Topic: Government and Politics

Gravy Train for European Politicians

In the dark days of the Soviet Union, the political elite (known as the nomenklatura) enjoyed immense privileges, including uncluttered roadway access on special ”Chaika lanes.” There’s now a new version of Chaika lanes, only this time the nomenklatura are members of the European Parliament. According to the UK-based Times, they are getting a special train to ferry them between Brussels and Strasbourg. Needless to say, the taxpayers who finance this elitist boondoggle will not be allowed to ride the train:

After years of being accused of riding the Brussels gravy train, members of the European parliament are about to step aboard a real one. A Eurocrats-only express service will be launched next month to ferry MEPs and officials in luxury at 186mph between one European parliament in Brussels and the other in Strasbourg. The buffet car will, of course, be fully stocked. The Strasbourg Express will leave Brussels for the first time at 9.57am on Monday, July 7. Each return journey will cost the taxpayer about £158,000, but the fare-paying public will be banned. MEPs will pay £170 for a return ticket, but will then be reimbursed. “The public will not be able to buy tickets or use this train,” said Thalys, the high-speed train operator that will run the service. …Every month, when the European parliament moves to Strasbourg, the “train of shame” will leave Brussels on a Monday, returning the following Thursday, with up to 377 MEPs and officials travelling each way in three spacious carriages. It is widely seen in Brussels as a gimmick to boost the French, whose insistence on maintaining the second parliament in Strasbourg makes such journeys necessary in the first place.

Whose Side Are You On?

In an article about the wave of conservative reform under Louisiana governor Bobby Jindal, the New York Times writes:

Meanwhile the House is considering an income tax cut that would cost the state $300 million. 

Another way to say that would be:

Meanwhile the House is considering an income tax cut that would save the taxpayers $300 million.

It all depends on whether you identify with the taxpayers or the tax consumers.

Surprise! Stadium Predictions Flawed

The Washington Examiner reports:

Attendance at Nationals Park has fallen more than a quarter short of a consultant’s projections for the stadium’s inaugural year, cutting into the revenue needed to pay the ballpark bonds and spurring a D.C. Council member to demand the city’s money back.

The District’s ability to pay down the debt on the publicly financed ballpark depends in part on the number of people who show up to the games, David Catania, independent at-large, wrote in a letter Tuesday to Chief Financial Officer Natwar Gandhi. 

A study was commissioned in 2005 by Gandhi’s office. Written by Los Angeles-based Economics Research Associates, the report predicted attendance at the 41,000-seat ballpark would average 39,130 in year one, dropping to 32,737 in year four.

But paid attendance through 28 games has averaged only 29,141, Catania said, 26 percent lower than the consultant’s estimates. The Nationals are drawing the 15th-best crowd in baseball, according to ESPN, with a team that is in last place in the National League East and a 22-31 record as of Wednesday.

“It appears now,” Catania wrote, “that ERA may have seriously overestimated ticket sales, which represents a major portion of stadium-related revenues.”

Gandhi says it doesn’t matter, the bonds can be paid off with attendance as low as 10,000 per game. Which raises the question: if it’s that easy to pay for the stadium, why didn’t the multi-millionaire team owners agree to pay for it themselves?

Of course, these economic projections for subsidized stadiums are always vastly overstated. As Dennis Coates and Brad Humphreys wrote in a 2004 Cato study criticizing the proposed stadium subsidy, “The wonder is that anyone finds such figures credible.”

Several Cato studies over the years have looked at the absurd economic claims of stadium advocates. In “Sports Pork: The Costly Relationship between Major League Sports and Government,” Raymond Keating finds:

The lone beneficiaries of sports subsidies are team owners and players. The existence of what economists call the “substitution effect” (in terms of the stadium game, leisure dollars will be spent one way or another whether a stadium exists or not), the dubiousness of the Keynesian multiplier, the offsetting impact of a negative multiplier, the inefficiency of government, and the negatives of higher taxes all argue against government sports subsidies. Indeed, the results of studies on changes in the economy resulting from the presence of stadiums, arenas, and sports teams show no positive economic impact from professional sports — or a possible negative effect.

In Regulation magazine, (.pdf) Coates and Humphreys found that the economic literature on stadium subsidies comes to consistent conclusions:

The evidence suggests that attracting a professional sports franchise to a city and building that franchise a new stadium or arena will have no effect on the growth rate of real per capita income and may reduce the level of real per capita income in that city.

And in “Caught Stealing: Debunking the Economic Case for D.C. Baseball,” Coates and Humphreys looked specifically at the economics of the new baseball stadium in Washington, D.C., and found similar results:

Our conclusion, and that of nearly all academic economists studying this issue, is that professional sports generally have little, if any, positive effect on a city’s economy. The net economic impact of professional sports in Washington, D.C., and the 36 other cities that hosted professional sports teams over nearly 30 years, was a reduction in real per capita income over the entire metropolitan area.

