Coyote Blog

Via the anti-Planner, comes this amazing slide from a presentation by the city of Omaha on their new initiative for "Livable Transportation" (ppt presentation).   Ray LaHood recently asked that all transportation authorities include "livability" in the next round of their 5-year transportation plans.

What does "Livability" even mean?  Well, I was not sure.  This is one of those vague happy-sounding words that give liberals a hard-on in the context of government programs but generally just end up being an excuse for the exercise of state power at the expense of individual choice.

But in this case we don't have to guess, because in the presentation linked above we have the following as the first slide in the presentation, defining livability in this context:

I kid you not -- the two key steps in livable transportation are apparently increasing delay in auto commutes and increasing the cost of auto commutes.   Wow, that certainly sounds like something that will make my life better  (on the bright side, it strikes me as a goal that the generally-incompetent government can actually achieve).

Of course, the issue is not really about livability, but about the imposition of a few intellectuals' disdain for cars on the rest of us.

And if you want to look for the financial incentives, the size of government per passenger-mile of commute is maximized with rail mass transit.   First, this is because rail is simply more expensive than driving -- way more expensive - - per passenger mile in any Western city like Omaha, even when all the costs of driving are considered.  Second, with rail, the government nationalizes things like driving and maintenance that you do yourself or are done by private actors, and brings them in-house to be performed by powerful government unions.

Postscript: Left unsaid in any of this presentation is how increasing commute delay leads to keeping  jobs and businesses in the lower left.  That strikes me as a non sequitur of epic proportions.

One might think a line like about Greek finances was printed just this week

What followed could only be described as a comic progression of populist pandering [and] the spread to the national economy of a series of parasitic labor unions and cabals

But in fact it is describing Greek conditions circa 1944.

A while back I observed that the difference between Greek and US finances is that the US needs to return to a spending level circa 2007, while Greece has no similar default state of relative fiscal sanity it can return to.  This article in Finem Respice reinforces this premise by discussing the absolute insanity of Greek fiscal management before and after and even during WWII, which was characterized by all the exact same problems that have driven the current crisis.  Good background reading.

Greece, then as now, was dominated by an expensive public sector funded insufficiently by a tax system that did not work.  As may happen soon, Greece was not able to borrow, so all they could do was print money and inflation soared.  Only one man was able to stop the inflation, and I won't spoil the ending by the humorous way he did so.

This was a pretty amazing article on cost savings experienced already by one school district in Wisconsin after the collective bargaining agreement with government unions was voided.

Of course, there have already been substantial cost-savings as more sane work rules have been put in place and employees have to pay a larger (but still trivial) share of their pension and health care premiums.

But I thought this bit of self-dealing by the unions was pretty amazing and is the type of thing that did not make the news back in the whole Wisconsin brouhaha

"The monetary part of it is not the entire issue," says Arnoldussen, a political independent who won a spot on the board in a nonpartisan election. Indeed, some of the most important improvements in Kaukauna's outlook are because of the new limits on collective bargaining.

In the past, Kaukauna's agreement with the teachers union required the school district to purchase health insurance coverage from something called WEA Trust -- a company created by the Wisconsin teachers union. "It was in the collective bargaining agreement that we could only negotiate with them," says Arnoldussen. "Well, you know what happens when you can only negotiate with one vendor." This year, WEA Trust told Kaukauna that it would face a significant increase in premiums.

Now, the collective bargaining agreement is gone, and the school district is free to shop around for coverage. And all of a sudden, WEA Trust has changed its position. "With these changes, the schools could go out for bids, and lo and behold, WEA Trust said, 'We can match the lowest bid,'" says Republican state Rep. Jim Steineke, who represents the area and supports the Walker changes. At least for the moment, Kaukauna is staying with WEA Trust, but saving substantial amounts of money.

This strikes me as an amazing example of self-dealing.  The union requires that their health care insurer get a monopoly, and then extract monopoly rents from the relationship.  You can be sure the union rank and file never saw a dime of these health care profits, which likely flowed to just a few union leaders plus the politicians who helped make it possible.

Bruce at Q&O has more

Standard disclaimer: I have no particular beef with unions per se, whose ability to organize workers is protected under the First Amendment's right to assembly.  My problems related to unions are

1. Government rules that tilt the balance of power in negotiation to unions, require that all employees (in certain non-right-to-work states) join unions or at least pay dues, etc.
2. Public unions are a different animal than private sector unions and I have turned pretty strongly against these.  The problem in public sector unions is that there is no adversary -- ie the politicians nominally negotiating with unions are often on the same side as the unions and cut horrible sweetheart deals that screw taxpayers.  Until we find a way to really represent taxpayers in public sector union negotiations as well as shareholders are represented in private sector negotiations, I tend to favor limits on public sector collective bargaining.

Allowing this kind of hell to exist has got to be one of the worst systematic civil rights violations that still exist in this country

The U.S. Department of Justice recently released its first-ever estimate of the number of inmates who are sexually abused in America each year. According to the department’s data, which are based on nationwide surveys of prison and jail inmates as well as young people in juvenile detention centers, at least 216,600 inmates were victimized in 2008 alone. Contrary to popular belief, most of the perpetrators were not other prisoners but staff members—corrections officials whose job it is to keep inmates safe. On average, each victim was abused between three and five times over the course of the year. The vast majority were too fearful of reprisals to seek help or file a formal complaint.

Just to calibrate, the total number of sexual assaults reported outside of prisons in the US is something like 190,000 a year.

Sexual violence is not an inevitable part of prison life. On the contrary, it is highly preventable. Corrections officials who are committed to running safe facilities train their staff thoroughly. They make sure that inmates who are especially vulnerable to abuse—such as small, mentally ill, and gay or transgender detainees—are not housed with likely perpetrators. And they hold those who commit sexual assaults accountable, even if they are colleagues.

But many corrections administrators are reluctant to make sexual abuse prevention a top priority, preferring to maintain the status quo rather than acknowledge the role their own employees play. Others are actually fighting reform efforts, claiming, in spite of the evidence, that sexual violence is rare.

This resistance is reflected in the slow implementation of the Prison Rape Elimination Act, which Congress unanimously passed in 2003. The law mandated binding national standards to help end sexual abuse in detention. But almost eight years later, the Justice Department has yet to promulgate final standards.

