Friday, November 28, 2014

Government Created Taxi Monopoly And Mandated Inflated Prices Broken By Free Market Competitors Like Uber And Lyft: Declines In Fares And Value Of Taxi Medallions

From The New York Times, Upshot, "Taxi Medallions Fall in Value, a Gauge of the Uber Revolution" by Josh Barro:
In major cities throughout the United States, taxi medallion prices are tumbling as taxis face competition from car-service apps like Uber and Lyft.

The average price of an individual New York City taxi medallion fell to $872,000 in October, down 17 percent from a peak reached in the spring of 2013, according to an analysis of sales data.
In Chicago, prices are down 17 percent. In Boston, they’re down at least 20 percent, though it’s hard to establish an exact market price because there have been only five trades since July. In Philadelphia, the taxi authority recently scrapped a planned medallion auction.
A seven mile ride from the Loop to the University of Chicago in a medallion taxi costs about $26, including tip. The same trip cost $12.29 this April with UberX, the lowest-cost service option from Uber.

Wednesday, November 26, 2014

Viral Video Of Milwaukee Police Chief On Homicides In Milwaukee

From FOXNEWSinsider, "Police Chief Explodes on Protesters:"
Milwaukee Police Chief Edward Flynn had fiery comments for reporters after a commission meeting Thursday night concerning the shooting of a black man by a white police officer.

The crowd lashed out because Flynn was seen checking his cell phone during the meeting, but his impassioned response put critics in their place, and the video has gone viral (watch below).

Monday, November 24, 2014

Gary Becker's Legacy By Guy Sorman

From City Journal, "Markets Everywhere: How economist Gary Becker changed our lives" by Guy Sorman:
[Gary] Becker not only came up with market-based solutions to public problems; he also debunked government efforts to use extensive regulations and spending to address those problems. This was a critical task, since the regulate-and-spend nanny-state approach, which denies the rationality of individuals and their capacity to take care of themselves, is seductive to many politicians and even to the public, in part because its unintended negative consequences, both moral and fiscal, aren’t always evident at first.

Becker viewed the Bloomberg administration’s 2006 ban on trans fats in restaurants as a classic example of overreaching regulation. The administration presumed that New Yorkers were too ignorant to make decisions in their own health interests. But were they? Yes, the evidence suggested that trans fats contributed to heart disease—though the degree of harm remained unclear. But before the ban, half of the city’s restaurants didn’t use trans fats, so health-conscious consumers could already easily avoid them if they wished. Further, the ban likely raised the cost of eating out in the city. Could such a price increase lead some New Yorkers to eat more at home—and perhaps eat more trans fats, too? Policymakers ignored such a possibility. Some customers, of course, may really love trans fats and want to consume them, even knowing that they could have bad health effects in the future. Defenders of the ban would say that making that choice could increase the incidence of heart disease in the city, which would burden Medicare and hence the taxpayer—a negative externality. If this were true, though, why not just let insurers require individuals who want to eat unhealthily to pay higher premiums? Why should the government impose a new regulation that diminishes freedom?

Public policies that curb personal liberty, Becker argued, too often are based on insufficient data; politicians regularly put them into effect without considering all their potential consequences or exploring alternatives. And such prohibitions are politically hard to remove, he added, meaning that the sphere of freedom continues to shrink.

Sunday, November 23, 2014

Giant Offshore Oil Projects Return To Gulf Of Mexico

From The Wall Street Journal, "Oil Boom Returns to Gulf After Deepwater Horizon Disaster: Exxon, Shell—Even BP—Push Ahead With Giant Offshore Projects" by Daniel Gilbert, Amy Harder and Justin Scheck:
For the near term, though, the activity promises to return the Gulf to prominence as a major source of U.S. energy. In 2001, the waters produced about a quarter of all American oil and gas. Since then, production has fallen by half as wells petered out and the government issued fewer permits in the aftermath of the 2010 Deepwater Horizon explosion and oil spill. Last year, the Gulf accounted for less than 10% of the country’s energy production, in part because of soaring output from wells drilled in onshore shale formations.

