -- not necessarily because they were better people.
Of the 45 relationship combinations enumerated, fairly high up on the list (#15 and #16) were households with adopted children. Over 1 million households included an adopted child. No comparisons with 1990 are possible because the question was not asked. Yet, I hope that we keep tracking this one and also that we see it trending up.
One thing that the bad news bears seldom acknowledge is that more people now live alone because they can. Children in poorer times and places stayed with parents (and grandparents and others) because a separate household was not affordable -- not necessarily because they were better people.
Of the 45 relationship combinations enumerated, fairly high up on the list (#15 and #16) were households with adopted children. Over 1 million households included an adopted child. No comparisons with 1990 are possible because the question was not asked. Yet, I hope that we keep tracking this one and also that we see it trending up.
Sunday, August 14, 2005
A little knowledge ...
Cold weather cities and regions in the U.S. have been relatively uncompetitive for some years. In "Smart Growth: Education, skilled workers and the cold-weather cities", Ed Glaeser finds links between human capital and growth and looks for an exogenous indicator and picks the number of local higher education establishments. (While the schools tend to be in place and established, their growth may be responsive to local conditions.)
Glaeser's analysis also points to the common sense guides for city growth: do not overregulate, lower taxes, fix the schools, limit crime.
Trouble is that the "educated classes" are also responsible for the crackpot policies that undermine Glaeser's policy guide. University communities (Berkeley, Madison, Cambridge, Austin, Tucson come to mind) often breed the silliest policies (rent controls, "living-wage" agreements and much weirder stuff like Berkeley's nuclear-free zone status, to name just a few).
Education can be a funny thing. Looking at its policy underside in more detail is a research agenda strongly suggested by Glaeser's findings.
Glaeser's analysis also points to the common sense guides for city growth: do not overregulate, lower taxes, fix the schools, limit crime.
Trouble is that the "educated classes" are also responsible for the crackpot policies that undermine Glaeser's policy guide. University communities (Berkeley, Madison, Cambridge, Austin, Tucson come to mind) often breed the silliest policies (rent controls, "living-wage" agreements and much weirder stuff like Berkeley's nuclear-free zone status, to name just a few).
Education can be a funny thing. Looking at its policy underside in more detail is a research agenda strongly suggested by Glaeser's findings.
Saturday, August 13, 2005
Read your own paper
Many Greens celebrate high oil prices, hoping that they will cause us to come to our senses.
But the front page of today's LA Times reports: "No Drive to Mass Transit ... Raul Mercado loves his 2002 eight-cylinder Mustang convertible but hates the high cost of operating it. As gas prices hit record highs in recent weeks, the security guard has been shelling out $40 each time he fills the tank. To save money, he bikes or walks to the beach instead of driving, ... But leave the Mustang at his Long Beach home and take the bus to work in Inglewood? No way. 'I have to pay', Mercado said. Public transportation 'takes too long.'"
The lead editorial of the same edition announces "Pumped-up public transit ... Amid all the pain inflicted by skyrocketing oil prices, there is a silver lining in LA ... the jump in MTA ridership will give the mayor considerable ammunition when he goes looking for federal and state funds ..." ... for more transit projects, including rail -- which the editorial admits, is "underutilized."
No one can accuse LA Times reporters of bending to the paper's editorial slant. Nor can anyone accuse their editorial writers of reading their own front-page news.
Transit's decline through the last 60 years has been steady (in spite of huge subsidies), even through the various oil "shocks". In the 70s, Americans swtiched to smaller cars, rather than use transit.
While security guard Raul Mercado grasps the simple truth -- that his time has value and in dispersed cities, transit is incredibly time consuming -- it is still beyond the capabilities of LA Times editorial writers. Many of the latter have been singing the same tune for many years and, therefore, share the blame for multi-billion transit waste in LA.
But the front page of today's LA Times reports: "No Drive to Mass Transit ... Raul Mercado loves his 2002 eight-cylinder Mustang convertible but hates the high cost of operating it. As gas prices hit record highs in recent weeks, the security guard has been shelling out $40 each time he fills the tank. To save money, he bikes or walks to the beach instead of driving, ... But leave the Mustang at his Long Beach home and take the bus to work in Inglewood? No way. 'I have to pay', Mercado said. Public transportation 'takes too long.'"
