Tag: California

Krugman’s ‘Gotcha’ Moment Leaves Something to Be Desired

I’ve had some fun over the years by pointing out that Paul Krugman has butchered numbers when writing about fiscal policy in nations such as FranceEstoniaGermany, and the United Kingdom.

So I shouldn’t be surprised that he wants to catch me making an error. But I’m not sure his “gotcha” moment is very persuasive. Here’s some of what he wrote for today’s New York Times.

Gov. Jerry Brown was able to push through a modestly liberal agenda of higher taxes, spending increases and a rise in the minimum wage. California also moved enthusiastically to implement Obamacare. …Needless to say, conservatives predicted doom. …Daniel J. Mitchell of the Cato Institute declared that by voting for Proposition 30, which authorized those tax increases, “the looters and moochers of the Golden State” (yes, they really do think they’re living in an Ayn Rand novel) were committing “economic suicide.”

Kudos to Krugman for having read Atlas Shrugged, or for at least knowing that Rand sometimes referred to “looters and moochers.” Though I have to subtract points because he thinks I’m a conservative rather than a libertarian.

But what about his characterization of my position? Well, he’s right, though I’m predicting slow-motion suicide. Voting for a tax hike isn’t akin to jumping off the Golden Gate bridge. Instead, by further penalizing success and expanding the burden of government, California is engaging in the economic equivalent of smoking four packs of cigarettes every day instead of three and one-half packs.

Can Litigation Save American Education?

Next week, the case of Vergara v. California goes to trial. The question being litigated is whether or not the state’s laws on teacher tenure (“permanent employment”), dismissals, and last-in-first-out layoffs disproportionately harm poor minority kids, thereby violating California’s constitution.

Plaintiffs in the case feel they have the evidence to prove this point (see the links above), and so far the courts have acknowledged that their view is at least plausible. Certainly these laws are incompatible with efforts to maximize the quality of the teaching workforce. And it does seem as though they do the most damage in districts and schools serving the most disadvantaged kids. But will a victory by the plaintiffs in this lawsuit do substantial and lasting good?

That’s less obvious. For one thing, these employment practices can be found in many places where they are not codified in state statutes.They are employment guarantees and benefits of the sort that are often sought and obtained by teachers’ unions in collective bargaining with districts. So getting rid of the laws won’t necessarily get rid of the practices.

More broadly, over a dozen states have explicit constitutional provisions demanding that they create “uniform” education systems—a more stringent equality requirement than is contained in California’s constitution—and it’s not at all obvious that this seemingly strict legal guarantee has made any difference in the quality of educational opportunity in those states.

It’s easy to empathize with the desire to see state legal precedents enforced, and bad laws overturned. But neither state constitutions nor legal precedents have been able to secure either the uniformity or the quality of American education systems, and there is no reason to expect that to change no matter how the Vergara case is decided. More than half a century after the victory in Brown v. Board of Education, poor African-American kids are  still disproportionately likely to be assigned to lousy schools. I wrote about this 11 years ago, and little has changed since then. Lawsuits can redress specific legal wrongs, like compelled segregation, but they can’t produce educational outcomes that require the coordination and relentless dedication of thousands or even millions of people, year after year.

For those who really want to maximize the quality of education offered to disadvantaged and minority students—indeed to all students—the best hope is to study the different sorts of education systems that have been tried around the world and across history, and then ensure universal access to the best among them: a free educational marketplace.

 

California Thinks Your Time Is Worthless

California’s S.B. 375 mandates that cities increase the population densities of targeted neighborhoods because everyone knows that people drive less in higher densities and transit-oriented developments relieve congestion. One problem, however, is that transportation models reveal that increased densities actually increase congestion, as measured by “level of service,” which measures traffic as a percent of a roadway’s capacity and which in turn can be used to estimate the hours of delay people suffer.

The California legislature has come up with a solution: S.B. 743, which exempts cities from having to calculate and disclose levels of service in their environmental impact reports for densification projects. Instead, the law requires planners to come up with alternative measures of the impacts of densification.

On Monday, December 30, the Governor’s Office of Planning and Research released a “preliminary evaluation of alternative methods of transportation analysis. The document notes that one problem with trying to measure levels of service is that it is “difficult and expensive to calculate.” Well, boo hoo. Life is complicated, and if you want to centrally plan society, you can either deal with difficult and expensive measurement problems, or you will botch things up even worse than if you do deal with those problems.

The paper also argues that measuring congestion leads people to want projects that might actually relieve congestion, such as increasing roadway capacities. This would be bad, says the paper, because increased capacities might simply “induce” more travel. The fact that such increased travel might actually produce some economic benefits for the state is ignored. Instead, suppressing travel (and therefore suppressing economic productivity) should be the goal.

The document suggests five alternative measures of the impacts of densfication on transportation:

  1. Vehicle miles traveled;
  2. Auto trips generated;
  3. Multi-model level of service;
  4. Auto fuel use; and
  5. Motor vehicle hours traveled.

