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Monthly Archives: April 2011

Transit Energy Efficiency

By | | Transportation
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A new report from Florida’s National Center for Transit Research looks at how transit can save energy. The report’s lead author, Steve Polzin, has been mentioned here before. Some of the findings are more surprising than others.

Transit uses about the same amount of energy as driving, the report finds, and transit in most places (including most Florida cities) uses much more. It has become more energy efficient in the past couple of years, but that is mainly because budget cuts have forced transit agencies to cut marginally productive routes. Expanding transit is not the key to saving energy, the report suggests; making better use of transit’s surplus capacity is.

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Federal Transportation Subsidies

By | | News commentary, Transportation
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Per passenger mile, federal subsidies to Amtrak are 30 times greater than federal subsidies to airlines and 500 times greater than federal subsidies to intercity buses, according to a new study from the American Bus Association. The study also reports that federal subsidies per passenger mile to public transit are 3,200 times greater than federal subsidies to autos.

The report, written by economist Robert Damuth of Nathan Associates, compared federal outlays for each mode with excise taxes collected from highway users and air travelers. It also apportioned costs to users such as auto drivers, intercity buses, and commercial airlines.

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Demand for Free Money Continues to Grow

By | | Transportation
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The demand for rail transit “is strong all across the country,” says a new report from Reconnecting America. How do they know? They simply added up all the “planned and proposed fixed-guideway transit projects” they could find.

They found a total of 643 projects (1-mb Excel spreadsheet) in about 80 urban areas whose total costs were estimated to be $233 billion. Of these, 43 are under construction, 95 are in the engineering phase, 108 are doing an alternatives analysis, 358 are “future plans,” and 39 are “stalled.” If all of these projects were built, the group promises, they “would connect 3.5 million more jobs to transit, an increase of 25 percent.”

Wowee! Spending more than a quarter of a trillion dollars (plus cost overruns) would connect transit to 2.5 percent of all jobs in the country. At that price, it would cost a mere $8.2 trillion to connect the remaining 82.5 percent of jobs to transit. That makes perfect sense in a Bizarro world considering Congress just killed President Obama’s high-speed rail plan to supposedly connect 80 percent of Americans for a mere half a trillion dollars.

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Life-Cycle Budgeting? No, Thanks

By | | Transportation, Why Planning Fails
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Life-cycle budgeting is suddenly the latest transportation-planning fad. Even some free-market groups are promoting it as a way to save tax dollars.

The theory is that a life-cycle analysis will look ahead at all future costs, not just the initial cost, of transportation projects. At first glance, this sounds great. Most transportation fixed infrastructure needs to be replaced every 30 years or so, and rolling stock needs even more frequent replacements. Transit agencies tend to look ahead only 30 years, thereby pretending that such replacements are not needed.

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The Rights of Mother Earth

By | | News commentary
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Here‘s a great way to bring about the collapse of civilization: declare that Mother Earth has equal rights with humans and give anyone standing to represent Mother Earth in court in challenging any activity by anyone else. In practically no time, the gears of industry would grind to a halt, agriculture would shut down, and the resulting problems would no doubt be blamed on greedy capitalists.

So of course the United Nations is apparently considering a proposal to do just that. This proposal was brought before the United Nations by Bolivia, which is about to pass its own Mother Earth law. This law gives Mother Earth the right to life, diversity (good-bye agriculture), water (good-bye industry), clean air (good-bye cities), equilibrium (good-bye science), and pollution-free living (good-bye just about everything).

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Contributing Factors, Part Two

By | | Meltdown
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Be sure to read part one first.

Greedy bankers: Changes in the banking industry caused the crisis, many writers claim, by creating perverse incentives to earn short-term profits by making long-term risks. “High leverage and risk-taking in general was fueled by the Street’s indulgent compensation practices,” says Lowenstein (p. 287). A prime example is Joseph Cassano, who ran the division of AIG that sold the mortgage bond insurance that ultimately bankrupted the company. AIG paid Cassano $280 million over eight years, including large bonuses based on profits that Cassano boosted by failing to set aside funds to pay off insurance policies should those bonds fail. Eight months before it went bankrupt, the AIG board fired him, giving him a $34 million severance bonus and then immediately rehiring him as a consultant for $1 million a month (Lowenstein p. 122).

