Tag: California

Yesterday’s Technology the Day After Tomorrow

The apparent death of California high-speed rail has led to a spate of stories asking, “What went wrong?” The answer to that question is a lot simpler than most people think: what went wrong is that the state even considered building the project in the first place.

Back in 1997, a graduate student at the University of California, Berkeley named David Levinson – who has since gone on to do a lot of incredible work on transportation access – asked whether high-speed rail would cost more or less than flying or driving. The state had not yet made cost estimates, so Levinson estimated that the line from San Francisco to Los Angeles would cost about $10 billion. Based on that, he found that high-speed rail would be “significantly more costly than expanding existing air service” and also more expensive than driving.

Just three years later, California’s first official estimate was that the SF-LA line would cost $20 billion. The state should have stopped right there. Yet, having made that estimate, the momentum was in place to continue even as estimates rose to $33 billion, then $68 billion, then $77 billion and more.

High-speed rail is presented as some kind of new technology race that America is in danger of losing if it doesn’t start building right away. In fact, American railroads began experimenting with high-speed trains back in the 1930s. Japan’s bullet trains date to 1964, 55 years ago. By that time, we had already surpassed them with jet airliners.

Today, air travel is far less expensive than train travel, with airfares averaging under 14 cents a passenger mile, barely more than a third of Amtrak fares even though Amtrak receives much bigger subsidies, per passenger mile, than the airlines. Racing to build a faster train would be like subsidizing the manufacture of new IBM Selectric typewriters because China developed a faster electric typewriter – no matter how fast, typewriters have been rendered obsolete by word processors.

The reason high-speed rail is expensive is that it requires a lot of precision infrastructure that is costly to build and costly to maintain. By comparison, airlines require very little infrastructure and while highway infrastructure is relatively inexpensive: for the cost of one mile of high-speed rail, California could build eight to ten miles of four-lane freeway.

Moreover, the growth in costs was totally predictable. Bent Flyvbjerg has shown that megaprojects like this just about always go way over the original projected cost because planners are guilty of optimism bias — they always make optimistic assumptions about each part of the project. Flyvbjerg went even further, saying that often planners weren’t just optimistic but engaged in “strategic misrepresentation” in order to get the projects approved. 

California rail planners, for example, justified the high costs with unrealistically high ridership projections. Although the California corridor has a lower population that is less optimally arranged than the Boston-to-Washington corridor, California was predicting that its high-speed rail line would attract 55 million riders a year, fifteen times the number carried by Amtrak’s high-speed Acela. Based on this, the planners predicted the trains would collect so much revenue above their operating costs that private parties would gladly invest $7.5 billion in the project. Such private money never materialized.

Whether light rail, heavy rail, commuter rail, or high-speed rail, it turns out to almost always be true that construction and operating costs are higherridership and revenues are lower, and projects take longer to complete than the original projections – a combination of problems known as the planning fallacy. Moreover, maintenance costs are almost never considered since rail infrastructure wears out after about 25 to 30 years, by which time the original planners are retired and won’t be blamed when the systems start falling apart. This is why rail transit today is suffering far more from crumbling infrastructure than the nation’s highways.

Though these problems are repeated over and over, many cities and states today are planning more such urban and intercity rail projects. The state of Washington is thinking about starting a state high-speed rail authority. Cities like Austin and Durham want to build light rail even though transit ridership in those regions (and just about everywhere else) is declining. 

The reason these projects go forward is the city or state hired some engineering firm to do a “feasibility study” – and then that firm spent part of its income from the study to lobby for the project, knowing that if it goes forward it is likely to get some of  the future contracts. A plan to extend Portland’s light rail into Vancover, Washington died after it was revealed that the main lobbyist for the project was paid by the contractor who was hired to write the environmental impact statement.

Such revelations rarely come in time: Honolulu is building a rail line whose costs have tripled partly because the transit agency turned most project administration over to consultants – paying them $505,000 a year per person – who made more than 270 contract changes that added a half a billion dollars to the total costs.

The bottom line is that states and cities should not even ask whether urban or intercity passenger rail projects are feasible. I can tell you at the start that they are not: unless you are in Tokyo or Hong Kong, buses, cars, and planes are always superior to passenger rail. Once you start spending money on it, it is hard to stop. The only thing that stopped California is that it literally didn’t have any more money to spend.

California’s 6-Month Paid Leave Program Is Not as Popular as You Think

At a press conference earlier this month, California Governor Gavin Newsom announced a new plan to offer 6-months of paid family leave in the Golden State. Despite it being the most generous in the nation, CNN parenting contributor Elissa Strauss felt it’s not enough, saying it’s “so much better than nothing, but leaves room for improvement.” Yet, the Cato 2018 Paid Leave Survey finds that at the national level, Americans are not supportive of establishing a 6-month paid leave program. 