There are many problems with these alternatives. First, they really aren’t any simpler to reliably calculate than levels of service. Second, they ignore the impact on people’s time and lives: if densification reduces per capita vehicle miles traveled by 1 percent, planners will regard it as a victory even if the other 99 percent of travel is slowed by millions of hours per year. Third, despite the “multi-modal” measure, these measures ignore the environmental impacts of transit. For example, they propose to estimate automotive fuel consumption, but ignore transit energy consumption.

Worst of all, the final “measure” proposed by state planners is to simply presume, without making any estimates, that there is no significant transportation impact from densification. After all, if you add one vehicle to a congested highway and traffic bogs down, can you blame that one vehicle, or is everyone else equally to blame? If the latter, then it seems ridiculous, at least to the planners, to blame densification for increased congestion when the existing residents contribute to the congestion as well. By the same token, if an airplane is full, and one more person wants to take that flight, then the airline should punish everyone who is already on board by simply delaying the plane until someone voluntarily gets off.

The real problem is that planners and planning enthusiasts in the legislature don’t like the results of their own plans, so they simply want to ignore them. What good is an environmental impact report process if the legislature mandates that any impacts it doesn’t like should simply not be evaluated in that process?

All of this is a predictable outcome of attempts to improve peoples’ lives through planning. Planners can’t deal with complexity, so they oversimplify. Planners can’t deal with letting people make their own decisions, so they try to constrict those decisions. Planners can’t imagine that anyone wants to live any way but the way planners think they should live, so they ignore the 80 to 90 percent who drive and want to live in single-family homes as they impose their lifestyle ideologies on as many people as possible. The result is the planning disaster known as California.

Do Not Walk, California—Run from EDLs

As early as next week, the California State Senate could vote on S.B. 397, a hitherto little-noticed bill that approves “enhanced drivers’ licenses” in California. The bill’s ostensible purpose is to bring California’s licenses up to the standards set by the Western Hemisphere Travel Initiative (WHTI), which mandated the use of a passport or “enhanced driver’s license” for sea and land crossings in 2008 within continental North America and the Caribbean. (Air travel still requires the use of a passport.) WHTI was and still is a paragon of costly overreaction to terrorism.

What’s “enhanced” about an “enhanced driver’s license”? It contains a radio frequency identification (RFID) chip, which in turn contains a personal identification number. Think of it as your Department of Homeland Security tracking number. The RFID chip broadcasts the information to any receiver that properly interrogates it. At the Canadian and Mexican border, this in theory allows for quicker transit and passage through EDL-specific “Ready Lanes.” The receiver pulls up information held in a DHS database, including identity data, the bearer’s picture, and signature. (Unsurprisingly, the bill reserves the right for the state to include other information in the future, should it deem it to be necessary.) At the border and beyond, it allows pretty much anyone to figure out your comings and goings.

Using RFID in identity documents was identified as a no-no by DHS’s privacy advisory committee in 2006. That doesn’t seem to have stopped the agency from moving forward with it. If S.B. 397 passes, EDLs in California would become legal but optional, as they currently are in New York, Michigan, Vermont, and Washington State. Given the government’s propensity for turning optional pilot programs into permanent mandatory programs (witness the current debate over the 17-year-old E-Verify “pilot progam”), it’s not difficult to imagine a time when the EDL programs cease to be optional—and when EDLs contain information well beyond a picture, a signature, and citizenship status. The government also tends to expand programs far beyond their original purposes.

Californians should not walk—they should run away from “enhanced” driver’s licenses.

UPDATE: Rep. Justin Amash (R-Mich.) is on the case for Michiganders.

Immigration Does Not Decrease Economic Freedom

A common criticism of immigration reform (here, here, and here) is that it will decrease economic freedom in the United States, by increasing the voting pool for the Democratic Party.  Leaving aside the issue of which party supports economic liberty, if any, it’s important to see what the actual impacts of immigration are on economic freedom in the United States and the world.  The political effects of immigrants after they arrive are less certain than the economic benefits.  Do immigrants decrease economic freedom in their new countries?  The bottom line: fears of immigrants decreasing economic freedom seem unfounded.

Since 1980, wealthy countries have seen rises in immigrant populations.  Immigrants are drawn to economic prosperity, higher wages, and better standards of living so it’s not surprising that wealthier countries have higher percentages of immigrants.  I excluded numerous small countries and petro-states like the UAE and Kuwait from the analysis.

I looked at the 25 wealthiest nations in the world in 1980 (by per capita GDP PPP) and considered their economic freedom rating and the percent foreign born.  I then tracked those same countries every 5 years until 2010.  Here are the averages for all 25 nations:

California’s ObamaCare Exchange Costs 56 Times More to Launch than Facebook

Robert Laszewski notes that launching California’s ObamaCare “Exchange” is so far costing taxpayers 56 times as much as it cost to launch Facebook, while its marketing budget is 8 times what Sen. Barbara Boxer (D-CA) spent on her reelection bid (adjusted for inflation):

So far California has received $910 million in federal grants to launch its new health insurance exchange under the Affordable Care Act (“Obamacare”).