Such pay rates are certainly questionable if not obscene. Yet there is little reason to think that they led to the crisis. Remember that all the major players–the ratings agencies, the bankers, AIG and other insurers–agreed that mortgages and mortgage bonds were, as the saying goes, as safe as houses. It is hard to imagine that people who were only getting paid five- or six-figure salaries wouldn’t have made exactly the same decisions as those who did get paid seven- and eight-figure salaries and bonuses.

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Contributing Factors, Part One

By | | Book reviews, Meltdown
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Today and tomorrow, as a part of the Antiplanner’s continuing series about the 2008 economic meltdown, I am going to look at many of the supposed causes of the crisis and show that, while some of them may have made the crisis worse, none of them were the ultimate cause of the crisis. In some cases, I’ll quote a 2009 paper written by two of my colleagues at Cato. In doing so, I have to confess that, while we agree about what didn’t cause the crisis, I haven’t been able to convince all of my Cato colleagues, including at least one of the authors of this paper, about what did cause it.

I’ll also quote from William Cohan’s House of Cards, a book that is mainly about Bear Stearns. In fact, only the first third of the book is about the 2008 crisis; the rest is on the history of that company in the 75 years before that crisis. Unlike some financial writers, Cohan actually worked on Wall Street for 17 years, including a decade as a managing director at JPMorgan Chase. Perhaps this is why Cohan can supply of lot of insights and details missing from some of the other books I’ve read on the crisis.

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Federal Budget Outlook

By | | News commentary
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Republican and Democratic responses to Standard & Poor’s negative outlook on the federal debt are so predictable they could have been scripted years ago. Democrats want to address the deficit by soaking the rich; Republicans want to cut supposedly vital programs such as Medicare and Planned Parenthood.

The problem with soaking the rich, as economist Kurt Hauser points out, is that it doesn’t increase overall revenues. As the above graph from American Thinker shows, since World War II, tax rates on the wealthy have ranged from 25 percent to 90 percent, yet total tax revenues have never varied much from 19 percent of GDP. As Reason’s Nick Gillespie emphasizes, the lesson is that, if you want to eliminate the deficit, you have to reduce spending to 19 percent of GDP.

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Dutch Superbus

By | | Transportation
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Last fall, the Onion made fun of Obama’s high-speed rail plan with an alternative high-speed bus proposal. But Wubbo Ockels, a physicist and the first Dutch astronaut, wasn’t laughing.

High-speed trains, Ockels says, are too slow and don’t go where people want to go. So he has designed and built a prototype electric-powered bus capable of going 150 mph. The bus holds 23 passengers and, as he envisions it, would operate on dedicated lanes in the median strips of existing highways. But it could also leave these lanes and operate at conventional speeds on ordinary roads and streets, which means it could serve far more destinations than high-speed trains.

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A Crisis of Reserves

By | | Book reviews, Meltdown
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The Antiplanner continues to read recent books about the 2008 financial crisis, but there are definite diminishing returns. I just finished Roger Lowenstein‘s The End of Wall Street and found it disappointing. It covered almost exactly the same ground as Too Big to Fail, but unlike the latter book, which was based mainly on interviews, Lowenstein’s book seems to be based heavily on articles and op eds in various newspapers and magazines.

The book is poorly referenced–sometimes a citation to a critical point lists nothing more than a person’s name–and somewhat superficial in its description of complex events. Lowenstein focuses heavily on subprime mortgages, but (as I’ll explain in detail in a later post) I don’t think they were the real problem. “Rampant speculation (and abuse) in mortgages was surely the primary cause of the bubble,” he concludes, but he doesn’t even sound like he believes it. There was just as much mortgage “abuse” in Texas as in California, yet Texas had no bubble. Rampant speculation only takes place after prices are already rapidly rising, so such speculation by itself can’t have caused the bubble.

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