Take California for example, where the prison guard union is among the most powerful in the country.  Given how far in the tank legislators in that state are for their public unions, it is hugely unlikely this will get addressed any time soon

Several times in the past I have posited that folks in power simply hate buses.  How else to explain light rail and high speed rail projects that are both substantially more expensive and substantially less flexible than buses.  Some of the reasons for this include:

• Politicians like rail better because it is sexier.  Period.   They are trying to spend taxpayer money to support their own re-election talking points.
• Unions and city workers like rail because it is more expensive.  More money gets spent, either creating more union jobs or giving transit leaders bigger budgets which translate into higher salaries and more prestige for themselves.  And the lack of flexibility is good for them because it makes their job immune to budget cutting.  Just too many sunk costs.
• Middle and upper-middle class folks in the public have a deep disdain for buses, which they associate with poverty and blue collar labor.  Riding buses hurts their self image, even if the service is no worse than trains.  Rail is the Louis Vuitton handbag of transit.

In Phoenix, light rail requires a subsidy of $3.82 center per mile (that is the government spending above and beyond the fare), which is nearly 10x what we spend on buses.  And light rail uses more energy per passenger mile here than driving.

Anyway, this story from Iowa seems to support my point -- the government is proposing to spend tens of millions of dollars to create a rail service that is slower and more costly than existing private bus service.

The latest in lunacy in high-speed rail lunacy: at Joel Kotkin’s newgeography.com Wendell Cox reports that the U.S. Transportation Department is dangling money before the government of Iowa seeking matching funds from the state for a high-speed rail line from Iowa City to Chicago. The “high-speed” trains would average 45 miles per hour and take five hours to reach Chicago from Iowa City. One might wonder how big the market for this service is, since Iowa City and Johnson County have only 130,882 people; add in adjoining Linn County (Cedar Rapids) and you’re only up to 342,108—not really enough, one would think, to supply enough riders to cover operating costs much less construction costs.

Oh, one other thing. Cox reports that there is already luxury bus service, with plus for laptops and wireless Internet, from Iowa City to Chicago. It’s part of a larger trend for private companies to offer convenient and inexpensive bus service. A one-way ticket on the bus costs $18, compared to a likely train fare of more than $50. And the bus takes only three hours and 50 minutes to get from Iowa City to Chicago. That’s one hour and 10 minutes faster than the “high-speed” train.

Don Boudreaux had these two rejoinders to the notion that the GM bailout is a success simply because GM is making a profit.

Economically literate opponents of the Detroit bailout never denied that pumping hundreds of millions of taxpayer dollars into Detroit automakers would restore those companies to health.  Instead, they argued, first, that bailing out Detroit takes resources from other valuable uses.  Because he doesn’t even recognize that other valuable uses were sacrificed by this bailout, Mr. Dionne offers no reason to think that the value of saving Detroit automakers exceeds the value of what was sacrificed to do so.  No legitimate declaration that the bailout is successful is possible, however, without evidence that the value of what was saved exceeds the value of what was sacrificed.

Economically literate bailout opponents argued also that it sets a bad precedent.  By signaling to big corporations that government stands ready to pay the tab for the consequences of their poor decisions, big corporations will more likely make poor decisions in the future.  It’s far too early for Mr. Dionne to conclude that this prediction is mistaken.

I would offer a third concern -- that the government has kept hundreds of thousands of skilled workers and billions of dollars of physical assets under the management of the same group that have decidedly underutilized these assets in the past.  A bankruptcy without Federal intervention would likely have shifted assets and skilled workers into new companies with different management teams and cultures pursuing different strategies with different information.

I always have trouble explaining this issue to people.   Think of a sports team with great players but a lousy coach and management team.  Having the government ensure that the lousy management stays in control of the great players is a waste for everyone.  I explained it more in depth in this post, where I concluded

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

All these management factors, from the managers themselves to process to history to culture could better be called the corporate DNA...

So what if GM dies?  Letting the GM’s of the world die is one of the best possible things we can do for our economy and the wealth of our nation.  Assuming GM’s DNA has a less than one multiplier, then releasing GM’s assets from GM’s control actually increases value.  Talented engineers, after some admittedly painful personal dislocation, find jobs designing things people want and value.  Their output has more value, which in the long run helps everyone, including themselves.

The alternative to not letting GM die is, well, Europe (and Japan).  A LOT of Europe’s productive assets are locked up in a few very large corporations with close ties to the state which are not allowed to fail, which are subsidized, protected from competition, etc.  In conjunction with European laws that limit labor mobility, protecting corporate dinosaurs has locked all of Europe’s most productive human and physical assets into organizations with DNA multipliers less than one.

I have argued for a long time that the shift of city transit departments from buses to a love affair with light rail has been a disaster.  Rail is so much more expensive per passenger mile, and so inflexible, that it generally forces a shrinkage in the total number of riders at the same time that budgets explode (example article here).

There are a lot of explanations for this phenomenon.  Part of it is incentives - heads of agencies with rail get paid more than bus-only agencies, and unions love the higher-paying rail jobs that never go away (part of the flexibility issues with rail).  Part of the explanation is cultural - rail is now hip and edgy and allegedly green and modern.  Buses are so last century.

And part of it is social/racial.  White upper middle class yuppies wouldn't be caught dead on buses.   They like trains better, particularly when they are successful in running rail routes through middle class commuting routes.  If the cost of this forces cut backs on buses that run where the poor need to go, oh well.

So, I ask you, what city in America is most famous as a model for urban planning and light rail?  Portland.  So it is interesting to see what effect this planning and transit strategy has had on the population.  I have already written here before that Portland bus service has been gutted in favor of rail, such that total ridership in the city has dropped despite spending a lot more transit dollars.  These maps from the Portland Oregonian show another effect -- shifting transit dollars to modes favored by rich white people has... caused Portland to be increasingly white.  What a surprise.  Via the anti-Planner

From the AZ Republic

Arizona police officers accused of misconduct will soon have more protection.

Gov. Jan Brewer has signed six bills, backed by police unions, that spell out procedures for internal investigations.

Great, because it was not already hard enough to take action against bad cops in a system where all the insiders - police and prosecutors - generally close ranks to defend them from scrutiny.

