On January 8, the Huffington Post published a piece titled “A Streetcar Named Deception,” by Lawrence Hanley, president of the Washington, D.C., transit workers union. Hanley echoes many of the concerns made in this blog and elsewhere:

Streetcars today are of little, if any, use to those who actually depend on public transit as their primary means of mobility. Unlike light rail, heavy rail, and bus rapid transit, streetcars don’t have dedicated lanes to keep them moving free of automobile traffic. And in many cases, they run slower than a standard bus. And unlike a bus, a streetcar can’t shift out of its lane to avoid an obstacle, causing more traffic.

Streetcars also divert taxpayer money away from mobility-focused transit that helps working people and into boutique transit loops meant for “choice riders.” Meanwhile, bus service that takes people where they really must go gets short shrift, with routes being cut and fares going up. Adding insult to injury, streetcars are usually marketed as “sleek,” “premium,” “clean” ways for the rising urban class to get around. Rather than investing in and improving transit for everybody, politicians and their corporate backers are intentionally developing parallel transit systems—one for the well-to-do and one for the rest of us.

A month later, the New York Times published a piece arguing that money spent on streetcars is largely wasted:

“Bus-based public transit in the United States suffers from an image problem.”

That fact, laid out in a 2009 report from the Federal Transit Administration, isn’t surprising, but it has led to a perverse outcome: Transit agencies are spending millions of dollars on new rail infrastructure that is no faster than existing bus service, simply because riders perceive a train as better than a bus.

Many who are serious about effective transit have abandoned streetcars as a viable option. Why do Kansas City leaders persist when no one, especially Kansas City voters, thinks this is a good idea?

The post Streetcars Have Lost the Left appeared first on Show-Me Institute.

Opportunity cost is what a person or group gives up when they choose between two or more alternatives. This may be a strong limitation on the actions of mere mortals, but these UMKC professors imply that the government is capable of magic that can free us from the burden of trade-offs. There are enough fallacies and half-truths in the article that it would take a whole book to respond in full (a book that someone actually wrote more than 60 years ago), so I will confine myself to some of the more glaring ones.

Arguing that there is no fiscal crisis in Social Security and Medicare, UMKC Associate Professor Stephanie Kelton writes:

the government’s ability to pay benefits does not in any way depend on the balance in the Social Security or Medicare Trust Funds. Benefit checks come directly from the Treasury, and, as Alan Greenspan has admitted, “[A] government cannot become insolvent with respect to obligations in its own currency.”

There is definitely some truth here; Social Security and Medicare are both paid out of general revenues, which is going to be even more necessary now that Social Security is itself running a deficit. Kelton tries to claim that we face no “tough choices” with these programs, but if no cuts are made to Medicare or Social Security, we will have to cut spending on other government programs, raise taxes, increase the deficit, or (as Kelton alludes with the Greenspan quote) trigger substantial inflation. I admit that I don’t know exactly what Kelton means by a “tough choice,” but none of those options are politically popular, so they all seem pretty tough to me.

Next, Professor Randall Wray takes a shot at showing that current deficits won’t get passed on to the next generation because government debt is really just an accounting trick:

There are about 13 trillion dollars in Treasury securities at the Fed. Collectively, these savings accounts are known as the national debt. The national debt represents a portion of the combined savings of US residents, corporations, banks, and foreign governments. And most folks probably don’t know that when a person buys them, the Fed simply transfers the dollars from her checking account to a savings account at the Fed called a “Treasury security.”

Tens of billions of dollars of these Treasury securities come due every week. When that happens, the Fed pays off that “debt” simply by transferring the dollars, plus interest, out of these savings accounts and back to the holders’ checking accounts.

In the future, when our grandkids make payments on Treasury securities, they will simply credit accounts at the Fed-just as we do today, and as our grandparents did before us. It is a simple matter of data entry, and not a financial burden.