The survey found that less than half (48%) support “establishing a new government program to provide 6-months of paid, job-protected, leave to workers after the birth or adoption of a child or to deal with their own or a family members serious illness.” Fifty-percent (50%) oppose establishing a 6-month paid leave program. 

Find full survey results here 

Notably, support is low despite the question not mentioning anything about tax increases or other trade-offs that are required when establishing a new government program. As the New York Times rightfully points out, it remains unclear how California will pay for 6-months of paid family leave benefits.

Fortunately, the Cato 2018 Paid Leave Survey asked Americans how much they’d be willing to pay in higher taxes each year to establish a 6-month paid leave program. The survey finds that 66% of Americans would oppose establishing a 6-month paid leave program if it cost them $525 per year in higher taxes, 68% would oppose if it cost $750 a year, and 69% would oppose if it cost $2,100 in higher taxes.[1] These costs are based on using certain program assumptions from the Family Medical Insurance Leave (FAMILY) Act sponsored by Sen. Kirsten Gillibrand (D-NY) and Rep. Rosa DeLauro (D-CT). (See here for more information).

Without mentioning tax increases, majorities of women (54%), mothers of children under 3 (59%), and African Americans (59%) favor creating a 6-month leave program, while majorities of men (58%) and whites (54%) would oppose. Latinos are evenly divided with 49% in support and 45% opposed. But, each of these groups opposes a 6-month program once taxes are mentioned. Majorities oppose among women (64%), men (67%), mothers of children under 3 (54%), whites (71%), Latinos (58%), and African Americans (51%) if a 6-month paid leave program cost $525 a year in higher taxes. 

Some could reasonably point out that California is more liberal than the rest of the country, with California voting Democratic in 7 of the past 10 presidential elections. To consider how Democratic-leaning Californians might feel about increasing their taxes to pay for a 6-month paid leave program, we can examine what Democrats nationally think about it:

When no taxes are mentioned 61% of Democrats support establishing a 6-month paid leave program and 38% are opposed. This includes 67% of Democratic women and 55% of Democratic men. (In contrast, 70% of Republicans oppose, including 64% of Republican women and 76% of Republican men). However, Democratic support flips as soon as tax increases are mentioned. If the 6-month program cost people $525 a year in higher taxes, 55% of Democrats would oppose the program and 44% would favor. If costs turned out to be higher, 67% of Democrats would oppose if the program cost them $750 a year in higher taxes and 71% would oppose if it cost them $2,100 a year in higher taxes. Furthermore, majorities of both Democratic women and men oppose a 6-month paid leave program once costs are considered.

These results suggest that if California voters more closely resemble national Democratic voters rather than the nation as a whole, they would like the program in theory but not in practice. While they may desire to offer a 6-month paid family leave benefit to people, they would not tolerate the higher taxes likely required to properly fund the program. 

California already has the highest income tax rates in the country, reaching up to 13.30%, with the average family paying 9.30%, and a statewide sales tax rate of 7.25% percent in addition to local sales tax rates. Especially given these conditions, it remains uncertain voters would be willing to tolerate another tax increase. One option to keep costs low could be to means-test the program so that only the needy would receive benefits. Otherwise, the program may be too expensive for voters to accept. Another option is to promote tax-advantaged savings accounts. Eighty-two percent (82%) of Democrats, as well as 78% of all Americans, would support creating tax-advantaged family leave savings accounts that could be used if people needed to take family or medical leave.

Altogether, these results indicate that while Californians may be excited about the benefits that this new program would offer, they are likely to resist the higher taxes likely required to make the program possible.

Read about the full survey results and analysis here.

For public opinion analysis sign up here to receive Cato’s upcoming digest of Public Opinion Insights and public opinion studies.

The Cato Institute 2018 Paid Leave survey was designed and conducted by the Cato Institute in collaboration with YouGov. YouGov collected responses online during October 1-4, 2018 from a national sample of 1,700 Americans 18 years of age and older. Restrictions are put in place to ensure that only the people selected and contacted by YouGov are allowed to participate. The margin of error for the survey is +/- 2.4 percentage points at the 95% level of confidence. 

      

 


[1]Public support doesn’t change much after taxes reach $525 a year perhaps because Americans aren’t supportive of the program to begin with. After taxes are mentioned there may be a threshold after which cost-conscious people will be opposed. Those who remain in support even if the costs rose to $2,100 a year may be very ideologically committed to establishing a program, they think someone else will foot the bill, or they may not believe taxes would actually be raised that much.