The new laws are not all bad -- at least one gives protections to internal whistle-blowers, something that is needed in a police culture that has an effective law of omerta against cops who call out other cops for bad behavior.  My guess, though, is that this rule will be used by unions who want to harass police management, rather than to protect street cops who testify against other street cops.

Defenders of the law said

Police unions weren't asking for anything more than the due process an arrested citizen receives, said Larry A. Lopez, president of the Arizona Conference of Police and Sheriffs.

"Just because we wear uniforms, we're not relegated to a watered-down version of constitutional rights," said Lopez, a Tucson officer.

I have said a number of times that this is not quite true.  Police are given powers to use force against other citizens that the rest of us do not possess.  This necessitates a kind of scrutiny and oversight by the state that would not be appropriate or legal for the average citizen.  For example, police simply do not have the privacy rights in conducting their jobs that the rest of us do.  We have seen too many times that when we give police broad discretion, special powers, and no oversight (or even a nudge and a wink guarantee against oversight), bad things inevitably happen.

If you are confused about what I am talking about, go read Radley Balko's archives.

So the Republicans in Wisconsin eliminated collective bargaining for public unions except on wages.  The Democratic Secretary of State, fully within the law, is delaying making the law official for 10 days.  This 10 days is giving us a great picture of the problem with public unions.

Why?  Because the 10 days was explicitly to allow cities and counties to cut new deals with unions, since all deals before the law is passed are grandfathered.  The fact that many city and county governments are rushing to take advantage of this window just proves that public collective bargaining is broken -- no one is looking after the taxpayers.  I have argued that public unions are basically on the same side of the table with governments in bargaining sessions.  What could be better proof?  If government officials really cared about the taxpayer or their fiduciary responsibility, why in the world would they be rushing to cut above-market deals with government employees when they won't have to do so in just 10 days?  Government officials are colluding with unions to race to transfer more wealth from taxpayers to workers before the window for such subsidies shuts.

Many of my Conservative friends often rail on liberals and liberal politics as being driven by envy.  I find that sort of assignment of motivation to be fairly unhelpful in most debates, though I do understand the case they are making.

In this context, though, I have to say that Kevin Drum gets the Chutzpah award of the week for claiming that Conservative politics are being driven by envy of government workers.  LOL.  I made a response in his comments section that was so obvious I hesitate to even repeat it here, but I will.  He made the point that government did not lay people off because it still had demand for its services

Kevin, you have it backwards because you confuse two terms. Private businesses did not lay people off because people stopped wanting their product, they laid people off because people stopped paying for their product. I am sure everyone still would like a Porche, just no one is paying for them right now. Ditto houses, etc.

Businesses reacted to the reality of less money coming in. They probably had many important things they could have continued doing in R&D or manufacturing streamlining, but the reality was that less money was coming in the door so they reduced their expenses to match.

The public sector issue is not different but identical. Sure, there are still lot of things they would like to be doing, but the fact is that less money is coming in the door. But rather than adjust to that fact, they arrogantly ignored it, running up debt in the taxpayers name so a bunch of deputy assistant principals could keep earning $80,000 a year. That is why folks are angry.

Kevin Drum is one of the few team politics blogs I read from either the Coke or the Pepsi side of the aisle because I think he often makes the leftish case more intelligently than most.  But I have been critical of him all week in his comments section for repeatedly defending public employees unions based on the benefits of private unions.  The two are very different, as pointed out by, well, about everybody who is not specifically beholden to the public employees unions.  Here is just the first one of many I found in my reader.

Collective bargaining was adopted as a key tactic for labor out of the sense that, by banding together in labor negotiations, workers were able to offset a perceived power imbalance vis a vis employers.  But what happens if the management team on the other side of the table in labor negotiations is not actually an adversary?

We have seen in the last week that the Democratic Party is operating, right up to the US President, as a wholly owned subsidiary of the public employee's unions.  In such a case, where state governments are historically dominated by Democrats, is it any wonder that compensation packages for unions have skyrocketed?  They have been negotiating with themselves!

I have argued for a while that Obama is building a European-style corporate state, where a troika of powerful government officials, unions, and the largest corporations run the country for their own benefit.  As far as the economy is concerned, this means legislation that cements the position of large, powerful competitors against smaller competitors or future upstarts.  You can see this in Europe, where for decades the list of largest corporations seldom turns over, as they have entrenched themselves in government to protect their position  ().

Here is today's episode, from the Obamacare law:

Under the headline, "Construction Stops at Physician Hospitals," Politico reports today that "Physician Hospitals of America says that construction had to stop at 45 hospitals nationwide or they would not be able to bill Medicare for treatments." Stopping construction at doctor-owned hospitals might not seem like the best way to boost the economy or to promote greater access and choice in health care, but that exactly what Obamacare is doing.

Kenneth Artz of the Heartland Institute explains, "Section 6001 of the health care law effectively bans new physician-owned hospitals (POHs) from starting up, and it keeps existing ones from expanding." Politico adds, "Friday [New Year's Eve] marked the last day physician-owned hospitals could get Medicare certification covering their new or expanded hospitals, one of the latest provisions of the reform law to go into effect."

This little-noticed but particularly egregious aspect of Obamacare is, by all accounts, a concession to the powerful American Hospital Association (AHA), a supporter of Obamacare, which prefers to have its member hospitals operate without competition from hospitals owned by doctors.

Via Overlawyered:

As part of the Consumer Product Safety Improvement Act of 2008 (CPSIA), Congress mandated that the CPSC create a "publicly available consumer product safety information database" compiling consumer complaints about the safety of products. Last week, by a 3-2 majority, the commission voted to adopt regulations that have dismayed many in the business community by ensuring that the database will needlessly include a wide range of secondhand, false, unfounded or tactical reports. The Washington Times editorializes:

"¦[Under the regulations as adopted last week] anybody who wants to trash a product, for whatever reason, can do so. The commission can leave a complaint on the database indefinitely without investigating its merits "even if a manufacturer has already provided evidence the claim is inaccurate," as noted by Carter Wood of the National Association of Manufacturers' "Shopfloor" blog"¦.

Trial lawyers pushing class-action suits could gin up hundreds of anonymous complaints, then point the jurors to those complaints at the "official" CPSC website as [support for] their theories that a product in question caused vast harm. "The agency does not appear to be concerned about fairness and does not care that unfounded complaints could damage the reputation of a company," said [Commissioner Nancy] Nord.