The lead editorial of the same edition announces "Pumped-up public transit ... Amid all the pain inflicted by skyrocketing oil prices, there is a silver lining in LA ... the jump in MTA ridership will give the mayor considerable ammunition when he goes looking for federal and state funds ..." ... for more transit projects, including rail -- which the editorial admits, is "underutilized."
No one can accuse LA Times reporters of bending to the paper's editorial slant. Nor can anyone accuse their editorial writers of reading their own front-page news.
Transit's decline through the last 60 years has been steady (in spite of huge subsidies), even through the various oil "shocks". In the 70s, Americans swtiched to smaller cars, rather than use transit.
While security guard Raul Mercado grasps the simple truth -- that his time has value and in dispersed cities, transit is incredibly time consuming -- it is still beyond the capabilities of LA Times editorial writers. Many of the latter have been singing the same tune for many years and, therefore, share the blame for multi-billion transit waste in LA.
Friday, August 12, 2005
Ethics and environment
Yesterday's WSJ included "Greenhouse Passes ... To Cut Pollution, Dutch Pay a Dump In Brazil to Clean Up ... Kyoto Treaty Creates Market In Gas-Emission Credits ..."
Problems create opportunities and, whenever possible, traders will see this and act. Going one better, potential traders will even do what they can to be inventive about lowering transactions costs so that trades that were once thought to be unlikely become routine. This is now happening on the internet fairly regularly. The history of wealth creation has lots to do with the scope of the exchange economy being expanded this way.
In the Summer, 2005, Independent Review, Mark Pennington notes that free-market envrionmentalism still has to persuade most of the environmental movement, whose members are likely to remain hostile unless there is what they consider an ethical argument and approach. Pennington's "Liberty, Markets, and Evironmental Values ... A Hayekian Defense of Free-Market Environmentalism" elaborates on the ethics of free market approaches.
There may be a widening, if grudging, acceptance of market efficiency but economists have been slow to remind others that markets are also a place of choice and liberty -- unless markets are corrupted by politics and politicians.
Problems create opportunities and, whenever possible, traders will see this and act. Going one better, potential traders will even do what they can to be inventive about lowering transactions costs so that trades that were once thought to be unlikely become routine. This is now happening on the internet fairly regularly. The history of wealth creation has lots to do with the scope of the exchange economy being expanded this way.
In the Summer, 2005, Independent Review, Mark Pennington notes that free-market envrionmentalism still has to persuade most of the environmental movement, whose members are likely to remain hostile unless there is what they consider an ethical argument and approach. Pennington's "Liberty, Markets, and Evironmental Values ... A Hayekian Defense of Free-Market Environmentalism" elaborates on the ethics of free market approaches.
There may be a widening, if grudging, acceptance of market efficiency but economists have been slow to remind others that markets are also a place of choice and liberty -- unless markets are corrupted by politics and politicians.
Wednesday, August 10, 2005
Religious freedom
Papers that report on tests of economic growth hypotheses across large international cross-sections keep cropping up. Ilan Alon and Gregory Chase have just published "Religious Freedom and Economic Prosperity" in the Spring/Summer Cato Journal.
There are many types of freedom and the power of economic freedom to generate prosperity has, not surprisingly, been well documented. What does religious freedom add? The authors test a religious freedom index in four models, where it competes with other freedoms to predict variations in prosperity (PPP per capita GDP). "All of the models using religious freedom as an explanatory variable had the predicted sign in the coefficient, and three of the four using the religious freedom variable exhibited significant results." (p. 405).
It seems that those who are eager to deny religious freedom already know the score.
There are many types of freedom and the power of economic freedom to generate prosperity has, not surprisingly, been well documented. What does religious freedom add? The authors test a religious freedom index in four models, where it competes with other freedoms to predict variations in prosperity (PPP per capita GDP). "All of the models using religious freedom as an explanatory variable had the predicted sign in the coefficient, and three of the four using the religious freedom variable exhibited significant results." (p. 405).
It seems that those who are eager to deny religious freedom already know the score.
Monday, August 08, 2005
Optimists and liberals
In yesterday's NY Times, David Brooks wrote on The Virtues Of Virtue, "According to the Bureau of Justice Statistics, the rate of family violence in this country has dropped by more than half since 1993. ..." In the same section, there is "Where Killers Are Out of Style ... The murder rate in New York is still falling. How low can it go?"