The California exchange, “Covered California,” has so far awarded a $183 million contract to Accenture to build the website, enrollment, and eligibility system and another $174 million to operate the exchange for four years.

The state will also spend $250 million on a two-year marketing campaign. By comparison California Senator Barbara Boxer spent $28 million on her 2010 statewide reelection campaign while her challenger spent another $22 million…

Privately funded Esurance began its multi-product national web business in 1998 with an initial $5.5 million round of venture fund investment in 1999 and a second round of $34 million a few months later.

The start-up experience of other major web companies is also instructive. Facebook received $13.7 million to launch in 2005. eBay was founded in 1995 and received its first venture money in 1997––$6.7 million in 1997.

Even doubling these investments for inflation still leaves quite a gap.

The California Exchange officials also say they need 20,000 part time enrollers to get everybody signed up––paying them $58 for each application. Having that many people out in the market creates quality control issues particularly when these people will be handling personal information like address, birth date, and social security number. California Blue Shield, by comparison has 5,000 employees serving 3.5 million members.

New York is off to a similar start. New York has received two grants totaling $340 millionagain just to set up an enrollment and eligibility process.

I thought it was notable that the Obama Administration has issued grants totaling $174 million to a non-profit group––Freelancers––for the purpose of setting up a new full service health plan in New York under the Affordable Care Act’s health insurance co-op program.

So, the Obama administration thinks it costs $174 million to set up a full service health insurance company in New York (including the significant cost of premium reserves) compared to $340 million to set up just a statewide insurance exchange to do eligibility and enrollment?

As many as 17 states are going to be setting up their own health insurance exchanges under the new law and the feds have so far released $3.4 billion to the states to build them. Little Vermont has received $124 million so far, Kentucky $253 million, and Oregon $242 million, for example. I wonder what the per person cost of exchange enrollment in Vermont will be?

Read the whole thing.

The $822,000-per-Year Bureaucrat and the Death of California

Over the years, I’ve shared some outrageous examples of overpaid bureaucrats.

Hopefully we’re all disgusted when insiders rig the system to rip off taxpayers. And I suspect you’re not surprised to see that the worst example on that list comes from California, which is in a race with Illinois to see which state can become the Greece of America.

Well, the Golden State has a new über-bureaucrat. Here are some of the jaw-dropping details from a Bloomberg report.

The numbers are even larger in California, where a state psychiatrist was paid $822,000, a highway patrol officer collected $484,000 in pay and pension benefits and 17 employees got checks of more than $200,000 for unused vacation and leave. The best-paid staff in other states earned far less for the same work, according to the data.

Wow, $822,000 for a state psychiatrist. Not bad for government work. So what is Governor Jerry Brown doing to fix the mess? As you might expect, he’s part of the problem.

…the state’s highest-paid employees make far more than comparable workers elsewhere in almost all job and wage categories, from public safety to health care, base pay to overtime. …California has set a pattern of lax management, inefficient operations and out-of-control costs. …In California, Governor Jerry Brown hasn’t curbed overtime expenses that lead the 12 largest states or limited payments for accumulated vacation time that allowed one employee to collect $609,000 at retirement in 2011. …Last year, Brown waived a cap on accrued leave for prison guards while granting them additional paid days off. California’s liability for the unused leave of its state workers has more than doubled in eight years, to $3.9 billion in 2011, from $1.4 billion in 2003, according to the state’s annual financial reports. …The per-worker costs of delivering services in California vastly exceed those even in New York, New Jersey, Illinois and Ohio.

Cartoon California Promised LandActually, it’s not just that he’s part of the problem. He’s making things worse, having seduced voters into approving a ballot measure to dramatically increase the tax burden on the upper-income taxpayers.

I suppose the silver lining to that dark cloud is that many bureaucrats now rank as part of the top 1 percent, so they’ll have to recycle some of their loot back to the political vultures in Sacramento.

But the biggest impact of the tax hike—as shown in the Ramirez cartoon—will be to accelerate the shift of entrepreneurs, investors, and small business owners to states that don’t steal as much. Indeed, a study from the Manhattan Institute looks at the exodus to lower-tax states.

The data also reveal the motives that drive individuals and businesses to leave California. One of these, of course, is work. …Taxation also appears to be a factor, especially as it contributes to the business climate and, in turn, jobs. Most of the destination states favored by Californians have lower taxes. States that have gained the most at California’s expense are rated as having better business climates. The data suggest that many cost drivers—taxes, regulations, the high price of housing and commercial real estate, costly electricity, union power, and high labor costs—are prompting businesses to locate outside California, thus helping to drive the exodus.

Yet another example of why tax competition is such an important force for economic liberalization. It punishes governments that are too greedy and gives taxpayers a chance to protect their property from the looter class.

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