Commissioners Nord and Anne Northup introduced an alternative proposal (PDF) aimed at making the contents of the database more reliable and accurate but were outvoted by the Democratic commission majority led by Chairman Inez Tenenbaum. Nord: "under the majority's approach, the database will not differentiate between complaints entered by lawyers, competitors, labor unions and advocacy groups who may have their own reasons to "˜salt' the database, from those of actual consumers with firsthand experience with a product."

Any number of private actors have already tackled this problem. Amazon.com has probably the most comprehensive set of product reviews, and has taken a number of steps (e.g. real name reviews) to increase trust in their system.  Reviewers who are shills (either for or against a product) are quickly outed by other reviewers.   Another site whose reviews I rely on a lot is TripAdvisor, which has hotel and other travel reviews.   TripAdvisor allows the reviewed hotels to respond to individual reviews in a way that the consumer can see to get both sides of the story.

Apparently, none of this back and forth will be allowed in the CPSC data base.  The Democrats who wrote the process only want bad stuff in the data base, so it will not allow manufacturer responses or even positive reviews to appear.  The only possible justification for the government to run this database would be for the government to take a role in investigating and confirming or overturning claims and complaints, but it is clear it won't be doing this either.   This will just be a location for disgruntled people to drop turds on various manufacturers, all with the imprimatur of the government.  I can't see consumers finding much value here compared to the alternatives, but I can see the value in a courtroom to be able to stuff a government site with unsubstantiated claims and then use that site to say that the "official" government site is full of criticisms of the product.

I was in discussions with California State Parks over the last few days.  Given that their new earmarked funding source was defeated in the last election, they are facing cuts next year.  A number of parks will again face closure.  As I have many times, I said that I could easily keep many of these parks open under our operations using only the gate fees and no public subsidies.

For the first time, someone explained to me why they could not entertain my proposal.  It is illegal in California to replace any function performed by a public employee with a private contractor.   The only way they could consider private operation of a park is to allow it to close, lay everyone off, let it sit closed to the public for a while, and then possibly reopen it with private management.  And even that approach will likely be challenged in the court.  The public employees unions are committed to allowing parks to permanently close rather than establish the precedent of private management.

More on public-private partnerships in recreation and how private management of public recreation works, here.

In a European-style corporate state, very large corporations (and their unions) get special protections, privileges, and exemptions, to the detriment of consumers, entrepreneurs, small businesses, and taxpayers.  Here we go, via Russ Roberts:

Nearly a million workers won't get a consumer protection in the U.S. health reform law meant to cap insurance costs because the government exempted their employers.

Thirty companies and organizations, including McDonald's (MCD) and Jack in the Box (JACK), won't be required to raise the minimum annual benefit included in low-cost health plans, which are often used to cover part-time or low-wage employees.

The Department of Health and Human Services, which provided a list of exemptions, said it granted waivers in late September so workers with such plans wouldn't lose coverage from employers who might choose instead to drop health insurance altogether.

Without waivers, companies would have had to provide a minimum of $750,000 in coverage next year, increasing to $1.25 million in 2012, $2 million in 2013 and unlimited in 2014.

"The big political issue here is the president promised no one would lose the coverage they've got," says Robert Laszewski, chief executive officer of consulting company Health Policy and Strategy Associates. "Here we are a month before the election, and these companies represent 1 million people who would lose the coverage they've got."

Actually, the real political question is why McDonald's gets special treatment, but the folks who run the deli downstairs in my building, who effectively compete with McDonald's, does not get to operate under the same law, merely because they are not large enough to get the President's special attention.

Congress just passed a new $26 billion payoff to state governments, easing the pressure on states to institute some sort of fiscal responsibility.  The follows on the heals of last year's tens of billions of dollars in direct aid to state budgets in the original stimulus bill.

Taking the pressure off states for real fiscal reform is bad enough, but this is worse:

Maintaining the salaries and generous benefit plans for members of teachers unions is indeed a top Democratic priority. That's why $10 billion of the bill's funding is allocated to education, and the money comes with strings that will multiply the benefits for this core Obama constituency.Specifically, the bill stipulates that federal funds must supplement, not replace, state spending on education. Also, in each state, next year's spending on elementary and secondary education as a percentage of total state revenues must be equal to or greater than the previous year's level.

This is roughly equivalent to the government telling mortgage holders that took on too much debt that the government will bail them out, a clear moral hazard.  But then it goes further to force the mortgage-holder to promise to take on a bigger mortgage next year.  Unbelievable.

In a move right out of Atlas Shrugged, Texas is singled out for special penalties in the law because, well, it seems to be doing better than all the other states economically and is one of the few that seem comitted to fiscal responsibility

For Texas, and only Texas, this funding rule will be in place through 2013 [rather than 2011]. This is a form of punishment because the Beltway crowd believes the Lone Star State didn't spend enough of its 2009 stimulus money.

So much for equal protection.  This Congress sure has set an incredible record for itself in choosing to reward and punish individual states (remember Nebraska and Louisiana) in its legislation.

The WSJ thinks perhaps a different kind of multiplier, other than the Keynesian one, is behind this legislation.

Keep in mind that this teacher bailout also amounts to a huge contribution by Democrats to their own election campaigns. The National Right to Work Committee estimates that two of every three teachers belong to unions. The average union dues payment varies, but a reasonable estimate is that between 1% and 1.5% of teacher salaries goes to dues. The National Education Association and other unions will thus get as much as $100 million in additional dues from this bill, much of which will flow immediately to endangered Democratic candidates in competitive House and Senate races this year.

This is a follow-up to my opinion piece in Forbes the other day.  Remember, this outcome is not somehow preventable by having "our, smarter guys" in charge -- it is an inevitable result of the information and incentives of government organizations.

Three days after the BP oil spill in the Gulf of Mexico began on April 20, the Netherlands offered the U.S. government ships equipped to handle a major spill, one much larger than the BP spill that then appeared to be underway. "Our system can handle 400 cubic metres per hour," Weird Koops, the chairman of Spill Response Group Holland, told Radio Netherlands Worldwide, giving each Dutch ship more cleanup capacity than all the ships that the U.S. was then employing in the Gulf to combat the spill....