Again, this has some truth to it, but what Wray does not discuss is that running deficits of upwards of 10 percent of GDP will eventually cause the interest rate the government pays on those bonds to skyrocket. Take a look at the second graph in this article, which shows the Congressional Budget Office’s projection of costs for Medicare, Social Security, and interest on the debt. Unless we rein in deficits, by the early 2030s we will be paying 5 percent of our GDP just for the privilege of borrowing more, and the number only rises from there. Furthermore, government debt is not merely an accounting trick. Those dollars command real resources in the economy, and when the government spends those dollars, there are fewer resources for private use. If the debt continues to grow, we will have to devote more resources every year to paying off those loans, which again entails either higher taxes, decreased government spending on other items, inflation, or some combination thereof.

Although the first two examples are bad enough, I have saved the worst for last (there are plenty of other absurdities in the article, but this post is long enough as it is). After giving us the single most asinine sentence in the article (“Taxes, then, are what give value to money.”), doctoral candidate Yeva Nersisyan gives a full-throated defense to the government-as-magic view of the world:

Any and all financial constraints on government spending such as issuing government bonds dollar for dollar against deficit spending, debt ceilings, and restrictions on the Fed’s ability to buy treasury securities are purely political and necessarily self imposed, because they are imposed on us by our chosen institutional arrangements and not by something inherent in our economic system.

No doubt that in purely dollar terms the government can spend as much as it wants. It could print us all checks for a million-kajillion dollars if it so pleased, but it still operates within a world with real constraints. There are only so many resources available in the country at any given time, and it is impossible for the government to create more out of thin air. Any attempt by the government to raise more revenue through taxation or inflation will be met at the margin with more and greater attempts by individuals and businesses to avoid those taxes and hedge against rising prices. In short, government cannot mandate prosperity.

I’m sure it’s comforting to believe that there is some omnipotent organization that can solve all our problems for us, but that is a childish view of the world, and as adults we must put away childish things.

The post Government: No Costs, All Benefits appeared first on Show-Me Institute.

[T]his could be seen as a historical turning point in the American consciousness about actually having awareness about where food comes from and what goes into how it gets made.

Most advocates for calorie count mandates emphasize the effect they could have on the population’s health. They say that if people read caloric data whenever they order food, they’ll make healthier choices and put less of a strain on the health care system.

The Huffington Post essay is unusual in that it connects calorie counts to the local food movement. At first glance, this seems puzzling, because a calorie count tells you nothing about where your food comes from. Furthermore, a dish that was served up from scratch in your home town might be high in calories, while produce flown in from hundreds of miles away could contain fewer calories. Supposing consumers pay attention to the calorie counts and consequently reduce the calories they consume — there’s evidence that they don’t, but supposing they do — the effect could be to discourage some people from eating local food. For example, think of people who live next to a cattle farm and have access to local hamburgers, but can’t buy vegetables unless they’re shipped in.

However, the Huffington Post writer may be on to something. Once people are comfortable with calorie counts on the menu board of every major chain restaurant, they’ll be less likely to object new national labeling mandates. They’ll take it for granted that the federal government tells restaurants what to write on menus. Proposals to label food as “local” or “organic” will then meet with less opposition.

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1. This production incentive encourages overproduction. This is undesireable from an environmental perspective, because it leads to deforestation. It’s also detrimental for the American economy because it results in an inefficient allocation of resources.
2. It increases the cost of fuel for taxpayers. Each gallon of ethanol that is produced costs them $4.18. This is separate from and in addition to the price that they pay at the pump. In a piece on The Huffington Post, Nathanael Greene explains how this happens:
   

   [N]ext year the oil companies will be required to buy 12.6 billion gallons of conventional corn ethanol, but because tax payers are giving them $5.85 billion they’ll consume 1.4 billion more than required. That works out to $4.18 per extra gallon.

3. It drives up the prices for corn, soybeans, and wheat. This is bad for consumers because they have to pay more for food. This is also bad for the environment because it leads to land-use change and further overproduction and deforestation. The FAPRI report quantifies that eliminating the tax credit for corn ethanol would cause the prices of these grains to fall. According to p. 64, if the production incentives were removed, the average corn prices would decrease by approximately $0.15 per bushel during the 2010-2019 period:
   
4. It discourages the development of biofuels that are cleaner and more renewable than corn ethanol. These alternatives are forced to compete at a disadvantage because they do not receive the financial favor that corn ethanol does.