And yet millionaire owners and mayors with Edifice Complexes keep commissioning these studies, and council members and editorial boards keep falling for them.

Today, In the Role of David Brooks, Mike Huckabee

A few weeks back, David Brooks was telling George Packer that philosophies of limited government were “politically unpopular and fundamentally un-American.” Now we have Mike Huckabee telling the Huffington Post the same thing:

The greatest threat to classic Republicanism is not liberalism; it’s this new brand of libertarianism, which is social liberalism and economic conservatism, but it’s a heartless, callous, soulless type of economic conservatism because it says “look, we want to cut taxes and eliminate government. If it means that elderly people don’t get their Medicare drugs, so be it. If it means little kids go without education and healthcare, so be it.” Well, that might be a quote pure economic conservative message, but it’s not an American message. It doesn’t fly. People aren’t going to buy that, because that’s not the way we are as a people. That’s not historic Republicanism. Historic Republicanism does not hate government; it’s just there to be as little of it as there can be. But they also recognize that government has to be paid for.

If you have a breakdown in the social structure of a community, it’s going to result in a more costly government … police on the streets, prison beds, court costs, alcohol abuse centers, domestic violence shelters, all are very expensive. What’s the answer to that? Cut them out? Well, the libertarians say “yes, we shouldn’t be funding that stuff.” But what you’ve done then is exacerbate a serious problem in your community. You can take the cops off the streets and just quit funding prison beds. Are your neighborhoods safer? Is it a better place to live? The net result is you have now a bigger problem than you had before.

First, there’s nothing “new” about libertarianism, although it appears someone’s just alerted Mike Huckabee to the phenomenon. Second, this business of the “un-Americanism” of libertarianism is ahistorical, although not particularly surprising coming from a Know Nothing demagogue like Mike Huckabee. Someday, advertising one’s own ignorance about the world won’t be considered a mark in one’s favor by conservatives. Until then, Mike Huckabee.

High Prices for Snickers? Feds Shouldn’t Point Fingers

Recently I blogged about the federal government investigating businesses for keeping the price of milk too high, even though the government’s own policies push up milk prices.

Government policies also seem to work at cross purposes with respect to chocolate. The Wall Street Journal reports that the price of a Snickers bar is up 6 percent over last year as a result of rising cocoa prices, and the government is looking for culprits. ”Chocolate makers are accused of colluding as far back as 2002. The U.S. Justice Department has inquired into their pricing practices….” For their part, chocolate makers are blaming high prices on speculation by hedge funds.

I don’t know why cocoa prices are high, but the other big input to chocolate is sugar. And we know that government sugar controls keep U.S. sugar prices about twice as high as world prices, which hurts consumers and has led to an exodus of sugar-using food manufacturers to Canada and Mexico.

In a report on the sugar industry in 2006, the Department of Commerce found that sugar represents 18 percent of the input costs of chocolate products, which indicates that the government’s high-price policy for sugar is taking a substantial bite out of the budgets of America’s chocoholics. 

Fiscal Responsibility, Bush Style

As we all know, if you just put the word “defense,” or “homeland” or “security” anywhere in the name of a government program, its fiscal impact is immediately zeroed out. But if this mystical transformation didn’t take place, President Bush’s fiscal legacy would be looking darker and darker each day. Noah Shachtman gives us a rundown:

The Pentagon’s internal watchdogs can’t keep up with the explosive growth in military spending. Which means $152 billion’s worth of contracts annually aren’t being reviewed for fraud, abuse and criminal interference by the Defense Department’s Inspector General, according to a newly-unearthed report to Congress. The result: “undetected or inadequately investigated criminal activity and significant financial loss,” as well as “personnel, facilities and assets [that] are more vulnerable to terrorist activities.”

Since fiscal year 2000, the military’s budget has essentially doubled, from less than $300 billion to more than $600 billion. Two wars have begun. But the number of criminal investigators and financial auditors at the Department of Defense Office of Inspector General (DoD IG) has stayed more or less the same. So there are now “gaps in coverage in important areas, such as major weapon systems acquisition, health care fraud, product substitution, and Defense intelligence agencies,” according to the report, obtained by the Project on Government Oversight.

[…]

The DOD IG’s office has certainly stayed busy. In just the last few months, the DOD IG caught a Philippine corporation bilking $100 million from the military health care system; nabbed a trio trying to bribe their way into drinking water contracts for troops; busted an Air Force general who tried to steer a $50 million deal to his buddies; and launched investigations into the Pentagon’s propaganda projects and the youthful arms-dealer who sold tens of millions of dollars’ worth of dud ammunition to the government.

Shachtman then observes: “The question is: How much more could they have done, with a bigger staff?” It’s almost like you sink a half a trillion dollars a year into one massive bureaucracy and it’s hard to keep track of it all. President McCain’s going to have to find a lot of earmarks to offset this sort of thing.