In sharp contrast to Dutch preparedness before the fact and the Dutch instinct to dive into action once an emergency becomes apparent, witness the American reaction to the Dutch offer of help. The U.S. government responded with "Thanks but no thanks," remarked Visser, despite BP's desire to bring in the Dutch equipment and despite the no-lose nature of the Dutch offer --the Dutch government offered the use of its equipment at no charge. Even after the U.S. refused, the Dutch kept their vessels on standby, hoping the Americans would come round. By May 5, the U.S. had not come round. To the contrary, the U.S. had also turned down offers of help from 12 other governments, most of them with superior expertise and equipment --unlike the U.S., Europe has robust fleets of Oil Spill Response Vessels that sail circles around their make-shift U.S. counterparts.

Why does neither the U.S. government nor U.S. energy companies have on hand the cleanup technology available in Europe? Ironically, the superior European technology runs afoul of U.S. environmental rules. The voracious Dutch vessels, for example, continuously suck up vast quantities of oily water, extract most of the oil and then spit overboard vast quantities of nearly oil-free water. Nearly oil-free isn't good enough for the U.S. regulators, who have a standard of 15 parts per million -- if water isn't at least 99.9985% pure, it may not be returned to the Gulf of Mexico....

The Americans, overwhelmed by the catastrophic consequences of the BP spill, finally relented and took the Dutch up on their offer -- but only partly. Because the U.S. didn't want Dutch ships working the Gulf, the U.S. airlifted the Dutch equipment to the Gulf and then retrofitted it to U.S. vessels. And rather than have experienced Dutch crews immediately operate the oil-skimming equipment, to appease labour unions the U.S. postponed the clean-up operation to allow U.S. crews to be trained.

Life is too short to spend much time on the Democratic Underground, but this article by Ernest Partridge popped up in one of my Google watch lists.  I highlight only because it contains this straw man:

The dogmatism of free market absolutism resides in the belief that the unregulated market never fails to be beneficial to all; the belief, in other words, that there are no malevolent effects of unconstrained market activity, no "back of the invisible hand." From this belief follows the insistence that the free market is self-correcting, and that there is thus no need for regulation � that, in Ronald Reagan�s enduring words, "government is not the solution to our problems, government is the problem."

I can't think of any thoughtful defender of capitalism and free markets that ever would have said that the market "never fails" or that it is "beneficial to all" or that there are never bad outcomes or that the market is perfectly self-correcting.

Bad, stupid shit happens all the time in free markets.  For example, BP idiotically dumps a few zillion barrels of oil into the Gulf of Mexico.  In a free society, BP will be out billions of dollars in cleanup costs and damage settlements -- it might even bankrupt itself if governments allow that to happen, and thus will never again be able to do something so careless.  Markets can't prevent a first dumb action, like huge leveraged bets on ever-increasing housing prices, but markets can make sure the folks involved don't have the resources to do it again -- that is, except if governments bail them out from their mistakes.

The point is not that markets are perfect -- the point is that they are superior in both function and the retention of personal liberty to the alternative of giving governments coercive power to use force against individuals to change market outcomes.  The point is not that individuals don't do destructive things within the context of free markets.  The point is that they have a lot less power to do harmful things over long periods of time than if one gave that person coercive power in a government job backed by police forces and armies.   There is only a limited amount of damage anyone can do when they depend on the uncoerced cooperation and agreement of their counter-party.   A tobacco company CEO doesn't have a hundredth the power to ruin peoples lives as does one member of Congress. Fifty years of slimy cigarette advertising doesn't have the power of one Congressional mandate.  Go to Chicago, Detroit, Baltimore -- which has been worse for these cities -- the private campaign to sell cigarettes or the government led war on drugs?

Its clear from later in the article that the author is yet another person with a list of pet peeves who wants to use force on the American citizenry to get his way.  The author doesn't like cigarettes, so intervention with tobacco companies is a valid role for government.  OK, well I can't stand reality TV shows, so much so that I would rather be in a room of smokers than a room with "the biggest loser" on TV, but you don't see me wanting to give government power to do something about it.

But what is amazing to me is how much his examples actually make the libertarian point for limitation of government.  Try his first one:

Private Prisons. Good for the corporations: more prisoners, "three strikes" laws, mandatory sentencing. The cost to society: less rehabilitation and early release, increased government expenditures and taxes. It is noteworthy that the United States has the largest prisoner to population ratio in the industrialized world.

You have to really re-read history to come to the conclusion that American incarceration rates are mainly driven by privatization of prisons.   My sense is the causality is the other direction - we have passed crazy drug laws and mandatory sentencing for sometimes petty crimes and have had to turn to private actors with private capital to keep up with the demand to construct new prisons.

Like the author, I hate this incarceration trend, but its really a stretch to blame this on privatization.  And, I am the first to deride the symbiotic relationship between powerful corporations and the government.  I have written on any number of occasions that both political parties in this country seem to be trying to build a European-style corporate state.  So, even if I don't think he has history quite right here, I am willing to concede the point.  Because, in fact, this seems to me an indictment of exactly what he is trying to defend -- the government interventionist state.

The only reason corporations lobby the government is that the government has the unique power to coercively intervene in markets.  Corporations try to engage this power for their own benefit and to step on competitors, both current and future.  The root cause failure here is not the fact that private companies try to engage this power, but that this power exists at all.

Amazingly, he makes the same argument about war:

War, Inc. Good for the corporations (i.e., the military-industrial complex and "private contractors" such as Halliburton and Blackwater): more wars, expenditure of rockets, bombs and ammunition (requiring restocking of inventories). Cost to society: avoidance of diplomatic solutions, increased military budget and battlefield casualties, disobedience to international law (e.g., the Geneva and Nuremberg protocols).

I am staggered to see that someone who is defending giving more power to the government is simultaneously highlighting examples where this power is misused so horribly  (and what could be a more despicable crime by legislators than incarcerating more people or starting wars just to help a favored corporate interests).  I don't think wars are started primarily to help armaments manufacturers, but if they are, then this kind of failure by politicians is FAR worse than any he could point out in unregulated markets, only making my point for me.  Markets are not perfect, but the cure of government use of force is worse than the disease.