The new projects here, from such companies as Hess Corp. , Exxon Mobil Corp. and Chevron Corp. , have the combined capacity to pump about 900,000 barrels a day—more than the oil and gas output of California. And that doesn’t include supplies from two projects led by BP PLC, which declined to provide details on output.

Costs here have been jumping, in part because companies are drilling farther from shore and in deeper waters. Deep-water wells are up to 25% more expensive today than in 2010, according to Shell and Chevron, and can cost $300 million each. New regulations have prompted companies to add safety features such as an extra stack of valves designed to stop an out-of-control well. The failure of such a device was a cause of the Deepwater Horizon disaster.

Gulf of Mexico Oil and Gas Production, 2001 -2013
Source: The Wall Street Journal

Thursday, November 20, 2014

Professor John Cochrane's Opinion On Inequality

From The Wall Street Journal, "What the Inequality Warriors Really Want: Confiscating wealth is ultimately about political power. Koch brothers, no. Public-employee unions, yes." by John Cochrane, professor of finance at the University of Chicago Booth School of Business, a senior fellow at the Hoover Institution, and an adjunct scholar at the Cato Institute:
If some get rich and others get richer, who cares? If we all become poor equally, is that not a problem? Why not fix policies and problems that make it harder to earn more?

Yes, the reported taxable income and wealth earned by the top 1% may have grown faster than for the rest. This could be good inequality—entrepreneurs start companies, develop new products and services, and get rich from a tiny fraction of the social benefit. Or it could be bad inequality—crony capitalists who get rich by exploiting favors from government. Most U.S. billionaires are entrepreneurs from modest backgrounds, operating in competitive new industries, suggesting the former.

But there are many other kinds and sources of inequality. The returns to skill have increased. People who can use or program computers, do math or run organizations have enjoyed relative wage increases. But why don’t others observe these returns, get skills and compete away the skill premium? A big reason: awful public schools dominated by teachers unions, which leave kids unprepared even to enter college. Limits on high-skill immigration also raise the skill premium.

Americans stuck in a cycle of terrible early-child experiences, substance abuse, broken families, unemployment and criminality represent a different source of inequality. Their problems have proven immune to floods of government money. And government programs and drug laws are arguably part of the problem.

Local Rail Systems Fare to Expense Ratio: Chart

From The Wall Street Journal, "Funding Battle Looms for New York’s Subway, Buses, Bridges: Fare and Toll Increases by New York’s Metropolitan Transportation Authority Could be Overshadowed by a Battle Over Overall Transit Funding Next Year" by Andrew Tangel:
Riders of the New York City subway, the nation’s largest mass transit network, last year shouldered 63.6% of the system’s $4.8 billion in operating costs, the third-highest so-called farebox recovery ratio for such U.S. systems, according to Federal Transit Administration data.
Local Rail System Fare to Expense Ratio
Source: The Wall Street Journal

Monday, November 17, 2014

Opponents To Keystone XL Delayed The Pipeline But Lost The Battle Against Canadian Oils Sands Fracking And Increased US Oil Production

From Bloomberg, "Keystone Pipe Vote Tackles Questions History Answered" by Jim Snyder and Jeremy van Loon:
The 830,000 barrels per day Keystone would carry have found other paths to the U.S. Cross-border pipelines such as Enbridge Inc.’s Alberta Clipper are considering expansion. By next year, Alberta, home to the Canadian oil sands, will have built about 700,000 barrels a day of rail capacity from almost nothing a few years ago, said Patrick Kenny, an analyst at National Bank Financial in Calgary.

“A lot of work has been done to backfill the capacity that Keystone XL was supposed to represent,” Kenny said. “Keystone would have been a ‘must-have’ without all the crude-by-rail that has come on in the last couple of years.”

U.S. production, meanwhile, is booming. In 2008, wells were pumping out around 5 million barrels a day. By August, that had risen to more than 8.6 million barrels, more than a 70 percent jump, according to the U.S. Energy Information Administration.

