Archives: August, 2009

A Transparent Inquiry: The Only Way Forward

How could a country that claims to abide by principles like constitutional government and the rule of law do anything other than investigate credible claims of official abuse?

News that Attorney General Holder will appoint a prosecutor to investigate such claims will only surprise or upset people who have lost track of our national values.

CIA Director Leon Panetta doesn’t help the cause by issuing a statement to the CIA staff saying, “America is a nation at war.” Whether we are or not, that lullaby-in-reverse – reassuring CIA staff with a poke at the panic button – would seem to ratify expediency over professionalism.

Virginia Bureaucrats Look to Extort Yoga Instructors

Last month I blogged about attempts by various state governments to regulate yoga instructors by forcing them to obtain a costly government license.  Today the Washington Post has a story on Virginia’s efforts to place the government boot on the necks of its yogis:

The State Council of Higher Education for Virginia recently declared that studios offering yoga teacher instruction must be certified. That involves a $2,500 fee, audits, annual charges of at least $500 and a pile of paperwork.

Let’s call this what it is: extortion.  And if you still harbor the illusion that bureaucrats don’t sit around thinking up ways to pilfer more money from productive members of society, think again:

In Virginia, yoga teacher training first hit the state’s radar late last year after a state employee conducting school audits happened upon an advertisement, said Linda Woodley, the higher education council’s director of private and out-of-state postsecondary education.  Before that, Woodley said, ‘I was not aware they existed, and they were not aware we existed.’

Well congratulations, Ms. Woodley – the yogi community now knows you exist.

Studios can teach lotus poses to as many clients as they like, state officials said. But teacher training programs, which the state views as similar to dog grooming, massage therapy or other classes intended to prepare someone for a job, must be certified under state law. (For instance, Simply Ballroom Dance Teachers Academy, Danny Ward Horseshoeing School and Jiggers Bartending School are certified.)

Virginia citizens should sleep sound at night knowing ballroom dance teachers, horseshoers, and bartenders are government certified.

Woodley said it’s also about ensuring that students who plunk down cash for training programs that can run a few thousand dollars are getting their money’s worth. Plus, she said, being listed on the government registry will give schools a marketing tool, like a Good Housekeeping seal of approval.

Good Housekeeping seal of approval?  Ladies and gentleman, this is the mentality of the state bureaucrats that the federal government has tasked with “stimulating” the economy with YOUR money.

High-Speed Fail

In a four-part series on the New York Times Economix blog, Harvard economist Edward Glaeser scrutinized high-speed rail and concluded that the benefits are overwhelmed by the costs. After making generous assumptions regarding the costs, user benefits, environmental benefits, and effects on urban development, Glaeser concludes that all the benefits of high-speed rail would still be less than half the costs.

As Washington Post writer Robert Samuelson observes, the Obama administration’s vision of high-speed rail is “a mirage. The costs of high-speed rail would be huge, and the public benefits meager.” Yet even Samuelson falls victim to the common assumption that high-speed rail “works in Europe and Asia” because population densities in those places are higher than in the United States.

The truth is that high-speed rail doesn’t work in Europe or Asia either. Japan and France have both spent about as much on high-speed rail as they have on their intercity freeway systems, yet the average residents of those countries travel by car 10 to 20 times as much as they travel by high-speed rail. They also fly domestically more than they take high-speed rail. While the highways and airlines pay for themselves out of gas taxes and other user fees, high-speed rail is heavily subsidized and serves only a tiny urban elite.

Obama uses the fact that France, Japan, and a few other countries are racing one another to have the fastest high-speed trains to argue that we need to join the race. That’s like saying we need to spend billions subsidizing buggy whip or horse collar manufacturers or some third-world country will beat us in those technologies. The fact is that high-speed trains will never be as fast as flying on long trips and never be as convenient as driving on short trips, and there is no medium-length trip in which high-speed rail can compete without heavy subsidies.

The rail advocates go ballistic whenever anyone questions their fantasies, mostly engaging in ad hominem attacks (“you must be paid by the oil companies!”) or accusing skeptics of lying about rail. The reality is that Glaeser (like me) “almost always prefer trains to driving.” If anything, he was too generous in many of his assumptions about high-speed rail.

For example, Glaeser built his case around a hypothetical high-speed line between Dallas-Ft. Worth and Houston, the nation’s fifth- and sixth-largest urban areas which together house close to 10 million people and are located about 240 miles apart, supposedly an ideal distance for high-speed trains. If the numbers don’t work for this market, how are they going to work for Eugene-Seattle, Tulsa-Oklahoma City, New Orleans-Mobile, St. Louis-Kansas City, or any of the other much smaller city pairs in the Obama high-speed rail plan?