Since the author dwells on cigarettes, just look at the so-called tobacco settlement.  Supposedly, this was the great government hammer wielded against cigarette companies to punish them for years of selling a dangerous product.  But in fact, all the settlement did was cement the market position of largest tobacco companies.  The settlement effectively made government a financial partner with tobacco companies, and since it was implemented, the government has wielded its power to protect the companies who were involved in the settlement against competition (particularly from low-price upstarts) so as to protect its own cash flow.  The position of the major tobacco companies has never been as secure and profitable.

I think the author's response would be that if we ban corporate election spending, then all would be well.  This does not pass any kind of smell test.  First, corporate giving has been effectively banned (or at least severely limited) for 20 years, and we see the staggering influence corporations have none-the-less.  We only have to look at Europe, where the troika of politicians, large corporations, and large unions run those states to their own benefit, to the detriment of all others (e.g. smaller businesses, business without political contacts, workers outside of favored fields like autos, young workers, etc.)  This symbiotic relationship occurs without campaign cash being a major element.

If you want to understand how this works, just look at recent legislation like cap-and-trad and health care.  Legislators propose some populist interventions in a market to help themselves get re-elected.  Corporations who might naturally oppose such interventions agree to support legislation in exchange for a number of subsidies and special protections. Trades occur that have little to do with campaign contributions.  Just look at the influence GE wields in getting special deals for itself.

The GM bankruptcy was a classic example.   GM is given a big taxpayer bailout and some cuts in labor costs.  In exchange for labor cost cuts, unions get the government to squash secured creditors of GM in their favor in dividing up ownership and also get some special considerations in pending health care legislation.  Secured creditors allow this to occur because they got TARP funds from the government.   Politicians get active support from GM and the UAW in getting out the vote, positive PR, etc.  The only people who lose are taxpayers, all the other automobile competitors, and workers in every other industry who must pay taxes to support auto workers special deal.

By the way, don't tell me that this is not what you want, that if only we have the right people (e.g. yourself) in power this will never happen.  Wrong.  It always happens.  Every dang time.  The incentives are overwhelming.  Given politicians the power to do that one good intervention you want, and you have also given them the power to do a thousand that you don't want.

Postscript: By the way, please do not ever take a "progressive" seriously when they say they care about the poor.  Take this for example:

Outsourcing of jobs. Good for the corporation: increased profits and return on investment of stockholders. Cost to society: poverty, loss of educational opportunities, redistribution of wealth "upward," shrinkage of customer base, economic depression.

Another way of stating outsourcing is say that it is "transferring a job from a rich American to a poor person in a developing nation."  As a country becomes richer and more educated, low-skilled jobs are not going to continue to get done by college grads.  PhD's, in general, are not going to stitch underwear.  Low skilled jobs in a wealthy society do get outsourced, and these new low-skilled jobs in developing nations become the seed or the catalyst for future wealth-creation and development.

This is one ironic problem that progressives in this country have -- even the poorest Americans would be middle class in many of the countries of the world.  If progressives really want to transfer wealth from the rich to the poor, everyone in the US would pay and no one would receive a dime, it would all flow to other countries.

As Obama pushes the US into a corporate state model like those in Europe, here is one cost we will face: increases in long-term unemployment.  Already we see higher structural barriers being created to employment (preference for preferred unions, higher minimum wage, reduced internships) combined with increasing incentives to remain unemployed (extension of unemployment benefits, subsidized medical services).

Most countries who move to this model experience very high long-term structural unemployment.   The costs to add an employee in Europe are really, really high, meaning that it is only done reluctantly and the preference is for highly skilled workers  (who is going to give a job for life to an untested, unskilled young worker?)  Further, these states are run by a troika of large corporations, unions, and government insiders who protect each other from competition.  Young unskilled workers are a competitive threat to established unions.  Since these unions workers get above-market wages, they are protected from younger workers who are willing to offer their admittedly less skilled labor much cheaper.

I was playing around with data released from the World Bank, and compared the US to a number of other industrialized countries on this metric.  Even in past recessions, long-term unemployment has remained low in the US (click to enlarge).  The metric is percent of total unemployed that are unemployed for longer than 1 year.

Readers of the site know that I do not generally join in with the Conservative bashing of unions, except to the extent that they feed at the public trough (e.g. at GM) where I will bash them equally with all other similar hogs.  Unions are perfectly acceptable associations of individuals in a free society for a generally rational purpose.  What upsets this equation is when the government attempts to intervene to tilt the playing field either towards employers or unions in their negotiations -- but this is a government intervention issue, not a union issue per se.

Far more problematic is the growing influence of public employee unions.  Union advocates talk about the need to help private unions in a power imbalance with large corporations, but talk about a power imbalance!  In the public sector, we have hugely powerful unions with absolutely no one willing to take them on.  Government leaders who supposedly should be advocates of taxpayers and pushing back against union demands are typically in bed with unions.  One might say it is a similar case to unions owning the private company in which they work, but in that case there are market dynamics that mitigate against overly high pay or indifferent customer service.  No such balancing mechanisms exist in government monopoly institutions.

There have been a lot of articles on this topic of late that I have been keeping in my reader but have not linked, so to do a bit of tab-clearing, here are some good recent articles on public sector unions.

Carpe Diem shows the direct relationship between increasing public sector unionization and public sector debt.  Chris Edwards appears to be the original source.

Chris Edwards followed up to show an inverse relationship between state management quality and unionization.

Bruce McQuain discusses the $500 billion California unfunded pension liability.  And this does not include the unfunded liabilities of all the state's cities and towns and counties, which typically don't book any liability at all for their future pension and medical commitments.

Steven Malanga on how public sector unions broke California.

The camera focuses on an official of the Service Employees International Union (SEIU), California's largest public-employee union, sitting in a legislative chamber and speaking into a microphone. "We helped to get you into office, and we got a good memory," she says matter-of-factly to the elected officials outside the shot. "Come November, if you don't back our program, we'll get you out of office.'

Traditionally, public sector unions have exercised a lot of power in elections, as evidenced by this example of the success of unions in fielding winning candidates in California school board elections.   Bruce McQuain reports that the SEIU has even formed its own 3rd party in North Carolina.  Its amazing that candidates whose main platform is to shift more taxpayer resources to the pockets of government workers has success.