Saturday, November 15, 2014

Farmed Grown Seafood Increasingly Meeting Consumption Demands And Accounts For Over 40 Percent Of Global Fish Output

From The Wall Street Journal, "Taming the Wild Tuna: Why Farmed Fish Are Taking Over Our Dinner Plates" by Yuka Hayashi:
With a decadeslong global consumption boom depleting natural fish populations of all kinds, demand is increasingly being met by farm-grown seafood. In 2012, farmed fish accounted for a record 42.2% of global output, compared with 13.4% in 1990 and 25.7% in 2000. A full 56% of global shrimp consumption now comes from farms, mostly in Southeast Asia and China. Oysters are started in hatcheries and then seeded in ocean beds. Atlantic salmon farming, which only started in earnest in the mid-1980s, now accounts for 99% of world-wide production—so much so that it has drawn criticism for polluting local water systems and spreading diseases to wild fish.

Tuesday, November 11, 2014

My Comment To Peter Orszag's Bloomberg Article About CBO's Non-Partisan Analysis

From BloombergView, "A Party Hack Would Ruin the CBO" by Peter R. Orszag:
The Congressional Budget Office should be able to celebrate its 40th anniversary this coming February with pride. The agency plays a crucial role in the nation's policy-making, providing rigorous and nonpartisan analysis of the budgetary and economic issues Congress considers, and objectively estimating the cost of legislative proposals.

The occasion will be ruined, however, if the new Republican Congress breaks its long tradition of naming an objective economist/policy analyst as CBO director, when the position becomes vacant next year, and instead appoints a party hack.
My posted comment to BloombergView, "A Party Hack Would Ruin the CBO" by Peter R. Orszag:
CBO's existing methodology can be greatly improved. The current methodology is a political compromise of arbitrary analytical policies that are subject to gamesmanship and do not follow accepted financial analysis protocol. CBO's analytical policies are biased towards bigger government and tax increases over smaller government and tax reductions.

CBO uses a 10-year window for analysis and does not time-value (present value) revenue and expenses. Any costs or revenues beyond the 10th year are not considered. For example, If CBO analyzed a government annuity program that collected premiums for 10 years and did not start payouts until the 11th year, CBO would count the premiums as revenue and say the program has no payout expenses. Likewise, if all the payouts occurred in year one and an equal amount of new taxes were collected in year 10, CBO would say the program is revenue neutral, where revenue equals costs. The correct analytical way to deal with mismatched timing of revenue/ expense, and to have an analytical period that coincides with the programs expected duration, is to use a present value framework where a dollar today is worth more that a dollar tomorrow. Present value allows CBO to analyze the financial impact of a program over its expected duration with mismatched revenue and expenses beyond 10 years.

CBO uses a static economic model instead of a dynamic model. CBO assumes government programs and policies will not change projected GDP, employment, hours worked, business formations, household formations, capital investment, etc. This policy favors bigger government and tax increases since CBO does not model negative or positive effects on GDP growth or employment from tax increases/decreases or new government legislation.

CBO assumes all enacted legislation will remain unchanged. Congress regularly enacts cost savings measures that have a future start date. CBO will assume those cost savings will occur and reduce government expenses, even if Congress has a history of delaying that start date of program reductions and cost savings. Similarly, some programs have expiration provisions, but Congress regularly extends the life of program. CBO assumes the expenses will end at the legislated expiration date.

CBO does not use expected values or a probabilistic approach to outcomes. Nor does CBO discuss a range of values for modeling outcomes of a government program. Suppose a new government program has a 70 percent chance of costing $40 billion and a 30 percent chance of costing $70 billion. CBO will use the $40 billion figure to analyze the program. A proper analysis would use the expected value (average) of the cost, which is $49 billion (.7x$40b + .3x$70b).

Saturday, November 8, 2014

Way Past The Time to End Teacher Tenure, Limit Charter Schools Or Deny School Vouchers In NYC

From The Wall Street Journal, "In New York City, Few Students Seek Transfers From Underperforming Schools: Some Who Ask to Change Schools Don’t Get Their Choice" by Leslie Brody:
More than 143,000 New York City students go to schools with such low test scores or graduation rates that they have the right to seek transfers to better ones.