The rail nuts don’t want to hear Glaeser’s (or Cato’s) numbers because they fantasize the Field of Dreams “build it and they will come” myth; that building rail will “create the demand for the rail lines.” That may have been true in nineteenth-century America, when no alternative forms of transportation could compete with rail. But it wasn’t true in twentieth-century France or Japan (where heavily subsidized high-speed rail carries only 4 to 6 percent of passenger travel), and it won’t be true in twenty-first-century America.

Building high-speed rail will be like standing in the chilly vestibule of an Amtrak train in mid-winter Chicago and burning million-dollar bills to keep warm. But that’s what happens when you base your transportation policies on a slogan from a Kevin Costner movie rather than on real data.

Federal Pay Continues Rapid Ascent

The Bureau of Economic Analysis has released its annual data on compensation levels by industry (Tables 6.2D, 6.3D, and 6.6D here). The data show that the pay advantage enjoyed by federal civilian workers over private-sector workers continues to expand.

The George W. Bush years were very lucrative for federal workers. In 2000, the average compensation (wages and benefits) of federal workers was 66 percent higher than the average compensation in the U.S. private sector. The new data show that average federal compensation is now more than double the average in the private sector.

Figure 1 looks at average wages. In 2008, the average wage for 1.9 million federal civilian workers was $79,197, which compared to an average $50,028 for the nation’s 108 million private sector workers (measured in full-time equivalents). The figure shows that the federal pay advantage (the gap between the lines) is steadily increasing.

Figure 2 shows that the federal advantage is even more pronounced when worker benefits are included. In 2008, federal worker compensation averaged a remarkable $119,982, which was more than double the private sector average of $59,909.

What is going on here? Members of Congress who have large numbers of federal workers in their districts relentlessly push for expanding federal worker compensation. Also, the Bush administration had little interest in fiscal restraint, and it usually got rolled by the federal unions. The result has been an increasingly overpaid elite of government workers, who are insulated from the economic reality of recessions and from the tough competitive climate of the private sector.

It’s time to put a stop to this. Federal wages should be frozen for a period of years, at least until the private-sector economy has recovered and average workers start seeing some wage gains of their own. At the same time, gold-plated federal benefit packages should be scaled back as unaffordable given today’s massive budget deficits. There are many qualitative benefits of government work—such as extremely high job security—so taxpayers should not have to pay for such lavish government pay packages.

Update: I respond to some criticisms of this post here.

Update 2: Compensation data for federal workers vs. other industries here.

Update 3: In September, the government revised the data for private sector workers. On 9/30/09, Figure 1 and the related text were updated to reflect this change.

Steele and the Left-Wing Republicans

One of the most disturbing things about the current health care debate is that some Republicans are positioning themselves as defenders of Big Government Medicare and against efforts to trim the program’s costs.

Yet the taxpayer costs of Medicare are expected to more than double over the next decade (from $425 billion in 2009 to $871 billion in 2019), and the program will consume an increasing share of the nation’s economy for decades to come unless there are serious cuts and reforms. Even the Obama administration talks about “bending the cost curve” to slow the program’s growth.

Yet Republican National Committee chairman, Michael Steele, takes to the Washington Post today to defend Medicare against any cuts, while at the same time criticizing the Democrats as “left-wing ideologues:”

  • “Under the Democrats’ plan, senior citizens will pay a steeper price and will have their treatment options reduced or rationed.”
  • “Republicans want reform that should first, do no harm, especially to our seniors.”
  • “We also believe that any health-care reform should be fully paid for, but not funded on the backs of our nation’s senior citizens.”
  • “First, we need to protect Medicare and not cut it in the name of ‘health-insurance reform.’”
  • “Reversing course and joining Republicans in support of health care for our nation’s senior citizens is a good place to start.”

Steele uses the mushy statist phrasing “our seniors” repeatedly, as if the government owns this group of people, and that they should have no responsibility for their own lives.

Fiscal conservatives, who have come out in droves to tea party protests and health care meetings this year, are angry at both parties for the government’s massive spending and debt binge in recent years. Mr. Steele has now informed these folks loud and clear that the Republican Party is not interested in restraining government; it is not interested in cutting the program that creates the single biggest threat to taxpayers in coming years. For apparently crass political reasons, Steele defends “our seniors,” but at the expense of massive tax hikes on “our children” if entitlement programs are not cut.

More ‘Success’ for the Massachusetts Model

The Boston Globe reports that Massachusetts now has the highest insurance premiums in the nation.   The average family premium for plans offered by employers in Massachusetts was $13,788 in 2008, 40 percent higher than in 2003. Over the same period, premiums nationwide rose an average of 33 percent.  And, according to the Commonwealth Fund, an annual family premium in Massachusetts is expected to hit $26,730 by 2020. Meanwhile CNN hails Romneycare as the model for the nation…

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