Finally, according to the GAO, union contracts have a lot to do with why the USPS is failing  (as labor accounts for 80% of USPS costs).  They seem to have all the labor problems GM had, except there is even less pressure to correct the problems, since after all we can't get our mail delivered by Honda or Toyota.  Here is an example:

• USPS workers participate in the federal workers' compensation program, which generally provides larger benefits than the private sector. And instead of retiring when eligible, USPS workers can stay on the "more generous" workers' compensation rolls.

• Collective bargaining agreements limit the amount of part-time and contract workers the USPS can use to fit its workload needs, and they limit managers from assigning work to employees outside of their crafts. The latter explains why you get stuck waiting in line at the post office while other postal employees seemingly oblivious to customers' needs go about doing less important tasks.

• Most postal employees are protected by "no-layoff" provisions, and the USPS must let go lower-cost part-time and temporary employees before it can lay off a full-time worker not covered by a no-layoff provision.

• The USPS covers a higher proportion of employee premiums for health care and life insurance than most other federal agencies, which is impressive because it's hard to be more generous than federal agencies.

• If the collective bargaining process reaches binding arbitration, there is no statutory requirement for the USPS's financial condition to be considered. This is like making the decision whether or not to go fishing, but not taking into consideration the fact that the boat has holes in its bottom.

After famously throwing out 200 years of bankruptcy law to hose secured creditors in favor of uni0ns at GM and Chrysler, the Obama Administration is again bailing out the unions that helped get him elected

Barely 15 percent of all construction-industry workers in the United States are union members, while the remaining 85 percent are nonunion, according to the U.S. Department of Labor's Bureau of Labor Statistics. So why has President Obama signed Executive Order 13502 directing federal agencies taking bids for government construction projects to accept only those from contractors who agree in advance to a project labor agreement that requires a union work force? Obama's new order applies to all federal construction projects with price tags of $25 million or more, and it means all such contracts will only be awarded to companies with unionized work forces.

The costs of this to the public are pretty obvious, not only in terms of fairness but in increased costs and reduced competition.

Another factor helps explain Obama's willingness to sign an executive order that will put millions more tax dollars in union coffers. Mix points out that unions under PLAs typically exact agreements that include requiring contractors to make payments to union pension funds. This is an increasingly urgent issue, as the Washington Examiner's Mark Hemingway has recently detailed in these pages. According to Labor Department filings, the average union pension has only enough money on hand to cover 62 percent of the benefits it has promised to union members. Pension plans with 80 percent funding are considered "endangered" by federal auditors, while those with less than 65 percent funding are put on the "critical" list. With this latest executive order, it's clear that Obama intends to give unions on the critical list a massive dose of federal tax dollars to cure what ails them.

I'll keep saying it - this is right from the playbook of the European-style corporate state.

For a while now I have been saying that Obama is not promoting Socialism, but rather an European-style corporate state -- where a troika of large unions, powerful politicians, and favored corporations worked together mainly to get themselves in power and to protect each other from competition.

It seems that Ron Paul sees it the same way:

Republicans and tea party activists are fond of accusing President Barack Obama of being a socialist, but today party gadfly Ron Paul said they had it wrong."In the technical sense, in the economic definition, he is not a socialist," the Texas Republican said to a smattering of applause at the Southern Republican Leadership Conference.

"He's a corporatist," Paul quickly added, meaning the president takes "care of corporations and corporations take over and run the country."

For years I have argued that the killer app that may someday actually lead to school choice will not be individual liberty (because no one in government gives a rip about that any more) and not education quality (because again, its clear no one really cares) but speech and religion.  If the right messes up schools enough, the left might finally be willing to shed their alliance with the teachers unions and consider school choice.  From a live-blog of a Texas Board of Education meeting (via Radley Balko)

9:27 - The board is taking up remaining amendments on the high school world history course.9:30 - Board member Cynthia Dunbar wants to change a standard having students study the impact of Enlightenment ideas on political revolutions from 1750 to the present. She wants to drop the reference to Enlightenment ideas (replacing with "the writings of") and to Thomas Jefferson. She adds Thomas Aquinas and others. Jefferson's ideas, she argues, were based on other political philosophers listed in the standards. We don't buy her argument at all. Board member Bob Craig of Lubbock points out that the curriculum writers clearly wanted to students to study Enlightenment ideas and Jefferson. Could Dunbar's problem be that Jefferson was a Deist? The board approves the amendment, taking Thomas Jefferson OUT of the world history standards.

9:40 - We're just picking ourselves up off the floor. The board's far-right faction has spent months now proclaiming the importance of emphasizing America's exceptionalism in social studies classrooms. But today they voted to remove one of the greatest of America's Founders, Thomas Jefferson, from a standard about the influence of great political philosophers on political revolutions from 1750 to today.

I am really swamped at work, but I have a number of good things saved that I want to share.

1.  This picture is the best single explanation of what is wrong with the stimulus jobs creation numbers -- the stimulus money comes from somewhere, and starves efficient businesses of capital in favor of politically connected endeavors.  HT Russ Roberts

2.  More on what I call the only good idea for reducing health care spending -- making individuals responsible for making price-value purchasing tradeoffs like we do, oh say, with absolutely everything else we buy.  This article on on HSA's in Indiana:

State employees enrolled in the consumer-driven plan will save more than $8 million in 2010 compared to their coworkers in the old-fashioned preferred provider organization (PPO) alternative. In the second straight year in which we've been forced to skip salary increases, workers switching to the HSA are adding thousands of dollars to their take-home pay.

Most important, we are seeing significant changes in behavior, and consequently lower total costs. In 2009, for example, state workers with the HSA visited emergency rooms and physicians 67% less frequently than co-workers with traditional health care. They were much more likely to use generic drugs than those enrolled in the conventional plan, resulting in an average lower cost per prescription of $18. They were admitted to hospitals less than half as frequently as their colleagues. Differences in health status between the groups account for part of this disparity, but consumer decision-making is, we've found, also a major factor.

Mark Perry reports in a later post that Congress is declaring war on HSA's

3.  There has been a lot of good stuff lately on the growing rift between the two America's -- those in government or with access to government patronage and those who actually make a living by being productive.  I am increasingly convinced that Obama and Congress are working to create a European-style corporate state, where government insiders, a few large corporations, and a few large unions protect themselves against everyone else.  Katherine Mangu-Ward looks at a study of government vs. private pay for the same jobs.  It used to be government paid less in return for having to work less hard and being impossible to fire.  Now government workers have it all.

