Category Archives: News commentary

Not All Infrastructure Is Created Equal

An op-ed in the New York Daily News argues that Trump’s infrastructure plan “will result in wasteful spending and do little to fix crumbling facilities or promote economic growth” unless it is properly targeted, and the best way to target is to spend only on infrastructure that can be built and maintained with user fees.

The country should also avoid building new infrastructure that will soon be obsolete. For example, Bay Area Rapid Transit (BART) spent nearly half a billion dollars building the Airport Connector, a 3.2-mile elevated cable-car line to the Oakland Airport. BART expected to cover operating costs by charging people $6 to travel between the airport and the nearest BART station. Instead, it is losing money, and they are blaming Uber and Lyft. It was a dumb idea even if they did recover operating costs, but new technologies have made it even dumber still.

The Trump Administration needs to learn the Antiplanner’s Law of Transportation Infrastructure: Any transportation technology that requires new infrastructure is doomed to failure because it will be unable to compete against technologies using existing infrastructure such as the nation’s hundreds of commercial airports and millions of miles of highways.

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Meet the New Secretary of Transportation

In what may turn out to be his least controversial cabinet nomination, President-elect Trump has picked Elaine Chao as Secretary of Transportation. Chao was previously Secretary of Labor under George W. Bush and Deputy Secretary of Transportation under George H.W. Bush. She has also served as director of the Peace Corps and worked as a distinguished fellow for the Heritage Foundation.

Chao was born in Taiwan and when she was 8 years old her family emigrated to the United States, where her father ended up founding a major shipping company that owns a fleet of at least fifteen ships. She earned a degree in economics from Mount Holyoke College in 1975 and an MBA from Harvard Business School in 1979.

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Trump’s Trillion-Dollar Infrastructure Plan

On the campaign trail, Donald Trump promised to spend twice as much on infrastructure as whatever Hillary Clinton was proposing, which at the time was $275 billion. Doubling down again in a speech after winning the election, Trump now proposes to spend a trillion dollars on infrastructure over the next ten years.

President Obama had proposed to fix infrastructure with an infrastructure bank, though just where the bank would get its money was never clear (actually, it was perfectly clear: the taxpayers). Trump’s alternative plan is for the private sector, not taxpayers, to spend the money, and to encourage them he proposes to offer tax credits for infrastructure projects. He says this would be “revenue neutral” because the taxes paid by people working on the infrastructure would offset the tax breaks. In short, Trump is proposing tax credits in lieu of an infrastructure bank as a form of economic stimulus.

America’s infrastructure needs are not nearly as serious as Trump thinks. Throwing a trillion dollars at infrastructure, no matter how it is funded, guarantees that a lot will be spent on unnecessary things. As Harvard economist Edward Glaeser recently pointed out in an article that should be required reading for Trump’s transition team, just calling something “infrastructure” doesn’t mean it is worth doing or that it will stimulate economic growth.

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Three Steps to Fix America’s Voting System

Almost everyone agrees that we just finished the most painful election season in anyone’s living memory, an agony made worse by the fact that it was nearly two years long. Fortunately, we aren’t doomed to repeat it, as we know many other countries have shorter and more civil election campaigns. Three changes to our method of electing presidents could reduce costs, save time, and make the process less divisive and alienating to voters.

First, we should replace individual state primaries with a national primary in June. Individual primaries not only stretch out the election season and give a few states inordinate say in the nominations, they promote divisiveness because they force presidential candidates to concentrate on local issues that are really outside the scope of the office of the president.

Second, we should abolish the electoral college. Hillary Clinton won at least 200,000 more votes than Donald Trump, but this is the second election in sixteen years in which the winner of the popular vote didn’t win the election.

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A Victory Over the Elites?

As the Antiplanner writes, it appears that Donald Trump will defy most polls and become the next president. While many people claimed his rhetoric was racist, the Antiplanner and others argued that he appealed to members of the working class who felt downtrodden by elitist policies.

Still, too many election results last night represented a victory of the elites over common sense. There is no better example of elitist thinking than light rail, which many people support because they are too snooty to ride a bus.

There were nearly 50 transit measures on various local ballots yesterday, and I haven’t looked at them all. (Update: APTA says 72 percent of yesterday’s transit measures passed.) But the biggest boondoggle appear to be winning, including Los Angeles’ $120 billion transit measure M and Seattle’s Sound Transit 3. It looks appears San Jose’s measure B, which would raise taxes to fund cost overruns for the BART line to San Jose, is winning.