Brooks tries to explain the good news and notes: "The first thing that has happened is that people have stopped believing in stupid ideas: that the traditional family is obsolete, that drugs are liberating that every adolescent's social duty is to rebel."
I agree. These and other 1960s ideas (many still popular on the left to this day) are both stupid and ruinous.
Why do conservatives point to the positives where they exist while liberals do not? There are many reasons, but among them is the inability to stop believing in exactly the dumb ideas that Brooks cites.
Brooks tries to explain the good news and notes: "The first thing that has happened is that people have stopped believing in stupid ideas: that the traditional family is obsolete, that drugs are liberating that every adolescent's social duty is to rebel."
I agree. These and other 1960s ideas (many still popular on the left to this day) are both stupid and ruinous.
Why do conservatives point to the positives where they exist while liberals do not? There are many reasons, but among them is the inability to stop believing in exactly the dumb ideas that Brooks cites.
Sunday, August 07, 2005
Back to the future?
I am reading Fred Siegel's delightful The Prince of the City: Giuliani, New York and the Genius of American Life.
Siegel sets the stage this way. "Giuliani first saved the city from its own, apparently intractable, political pathologies well before he saved the city and country from the panic that could have followed the 9/11 attacks. Time and again, from reducing crime and welfare, to driving the mob out of the garbage industry and reforming City University, he achieved what the conventional wisdom had assumed was impossible. The third and by far the least known of his extraordinary accomplishments was to revive the idea of upward mobility for the poor in a city whose economy had been organized around servicing poverty."
Reading the early chapters, I confess that I had forgotten just how toxic liberal policies towards the cities were. Siegel reminds us of racial politics at its cynical worst, incited by armies of opportunists and economic know-nothings -- to name just the headliners.
Siegel demonstrates that Giuliano had the Machiavellian clarity of vision as well as the skills to take all of this on and to succeed.
He is to be reckoned with, especially (in Siegel's view) as 2008 will be a year when the Bush coalition will give way to a more centrist Republicanism.
Bill Frist has taken note -- and is surely reading The Prince of City, if he has not already done so.
Siegel sets the stage this way. "Giuliani first saved the city from its own, apparently intractable, political pathologies well before he saved the city and country from the panic that could have followed the 9/11 attacks. Time and again, from reducing crime and welfare, to driving the mob out of the garbage industry and reforming City University, he achieved what the conventional wisdom had assumed was impossible. The third and by far the least known of his extraordinary accomplishments was to revive the idea of upward mobility for the poor in a city whose economy had been organized around servicing poverty."
Reading the early chapters, I confess that I had forgotten just how toxic liberal policies towards the cities were. Siegel reminds us of racial politics at its cynical worst, incited by armies of opportunists and economic know-nothings -- to name just the headliners.
Siegel demonstrates that Giuliano had the Machiavellian clarity of vision as well as the skills to take all of this on and to succeed.
He is to be reckoned with, especially (in Siegel's view) as 2008 will be a year when the Bush coalition will give way to a more centrist Republicanism.
Bill Frist has taken note -- and is surely reading The Prince of City, if he has not already done so.
Saturday, August 06, 2005
London fallout
Governments can be predators and they can be incompetent. They are often both. Going to war unleashes multiple horrors, including the expansion of government's role and reach. This is why libertarians and others insist that going to war is a last resort, reserved for genuine emergencies.
The current debate is over the question of whether we are now in one of these. That sentiment will change when the next outrage occurs. Given how easy these are to perpetrate, what are the odds? No one knows but we now know how easy they are to mount. No one needs to learn to fly a jetliner.
The London subway attacks emboldened security forces as well as the many plotters. I fear that they were most inspiring to the psychopaths. 7/7 may turn out to be more ominous than 9/11.
The current debate is over the question of whether we are now in one of these. That sentiment will change when the next outrage occurs. Given how easy these are to perpetrate, what are the odds? No one knows but we now know how easy they are to mount. No one needs to learn to fly a jetliner.
The London subway attacks emboldened security forces as well as the many plotters. I fear that they were most inspiring to the psychopaths. 7/7 may turn out to be more ominous than 9/11.
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