There are two million civilian federal workers. 1.1 million of them have direct private sector equivalents. And they are laughing their asses off at those private sector suckers, who are doing similar jobs for less pay"”often a lot less.

"Accountants, nurses, chemists, surveyors, cooks, clerks and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector," according to a USA Today report. In jobs where there are private equivalents, the feds are earning $7,645 more on average than their private counterparts.

Her post has more data. And an update and response to criticisms is here.  Mark Perry looks at wage growth, and the difference is amazing.  Government employees are the new robber barons, and this time, the title is appropriate.

And speaking of the corporate state, this was an interesting essay at the Claremont Institute, via Maggies Farm.

Joseph Schumpeter ominously speculated that as capitalism succeeded, democracies in time would come to expect its end (wealth) but reject its means (free-market competition). He worried that because of the inequality and creative destruction it brings, capitalism would provoke a kind of adverse reaction. A popular call would arise for government to plan market outcomes according to some utopian view of society's good, and this democratically guided central planning would inevitably slow economic growth. Schumpeter predicted, in turn, that if economic expansion faltered, individual liberty would be directly imperiled or quietly ceded by citizens resigned to having their diminished economic position protected by the state.

The one mistake writers often make is to call capitalism a "system."  Capitalism is the un-system.  It is the lack of a system.  It is the natural self-organization of individuals when they freely follow their own self-interest.

4.  The individual responsibility story of the day, via Overlawyered

In 2004, truck driver Simon Loza Mejia violated company regulations, and took his eight-year-old Diana Yuleidy Loza-Jimenez along on a long-haul trip from Oregon to Bakersfield. That November 27, he was pulling away in the truck, but apparently didn't bother to check where his daughter was, and ran over her. This was, argued her attorneys, the fault of her father's employer"”and a Sacramento County judge agreed with the argument that it was legally irrelevant that her father was the one who ran her over. Unsurprisingly, a jury ignorant of the facts awarded Diana, whose lower body was crushed, a jackpot verdict of $24.3 million.

5.  Charter schools in Harlem.  Never have so many kids been held hostage to so few, in this case a few union officials and their captive legislators.

The United Federation of Teachers and its political acolytes in the New York state legislature are hell-bent on blocking school choice for underprivileged families. Worried that high-performing charters are "saturating" Harlem, State Sen. Bill Perkins and State Assemblyman Keith Wright have backed legislation that would gut state per-pupil funding at charter schools and allow a single charter operator to educate no more than 5% of a district's students. Unions dislike charter schools because many aren't organized. But how does limiting the replication of successful public education models benefit ghetto kids?

These obstructionists, Mr. Clark says, aren't doing the community any favors. "The teachers unions ought to be ashamed of themselves because they know better than I do how bad these schools are," he says. "Everybody on my block and in my building and around the corner . . . they all want charter schools. They don't want a political debate."

Separately, John Stoessel digs into Diane Ravitch's shilling for the teachers unions.

6.  I could have sworn the politicians swore up and down they would never ever interfere with business decisions at GM.

General Motors Co. will reinstate 661 dealerships it sought to drop from its sales network.GM executives said Friday that the dealerships -- more than half of those seeking to stay with the automaker -- will receive letters giving them the option to remain open. GM said it would not have enough time to negotiate with all 1,100 dealerships that appealed the automaker's decision to close them within a four-month window imposed by the federal government....

"It's not exactly what they wanted to do, and it's always I think a little embarrassing when you have to make changes based on an arbitration process, but they've had to adjust and move forward," he said.

Well, at least the Congress and the DOT is hammering GM's competitor Toyota, so I guess they can call it even.  Welcome to Europe, guys.  I have said it before, but this is exactly the kind of BS European nations do all the time - hammering foreign competitors of their domestic politically connected manufacturers in exchange for substantial ability to regulate and modify these companies decisions.  Soon to follow - Europe's lower growth rates and higher structural unemployment.

7.  Dog bites man:  Paul Krugman still a political hack who is willing to eschew everything he knows or has written about economics to support his team.

I have to tell one of my favorite stories of chutzpah.  In the 1940's and 1950's, railroads were making the transition from steam engines to diesel engines.  One of the changes was that a diesel engine only needed a driver, it did not need a fireman as steam engines did to shovel coal and keep the boiler running well.   The unions of course saw this coming.  So what did they do?  They preemptively made the demand that diesel engines should have to have TWO fireman.  Railroads spent so much time fighting this insane proposal that it took them years to get the firemen per locomotive to the correct number (ie zero).

I am reminded of this story when I think of how the Obama administration has handled the issue of CO2 abatement.  Reasonable people understand that CO2 abatement will be horrifically expensive - it just will not be cheap in terms of cost or lost economic output and lost personal liberties to take the country back to a CO2 per capita it last had in the 19th century.     But rather than taking this on, the Obama administration preemtively attacked, saying that in fact Co2 abatement would lead to economic growth and job creation.  This was the broken windows fallacy on steroids, but the usual progressive illiterates and consumers of party talking points have run with it.

We are finally getting folks to start to address the true costs of CO2 abatement, and they are enormous.  People who push the precautionary principle try to say that even a small risk of climate catastrophe outweighs some minor abatement costs.  But does a small change of manmade warming outweigh a near certainty of enormous economic costs?

I have said for years that to really get to an 80% reduction target, gas prices would have to rise over $20 a gallon  (they are at $10 already in Europe and they are no where near the targets).  Some researchers looked at the gas price implications of more modest CO2 targets:

To meet the Obama administration's targets for cutting greenhouse gas emissions, some researchers say, Americans may have to experience a sobering reality: gas at $7 a gallon.

To reduce carbon dioxide emissions in the transportation sector 14 percent from 2005 levels by 2020, the cost of driving must simply increase, according to a forthcoming report by researchers at Harvard's Belfer Center for Science and International Affairs.

And this is with a straight tax, probably the most efficient way to hit the targets.  The study agreed that other intervenist approaches didn't seem to work as well as a straight tax:

In the modeling, it turned out that issuing tax credits could backfire, while taxes on fuel proved beneficial.