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Election 2016: New Faces; Same Old Policies

After many months of hype, the election tomorrow almost seems like an anticlimax. Maybe it only feels that way to the Antiplanner because I voted more than a week ago. Polls indicate that Trump has closed much of the gap that had opened up after the conventions. But I can’t help but think that, no matter who wins, nothing much is going to change.

Certainly none of the apocalyptic predictions made for if Clinton or Trump are elected are likely to come true. Our systems has too many checks and balances for anything really bad, such as nuclear war or a fascist dictatorship, to happen.

Instead, what is more likely is continued paralysis as our high-paid representatives in Congress decide the best course for them is to do nothing because doing anything would lend credibility to the other party. That means we’ll continue to fight too many wars, spend money on frivolous domestic projects, and grow more polarized.

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Not Guilty

It seems like we’ve been here before. A bunch of people mount a protest against the federal government. The only real violence is committed by the police. When seven of the people are put on trial for conspiracy charges, they turn the courtroom into a circus. The nation is shocked when all of them are found innocent of conspiring to break the law.

I’m writing, of course, about the Chicago Seven, one of whom, Tom Hayden, passed away earlier this week. Just four days later, the Malheur Seven were similarly found innocent of conspiracy charges in Portland.

The parallels go further. After the Chicago Seven cases were heard (but before the jury rendered a verdict), the judge cited the defendants for contempt of court and sentenced them to 2-1/2 to 4 years in prison (all of which were reversed on appeal). After the Malheur Seven jury presented its verdict, U.S. marshalls arrested and allegedly tased one of their lawyers for protesting the detention of his client without offering a warrant.

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Debt Without Deficits

According to the Congressional Budget Office, the federal deficit in 2016 was $590 billion. But the federal debt in 2016 grew by $1.4 trillion. That means the debt grew by about $800 billion more than the deficit. How can that be?

The answer is that Congress uses all kinds of accounting tricks to pretend that money it borrows isn’t part of the deficit. You can read a complete list of those accounting tricks in an article by Dr. Lacy Hunt (you’ll have to get a free subscription to John Mauldin’s newsletter to read the article, which is well worth doing if you are at all interested in macroeconomic issues).

From the Antiplanner’s point of view, the most important accounting trick is that some spending from borrowed money is regarded as “an investment,” and so isn’t counted in the deficit. This includes student loans and highway and transit spending. In 2016, Congress borrowed $70 billion to pay for highways and transit, yet that isn’t included in the $590 billion deficit.

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Stifling the Economy

Sex scandals have drowned out the real scandal of 2016, which is the slow economic growth experienced since the 2008 financial crisis. This is the slowest recovery from a recession in history, and that has hurt tens of millions of Americans. Recent articles in the New York Times and Wall Street Journal have asked why the economy is growing so slowly, but neither answered the question.

The answer seems obvious to the Antiplanner: the economy is growing slowly because it is being stifled by a government doing the same thing the government did during the Great Depression (as described by Amity Shlaes), which is encumbering businesses with regulation while spending federal dollars on “stimulus” projects that aren’t very stimulating.

Here’s a true story. During the Depression, the railroads complained that they were heavily regulated by the Interstate Commerce Commission while the airlines, truckers, and bus companies were not. President Roosevelt named Joseph Eastman, a long-time member of the Interstate Commerce Commission, his “transportation czar” (formally, the “federal coordinator of transportation”). Eastman realized he had two alternatives: deregulate the railroads or overregulate everyone else. As someone comfortable with regulation, he choose the latter.

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Densification the Hammer; Cities the Nail

With 560 murders this year and counting, Chicago has become known as the murder capital of the nation. Some take issue with this, noting that Chicago’s murder rate per 100,000 people is much lower than many other cities including Baltimore, New Orleans, and Newark. Yet the moniker has stuck, leading many to ask why Chicago violence is so bad.

According to Atlantic‘s CityLab and Chicago’s Metropolitan Planning Organization, the answer is urban sprawl. Both say there is a strong correlation between declining city populations and rising crime.

Of “the six U.S. cities that have earned the dubious distinction of official ‘murder capital'” over the past 30 years, says CityLab, four have had declining populations. The Metropolitan Planning Council points to a study that found, “almost all of the crime-related population decline is attributable to increased outmigration rather than a decrease in arrivals.” The solution, both CityLab and the MPO argue, is to promote gentrification and immigration.

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