The California TRUST Act Reduced Deportations

Sanctuary policies on the city, county, and state level are frequently in the news.  Opponents claim that they increase crime in jurisdictions while proponents claim that they allow illegal immigrants, their families, and their American neighbors to rest a little easier knowing that the local government won’t help the federal government enforce its immigration laws.  Both sides assume that sanctuary policies produce those results by decreasing the scope and scale of immigration enforcement within their jurisdictions that, in turn, reduce the number of deportations from there.

There are undoubtedly individual cases where a sanctuary policy helps a person avoid deportation, but the more important question is whether they reduce deportations overall.  If there isn’t much of an impact, then the debate over sanctuary policies is just a costly diversion from other issues.  However, if sanctuary policies do reduce deportations, then perhaps pro-immigration activists and policy-makers should devote more effort to increase their number.  Likewise, opponents of sanctuary policies should also stop opposing them if they don’t have an impact on deportations but expand their opposition if they do reduce deportations by a lot  

There is suggestive evidence that sanctuary policies reduce deportations but many reasons to also be skeptical of big effects.  We decided to look at how the California TRUST Act reduced deportations from California.  Governor Jerry Brown (D) signed the TRUST Act in October 2013 – the beginning of the fiscal year for 2014.  The TRUST Act was a state-level sanctuary policy that limited law enforcement cooperation with ICE unless the arrestee had already been convicted of serious crimes. 

ICE deports people apprehended in specific Areas of Responsibility (AOR).  There are three AORs that include the states of California and Hawaii.  For the purposes of this blog, we assumed that Hawaii was not part of the California AORs.  According to the Center for Migration Studies, Hawaii’s illegal immigrant population was under 40,000 in 2015 while California’s was almost 2.6 million.  Since Hawaii’s illegal immigrant population was only 1.5 percent of California’s, we were comfortable in ignoring it.

Figure 1 shows a steep relative decline in deportations from the California AOR relative to the rest of the country when the TRUST Act was enacted.  In FY2014, the first year that the TRUST Act was in effect, deportations from California dropped 39 percent relative to FY2013.  In the rest of the country in FY2014, they only dropped 9 percent relative to FY2013. 

Figure 1

Annual Percentage Change in Removals by AOR

 

Sources: ICE and authors’ calculations. 

 

Figure 2 shows the differences in removal trends before and after California’s TRUST Act became law relative to the other AORs that were not covered by the California law.  Each regression line fit to the pre- and post-TRUST Act, called “Fitted Values,” highlights the change from a steady increase in the number of removals from California’s AOR to a precipitous decline in the number of removals when the TRUST Act became law. 

 

Figure 2

California Deportation Trends Pre- and Post-TRUST Act

 

Sources:  ICE and authors’ calculations.

 

On a statistical basis, these findings are merely suggestive as we only have 12 years of data and we didn’t control for any other factors.  For Figure 2, it appears that the more substantive change transpired in FY2012 prior to the TRUST Act.  Regardless, this simple exercise strongly suggests that the California TRUST Act caused the number of deportations from California to fall faster than they otherwise would have relative to other AORs. 

“Genetic Informants” and the Hunt for the Golden State Killer

Last week officers with the Sacramento County Sheriff’s Department arrested Joseph James DeAngelo, the suspected Golden State Killer who allegedly committed a dozen murders, at least 50 rapes, and more than 100 burglaries in California between 1976 and 1986. Police made the arrest after uploading DeAngelo’s “discarded DNA” to one of the increasingly popular genealogy websites. Using information from the site, investigators were able to find DeAngelo’s distant relatives, thereby significantly narrowing their list of suspects. This investigatory technique is worth keeping an eye on, not least because millions of people are using DNA-based genealogical sites.

I’m one of them. I’ve signed up to 23andMe as well as MyHeritage, both of which offer DNA analysis. I did this in part because family history is a minor hobby of mine, but also because 23andMe offers interesting medical information. While both companies offer a DNA service, I’ve only used 23andMe’s because MyHeritage allows its users to upload 23andMe data. One of the features of MyHeritage is its “DNA Matching” service, which updates me when a distant relative is found thanks to automated DNA analysis.

This month alone MyHeritage has altered me to the existence of two more 3rd - 5th cousins. This DNA Matching service has identified hundreds of my distant relatives, with varying degrees of confidence. 23andMe has a similar relative-finding feature. MyHeritage and 23andMe, as well as Ancestry.com, have all denied working with law enforcement in the Golden State Killer case.