The corn ethanol production incentive program is an application of the broken window fallacy. Politicians in Washington fail to consider the cost to taxpayers, and the aforementioned negative consequences. When taxpayers are forced to spend their money on subsidizing the overproduction of corn ethanol, they cannot spend it on something else, such as infrastructure or education or alternative renewable fuels.

Supporters of the production incentives will argue that discontinuing the program would hurt farmers’ bottom lines. However, government payments constitute a very small amount of their compensation relative to sales, as shown on p. 62 of the report. For this reason, eliminating the production incentives would not actually be detrimental to this group:

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The latest example is this essay in the Huffington Post by Debra Eschmeyer, Media Director of the National Farm to School Network. Eschmeyer argues for a direct link between school lunches and national security:

Do tater tots, pizza, and soda rise to the level of calling in Janet Napolitano or David Petraeus? Oddly, yes, because the National School Lunch Program was originally created to promote “nutrition in the national defense,” as a solution to young men who were unfit for service in WWI and WWII. The lunch line was actually designed to prepare soldiers for the front lines. (And sadly, 27 percent of the population for military service today are too obese/overweight to serve).

Eschmeyer then turns her attention away from history and calls for a “fight” against poor nutrition.

Is Eschmeyer correct that we need better cafeteria food to keep out foreign invaders? I don’t think so. There are many other factors that prevent people from joining the military, such as criminal records, lack of education, and health problems that are not related to food (including poor eyesight, mental illness, and others). It’s worth noting that the report Eschmeyer cites about military service recommends expanding preschool education in an effort to improve graduation rates, but makes no mention of school lunches.

Fortunately, we don’t need a large percentage of the population to defend the country right now, so it doesn’t really matter that so many people can’t serve for one reason or another. Problems like obesity don’t determine whether we have a military, but which people are employed by it. As a country, we can still enjoy the benefits of national defense. The only people who lose out when the army excludes lots of overweight people are the overweight people who want to serve. And if someone wants to join the armed forces but is barred by weight, he can make nutritional or other lifestyle changes to improve his fitness. In this sense, overweight people are in a better position than others who are disqualified, because it’s possible for them to bring their weight down to military standards through their own initiative.

The fact that a small percentage of the population is eligible for military service can be a good thing, depending on how you look at it. It means that we are living in such a peaceful time in history that our military can afford to be selective, excluding people who don’t have quite enough education or whose weight is just a little higher than the ideal.

The defense argument for better school lunches doesn’t pass inspection. If states like Missouri think kindergartners don’t eat enough vegetables, they shouldn’t frame that as a national security crisis. There’s no need to call in the federal government — or to call forth the militia.

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Yesterday on the Huffington Post, Maher posted an editorial,  “New Rule: You Can’t Complain About Health Care Reform If You’re Not Willing to Reform Your Own Health.”

President Obama has identified all the problems with the health care system, but there’s one tiny issue he refuses to tackle, and that’s our actual health.

The best thing that a person can do to improve for his or her health is to abandon unhealthy habits. These are lifestyle changes that are simple and inexpensive. If a person quits smoking, he or she will even save money.

This week, the British Medical Journal published a study showing that men who stopped smoking and switched to a low-fat diet elongated their lives by an average of 10 years. The researchers followed 19,000 men, starting in the late 1960s. PLOS-Medicine published a similar study in 2008 that demonstrated a 14-year increase in longevity, not just 10, with four items only: non-smoking, daily exercise, eating vegetables and fruits, and weight control.

There is a farrago of other lifestyle changes that can positively affect a person’s longevity, such as flossing and moving to a rural area.

If Americans do not stop shirking personal responsibility for their own health, any effort at health care reform will be inefficacious.

But I suppose that it’s easier to blame fast food restaurants or the government.

The post Personal Responsibility Is the Best Medicine appeared first on Show-Me Institute.

Governments should devote stimulus funds to charter school expansion and encourage public private partnerships to ensure efficient use of the funds. Charter schools have illustrated the ability to improve the quality of education in the communities they serve. Yet, across the nation, these schools struggle to finance new construction or capital improvements.

I’d rather that the current federal stimulus program didn’t exist at all — the best thing government officials could do to jump start the economy would be to cut both spending and taxes to the bone — but as long as the spending is going to happen, providing kids an escape route from failing public schools is a pretty good cause.

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