But only 6,662 families took advantage of the option this year, according to city data, and 1,815 didn’t get the transfer they wanted.
Such transfers can be daunting, however. Students who get them often travel long distances across the city. Working parents who don’t want their children alone on buses or subways must patch together elaborate after-school pickup plans.
Source: The Wall Street Journal

Thursday, November 6, 2014

Researchers Demonstrate Non-Invasive Device To Control Another's Hand Movements Over The Internet By Thoughts

From ScienceBlog, "Study shows direct brain interface between humans:"
University of Washington researchers have successfully replicated a direct brain-to-brain connection between pairs of people as part of a scientific study following the team’s initial demonstration a year ago. In the newly published study, which involved six people, researchers were able to transmit the signals from one person’s brain over the Internet and use these signals to control the hand motions of another person within a split second of sending that signal.
The research team combined two kinds of noninvasive instruments and fine-tuned software to connect two human brains in real time. The process is fairly straightforward. One participant is hooked to an electroencephalography machine that reads brain activity and sends electrical pulses via the Web to the second participant, who is wearing a swim cap with a transcranial magnetic stimulation coil placed near the part of the brain that controls hand movements.

Using this setup, one person can send a command to move the hand of the other by simply thinking about that hand movement.

Tuesday, November 4, 2014

Capitalism Works: Producers, Retailers Increase Supply Of Antibiotic-Free Poultry And Meats To Meet Market Demand: No Government Regulation Needed

From The Wall Street Journal, "Meat Companies Go Antibiotics-Free as More Consumers Demand It: Food Producers Increasingly Offer Chicken, Beef and Pork Raised Without Antibiotics, Responding to Consumer Concerns About Resistant Bacteria" by David Kesmodel, Jacob Bunge and Betsy McKay:
"I was pretty apprehensive," the Kentucky farmer [Brandon Glenn] says of instructions three years ago from Perdue Farms Inc. to halt almost all antibiotic use. "How are we going to keep these chickens alive without giving them their medication? But Perdue said: ‘This is what the market is going to.’ "

Perdue is among a growing array of food producers moving to limit the routine use of antibiotics in livestock production—less in response to regulatory action than to consumer pressure.

Competitor Tyson Foods Inc. launched a brand of chicken without antibiotics last year and also markets antibiotic-free beef. Retailers where people now can buy meat raised without antibiotics include Wal-Mart Stores Inc. and BJ’s Wholesale Club Inc. Fast-food chain Chick-fil-A Inc. says it is phasing out all chicken raised with antibiotics over five years.

Sales Of Chicken Without Antibiotics: 2009-2014
Source: The Wall Street Journal

As US per capita GDP increased over the years and as US poverty declined as government programs, such as SNAP (Food Stamps), supplemented the income of the poor, there is a consistent tendency of better-off consumers to change their consumption preferences to items that they perceive as higher quality. In this case, consumers are switching their consumption to a perceived higher quality meat and poultry that are antibiotic free.

At first consumers wanted low cost, readily available meats and poultry and the producers responded by increasing the supply and lowering the cost by increasing productivity at the farm level. Now that consumer product preferences and views about antibiotics are changing, the suppliers are responding to the new consumer wants for a product without antibiotics.

Pass-Through Businesses Account For Majority Of Private Sector Employment And Net Business Income

From Tax Foundation, "Most of the Private Sector Workforce is Employed by Pass-through Businesses" by Kyle Pomerleau:
In the past three decades, the importance of “pass-through” businesses has grown substantially. The combined net income of sole proprietors, LLCs, Partnerships, and S corporations has increased fivefold and now accounts for more than 50 percent of all business income. C corporations now earn less than half of all business income.

Another way to look at how pass-through businesses have increased in importance is their role as employers. Not only do they account for more than 50 percent of net business income in the United States, they account for more than 50 percent of employment too.

According to 2012 census data, 54.8 percent of all business employment (employment excluding non-profits and governments) is pass-through business employment. This represents approximately 66.6 million workers and sole proprietors. C corporations comprise the remaining 45 percent, or 54.9 million workers.

Share Of Private Sector Employment From Pass Through Businesses
Source: Tax Foundation