What’s Government Good For?

Those of us who are critical of government usually admit that there are a few tasks that government must perform.  Run the roads, for instance.  Yes, toll roads can work well, but it’s hard to figure out a truly private system of , say, city streets.  I realize that some people might view me as being a hopelessly antiquated “policy libertarian” unable to see the possibilities of creative and entrepreneurial people.  But that’s just the way I am.

Still, I’m starting to wonder.  At least, it looks like maybe anarchy on the roads might be better than strict government regulation.  Reports the Times of London:

What would happen if traffic lights were suddenly switched off? Would there be gridlock or would the queues of frustrated drivers miraculously disappear?

People in London are about to find out the answer in Britain’s first test of the theory that removing lights will cure congestion.

For six months, lights at up to seven junctions in Ealing will be concealed by bags and drivers will be left to negotiate their way across by establishing eye contact with pedestrians and other motorists.

Ealing Council believes that, far from improving the flow of traffic, lights cause delays and may even increase road danger. Drivers race towards green lights to make it across before they turn red. Confidence that they have right of way lulls them into a false sense of security, meaning that they fail to anticipate hazards coming from the side. The council hopes that drivers will learn to co-operate, crossing junctions on a first-come first-served basis rather than obeying robotic signals that have no sense of where people are waiting.

Westminster City Council is also considering a trial but has yet to identify likely junctions.

Ealing found evidence to support its theory when the lights failed one day at a busy junction and traffic flowed better than before. Councillors have approved a report which recommended that they “experimentally remove signals since experience of signal failure showed that junction worked well”.

The Conservative-controlled council has won the support of Boris Johnson, the Mayor of London, who is responsible for all 5,000 sets of lights in the capital through Transport for London.

One shouldn’t take Ealing’s lesson too far.  However, the experience suggests that one should never assume that the way things are done are the way they must be done.  We should always be willing to take a fresh look and rethink the status quo, even if we end up deciding that the status quo really is the best approach.

Teachers in the Money

A few months ago, I wrote a report that busted two pervasive education myths: that student loan burdens are crushing recent graduates, and that teachers get paid peanuts. In the paper, I itemized first-year public school teacher salaries in districts around the country, and pointed to Bureau of Labor Statistics research showing that teachers work significantly less time for their salaries than do most other professionals. Even accounting for time teachers work beyond their contracted hours – grading papers at home, meeting with students after school, etc. – teachers work on average 18 fewer minutes a day than other professionals. And that figure does not include summer and other vacations – it is only for the contracted school year.  Perhaps most important, at least when it comes to earnings, I noted that that free time can be used to pursue additional employment.

After making my point about how much time teachers work for their salaries relative to other professionals, and noting that teachers can make more bucks with the extra time they have available, I pursued the point no further. But a New York Post article today shows just how much overtime pay intrepid public school teachers, at least in New York City, can make.

At the top end, a teacher at the High School of Telecommunication Arts and Technology made $60,000 developing a data analysis system for numerous schools. That brought his total compensation to $141,159 for 2007-08. A teacher at Chelsea Career & Technical Education HS took in $52,001 of OT teaching night classes at another high school, bringing his total earnings to $152,050 (his base salary was $100,049).  And the Post offers several other examples.

Now, some people will read this blog entry as an attack on the big earners in NYC and teachers generally. They will be wrong: What these teachers did to earn their extra dollars might have been worth every penny, I don’t know, and they very likely put in much more time than other professionals to earn all their dough.  This does, though, just strengthen the almost irrefutable point I made in my report: On an hourly basis, teachers get salaries comparable to other professionals, and the fact that teachers work many fewer hours to get those salaries gives them significant time to earn extra dough. Sometimes, a LOT of extra dough.

If You Like Fannie Mae, You’ll Love Auto Mac

While Bank of America and Citi grabbed most of the attention in the recently released bank “stress tests”  one of the biggest capital holes to be filled is that of GMAC, which under the stress test’s relatively light assumptions will need to raise another $11.5 billion in capital.

As one of the smaller of the stressed tested banks, and having almost no trading and counterparty risk – and hence little or no systemic risk, GMAC would hardly seem the candidate for any additional bailout funds.  Were GMAC to fold, our financial markets would hardly notice.  Who might notice is our auto manufacturers.

Just as easy credit inflated our housing market, it was easy credit – who can forget 0% financing – that lead the auto sales boom of the early 2000’s.  Just as many see Fannie and Freddie – along with help from the Federal Reserve – as leading us to a housing recovery, many also see GMAC as being at the heart of any recovery in the auto industry.

Given the state of the auto industry and the increasing level of defaults on auto loans, the safe bet is that GMAC will have a tough time rasing the needed $11.5 billion from non-governmental sources.

Once the government becomes a majority owner of GMAC, its only a matter of time until its focus shifts from re-bulding its financial health to expanding the American Dream of auto-ownership.

Good News! Recession Cuts Trade Deficit in Half!

The latest U.S. trade numbers were released this morning, and the news reports so far have predictably focused on the fact that the U.S. trade deficit in March expanded modestly compared to February.

The real story behind the numbers, however, is that U.S. imports and exports continue to decline. Compared to the month before, U.S. exports of goods fell another $3.0 billion, while imports fell by $1.6 billion.

If we go back a full year, the drop in trade is staggering. Between March of 2008 and March of 2009, U.S. exports of goods and services fell by 17 percent, and imports fell an even steeper 27 percent. As a result, the goods and services deficit is less than half of what it was a year ago.

Critics of trade such as CNN’s Lou Dobbs are always harping that if we could only reduce our dependence on imports, and along with it the trade deficit, Americans would enjoy higher wages and more plentiful jobs.

Well, we’ve managed in the past year to reduce imports by more than a quarter and cut the trade deficit by more than half. Are we feeling any better?

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Getting Our Terminology Straight

Dave Hornstein takes Martha Gore to task for describing Barack Obama’s health care reform plan as “nationalized health care.” “Let’s get our terminology straight,” Hornstein argues. “Nationalized or socialized medicine is a health care system that is publicly financed and delivered, such as Great Britain’s National Health Service.  That is not part of Obama’s proposal or the Single Payer plan.”

Yes, let’s get our terminology straight. Socialized medicine exists to the extent that government controls medical resources and socializes the costs. What matters is who controls the money. Whether we nominally call doctors or hospitals private or public doesn’t matter. If they’re getting most of their checks from the government, that’s who’s in control.

If government controls the resources, it’s socialized medicine. The government can funnel the money through insurers and keep all the doctors and hospitals private and it would still be socialized medicine. If they have the money, they run the show. Everything else is just window dressing.

For more, see here.

It Begins: White House Unleashes the Health Care Tempest

Monday’s meeting between President Obama and representatives of the health care industry is part of an ongoing process of trying to strike a deal between government and industry over how to reform health care. Notably absent from that equation is the most important party: health care consumers.

Health care reform should be about empowering patients, not about how much increased government control the health care industry is willing to accept.

Moreover, any promised health care savings that came out of yesterday’s meeting are likely to prove illusory in the face of increased government regulation, subsidies and interference that will almost certainly drive up the cost (and decrease the quality) of health care.