According to The New York Times, investigators sent the suspected Golden State Killer’s DNA to GEDmatch, a free genealogical service. A GEDmatch release stated that it had not been approached by law enforcement and warned customers, “If you are concerned about non-genealogical uses of your DNA, you should not upload your DNA to the database.”

California’s Pension Woes Exacerbated by Politics

California governor Jerry Brown has been taking a victory lap of sorts after putting forth a budget for fiscal year 2019 that would include a $6 billion surplus, a remarkable turnaround for a state that hemorrhaged red ink in the wake of the great recession.

Of course, much of that surplus arrived via a hefty tax increase, as well as a surfeit of revenue resulting from the stock market boom via capital gains taxes, so attributing this turnaround to fiscal probity might be taking things a bit far.

However, Governor Brown does get credit for at least temporarily righting what seemed to be a sinking ship. What’s more, he seems to realize that this surplus can easily disappear, and he has warned his potential successors to resist spending that surplus. What Brown is fully aware of is that even the most spectacular stock market increase is not enough to erase the state’s most pressing financial problem—namely, its underfunded government pension.

Currently, it has enough money set aside to cover just 68% of its future obligations—certainly far from the most indebted state (that would be my own state of Illinois), but still low enough to dismiss any notion that future stock market growth can remedy the problem.

Despite this, the California Public Employees Retirement System, or CalPERS, has put politics ahead of achieving a high rate of return by insisting that the boards of the companies it invests in adhere to various social and environmental practices.

It’s nonsense, of course, and it amounts to little more than an extension of politics into a realm that doesn’t have room for it.

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California Spending Under Governor Brown

The Wall Street Journal had a flattering piece about Governor Jerry Brown’s budgeting today:

California Gov. Jerry Brown appears poised to exit office next year with a top political priority in hand: free from the massive budget deficits that had weighed on his predecessors.

… Mr. Brown has been preaching frugality for years—he kicked off one past budget talk with Aesop’s fable about the thrifty ant and the lazy grasshopper.

Mr. Brown took office in 2011 with a $27 billion deficit and drastically slashed spending. In 2012, he staked his governorship on a tax increase that voters approved that year and reauthorized in 2016.

Brown might have been “preaching frugality,” but his high-speed rail boondoggle is about as spendthrift as you can get.

As for state deficits, they generally arise when states project high future spending growth even when revenues are stagnating. They have more to do with excessively optimistic forecasts than they do with real gaps between current spending and revenues.  

California general fund spending increases have been substantial under Brown, as shown in the chart below using the latest state data.

Spending fell 6 percent Brown’s first year, but then bounced back strongly, rising 46 percent from 2012 to the enacted level for 2018.

During the whole period, 2011 to 2018, general fund spending rose 38 percent in California, compared to an average 27 percent in the other 49 states, per NASBO data.

Total California spending (general and nongeneral funds) has risen 44 percent under Brown, 2011-2018. Perhaps Brown did too much preaching, and not enough actual cutting.

In the Cato 2016 Governors Report Card, I assigned Brown an “F.” Look for another Report Card this October.

An Electrifyingly Bad Decision

Transportation Secretary Elaine Chao’s decision to give $647 million to California to electrify a San Francisco commuter rail line tells states and cities across the nation that they should plan the most expensive and wasteful infrastructure projects they can and the Trump administration will support them. The Caltrains electrification project had no political, economic, social, or environmental justification, so Chao’s support for the project despite its lack of virtues does not bode well for those who hoped that the Trump administration would take a fiscally conservative stance on infrastructure and transportation.

The California project had already been funded by the Obama administration, but it was a last-minute approval by an acting administrator who immediately then took a high-paying job with one of Caltrains’ contractors. When Chao took office, every single Republican in the California congressional delegation asked her to overturn the decision, and she agreed to review it. Even some Democrats opposed the project, meaning there was far less political pressure to fund it than many other equally wasteful programs.

Caltrains carries just 4 percent of transit riders in the San Francisco Bay Area, and based on the dubious claim that electric trains would go a little faster than Diesel-electric trains, the environmental assessment for the project predicted that electrification would boost ridership by less than 10 percent. It would save no energy and have a trivial effect on air pollution. 

Instead, the main purpose of the Caltrains project was to wire the way for California’s bloated high-speed trains, which at least initially would use the same electric power to get to San Francisco. Normally, high-speed trains would not use the same track as ordinary commuter trains, but the costs of the high-speed rail project have risen so much that the state’s rail authority is cutting corners wherever it can. One result is that the project, if it is ever completed, won’t really run trains at high speeds for much of its route.

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